Deutsche Archives - Page 2 of 8 - The Automatic Earth

From what I understand Zebley will be sworn in for the Intelligence Committe part, the last part, but not the Judiciary Committee, the first 3 hours. Hints at them knowing at least some of what’s going to be asked.

• Mueller In Last-Minute Request For Aide To Be With Him During Testimony (NBC)

One of former special counsel Robert Mueller’s longtime aides will appear alongside him during his highly-anticipated testimony before the House Judiciary Committee, a spokesperson said Tuesday, but is not expected to be sworn in. Mueller’s team made a last-minute request that Aaron Zebley be sworn in and testify with him during his scheduled hearings before Congress on Wednesday, a congressional source familiar with the request told NBC News. Mueller is slated to testify on his report into Russian interference in the 2016 election and the country’s influence on President Donald Trump for three hours before the House Judiciary Committee, take a break, then appear for at least two additional hours before the House Intelligence Committee.

For the first hearing, Zebley will sit alongside Mueller as his counsel, according to the Judiciary Committee spokesperson. The committee, however, is not updating its guidance to include Zebley as a witness. This means that Zebley will not be sworn in. Mueller can confer with him as he is questioned by the panel, according to committee rules, but cannot answer questions. The ranking Republican on the Judiciary Committee, Rep. Doug Collins of Georgia, said Tuesday that GOP members had “not gotten assurances from the House Democrats on the committee that he [Zebley] will not speak.”

“He’s not supposed to speak in that role to anyone on the committee or asked questions. And we’re asking, and, frankly, that that be confirmed before the hearing. So we don’t have to waste time with it tomorrow,” Collins said. Jim Popkin, Mueller’s spokesperson, disputed the idea that Zebley’s presence at the hearings amounted to an 11th-hour addition. “Aaron Zebley was the Deputy Special Counsel and had day-to-day oversight of the investigations conducted by the Office,” Popkin said in a statement Tuesday. “He will accompany Special Counsel Mueller to the Wednesday hearings, as was discussed with the committees more than a week ago.”

Mueller’s people asked Barr for guidance on what he can talk about. Wonder how many times they will refer to that guidance when not answering questions. Sort of like taking the fifth.

• Questions for Mueller (Aaron Maté)

”For two years, Democrats have waited on Robert Mueller to deliver a death blow to the Trump presidency,” The New York Times observed on July 20. “On Wednesday, in back-to-back hearings with the former special counsel, that wish could face its final make-or-break moment.” The very fact that Democrats had to subpoena Mueller in order to create this final moment should in fact be the final reminder of what a mistake it was for Democrats to have waited on him. If Mueller had incriminating information yet to share, or had been stymied from doing his work, or if Attorney General William Barr had somehow misrepresented his findings, then it stands to reason that Mueller would be welcoming the opportunity to appear before Congress, not resisting it.

The reality is that Mueller’s investigation did not indict anyone on the Trump campaign for collusion with Russia, or even for anything related to the 2016 election. Mueller’s report found no evidence of a Trump-Russia conspiracy, and even undermined the case for it. That said, there are unresolved matters that Mueller’s testimony could help clarify. Mueller claimed to have established that the Russian government conducted “a sweeping and systematic” interference campaign in order to elect Trump, yet the contents of his report don’t support that allegation. The Mueller report repeatedly excludes countervailing information in order to suggest, misleadingly, that the Trump campaign had suspect “links” and “ties” to people connected with Russia. And Mueller and other intelligence officials involved in the Russia probe made questionable investigative decisions that are worthy of scrutiny.

Horowitz has to finish his report first before Durham can do anything. Today’s hearings are far from the last thing on the topic.

• Robert Mueller, The ‘Magician Of Omission’ On Russia (Solomon)

While most of the political world focused its attention elsewhere, special prosecutor John Durham’s team quietly reached out this summer to a lawyer representing European academic Joseph Mifsud, one of the earliest and most mysterious figures in the now closed Russia-collusion case. An investigator told Swiss attorney Stephan Roh that Durham’s team wanted to interview Mifsud, or at the very least review a recorded deposition the professor gave in summer 2018 about his role in the drama involving Donald Trump, Russia and the 2016 election. The contact, confirmed by multiple sources and contemporaneous email, sent an unmistakable message:

Durham, the U.S. attorney handpicked by Attorney General William Barr to determine whether the FBI committed abuses during the Russia investigation, is taking a second look at one of the noteworthy figures and the conclusions of former special counsel Robert Mueller’s final report. The evidence I reviewed suggests Mueller’s handiwork may be exposed for glaring omissions that, when brought to public light, leave key questions unanswered, especially about how the FBI’s unprecedented probe of the Trump campaign started. Durham is focused on determining whether any government or private figures who came in contact with the Trump campaign in 2016 “were engaged in improper surveillance,” a U.S. official told me when asked about the Mifsud overture.

Is someone going to question Weismann at some point?

• Mueller Deputy Andrew Weissmann’s Offer To An Oligarch Could Hurt DOJ (Solomon)

At the time, pressure was building inside the DOJ and the FBI to find smoking-gun evidence against Trump in the Russia case because the Steele dossier — upon which the early surveillance warrants were based — was turning out to be an uncorroborated mess. (“There’s no big there there,” lead FBI agent Pete Strzok texted a few days before Weissmann’s overture.) Likewise, key evidence that the DOJ used to indict Firtash on corruption charges in 2014 was falling apart. Two central witnesses were in the process of recanting testimony, and a document the FBI portrayed as bribery evidence inside Firtash’s company was exposed as a hypothetical slide from an American consultant’s PowerPoint presentation, according to court records I reviewed.

In other words, the DOJ faced potential embarrassment in two high-profile cases when Weissmann made an unsolicited approach on June 4, 2017, that surprised even Firtash’s U.S. legal team. To some, the offer smacked of being desperately premature. Mueller was appointed just two weeks earlier, did not even have a full staff selected, and was still getting up to speed on the details of the investigation. So why rush to make a deal when the prosecution team still was being selected, some wondered. Second, Weissmann’s approach was audaciously aggressive, even for a prosecutor with his reputation.

According to a defense memo recounting Weissmann’s contacts, the prosecutor claimed the Mueller team could “resolve the Firtash case” in Chicago and neither the DOJ nor the Chicago U.S. Attorney’s Office “could interfere with or prevent a solution,” including withdrawing all charges. “The complete dropping of the proceedings … was doubtless on the table,” according to the defense memo.

“So we beat on, against the sun, borne back ceaselessly into hell.”

• The Clown Is Crowned As The Country Burns In Hell (G.)

Well, here we are then. Someone who could easily be rejected as a Guess Who character for looking too ridiculous is now to lead the country. A man whose DNA profile is the exact same as a Bernard Manning joke. A man who mentioned the 20 hustings he had taken part in, approximately 30 seconds after Conservative party chairman Brandon Lewis talked of the 16 hustings held. With 8,000 members of the Johnson family watching on – and Jeremy Hunt, looking for all the world like a sub who’s never gonna get off the bench and knows it – Boris Johnson was announced as the new leader of the Conservative party, and, in short order, the new prime minister. Elected by a staggering 0.2% of the nation, we can’t say it isn’t the will of the people.

It’s quite extraordinary, isn’t it, when the new leader of the country opens his inaugural speech with: “There may be people here who wonder quite what they have done!” – having to address the fact that many people in the room are coming to terms with the fact they’ve got shit on their shoe. “Do you look daunted?!” he boomed, “You don’t look remotely daunted to me!” Which was met with a Spectoresque wall of silence, a number of faces as white as Elizabeth I’s, and a solitary cry of: “No!”.

[..] I don’t really know what to say myself. I don’t understand how a man can lie his way about bananas and condoms to high office. I don’t understand how a man whose entire prep for anything seems to consist of drawing a cock and balls – but in Latin! – on a sheet of paper, ends up in high office. I don’t understand how a man can be recorded offering to facilitate the assault of a journalist and reach high office. I don’t understand how a man can be fired twice for cavalierly making stuff up and reach high office. I don’t understand how a man whose entire personality is a job-lot sold off from a closing down joke shop can reach high office. A racist, an inveterate liar, a man who makes Machiavelli look misunderstood and Pinocchio button-nosed. It’s 33C outside in London. You can’t tell whether people are crying or sweating. We can’t do anything until we get a say – which, this time, we did not. So we beat on, against the sun, borne back ceaselessly into hell.

There will not be a recovery. The only thing they can so is prolong the agony.

• Deutsche Bank’s Problem Derivatives Cloud Recovery (R.)

Deutsche Bank’s turnaround strategy rests in large part on shedding 288 billion euros of unwanted assets. Three bank insiders said it will take years, tying up capital that could have generated income of 500 million euros ($557 million) a year. The opportunity cost of holding the assets, which has not been previously reported, underscores the challenges facing Chief Executive Christian Sewing as he attempts to turn around the bank and restore confidence among investors who have seen the value of their shares decline by 75% in the past four years. Sewing said earlier this month that Deutsche, Germany’s largest lender, would set up a bad bank to house the assets, which include equity, credit and interest-rate derivatives.

The bank said it wants to offload most of its derivatives by 2020. Executives managing the book can either sell positions or allow them to gradually wind down over time, depending on which is more profitable. The bank is planning an auction of its short-dated equity derivatives book, having already received “significant expressions of interest,” the sources familiar with the matter said. However, its long-dated interest rate and credit derivatives are expected to be much harder to offload, the sources said. Deutsche Bank has held on-and-off talks with potential buyers of some of those assets over the past two years, three people said. The sales did not happen because the prices offered would have resulted in hundreds of millions of euros in losses for the bank, they said.

What, laundering as well?

• Deutsche Bank Flagged Epstein’s Overseas Transactions To US Watchdog (CNBC)

Deutsche Bank notified U.S. financial watchdogs about suspicious transactions by accused child sex trafficker Jeffrey Epstein — a customer of the bank — according to a new report Tuesday. The transactions, which involved Epstein moving money out of the United States, were flagged after Deutsche Bank discovered them while looking for indications that the wealthy financier was using his money for sex trafficking, The New York Times reported. Epstein had been a client of Deutsche Bank’s private banking division since at least 2013, five years after he pleaded guilty to prostitution-related charges involving a teenage girl filed by Florida state prosecutors, the Times noted.

That guilty plea led to Epstein — a former friend of Presidents Donald Trump and Bill Clinton — being required to register as a sex offender. According to the new article, an anti-money laundering compliance officer in Deutsche Bank’s office in New York and Florida raised concerns about the bank’s relationship with Epstein in 2015 and 2016. Those officers also reportedly put together a suspicious activity report on potentially illegal activity in an Epstein account at the time, which had moved money outside of the U.S. The Times said it was not clear if that report was ever filed with the financial crimes division of the U.S. Treasury Department. But the latest suspicious transactions were reported this year, according to the article.

But but.

• Berkeley First US City To Ban Natural Gas (G.)

Berkeley this week became the first city in the United States to ban natural, fossil gas hook-ups in new buildings. The landmark ordinance was passed into law on Tuesday, after being approved unanimously by the city council the previous week amid resounding public support. Although Berkeley may be pushing the vanguard, the city is hardly alone. Governments across the US and Europe are looking at strategies to phase out gas. In California alone, dozens of cities and counties are considering eliminating fossil fuel hook-ups to power stoves and heat homes in new buildings, while California state agencies pencil out new rules and regulations that would slash emissions. Natural gas, it seems, has become the new climate crisis frontline. Berkeley’s ordinance, which goes into effect on 1 January, will ban gas hook-ups in new multi-family construction, with some allowances for first-floor retail and certain types of large structures.

The reasons behind the decision are multifold. Energy use in buildings accounts for about 25% of greenhouse gas emissions in California. If the state is to meet its goal of 100% zero-carbon energy by 2045, the gas will have to go. For decades, gas was considered among the preferred energy sources for buildings and embraced as a bridge from dirtier fossil fuels to a green energy future. “There’s been a lingering perception that burning gas was cleaner than electricity, which might have been true 20 years ago when electricity came from burning coal,” said Pierre Delforge, a senior scientist with the Natural Resources Defense Council . “When we look at electrification policies, we need to think about what the grid will look like in 10 or 20 years, not what it looked like yesterday.”

Not the Onion.

• Libra Scams Are Already Popping Up On Facebook (F.)

As Facebook faces skepticism from regulators that it can handle launching its cryptocurrency Libra, a raft of fake accounts and scams purporting to sell Libra have cropped up on its own platform, according to the Washington Post. At least a dozen fake pages and websites on Facebook and Instagram claim to be associated with Facebook’s Libra, which has yet to be officially launched. One video offered a discount on Libra coins that have been distributed to early investors. Another linked to a realistic-looking fake website called “buylibracoins.com.” The website remains online. The scams even spread to YouTube and Twitter, according to the Washington Post. Facebook says Libra will allow people to send money to each other without a traditional middleman, such as a bank.

A digital wallet, called Calibra, will also be available as a stand-alone app on Facebook Messenger and WhatsApp. A Facebook spokesperson told Forbes that it “removes ads and Pages that violate our policies when we become aware of them, and we are constantly working to improve detection of scams on our platforms.” Key Background: In 2018, Facebook banned advertisements involving cryptocurrency or initial coin offerings to combat the proliferation of scams and bogus ICOs cropping up as the price of Bitcoin soared. Over the last few months, Facebook has been softening the ban in the run up to the announcement of Libra—and it appears scammers are taking advantage. Libra scams may not help Facebook convince lawmakers and regulators that it can protect user privacy and prevent the digital currency from being used in criminal activity.

I’ll believe it when I see it. Because Big Tech=CIA.

• Big Tech Faces Broad US Justice Department Antitrust Probe (R.)

The U.S. Justice Department said on Tuesday it was opening a broad investigation of major digital technology firms into whether they engage in anticompetitive practices, the strongest sign the Trump administration is stepping up its scrutiny of Big Tech. The review will look into “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers,” the Justice Department said in a statement. The Justice Department did not identify specific companies but said the review would consider concerns raised about “search, social media, and some retail services online” — an apparent reference to Alphabet Inc, Amazon.com Inc and Facebook Inc, and potentially Apple Inc.

[..] The announcement comes a day before the Federal Trade Commission is set to announce a $5 billion penalty to Facebook for failing to properly protect user privacy. Senator Richard Blumenthal, a Democrat, said the Justice Department “must now be bold and fearless in stopping Big Tech’s misuse of its monopolistic power. Too long absent and apathetic, enforcers now must prevent privacy abuse, anticompetitive tactics, innovation roadblocks, and other hallmarks of excessive market power.” In June, Reuters reported the Trump administration was gearing up to investigate whether Amazon, Apple, Facebook and Alphabet’s Google misuse their massive market power, setting up what could be an unprecedented, wide-ranging probe of some of the world’s largest companies.

The FBI tried to steal the black boxes, but Malaysian secret service had already ‘smuggled’ agents into the Donbass ahead of other countries. Oh, and literally everybody has been caught lying. What a story this is becoming,

• MH17 Evidence Tampering Revealed by Malaysia (John Helmer)

A new documentary from Max van der Werff, the leading independent investigator of the Malaysia Airlines Flight MH17 disaster, has revealed breakthrough evidence of tampering and forging of prosecution materials; suppression of Ukrainian Air Force radar tapes; and lying by the Dutch, Ukrainian, US and Australian governments. An attempt by agents of the FBI to take possession of the black boxes of the downed aircraft is also revealed by a Malaysian National Security Council official for the first time. The sources of the breakthrough are Malaysian — Prime Minister of Malaysia Mohamad Mahathir; Colonel Mohamad Sakri, the officer in charge of the MH17 investigation for the Prime Minister’s Department and Malaysia’s National Security Council following the crash on July 17, 2014; and a forensic analysis by Malaysia’s OG IT Forensic Services of Ukrainian Secret Service (SBU) telephone tapes which Dutch prosecutors have announced as genuine.

The 298 casualties of MH17 included 192 Dutch; 44 Malaysians; 27 Australians; 15 Indonesians. The nationality counts vary because the airline manifest does not identify dual nationals of Australia, the UK, and the US. The new film throws the full weight of the Malaysian Government, one of the five members of the Joint Investigation Team (JIT), against the published findings and the recent indictment of Russian suspects reported by the Dutch officials in charge of the JIT; in addition to Malaysia and The Netherlands, the members of the JIT are Australia, Ukraine and Belgium. Malaysia’s exclusion from the JIT at the outset, and Belgium’s inclusion (4 Belgian nationals were listed on the MH17 passenger manifest), have never been explained.

The film reveals the Malaysian Government’s evidence for judging the JIT’s witness testimony, photographs, video clips, and telephone tapes to have been manipulated by the Ukrainian Security Service (SBU), and to be inadmissible in a criminal prosecution in a Malaysian or other national or international court. For the first time also, the Malaysian Government reveals how it got in the way of attempts the US was organizing during the first week after the crash to launch a NATO military attack on eastern Ukraine. The cover story for that was to rescue the plane, passenger bodies, and evidence of what had caused the crash. In fact, the operation was aimed at defeating the separatist movements in the Donbass, and to move against Russian-held Crimea. The new film reveals that a secret Malaysian military operation took custody of the MH17 black boxes on July 22, preventing the US and Ukraine from seizing them. The Malaysian operation, revealed in the film by the Malaysian Army colonel who led it, eliminated the evidence for the camouflage story, reinforcing the German Government’s opposition to the armed attack, and forcing the Dutch to call off the invasion on July 27.

Not the first time he’s said it, but this time it’s directly to the FAA.

• Ralph Nader Says Boeing 737 Max Should Never Fly Again (CNBC)

Consumer advocate Ralph Nader on Tuesday urged the Federal Aviation Administration to permanently ground Boeing’s 737 Max jet. “The plane cannot be refixed,” said Nader, whose grandniece was killed in a March crash of a 737 Max jet in Ethiopia. “It has to be recalled” and permanently taken out of service, he said. Regulators worldwide ordered airlines to ground their 737 Max planes in mid-March after the crash in Ethiopia and one in Indonesia that occurred within five months of one another, killing a total of 346 people. Since then, Boeing has been preparing to get the Max back in the air. Airlines have canceled thousands of flights due to the grounding and are planning to do so until at least November, a move that Boeing said it took a $4.9 billion charge for in its second quarter.

But the planemaker needs to “take their losses” on the jet, Nader said in an interview with CNBC’s “Squawk on the Street.” Crash investigators have pointed to an issue with the jets’ software, for which Boeing said it has developed a fix, as the cause behind the two fatal crashes. But once a software upgrade is submitted to the FAA, it will likely take at least another month before the planes are back in operation. On the software fix, Nader said it shouldn’t be trusted since executives are “stuck in their bad decision” and are “ignoring preventable aerodynamic design.” “It’s a new plane; they can’t say it’s just a little bit changed,” he said. “It needs full certification.”

Debt Rattle July 11 2019

Jul 112019

July 11, 2019 Posted by Raúl Ilargi Meijer at 8:53 am Finance Tagged with: AOC, Brexit, Deutsche, Epstein, Fed, Iran, Major, OPCW, Powell, Queen, rate cut, revolutionary, Schumer, tanker, Trump 8 Responses »

Pablo Picasso Guernica 1937

• Dollar Slips After Powell Bolsters Rate Cut Bets (R.)

• AOC Is Making Monetary Policy Cool (and Political) Again (NYM)

• Trump Tasks Aides To Find A Way To Weaken The US Dollar (CNBC)

• Lock Him Up (Pinkerton)

• Schumer Got Thousands In Donations From Jeffrey Epstein (NYP)

• Democrat Rep. Stacey Plaskett To Donate Epstein Campaign Contributions (CNBC)

• US Probing Deutsche Bank’s Dealings With Malaysia’s 1MDB (ZH)

• Obama the Conservative vs Trump the Revolutionary (EH)

• Former UK PM Major Vows To Block Brexit Parliament Suspension (R.)

• OPCW’s New Chemical Weapons Team To Launch First Syria Investigations (R.)

• UK, US Claim Iranian Boats Attempt To Seize Tanker In Strait Of Hormuz (ZH)

I’m getting so sick of this. Powelll wants to cut rates but it makes no sense if he’s to uphold Trump’s claim of a great US economy. So what does his spin team come up with? Cut rates because other countries are not doing so well. Cut the crap.

• Dollar Slips After Powell Bolsters Rate Cut Bets (R.)

The dollar eased on Thursday after Federal Reserve Chairman Jerome Powell set the stage for a rate cut later this month, vowing to “act as appropriate” to ensure the world’s biggest economy will be able to sustain a decade-long expansion. In testimony to Congress, Powell pointed to “broad” global weakness that was clouding the U.S. economic outlook amid uncertainty about the fallout from the Trump administration’s trade conflict with China and other nations. “Chairman Powell sounded dovish on most dimensions. This is slightly surprising given benign trade developments following last month’s G20 meeting and the recent rebound in nonfarm payrolls,” said Michael Swell, co-head of global fixed income portfolio management at Goldman Sachs Asset Management.

“Overall, his comments around slowing growth against a backdrop of muted inflation and elevated uncertainties is consistent with ‘insurance rate cuts’ this year.” Adding to a generally dovish tone in his testimony, the minutes from the Fed’s previous policy meeting showed many policymakers thought more stimulus would be needed soon, reviving speculation of an aggressive rate cut.

