Oct 082017
 
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Fred Lyon Barbary Coast 1950

 

A friend sent me a post from the DiEM25 website last week, entitled Critique of DiEM25 policy on immigrants and refugees. DiEM25 is a pan-European political movement of which former Greek finance minister Yanis Varoufakis is a co-founder.

I started writing some lines as a response to my friend. Then it became a bit more. Wouldn’t you know… And then it was a whole article. So here’s my comments to it first, and then the original by someone calling themselves ‘dross22′. Now, in case I haven’t made this sufficiently abundantly clear yet, in my view Yanis’ knowledge and intellect is probably far superior to mine, and I’m a fan. But…

I don’t mean to imply that the views in the comment posted at DiEM25 are those of Yanis, but I do think it’s good to point out that these views exist within the movement. Moreover, as I wrote a few days ago, Yanis himself also thinks the EU should become ‘a federal state’. And I don’t agree with that. In fact, I think that’s a sure-fire way to absolute mayhem. Catalonia is only the latest example of why that is. Greece is an obvious other.

 

From that post on the DiEM25 site (see full text below):

[..] .. local European nationalism must be eradicated by creating a common European state. But a progressive European state would inevitably require a sense of identity that, in true progressive spirit, is radically opposed to religion. It would be hypocrisy to exclude Islam. Pluralism of values is a weapon of the establishment and we have to do away with it. In a Europe that is green nobody can afford pluralism in regards to lifestyle choices.

That’s quite the hand- and mouthful. Nationalism must be eradicated and religion radically opposed. Yeah, that should get you elected… You don’t want Islam in Europe, and therefore you want to do away with Christianity too. “..a sense of identity that, in true progressive spirit, is radically opposed to religion.” That’s 2000 years of often deeply ingrained history and culture out the door and down the toilet. And don’t even get me started on statues. Don’t you dare.

Look, I‘m not a religious person, but I would never want to even try to take anyone’s faith away from them. That’s the Soviet Union, China. That’s not Europe. Nor do I see what’s wrong with pluralism, seems kind of Orwellian to me. “..local European nationalism must be eradicated by creating a common European state.”  Say what? Why? What kind of movement is this? That’s not thinking, that’s dogma. And not a very clever kind of it.

Pluralism (differences) is the essence and the beauty of Europe. Plus, because of its divergence in language, culture etc., forget about unifying the whole continent, if that was ever desirable. I know the author specifically narrows it down to pluralism of values and lifestyle choices, but the EU already has enough rules and laws that regulate the worst of that.

Moreover, Europe has bigger issues than ‘pluralism in lifestyle choices’. Europe is in very troubled economic times, even if the media won’t tell you that. Because of that it’s all oil on fire, pluralism, immigration, the lot. People that do have jobs have much shittier jobs (gig economy my donkey) than those who went before them. Much of the EU is mired in way over-leveraged mortgages and other household and state debt, it’s just that you wouldn’t know it to listen to politicians and media. 

And that’s without mentioning bank debt, corporate debt, non-performing loans. Greece is paying the price right now for the credit casino (the house always wins) run by French/German banks. Other countries will be too in the near future. As soon as interest rates go up, there’ll be a mushroom cloud on the financial horizon. And Draghi will have emptied all his guns when it happens, saving EU banks but not EU citizens.

If by values and lifestyle you mean only that Islam should not replace Christianity in Europe, I’m your man. But that doesn’t mean Christianity should be suppressed or obliterated because of this. What you do instead is make it clear that you can be muslim, but only in as far as what it teaches does not contradict various European laws. And you actively enforce that.

 

[..] .. there can be no doubt that our stance on the migrants is jeopardizing our electoral prospects and our ability to influence society.. [..] This Europe will certainly not put the migrants to good use or treat them well and this will lead them to open up further to the influence of Islamic radicalism with the usual consequences.

[..] The Islamic migrants and the minorities are rather insignificant pawns that are best sacrificed as our current political situation demands. The establishment sacrifices pawns, and even rooks for its own political ends. We have to do the same.

The language is nigh unpalatable. As for (im-)migrants, it is obvious that wanting to incorporate too many of them too fast can only lead to trouble. Apart from all other discussions about values etc. After the financial crisis, it’s Europe’s main problem today. Or perhaps it’s a toss-up between finance and politics.

Perhaps what’s an even bigger issue is that what Merkel says happens, does in the EU. In economics, and in politics, and on the migration question. There is no sovereignty left. No democracy. As I’ve written before, tell the French, or Italians, that they have no say left in their own country, that Berlin controls it all. And then wait for their response. They have not a clue. Nobody told them. They sure never signed up to be ruled by Germany. But they are.

