Mar 222019
 


Margaret Bourke-White Coney Island 1952

 

EU Leaders Decide UK’s Fate Behind Closed Doors, Leave May Waiting (Ind.)
May’s Appeal Falls Flat As EU Seizes Control Of Brexit Date (G.)
Five Percent? EU Leaders Doubt May’s Brexit Vote Chances (R.)
Cabinet Ministers Believe Risk Of No-Deal Brexit Now ‘Very Real’ (G.)
Brexit: Hundreds Of Gagging Orders Taken Out By UK Government (Sky)
‘Survivability’ Of The EU Is A Serious Question: Stephen Roach (CNBC)
Indonesian Airline Garuda Cancels Order For 49 Boeing 737 Max 8 Jets (G.)
Australia Home Builders Start Laying Off Workers (ABC.au)
Top Oil Firms Spend Millions Lobbying To Block Climate Change Policies (G.)
How The Car Industry Hid The Truth About Diesel Emissions (G.)
US Cold Warriors Escalate Toward Actual War With Russia (Stephen Cohen)
Los Angeles Bans Monsanto’s Roundup (RT)

 

 

April 12 is the new March 29..

“I hope we can all agree that we are at the moment of decision,” Theresa May said at a press conference in the early hours of the morning.”

Meanwhile, there’s talk about April snap elections. More likely than a 2nd referendum.

EU Leaders Decide UK’s Fate Behind Closed Doors, Leave May Waiting (Ind.)

Theresa May was left waiting while European leaders decided the future of Brexit behind closed doors. The prime minister had hoped to be handed an extension of the Article 50 period until 30 June before making a statement from Brussels in the early evening. Instead, the 27 presidents and prime ministers were locked in talks long into the night after they tore up draft proposals and produced a complicated conditional plan. Diplomats in the room painted a disorientating picture of discussions, with proposals for shorter and longer deadlines made by different countries. EU leaders ultimately agreed that the UK could have an unconditional extension until 12 April, and a further extension until 22 May if MPs approved the withdrawal agreement next week.

The so-called “flextension” would also give the UK the option of a longer delay if needed, but only on the condition of deciding to join in European Parliament elections before April 12. One EU official said: “March 29th is over. As of tonight, April 12th is the new March 29th.” Speaking after the agreement was struck, European Council president Donald Tusk said Ms May “accepts the extension scenarios”. He added: “Frankly speaking I was really sad before our meeting – now I am much more optimistic.” European Commission president Jean-Claude Juncker added: “This closes and completes the full package. There’s no more we can give. We’re hopeful that the agreement will be adopted by the House of Commons.” “I hope we can all agree that we are at the moment of decision,” Theresa May said at a press conference in the early hours of the morning.

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The rope to hang herself with.

May’s Appeal Falls Flat As EU Seizes Control Of Brexit Date (G.)

The EU has handed Theresa May two weeks’ grace to devise an alternative Brexit plan if her deal falls next week after the prime minister failed to convince the bloc that she was capable of avoiding a no-deal Brexit. After a marathon late-night session of talks, the EU’s leaders ripped up May’s proposals and a new Brexit timeline was pushed on the prime minister to avoid the cliff-edge deadline of 29 March – next Friday. Under the deal agreed by May, Britain will now stay a member state until 12 April if the withdrawal agreement is rejected by MPs at the third time of asking. The government will be able to seek a longer extension during that period if it can both “indicate a way forward” and agree to hold European elections.

In the unlikely event that May does win the support of the Commons when the Brexit deal goes to MPs again on Tuesday, the UK will stay a member state until 22 May to allow necessary withdrawal legislation to be passed. “The 12 April is the new 29 March,” an EU official said. Donald Tusk, the European council president, told reporters in a late-night press conference that he had several meetings through the evening to secure May’s agreement. He said: “What this means in practice is that, until that date, all options will remain open, and the cliff-edge date will be delayed. The UK government will still have a choice of a deal, no-deal, a long extension or revoking article 50.” Asked how long an extension could be on offer, the European commission president, Jean-Claude Juncker, said: “Until the very end.”

[..] As their talks wound on, the EU moved towards the “flextension” delay. It was then put to May by Tusk shortly after 11pm Brussels time after eight hours of talks, with and without the prime minister. “What this model is designed for is to make it clear that no deal is not the EU’s choice, it is the UK’s choice,” a diplomatic source said. “The prime minister is braced for a long extension, but doesn’t want to take responsibility for it,” the source said. The EU had initially looked at solely offering an extension up until 22 May, the day before European elections would be held, on the condition May’s deal passed next week. But it was a lack of confidence in the prime minister following her latest performance in front of the leaders that forced the EU’s member states to act to shore up against a no-deal Brexit and allow the British parliament time to take control.

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May spoke for quite a long time, and had nothing new to say. She actually thinks she can win just because everyone’s too scared of a no-deal Brexit.

Five Percent? EU Leaders Doubt May’s Brexit Vote Chances (R.)