The Fed’s pumping is great news in the short term but it can’t last forever. Be prudent in your market investing.

— Donald J. Trump (@realDonaldTrump) July 18, 2013

And AOC also wants low interest rates. Everyone wants the same thing, and nobody says: Wait a minute?!

• AOC Is Making Monetary Policy Cool (and Political) Again (NYM)

Ocasio-Cortez : In early 2014, the Federal Reserve believed that the long run unemployment rate was around 5.4 percent. In early 2018, it as estimated that this was now lower, around 4.5 percent. Now, the estimate is around 4.2 percent. What is the current unemployment rate today?
Powell : 3.7 percent.

Ocasio: 3.7 percent…Unemployment has fallen about three full points since 2014 but inflation is no higher today than it was five years ago. Given these facts, do you think it’s possible that the Fed’s estimates of the lowest sustainable unemployment rate may have been too high?
Powell : Absolutely.

This exchange may sound dull and technical. But the congresswoman’s point has real human stakes. America’s central bank has a dual mandate: to promote full employment and price stability. How the Fed chooses to balance those two objectives has redistributive implications. The wealthy have far more to lose from inflation than they do from modest levels of unemployment. In fact, many business owners may actually prefer for the U.S. economy not to achieve full employment, since workers tend to be less demanding when jobs are scarce. By contrast, the most vulnerable workers in the U.S. — such as those with criminal records or little experience — will struggle to get a foothold in the labor market unless policy makers err on the side of letting unemployment fall “too low.”

And this is what AOC’s questions are implicitly about. If the Federal Reserve believes that the U.S. economy cannot sustain unemployment below 5 percent without suffering high inflation, then it will raise interest rates to cool off investment, thereby preventing too many workers from getting jobs. Ocasio-Cortez’s implication is that, by raising interest rates out of a fear of illusory inflation, the Fed may have needlessly hurt American workers. Powell’s concession on that point is significant, and suggests that the central bank will be less inclined to err on the side of hurting the vulnerable in the future.

We’re all of us in the gutter… (but apparently there’s no-one left looking at the stars).

• Trump Tasks Aides To Find A Way To Weaken The US Dollar (CNBC)

President Donald Trump has reportedly tasked aides to find a way to weaken the U.S. dollar in an effort to boost the economy ahead of the 2020 presidential election. The president also asked about the greenback while interviewing Federal Reserve board nominees Judy Shelton and Christopher Waller, people familiar with the matter told Bloomberg News. Those individuals also told Bloomberg that Trump’s chief economic advisor, Larry Kudlow, and Treasury Secretary Steven Mnuchin disapprove of the idea of government tampering to weaken the dollar. Traditionally, past administrations have always maintained publicly they were for a strong dollar because dollar assets like Treasurys are so widely held around the globe.

Trump has often bemoaned the relative strength of the U.S. dollar in foreign exchange markets, blaming foreign nations for devaluing their currencies and thereby inflating the American trade deficit. Last week, the president said in a tweet that the U.S. should match China and Europe’s “currency manipulation game.” “China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA,” Trump said on Twitter. “We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!”

About Epstein, but with a historical twist.

• Lock Him Up (Pinkerton)

One landmark of American reform was the White-Slave Traffic Act, signed into law in 1910 (“white slavery,” we might note, is known today as “sex trafficking”). That law, aimed at preventing not only prostitution but also “debauchery,” is known as the Mann Act in honor of its principal author, Representative James R. Mann, Republican of Illinois, who served in Congress from 1897 to 1922. Mann’s career mostly coincided with the presidential tenures of two great reformers, Theodore Roosevelt and Woodrow Wilson. And it’s hard to overstate just how central to progressive thinking was the combatting of “vice.” After all, if the goal was to create a just society, it also had to be a wholesome society; otherwise no justice could be sustainable.

Thus when Roosevelt served as police commissioner of New York City in the mid-1890s, he focused on fighting vice, rackets, and corruption. Of course, Mann, Roosevelt, and Wilson had much more on their minds than just cleaning up depravity. They saw themselves as reformers across the board; that is, they were eager to improve economic conditions as well as social ones. So it was that Mann also co-authored the Mann-Elkins Act, further regulating the railroads; he also spearheaded the Pure Food and Drug Act, creating the FDA. It’s interesting that when Mann died in 1922, The New York Times ran an entirely admiring obituary, recalling him as “a dominating figure in the House…[a] leader in dozens of parliamentary battles.” In other words, back then, the Times was fully onboard with full-spectrum cleanup, on the Right as well as the Left.

To be sure, the Mann Act hardly eradicated the problem of sex-trafficking, just as Mann’s other legislative efforts did not put an end to abuses in transportation and in foods and drugs. However, we can say that Mann made things better. Of course, the Mann Act has long been controversial. Back in 1913, the African-American boxer Jack Johnson was convicted according to its provisions. (Intriguingly, in 2018, Johnson was posthumously pardoned by President Trump.) In 1944, film legend Charlie Chaplin, too, found himself busted on a Mann Act rap. Chaplin was accused of transporting a young “actress” across state lines; he was acquitted after a sensational trial, but not before it was learned that he had financed his lover’s two abortions. Chaplin’s career in Hollywood was effectively over.

Schumer telling others what to do, but doing dick all himself. How much did the Clinton Foundation get?

• Schumer Got Thousands In Donations From Jeffrey Epstein (NYP)

Sen. Chuck Schumer — who called on Labor Secretary Alexander Acosta to resign and said President Trump should “answer” for his friendship with Jeffrey Epstein — accepted thousands of dollars in donations from the alleged pedophile throughout the 1990s, The Post has learned. Federal Election Commission records show that Schumer received seven $1,000 donations from Epstein between 1992 and 1997, first as a U.S. congressman from New York and then when he was vying to be the state’s senator in 1998, an election he won. Epstein — who was arrested Saturday and charged with sex trafficking and a related conspiracy count for allegedly sexually abusing a vast network of underage girls — also gave $10,000 to “Victory in New York,” a joint fundraising committee established by Schumer and the Democratic Senatorial Campaign Committee.

Epstein gave an additional $5,000 to “Win New York,” a Schumer-associated joint committee that benefited the Liberal Party of New York State. Both of Epstein’s donations to the committees came in October 1998 — and look to have primarily benefited the DSCC and the Liberal Party of New York, as Epstein would have already met the $2,000 limit of donating individually to Schumer. At the time, donors could give $1,000 to a candidate per election — once in the primary and again in the general. That means Schumer and Schumer-linked entities received a combined $22,000.

On the Senate floor Tuesday, Schumer made three Epstein-related demands. He first called on Acosta to resign. [..] “Instead of prosecuting a predator and serial sex trafficker of children, Acosta chose to let him off easy,” Schumer said on the floor. “This is not acceptable. We cannot have, as one of the leading appointed officials in America, someone who has done this.” Schumer also asked that the Department of Justice’s Office of Professional Responsibility make public its review of Acosta’s handling of the case. Finally, Schumer said that Trump should paint a fuller picture of what he meant when he called Epstein a “terrific guy” in a 2002 article for New York Magazine.

An April 2011 court filing shows that Trump eventually barred Epstein from Mar-a-Lago “because Epstein sexually assaulted a girl at the club,” the documents allege. Trump didn’t officially launch a political career until June 2015. No FEC records show that Epstein was ever a Trump donor.

So when will Schumer follow suit? And the rest of them?

• Democrat Rep. Stacey Plaskett To Donate Epstein Campaign Contributions (CNBC)

Democratic congresswoman Stacey Plaskett has decided to reverse course and will give away the contributions she has received from Jeffrey Epstein, who is accused of child sex trafficking. The move comes a day after her team told CNBC that she was unlikely to return the campaign donations after Epstein’s arrest. “In light of new information and allegations that have been made against Jeffrey Epstein I have decided to make contributions to Virgin Islands organizations that work with women and children in the amount of his previous contributions,” Plaskett said in a statement Tuesday.

“My litmus test for accepting campaign contributions has been based on whether the donor’s money was made legally or by ill-gotten means and that the contributor will not ask of me or my Congressional office for any special favors. All my contributions have passed that test. In this case however, I am uncomfortable having received money from someone who has been accused of these egregious actions multiple times,” said Plaskett, who represents the U.S. Virgin Islands in the House as a delegate. Her spokesman Mike McQueery later noted the Epstein donations will be given to The Women’s Coalition and The Family Resource Center.

Her initial announcement led to an outcry on social media, with prominent Democratic strategists such as Adam Parkhomenko calling on Plaskett to give the money over to a nonprofit organization such as the Rape, Abuse & Incest National Network. Since Epstein pleaded not guilty Monday, Plaskett is the first politician to say she is giving away donations from Epstein.

Deutsche severed ties with Epstein just months ago.

• US Probing Deutsche Bank’s Dealings With Malaysia’s 1MDB (ZH)

When it rains inside the halls of Deutsche Bank, the flood is biblical. Just when it seemed that the biggest (if not for long) German bank, already reeling from the biggest mass layoffs since Lehman, couldn’t possibly bear any more bad news, along comes the US government with yet another potentially criminal investigation, this time over Deutsche Bank’s involvement with the sprawling, multibillion-dollar Malaysian development fraud scandal that toppled a prime minister, crippled Goldman Sachs stock and stretched from Hollywood to Wall Street. According to the WSJ, the DOJ is investigating whether the German bank violated foreign corruption or anti-money-laundering laws in its work for the 1Malaysia Development Bhd. fund, or 1MDB, which included helping the fund raise $1.2 billion in 2014 as concerns about the fund’s management and financials had begun to circulate.

So how did Deutsche Bank get thrown into yet another scandal? It turns out that DB was snitched out by former Goldman banker, Tim Leissner, the man who was ground zero in the original 1MDB scandal, and who ended up costing Goldman billions in dollar in market cap as its stock tumbled last year as its role in the biggest Malaysian corruption scandal got exposed, and according to some, cost Lloyd Blankfein his job. As it turns out, Leissner is now cooperating with authorities, and among his “good Samaritan” duties decided to throw the one bank that has more dirt on it than Goldman: Deutsche Bank. As we have reported extensively in the past, prosecutors have been investigating similar issues at Goldman, where Leissner, a former managing director, pleaded guilty last year and admitted to earlier helping siphon off billions of dollars from the fund.

[..] But wait, there’s more! Because roughly at the same time as DB’s potential role in the 1MDB scandal was exposed by the WSJ, both the NYT and Bloomberg reported that the German bank had extended relations with yet another, even more scandalous figure: Jeffrey Epstein. According to NYT, Epstein “appears to have been doing business and trading currencies through Deutsche Bank until just a few months ago.” But as the possibility of federal charges loomed, the bank ended its client relationship with Epstein. It is not clear what the value of those accounts were at the time they were closed. Bloomberg confirms, reporting that “Deutsche Bank severed business ties with Jeffrey Epstein earlier this year, just as federal authorities were preparing to charge the financier with operating a sex-trafficking ring of underage girls [..] “

Nice take by Ed Harrison. I’m no big fan of these alleged sharp divisions between generations, though.

• Obama the Conservative vs Trump the Revolutionary (EH)

I would argue that [Obama] ran for President in 2008 on a slogan – Change You Can Believe In – which very much fits his generation, late baby boom reaching across to the early Gen X’ers. “Change you can believe in” is a moniker designed to evoke a sense of technocratic tweaking, of taking a good system and making it more efficient and more fair for all citizens. It is not a call for revolution. What Obama was saying was essentially, “I am going to take the system we have – the best that man has created – and make it better.” He was not saying, “the system is rigged. The system is broken. And I’m going to burn it down and build up something better.”

Obama’s message was a conservative message. It was a message that was steeped in the status quo, with the change coming only at the margin. It meant continuity in policy and a bevy of tried and trusted policymakers to get us to the next destination. Even Obamacare is a tweak of the existing policy. It is not a fundamentally different healthcare system controlled by different healthcare providers. [..] Donald Trump doesn’t think that way. Norms only matter to him to the degree they move his personal agenda forward. He’s a pretty simple guy in this sense. If a policy choice or a norm helps Donald Trump, then he’s for it. If it hurts him, he’s against it. It’s as simple as that. But, that’s not conservative …at all. Trump may message “Make America Great Again”. But, his process is more about bending and breaking rules, damn the consequences.

None of this is to say that Millennials would support Trump over Obama because they want change. It’s more that Obama’s ‘change you can believe in’ approach was a very incremental, status quo-oriented conservative approach that has disappointed Millennials. They want still more change – not a bend and break the rule kind – but a fundamental systemic change. What does that mean about the next economic downturn? Personally, I think it means that — when people living in precarious at-will employment, with insufficient healthcare coverage, saddled by student debt, unable to purchase homes to build wealth feel the full bore of an economic downturn — they will be willing to burn the system down. They will have no allegiance to the status quo and will vote accordingly.

Oh, c’mon, wouldn’t it be highly fitting if the Queen were to hammer the final nail into British democracy?

• Former UK PM Major Vows To Block Brexit Parliament Suspension (R.)

Former British prime minister John Major vowed on Wednesday to go to court to block his party colleague Boris Johnson from suspending parliament and dragging the queen into a constitutional crisis to deliver a no-deal Brexit. Johnson, the favourite to win a Conservative leadership election and so become the next prime minister, has refused to rule out suspending, or proroguing, parliament to ensure Britain leaves the European Union on Oct. 31 — with or without a deal. That could provoke a constitutional crisis in one of the world’s oldest and most stable democracies because parliament is opposed to a disorderly exit, lacking a transition deal to ease the economic dislocation of leaving the bloc.

While it is essentially up to the prime minister to make the decision, Major, an opponent of Brexit who has not shied away for criticising his party on the issue, said it would require the queen’s blessing. “In order to close down parliament, the prime minister would have to go to Her Majesty the Queen and ask for her permission to prorogue,” he told BBC Radio. “If her first minister asks for that permission, it is almost inconceivable that the queen will do anything other than grant it. “She is then in the midst of a constitutional controversy that no serious politician should put the queen in the middle of. If that were to happen, there would be a queue of people who would seek judicial review. I for one would be prepared to go and seek judicial review.”

Major accused Johnson of hypocrisy for backing Brexit to secure more power for Britain’s parliament, only to propose to sideline lawmakers when it suited him. He said parliament had not been suspended since King Charles I did so during the English Civil War. Charles was eventually executed, in 1649.

The OPCW killed its own credibility, thoroughly. Disband it.

• OPCW’s New Chemical Weapons Team To Launch First Syria Investigations (R.)

A new team established by the global chemical weapons watchdog to attribute blame for the use of banned munitions in Syria will investigate nine alleged attacks during the country’s civil war, including in the town of Douma, sources briefed on the matter told Reuters. The Organisation for the Prohibition of Chemical Weapons (OPCW) was created in 1997 as a technical body to enforce a global non-proliferation treaty. Until now it had been authorised only to say whether chemical attacks occurred, not who perpetrated them. Last June, the Investigation and Identification Team (IIT) was established by the OPCW’s member states during a special session, a move that has brought deeper political division to the U.N. -backed agency.

Now it has identified the locations of its first investigations to be conducted in the coming three years. A document circulated to OPCW member states, a copy of which was seen by Reuters, said the team “has identified a non-exhaustive provisional list of incidents on which it intends to focus its investigative work” between 2014 and 2018. The British-led proposal creating the 10-member team was supported by the United States and European Union, but opposed by Russia, Iran, Syria and their allies. Syria has refused to issue visas to the team’s members or to provide it with documentation, OPCW chief Fernando Arias said in comments to member states published last month.

Where’s the credibility in this case?

• UK, US Claim Iranian Boats Attempt To Seize Tanker In Strait Of Hormuz (ZH)

With the Persian Gulf uncharacteristically quiet in recent days, without any material provocation either real or staged, late on Wednesday CNN reported that five armed Iranian Islamic Revolutionary Guard boats unsuccessfully tried to seize a British oil tanker in the Persian Gulf. There was no independent verification of the report, but instead it was once again sourced to those who stands to gain the most from a way with Iran, namely “two US officials with direct knowledge of the incident.” According to the report, the British Heritage tanker was sailing out of the Persian Gulf and was crossing into the Strait of Hormuz area when it was approached by the Iranian boats.

The Iranians ordered the tanker to change course and stop in nearby Iranian territorial waters, according to the officials. A US aircraft was overhead and recorded video of the incident, although so far a video has not been released. In addition to the US aircraft escort, the UK’s Royal Navy frigate HMS Montrose had been escorting the tanker, and during the confrontation, it trained its deck guns on the Iranians and gave them a verbal warning to back away, which they did. Montrose is equipped on the deck with 30 mm guns specifically designed to drive off small boats. The frigate was in the region performing a “maritime security role” according to a prior notification from UK officials.

Seen at the inane Defend Media Freedom conference in the UK.

‘Man goes to a psychiatrist. He says, “I keep thinking I’m a dog.” Psychiatrist says, “OK, let’s get you on the couch.” Man says, “I’m not allowed on the couch.”‘

Debt Rattle July 10 2019

Jul 102019

July 10, 2019 Posted by Raúl Ilargi Meijer at 9:47 am Finance Tagged with: Antarctica, AOC, Attenborough, Cyprus, Deutsche, drilling, Epstein, Facebook, honeybees, Syria, Trump, Turkey, Twitter, Yemen 11 Responses »

Pablo Picasso Guernica [Study] V 1937

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

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

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

• Ocasio-Cortez Sued Over Twitter Blocks (Hill)

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

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

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

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

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

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

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

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

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

• Glacial Melting In Antarctica May Become Irreversible (G.)

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

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

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

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

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

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

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

Best-selling author James Patterson on the Jeffrey Epstein case as it relates to President Donald Trump: “There were some complaints about Epstein at Mar-a-Lago. I spoke to the head of the spa there. … She said she went to Trump and he threw [Epstein] out of the club.” pic.twitter.com/kNDK4MdrEd

— Ryan Saavedra (@RealSaavedra) July 9, 2019

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

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

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

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

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

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

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

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

The goose and the gander.

• Ocasio-Cortez Sued Over Twitter Blocks (Hill)

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

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

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

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

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

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

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

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

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

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

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

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

Don’t.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Turkey claims northern Cyprus is Turkish land.

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

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

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

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

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

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

He woke up late, but he did.

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

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

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

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

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

• Glacial Melting In Antarctica May Become Irreversible (G.)

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

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

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

Debt Rattle June 30 2019

Jun 302019

June 30, 2019 Posted by Raúl Ilargi Meijer at 9:24 am Finance Tagged with: Assange, Boeing, Brexit, China, Deutsche, DMZ, extradition, Kim Jong Un, Law of the Sea, OPEC, Pinochet, Russia, Salvini, Trump 7 Responses »

• Trump Invites Kim Jong-Un to the White House (BI)

• China Warns Of Long Road Ahead For Deal With US After Ice-Breaking Talks (R.)

• Russia and Saudi Arabia Agree To Extend OPEC Oil Output Cuts Into 2020 (MW)

• Johnson And Hunt Don’t Understand What It’s Like When A Wall Falls (G.)

• The Extradition Cases of Pinochet & Assange (Vos)

• UN Torture Rapporteur About Op-Ed On Assange Rejected By MSM (RT)

• Boeing Outsourced Its 737 MAX Software To $9-Per-Hour Engineers (ZH)

• Deutsche Bank’s Medieval Medicine (Coppola)

• Declaration of Digital Independence (Sanger)

• Italian Police Arrest Migrant-Rescue Ship Captain After Docking (R.)

• Spike In Autism Linked To Preservative In Processed Foods (F.)

Big moment no matter what. The situation at the DMZ has changed a lot in the past year. It’s like the DMZ has been dimilitarized. Far fewer weapons, guards don’t even wear helmets anymore.

• Trump Invites Kim Jong-Un to the White House (BI)

Donald Trump has invited Kim Jong Un to the White House, after he became the first serving American President to step over the North Korean border and shake hands with a North Korean leader. Trump crossed over from the demilitarized zone to shake hands with Kim Jong Un, after earlier offering the meeting on Twitter. “When I put out the social media notification, if he didn’t show up he would have made me look very bad,” Trump told reporters. Kim Jong Un responded that “I was very surprised to hear about your offer on the tweet and only late in the afternoon I was able to confirm your invitation.”

The US president described his relationship with the North Korean leader as a “great friendship.” “This was a special moment, a historic moment,” Trump told reporters. “Stepping across that line was a great honour. A lot of progress has been made and a lot of friendships have been made and this in particular is a great friendship.” Following their handshake, the two men took part in a press conference during which the US president confirmed that he was extending an invite to Kim Jong Un to the White House. Trump thanked Kim Jong Un for meeting him. “I want to thank the chairman. You’ve got to hear that powerful voice.”

But at least talks are back on.

• China Warns Of Long Road Ahead For Deal With US After Ice-Breaking Talks (R.)

China and the United States will face a long road before they can reach a deal to end their bitter trade war, with more fights ahead likely, Chinese state media said after the two countries’ presidents held ice-breaking talks in Japan. The world’s two largest economies are in the midst of a bitter trade war, which has seen them level increasingly severe tariffs on each other’s imports. In a sign of significant progress in relations on Saturday, Chinese President Xi Jinping and U.S. President Donald Trump, on the sidelines of the G20 summit in Osaka, agreed to a ceasefire and a return to talks.