Ergo: The EU continues to exist only by the grace of media deception. And that’s an awfully thin veneer. I don’t know the ins and outs of DiEM25, but these lines make me seasick. Prediction: It’ll all fall apart at the first serious challenge and/or debate. Too many differing views from too many different locations and languages, and not nearly sufficient critical thought. 

Love Yanis though. And love him for trying. But what he must have experienced is what we at the Automatic Earth did too in 2010/11/12. That is, when the Automatic Earth’s Nicole Foss spoke in numerous locations in Italy, and we’re very grateful to our friends all over the country to make it happen, we needed translators at every talk. What I mean is you can get the big ideas across, but the details will always fall by the wayside. And that is Europe. 

 

A common European state is therefore neither desirable nor practical. The model of the European Parliament, with more translators than members of parliament, is as wrong as it is overkill. The EU is a step too far, a bridge too far. It serves a centralization dream, and the politics and economics that come with it, but it doesn’t serve the European people. 

Catalunya is just one more example of that. Greece is still the main eyesore, but you just wait till Spanish tanks appear on Barcelona’s Ramblas and Brussels has nothing. Their official response is that the use of ‘Proportionate Force’ is fine, but if that’s how you label having police in full battle gear beat up grandmas, how can you condemn tanks in the streets? Where’s the dividing line?

The EU is a giant failure. Ironically, it has done a lot of good on issues like food standards -though it tends to produce far too much paperwork on everything-, but the essence is it has -predictably- fallen victim to its upper echelons’ power grabbing. EU leaders don’t give a hoot what Europeans think, the way the important posts are divided means they don’t have to. And in the end, Germany wins (old British soccer joke).

Berlin, the European Commission, the ECB, they’re actively killing the Union, democracy, and all the good that has come out of Brussels. There’s no stopping it. And then Yanis Varoufakis and DiEM25 come along and say they ‘must’ “.. eradicate local European nationalism by creating a common European state.” 

Sorry boyos, wrong time, wrong place. Europe today must find a way to function without being anywhere near a common state, because it won’t have one for a long time. Focusing on that common state can only lead to the opposite: trouble, battle, even war between the different and numerous nation states.

 

To repeat myself once again: centralization, like globalization, only works as long as people feel they economically profit from it. In the current global and European economy, they do not, no matter what any media or politician tell you. Therefore, the focus should be on countries working together, not on becoming one state (or fiscal union, banking union). It’s not going to work, it’s going to cause major trouble, including war.

Greece may have bent over and let Berlin screw it up its donkey, but not all countries will react that way. Watch Catalonia, Hungary, Poland. And then what can Brussels do? It doesn’t have an army. Germany has a feeble one, for good reasons. NATO? The Visograd nations, Hungary etc, have different ideas about issues like immigration than Brussels and Berlin do.

How do Merkel et al plan to force them to change their ideas? Or, come to think of it, why would they want to? What Europe should be doing, but isn’t, and what a movement like DiEM25 should actively propagate, but isn’t either, is an immediate end to the deliberate creation of utter chaos in Libya, Iraq, Syria. But the European arms industry makes too much money off that chaos.

If that doesn’t stop, immigrants will keep coming. And that can only lead to more chaos in Europe too. It’s not sufficient to say you want immigration to stop. You need to take a stand against the forces that make it happen, starting with the forces in your own countries and societies (this very much includes your governments).

If you don’t focus on the basic conditions that must be fulfilled to ‘save Europe’, you will not save it. Europe is in such a crisis, or crises rather, that talking about programs and ideas from comfortable chairs is no longer a real option. Europe is very much like the orchestra on the Titanic: it keeps playing as if there is no threat ahead. And you have to tell them to stop playing. That’s your job.

Talking about what so and so would like to see by 2025 is a waste of time. But yeah, it’s comfortable, and comforting, to do it with a group of like-minded souls who fool themselves into thinking they’re smart and doing a good job. But the problem is here, now, not in 2025. And if you don’t work to solve it now, today, 2025 won’t look anything like what you have in mind.

Europeans must put a halt to European companies making billions on arms sales and oil in North Africa and the Middle East. And since these companies are protected and supported by the current leadership in Brussels and all other EU capitals, these will have to go too. That should be the focus. All the rest is the orchestra continuing to play.

Europeans don’t want a federal EU state. They don’t want to be forced to give up their national indentities, and they don’t want to lose their religions. Cue REM.