After British Prime Minister Theresa May reassured them she could win a crunch vote in parliament next week to ensure an orderly Brexit, EU leaders were left even more doubtful of her chances. Following more than an hour of explanations that with days left until Britain might crash out she could win over lawmakers who have twice rejected her EU withdrawal deal, May left the summit room on Thursday and the other 27 leaders conferred — finding a consensus that they were even less convinced than before, officials familiar with their discussions told Reuters.

French President Emmanuel Macron told the room that before coming to Brussels he had thought May had only a 10 percent chance of winning the vote. After listening to the prime minister, he said, he had cut his estimate — to five percent. To general assent, one person present said, summit chair Donald Tusk shot back that Macron was being “very optimistic”. After hours of discussion, the leaders agreed to delay Brexit beyond the deadline of next Friday — but possibly only to April 12 or into May, trying to shift responsibility for any chaotic no-deal outcome back to London from Brussels.

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They should simply all resign.

Cabinet Ministers Believe Risk Of No-Deal Brexit Now ‘Very Real’ (G.)

Cabinet ministers believe there is now a real risk of a no-deal Brexit, with sources close to them describing the mood in government as depressing and No 10 as “run by lunatics”. Senior members of the cabinet from both sides of the Brexit argument are understood to think the chances of the UK leaving without a deal have substantially increased after the prime minister set herself against a longer extension to article 50. One aide to a cabinet minister said No 10 was in “full-on bunker mode” and the prime minister’s speech from Downing Street showed “they have all taken leave of their senses”. Another soft Brexit cabinet source described the mood as “depressing” and said of no deal: “The risk is now very real.”

On the other side, one leave-supporting cabinet minister believes May has no intention of resigning if her deal fails to pass next Tuesday and that she would prefer to switch to a position of supporting no deal rather than allow a longer extension to article 50. They point to the fact that 63% of Conservative MPs opposed a delay to Brexit and opinion polls suggesting a shift in public opinion towards no deal. In this scenario, the prime minister could attempt another meaningful vote next Thursday in a high-stakes gamble that would challenge MPs to back her deal or face no deal at the last minute. On Thursday, Liz Truss, a Treasury minister who sits in cabinet, told the Sun that she did not believe the “plague of locusts stuff” around leaving without a deal, adding: “I believe No Deal is better than a long extension.”

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What secret activities are taking place? What role does the secret service play in them?

Brexit: Hundreds Of Gagging Orders Taken Out By UK Government (Sky)

Sky News can reveal that the government has taken out hundreds of gagging orders as part of its preparations for a no-deal Brexit. The orders, formerly known as non-disclosure agreements (NDAs), are legally binding contracts to stop confidential conversations being talked about in public. They are typically used to maintain secrecy around corporate deals or to protect intellectual property. However, we have discovered that the use of these NDAs has become prevalent across great swathes of the UK government. Using freedom of information requests, Sky News asked departments to reveal how many NDAs each had taken out as part of their preparations for Brexit. All responded, although not all of them actually answered the question.

The Department for Transport (DfT) told us it had 79 separate NDAs by the end of February. Of these, we understand that around 50 had been signed in the preceding three months, at an average of around four per week. Although the names of those involved have obviously not been made public, we understand that the DfT’s gagging orders involve hauliers, public transport companies, infrastructure operators and petrol retailers. Some told us they felt frustrated that a government “obsession with secrecy” had hindered constructive debate and exchange of information. [..] The Home Office refused to answer the question, saying that it would be too burdensome to research the answer. However, Sky News has since confirmed that the Home Office has taken out at least 100 gagging orders, simply in relation to ports. It is unclear how many gagging orders it has in relation to the rest of its work.

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Toxic cocktail.

‘Survivability’ Of The EU Is A Serious Question: Stephen Roach (CNBC)

As U.K. Prime Minister Theresa May presses on to take Britain out of the European Union, one leading economist raised questions about the viability of the single political and economic bloc. “You have to wonder about the future of the European Union itself … this is an imperfect union and the survivability of it is, I think, a serious question,” Stephen Roach, a senior fellow at Yale University, told CNBC’s Sri Jegarajah on Friday. Even before Brexit came about, the EU faced multiple challenges over the last decade, said Roach, who’s a former chairman of Morgan Stanley Asia. Those challenges include a sovereign debt crisis in Greece and a standoff with Italian leaders over the country’s spending plans.

And with the U.K. — one of the largest European economies — planning to leave the bloc, it remains to be seen whether the EU has the ability to withstand more pressure coming from member states while still reeling from the shocks of the global financial crisis, said Roach. [..] “The idea that one-size-fits-all has been rejected repeatedly over the last 10 years,” he said. “In the early days there was some convergence of economic cycles, but then the asymmetric shocks in (2008 and 2009) have continued to ripple through the landscape and really challenge the idea that this is a cohesive economic zone that can be guided by one central bank,” he added.

[..] Even though the circumstances surrounding Brexit are still uncertain and pose a major risk within Europe, Roach said the event itself wouldn’t be enough to derail the global economy. What Brexit does accomplish, however, is to add to the “toxic cocktail” that threatens to hit growth, the economist said. “The downward growth pressure is in China, the weakness in Japan, the deceleration in the United States. In conjunction with uncertainties and potential shock coming out of Brexit, it’s certainly a potentially toxic cocktail for the global economy,” Roach said.