However, the official China Daily, an English-language daily often used by Beijing to put its message out to the rest of the world, warned while there was now a greater likelihood of reaching an agreement, there’s no guarantee there would be one. “Even though Washington agreed to postpone levying additional tariffs on Chinese goods to make way for negotiations, and Trump even hinted at putting off decisions on Huawei until the end of negotiations, things are still very much up in the air,” it said in an editorial late Saturday. “Agreement on 90 percent of the issues has proved not to be enough, and with the remaining 10 percent where their fundamental differences reside, it is not going to be easy to reach a 100-percent consensus, since at this point, they remain widely apart even on the conceptual level.”

What else could they do?

• Russia and Saudi Arabia Agree To Extend OPEC Oil Output Cuts Into 2020 (MW)

Russia and Saudi Arabia have agreed to extend the OPEC oil production cuts deal by another six to nine months, Russian President Vladimir Putin said at the G-20 leaders summit in Japan on Saturday. The OPEC+ group — the Organization of the Petroleum Exporting Countries, plus Russia and other producers — meet on July 1-2 to renegotiate the pact which expires June 30. In 2016, Saudi Arabia and Russia agreed to try to jointly manage global oil output to support prices in what became known as the OPEC+ coalition and the current deal called for production cuts of 1.2 million barrels a day. “We will support the extension, both Russia and Saudi Arabia,” Putin said at a news conference in Osaka, Reuters reported.

“As far as the length of the extension is concerned, we have yet to decide whether it will be six or nine months. Maybe it will be nine months,” said Putin said, who met the crown prince on the sidelines of the G-20 summit in Osaka, Japan. “In any event we will support the continuation of agreements, both Russia and Saudi Arabia, in the volumes previously agreed.” The announcement marks the first time a leader from the OPEC+ group has indicated the curbs could be needed into 2020. That reflects a gloomy outlook for oil demand next year due to a combination of slowing global economic growth and rising U.S. shale oil output.

“For 34 years I lived behind the Iron Curtain so I know only too well what it means once borders vanish, once walls fall.”

• Johnson And Hunt Don’t Understand What It’s Like When A Wall Falls (G.)

Perhaps it is a problem of language. The dictionary lacks a necessary word: UKish. Northern Ireland is not in Britain but it is in the UK. The porous boundary that divides it from the rest of Ireland is not, strictly speaking, a British frontier. So it is called “the Irish border”, making it, for the Brexiters, someone else’s problem. The terrain where a post-Brexit UK meets the remaining 27-member EU bloc is, as the miserable Tory leadership debate shows yet again, somewhere over there. For Boris Johnson and Jeremy Hunt, its troubles are, as Neville Chamberlain might put it, “a quarrel in a faraway country between people of whom we know nothing”. They might have to know more about it if only we could call it what it is: the UKish border.

Hunt and Johnson both agree that a no-deal Brexit must be kept alive as a serious proposition. Both also agree that once in Downing Street they will reopen negotiations with the EU with the primary aim of ditching from the withdrawal agreement the so-called Irish backstop, which is also, of course, the UKish backstop. Hunt puts this in more emollient terms than Johnson, but makes up for this weakness by promising to include on his negotiating team representatives of the famously emollient Democratic Unionist party, which does not represent most voters in Northern Ireland. All of this is so drearily familiar (this hobbyhorse comes round and round on the non-stop Brexit carousel) that it is hard to remember how surreal it is.

It is weird not just because the backstop was designed around British demands; not just because Hunt and Johnson were in the cabinet when it was negotiated; not just because they both voted for it in parliament; and not just because the EU has repeated, over and over, that, in the words of the European council in January: “The backstop is part of the withdrawal agreement and the withdrawal agreement is not open for renegotiation.” That should be enough to be going on with, but there is an even deeper absurdity. On 4 April last, the German chancellor, Angela Merkel, flew to Dublin [..] she said: “For 34 years I lived behind the Iron Curtain so I know only too well what it means once borders vanish, once walls fall.”

Crazy enough that these two people are mentioned in the same sentence.

• The Extradition Cases of Pinochet & Assange (Vos)

In October 1998, Pinochet, whose regime became a byword for political killings, “disappearances” and torture, was arrested in London while there for medical treatment. A judge in Madrid, Baltasar Garzón, sought his extradition in connection with the deaths of Spanish citizens in Chile. Citing the aging Pinochet’s inability to stand trial, the United Kingdom in 2000 ultimately prevented him from being extradited to Spain where he would have faced prosecution for human rights abuses. At an early point in the proceedings, Pinochet’s lawyer, Clare Montgomery, made an argument in his defense that had nothing to do with age or poor health.

“States and the organs of state, including heads of state and former heads of state, are entitled to absolute immunity from criminal proceedings in the national courts of other countries,” the Guardian quoted Montgomery as saying. She argued that crimes against humanity should be narrowly defined within the context of international warfare, as the BBC reported. Montgomery’s immunity argument was overturned by the House of Lords. But the extradition court ruled that the poor health of Pinochet, a friend of former Prime Minister Margaret Thatcher, would prevent him from being sent to Spain. Though the cases of Pinochet and Assange are separated by more than two decades, two of the participants are the same, this time playing very different roles.

Montgomery reappeared in the Assange case to argue on behalf of a Swedish prosecutor’s right to seek a European arrest warrant for Assange. Her argument ultimately failed. A Swedish court recently denied the European arrest warrant. But as in the Pinochet case, Montgomery helped buy time, this time allowing Swedish sexual allegations to persist and muddy Assange’s reputation. Garzón, the Spanish judge, who had requested Pinochet’s extradition, also reappears in Assange’s case. He is a well-known defender of human rights, “viewed by many as Spain’s most courageous legal watchdog and the scourge of bent politicians and drug warlords the world over,” as the The Independent described him a few years ago. He now leads Assange’s legal team.

Melzer is not planning to let go. Now where’s his support?

“When you start exposing an isolated individual who can’t defend himself to a sustained campaign of humiliation, of shame, of ridicule, even death threats, then it can cause severe psychological trauma.”

• UN Torture Rapporteur About Op-Ed On Assange Rejected By MSM (RT)

The UN rapporteur on torture told RT about the fanciful excuses Western media used to avoid publishing his damning op-ed on the extreme pressure Julian Assange was exposed to – despite covering every wild allegation against him. A host of reputed Western media outlets turned a deaf ear to Nils Melzer and his op-ed in which he said Julian Assange was exposed to enormous psychological trauma and isolation while in the Ecuadorian Embassy, and afterwards in the UK high-security prison. “Some of them said it wasn’t high enough on their news agenda, some of them said it wasn’t within their core area of interest.”

“The explanations seem awkward given that the same newspapers – the Guardian, the Times, the Washington Post, the Telegraph, and others – have been running news stories about Assange “when it was about his cat and his skateboard and… allegations that he smeared excrement on the walls.” “But when you have a serious piece that actually tries to de-mask this public narrative and to actually show the facts below it, then they’re not interested.”

In his piece, which was eventually published on blogging website Medium, Melzer admitted he “had been blinded by propaganda” and didn’t believe Assange was being dehumanized through isolation, ridicule, and shame. He even asked himself how could “life in an Embassy with a cat and a skateboard ever amount to torture.” “I didn’t know Assange, so I took with me experienced medical experts, a psychiatrist and a forensic expert that have worked for decades in examining torture victims,” he told RT. These experts, he said, found that Assange showed “all the symptoms that are typical for a person who has been exposed to prolonged psychological torture.”

He has been exposed to public mobbing. Now, that’s the slippery slope… When you start exposing an isolated individual who can’t defend himself to a sustained campaign of humiliation, of shame, of ridicule, even death threats, then it can cause severe psychological trauma.

Criminal investigation next.

• Boeing Outsourced Its 737 MAX Software To $9-Per-Hour Engineers (ZH)

The software at the heart of the Boeing 737 MAX crisis was developed at a time when the company was laying off experienced engineers and replacing them with temporary workers making as little as $9 per hour, according to Bloomberg. In an effort to cut costs, Boeing was relying on subcontractors making paltry wages to develop and test its software. Often times, these subcontractors would be from countries lacking a deep background in aerospace, like India. Boeing had recent college graduates working for Indian software developer HCL Technologies Ltd. in a building across from Seattle’s Boeing Field, in flight test groups supporting the MAX. The coders from HCL designed to specifications set by Boeing but, according to Mark Rabin, a former Boeing software engineer, “it was controversial because it was far less efficient than Boeing engineers just writing the code.”

Rabin said: “…it took many rounds going back and forth because the code was not done correctly.” In addition to cutting costs, the hiring of Indian companies may have landed Boeing orders for the Indian military and commercial aircraft, like a $22 billion order received in January 2017. That order included 100 737 MAX 8 jets and was Boeing’s largest order ever from an Indian airline. India traditionally orders from Airbus. HCL engineers helped develop and test the 737 MAX’s flight display software while employees from another Indian company, Cyient Ltd, handled the software for flight test equipment. In 2011, Boeing named Cyient, then known as Infotech, to a list of its “suppliers of the year”. One HCL employee posted online: “Provided quick workaround to resolve production issue which resulted in not delaying flight test of 737-Max (delay in each flight test will cost very big amount for Boeing).”

Does Merkel really want to risk things getting worse?

• Deutsche Bank’s Medieval Medicine (Coppola)

If there is one thing that Deutsche Bank executives agree on, it is the efficacy of medieval medicine. Bloodletting, to be precise. Successive Chief Executives have bled the patient, but it hasn’t recovered: profits remain disappointing, and the share price has continued to decline. So the latest incumbent is going to bleed it again – on a much larger scale. On Friday, June 28, the Wall Street Journal revealed plans to slash up to 20,000 jobs worldwide. This would reduce full-time headcount to just over 70,000, the lowest since the financial crisis. The WSJ says the staff cuts will fall “across all divisions and business lines.” But the largest cuts are expected to fall on the investment bank and the troubled U.S. arm. Deutsche Bank has been trying – and largely failing – to reduce its staff costs for years.

It may surprise people to learn that despite repeated cuts, Deutsche Bank’s headcount is significantly higher than it was in 2008. This is mainly due to the acquisition of PostBank in 2010, which added 18,000 employees. Back in 2016, Deutsche Bank announced plans to cut its headcount to 77,000, largely through disposing of PostBank. But when the PostBank disposal evaporated, so too did the headcount reductions. The bank now intends to integrate PostBank with its own retail bank, and says this will achieve “synergies” (i.e. cost savings). Presumably that will mean headcount reductions, though it is not clear whether these are included in the plans leaked to the WSJ.

But there has also been a gradual increase in headcount in other divisions, notably the investment bank. Frankly, given the bank’s awful performance in recent years, it is hard to see what benefit this has brought. It looks suspiciously like empire-building to me. Or perhaps gambling. “Recruit some star performers, they’ll soon turn this business round….” [..] Deutsche Bank’s high cost-income ratio isn’t caused by clerks in retail branches. No, it is due to the insanely high salaries and bonuses Deutsche Bank pays to traders and analysts in its investment bank. And above all, it is due to executive management’s head-in-the-sand attitude to business lines in terminal decline. In 2016, despite glaringly poor performance in its equities division, Deutsche Bank recruited more equities analysts. Now, it appears to be intending to sack them all.

Larry Sanger is a co-founder of Wikipedia. This is a very detailed declaration.

• Declaration of Digital Independence (Sanger)

Humanity has been contemptuously used by vast digital empires. Thus it is now necessary to replace these empires with decentralized networks of independent individuals, as in the first decades of the Internet. As our participation has been voluntary, no one doubts our right to take this step. But if we are to persuade as many people as possible to join together and make reformed networks possible, we should declare our reasons for wanting to replace the old. We declare that we have unalienable digital rights, rights that define how information that we individually own may or may not be treated by others, and that among these rights are free speech, privacy, and security.

Since the proprietary, centralized architecture of the Internet at present has induced most of us to abandon these rights, however reluctantly or cynically, we ought to demand a new system that respects them properly. The difficulty and divisiveness of wholesale reform means that this task is not to be undertaken lightly. For years we have approved of and even celebrated enterprise as it has profited from our communication and labor without compensation to us. But it has become abundantly clear more recently that a callous, secretive, controlling, and exploitative animus guides the centralized networks of the Internet and the corporations behind them. The long train of abuses we have suffered makes it our right, even our duty, to replace the old networks. To show what train of abuses we have suffered at the hands of these giant corporations, let these facts be submitted to a candid world.

The international Law of the Sea makes it obligatory to rescue people in peril. Salvini is breaking that law.

• Italian Police Arrest Migrant-Rescue Ship Captain After Docking (R.)

Italian police arrested on Saturday the German captain of a migrant-rescue ship at the center of a standoff with the Italian government, after she docked at the island port of Lampedusa. The Dutch-flagged Sea-Watch 3, operated by German charity Sea-Watch, has been at sea for more than two weeks with rescued Africans on board. After waiting in international waters for an invitation from Italy or an EU state to accept the ship, German captain Carola Rackete decided this week to sail for the southern Italian island of Lampedusa but was blocked by Italian government vessels. The ship eventually entered the port in the early hours of Saturday morning amid a heavy police presence.

Live television video showed the 31-year-old Rackete being taken off Sea-Watch 3 by tax police and driven away amid applause and barracking from bystanders gathered at the port. She has been arrested for “resisting a war ship”, a charge which, according to media reports, carries a penalty of up to 10 years in prison. After Rackete was taken away, 40 Africans on board the ship were allowed to disembark and were taken to a reception center on the island. Italy’s right-wing interior minister, Matteo Salvini, who is taking a tough line against migrant rescue ships, previously said he would only allow Rackete to dock when other European Union states agree to immediately take the migrants. “Outlaw arrested. Pirate ship seized. Big fine on foreign NGO. Migrants all redistributed in other European countries. Mission completed,” Salvini said in a tweet on Saturday.

Suicide. Or murder, since it’s about babies.

• Spike In Autism Linked To Preservative In Processed Foods (F.)

Researchers from the University of Central Florida (UCF) just announced intriguing findings which describe cellular changes that develop when neuronal stem cells are exposed to elevated levels of a chemical typically found in processed foods. The study serves as an example of the importance of the food pregnant women eat, and how it may potentially affect development of the fetal brain. The study describes how elevated levels of the preservative, propionic acid (PPA)–used to extend shelf life and reduce mold in packaged foods, breads and cheeses—can adversely affect the development and differentiation of neurons in fetal brains in children with autism spectrum disorder (ASD).

From clinical experience, healthcare providers have observed for many decades how children with ASD are often afflicted with gastrointestinal ailments, including chronic constipation and irritable bowel syndrome (IBS). The mechanism behind this association is unclear, but ongoing research suggests that the gut microbiome plays an important role in brain development. One of the key questions is how the gut microbiome–the bacteria that live in our intestines–may be unique in those with ASD compared to those without the condition. Previous studies have demonstrated increased levels of PPA, a short chain fatty acid (SCFA), in the feces of children with ASD; we also know that the gut microbiome in these children is also quite distinct in terms of the type of bacteria that inhabit their intestines.

Clostridia, Bacteriodetes, and Desulfovibrio bacteria are unique to patients with ASD. What’s interesting is that these bacteria are also known to be fermenters of carbohydrates that produce PPA, and other SCFAs as well. Ironically, while PPA is the most common compound produced by bacteria in ASD patients, it is also widely used in the food industry as a preservative due to its ability to inhibit growth of fungi (mold). In the current study, Saleh Naser, PhD and her team at UCF found that when neural stem cells were exposed to high levels of PPA, the neurons incurred multiple changes resulting in cellular damage and inflammation.

One of the major effects of PPA they noted was the overproduction of glial cells , the protective outer cells making up the sheath covering neurons, with a corresponding reduction in the number of neurons themselves. An excess of glial cells may disrupt the connectivity between the neurons and induce inflammation, a common finding in the brains of children with ASD. While prior studies have suggested the role of genetic factors and environmental influence in ASD, this study, according to the authors, is the first to note a molecular link from elevated levels of PPA, overproduction of glial cells, disruption of neural connections and autism.

Wednesday is Julian’s birthday.

Debt Rattle June 29 2019

Jun 292019

June 29, 2019 Posted by Raúl Ilargi Meijer at 10:09 am Finance Tagged with: Boeing, China, Deutsche, DMZ, Dreamliner, EU, India, Iran, rate cut, trade talks, Trump, Wall Street 6 Responses »

Salvador Dali Paranoiac Woman-Horse (Invisible Sleeping Woman, Lion, Horse) 1930

• Wall Street Wraps Up Its Best June In Generations (R.)

• Not A Rate-Cut Economy (WS)

• You Are Nuts To Think A July Interest-Rate Cut Is A Slam Dunk (MW)

• Deutsche Bank To Fire Up To 20,000: One In Six Full-Time Positions (ZH)

• China and US Agree To Restart Trade Talks (R.)

• Russia-India-China Will Be The Big G20 Hit (Escobar)

• Trump Offers To Meet Kim Jong-Un At The DMZ (R.)

• Boeing 737 Max Likely Grounded Until The End Of The Year (CNBC)

• Boeing 787 Dreamliner Caught In Deepening 737 MAX Probe (RT)

• EU Leaders Decide Against Weber For Commission Presidency (R.)

• Say Anything! (Kunstler)

And nobody cares that none of it is real… Or that 3/4 of Americans live paycheck to paycheck.

• Wall Street Wraps Up Its Best June In Generations (R.)

Wall Street advanced in heavy trading on Friday, with the S&P 500 and the Dow closing the book on their best June in generations, ahead of much-anticipated trade talks between U.S. President Donald Trump and Chinese counterpart Xi Jinping at the G20 summit now underway in Japan. All three major U.S. stock indexes gained ground at the close of the week, month, quarter and first half of the year, during which time the U.S. stock market has had a remarkable run. The S&P 500 had its best June since 1955. The Dow posted its biggest June percentage gain since 1938, the waning days of the Great Depression.

From the start of 2019, after investors fled equities amid fears of a global economic slowdown, which sent stock markets tumbling in December, the benchmark S&P 500 jumped 17.3%, its largest first-half increase since 1997. “The market came to the realization that the world is not going to end,” said John Ham, financial adviser at New England Investment and Retirement Group in North Andover, Massachusetts. “Also, (Federal Reserve chair) Powell did a 180 since (the Fed’s) last (interest) rate hike, which has put wind in our sails in the first half of the year.”

Mostly it all just sounds stupid to me.

• Not A Rate-Cut Economy (WS)

The inflation index that the Fed has anointed to be the yardstick for its inflation target – the PCE price index without the volatile food and energy components – rose 0.19% in May from April, according to the Bureau of Economic Analysis this morning. This increase in “core PCE” was near the top of the range since 2010. It followed the 0.25% jump in April, which had been the third largest increase since 2010. Fed Chair Jerome Powell, at the press conference following the no-rate-hike FOMC meeting last week, gave a clear and succinct summary of the US economy. It was mostly in good shape, he said, in particular where it mattered the most: “All of the underlying fundamentals for the consumer-spending part of the economy, which is 70% of the economy, are quite solid,” he said.

[..] The Fed’s “symmetric” target is a 2% annual increase in the core PCE index, meaning the increase can fluctuate some above or below the target without causing the Fed to act. Core PCE inflation was in the 2%-range for much of last year. But early this year, the increases softened. So in his opening remarks at the press conference, Powell said that “committee participants expressed concerns about the pace of inflation’s return to 2 percent.” [..] a trigger for a rate cut would be a “sustained” period significantly below the 2% target. Inflation data is volatile and jumps up and down. Earlier this year, when core PCE inflation fell significantly below 2%, Powell said that the factors behind this low inflation were “transitory.”

Janet Yellen, when she was still Fed Chair, also used “transitory” to describe the factors that in early and mid-2017 were causing an actual dip in core PCE – which hasn’t happened this year. And a few months later, she was proven right. After today’s data on the increase in the core PCE index, following the jump in April, the three-month increase – March, April, and May – has now hit 0.50%. Annualized, this amounts to 2.0% core PCE inflation over the past three months, in the bull’s eye of the Fed’s symmetrical target, with the last two months being substantially above the Fed’s target. But note the sharp decline in January, February, and March, and how it has now reversed:

The sooner the Fed is gone the better.

• You Are Nuts To Think A July Interest-Rate Cut Is A Slam Dunk (MW)

The markets have gotten so used to the Federal Reserve doing whatever it takes to keep the S&P 500 and bond prices rising that traders and investors are now expecting the Fed to go against its own judgment and aggressively cut interest rates next month. In putting a 100% probability on a cut in the federal funds target rate at the next Fed meeting on July 30 and 31, traders — and the economists who advise them — seem to have forgotten how language and math work. Not to mention economics. Comments by Fed Chairman Jerome Powell in the past 10 days have indicated that the Fed is open to cutting rates if necessary to keep the expansion going, but there’s no sign that policy makers have made up their minds about a July cut — or any cut at all, for that matter.

Powell said it would depend, “you know, on actual data and evolving risks.” The Fed might very well deliver the rate cut that the market is demanding, but only if something significant changes in the next four and a half weeks. The Fed won’t cut rates because it promised to do so at the last Fed meeting (it didn’t). And it won’t cut rates because the U.S. economy is teetering on the edge of recession (it isn’t), or because inflation is dropping (uh-uh), or because fragile financial markets could use a shot of confidence (nope). Before they cut rates, Fed officials would want to see some hard evidence that the outlook for the economy has materially worsened since they met on June 19. About the only thing that would qualify would be a disastrous meeting between Donald Trump and China’s Xi Jinping this weekend.