 

 

Still, Yanis has excellent ideas. As I said, I’m a fan. The way he describes his concept of parallel payment systems in the latter part of this recent video is outstanding, if you ask me. It’s the idea he never got to put into practice in Greece.

 

 

 

Here’s dross22’s full comment:

Critique of DiEM25 policy on immigrants and refugees (from DiEM 25’s official forum)

In my humble opinion the liberal way we’re approaching the refugee issue is very hard to market to the European demos. If Europe were one country and if the political climate were different, we’d have the resources to deal with the matter in the decent way we propagate. But unfortunately, Europe is currently at an advanced stage of disintegration making any discussion of a federal European state idle talk. As you all know, our mission here at DiEM is to get Europe out of the mire the establishment has got it into and then proceed to make of it a federal state. All of our very sensible and very realistic proposals take into account the fact that we’re not where we’d like to be. Yet when it comes to the refugee issue, we propagate a treatment that assumes away the current state of Europe.

Germany’s periphery and near east is divided between a collection of right-wing authoritarian states (Poland, Hungary, Ukraine etc.) and German industrial clients (Netherlands, Austria, Czech Republic, Slovakia, Slovenia, Estonia, Finland). In the Balkan South we have Brussels-Berlin protectorates (Kosovo, Montenegro, Bosnia-Herzegovina, Croatia), a debt colony and testing ground of the establishment’s policies (Greece) and states ruled by criminal syndicates (Albania, Serbia, Bulgaria). In the Romance countries (including France) we have states on the verge of fiscal breakdown, and in Germany and Brussels, the core of the establishment, we have a host of ruling incompetents that can only survive by feeding the monster they created in 2010. The feces of that monster feeds nationalistic flies and worms everywhere.

This is not a Europe that can handle the refugee issue. Indeed, all it has managed to do is let Germany bear the burden of adjustment, hence contributing significantly to AfD’s resonance in German society and forcing a desperate establishment to go as far as to bribe Turkey to stem the flow. The establishment did this hideous thing for tactical reasons and the case can be made that, in part, they owe their political survival to how they instrumentalize and adapt to the reality of xenophobia. We too have to understand quickly that racism is here to stay.

This unfortunate development is due to two things. It’s Islamist radicalism in the Mid-East and Africa, where the migrants come from, leading to terrorist activity within Europe, and a widespread plebian racism against which, given an environment where a strong left has been absent for many decades, no sufficient immune defenses exist. This is even more so in the illiberal states that succeeded the Soviet Empire. Notwithstanding their relative lack of migrants, the masses there are saturated with an almost autistic sense of nationalism.

This being the situation of the Europe we live in, there can be no doubt that our stance on the migrants is jeopardizing our electoral prospects and our ability to influence society. It’s beneficial to continue to expose the unethical deal that the establishment has with Turkey but other than that we must cease with our polemic. Instead I propose adopting a different, more sophisticated electoral strategy. We should point out that we’re not opposed to migration in principle. That in fact migration empowers, not weakens a society. But that the surrounding situation is not always the same. When European masses went to America, they were going to a place where employment was in high demand and that had familiar institutions. Today we have a Europe in the midst of an existential crisis where unemployment is high and set to rise.

This Europe will certainly not put the migrants to good use or treat them well and this will lead them to open up further to the influence of Islamic radicalism with the usual consequences. The strong patriarchalist values of the Islamic masses are a social impediment too. Even the most passionate activists must admit that those people don’t share our progressive values and breed too much, which is an ecologically unsustainable behavior. Their values can change only in a progressive environment that we don’t yet have. So what we can immediately do is subject all migrants to review and keep those with valuable skills and small families. The rest should be escorted to their countries of origin. Until Europe changes we shall enforce a moratorium on unqualified migration from those countries.

In a green Europe consumption is limited and breeding is not encouraged. Immigration from failed states, motivated (among other factors) by the desire to consume more and breed more with better safety, is undesirable. It is a liability that exposes us to the heavy ammunition from vast areas of a right-wing that, lest we forget, is stronger than we, the defeated left. In a progressive Europe, borders are internally shot down and Europeans can move and settle everywhere. But we still require European borders. There is no reason to burden ourselves with masses that are unaccustomed to the institutions of advanced societies, pose a lingering threat to our security and come with strong reactionary values. Instead of denying that fact we should point to the structural similarities of their ideology with that of the far right.