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More will follow. And we’ll see airlines and Boeing being sued for gross negligence and other crimes.

Indonesian Airline Garuda Cancels Order For 49 Boeing 737 Max 8 Jets (G.)

Indonesia’s national carrier Garuda has cancelled a multibillion-dollar order for 49 Boeing 737 Max 8 jets after two fatal crashes involving the plane, the company said, blaming passengers’ loss of trust in the aircraft. In what is thought to be the first formal cancellation for the model, Garuda spokesman Ikhsan Rosan said: “We have sent a letter to Boeing requesting that the order be cancelled. “The reason is that Garuda passengers in Indonesia have lost trust and no longer have the confidence” in the plane, he said, adding that the airline was awaiting a response from Boeing. As Boeing continued to work on a fix for the planes grounded by airlines across the world, reports on Friday suggested that the manufacturer would make it compulsory for airlines buying the aircraft to have one of two optional safety features installed.

The equipment alerts pilots of faulty information from key sensors. It will now be included on every 737 Max as part of changes that Boeing is rushing to complete on the jets by early next week, according to two people familiar with the changes. Airlines can decide whether to pay for upgrades to a standard plane, a common practice in the industry which enables manufacturers to charge extra. Garuda had already received one of the 737 MAX 8 planes, part of a 50-plane order worth $4.9bn at list prices when it was announced in 2014. Garuda is also talking to Boeing about whether or not to return the plane it has received, the spokesman told AFP.

[..] This month, Indonesia’s Lion Air said was postponing taking delivery of four new Boeing 737 Max 8 jets after an Ethiopian Airlines plane of the same model crashed minutes into a flight to Nairobi, killing all 157 people on board. That came after a Lion Air jet of the same model crashed in Indonesia in October, killing all 189 people on board.

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When recessions slowly creep up on you. They still can’t believe it: “the highest low point on record”.

Australia Home Builders Start Laying Off Workers (ABC.au)

Since building its first house in 1957, Zuccala Homes has seen its fair share of highs and lows in Melbourne’s residential construction market. With housing well and truly in a downturn, director Greg Zuccala said this was one of the worst he had seen. “Builders are just battening down the hatches and looking after their costs,” Mr Zuccala told ABC’s The Business. Melbourne house prices have fallen 9.6 per cent since their 2017 peak, and that is having big implications for home builders. “We do a bit of business with some investors, but mostly our bread and butter is owner occupiers.” That huge fall in demand for new home builds meant Mr Zuccala had to find savings.

To do that, he was forced to lay off four workers. “We’ve had to adjust things there to meet the market,” he said. “I think a lot of building companies at the moment find themselves in the same situation.” Residential construction is a $105 billion business in Australia and, as Australia’s fourth biggest sector, it accounts for 8 per cent of GDP. [..] But it is not all doom and gloom. While there is no denying Australia is in the midst of a downturn, and that is hurting the construction sector, the numbers are still good in a historical context. Nationally, new home building peaked in 2016 with about 230,000 new dwellings. “We see it bottoming out to about 175,000 over the next few years,” Mr Garrett forecast. “It’s worth emphasising, that 175,000 as a low point would still be the highest ever low point for new home building on record.”

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Best part of it is they receive that money in subsidies. Put at $5 trillion a year by one report.

Top Oil Firms Spend Millions Lobbying To Block Climate Change Policies (G.)

The largest five stock market listed oil and gas companies spend nearly $200m (£153m) a year lobbying to delay, control or block policies to tackle climate change, according to a new report. Chevron, BP and ExxonMobil were the main companies leading the field in direct lobbying to push against a climate policy to tackle global warming, the report said. Increasingly they are using social media to successfully push their agenda to weaken and oppose any meaningful legislation to tackle global warming. In the run-up to the US midterm elections last year $2m was spent on targeted Facebook and Instagram ads by global oil giants and their industry bodies, promoting the benefits of increased fossil fuel production, according to the report published on Friday by InfluenceMap.

Separately, BP donated $13m to a campaign, also supported by Chevron, that successfully stopped a carbon tax in Washington state – $1m of which was spent on social media ads, the research shows. Edward Collins, the report’s author, analysed corporate spending on lobbying, briefing and advertising, and assessed what proportion was dedicated to climate issues. He said: “Oil majors’ climate branding sounds increasingly hollow and their credibility is on the line. They publicly support climate action while lobbying against binding policy. They advocate low-carbon solutions but such investments are dwarfed by spending on expanding their fossil fuel business.”

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The ‘Dieselgate’ scandal was suppressed for years – while we should have been driving electric cars.

For Christ sake, ‘we’ shouldn’t have been driving any cars.

How The Car Industry Hid The Truth About Diesel Emissions (G.)

John German had not been looking to make a splash when he commissioned an examination of pollution from diesel cars back in 2013. The exam compared what came out of their exhausts, during the lab tests that were required by law, with emissions on the road under real driving conditions. German and his colleagues at the International Council on Clean Transportation (ICCT) in the US just wanted to tie up the last loose ends in a big report, and thought the research would give them something positive to say about diesel. They might even be able to offer tips to Europe from the US’s experience in getting the dirty fuel to run a little cleaner.