No more global player.

Wall Street may have the best June in generations, but not all of Wall Street.

• Deutsche Bank To Fire Up To 20,000: One In Six Full-Time Positions (ZH)

While Deutsche Bank finally delivered some good news for a change to its long-suffering investors, when it miraculously failed to fail the latest Fed stress test, on Friday the chronically sick bank reverted to its “cutting into muscle” baseline when the largest German lender with the €45 trillion notional derivatives was said to be preparing “to cut as much as half its global workforce in equities trading as part of a broad restructuring to boost profitability”, according to Bloomberg with the WSJ adding that the total number could be between 15,000 and 20,000 job cuts, or more than one in six full-time positions globally. The cuts being contemplated by senior executives reflect an acceleration of Deutsche Bank’s downsizing and another major pullback from its global ambitions.

If followed through, the reduction would represent 16% to 22% of Deutsche Bank’s workforce of 91,463 employees, as disclosed by the bank as of the end of March. According to the proposed plan the bank will eliminate hundreds of positions in equities trading and research, as well as derivatives trading, and is expected to start informing staff of cuts – including in the U.S. and Asia – as soon as next month. Rates trading is also affected. While the move begs the question just how effective half of the bank’s equity trading desk was, it will likely be welcomed by the market even if by slashing revenue producers the bank confirms that its trading margins have dropped to negative levels, a virtually unheard of event.

They should always talk.

• China and US Agree To Restart Trade Talks (R.)

The United States and China agreed on Saturday to restart trade talks and that Washington would hold off on imposing new tariffs on Chinese exports, signaling a pause in the trade hostilities between the world’s two largest economies. The truce offered relief from a nearly year-long dispute in which the countries have slapped tariffs on billions of dollars of each other’s imports, disrupting global supply lines, roiling markets and dragging on global economic growth. “We’re right back on track and we’ll see what happens,” U.S. President Donald Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping on the sidelines of a summit of leaders of the Group of 20 (G20) major economies in Japan.

Trump said while he would not lift existing import tariffs, he would refrain from slapping new levies on an additional $300 billion worth of Chinese goods – which would have effectively extended tariffs to everything China exports to the America. “We’re holding back on tariffs and they’re going to buy farm products,” he said at a news conference. “If we make a deal, it will be a very historic event.” Trump said China would buy more farm products but did not provide specifics. In a lengthy statement on the talks, China’s foreign ministry said the United States would not add new tariffs on Chinese exports and that negotiators of both countries would discuss specific issues. Xi told Trump he hoped the United States could treat Chinese companies fairly, the statement added.

India and Iran.

• Russia-India-China Will Be The Big G20 Hit (Escobar)

It all started with the Vladimir Putin–Xi Jinping summit in Moscow on June 5. Far from a mere bilateral, this meeting upgraded the Eurasian integration process to another level. The Russian and Chinese presidents discussed everything from the progressive interconnection of the New Silk Roads with the Eurasia Economic Union, especially in and around Central Asia, to their concerted strategy for the Korean Peninsula. A particular theme stood out: They discussed how the connecting role of Persia in the Ancient Silk Road is about to be replicated by Iran in the New Silk Roads, or Belt and Road Initiative (BRI). And that is non-negotiable.

Especially after the Russia-China strategic partnership, less than a month before the Moscow summit, offered explicit support for Tehran signaling that regime change simply won’t be accepted, diplomatic sources say. Putin and Xi solidified the roadmap at the St Petersburg Economic Forum. And the Greater Eurasia interconnection continued to be woven immediately after at the Shanghai Cooperation Organization (SCO) summit in Bishkek, with two essential interlocutors: India, a fellow BRICS (Brazil, Russia, India, China, South Africa) and SCO member, and SCO observer Iran.

At the SCO summit we had Putin, Xi, Narendra Modi, Imran Khan and Iranian President Hassan Rouhani sitting at the same table. Hanging over the proceedings, like concentric Damocles swords, were the US-China trade war, sanctions on Russia, and the explosive situation in the Persian Gulf. Rouhani was forceful – and played his cards masterfully – as he described the mechanism and effects of the US economic blockade on Iran, which led Modi and leaders of the Central Asian “stans” to pay closer attention to Russia-China’s Eurasia roadmap. This occurred as Xi made clear that Chinese investments across Central Asia on myriad BRI projects will be significantly increased.

“While there, if Chairman Kim of North Korea sees this, I would meet him at the Border/DMZ just to shake his hand and say Hello(?)!”

• Trump Offers To Meet Kim Jong-Un At The DMZ (R.)

U.S. President Donald Trump said on Saturday he would like to see North Korean leader Kim Jong Un this weekend at the demilitarized zone (DMZ) between North and South Korea, and North Korea said a meeting would be “meaningful” if it happened. Trump, who is in Osaka, Japan, for a Group of 20 summit, is due to arrive in South Korea later on Saturday. He is scheduled to return to Washington on Sunday. If Trump and Kim were to meet, it would be for the third time in just over a year, and four months since their second summit, in Vietnam, broke down with no progress on U.S. efforts to press North Korea to give up its nuclear weapons.

Trump made the offer to meet Kim in a comment on Twitter about his trip to South Korea. “While there, if Chairman Kim of North Korea sees this, I would meet him at the Border/DMZ just to shake his hand and say Hello(?)!” he said. Trump later told reporters his offer to Kim was a spur-of-the-moment idea: “I just thought of it this morning.” “We’ll be there and I just put out a feeler because I don’t know where he is right now. He may not be in North Korea,” he said. “If he’s there, we’ll see each other for two minutes, that’s all we can, but that will be fine,” he added. Trump said he and Kim “get along very well”.

They still pretend it’s about software.

• Boeing 737 Max Likely Grounded Until The End Of The Year (CNBC)

Boeing’s 737 Max could stay on the ground until late this year after a new problem emerged with the plane’s in-flight control chip. This latest holdup in the plane’s troubled recertification process has to do with a chip failure that can cause uncommanded movement of a panel on the aircraft’s tail, pointing the plane’s nose downward, a Boeing official said. Subsequent emergency tests to fix the issue showed it took pilots longer than expected to solve the problem, according to The Wall Street Journal. This marks a new problem with the plane unrelated to the issues Boeing is already facing with the plane’s MCAS automated flight control system, an issue the company maintains can be remedied by a software fix.

Boeing hopes to submit all of its fixes to the Federal Aviation Administration this fall, the Boeing official said. “We’re expecting a September time frame for a full software package to fix both MCAS and this new issue,” the official said. “We believe additional items will be remedied by a software fix.” Once that software package is submitted, it will likely take at least another two months before the planes are flying again. The FAA will need time to recertify the planes. Boeing will need to reach agreement with airlines and pilots unions on how much extra training pilots will need. And the airlines will need some time to complete necessary maintenance checks.

There we go…

• Boeing 787 Dreamliner Caught In Deepening 737 MAX Probe (RT)

Federal prosecutors are expanding their Boeing probe, investigating charges the 787 Dreamliner’s manufacture was plagued with the same incompetence that dogged the doomed 737 MAX and resulted in hundreds of deaths. The US Department of Justice has requested records related to 787 Dreamliner production at Boeing’s South Carolina plant, where two sources who spoke to the Seattle Times said there have been allegations of “shoddy work.” A third source confirmed individual employees at the Charleston plant had received subpoenas earlier this month from the “same group” of prosecutors conducting the ongoing probe into the 737 MAX.

Boeing is in the hot seat over alleged poor quality workmanship and cutting corners at the South Carolina plant. Prosecutors are likely concerned with whether “broad cultural problems” pervade the entire company, including pressure to OK shoddy work in order to deliver planes on time, one source told the Seattle Times. The South Carolina plant manufactured 45 percent of Boeing’s 787s last year, but its supersize -10 model is built exclusively there. Prosecutors are on the hunt for “hallmarks of classic fraud,” the source said, such as lying or misrepresentation to customers and regulators. Whistleblowers in the Charleston factory who pointed to debris and even tools left in the engine, near wiring, and in other sensitive locations likely to cause operating issues told the New York Times they were punished by management, and managers reported they had been pushed to churn planes out faster and cover up delays.

[..] A critical fire-fighting system on the Dreamliner was discovered to be dysfunctional earlier this month, leading Boeing to issue a warning that the switch designed to extinguish engine fires had failed in “some cases.” While the FAA warned that “the potential exists for an airline fire to be uncontrollable,” they opted not to ground the 787s, instead ordering airlines to check that the switch was functional every 30 days.

Tidings from the Empire.

• EU Leaders Decide Against Weber For Commission Presidency (R.)

European Union leaders have agreed that conservative German candidate Manfred Weber will not become president of the bloc’s executive Commission, Germany’s Die Welt daily reported on Friday, citing sources familiar with the decision. The decision was reached during talks on the sidelines of the G20 summit in Osaka, Japan, Die Welt said. If confirmed, the compromise would be a blow to Chancellor Angela Merkel, who had backed Weber’s bid to replace Jean-Claude Juncker. French President Emmanuel Macron had opposed Weber’s candidacy, partly because of his lack of experience in high office.

EU leaders failed at a summit earlier this month to agree on who should hold the bloc’s top jobs after European Parliament elections last month, including on the Commission, which has broad powers on matters from trade to competition and climate policy. Weber is the leader of the European People’s Party (EPP), the conservative bloc that won most seats in the election and which includes Merkel’s Christian Democrats (CDU). A senior European diplomat told Reuters that socialist Dutchman Frans Timmermans, a deputy head at the Commission, was the front-runner to succeed Juncker. “Timmermans is the best placed,” the diplomat said.

The EU’s 28 national leaders will meet on June 30 to decide who fills the five prominent positions that would help the bloc navigate through internal and external challenges. The jobs include the presidency of the European Central Bank, which has helped the bloc’s economy return to growth after the financial crisis thanks to an extraordinary monetary stimulus programme.

“..a wayward jellyfish blown hither and yon by Progressive winds..”

• Say Anything! (Kunstler)

Apart from the colorful homage to all things Mexican, the signal event of the night was Elizabeth Warren’s stealth political suicide when the popular question of Medicare-for-all came up and NBC’s Lester Holt asked the candidates for a show of hands as to who would abolish private health insurance altogether. Up shot Liz’s hand. Only New York’s mayor, the feckless Bill DeBlasio joined her. If the contest was a game of “Survivor” both would have thereby voted themselves off the island — except Big Bill was never really on the island, just circling around it like a wayward jellyfish blown hither and yon by Progressive winds.

The only “B” Team figure onstage who appeared to be a serious candidate was Hawaiian congressperson Tulsi Gabbard, a major in the US Army Reserve with tours-of-duty in Iraq and Kuwait — especially impressive when smacking down cretinous Ohio congressman Tim Ryan, who mistakenly asserted that the Taliban were behind 9/11. Uh, no, Tulsi informed him, it was al Qaeda (sponsored by our “friend” Saudi Arabia). I predict Tulsi will make the cut to the “A” team, despite the news media’s desperate efforts to shove her off the playing field.

Debt Rattle June 28 2019

Jun 282019

June 28, 2019 Posted by Raúl Ilargi Meijer at 9:41 am Finance Tagged with: Boeing, car industry, China, CIA, Deutsche, GMO, Iran, military, monopoly, NATO, nukes, Varoufakis 13 Responses »

Salvador Dali Invisible Sleeping Woman, Horse, Lion 1930

• 56% Of Americans Are Lying Awake At Night Worrying About Money (MW)

• America’s Monopoly Crisis Hits the Military (AC)

• US Car Industry Is Killing Itself (WS)

• Baoshang Bank Collapse Threatens China’s Economy (ABC.au)

• Deutsche Bank Passes Fed Stress Test In Boost For Its US Operations (R.)

• Paul Singer Warns A 40% Market Crash Is Coming (ZH)

• US Gets No Commitment From NATO Allies For Help On Iran Threat (AP)

• Boeing Hopes To Complete 737 MAX Software Fix In September (AP)

• Large US Companies Are Getting Bigger While The Small Wither Away (MW)

• CIA Finances Another Group of Fraudsters: the Venezuelan ‘Opposition’ (SCF)

• Varoufakis: My Proposals Don’t Need Negotiation With Greece’s Creditors (A.)

• The First Genetically Modified Animals Approved For US Consumption (AP)

Brought to you by the world’s richest country.

• 56% Of Americans Are Lying Awake At Night Worrying About Money (MW)

How are you sleeping lately? Some Americans are feeling uneasy. Consumer confidence fell to a two-year low in June, the Conference Board announced this week. It fell to 121.5 this month from a 131.3 in May. That’s the lowest level since September 2017. “The escalation in trade and tariff tensions earlier this month appears to have shaken consumers’ confidence,” Lynn Franco, senior director at the Conference Board, said in a statement. Continued uncertainty could “diminish” people’s confidence in the economic expansion, she added. Many people are living with wildly fluctuating income, a recent report from the Board of Governors of the Federal Reserve System said.

“Volatile income and low savings can turn common experiences — such as waiting a few days for a bank deposit to be available — into a problem.” Despite unemployment hitting a 49-year low, plus low interest rates and inflation, people are feeling skittish. “A major trade war between the U.S. and China represents our greatest economic risk,” according to Lynn Reaser, chief economist of the Controller’s Council of Economic Advisors. All of these worries are taking their toll. 78% of adults are losing sleep over work, relationships, retirement and other worries, according to a study released Thursday by personal-finance site Bankrate.com. Over half (56%) of Americans are lying awake at night worrying about money.

Can’t make anything anymore. And now there are plans to make Europe use US nukes…..

• America’s Monopoly Crisis Hits the Military (AC)

Early this year, U.S. authorities filed criminal charges—including bank fraud, obstruction of justice, and theft of technology—against the largest maker of telecommunications equipment in the world, a Chinese giant named Huawei. Chinese dominance in telecom equipment has created a crisis among Western espionage agencies, who, fearful of Chinese spying, are attempting to prevent the spread of Huawei equipment worldwide, especially in the critical 5G next-generation mobile networking space. In response to the campaign to block the purchase of Huawei equipment, the company has engaged in a public relations offensive.

The company’s CEO, Ren Zhengfei, portrayed Western fears as an advertisement for its products, which are, he said, “so good that the U.S. government is scared.” There’s little question the Chinese government is interested in using equipment to spy. What is surprising is Zhengfei is right about the products. Huawei, a relatively new company in the telecom equipment space, has amassed top market share because its equipment—espionage vulnerabilities aside—is the best value on the market. In historical terms, this is a shocking turnaround. Americans invented the telephone business and until recently dominated production and research. But in the last 20 years, every single American producer of key telecommunication equipment sectors is gone.

Today, only two European makers—Ericsson and Nokia—are left to compete with Huawei and another Chinese competitor, ZTE. This story of lost American leadership and production is not unique. In fact, the destruction of America’s once vibrant military and commercial industrial capacity in many sectors has become the single biggest unacknowledged threat to our national security. Because of public policies focused on finance instead of production, the United States increasingly cannot produce or maintain vital systems upon which our economy, our military, and our allies rely. Huawei is just a particularly prominent example.

Well, they can still make cars…

• US Car Industry Is Killing Itself (WS)

The average age of passenger cars and trucks on the road in the US ticked up again in 2019, to another record of 11.8 years, IHS Markit reported today. When I entered the car business in 1985, the average age had just ticked up to 7.8 years, and the industry was fretting over it and thought the trend would have to reverse, and customers would soon come out of hiding and massively replace those old clunkers with new vehicles, and everyone would sell more and make more. But those industry hopes for a sustained reversal of the trend of the rising average age have been bitterly disappointed:

This rising average age is largely driven by vehicles lasting longer – an unintended consequence of relentless improvements in overall quality, forced upon automakers by finicky customers in an ultra-competitive market where automakers struggle to stay alive. To make it in the US, they have to constantly improve their products, and stragglers that can’t compete are left unceremoniously by the wayside. US consumers are brutal. This unintended consequence of rising overall quality contributes to the dreadful industry problem: The US, despite constant population growth, is a horribly mature auto market. In 1999, so 20 years ago, new vehicle sales reached a record of 16.9 million units.

This record was broken in 2000, with 17.3 million units. Then sales tapered off. By 2007, they’d dropped to 16.1 million units. Then the Financial Crisis hit, GM and Chrysler went bankrupt, Ford almost did, and peak-to-trough, sales plunged 40% to 10.4 million units by 2009. The recovery has been steep, and in 2015, finally the old record of the year 2000 was broken, but barely with 17.48 million units, and in 2016, the industry eked out another record of 17.55 million units. And that was it. Sales have fizzled since then. So far in 2019, the data indicates that sales are likely to fall below 17 million units, according to my own estimates, bringing the industry right back where it had been 20 years ago in 1999:

Nothing a little QE won’t fix?!

• Baoshang Bank Collapse Threatens China’s Economy (ABC.au)

Up until a few weeks ago the Baoshang Bank’s prospects seemed bright enough. According to Baoshing’s most recent regulatory filing, the smallish lender based in Inner-Mongolia, made a $600 million profit in 2017. It had assets of around $90 billion, non-performing loans were modest — under 2 per cent — and its capital buffers would fit comfortably with the global demands of a Tier1 bank. Then it collapsed. That set off a series of events rarely, if ever, seen in Chinese banking. Regulators seized Baoshang, the first action of its type since 1998. That may have shaken the foundations of Chinese banking, but of far greater significance was the collapse caused by China’s first recorded interbank default.

It is yet to be a “Lehman moment” — where the credit market freezes, banks stop lending to each other and the economy teeters above the abyss —but it has, as Societe Generale’s Wei Yao noted, “triggered severe liquidity tensions in the interbank market”. “The Baoshang incidence has challenged one fundamental belief of China’s financial system; interbank defaults are not possible thanks to 100 per cent implicit guarantees,” Ms Yao said. “Now that credit risks and counter-party risks have finally descended on this very core market in China’s financial system, all the key players in the system have to figure out how to price risks in the new paradigm, and quickly.”

Ms Yao said the understandable consequence was “a big and unpleasant wave of risk repricing”, with major banks shying away from doing business with smaller lenders. And that’s a worry, as small-to-medium sized banks combined have balance sheets as big as the big banks combined, but are far more dependent on interbank funding. The central bank (PBoC) immediately pumped around 600 billion yuan ($125 billion) into the system and halted a run on the banks by guaranteeing 100 per cent of all retail deposits.

Not the Onion.

• Deutsche Bank Passes Fed Stress Test In Boost For Its US Operations (R.)

Deutsche Bank’s shares rose as much as 4.8% on Friday after Germany’s biggest bank passed an annual health check by the U.S. Federal Reserve, in a boost to its Wall Street operations. But the Federal Reserve placed conditions on the U.S. operations of Credit Suisse, knocking its shares 1% lower after identifying weaknesses in its capital planning. The tests assess whether it is safe for banks to implement their capital plans, including using extra capital for stock buybacks, dividends and other purposes beyond providing a cushion against losses. They are designed to avoid a repeat of the taxpayer bailouts of the 2007-2009 financial crisis.

Deutsche Bank, whose U.S. business has been plagued by litigation, underperformance and regulatory investigations, topped the German bluechip index .GDAX in Frankfurt after its U.S. shares were up as much as 6% in after-the-bell trading on Thursday following the Fed’s news. The German bank maintained a large presence on Wall Street after the 2007-2009 financial crisis, while Credit Suisse made big cuts. But Deutsche’s efforts to compete with U.S. rivals have been hampered by litigation and regulatory investigations. Deutsche Bank Chief Executive Christian Sewing, who is battling to turn the bank around, said the Fed’s decision was “excellent news” in a memo to staff on its website. “Achieving success here was one of the key goals we set a year ago. It is a huge step forward for our business in the U.S. and globally. A strong operating platform in the Americas is essential to our clients,” he said.

Lowballing.

• Paul Singer Warns A 40% Market Crash Is Coming (ZH)

Speaking at the Aspen Ideas Festival, billionaire investor and Elliott Management founder, Paul Singer, warned that the global economy is heading toward a “significant market downturn” cautioning that “the global financial system is very much toward the risky end of the spectrum.” While Paul Singer’s traditionally downcast outlook is hardly surprising, as it permeates every investor letter published by the successful investor who has been particularly clear in the past decade that the Fed’s monetary experiment will end terribly, he sees two particular reasons why the economy is approaching a tipping point: “global debt is at an all-time high.

Derivatives are at an all-time high and it took all of this monetary easing to get to where we are today and I don’t think central bankers, or policymakers or academics are in any better shape to predict the next downturn and I think we are the high end of the risk spectrum.” He then ominously added that “I’m expecting the possibility of a significant market downturn.” How bad would the crash be? According to the Elliott Management CEO, there will be a market “correction” of 30% to 40% when the downturn hits, although unlike Goldman – which gave a timeline of 12 months in which the next major market will materialize, Singer said he couldn’t predict the timing.

In the panel discussion, Singer also said the market meltdown late last year after interest rates spiked in the 4th quarter was the first hint of a pending slump, as it indicated that the Federal Reserve and other central banks were now victims of their policies, something he has been warning about for years. “December supported the notion that they’re trapped,” he said. “What they should have done, and what they should do now, is try to restore the soundness of money. They should not be cutting rates right now. They should be calling on the congresses and parliaments around the developed world to take steps to deal with the economic slowdown in growth.”