Migrants from areas within reach of the Islamist terrorist network pose a danger to our domestic security in three ways. First of all, by bringing their tribal and religious rivalries within our borders, secondly by their potential terrorist activity against European citizens and thirdly by helping our local nationalism gain ground. That local European nationalism must be eradicated by creating a common European state. But a progressive European state would inevitably require a sense of identity that, in true progressive spirit, is radically opposed to religion. It would be hypocrisy to exclude Islam. Pluralism of values is a weapon of the establishment and we have to do away with it. In a Europe that is green nobody can afford pluralism in regards to lifestyle choices. In a Europe where capital has no rights over the public, where it serves human potential and not unbridled, wasteful consumerism, there can be no pluralism.

We should give up on the migrants. I understand the sorrows of those people forced to flee their countries. But I am not willing to sacrifice the progressive future of Europe, to let bigots win and see them screw this place for good just for the sake of a small minority of people that don’t share our values and that, should the bigots win, will be subject to mass abuse anyway. The surest way to protect people with such backgrounds from the worst scenarios is to defeat the nationalist international. But this won’t be done unless we become psychologically detached from the minorities and from political correctness which are tools the establishment uses.

Let’s don’t forget that people with a migration background are vulnerable to racism too once they get comfortable. For example Turks in Germany vote en masse in favor of right-wing parties, even the AfD. I look up to people that have the remarkable courage to actively help those in need but I don’t believe this advances our movement at all. The Islamic migrants and the minorities are rather insignificant pawns that are best sacrificed as our current political situation demands. The establishment sacrifices pawns, and even rooks for its own political ends. We have to do the same.

I understand what co-founder Yanis said about the global wall and how borders divide the planet. But, in spite of their truth content, expressions such as ”borders are wounds on the face of the planet” are Soviet-era anti-colonialist slogans that today only serve to discredit those who use them. I admire someone who has the moral courage for such unorthodox opinions but these things sound crazy to the masses, especially today. There is much at stake with DiEM’s new deal and it is imperative to be more careful with our choice of words and positions. When Yanis was finance minister, he was careful not to be as open and frank as he would have been as an outsider. But he is no longer the outsider he was before 2015. None of us are. We are here to do politics and our actions and words should be subordinated to the pursuit of success in the political arena. Only success can materialize our agenda and defeat the monster of the establishment and the nationalist international.

 

 

And if you still don’t have enough then, read the Mises Institute’s Why Small States are Better.

In small states the government is closer to its citizens and by that better observable and controllable by the populace. Small states are more flexible and are better at reacting and adapting to challenges. Furthermore, there is a tendency that small states are more peaceful, because they can’t produce all goods and services by themselves and are thereby dependent on undisturbed trade.

 

 

Sep 112016
 
 September 11, 2016  Posted by at 9:28 am Finance Tagged with: , , , , , , , ,  6 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Harris&Ewing No caption, Washington DC 1915

Fed Dove Frets About Asset Bubbles, Wall Street Freaks Out (WS)
Hostage to a Bull Market (Jim Grant)
Leverage Soars to New Heights as Corporate Bond Deluge Rolls On (BBG)
On Nov. 8 Americans Decide To Either Rescue The Banks Or The Consumer (RI)
Wells Fargo Opened a Couple Million Fake Accounts (BBG)
It’s Business As Usual At Wells Fargo After Record Fine (MW)
New Zealand Prepares for the Party to End (Hickey)
Italy’s Renzi: At Last Hollande Is With Us, We Can Cause A Stir (Kath.)
Yanis Varoufakis’s Fantasy Politics (Jacobin)
Greek PM Tsipras Pledges Growth Amid Protests, Austerity Plans (AP)
EU Adds €115 Million In Aid For Migrants In Greece (DW)
Rescuers Bring 2,300 Migrants To Safety From Mediterranean on Saturday (R.)

 

 

There’s only one solution: take away from central banks their current powers to manipulate markets and economies.

Fed Dove Frets About Asset Bubbles, Wall Street Freaks Out (WS)

When Boston Fed governor Eric Rosengren, a voting member of the Federal Open Markets Committee, where monetary policy is decided, shared some aspects of his worries on Friday morning, markets tanked instantly. This came just after the ECB’s refusal to please the markets with promises of additional bond purchases. Instead, it stuck to the promises it had made previously. What a disappointment for markets running on nothing but central-bank mouth-wagging and money-printing! [..] In his speech, Rosengren discussed how the US economy has been “fairly resilient” and is near “reaching the Federal Reserve’s dual mandate from Congress (stable prices and maximum sustainable employment),” despite all the global headwinds, some of which he enumerated.