But that was not how it turned out. They chose a Volkswagen Jetta as their first test subject, and a VW Passat next. Regulators in California agreed to do the routine certification test for them, and the council hired researchers from West Virginia University to then drive the same cars through cities, along highways and into the mountains, using equipment that tests emissions straight from the cars’ exhausts.

It was clear right away that something was off. At first, German wondered if the cars might be malfunctioning, and he asked if a dashboard light had come on. That didn’t really make sense, though – the cars had just passed the California regulators’ test. His partners thought there might be a problem with their equipment, and they recalibrated it again and again. But the results didn’t change. Nitrogen oxide (NOx) pollution from the Jetta’s tailpipe was 15 times the allowed limit, shooting up to 35 times under some conditions; the Passat varied between five and 20 times the limit. German had been around the auto industry all his life, so he had a pretty good idea what was going on. This had to be a “defeat device” – a deliberate effort to evade the rules.

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“Words, as Russians say, are also deeds.”

US Cold Warriors Escalate Toward Actual War With Russia (Stephen Cohen)

[..] the preceding Cold War was driven by an intense ideological conflict between Soviet Communism and Western capitalism. Where is the ideological threat today, considering that post–Soviet Russia is also a capitalist country? In a perhaps unprecedented nearly 10,000-word manifesto from March 14 in the front news pages of (again) the Post, Robert Kagan provided the answer: “Today, authoritarianism has emerged as the greatest challenge facing the liberal democratic world—a profound ideological, as well as strategic, challenge.” That is, “authoritarianism” has replaced Soviet Communism in our times, with Russia again in the forefront.

The substance of Kagan’s “authoritarianism” as “an ideological force” is thin, barely enough for a short opinion article, often inconsistent and rarely empirical. It amounts to a batch of “strongman” leaders (prominently Putin, of course), despite their very different kinds of societies, political cultures, states, and histories, and despite their different nationalisms and ruling styles. Still, credit Kagan’s ambition to be the undisputed ideologist of the new American Cold War, though less the Post for taking the voluminous result so seriously. The forty-year Cold War often flirted with hot war, and that, too, seems to be on the agenda. Words, as Russians say, are also deeds. They have consequences, especially when uttered by people of standing in influential outlets.

[..] Histories of the forty-year US-Soviet Cold War tell us that both sides came to understand their mutual responsibility for the conflict, a recognition that created political space for the constant peace-keeping negotiations, including nuclear arms control agreements, often known as détente. But as I also chronicle in the book, today’s American Cold Warriors blame only Russia, specifically “Putin’s Russia,” leaving no room or incentive for rethinking any US policy toward post–Soviet Russia since 1991.

Still more, as I have also long pointed out, Moscow closely follows what is said and written in the United States about US-Russian relations. Here too words have consequences. On March 14, Russia’s National Security Council, headed by President Putin, officially raised its perception of American intentions toward Russia from “military dangers” (opasnosti) to direct “military threats” (ugrozy). In short, the Kremlin is preparing for war, however defensive its intention.

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Miami and LA. Who’s next?!

Los Angeles Bans Monsanto’s Roundup (RT)

Los Angeles county authorities have banned all use of notorious weed killer glyphosate – the herbicide better known by its Monsanto/Bayer trade name, Roundup – after a second court ruling linking it to a man’s cancer. “I am asking county departments to stop the use of this herbicide until public health and environmental professionals can determine if it’s safe for further use in L.A. County and explore alternative methods for vegetation management,” Kathryn Barger of the Los Angeles County Board of Supervisors said. The motion follows of a San Francisco court’s ruling that Roundup was a “substantial factor” in 70-year-old Edwin Hardeman’s non-Hodgkin’s lymphoma, which he developed after using the herbicide on his Sonoma property for decades.

The verdict was the second such unfavorable ruling for Germany’s Bayer, which was fortunate enough to acquire Monsanto just last year. With legal responsibility no longer falling on Americans’ shoulders, a California court awarded plaintiff Dewayne Johnson $289 million last August, ruling the popular herbicide also caused his non-Hodgkins lymphoma. The payout was later reduced to $78 million, but it opened the floodgates for upwards of 9,300 similar lawsuits against Bayer. While the supervisory board motion doesn’t mention the recent court verdicts, it does cite “a growing body of scientific study” suggesting glyphosate’s carcinogenicity and asks the Department of Public Works to look into possible alternatives and deliver a report with recommendations within 30 days.

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May 242017
 
 May 24, 2017  Posted by at 9:32 am Finance Tagged with: , , , , , , , , , ,  


Henri Matisse Nu Blue IV 1952

 

China Hit by First Moody’s Downgrade Since 1989 on Debt Risk (BBG)
Chinese Banks Are In Big Trouble (ZH)
American Exceptionalism – Population Growth vs Money Growth (Econimica)
Shiller: Stay In The Market, It ‘Could Go Up 50% From Here’ (CNBC)
German Police Search Daimler Facilities In Dieselgate Probe (DW)
Canada Must Deflate Its Housing Bubble (BBG Ed.)
The Violence of Austerity (OD)
IMF Wants More Realism In Eurozone Assumptions On Greece (R.)
QE Remains A Long Shot For Greece (K.)
In Germany, Syrian Man Wins Case Against Deportation To Greece (AP)
Elder Refugees Seeking Asylum in Europe Left Stranded in Greece – HRW (GR)
Tasmania Bans Super Trawlers From Its Waters (AAP)
Fossils Cast Doubt On Human Lineage Originating In Africa (R.)