Europe likes Iran just the way it is.

• US Gets No Commitment From NATO Allies For Help On Iran Threat (AP)

NATO allies gave the U.S. no firm commitments that they will participate in a global effort to secure international waterways against threats from Iran, acting Defense Secretary Mark Esper said Thursday, wrapping up his first alliance meeting. Esper said the U.S. will come back next month and provide reluctant allies more details on exactly how the Iranian threat has escalated in recent months, and how nations can work together to deter further aggression. “At the end of the day what our ask is here, near term, is to publicly condemn Iran’s bad behavior,” Esper said as he prepared to leave Brussels. “And in the meantime, in order to avoid a military escalation, help us maintain the freedom of navigation in the Strait of Hormuz, in the Persian Gulf and wherever.”

Esper, who didn’t have high expectations for firm commitments coming in, got little of either, though he said that some allies privately expressed interest in hearing more. Esper’s visit to NATO, just days after he took over at the Pentagon, came amid sharply increased tensions between the U.S. and the Islamic Republic. The Trump administration has blamed Iran for recent attacks on oil tankers in the Gulf of Oman, as well as bombings in Iraq. Iranian forces also shot down an American drone that it said had flown into its airspace, which the U.S. disputes. Earlier this week, as he headed to NATO, Esper said his goal was to persuade allies that the confrontation with Iran is a global challenge requiring an international response, and that it is “not Iran versus the United States.”

“There are many families here who will not want to participate in mediation until they know what Boeing knew, when they knew it, what they did about it, and what they’re going to do about it..”

• Boeing Hopes To Complete 737 MAX Software Fix In September (AP)

Boeing says it expects to finish work on updated flight-control software for the 737 Max in September, a sign that the troubled jet likely won’t be flying until late this year. The latest delay in fixing the Max came a day after the disclosure that government test pilots found a new technology flaw in the plane during a test on a flight simulator. The plane has been grounded since mid-March after two crashes that killed 346 people. Preliminary accident reports pointed to software that erroneously pointed the planes’ noses down and overpowered pilots’ efforts to regain control. A Boeing official said Thursday that the company expects to submit the software update to the Federal Aviation Administration for approval “in the September timeframe.”

Once Boeing submits its changes, the FAA is expected to take several weeks to analyze them, and airlines would need additional time to take their grounded Max jets out of storage and prepare them to fly again. Airlines were already lowering expectations for a quick return of the plane, which has been grounded since mid-March. Southwest Airlines, the biggest operator of Max jets, announced Thursday that it has taken the plane out of its schedule for another month, through Oct. 1. Earlier this week, United Airlines pulled the plane from its schedule through early September.

While Boeing engineers continue working on the plane’s software, company lawyers pushed Thursday to settle lawsuits brought by the families of dozens of passengers killed in the October crash of a Lion Air Max off the coast of Indonesia and the March crash of an Ethiopian Airlines Max near Addis Ababa. Boeing and the families of Lion Air Flight 610 victims agreed to mediation that could lead to early settlements. However, the families of some Ethiopian Airlines Flight 302 passengers are resisting mediation. “There are many families here who will not want to participate in mediation until they know what Boeing knew, when they knew it, what they did about it, and what they’re going to do about it to prevent this kind of disaster from occurring again,” said Robert Clifford, a Chicago lawyer who filed lawsuits on behalf of nearly two dozen victims of the Ethiopian crash.

Concentrate.

• Large US Companies Are Getting Bigger While The Small Wither Away (MW)

FTSE Russell will rebalance its suite of indexes at the close of trade Friday, and the changes will reflect several broad trends in equity markets over the past year, including the resilience of large-capitalization companies, the dismal performance of smaller U.S. firms, and the emergence of new, highly valued technology companies that promise to, or already have, revolutionized their respective industries. “We reconstitute the Russell indexes annually to accurately reflect equity markets,” said Catherine Yoshimoto, director of product management at FTSE Russell, in an interview. “All the companies are ranked by total market capitalization and the break point between the [large cap] Russell 1000 and [small cap] Russell 2000 are reset.”

The dividing line between the large cap index and the small fell this year, from a capitalization of $3.7 billion to $3.6 billion, as a result of the poor performance of small cap companies, which shrunk in average market capitalization from $2.5 trillion to $2.4 trillion, as the small cap index fell 6.3% over the past 12 months, versus a 7.5% rise in price for larger companies. Steven DeSanctis, equity strategist at Jefferies told MarketWatch that today’s environment — with rising labor costs, material costs and new trade barriers — is especially difficult for small companies to navigate. He estimates that earnings for Russell 2000 companies fell 14.5% in the first quarter of this year on 3.4% of sales growth, while the second quarter will likely show small-cap earnings falling 11.5%, on 3.6% of revenue growth. “Small cap companies are getting squeezed at the margin,” he said. “A lot of companies have revenue growth but falling profits.”

The story gets uglier by the day.

• CIA Finances Another Group of Fraudsters: the Venezuelan ‘Opposition’ (SCF)

Once again, the Central Intelligence Agency has been caught financing a group of grifters and fraudsters at the expense of the American taxpayers. In the latest case, just another in the agency’s 72-year history, the Trump administration-appointed ad hoc board of CITGO, the US subsidiary of the state-owned Venezuelan oil company, PDVSA, stands accused of steering $70 million of escrowed funds, earmarked for PDVSA’s fiscal year 2020 bond, to the pockets of CIA-supported officials of the Venezuelan opposition “Popular Will” party headed by the so-called “interim president” of Venezuela, Juan Guaidó.

In addition to Guaidó, who is accused by the legitimate Venezuelan government of money laundering, treason, and corruption, other Popular Will leaders under investigation by both the Venezuelan Attorney General and the US Justice Department include Carlos Vecchio, Guaidó’s envoy in Washington; Rossana Barrera and Kevin Rojas, Guaidó’s emissaries in Cucuta, a Colombian-Venezuelan border town; Sergio Vargara, Barrera’s brother-in-law and a Member of the Venezuelan Congress; Guaidó’s “ambassador” to Colombia, Humberto Calderon Berti, opposition businessman Miguel Sabal; and Guaidó’s chief of staff, Roberto Marrero. Over two dozen other Popular Will leaders are also under investigation for fraud involving money earmarked by the Trump administration, particularly Iran-Contra scandal felon and current Trump special envoy for regime change in Venezuela, Elliot Abrams.

Barrera and Rojas are accused of spending money given to the Popular Will by the US Agency for International Development (USAID), a longtime CIA financial pass-through, for “humanitarian relief” for alleged massive numbers of Venezuelan refugees in Colombia. The Popular Will grifters reportedly used the aid money, including that which was raised by Virgin Group’s billionaire founder and obvious CIA dupe Richard Branson, for expensive hotels, fancy restaurants, nightclubs, prostitutes, and clothing.

Varoufakis is way ahead of his time. Elections July 7, but he’ll be lucky to get any seats at all.

• Varoufakis: My Proposals Don’t Need Negotiation With Greece’s Creditors (A.)

– Reduction of the public debt with an embedded growth clause: the higher the national income, the more creditors will receive, and the reverse. Varoufakis said that this will force lenders to become partners in the recovery of Greece.

– Ending austerity by a drastic reduction of surpluses. Varoufakis said that Syriza and ND have pledged to return to the lenders the equivalent of at least 7,000 euros per capita each year from the so-called primary state surpluses. MeRA25 will unilaterally reduce these surpluses by 60-100 pct, depending on the recovery rate, he added.

– Abolition of obligatory prepayment of 100% of taxes, and capping the VAT rate at 18% for cash purchases, 15% for using a credit card. Reduction of corporate tax: e.g. from current 29 pct, to 26 pct for large businesses, 20 pct for medium-sized ones and 15 pct for small businesses; capping profits on SMEs at 50 pct tax (currently at 75 pct).

– Public extra-bank reliant payment system allowing free digital transactions among citizens, businesses and the state, benefitting all: e.g. by mutual debt cancellation, tax deductions, funding of anti-poverty programs, reducting the hold of private banks and the European Central Bank on citizens and state alike.

– Establishment of a public management company of private debt, so that non-performing loans (NPLs) are transferred from banks to this organisation, in exchange for government guarantees not counted towards public debt. In addition, a ban on loan sales, foreclosure auctions, especially of primary residences and small businesses.

– Inclusion under the Foundation of Social Insurance (IKA) of all freelancers who work more than 8 hours a week for the same employer. Incentives towards start-up entrepreneurs with a 5-year exemption from taxes and insurance contributions.

– Conversion of the Hellenic Republic Asset Development Fund to a Development Bank, abolition of all privatizations, and use of public property as collateral to create investment flows in the public sector; the new bank’s shares will be owned by insurance funds, boosting their capitalization.

Yanis Varoufakis insisted that these measures would be implemented without negotiation with Greece’s lenders and financial institutions, and underlined that the creditors might react by bringing back GRexit scenarios. In this case, which he ruled out, “it will cost them 1 trillion euros.” “If we continue to apply Syriza’s fourth memorandum there will be no young people left in our country,” concluded Varoufakis, who also reiterated that his party will not give a vote of confidence to either Syriza or New Democracy, but will nevertheless support any bill it considers fair.

Mass suicide.

• The First Genetically Modified Animals Approved For US Consumption (AP)

Inside an Indiana aquafarming complex, thousands of salmon eggs genetically modified to grow faster than normal are hatching into tiny fish. After growing to roughly 10 pounds (4.5 kilograms) in indoor tanks, they could be served in restaurants by late next year. The salmon produced by AquaBounty are the first genetically modified animals approved for human consumption in the U.S. They represent one way companies are pushing to transform the plants and animals we eat, even as consumer advocacy groups call for greater caution. AquaBounty hasn’t sold any fish in the U.S. yet, but it says its salmon may first turn up in places like restaurants or university cafeterias, which would decide whether to tell diners that the fish are genetically modified.

“It’s their customer, not ours,” said Sylvia Wulf, AquaBounty’s CEO. To produce its fish, Aquabounty injected Atlantic salmon with DNA from other fish species that make them grow to full size in about 18 months, which could be about twice as fast as regular salmon. The company says that’s more efficient since less feed is required. The eggs were shipped to the U.S. from the company’s Canadian location last month after clearing final regulatory hurdles.

As AquaBounty worked through years of government approvals, several grocers including Kroger and Whole Foods responded to a campaign by consumer groups with a vow to not sell the fish. Already, most corn and soy in the U.S. is genetically modified to be more resistant to pests and herbicides. But as genetically modified salmon make their way to dinner plates, the pace of change to the food supply could accelerate. This month, President Donald Trump signed an executive order directing federal agencies to simplify regulations for genetically engineered plants and animals. The move comes as companies are turning to a newer gene-editing technology that makes it easier to tinker with plant and animal DNA.

Debt Rattle June 17 2019

Jun 172019

June 17, 2019 Posted by Raúl Ilargi Meijer at 9:13 am Finance Tagged with: bad bank, Boeing, Brexit, China, Deutsche, Hong Kong, Huawei, Iran, Japan, S400, tankers, Tiananmen, Wall Street 9 Responses »

Pablo Picasso The sculptor and his statue 1933

• The Bleak Mood Of Pre-Brexit UK (O.)

• Boeing May Never Recover From 737 Debacle (Auerback)

• Huawei Prepares For 40%-60% Fall In International Smartphone Shipments (R.)

• Huawei Moves To Russia-China Operating System (Escobar)

• Deutsche Bank To Set Up €50 Billion Bad Bank (R.)

• How Wall Street Got Rich Off The Fresh Market Deal (Cohan)

• Japan Demands More Proof From US That Iran Attacked Tankers (JT)

• The S-400 Is a Formidable Threat to US Arms Industry (Pieraccini)

• While Lam Relents, Hong Kong Calls Massively For Her Ouster (AT)

• Chinese Activists Seek UN Investigation Into Tiananmen Crackdown (R.)

Broken. Completely.

• The Bleak Mood Of Pre-Brexit UK (O.)

The survey by BritainThinks reveals an astonishing lack of faith in the political system among the British people, with less than 6% believing their politicians understand them. Some 75% say that UK politics is not fit for purpose. As the Conservative party focuses on who its new leader should be, and the Brexit impasse continues with no solution in sight, 86% think the UK needs a strong leader more than ever – but only 21% think the next prime minister, whoever it may be, will be up to the job. Some 52% believe the country is heading for a Boris Johnson premiership.

Pollster Deborah Mattinson said she was shocked by the findings. “I have been listening to people in focus groups since the late 1980s and I cannot recall a time when the national mood was more despairing. ‘Broken’, ‘sad’, ‘worried’, ‘angry’– the negatives tumble out, as does the long list of grievances. I’m hearing anxieties voiced in a way that I haven’t heard since the 1990s: a rundown NHS, job insecurity, teacher shortages.” BritainThinks polled more than 2,000 people and hosted several focus groups in London and Leicester to gauge the national mood.

Almost three-quarters of the British public believe the divisions on Brexit between Leavers and Remainers will deepen and get worse within the next year. Two-thirds feel depressed by rising poverty and homelessness. While people say Brexit has made them more politically engaged – 40% are paying more attention since the 2016 referendum, rising to 50% in those aged between 18 and 24 – the polling suggests the bitter political debate over leaving the EU has shattered public trust in the way the nation is governed. Some 83% feel let down by the political establishment and almost three-quarters (73%) believe the country has become an international laughing stock and that British values are in decline.

Ralph Nader says the 737 MAX should never fly again.

• Boeing May Never Recover From 737 Debacle (Auerback)

Many of us are familiar with the acronym “FUBAR.” A recent New York Times article on the Boeing 737 fiasco provides a perfect illustration of the concept. We’re now learning that the company “built deadly assumptions” into its newly designed 737 Max aircraft and, specifically, its Maneuvering Characteristics Augmentation System (MCAS). Even worse, the Times account concludes that the recent air crashes that have resulted in a worldwide grounding of the Boeing Max plane “might have been avoided, if employees and regulators had a better understanding of MCAS” and if the US Federal Aviation Authority (FAA) itself was not operating with outdated data on the software changes (which Boeing failed to provide).

The analysis is excellent as far as it goes. But the most damning fact only briefly hinted at in the article is that the problems were evident as early as 2012, some five years before the newest 737 version was marketed and sold across the globe. “At its core, this was a hardware problem, not a software issue. Even when Boeing was using a relatively “safer” version of the early MCAS software (that was later changed to a more dangerous version), the new 737 still had an engine too large to be accommodated in its traditional spot on the plane, which ultimately distorted “the relationship between the engine’s ‘thrust’ and its center of gravity,” as I’ve written before. The resultant aerodynamic problems could not be solved with a software “solution,” no matter how “safe” the original MCAS version (that was ultimately changed to an even more dangerous version) was purported to be.”

Just don’t expect any blowback from Washington. The whole episode provides yet another sick illustration of how the entire system of governance in the US has degenerated into a fully fledged “predator state.” About the only good thing that might emerge from this whole fiasco is that Boeing will provide future Master of Business Administration students with a textbook example of how not to manage a crisis. Likewise, future historians and political scientists will marvel in incredulity at the magnitude of corruption that enveloped the US during this very dark time in the life of the republic. Assuming, of course, that there still anything left worth studying by that point.

[..] Recall that the genesis of this disaster was a problem of hardware, not just MCAS. The extra lift of the far larger-diameter engines of the 737 Max (placed on a different position on the wing) caused the plane to pitch up whenever it approached stall angles of attack at both high and low speeds. This is a problem that should have become glaringly obvious to the greenest of aerodynamics personnel at Boeing the moment the first wind-tunnel model was tested at angles of attack higher than stall (it may have even been obvious on even earlier fluid-dynamics computer-simulation results).

“.. In order to offset overseas decline, Huawei is aiming to grab up to half of China’s smartphone market in 2019..”

• Huawei Prepares For 40%-60% Fall In International Smartphone Shipments (R.)

Huawei Technologies Co Ltd is preparing for a 40% to 60% decline in international smartphone shipments, Bloomberg reported on Sunday. The Chinese technology company is looking at options that include pulling the latest model of its marquee overseas smartphone, the Honor 20, according to the article, which cited people familiar with the matter. The device will begin selling in parts of Europe, including Britain and France, on June 21, the report said. Executives will be monitoring the launch and may cut off shipments if the sales are poor, it said. Marketing and sales managers at the tech giant are internally expecting a drop in volumes of anywhere between 40 million to 60 million smartphones this year, the report said. In order to offset overseas decline, Huawei is aiming to grab up to half of China’s smartphone market in 2019, Bloomberg said.

Be careful what you wish for. Sanctions made Russia stronger too.

• Huawei Moves To Russia-China Operating System (Escobar)

Google cuts Huawei off Android; so Huawei may migrate to Aurora. Call it mobile Eurasia integration; the evolving Russia-China strategic partnership may be on the verge of spawning its own operating system – and that is not a metaphor. Aurora is a mobile operating system currently developed by Russian Open Mobile Platform, based in Moscow. It is based on the Sailfish operating system, designed by Finnish technology company Jolla, which featured a batch of Russians in the development team. Quite a few top coders at Google and Apple also come from the former USSR – exponents of a brilliant scientific academy tradition.

In 2014, Russian entrepreneur Grigory Berezkin started co-owning Jolla, and from 2016 his Mobile Platform company started developing a Russian version of the operating system. In 2018, Rostelecom, a state company, bought a 75% share in Open Mobile Platform. Ahead of the St Petersburg International Economic Forum last week, Huawei chairman Guo Ping discussed the possibility of adopting Aurora with Russian minister of digital development and communications, Konstantin Noskov. According to Guo, “China is already testing devices with the Aurora pre-installed.” In Moscow, before moving to St Petersburg, Presidents Putin and Xi Jinping discussed multiple possible deals; and these include Huawei-Aurora, as well as where to locate some of Huawei’s production lines in Russia.

Aurora could be regarded as part of Huawei’s fast-evolving Plan B. Huawei is now turbo-charging the development and implementation of its own operating system, HongMeng, a process that started no less than seven years ago. Most of the work on an operating system is writing drivers and APIs (application programming interfaces). Huawei would be able to integrate their code to the Russian system in no time. HongMeng, for its part, is a key project of Huawei 2012 Laboratories, the innovation, research and technological development arm of the Shenzhen colossus. No Google? Who cares? Tencent, Xiaomi, Vivo and Oppo are already testing the HongMeng operating system, as part of a batch of one million devices already distributed.

Mutti is not happy.

• Deutsche Bank To Set Up €50 Billion Bad Bank (R.)

Deutsche Bank is planning to overhaul its trading operations by creating a “bad bank” to hold tens of billions of euros of assets and shrinking or shutting its U.S. equity and trading businesses, the Financial Times reported on Sunday. The bad bank would house or sell assets valued at up to 50 billion euros ($56.06 billion)- after adjusting for risk – and comprise mainly long-dated derivatives, the FT reported, citing four people briefed on the plan. With the creation of the bad bank, Chief Executive Officer Christian Sewing is shifting the German lender away from investment banking and focusing on transaction banking and private wealth management, the newspaper said.

As part of the restructuring, the lender’s equity and rates trading units outside continental Europe will be shrunk or closed entirely, the report said. The bank is planning cuts at its U.S. equities business, including prime brokerage and equity derivatives, to win over shareholders unhappy about its performance, four sources familiar with the matter told Reuters in May. “As we said at the AGM on May 23, Deutsche Bank is working on measures to accelerate its transformation so as to improve its sustainable profitability. We will update all stakeholders if and when required,” Deutsche Bank said in an emailed statement on Sunday in response to the FT report.

Grand theft auto made legal.

• How Wall Street Got Rich Off The Fresh Market Deal (Cohan)

Take the case of the March 2016, $1.36 billion cash buyout of a supermarket chain, Fresh Market, by Apollo Global Management, the firm started by Leon Black nearly 30 years ago that now manages more than $300 billion. In that deal Apollo teamed up with Ray Berry, the company’s founder, and his son, Brett, to buy out the company’s public stockholders. Before the buyout the Berrys owned about 10% of the public Fresh Market. They agreed to roll over that stake into the newly private Fresh Market, giving them about the same ownership in the private company—worth somewhere between $136 million and $930 million, if the alchemy of leveraged buyouts worked out. Apollo would own the remaining 90% of the equity of the private company.

Because the deal was, in effect, a management buyout of the company, Fresh Market set up a special three-member committee of independent directors to evaluate the Apollo proposal, as well as any others that might come in over the transom after the company decided to put itself up for sale shortly after September 1, 2015. As professional referees, the special committee hired JPMorgan Chase as its financial adviser, and Cravath, Swaine & Moore as one of its legal advisers. Their job was to evaluate the various proposals to buy Fresh Market, a collection of 186 stores in 27 states as of March 2016, and to make sure that the one chosen was, in the parlance of Wall Street, “fair” to the public shareholders of the company “from a financial point of view.”

That’s when things got interesting, especially since Apollo was the only final bid the company received. According to a class action shareholder lawsuit that is still wending its way through the Delaware Court of Chancery, Apollo used its long-standing financial ties to JPMorgan Chase and Cravath to co-opt the process for the benefit of itself and the Berrys, allowing them to buy the company on the cheap. In effect, the lawsuit alleges, by teaming up with the Berrys on an exclusive basis, Apollo was able to buy Fresh Market knowing that its competition for the company would be at a severe disadvantage, without being able to count on the Berrys support, and that JPMorgan Chase would likely bless the fairness of the deal.