And so, he said, “a reasonable case can be made for continuing to pursue a gradual normalization of monetary policy.” Hence, rate increases, even though there were some “conflicting signals” in the economic data – “Clearly, the first two quarters did not live up to the forecasts,” he said. But “waiting too long to tighten” would expose the economy to two risks: First, the economy overheats – the belated tightening might “require more rapid increases in interest rates later in the cycle,” which will likely “result” in a recession, as it did “frequently” in the past. And second, asset bubbles – “that some asset markets become too ebullient.” He pointed at commercial real estate prices that “have risen quite rapidly over the past five years, particularly for multifamily properties.”

He added: Because commercial real estate is widely held in the portfolios of leveraged institutions, commercial real estate cycles can amplify the impact of economic downturns as financial institutions need to write down the value of loans and cut back on lending to maintain their capital ratios. And what a bubble it is. Over the past 12 months, prices have jumped only 6%, according to the Green Street Commercial Property Price Index, compared to the double-digit gains in prior years. “Equilibrium,” the report called it. The index has soared 107% from May 2009, and 26.5% from the peak of the totally crazy prior bubble that ended with such spectacular fireworks:

Read more …

Excellent from Grant, fully in line with Nicole’s series the past week.

Hostage to a Bull Market (Jim Grant)

If there is a curse between the covers of this thin, self-satisfied volume, it doesn’t have to do with cash, the title to the contrary notwithstanding. Freedom is rather the subject of the author’s malediction. He’s not against it in principle, only in practice. Ken Rogoff is a chaired Harvard economics professor, a one-time chief economist at the International Monetary Fund and (to boot) a chess grandmaster. He laid out his case against cash in a Saturday essay in this newspaper two weeks ago. By abolishing large-denomination bills, he said there, the government could strike a blow against sin and perfect the Federal Reserve’s control of interest rates. “The Curse of Cash,” the Rogoffian case in full, comes in two parts.

The first is a helping of monetary small bites: a little history (in which the gold standard gets the back of the author’s hand), a little central-banking practice, a little underground economy. It’s all in the service of showing where money came from and where it should be going. Terrorists traffic in cash, Mr. Rogoff observes. So do drug dealers and tax cheats. Good, compliant citizens rarely touch the $100 bills that constitute a sizable portion of the suspiciously immense volume of greenbacks outstanding—$4,200 per capita. Get rid of them is the author’s message. Then, again, one could legalize certain narcotics to discommode the drug dealers and adopt Steve Forbes’s flat tax to fill up the Treasury. Mr. Rogoff considers neither policy option. Government control is not only his preferred position.

It is the only position that seems to cross his mind. Which brings us to the business end of this production. Come the next recession, the book’s second part contends, the Fed should have the latitude to drive interest rates below zero. Mr. Rogoff lays the blame for America’s lamentable post-financial-crisis economic record not on the Obama administration’s suffocating tax and regulatory policies. The problem is rather the Fed’s inability to put its main interest rate, the federal funds rate, where it has never been before. In a deep recession, Mr. Rogoff proposes, the Fed ought not to stop cutting rates when it comes to zero. It should plunge right ahead, to minus 1%, minus 2%, minus 3% and so forth.

At one negative rate or another, the theory goes, despoiled bank depositors will stop saving and start spending. According to the worldview of the people who constitute what Mr. Rogoff fraternally calls the “policy community” (who elected them?), the spending will buttress “aggregate demand,” thus restore prosperity. You may doubt this. Mr. Rogoff himself sees difficulties. For him, the problem is cash. The ungrateful objects of the policy community’s statecraft will stockpile it. What would you do if your bank docked you, say, 3% a year for the privilege of holding your money? Why, you might convert your deposit into $100 bills, rent a safe deposit box and count yourself a shrewd investor. Hence the shooting war against currency.

Read more …

Historians will see us as too deluded to be true.

Leverage Soars to New Heights as Corporate Bond Deluge Rolls On (BBG)

Here’s a gut check for bond investors: corporate America is now more leveraged than ever. As this year’s corporate bond sales raced past $1 trillion on Wednesday – marking the fifth consecutive year of trillion-plus issuance – Morgan Stanley published a report Friday highlighting the growing strains on company balance sheets. The report, which estimated US companies’ collective debt at a record 2.4 times their collective earnings as of June, comes at a time of growing angst in global bond markets “The investment-grade ‘safe’ part of the market is becoming the most dangerous,” said Ashish Shah, CIO at AllianceBernstein. “There are so little returns out there. People are crowding into whatever they can.”