 

 

Moody’s worries are the local government financing vehicles and state-owned enterprises, which are umbilically linked to the shadow banks.

You can’t run an entire economy from and in the shadows.

China Hit by First Moody’s Downgrade Since 1989 on Debt Risk (BBG)

Moody’s Investors Service cut its rating on China’s debt for the first time since 1989, challenging the view that the nation’s leadership will be able to rein in leverage while maintaining the pace of economic growth. Stocks and the yuan slipped in early trading after Moody’s reduced the rating to A1 from Aa3 on Wednesday, with markets paring losses in the afternoon. Moody’s cited the likelihood of a “material rise” in economy-wide debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative. It’s “absolutely groundless” for Moody’s to argue that local government financing vehicles and state-owned enterprise debt will swell the government’s contingent liabilities, according to a response released by the Ministry of Finance. The ratings company has underestimated the capability of the government to deepen reform and boost demand, the ministry said.

It wouldn’t be the first time a rating company was behind the curve, nor is such pushback unique – U.S. Treasury officials questioned the credibility of a 2011 downgrade from Standard & Poor’s. Still, the move underscores broader doubts over whether President Xi Jinping’s government can simultaneously cut excessive leverage and steady growth, all with a twice a decade reshuffle of top party posts looming later this year. “It is a psychological blow that China will not take kindly to and absolutely speaks to the rising financial pressures,” said Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen. That said, “it doesn’t matter much in the grand scheme of things because so much of Chinese debt is held by state or quasi-state actors and minimal amounts are international investors.”

Total outstanding credit climbed to about 260% of GDP by the end of 2016, up from 160% in 2008. At the same time, China’s external debt is low by international standards, at around 12% of gross domestic product, according to the IMF, meaning that a downgrade isn’t likely to be as disruptive as it would be for nations more reliant on international funding. Overseas institutions’ holdings of onshore bonds dropped to 830 billion yuan ($121 billion) as of the end of March, from 853 billion yuan three months earlier, People’s Bank of China data show. That’s less than 1.5% of 63.7 trillion yuan of outstanding notes. Moody’s last cut China’s sovereign rating in 1989, when it downgraded the sovereign to Baa2 from Baa1, according to spokesperson, Manvela Yeung. Moody’s lowered China’s credit-rating outlook to negative from stable in March 2016, citing rising debt, falling currency reserves and uncertainty over authorities’ ability to carry out reforms.

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Starting to be painful. At some point, Beijing total control will come up empty.

Chinese Banks Are In Big Trouble (ZH)

That’s not supposed to happen… With the crackdown on financial system leverage underway, Chinese banks (and securities firms) are in big trouble. As we noted previously, China’s bond curve is inverted, yields are surging, and Chinese regulatory decisions shutting down various shadow-banking pipelines has crushed securities firms’ stocks. However, as Bloomberg points out, as China’s deleveraging efforts cut into banks’ profit margins, rising base funding costs and interbank credit risk concerns have pushed banks’ cost of borrowing beyond the rate they charge customers for loans for the first time in history. As the chart shows, the one-year Shanghai Interbank Offered Rate has exceeded the Loan Prime Rate, the first time this has happened since the latter was introduced in 2013. “This is probably just the beginning” and interbank funding costs will rise further amid the drive to reduce leverage, said Xu Hanfei at China Merchants Securities in Shanghai.

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Wonderful from Chris Hamilton.

American Exceptionalism – Population Growth vs Money Growth (Econimica)

Since 1971, and the disconnection of the dollar from a finite gold backing, the value of money (the dollar) has been determined by it’s purchasing power versus the inflation of the assets to be purchased. Thus printing more money has not necessarily created “wealth” if the assets to be purchased are rising as fast or faster than the purchasing power of the “money”. The Fed touts it’s dual mandate of full employment and stable prices…but the result in prices; not so stable. The primary global asset purchasable only in US dollars, crude oil, has told a story of wildly gyrating prices. Since the end of Bretton Woods and the subsequent Congressionally dual mandated roles bestowed on the Fed…crude oil prices have gone bezerk, twice climbing nearly 10x’s within a decade. This is the opposite of stable (particularly compared to the price stability from WWII’s end until the Fed took over).

Soooo, theoretically the growth of “money” should be linked to the growth of the population, to ensure an adequate and stable money supply exists for the growing population. In a moment I’ll show you anything but a stable money supply. But first, the chart below shows the total 25-54yr/old US population, those employed among them, and the value in dollars of all publicly traded US stocks (represented by the Wilshire 5000). Something far beyond population growth or employment growth is pushing up the value of dollar based assets, gauging by US stock markets accelerating appreciation.