Japan, Germany, Corbyn…

• Japan Demands More Proof From US That Iran Attacked Tankers (JT)

The Japanese government has been requesting the United States for concrete evidence to back its assertion that Iran is to blame for the attacks on two tankers near the Strait of Hormuz on Thursday, government sources said Sunday. The request came after U.S. Secretary of State Mike Pompeo gave a statement hours after the attacks blaming Iran but without offering proof. The Department of Defense later released a video allegedly showing an Iranian patrol boat removing an unexploded mine attached to the side of the Japanese-operated tanker Kokuka Courageous. But Japanese government officials remain unconvinced, the sources said. “The U.S. explanation has not helped us go beyond speculation,” said one senior government official.

Japan has been seeking more concrete evidence through various channels, including Foreign Minister Taro Kono who is likely to have made the request during a call with his counterpart on Friday, the sources said. Pompeo said in a press conference Thursday that the United States’ assessment was based on their “intelligence, the weapons used, the level of expertise needed to execute the operation, recent similar Iranian attacks on shipping, and the fact that no proxy group operating in the area has the resources and proficiency to act with such a high degree of sophistication.” A source close to Prime Minister Shinzo Abe said, “These are not definite proof that it’s Iran.” “Even if it’s the United States that makes the assertion, we cannot simply say we believe it,” he said.

AI at its best.

• The S-400 Is a Formidable Threat to US Arms Industry (Pieraccini)

The US finds itself faced with a situation it has not found itself in over the last 50 years, namely, an environment where it does not expect to automatically enjoy air superiority. Whatever semblance of an air defense that may have hitherto been able to pose any conceivable threat to Uncle Sam’s war machine was rudely dismissed by a wave of cruise missiles. To give two prime examples that occurred in Syria in 2018, latest-generation missiles were intercepted and shot down by decades-old Russian and Syrian systems. While the S-400 system has never been employed in Syria, it is noteworthy that the Serbian S-125 systems succeeded in identifying and shooting down an American F-117 stealth aircraft during the war in the Balkans.

There is a more secret aspect of the S-400 that is little disclosed, either within Russia itself or without. It concerns the S-400’s ability to collect data through its radar systems. It is worth noting Department of Defense spokesman Eric Pahon’s alarm over Turkey’s planned purchase of the S-400: “We have been clear that purchasing the S-400 would create an unacceptable risk because its radar system could provide the Russian military sensitive information on the F-35. Those concerns cannot be mitigated. The S-400 is a system built in Russia to try to shoot down aircraft like the F-35, and it is inconceivable to imagine.

Certainly, in the event of an armed conflict, the S-400’s ability to shoot down fifth-generation aircraft is a huge concern for the United States and her allies who have invested so heavily in such aircraft. Similarly, a NATO country preferring Russian to American systems is cause for alarm. This is leaving aside the fact that the S-400 is spreading around the world, from China to Belarus, with dozens of countries waiting in line for the ability to seal their skies from the benevolent bombs of freedom. It is an excellent stick with which to keep a prowling Washington at bay.

[..] The ability of the S-400 to collect data on both the F-35 and F-22 – the crown jewels of the US military-industrial complex – is a cause for sleepless nights for US military planners. What in particular causes them nightmares is that, for the S-400 to function in Turkey, it will have to be integrated into Turkey’s current “identification friend or foe” (IFF) systems, which in turn are part of NATO’s military tactical data-link network, known as Link 16.

2 million. Beijing has said it stands behind her.

• While Lam Relents, Hong Kong Calls Massively For Her Ouster (AT)

Hong Kong’s embattled Chief Executive Carrie Lam issued a public apology Sunday evening (June 16) as hundreds of thousands of protestors dressed in black clogged the city’s streets in another massive protest demanding her resignation and the scrapping of a contentious bill that would allow for the extradition of suspects to mainland China. A day after Lam announced a surprise decision to indefinitely postpone the bill in a press conference on Saturday, the city’s leader vowed to “sincerely and humbly accept all criticism and to improve and serve the public” in a statement released at 8:30 pm as chanting crowds stood outside the gates of her office calling for her to step down.

“Carrie Lam’s press conference yesterday just made Hong Kong people angrier. We don’t think she will step down, but we must force her out,” said 27-year-old Chiew minutes before demonstrators began marching from Victoria Park in the scorching afternoon heat with the aim of forcing the government to rescind, rather than postpone, the controversial bill. Gripped by a surge of mass dissent, the Asian financial hub has been thrust into political crisis amid the largest political demonstrations and some of the worst scenes of violence since Hong Kong’s return to Chinese rule in 1997. Organizers from the Civil Human Rights Front said almost two million people took part in Sunday’s march.

Protest organizers said almost two million people took part in a mammoth June 16 protest march. Photo: Nile Bowie

Yeah, that’s going to happen.

• Chinese Activists Seek UN Investigation Into Tiananmen Crackdown (R.)

More than 20 Chinese activists who took part in the Tiananmen Square pro-democracy movement called on Monday on the United Nations’ top human rights body to investigate Beijing’s deadly crackdown 30 years ago. Wang Dan and 21 others, backed by the group Chinese Human Rights Defenders, said they had submitted the complaint to the U.N. Human Rights Council, a Geneva forum which opens a three-week session on June 24. “We request the HRC investigate the gross violations of human rights and fundamental freedoms committed by the Chinese government during its military assault on peaceful protests,” they said in statement.

They also sought action over “the consistent pattern of human rights violations in persecuting Chinese citizens during the past three decades who broke the silence” about the events of June 3-4, 1989. The anniversary remains taboo in China. Beijing has not held a public inquiry nor permitted an independent investigation, the statement said. Beijing enjoys strong support among developing countries at the Human Rights Council, a 47-member state forum that has never adopted a resolution on China since being set up in 2006.

Debt Rattle March 11 2019

Mar 112019

March 11, 2019 Posted by Raúl Ilargi Meijer at 10:06 am Finance Tagged with: backstop, Brexit, China, Deutsche, DOJ, FBI, Fed, Ireland, Mueller, Ohr, Powell, Shale, Steele, war simulations 3 Responses »

Jean Metzinger Soldier playing chess 1915

• Brexit Talks ‘Deadlocked’, Says Downing Street (G.)

• Brexit Fallout On UK Finance Intensifies (R.)

• How Central Bankers Blew Up The Global Economy (ABC.au)

• What Fed Chair Powell Said On 60 Minutes (ZH)

• China’s GDP Growth Could Be Half Of Reported Number – Pettis (SCMP)

• Brookings Says China Overstated Size Of Its Economy By 12% (ZH)

• Deutsche Bank Begins Talks Over Merger With Rival Commerzbank (G.)

• Leaked Documents Reveal DOJ Protected Steele After FBI Shunning (KK)

• How US Government and Media Spread Pro-War Propaganda (Greenwald)

• US “Gets Its Ass Handed To It” In World War III Simulations (ZH)

• Why The Shale Boom Left California Behind (Rapier)

• Elderly Americans Are Dying Without Getting To Read Mueller’s Report (NW)

Crunch time starts tomorrow. The backstop is the big issue. EU cannot ‘budge’, because it would mean leaving Ireland out in the cold. It’s called the Irish backstop for a reason.

• Brexit Talks ‘Deadlocked’, Says Downing Street (G.)

Downing Street has described the Brexit talks in Brussels as “deadlocked” after negotiations over the weekend failed to find a breakthrough on the Irish backstop. Theresa May and Jean-Claude Juncker, the European commission president, spoke on the telephone on Sunday evening, but plans for the prime minister to visit the Belgian capital to sign off on any compromise are on hold. The EU refuses to budge on the British proposal for what it believes is an attempt to build a unilateral exit mechanism into the Irish backstop, the arrangement that would keep the UK in a customs union to avoid a hard border on the island of Ireland.

The attorney general, Geoffrey Cox, is unlikely without such a concession to revise his legal opinion, given before the last vote on May’s deal, that the backstop could be in force “indefinitely”. The prime minister pledged in parliament to put her deal to the Commons on Tuesday but she is being urged by senior Conservative MPs to pull the vote if she fails to secure significant concessions from Brussels. Leading Tories have warned Downing Street it could face a second huge defeat similar to the historic 230-vote loss in January if the government goes ahead. They have advised May instead to replace the vote with a motion setting out the sort of Brexit deal that would be acceptable to Tory MPs, in the hope that this would trigger concessions from the EU.

All they have left is finance. Austerity ate the rest.

• Brexit Fallout On UK Finance Intensifies (R.)

More than 275 financial firms are moving a combined $1.2 trillion in assets and funds and thousands of staff from Britain to the European Union in readiness for Brexit at a cost of up to $4 billion, a report from a think tank said on Monday. UK lawmakers are due to vote on Tuesday on an EU divorce settlement. But with less than three weeks to go before Brexit day on March 29, it is still unclear whether the deal will be approved, whether departure from the EU will be delayed, or whether it will happen without agreement. The report by the New Financial think tank, one of the most detailed yet on the impact of Brexit on financial services, said Dublin alone accounted for 100 relocations, ahead of Luxembourg with 60, Paris 41, Frankfurt 40, and Amsterdam 32.

The independent think tank said half of the affected asset management firms, such as Goldman Sachs Investment Management, Morgan Stanley Investment Management and Vanguard, had chosen Dublin, with Luxembourg the next port of call, attracting firms like Schroders, JP Morgan Wealth Management and Aviva Investors. Nearly 90 percent of all firms moving to Frankfurt are banks, while two-thirds of those going to Amsterdam are trading platforms or brokers. Paris is carving out a niche for markets and trading operations of banks and attracting a broad spread of firms.

This still needs to be explained, apparently.

• How Central Bankers Blew Up The Global Economy (ABC.au)

We humans are a social lot. We just love being part of a pack, a member of a team. We crave acceptance, to the point where isolation or banishment ranks among the worst forms of punishment. Even when it comes to the dodgy art of forecasting, everyone seems to cluster around a central position, which kind of defeats the point of forecasting. And so, in July two years ago, when the groundswell of opinion began to shift — that the Reserve Bank would be raising interest rates — arguing otherwise was a fairly lonely position. As time went on, almost everyone shifted position as we dug in here, here and here.

To be fair, most of the highly paid, well-heeled professional market economists were being egged on by the authorities, and particularly the Reserve Bank, which was spinning the line that the next rate move was up. In the past fortnight, however, the pack suddenly has turned on its tail as fears about the global economy and a sudden slowdown in our own growth forced a rethink. The switch to a rate cut has turned into a stampede. Put aside all the complex formula. Forget the high-level macro-economic analysis. There’s a very simple reason the Reserve Bank couldn’t and can’t raise interest rates. There’s too much debt. Australian households are among the world’s most indebted when compared with their income.

And we’ve spent most of it on real estate. What these two graphs show is how the Reserve Bank, effectively, snookered itself. Back in 2012, when debt and housing prices already were elevated, it fired up the east coast housing market, and construction, to take up the employment slack as the mining boom unwound. But it created a monster. As housing went on a tear, the short-term sugar hit turned toxic. Employment took off. But housing became unaffordable to almost everyone under 35. And our household debt levels reached for the stars. The end result? It couldn’t cut rates if it needed. That would add heat to a dangerously inflated housing bubble. And it could never raise rates, because that would kill household spending.

3 Stooges.

Nomi Prins: “Number of times the word “bubble” appeared in the 60 Minutes interview with Fed. Chair Jerome Powell. Zero.”

A central bank can have benefits, but not when it only serves the rich. If we don’t get rid of Fed and ECB, there’ll be very steep prices to pay.

Note: there’s a video at the link, but it started itself so I threw it out.

• What Fed Chair Powell Said On 60 Minutes (ZH)

A decade after Ben Bernanke appeared on “60 Minutes”, vowing that the Fed could easily crush inflation, as it could “raise interest rates in 15 minutes”, of course with the occasional “pause” along the way should the S&P dip by 20% or so, current Fed Chairman Jerome Powell will follow in his footsteps on Sunday night, when surrounded by former Fed Chairs Bernanke and Yellen, he will try to reach beyond the Fed’s traditional audience of markets, journalists and lawmakers to counter the attacks from President Trump, even after the Fed’s paused on raising interest rates, said Sarah Binder, a professor of political science at George Washington University, quoted by MarketWatch.

“He wants to counter the president’s message that policy is all wrong,” Binder said. Binder said she was struck by the still photo of the “60 Minutes” interview that shows Powell alongside his two predecessors Janet Yellen and Ben Bernanke. “This puts a human face on the central bank. It says, ‘we’re the Fed and we’re here to help,’” Binder said. Bernanke also faced criticism when he went on “60 Minutes” in March 2009. The Fed was facing concerted attacks by lawmakers and populist “End the Fed” groups, who considering the record wealth divide in the US created by the central bank, were spot on.

I’m going with Xiang Songzuo: “..China’s GDP growth for 2018 could be 1.67 per cent or even negative..”

• China’s GDP Growth Could Be Half Of Reported Number – Pettis (SCMP)

If China’s bad debts were written down, its economic growth rate would be half the recorded number, a US economist at a prominent Chinese university has warned. In a speech in Shanghai this week, Michael Pettis, professor of finance at Peking University, warned that China’s debt is closely linked to the government’s perceived overstatement of its GDP. The government is accused of perpetuating the existence of “zombie companies”, by granting loss-making companies loans. Banks in turn treat these companies as creditworthy, whereas in reality they should be written off as bad debt, Pettis said. “If you believe there is bad debt that has not been sufficiently written down, you must believe that China’s GDP is overstated, relative to what it would be in any other country. That must be true,” Pettis said.

“If we are able to calculate GDP correctly, it would probably be half of the recorded number.” Pettis is not alone seeing troubles with China’s official growth number. In December, Xiang Songzuo, an outspoken professor from the Renmin University of China, who previously served as chief economist for Agricultural Bank of China, cited unidentified internal reports as saying that said China’s GDP growth for 2018 could be 1.67 per cent or even negative, a far cry from the official figures. Furthermore, a group of four economists published a paper this week arguing that China might have overstated its annual growth rate by 2 percentage points on average from 2008 to 2016. China’s official statistics agency said the country’s economic growth rate was 6.6 per cent in 2018.

The Chinese government said it would try to achieve an economic growth rate between 6.0 to 6.5 per cent in 2019, a moderate slowdown from previous years, but nevertheless a much faster rate compared with other major economies. Pettis is a renowned expert on China’s economy. For decades, he has been commenting on financial affairs in China and was among the early observers of the imbalances in the Chinese economy. He said in his speech on Wednesday that China’s growth will significantly decelerate as the country’s debt level rises.

Brookings is many years late.

• Brookings Says China Overstated Size Of Its Economy By 12% (ZH)

Since China managed to weather the fallout from the financial crisis without registering much of a slowdown in its “official” GDP figures, playing “guess the real growth rate” has become one of the most popular parlor games among the professional economist set. Whereas the stakes are much higher for academics on the mainland (one of whom was censored and threatened by government thugs after speculating that GDP growth on the mainland might be closer to 2%), researchers at American think tanks have freely offered estimates ranging from 2% to 4% (which, admittedly, would still put China well ahead of the US).

But as investors and economists once again cast a wary eye toward China as signs of flagging growth are once again threatening to sink the whole world into a recession, a team of researchers from the Brookings Institute has published a carefully researched paper detailing the exact mechanism by which authorities in Beijing inflate the country’s GDP figures, while estimating that China’s economy is roughly 12% smaller than the official figures would suggest. Brookings published the paper on Thursday, just two days after Party leaders at the annual National Party Congress lowered their economic growth forecast to between 6% and 6.5% of GDP.

Though the paper focused on the period between 2008 and 2016, it’s the latest evidence that China’s economic slowdown has been more severe than believed, and that the growth rate from last year – China’s worst since the early 1990s – might, in reality, be just under 6% (compared with 6.6%). According to Brookings, much of the manipulation in Chinese official government statistics takes place at the local level. In what the FT described as “a legacy of Maoist state planning”, authorities in Beijing hand down growth targets to local officials, who use it to goalseek the official statistics they hand back. “China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local governments to calculate GDP at the national level,” the study’s authors said.

Two staggering drunks lean on each other so they can make it to the bar and continue drinking.

• Deutsche Bank Begins Talks Over Merger With Rival Commerzbank (G.)

Deutsche Bank has begun tentative merger talks with rival Commerzbank, which would create Europe’s second biggest bank behind HSBC and fend off unwanted potential bidders such as French giant BNP Paribas. Reports in Germany’s Welt am Sonntag suggest that the banks have come under political pressure to consider a merger and avert a foreign takeover of Commerzbank, much the smaller partner in any deal. Deutsche is regarded as a bank of global importance, but has been plagued by three years of losses, boardroom battles, money laundering issues and its role as the biggest lender to the Trump business empire.

Despite Germany’s industrial dominance in Europe, it has only one bank in the continent’s top 20, and Berlin is understood to be keen to create a larger national champion. The combination of the two banks mean that Deutsche, currently fifth biggest, and Commerzbank, currently 23rd, will become Europe’s second biggest bank and only marginally behind HSBC. Deutsche Bank’s chief executive Christian Sewing was seen to be the main opponent of a merger, but investor pressure – Deutsche’ shares are trading at around €7.68 compared with €32 five years ago – is understood to have forced his hand. The talks are believed to be at a very early stage – “unofficial contacts in a very small group” according to Welt am Sonntag – but are likely to be welcomed by major shareholders.

This is getting too stupid. But who’s going to investigate the DOJ and FBI?

• Leaked Documents Reveal DOJ Protected Steele After FBI Shunning (KK)

Steele was cut off by the FBI for revealing his relationship with the Bureau to the media – but Ohr continued to pass information from Steele to his colleagues, regularly spoke to him via email and phone, and met up with him face-to-face on several occasions. Information watchdog Judicial Watch has released 339-pages of US Department of Justice records, revealing former Associate Deputy Attorney General Bruce Ohr remained in regular contact with ex-MI6 operative Christopher Steele after Steele’s status as a paid confidential informant was terminated by the FBI in November 2016.

“These smoking gun documents show Christopher Steele, a Hillary Clinton operative and anti-Trump foreign national, secretly worked hand-in-glove with the Justice Department on its illicit targeting of President Trump. These documents leave no doubt that for more than a year after the FBI fired Christopher Steele for leaking, and for some 10 months after Donald Trump was sworn in as president, Bruce Ohr continued to act as a go-between for Steele with the FBI and Justice Department. The anti-Trump Russia investigation, now run by Robert Mueller, has been thoroughly compromised by this insider corruption,” said Judicial Watch President Tom Fitton.

Whether an accurate appraisal or not, it’s clear from the assorted communications Ohr was determined to ensure Steele retained access to the Bureau, and this contact remained hidden from public view – for instance, when acting Attorney General Sally Yates was fired by Trump January 2017, Steele feared Ohr would be fired too, and texted him to express his “sympathy and support”. “If you end up out, I really need another contact point/number who is briefed. We can’t allow our guy to be forced to go back home. It would be disastrous all round, though his position right now looks stable. A million thanks,” Steele wrote. In response, Ohr assured the Orbis chief he could “certainly” give him an FBI contact “if it becomes necessary”.

On 6 March that year, Senator Chuck Grassley wrote to then-FBI Director James Comey, seeking clarity on the nature of Steele’s relationship with the FBI. The next day, Steele texted Ohr to say he was “very concerned” by the letter, and its “possible implications for our operations and sources…We need some reassurance…Really fundamental issues at stake here”. Days later, with Comey scheduled to testify before Congress, Steele told Ohr he was “a bit apprehensive” and hoped “important firewalls will hold”. On 24 March, Ohr and Steele discussed their “response” to the testimony, as he understood “an approach from the Senate Intelligence Committee” to Orbis was imminent.

On 26 October, Steele said he’s “very concerned” about documents the FBI intended to turn over to Congress about his work and “relationship with them”. “Can we have a word tomorrow please? Just seen a story in the media about the Bureau handing over docs to Congress…Peoples live may be engangered [sic],” he despaired.

Same as it ever was.

• How US Government and Media Spread Pro-War Propaganda (Greenwald)

[..] on February 23, when the narrative shifted radically in favor of those U.S. officials who want regime change operations in Venezuela. That’s because images were broadcast all over the world of trucks carrying humanitarian aid burning in Colombia on the Venezuela border. U.S. officials who have been agitating for a regime change war in Venezuela – Marco Rubio, John Bolton, Mike Pompeo, the head of USAid Mark Green – used Twitter to spread classic Fake News: they vehemently stated that the trucks were set on fire, on purpose, by President Nicolas Maduro’s forces. [..] on Saturday night, the New York Times published a detailed video and accompanying article proving that this entire story was a lie.

The humanitarian trucks were not set on fire by Maduro’s forces. They were set on fire by anti-Maduro protesters who threw a molotov cocktail that hit one of the trucks. And the NYT’s video traces how the lie spread: from U.S. officials who baselessly announced that Maduro burned them to media outlets that mindlessly repeated the lie. [..] While the NYT’s article and video are perfectly good and necessary journalism, the credit they are implicitly claiming for themselves for exposing this lie is totally undeserved. That’s because independent journalists – the kind who question rather than mindlessly repeat government claims and are therefore mocked and marginalized and kept off mainstream television – used exactly this same evidence on the day of the incident to debunk the lies being told by Rubio, Pompeo, Bolton and CNN.