The debt metric, which doesn’t include banks and other financial companies, has climbed for five straight quarters as corporate profits decline at the same time companies load up on the increasingly cheap borrowings, Morgan Stanley analysts led by Adam Richmond wrote in a note to clients. In 2010, when the U.S. economy started recovering from the longest recession since the Great Depression, the ratio fell to 1.7 times. But what has the analysts uneasy isn’t just the speed at which leverage is climbing, but that it’s happening while the economy continues to grow. “Leverage tends to rise most in a recession – so the fact that it is this high in a ‘healthy economy’ is even more concerning,” the analysts wrote. In other words, they said, “mistakes are both more likely and more costly.”

The analysts’ assessment wasn’t totally worrisome. Years of near-zero interest rates have made it a lot easier to service those debt loads. The typical company’s annual earnings before interest, taxes, depreciation and amortization, known as Ebitda, is still almost 10 times its interest payments, Morgan Stanley’s data shows. Even that number has been declining, though, as earnings slump.

Read more …

“Today, consumption can only increase if someone hands out money. This money cannot be earned by companies, because consumers are unable to buy additional products.”

On Nov. 8 Americans Decide To Either Rescue The Banks Or The Consumer (RI)

Recently, the Fed decided not to change interest rates. Various reasons were given, but as we know, there are two “parties” in the US, one which favors monetary easing, and the other, tightening, and each has arguments for their case. Economists are divided on how to proceed. They disagree on precisely this: which economic policies can facilitate growth in our times? A brief look at the last 50 years provides some context. In the 70s, household incomes fell, most of all from 1972-73, and with them, spending. Starting in 1981, (Reaganomics!), spending began to rise, but income, hardly at all. Economic growth was due to increased consumption driven by a rise in household debt, and from 2008 on, in government debt. If we look at real disposable household income, it is the same today as it was in the early 60s.

Today, average household debt is 120% of annual income, whereas up until 1981 it never exceeded 65%. Note too, that in 1981, the discount rate was 19%, whereas today it is practically zero. Today, consumption can only increase if someone hands out money. This money cannot be earned by companies, because consumers are unable to buy additional products. So the only way is to increase debt. But lowering interest rates is impossible because they are already at zero. So there are two options: 1) print money and hand it out to people through the banks, with the understanding that this money will not be returned, or 2) restructure the existing debt, both personal and corporate, in the hopes that then people will start to consume.

In order to do this, interest rates would have to be raised to at least 3-4%, with the banks taking a major hit, because their customers cannot service their loans at those rates… Voila the collision of interests between the people and the banks. Unsurprisingly, the two US candidates disagree on this issue. Clinton is for option 1, i.e. more monetary easing (helping the banks), and Trump is for tightening (helping the people). The choice, of course, lies with the American voter.

Read more …

And nobody in management noticed a thing?

Wells Fargo Opened a Couple Million Fake Accounts (BBG)

[..] Wells Fargo was fined $185 million by various regulators for opening customer accounts without the customers’ permission, and that is bad, but there is also something almost heroic about it. There’s a standard story in most bank scandals, in which small groups of highly paid traders gleefully and ungrammatically conspire to rip-off customers and make a lot of money for themselves and their bank. This isn’t that. This looks more like a vast uprising of low-paid and ill-treated Wells Fargo employees against their bosses. The Consumer Financial Protection Bureau, which fined Wells Fargo $100 million, reports that about 5,300 employees have been fired for signing customers up for fake accounts since 2011. You’d have a tough time organizing 5,300 people into a conspiracy, which makes me think that this was less a conspiracy and more a spontaneous revolt.

Read more …

“Wells Fargo’s punishment comes to only 0.9% of the $22.9 billion that the bank earned last year..”

It’s Business As Usual At Wells Fargo After Record Fine (MW)

“The fine is a rounding error, and I don’t see any unintended consequences.” So said FBR analyst Paul Miller, describing the $185 million in fines and penalties, plus another $5 million for “customer remediation,” that Wells Fargo agreed to pay. Wells Fargo’s punishment comes to only 0.9% of the $22.9 billion that the bank earned last year. The Consumer Financial Protection Bureau (CFPB) found “widespread unlawful practices” at the third-largest U.S. bank by assets, including the opening of “hundreds of thousands” of accounts by employees without customers’ knowledge so employees could hit lofty sales targets. The fine was the largest levied since the CFPB’s founding in 2011.