With that in mind, the chart below shows the growth of M3 money (the broadest measure of US “money”) and the broader 15-64yr/old US population since 1971. The money supply has grown in excess of 20x’s (2,000%) vs. the working age population (15-64yr/olds) which has grown less than 1x (nearly 70% increase).

This results in a rising ratio of “money” on a per capita of the core population basis, as the chart below details. The total amount of “money” rose from approximately $5 thousand dollars per working age adult to todays $65 thousand dollars per adult…an increase of 13x’s (1.300%).

The annual growth of the 15-64yr/old core US population peaked in 2003 and annual core population growth has decelerated by 90% since…while annual M3 growth has doubled over the same time period. [..] The chart below from 2000 into 2017 shows the change in both core population and M3 money supply, showing the year over year change on a monthly basis…and the current fall in core population growth will continue downward, likely turning negative at times over the next year (yet another first for America).

The final chart is the growth in M3 money supply per the growth in the adult, working age population. I’m not an economist or expert on much of anything…but that doesn’t look particularly good to me (something to do with “hyper-monetization” or some such thing). All I can say is the appearance of hockey sticks typically aren’t a good or stable sign but their appearance, just like those of black swans, has become the “new normal”.

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It could also fall by 50%.

Shiller: Stay In The Market, It ‘Could Go Up 50% From Here’ (CNBC)

Nobel Prize-winning economist Robert Shiller believes investors should continue to own stocks because the bull market may continue for years. CNBC’s Mike Santoli spoke with Shiller in an exclusive interview for CNBC PRO. Santoli asked Shiller about his market outlook. “I would say have some stocks in your portfolio. It could go up 50% from here. That’s what it did around 2000, after it reached this level, it went up another 50%. So I’m not against investing in the stock market when you consider the alternatives. But I think if one wants to diversify, US is high in its CAPE ratio. You can go practically anywhere else in the world and it’s lower,” Shiller said. “We could even set a new another record high in CAPE, that’s not a forecast.”

Shiller developed the “cyclically adjusted price-to-earnings ratio” (CAPE) market valuation measure, which is calculated using price divided by the index’s average historical 10-year earnings, adjusted for inflation. The economist’s research found future 10-year stock market returns were negatively correlated to high CAPE ratio readings on a relative basis. However, even though the current CAPE ratio is at 29, which is above the 17 historical average, the economist is not calling for a market decline. “I can see it as a real possibility that stocks prices and house prices would both keep going up for years, but I’m not forecasting that by any means,” he added.

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Dragging on.

German Police Search Daimler Facilities In Dieselgate Probe (DW)

German authorities have raided several locations associated with German premium carmaker Daimler. They acted on an initial suspicion of fraud involving misleading information about emission levels. Prosecutors in the southern German city of Stuttgart confirmed Tuesday they had searched about a dozen locations associated with the maker of Mercedes-Benz cars. The raids came as a result of the company being suspected of fraud and misleading advertising in relation to the selling of diesel-powered vehicles. Prosecutors have yet to provide further details on the raids. They only said the raids were carried out by well over 200 investigators across the country, with the focus of the search in progress on locations in the states of Baden-Württemberg, Lower Saxony, Saxony and the the city state of Berlin.

The carmaker said the investigations targeted “known and unknown employees of Daimler over suspicion of fraud related to the possible manipulation of exhaust gas emissions in passenger cars with diesel engines.” Daimler executives said they were not aware of any emissions scandal, adding that they were fully co-operating with investigators. The automaker had earlier agreed with Germany’s Federal Motor Transport Authority to “voluntarily” recall 247,000 vehicles to remove “potentially problematic technology,” which Daimler said had been installed to prevent engines from being damaged. Daimler has also been in the crosshairs of prosecutors in the US where it faces a number of class-action suits by car owners who have accused the company of not being accurate in stating emissions levels for a number of its diesel-powered models.

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You don’t say.

Canada Must Deflate Its Housing Bubble (BBG Ed.)

Canada’s housing market offers a case study in a contentious economic issue: If a central bank sees a bubble forming, should it act to deflate it? In this instance, the answer should be a resounding yes. A combination of foreign money, local speculation and abundant credit has driven Canadian house prices to levels that even government officials recognize cannot be sustained. In the Toronto area, for example, they were up 32% from a year earlier in April. David Rosenberg, an economist at Canadian investment firm Gluskin Sheff, notes that it would take a decline of more than 40% to restore the historical relationship between prices and household income. Granted, the bubble bears little resemblance to the U.S. subprime boom that triggered the global financial crisis.

Although one specialized lender, Home Capital, has had issues with fraudulent mortgage applications, regulation has largely kept out high-risk products. Homeowners haven’t been withdrawing a lot of equity, and can’t legally walk away from their debts like many Americans can. Banks aren’t sitting on the kinds of structured products that destroyed balance sheets in the U.S. Nearly all mortgage securities and a large portion of loans are guaranteed by the government. That said, the situation presents clear risks. As buyers stretch to afford homes, household debt has risen to 167% of disposable income – the highest among the Group of Seven industrialized nations. This is a serious vulnerability, and a big part of the rationale behind Canadian banks’ recent ratings downgrade. The more indebted people are, the more sensitive their spending becomes to changes in prices and interest rates, potentially allowing an otherwise small shock to result in a deep recession.