On February 24, the day the lie spread, Max Blumenthal wrote from Venezuela, on the independent reporting Grayzone site, that “the claim was absurd on its face,” noting that he “personally witnessed tear gas canisters hit every kind of vehicle imaginable in the occupied Palestinian West Bank, and I have never seen a fire like the one that erupted on the Santander bridge.” He compiled substantial evidence strongly suggesting that the trucks were set ablaze by anti-Maduro protesters, including Bloomberg video showing them using Molotov cocktails, to express serious doubts about the mainstream narrative. On Twitter, in response to Marco Rubio’s lie, he wrote: “I did not see any Venezuelan government forces set fire to US aid trucks on the Colombian side of the border. And neither did you. Actually, the evidence so far is pointing in the other direction.”

Is this going to have the neocons clamor for war today, before everyone understands it?

• US “Gets Its Ass Handed To It” In World War III Simulations (ZH)

In simulated World War III scenarios, the U.S. continues to lose against Russia and China, two top war planners warned last week. “In our games, when we fight Russia and China, blue gets its ass handed to it” RAND analyst David Ochmanek said Thursday. RAND’s wargames show how US Armed Forces – colored blue on wargame maps – experience the most substantial losses in one scenario after another and still can’t thwart Russia or China – which predictably is red – from accomplishing their objectives: annihilating Western forces. “We lose a lot of people. We lose a lot of equipment. We usually fail to achieve our objective of preventing aggression by the adversary,” he warned.

In the next military conflict, which some believe may come as soon as the mid-2020s, all five battlefield domains: land, sea, air, space, and cyberspace, will be heavily contested, suggesting the U.S. could have a difficult time in achieving superiority as it has in prior conflicts. The simulated war games showed, the “red” aggressor force often destroys U.S. F-35 Lightning II stealth fighters on the runway, sends several Naval fleets to the depths, destroys US military bases, and through electronic warfare, takes control of critical military communication systems. In short, a gruesome, if simulated, annihilation of some of the most modern of US forces. “In every case I know of,” said Robert Work, a former deputy secretary of defense with years of wargaming experience, “the F-35 rules the sky when it’s in the sky, but it gets killed on the ground in large numbers.”

So, as Russia and China develop fifth-generation fighters and hypersonic missiles, “things that rely on sophisticated base infrastructures like runways and fuel tanks are going to have a hard time,” Ochmanek said. “Things that sail on the surface of the sea are going to have a hard time.” “That’s why the 2020 budget coming out next week retires the carrier USS Truman decades early and cuts two amphibious landing ships, as we’ve reported. It’s also why the Marine Corps is buying the jump-jet version of the F-35, which can take off and land from tiny, ad hoc airstrips, but how well they can maintain a high-tech aircraft in low-tech surroundings is an open question,” said Breaking Defense.

Love Robert, but talking about shale is interesting only when you include industry debt.

• Why The Shale Boom Left California Behind (Rapier)

Many people are unaware about California’s importance in the U.S. oil industry. In fact, 100 years ago California was the top oil producer in the U.S., responsible at one point for nearly 40% of U.S. oil production. California oil production rose throughout most of the 20th century, briefly eclipsing one million barrels per day in the early 1980s. Oil production began to decline there after peaking in 1985. The same pattern took place in many other states, and in fact was the case for the entire U.S., where oil production peaked in 1970, and then declined over the next 35 years. But the shale boom changed the trajectory of U.S. oil production.

Oil production that had fallen for decades reversed direction and began to surge about a decade ago. Almost every state with shale oil resources saw a similar surge in production. Since 2010, U.S. oil production has increased by 131%, with huge gains in oil production in the following states (among others): • North Dakota – up 634% • Colorado – up 508% • New Mexico – up 377% •Texas – up 330% • Oklahoma – up 238%. In fact, only three major oil-producing states have seen a decline in oil production since 2010: California, Louisiana, and Alaska. One of the graphics I created for my presentation shows the stark contrast between oil production in Texas and California as the shale boom unfolded.

During the 1980s and 1990s, oil production in Texas was declining faster than it was in California. Had that trajectory been maintained, Texas oil production may have fallen below California’s in about 2010. Instead, the shale boom has added nearly four million BPD of oil production in Texas. Millions of barrels were added in other states as well, and California began to slide down the ranks of leading oil producers. Just a few years ago California was still in 2nd place, but now it has slipped to 6th, behind Texas, North Dakota, New Mexico, Oklahoma, and Alaska.

“.. And They’re Hot Happy About It”. Not the Onion, but Newsweek.

• Elderly Americans Are Dying Without Getting To Read Mueller’s Report (NW)

As special counsel Robert Mueller’s investigation is reportedly coming to an end, elderly and sick Americans are trying to hold on to their lives so they can read the highly-anticipated report that has been nearly two years in the making. World War II veteran Mitchell Tendler—a man who survived numerous historic milestones, including the Korean War, Vietnam, Watergate and President BIll Clinton’s impeachment—fell sick on Dec. 29, at 93 years old, reported NPR. “I got a call at 11 o’clock. My mom said, ‘Well, Dad’s not feeling well—he really can’t stand,'” Tendler’s son, Walter, recalled. “Within a couple of hours they called 911 and got him into the ER because it wasn’t getting any better.”

Tendler survived two implantable defibrillators throughout his life. But while on his third, he started to fade. After he was provided painkillers by doctors, Tendler voiced his final thoughts. “It just was quiet for a little while,” Walter Tendler told the news outlet, “and then he just sits up in bed halfway and looks at me and he goes, ‘S***, I’m not going to see the Mueller report, am I?’ And that was really the last coherent thing that he said.” Richard Armstrong, a 94-year-old currently in hospice care in New Jersey, related to Tendler’s sentiments. “I know exactly how he feels. I feel the same way. I’ve been diagnosed with pancreatic cancer,” Armstrong told NPR.

“I was hoping to live to see the outcome of what I think it should be—justice. I’ll be surprised and disappointed if it isn’t.” After seeing Tendler’s words—shared on Twitter by Benjamin Wittes, a senior fellow at the Brookings Institution—Kristina Makansi, who lives in Arizona, thought about her mother who passed away at the age of 94 in January. “When I saw that tweet about the Mueller report and the old man on his deathbed, I thought, Oh my gosh, that’s the kind of thing that my mother would say,” she said. “I think she really wanted to see that justice was done… and that the investigation was allowed to proceed without any shenanigans and obstruction.”

Debt Rattle February 12 2019

Feb 122019

February 12, 2019 Posted by Raúl Ilargi Meijer at 11:20 am Finance Tagged with: Brexit, Deutsche, dick pic, EU, Fed, Green New Deal, insects, MAGA, shutdown, Trump, wall, Warren, Xi 5 Responses »

Vincent van Gogh On the outskirts of Paris 1887

• Global Insect Decline May See ‘Plague Of Pests’ (BBC)

• Complex, Dynamic Environmental Destabilisation (BBC)

• Politicians Are Complicit In The Killing Of Our Insects (G.)

• Should We Really Not Worry About The Fed’s Balance Sheet? (Roberts)

• Party Leaders Reach Deal To Avoid Fresh US Government Shutdown (AP)

• Warren’s Foreign Policy Shows She’s Missing Why Trump Was Elected (G.)

• Mistaken Futures (Kunstler)

• May To Ask MPs For Further Fortnight’s Grace In Brexit Talks (G.)

• Europeans Must Get Rid Of The Failing EU One Way Or Another (MW)

• “Insane” Deutsche Bank Drowning Under Soaring Funding Costs (ZH)

• Nearly A Fifth Of The EU’s Budget Goes On Livestock Farming (G.)

• China Has No Use For Democracy. It Needs A Strong Leader Like Xi (SCMP)

• History’s 10 Most Culturally Significant Dick Pic Scandals (Taibbi)

Roaches in a nuclear winter.

• Global Insect Decline May See ‘Plague Of Pests’ (BBC)

A scientific review of insect numbers suggests that 40% of species are undergoing “dramatic rates of decline” around the world. The study says that bees, ants and beetles are disappearing eight times faster than mammals, birds or reptiles. But researchers say that some species, such as houseflies and cockroaches, are likely to boom. The general insect decline is being caused by intensive agriculture, pesticides and climate change. Insects make up the majority of creatures that live on land, and provide key benefits to many other species, including humans. They provide food for birds, bats and small mammals; they pollinate around 75% of the crops in the world; they replenish soils and keep pest numbers in check.

Many other studies in recent years have shown that individual species of insects, such as bees, have suffered huge declines, particularly in developed economies. But this new paper takes a broader look. Published in the journal Biological Conservation, it reviews 73 existing studies from around the world published over the past 13 years. The researchers found that declines in almost all regions may lead to the extinction of 40% of insects over the next few decades. One-third of insect species are classed as Endangered. “The main factor is the loss of habitat, due to agricultural practices, urbanisation and deforestation,” lead author Dr Francisco Sánchez-Bayo, from the University of Sydney, told BBC News.

“Second is the increasing use of fertilisers and pesticides in agriculture worldwide and contamination with chemical pollutants of all kinds. Thirdly, we have biological factors, such as invasive species and pathogens; and fourthly, we have climate change, particularly in tropical areas where it is known to have a big impact.” [..] “Fast-breeding pest insects will probably thrive because of the warmer conditions, because many of their natural enemies, which breed more slowly, will disappear,” said Prof Dave Goulson from the University of Sussex who was not involved in the review. “It’s quite plausible that we might end up with plagues of small numbers of pest insects, but we will lose all the wonderful ones that we want, like bees and hoverflies and butterflies and dung beetles that do a great job of disposing of animal waste.” Prof Goulson said that some tough, adaptable, generalist species – like houseflies and cockroaches – seem to be able to live comfortably in a human-made environment and have evolved resistance to pesticides.

Nobody listened so far; why would they now?

• Complex, Dynamic Environmental Destabilisation (BBC)

• Topsoil is being lost 10 to 40 times faster than it is being replenished by natural processes • Since the mid-20th Century, 30% of the world’s arable land has become unproductive due to erosion • 95% of the Earth’s land areas could become degraded by 2050 • Since 2005, the number of floods has increased by a factor of 15, extreme temperature events by a factor of 20, and wildfires sevenfold • Vertebrate populations have fallen by an average of 60% since the 1970s, and insect numbers – vital for pollination – have declined even faster in some countries.

Scientists warn of a potentially deadly combination of factors. These include climate change, mass loss of species, topsoil erosion, forest felling and acidifying oceans. The report from the centre-left Institute for Public Policy Research says these factors are “driving a complex, dynamic process of environmental destabilisation that has reached critical levels. “This destabilisation is occurring at speeds unprecedented in human history and, in some cases, over billions of years.” The UK is described as one of the most nature-depleted countries in the world. Some 2.2 million tonnes of UK topsoil is eroded annually, and over 17% of arable land shows signs of erosion. Nearly 85% of fertile peat topsoil in East Anglia has been lost since 1850, with the remainder at risk of being lost over next 30–60 years. The IIPR says many scientists believe we have entered a new era of rapid environmental change.

The report warns: “We define this as the ‘age of environmental breakdown’ to better highlight the severity of the scale, pace and implications of environmental destabilisation resulting from aggregate human activity.” Simon Lewis, Professor of Global Change Science at University College London, told BBC News: “IPPR are right to say that environmental change is happening ever-faster and threatens to destabilise society. “Future problems with food supplies could cause price spikes that drive civil unrest, while increases in levels of migration can strain societies. “Both together could overload political institutions and global networks of trade. “This century will be marked by rapid social and environmental change – that is certain. What is less clear is if societies can make wise political choices to avoid disaster in the future.”

Written of course by a politician. Who thinks politicians can turn this around. Because they can do anything.

• Politicians Are Complicit In The Killing Of Our Insects (G.)

Most of us spend more time swatting away or avoiding wasps and moths than we do contemplating their importance to the web of life. But it is no exaggeration to say that the horrifying decline in the number of these creatures – the most widespread on Earth – is a barometer for the whole planet. The new global scientific review into the perilous condition of our insects reports that more than 40% of insect species are threatened with extinction while the mass of insects is declining by 2.5% a year. This catastrophic decline is a direct cause of the existential threat to other animals, insects being at the bottom of the chain and the primary food source. Since 1970, 60% of mammals, birds, fish and reptiles have been wiped out.

The review identifies a key driver towards this mass extinction: habitat loss and conversion to intensive agriculture with its associated use of pesticides. Given this is a manmade disaster, surely we are capable of tackling and reversing it? As a member of the European parliament’s agriculture committee, I regularly debate the use of pesticides in farming with my colleagues. I have lost count of the number of times I have begun meetings with what feels like a sermon on the Armageddon taking place in our countryside. I am always greeted with patient, patronising smiles from many of my fellow MEPs, before they go on to ignore the warnings and refuse to limit the use of pesticides in our fields.

Some of the members of this committee are themselves farmers who have grown increasingly dependent on powerful and toxic pesticides. But others have taken the agribusiness shilling and believe that their role in policymaking is simply to support the corporations that sell these poisons. And this is the nub of the issue. What might accurately be dubbed insectageddon is being driven by the agrichemicals industry. This situation is compounded by compliant politicians and policymakers who fall prey to lobbying pressure and then refuse to implement science-driven policy to protect wildlife.

What we should do is end the Fed. And replace it with markets.

• Should We Really Not Worry About The Fed’s Balance Sheet? (Roberts)

Bill Dudley, who is now a senior research scholar at Princeton University’s Center for Economic Policy Studies and previously served as president of the New York Fed and was vice-chairman of the Federal Open Market Committee, recently penned an interesting piece from Bloomberg stating: “Financial types have long had a preoccupation: What will the Federal Reserve do with all the fixed income securities it purchased to help the U.S. economy recover from the last recession? The Fed’s efforts to shrink its holdings have been blamed for various ills, including December’s stock-market swoon. And any new nuance of policy — such as last week’s statement on “balance sheet normalization” — is seen as a really big deal. I’m amazed and baffled by this. It gets much more attention than it deserves.”

[..] In his opening paragraph, Bill attempts to dismiss the linkage between the balance sheet and the financial markets. “Yes, it’s true that stock prices declined at a time when the Fed was allowing its holdings of Treasury and mortgage-backed securities to run off at a rate of up to $50 billion a month. But the balance sheet contraction had been underway for more than a year, without any modifications or mid-course corrections. Thus, this should have been fully discounted.” While this is a true statement, what Bill forgot to mention was that Global Central banks had stepped in to flood the system with liquidity. As you can see in the chart below, while the Fed had stopped expanding their balance sheet, everyone else went into over-drive.

The chart below shows the ECB’s balance sheet and trajectory. Yes, they are slowing “QE” but it is still growing currently.

Far from over.

• Party Leaders Reach Deal To Avoid Fresh US Government Shutdown (AP)

Democratic and Republican leaders announced late Monday that they had reached a deal to avoid a government shutdown when funding under a stopgap agreement expires at midnight on Friday. The proposal would require the signature of Donald Trump to avert a new shutdown. The agreement would allocate far less money for Trump’s border wall than the White House’s $5.7bn wish list, settling for a figure of nearly $1.4bn, according to congressional aides. The funding measure is through the fiscal year, which ends 30 September. The agreement means 55 miles of new fencing — constructed through existing designs such as metal slats instead of a concrete wall — but far less than the 215 miles the White House demanded in December. The fencing would be built in the Rio Grande Valley in Texas.

At a rally in El Paso, Texas, on Monday Trump said he had been informed about the committee’s progress. “Just so you know, we’re building the wall anyway”, he added. Negotiators have been trying to reach a deal to fund nine government departments that partially closed for 35 days in December and January. Trump and congressional Democrats agreed on 25 January to temporarily fund the departments and negotiate a funding solution by 8 February. Talks most recently broke down on Sunday, reportedly over a disagreement about the maximum number of undocumented immigrants who might be detained at any one time.

Warren is irrelevant.

• Warren’s Foreign Policy Shows She’s Missing Why Trump Was Elected (G.)

The United States, Warren says, has embarked on “a series of seemingly endless wars, engaging in conflicts with mistaken or uncertain objectives and no obvious path to completion”. It’s fine rhetoric but the obvious path to completion is merely to end the wars. And yet the Bush White House couldn’t or didn’t want to. And Obama vacillated and expanded to the point where bombing and killing was being pursued in almost a dozen countries when he left office. And as for Trump? He’s done little and he’s been publicly admonished by his own secretary of defense when he decided he wanted to end just one of those conflicts.

But “the United States”? Really? Other than Afghanistan after 9/11 – and that’s all – “the United States” didn’t embark on these wars. The national security community did. The government. Overtly, covertly, with high hopes or unwarranted self-confidence, they got their way. Who is the real culprit then? It isn’t Warren’s “elites”, the corporation, or Trump. It is Washington and its ability, indeed even its self-appointed duty, to stand in the way of anything that it sees as not in its interest.

She may not think it, but Warren is merely genuflecting before this deep state, declaring her allegiance to a “muscular military” and calling for “strong yet pragmatic security policies”. She of course offers a laundry list of things that must be preserved or strengthened that’s non-military – from technological superiority to diplomacy to strong alliances. And she decries the military and civilian policymakers who “seem [in]capable of defining success”. But in her innocence as to why we are stuck in seemingly endless wars she also seems oblivious to the fact that she is already capitulating to the very forces that ensure that we can’t change anything.

Will the Green New Deal Make America Great Again?

• Mistaken Futures (Kunstler)

The self-proclaimed socialists are actually seeing the world through a rear-view mirror. What they are really talking about is divvying up the previously-accumulated wealth, soon to be bygone. Entropy is having its wicked way with that wealth, first by transmogrifying it into ever more abstract forms, and then by dissipating it as waste all over the planet. In short, the next time socialism is enlisted as a tool for redistributing wealth, we will make the unhappy discovery that most of that wealth is gone. The process will be uncomfortably sharp and disorientating. The West especially will not know what hit it as it emergently self-reorganizes back into something that resembles the old-time feudalism.

We have a new kind of mass squalor in America: a great many people who have nothing to do, no means of support, and the flimsiest notions of purpose in life. The socialists have no answers for them. They will not be “retrained” in some imagined federal crusade to turn meth freaks into code-writers for Google. Something the analysts are calling “recession” is ploughing across the landscape like one of those darkly majestic dust-storms of the 1930s, only this time we won’t be able to re-fight anything like World War Two to get all the machines running again in the aftermath. Nor, of course, will the Make America Great Again fantasy work out for those waiting in the squalid ruins of the post-industrial rust-belt or the strip-mall wastelands of the Sunbelt.

Most of the beliefs and attitudes of the present day will be overturned with the demise of the industrial orgy, like the idea that humanity follows an unerring arc of progress, that men and women are interchangeable and can do exactly the same work, that society should not be hierarchical, that technology will rescue us, and that we can organize some political work-arounds to avoid the pain of universal contraction. There are no coherent ideas in the political arena just now. Our prospects are really too alarming. So, jump on-board the socialism ship and see if it makes you feel better to sail to the end of the earth. But mind the gap at the very edge. It’s a doozie.

And 2 more weeks after that etc. till the clock runs out.

• May To Ask MPs For Further Fortnight’s Grace In Brexit Talks (G.)

Theresa May hopes to convince the House of Commons on Tuesday to give her another fortnight’s grace to keep pushing for changes to the Irish backstop – despite the insistence of Michel Barnier that it is Britain that must compromise. With 45 days to go until Britain is due by law to leave the EU, with or without a deal, the prime minister will address MPs about progress in the Brexit talks, No 10 announced on Monday. She is unlikely to signal any shift towards a closer future relationship with the EU, after writing to Jeremy Corbyn to underline her continued objections to a customs union, and instead she will focus on the backstop.

“We are absolutely clear on this: we’re not considering Jeremy Corbyn’s customs proposals, we’re not considering any proposals to remain in the customs union. We must have our own, independent trade policy,” May’s spokesman said on Monday. May will stress her continued focus on the backstop, but the EU’s chief negotiator insisted on Monday there was no question of Brussels giving in to Downing Street’s demands. “We’re waiting for clarity and movement from the United Kingdom,” Barnier told reporters after talks in Luxembourg with the country’s prime minister, Xavier Bettel.

The EU has the exact same flaws as its member states, but in the latter the losers can get voted out.

• Europeans Must Get Rid Of The Failing EU One Way Or Another (MW)

Populism is sweeping Europe, because the European Union and its constituent governments have become as unresponsive as the 18th century aristocracies those replaced.The EU antecedent, the European Economic Community (1957) was created to prevent another World War by integrating the continent’s iron and steel industries and then its broader continental markets for goods, services, capital and labor. The process created a politically unaccountable bureaucracy, whose broad policy directions are set by consensus among the national heads of government and cabinet ministers. However, Brussels enjoys wide administrative discretion in supervising the customs union, agricultural and fisheries management, and national subsidies, anticompetitive practices, and other behavior that could undermine the “single market.”