Shares of San Francisco-based Wells Fargo fell 2.4% at the close of regular trading Friday, in line with the benchmark S&P 500 suggesting a low level of worry among investors. But there could be longer-term consequences for the bank’s reputation, as Federal Reserve Gov. Daniel Tarullo said during a CNBC interview that criminal charges against bank officers should be pursued. In Wells Fargo’s more than 6,000 retail branches, there has long been a culture of cross-selling as many products to customers as possible, which has been a big part of the bank’s success for decades, according to Marty Mosby, director of bank and equity strategies at Memphis, Tenn.-based broker-dealer Vining Sparks.

Read more …

I’m afraid the walls will have to come crumbling down before Kiwis accept their reality.

New Zealand Prepares for the Party to End (Hickey)

Should we all celebrate? Or sink into a great depression, or run for the nearest bunker? It’s hard to know how to react to the news Auckland’s average house value rose over $1 million in August. Auckland’s homeowners should in theory be celebrating their good fortune and voting for more of the same. Anyone who invested just over $53,000 of their money in 2011 to buy an average Auckland house with a 90% mortgage would now be sitting on tax-free capital gains of $486,000. Indeed, some are celebrating. New car sales are at record highs and spending in Auckland’s cafes, bars and restaurants is growing at double-digit rates. But it’s not the sort of go-for-broke debt-fuelled spending binge like the one we saw from 2002-07 when mortgage lending grew at an annual rate of 15%.

Mortgage debt grew 9% in the last year and most people think it has peaked, given the Reserve Bank’s latest restrictions on low deposit lending and a limit on debt to income multiples expected next year. Most Aucklanders don’t believe the manna from the great housing gods in the heavens is real enough to go withdrawing from their household ATMs, which is why the lending growth is relatively subdued. They can also feel in their bones that house prices at 10 times incomes are hyper≠ventilated, if not downright over-valued. New Zealand’s house-price-to-income multiple is the second-most-expensive relative to long run averages in the OECD (behind Belgium), and is the most expensive relative to rents in the OECD. That overvaluation has grown more than any other country in the OECD over the past six years.

This is not the sort of world champion tag we want. The $1m milestone is clearly a moment of despair for those young Aucklanders aspiring to own a home and start a family, particularly those whose parents were also renters. The combination of the price rises and the new LVR rules mean they face decades of saving for a deposit, let along being able to borrow the hundreds and hundreds of thousands to buy a home. All they can hope for is to win Lotto or to marry into a rich family. Another response is to hunker down and prepare for an implosion, which means saving madly to repay debt ahead of the housing market end-times and to diversify into other types of assets. This isn’t so much a celebration as a preparing for the party to be shut down.

Read more …

Really?

Italy’s Renzi: At Last Hollande Is With Us, We Can Cause A Stir (Kath.)

After the EU-Mediterranean summit in Athens on Friday, Italian Prime Minister Matteo Renzi expressed his satisfaction that French President Francois Hollande joined Alexis Tsipras’s initiative to form a front against austerity, Italy’s Corriere della Sera newspaper reported on Saturday. “At last, Hollande is with us, he got over his indecisiveness,” the paper quoted Renzi as saying. “Now we can take action.” On the flight back to Rome from Athens, Renzi appeared more than satisfied with the outcome of the summit, the paper reported. Renzi is said to have expressed relief, in comments to journalists, that Hollande signed a declaration embracing the policies that Italy and other southern European countries are promoting. “Now we are many, we can cause a stir,” Renzi is reported to have said, adding that he expected that “in the future the balance of power will change.”

Read more …

Much as I appreciate Yanis, I’m afraid I have to agree with much of this article. Reforming the EU is akin to reforming the mob. Why not put your energy into an organization that exists ‘parallel’ to the EU?

Yanis Varoufakis’s Fantasy Politics (Jacobin)

To his credit, Varoufakis at least recognizes that progressives “have no alternative” but a “head-on clash with the EU establishment,” since the European Union simply cannot be reformed to make it more democratic. But, he nonetheless insists, leftists must not support referenda to leave the EU. He offers two confused reasons for this. First, since exit referenda are “movements that have been devised and led primarily by the Right,” it is “unlikely” that joining them “will help the Left block their opponents’ political ascendancy.” This left defeatism is simply a self-fulfilling prophecy. If the Left refuses to lead exit referenda campaigns, of course the running will be left to the Right. And since the Left cannot convincingly defend the European Union, that leaves the Right to benefit.