What to do? Administrative efforts to curb lending and tax foreign buyers have helped but haven’t solved the problem. That’s largely because extremely low interest rates are still giving people a big incentive to borrow. The Bank of Canada has held its target rate at 1% or lower since 2009, and at 0.5% since 2015, when it eased to counteract the effect of falling oil prices. That’s a very stimulative stance in a country where the neutral rate is estimated to be about 3% or higher. One can’t help but see a parallel with the low U.S. rates and the housing bubble of the early 2000s.

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The Violence of Austerity, edited by Vickie Cooper and David Whyte, is published by Pluto Press.

The Violence of Austerity (OD)

As we move towards the general election, we are paralyzed by what is probably the biggest single issue affecting ordinary people in the country: austerity. We are unable to fully understand both the economic madness of austerity and the true scale of the human cost and death toll that ‘fiscal discipline’ has unleashed. Since coming into power as Prime Minister, Theresa May has made a strategic decision not to use the word ‘austerity’. Instead she has adopted a more palatable language in a vain attempt to distance herself from the Cameron governments before her: “you call it austerity; I call it living within our means.” The experience of countless thousands of people is precisely the opposite: people are actively prevented from living within their means and are cut off from their most basic entitlement to: housing, food, health care, social care and general protection from hardship.

And people are dying as a result of these austerity effects. In February, Jeremy Corbyn made precisely this point when he observed the conclusions of one report that 30,000 people were dying unnecessarily every year because of the cuts to NHS and to local authority social care budgets. But this is really only the tip of the iceberg. The scale of disruption felt by people at the sharp end of these benefit reforms is enormous. Countless thousands of others have died prematurely following work capability assessments: approximately 10,000 according the government’s own figures. People are dying as a result of benefit sanction which has fatal impacts on existing health conditions, such as diabetes and heart disease. Austerity is about dismantling social protection. The crisis we face in social care is precipitated by cuts to local authority funding.

In the first 5 years of austerity, local authority budgets were cut by 40%, amounting to an estimated £18bn in care provision. A decade of cuts, when added up, also means that some key agencies that protect us, such as the Health and Safety Executive and the Environment Agency will have been decimated by up to 60% of funding cuts. Scaling back on an already paltry funding in these critical areas of regulation will lead to a rise in pollution related illness and disease and will fail to ensure people are safe at work. The economic folly is that austerity will cost society more in the long term. Local authorities are, for example, housing people in very expensive temporary accommodation because the government has disinvested in social housing.

The crisis in homelessness has paradoxically led to a £400 million rise in benefit payments. The future costs of disinvesting in young people will be seismic. Ending austerity would mean restoring our system of social protection and restoring the spending power of local authorities. It would mean, as all the political parties except the Conservatives recognise, taxing the rich, not punishing the poor in order to pay for a problem that has its roots in a global financial system that enriched the elite. It would also mean recognizing that the best way to prevent the worsening violence of austerity and to rebuild the economy is to re-invest in public sector jobs.

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The Greek government is being played for fools. Given how long this has been going on, one might suggest they are.

IMF Wants More Realism In Eurozone Assumptions On Greece (R.)

The IMF needs to see more realistic euro zone assumptions about Greece’s economy and more detail on planned debt relief measures to join a bailout, IMF’s European Department head Poul Thomsen said. Thomsen said the IMF and Greece’s euro zone lenders made progress in talks on Monday, but were not yet quite there. “We still think there is a need for more realism in assumptions and more specificity,” Thomsen said on Tuesday. The euro zone and the IMF agreed on Monday that Greece would have to keep a primary surplus – the budget balance before debt servicing – at 3.5% of GDP for five years after the bailout ends in 2018. But officials said the size of the surplus afterwards was still under discussion and there were also differences on economic growth assumptions, especially that forecasts used for debt relief plans spanned dozens of years. A group of euro zone countries led by Germany wants the IMF to join the Greek bailout, now handled by euro zone governments alone, to increase credibility. The IMF says that it will only join if Greece is granted debt relief.

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Greece will be declared eligible for inclusion in the ECB’s QE only AFTER the central bank says it will taper QE.

QE Remains A Long Shot For Greece (K.)

Greece is nowhere near a swift inclusion in the ECB’s QE program, according to senior officials at domestic banks. They argue that the issue of the national debt, and securing its sustainability in a way that would satisfy the IMF too, constitutes a particularly complex problem that may well be too hard to resolve by next month’s Eurogroup. They therefore consider Greece’s entry into the ECB’s bond-buying program this summer unlikely – instead expecting it to happen after the German election in the fall, either by the end of 2017 or in early 2018. Some go as far as expressing concern as to whether Greece will make it in at all before the program ends.