Through a succession of treaties and agreements, national leaders “pooled sovereignty” to empower the European Commission to issue edicts that member states must directly obey or conform national laws and regulations in areas such as social policy and human rights, consumer protection and product standards, transportation, and immigration. European Court rulings have direct application in national courts, and 19 of the 28 states have ceded monetary policy to the European Central Bank by adopting the euro. To win votes, mainstream national politicians have endemically statist impulses, and hue to globalist views regarding the virtues of freer trade and more open immigration, regulatory responses to environmental challenges like climate change rather than mitigation, and impelling cultural diversity as opposed to preserving local cultures.

In Europe, national leaders have empowered the commission to impose the pain and constraints on private freedoms that such globalist policies require. Then they can point to Brussels to alibi they are just advancing a stronger European Union.

Deutsche is a wager gone horribly wrong.

• “Insane” Deutsche Bank Drowning Under Soaring Funding Costs (ZH)

Following years of dismal performance, uncovered attempts at market manipulation and fraudulent activities, and painful corporate reorganizations which its latest earnings report showed have “cut deeply into the muscle”, Deutsche Bank is a shadow of its former self, with its stock price trading just shy of all time lows. But an even bigger problem for Germany’s biggest lender is that it is now forced to pay the highest financing rates on the euro debt market for a leading international bank this year according to the FT, and also the highest rates among large banks to raise debt this year according to Bloomberg, in a further sign of the German lender’s uphill struggle to turn its operations around and reduce its funding costs.

As the FT first reported, followed promptly by Bloomberg, the bank raised eyebrows last week when it sold a total of €3.6BN in euro-denominated debt, paying 180 bps over the benchmarks for a two-year bond, a steep rate for short-term funding. Deutsche Bank also paid 230 bps over benchmarks for a senior seven-year bond that can absorb losses in a crisis. By comparison, French banking giant BNP Paribas SA last month offered 50 bps less for equally-ranked notes that mature one year later. More embarrassing, Deutsche Bank paid a higher rate than Spanish lender CaixaBank, which recently raised five-year bonds at 225bp.

In a latest note to clients, Corinna Dröse, a Frankfurt-based bond analyst at DZ Bank, said: “The high spreads reflect [Deutsche’s] high idiosyncratic risk, which is rooted in the lender’s chronic weakness in earnings.” “Deutsche has to pay significantly higher risk premiums than almost all other large European banks . . . [the] high spreads express severe doubts, mainly triggered by its poor revenue,” said Michael Hünseler, head of credit portfolio management at Assenagon. Intimately linked with the bank’s deteriorating fortunes – and stock price – investors are increasingly demanding that Deutsche Bank pay higher rates of return than even some of Europe’s “most troubled banks” as the firm grapples with a prolonged decline in revenue.

Finance chief James von Moltke said last year that the bank was caught in a “vicious circle” of declining revenue, sticky expenses, a lowered credit rating and rising funding costs. While the firm cut expenses, revenue and the price of funding remain a concern. “A key priority for us now is lowering our funding costs and improving our credit ratings,” von Moltke said during a call with fixed-income investors last week. “We must not compromise on the strength of our capital, funding, or liquidity, but we have to prove that we can generate long-term, sustainable profitability.”

It’s not about eating meat, it’s about industrial farming. All these scientists telling people what to eat are useless.

• Nearly A Fifth Of The EU’s Budget Goes On Livestock Farming (G.)

Nearly a fifth of the EU’s total budget – more than £24bn of taxpayer money – goes to support livestock farming across Europe, according to new research by Greenpeace. At a time when scientists are calling for significant reductions in meat consumption, the report’s authors say taxpayers’ money should be redirected away from grain-fed, industrial animal farming. Last month, the Eat-Lancet Commission of scientists called for a new plant-focused diet to help avoid dangerous levels of climate change and the destruction of wildlife. Such a diet would require cutting red meat consumption in Europe by 77%.

Public Health England’s dietary guidelines recommend that meat and dairy, including non-animal-based protein alternatives such as beans and pulses, should make up no more than our 20% of dietary intake. Yet, Europeans eat more than twice as much meat as national dietary authorities recommend, as well as twice the global average. “Adopting diets lower in meat and dairy would not only tackle health problems but would also reduce the pressure on land, freeing up more space for nature,” said the Greenpeace EU agriculture policy director Marco Contiero. [..] Researchers calculated that 125 million hectares (308 million acres) of land in Europe is used to graze livestock or produce feed – this includes more than 60% of arable land that could otherwise be used to grow food directly for human consumption.

China has no idea what democracy is. But it has a ruling class just like our countries.

• China Has No Use For Democracy. It Needs A Strong Leader Like Xi (SCMP)

Throughout my life, I have had the opportunity to meet nearly every Chinese leader since the 1930s (with the exception of Mao Zedong), including Chiang Kai-shek, Wang Jingwei and more contemporary figures such as Hu Jintao, Jiang Zemin and Xi. As individuals, they frequently came off as kind, caring and intelligent. From afar, as I watched them govern, I would view them in a different light, as dictators. This is the reality of leadership in China. Previously, emperors in China were said to rule because of their “Mandate of Heaven”. When Mao seized power, it was clear that he had won his position through revolution. Yet the selection of Xi, like the selection of his predecessors since Mao’s death in 1976, is cloaked in secrecy.

Even those in the US who question whether, and to what degree, Russian interference influenced the 2016 election will concede that, based on US law, Trump is a legally elected president. These results are publicly available, and have been analysed repeatedly by the media, politicians and the American public. But China lacks such luxuries. Its citizens have no official records to turn to for an explanation of why and how Xi was chosen. [..] Under Xi’s leadership, China has adopted a more aggressive stance internationally, imprisoned thousands of party members on corruption charges and removed constitutional limitations on presidential term limits. Amid these developments, the question of how Xi was chosen again comes to mind. The short answer is, we can only guess.

Why, why and why?

• History’s 10 Most Culturally Significant Dick Pic Scandals (Taibbi)

The AMI-Jeff Bezos scandal is set up to dominate headlines for a while. Who knows where it will lead? In the third world, an oligarch-president proxy war playing out in public like this usually presages a coup. If this were Thailand or Uruguay, bookies would already have odds on a Bezos-Mark-Zuckerberg-Sundar-Pichai junta being in power by May. This scandal will at least drag us through unprecedented legal and ethical conundrums. Can the president use the surveillance powers of the state to go after political enemies? Can a billionaire intelligence contractor and administrator of one of earth’s largest private data collections — including the so-called “Secret Region” cloud — fight back using his own surveillance trove through a newspaper he owns?

This story could blur the lines between public and private power to the point of meaninglessness. America could very well find its fate decided by a series of pre-dawn phone calls, after which we’d wake up to find Trump flying to Switzerland, Amazon lieutenants in the Joint Chiefs office and the presidency replaced by an executive board. At the center of all of this: a dick pic. Nothing could be more American than the fate of our democracy now hanging (!) on what Enquirer editor Dylan Howard euphemistically describes as a “below-the-belt selfie.”

Debt Rattle January 4 2019

Jan 042019

January 4, 2019 Posted by Raúl Ilargi Meijer at 10:24 am Finance Tagged with: Amazon, Apple, Brazil, Brexit, Democrats, Deutsche, House, impeachment, Monsanto, rainforest, Roundup, Tories, UBS 11 Responses »

Yasuhiro Ishimoto Untitled, Chicago 1950

• Congratulations! Apple Loses Record $463 Billion in Market Cap in Three Months (Mish)

• Apple Just Lost A Facebook (CNBC)

• Apple Suffers Its Biggest Single-Day Loss In 6 Years (CNBC)

• Why This Time Is Different (MooTrades)

• Democrats Introduce Impeachment Articles On 1st Day In The House (RT)

• Canada Says 13 Citizens Detained In China Since Huawei CFO’s Arrest (R.)

• UBS Chairman Pours Cold Water On Deutsche Bank Merger Talk (R.)

• Google Shifted $23 Billion To Tax Haven Bermuda In 2017 (R.)

• Over Half Of Tory Members Consider Quitting Party Over May’s Brexit Deal (BI)

• US Judge Limits Evidence In Trial Over Roundup Cancer Claims (R.)

• New Brazil President Bolsonaro Launches Assault On Amazon Rainforest (G.)

Losing half a trillion in 3 months should be no surprise now central banks have killed the negative feedback from a functioning market. It’ll be runaway wild swings till it is restored.

• Congratulations! Apple Loses Record $463 Billion in Market Cap in Three Months (Mish)

Apple set a record that will take a long time to beat. The first $ trillion company lost nearly half that in 3 months. On, August 2, Apple became the World’s First Trillion-Dollar Company at $207.05 per share. Hooray! On October 3, Apple had a peak market cap of about $1.138 trillion. Today, Apple’s market cap is about $675 billion. That’s a record market cap loss of $463 billion in three short months. Expect more stories similar to this, but this may be hard to top. Amazon has a chance but it needs a big disaster soon.

• more than double the size of Wells Fargo • more than three times the size of McDonald’s • more than five times the size of Costco • more than 10 times the size of Raytheon.

• Apple Just Lost A Facebook (CNBC)

In only three months, Apple has lost $452 billion in market capitalization, including tens of billions on Thursday as the tech giant’s stock sank further. Apple shares have fallen by 39.1 percent since Oct. 3, when the stock hit a 52-week high of $233.47 a share. With its market cap down to about $674 billion, those losses are larger than individual value of 496 members of the S&P 500 — including Facebook and J.P. Morgan. Microsoft, Amazon, Alphabet and Berkshire Hathaway are the only S&P 500 members with larger market caps than Apple’s loss since its recent high.

To put the Apple market value plunge in context, $446 billion is: • more than double the size of Wells Fargo • more than three times the size of McDonald’s • more than five times the size of Costco • more than 10 times the size of Raytheon. Apple gave a sudden warning to investors on Wednesday afternoon, lowering its fiscal first-quarter revenue guidance. Wall Street reacted, with one analyst saying this will represent Apple’s “biggest miss in years” and another saying the company’s announcement “raises more questions than answers.” Apple CEO Tim Cook’s letter to investors blamed a variety of factors for the guidance cut, including declining iPhone revenue and China’s weakening economy.

Only 6 years? That makes it sound cookie cutter.

• Apple Suffers Its Biggest Single-Day Loss In 6 Years (CNBC)

Apple stock cratered almost 10 percent Thursday, a day after slashing revenue guidance in a rare acknowledgement of waning sales. The stock ended trading at $142.19, its lowest price level since July 2017. The plunge makes for Apple’s worst day of trading since January 2013, and it extends a painful year-end trend for Apple into 2019. The stock, which once traded above $230 per share, shed 30 percent in the fourth quarter of 2018. Thursday’s losses push Apple’s market valuation below $700 billion and behind the market cap of Alphabet to become the fourth most valuable publicly traded U.S. company — down from the top spot just two months ago. The company has lost $450 billion in market value since its peak of about $1.1 trillion last year.

Hard not to think that people working in finance still can’t believe the industry doesn’t function. They keep trying to explain what happens, from inside their faulty models.

• Why This Time Is Different (MooTrades)

We have seen the last three bull markets catalyzed largely by loosening liquidity conditions during the bear markets that preceded them by central banks — in more and more of a globally coordinated fashion. This has led me to believe that the expansion of liquidity is the primary driver for consistent risk asset upward price revisions (aka bull markets). More than economic developments, earnings or political discourse. As a result it is crucial to realize that the ‘punch bowl’ of quantitative easing, the veritable liquidity spigot that juiced markets higher over the last 9.5 years, is not only running dry, but going in reverse (taking liquidity from markets). The impact of this reversal cannot overstated. It will be the primary catalyst that drives this bear market in equities lower. Only a reversal of tightening liquidity conditions will drive risk assets higher again.

Macro: • $1 of US GDP growth now costs $4 of debt, and is only growing as we push on the string of debt to borrow forward demand to today. • US now has $200 trillion of unfunded liabilities over the next 10 year period. • Debt monetization isn’t just important, it will become a necessity. Otherwise rates normalize and the party ends in a very bad way (insolvency and/or extreme austerity measures).

Everybody is getting ready for a fight. Just not one that would benefit their voters.

• Democrats Introduce Impeachment Articles On 1st Day In The House (RT)

Democrats are flexing their muscles as the incoming majority in the US House of Representatives, introducing articles of impeachment and even quixotic constitutional amendments even though they have no hope of passing. Rep. Brad Sherman (D-CA) introduced articles of impeachment on the first day of the 2019 Congress, starting with a resolution demanding President Donald Trump be impeached for “threatening, and then terminating” then-FBI Director James Comey in 2017. Reserving the option to introduce more articles later, Sherman told CNN he wanted to be able to “force the conversation on impeachment” when (if?) the Mueller report is released, “challenging” his Democratic colleagues who haven’t yet chosen to support Trump’s impeachment.

Sherman filed the exact same impeachment resolution in 2017 but could only muster one supporter, Rep. Al Green (D-TX), who later filed his own articles of impeachment. Rep. Rashida Tlaib (D-MI) didn’t even wait until she was seated as a congresswoman to go after the president’s job, publishing an op-ed on Thursday entitled “Now is the time to begin impeachment proceedings against President Trump.” “We already have overwhelming evidence that the president has committed impeachable offenses,” she wrote, accusing Trump of “abuse of power and abuse of the public trust” along with a laundry list of crimes. In person, she was even more direct, reportedly telling a MoveOn.org reception, “We’re gonna impeach that mother**ker.”

Speaker of the House Nancy Pelosi has been noticeably reticent on impeachment, telling NBC on Thursday that Democrats should wait for the Mueller report before making any moves. “We shouldn’t be impeaching for a political reason, and we shouldn’t avoid impeachment for a political reason,” she said. Many rank-and-file Democrats ran on pro-impeachment platforms, but with polls indicating only a third of Americans support the idea and a two-thirds majority in the Republican-controlled Senate required to remove the president, they are unlikely to make any sudden moves.

“..there are almost 900 Canadians in a similar situation in the United States..”

• Canada Says 13 Citizens Detained In China Since Huawei CFO’s Arrest (R.)

Canada has said 13 of its citizens have been detained in China since the Huawei executive Meng Wanzhou was arrested in December in Vancouver at the request of the US. “At least” eight of those 13 have since been released, a Canadian government statement said, without disclosing what charges if any had been laid. Prior to Thursday’s statement, detention of only three Canadian citizens had been publicly disclosed. Diplomatic tensions between Canada and China have escalated since Meng’s arrest on 1 December. The Canadian government has said several times it sees no explicit link between the arrest of Meng, the daughter of Huawei’s founder, and the detentions of Canadian citizens. But Beijing-based western diplomats and former Canadian diplomats have said they believe the detentions were a “tit-for-tat” reprisal by China.

Meng was released on a C$10m ($7.4m) bail on 11 December and is living in one of her two Vancouver homes as she fights extradition to the US. The 46-year-old executive must wear an ankle monitor and stay at home from 11pm to 6am. The 13 Canadians detained included Michael Kovrig, Michael Spavor and Sarah McIver, a Canadian government official said on Thursday. McIver, a teacher, has been released and returned to Canada. Kovrig and Spavor remain in custody. Canadian consular officials saw them once each in mid-December. Overall there are about 200 Canadians who have been detained in China for a variety of alleged infractions and continue to face on-going legal proceedings. “This number has remained relatively stable,” the official said. In comparison there are almost 900 Canadians in a similar situation in the United States, the official said.

Who’s going to save Deutsche? It’s far too big not to be saved. But it would drag down any other bank with it. Let the German government do it.

• UBS Chairman Pours Cold Water On Deutsche Bank Merger Talk (R.)

Swiss bank UBS is not looking to merge with any other bank, Chairman Axel Weber told the Tages-Anzeiger newspaper, dismissing speculation that UBS could join forces with Deutsche Bank. “There is a lot of talk in Europe and the United States about mergers but nothing happens. These are all simulation games,” he said in an interview published on Thursday. Asked specifically about whether UBS, the world’s largest wealth manager, was running simulations about Germany’s biggest lender, Weber said: “Every company has to think things over, but it makes little sense to consider mergers at group level now. These paralyze companies for years.

“UBS is much stronger today than before the financial crisis, but combining with another bank — no matter which — would be premature at this moment. We want to grow primarily organically and we surely have to be able to walk before we want to run.” Weber, a former Bundesbank chief who joined UBS in 2012, said he could imagine remaining in his post until 2022. Asked how long Chief Executive Sergio Ermotti might stay, he said UBS wanted an orderly leadership transition and was under no pressure to act while it ensured the right talent was in place.

The Dutch finance minister published a list of tax havens a few days ago. Holland wasn’t on it. These people don’t give a sh*t about their credibility.

• Google Shifted $23 Billion To Tax Haven Bermuda In 2017 (R.)

Google moved 19.9 billion euros ($22.7 billion) through a Dutch shell company to Bermuda in 2017, as part of an arrangement that allows it to reduce its foreign tax bill, according to documents filed at the Dutch Chamber of Commerce. The amount channeled through Google Netherlands Holdings BV was around 4 billion euros more than in 2016, the documents, filed on Dec. 21, showed. “We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” Google said in a statement. “Google, like other multinational companies, pays the vast majority of its corporate income tax in its home country, and we have paid a global effective tax rate of 26 percent over the last ten years.”

For more than a decade the arrangement has allowed Google owner Alphabet to enjoy an effective tax rate in the single digits on its non-U.S. profits, around a quarter the average tax rate in its overseas markets. The subsidiary in the Netherlands is used to shift revenue from royalties earned outside the United States to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax. The tax strategy, known as the “Double Irish, Dutch Sandwich”, is legal and allows Google to avoid triggering U.S. income taxes or European withholding taxes on the funds, which represent the bulk of its overseas profits.

“76% of Tory members said that warnings about no deal Brexit — like those on food & medicine — are “exaggerated or invented, and in reality leaving without a deal would not cause serious disruption.”

• Over Half Of Tory Members Consider Quitting Party Over May’s Brexit Deal (BI)

Conservative party members overwhelmingly want MPs to vote down Theresa May’s Brexit deal, with more than half saying they have even considered ripping up their membership over it, according to a new poll. A survey of 1,215 Tory party members published on Friday found that 59% of Conservative party members oppose the Withdrawal Agreement May has negotiated with the European Union, while just 38% support it. Among all Conservative party members, more than half (56%) said they had considered quitting the party over May’s deal, according to YouGov polling for leading academics at the ESRC-funded Party Members Project.

The findings will spook figures in Downing Street who had hoped that Conservative MPs would return from their constituencies over Christmas having been urged by party members to get behind May and her deal. The prime minister was forced to postpone a parliamentary vote on her deal after more than 100 of her MPs announced that they planned to oppose it. [..] The Tory party membership is particularly supportive of leaving the EU without a deal, despite the myriad warnings from ministers about the disruption it would cause across multiple aspects of life in the UK, including food and medicine. A whopping 76% of Tory members said that warnings about a no deal Brexit are “exaggerated or invented, and in reality leaving without a deal would not cause serious disruption.” Just 18% said the warnings were realistic.

The -legal- power of Monsanto should never be underestimated.

• US Judge Limits Evidence In Trial Over Roundup Cancer Claims (R.)

A federal judge overseeing lawsuits alleging Bayer’s glyphosate-based weed killer causes cancer has issued a ruling that could severely restrict evidence that the plaintiffs consider crucial to their cases. U.S. District Judge Vince Chhabria in San Francisco in an order on Thursday granted Bayer unit Monsanto’s request to split an upcoming trial into two phases. The order initially bars lawyers for plaintiff Edwin Hardeman from introducing evidence that the company allegedly attempted to influence regulators and manipulate public opinion.

Thursday’s order applies to Hardeman’s case, which is scheduled to go to trial on Feb. 25, and two other so-called bellwether trials which will help determine the range of damages and define settlement options for the rest of the 620 Roundup cases before Chhabria. But Hardeman’s lawyers contended that such evidence, including internal Monsanto documents, showed the company’s misconduct and were critical to California state court jury’s August 2018 decision to award $289 million in a similar case. The verdict sent Bayer shares tumbling though the award was later reduced to $78 million and is under appeal. Under Chhabria’s order, evidence of Monsanto’s alleged misconduct would be allowed only if glyphosate was found to have caused Hardeman’s cancer and the trial proceeded to a second phase to determine Bayer’s liability.

Time to cut all ties with Brazil.

• New Brazil President Bolsonaro Launches Assault On Amazon Rainforest (G.)

Hours after taking office, Brazil’s new president, Jair Bolsonaro, has launched an assault on environmental and Amazon protections with an executive order transferring the regulation and creation of new indigenous reserves to the agriculture ministry – which is controlled by the powerful agribusiness lobby. The move sparked outcry from indigenous leaders, who said it threatened their reserves, which make up about 13% of Brazilian territory, and marked a symbolic concession to farming interests at a time when deforestation is rising again. “There will be an increase in deforestation and violence against indigenous people,” said Dinaman Tuxá, the executive coordinator of the Articulation of Indigenous People of Brazil (Apib).

“Indigenous people are defenders and protectors of the environment.” Sonia Guajajara, an indigenous leader who stood as vice-presidential candidate for the Socialism and Freedom party (PSOL) tweeted her opposition. “The dismantling has already begun,” she posted on Tuesday. Previously, demarcation of indigenous reserves was controlled by the indigenous agency Funai, which has been moved from the justice ministry to a new ministry of women, family and human rights controlled by an evangelical pastor. The decision was included in an executive order which also gave Bolsonaro’s government secretary potentially far-reaching powers over non-governmental organizations working in Brazil.

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