Secondly, Varoufakis suggests that restoring national democracy will mean the end of the free movement of “workers.” “Given that the EU has established free movement, Lexit involves acquiescence to – if not actual support for – the reestablishment of national border controls, complete with barbed wire and armed guards.” Leaving aside the fact that left-wing leadership could theoretically persuade an electorate to accept open borders, this defence of the EU is simply bizarre. The European Union is very far from “borderless” (his word). It has created free movement not for “workers,” but for EU citizens, albeit limited for the citizens from accession countries.

But for non-EU workers, the European Union has established Fortress Europe: “barbed wire and armed guards” surround the continent, resulting in thousands of dead Africans and Asians in the Mediterranean Sea, and hundreds of thousands more languishing in squalid conditions in southeast Europe (including Varoufakis’s own home country, Greece) and Turkey. Moreover, the migration crisis has led to the restoration of “barbed wire and armed guards” across the continent. The idea that the European Union safeguards some sort of workers’ paradise of open borders against right-wing revanchism is ludicrous.

Read more …

Growth is a pipedream wih half your young people long term unemployed (which kills economic activity), wages as low as €100 a week, and pensions at €380 a month (both of which kill consumption).

Greek PM Tsipras Pledges Growth Amid Protests, Austerity Plans (AP)

Greece’s prime minister promised Saturday to deliver economic growth to a country hammered by years of economic hardship, as thousands gathered in protest at more planned austerity measures. About 15,000 protesters – beating drums, waving black flags and holding helium balloons bearing anti-government slogans – took part in demonstrations, marching through the center of Greece’s second-largest city, Thessaloniki, where Prime Minister Alexis Tsipras spoke on the state of the nation’s economy. “In five disastrous years … a quarter of our national wealth was destroyed, disposable income fell by 40%, unemployment soared to 28% and the level of poverty rose to 38%,” Tsipras told an audience of politicians and business leaders, referring to governments before he took office in early 2015.

“Now, all the indications are that this chapter is closing…Finally, we are going from a negative direction to a positive one.” As expected Tsipras said that €246 million, the proceeds of a recent auction of TV licenses, would go toward the “needs of the welfare state.” He promised 10,000 new jobs at state hospitals, thousands more free meals at schools, more kindergarten places and a program aimed at bringing back young Greeks who left the country due to the crisis. “Every last euro of the €246 million will go the people,” he said. He also heralded a 5-year action plan – “a realistic road map for the recovery of the economy and reduction of burdens” – that would bring about a “new Greece” by 2021 and promised to freeze the social security contributions of self-employed Greeks as well as reducing taxes in two years time.

Read more …

I had to read 5-6 versions of this, in order to find where the money would be going. Turns out, as I feared, that it goes not to the Greeks but to -mostly- international NGOs, who’ve done a far from stellar job. Give a fraction of the €115 million to Konstantinos and his O Allos Anthropos ‘movement’ that we support, and many more people get help. That this is still needed despite the 100s of millions of euros doled out to those NGOs says more than enough. International NGOs are way too expensive and inefficient. So please click that link and help The Automatic Earth help where it counts.

EU Adds €115 Million In Aid For Migrants In Greece (DW)

The European Union will provide humanitarian organizations in Greece an additional €115 million on top of €83 million from earlier this year, the European Commission said on Saturday. “The European Commission continues to put solidarity into action to better manage the refugee crisis, in close cooperation with the Greek Government,” Humanitarian Aid Commissioner Christos Stylianides said. “The new funding has the key aim to improve conditions for refugees in Greece, and make a difference ahead of the upcoming winter.”

About 60,000 refugees and migrants are stranded in Greece due to border closures implemented earlier this year in the Balkans. Rights organizations have documented poor conditions in overcrowded camps. The new funding will help improve existing shelters and build new ones, pay for a voucher system for migrants, and provide education and other support to unaccompanied minors. It will be channelled via humanitarian organizations. The EU’s emergency support aid is in addition to financial assistance given under other funding programmes.

Read more …

A routine day.

Rescuers Bring 2,300 Migrants To Safety From Mediterranean on Saturday (R.)

Rescuers pulled 2,300 migrants to safety on Saturday in 18 separate rescue operations in the Mediterranean coordinated by the Italian coast guard. A Spanish boat belonging to an EU naval force, an Irish navy vessel and boats of four non-governmental organizations were involved in the rescue operations, the coast guard said in a statement. It did not say where the migrants, who were traveling in 17 rubber vessel and one small boat, originally came from. Since moves to stop people crossing from Turkey to Greece, Europe’s worst migrant crisis since World War Two is now focused on Italy, where some 115,000 people had arrived by the end of August, according to the United Nations refugee agency UNHCR.

Read more …