While there are more and more voices within the ECB speaking in favor of concluding the program earlier, Greece would like enjoy its benefits for more than two years. Greek banks are hoping a formula will be found at the next Eurogroup, on June 15, that will allow the disbursement of the next bailout tranche while putting off any decisions on the debt. The most optimistic observers note there is a chance of Greece entering QE between July and September and next month’s Eurogroup will be crucial to this end. The ECB argues that Greece’s inclusion in the bond-buying program requires the safeguarding of the debt’s sustainability.

In this context political statements or a mere reference to a series of measures will not suffice, as they will have to constitute legally binding pledges, which is highly unlikely before the German election. Goldman Sachs stated in an analysis that this country is not likely to fulfill the terms the ECB has set to join QE before the reduction of the monthly rate of bond purchases is activated. It also highlighted the high rate of bad loans as a point of concern that might also delay the decision for Greece to enjoy the benefits of QE. Similarly, Citi estimates that without an agreement on the easing of the debt, both inclusion in QE and a return to the bond markets would be quite difficult for Greece.

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In one and the same Union, laws and rights are widely divergent. That is not a union.

In Germany, Syrian Man Wins Case Against Deportation To Greece (AP)

Germany’s highest court has upheld a complaint by a Syrian whose asylum claim was rejected because he’d already been granted asylum in Greece. The man, whose name wasn’t released, arrived in Germany in 2015. He told officials he had already been granted protection in Greece but had been living on the street there and received no support from the Greek government. The man’s claim in Germany was rejected, meaning that he risked deportation to Greece. Germany’s Federal Constitutional Court said Tuesday that a lower court had wrongly failed to take account of a lack of welfare payments for refugees in Greece and to check whether there were assurances that the man would be given at least temporary housing. Judges sent the case back to the lower court to reconsider.

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Who cares about human rights declarations when elections are coming up?

Elder Refugees Seeking Asylum in Europe Left Stranded in Greece – HRW (GR)

There are many unnecessary delays and arbitrary barriers which keep older refugees and asylum seekers stranded in Greece, unable to reunite with family members who have legal status in the EU, Human Rights Watch said on Monday. According to their publication on Monday, EU: Older Refugees Stranded in Greece, one of the main issues that older refugees face is that family reunification does not focus on reuniting an entire family, but spouses and parents with minor children who are under the age of 18. Hundreds of older refugees and asylum seekers currently in Greece who have fled war zones and persecution are waiting to learn if they will be allowed to reunite with adult family members who have been granted residency in another EU country. Although EU law provides for family reunification for older people, lack of clarity or explicit provisions governing the process means that they can remain in limbo, far from their family for prolonged periods of time.

“These older people, already victims of conflict and persecution, hoped to find protection in the EU after treacherous journeys to Greece, and to be reunited with their family,” said Bethany Brown, researcher on older people’s rights at Human Rights Watch. “Now they don’t know if they will ever see their relatives again.” While several barriers are common to all asylum seekers, they can have a more significant impact on older people. Older people have been shown, in some contexts, to have significantly higher rates of psychological distress than the general refugee population, and often suffer from health issues, injuries and violence during displacement, and frailty that can be exacerbated by time and uncertainty.

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A little piece of news. But a good one.

Tasmania Bans Super Trawlers From Its Waters (AAP)

Tasmania’s parliament has passed laws banning super trawler fishing vessels from operating in the state’s waters. Legislation was given a green light on Wednesday, with Liberal government MP Mark Shelton confirming that any future attempts to allow freezer trawler vessels would require an act of parliament. “Our bill should give recreational fishers additional comfort that any future attempt to let super trawlers into the small pelagic fishery will be met with parliamentary hurdles,” he said.

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Graecopithecus freybergi.

Fossils Cast Doubt On Human Lineage Originating In Africa (R.)

Fossils from Greece and Bulgaria of an ape-like creature that lived 7.2 million years ago may fundamentally alter the understanding of human origins, casting doubt on the view that the evolutionary lineage that led to people arose in Africa. Scientists said on Monday the creature, known as Graecopithecus freybergi and known only from a lower jawbone and an isolated tooth, may be the oldest-known member of the human lineage that began after an evolutionary split from the line that led to chimpanzees, our closest cousins. The jawbone, which included teeth, was unearthed in 1944 in Athens. The premolar was found in south-central Bulgaria in 2009.

The researchers examined them using sophisticated new techniques including CT scans and established their age by dating the sedimentary rock in which they were found. They found dental root development that possessed telltale human characteristics not seen in chimps and their ancestors, placing Graecopithecus within the human lineage, known as hominins. Until now, the oldest-known hominin was Sahelanthropus, which lived 6-7 million years ago in Chad. The scientific consensus long has been that hominins originated in Africa. Considering the Graecopithecus fossils hail from the Balkans, the eastern Mediterranean may have given rise to the human lineage, the researchers said.

The findings in no way call into question that our species, Homo sapiens, first appeared in Africa about 200,000 years ago and later migrated to other parts of the world, the researchers said. “Our species evolved in Africa. Our lineage may not have,” said paleoanthropologist Madelaine Böhme of Germany’s University of Tübingen, adding that the findings “may change radically our understanding of early human/hominin origin.” Homo sapiens is only the latest in a long evolutionary hominin line that began with overwhelmingly ape-like species, followed by a succession of species acquiring more and more human traits over time.

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