Apr 272019
 
 April 27, 2019  Posted by at 8:56 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh Pietà (after Delacroix) 1889

 

The Big Mystery In The GDP Report – Where Did The Inventories Come From? (MW)
China Finds Dollar Hegemony Is A Tough Nut To Crack (WS)
Nearly 102 Million Americans Do Not Have A Job Right Now (Snyder)
Trump Makes Post-Mueller Vow To Release “Devastating” FISA Docs (ZH)
Blowback Is a Harsh Mistress (Kunstler)
Marina Butina Sentenced To 18 Months In Prison (ZH)
Labour Party In ‘Complete Meltdown’ Over Final Say (Ind.)
London Extinction Rebellion Mural is a Banksy (G.)
Greeks The Most Stressed People Worldwide – Gallup (K.)
Brazil Governed By ‘Lunatics’ And US ‘Lackeys’ – Lula (G.)
Ecuador Amazon Tribe Win First Victory Against Government, Oil Companies (AFP)

 

 

Industrial production and imports are both down. But inventories rise.

The Big Mystery In The GDP Report – Where Did The Inventories Come From? (MW)

It is a case that would make Sherlock Holmes proud. Growth in the first quarter smashed expectations, fueled in part by strong inventory building. According to the government, $32 billion of goods were added to inventories this quarter, or $128 billion annualized. This stockpiling of goods boosted first-quarter GDP growth by about 70 basis points and helped propel growth to a 3.2% annual rate, well above forecasts. The problem is that it is not at all obvious where these inventories came from. Goods have to come from somewhere, either produced by domestic firms or imported from abroad. The mystery is that both production and imports fell in the first three months of the year, according to government data.

“You can’t stockpile what you do not import or do not produce,” said Robert Brusca, chief economist at FAO Economics. The Fed reported last week that industrial output slipped at a 0.3% annual rate in the first quarter. And the government’s GDP report estimates that imports fell 3.7% in the first three months of the year. The one other explanation — that consumption fell sharply enough to leave businesses with unexpected unsold goods — also doesn’t fit the evidence, Brusca said. Consumption did not fall faster than industrial production or imports to generate any surplus, he said. To be sure, spending on consumer durable goods fell 5.3%, the biggest drop in 10 years. Business spending on equipment was also weak. “Any way you slice it, this GDP report…is an apparent mess,” he said.

Read more …

Nobody will want the yuan as long as Beijing decides what it’s worth.

China Finds Dollar Hegemony Is A Tough Nut To Crack (WS)

In terms of global reserve currency, the renminbi (RMB) has a share of only 1.9%, in fifth place, and barely ahead of the Canadian dollar, but miles behind the US dollar (61.7%) and the euro (20.7%). Over the past two years, the RMB has made only microscopic headway as a reserve currency. And as an international payments currency, the RMB has failed similarly to crack the co-hegemony of the dollar and the euro. “With more than 1,900 financial institutions now using the RMB for payments with China and Hong Kong, the internationalization of RMB carries great strategic significance” for banks and financial institutions, gushes SWIFT (Society for Worldwide Interbank Financial Telecommunication), which tracks the progress of the RMB as payment currency.


But in March 2019, the RMB had a minuscule share of merely 1.22% for international cross-border payments by value (cross-border payments from one Eurozone country to another Eurozone country are excluded). This minuscule share put the RMB in 8th position, just behind the Swiss franc:

Read more …

Civilian labor force participation rate lingers around 63%.

Nearly 102 Million Americans Do Not Have A Job Right Now (Snyder)

At this moment, we are told that only 6.2 million Americans are officially “unemployed”, and that sounds really, really good. But that is only half the story. What the mainstream media rarely mentions is the fact that the number of Americans categorized as “not in the labor force” has absolutely exploded since the last recession. Right now, that number is sitting at 95.577 million. When you add 6.2 million “officially unemployed” Americans to 95.577 million Americans that are categorized as “not in the labor force”, you get a grand total of almost 102 million Americans that do not have a job right now. If that sounds terrible to you, that is because it is terrible.

Yes, the U.S. population has been growing over the last decade, and that is part of the reason why the number of Americans “not in the labor force” has been growing. But overall, the truth is that the level of unemployment in this country is not that much different than it was during the last recession. John Williams of shadowstats.com tracks what the real employment figure would be if honest numbers were being used, and according to him the real rate of unemployment in the United States at the moment is 21.2 percent.

Just before the last recession, the civilian labor force participation rate was sitting at about 66 percent, and that was pretty good. But then the recession hit, and the civilian labor force participation rate fell below 63 percent, and it stayed between 62 percent and 63 percent for an extended period of time. So where are we today? At this moment, we are sitting at just 63.0 percent. Does that look like a recovery to you? Of course not.

Read more …

“I’m glad I waited because i thought that maybe they would obstruct if I did it early..”

Trump Makes Post-Mueller Vow To Release “Devastating” FISA Docs (ZH)

President Trump on Thursday renewed his vow to declassify a wide swath of “devastating” documents related to the Russia probe “and much more” – adding that he’s glad he waited until the Mueller investigation was complete. In a Thursday night phone interview on Fox News, host Sean Hannity asked “will you declassify the FISA applications, gang of 8 material, those 302s – what we call on this program ‘the bucket of five’?” To which Trump replied: “Yes, everything is going to be declassified – and more, much more than what you just mentioned. It will all be declassified, and I’m glad I waited because i thought that maybe they would obstruct if I did it early – and I think I was right. So I’m glad I waited, and now the Attorney General can take a look – a very strong look at whatever it is, but it will be declassified and more than what you just mentioned.”

Last September 17th, Trump vowed to release all text messages related to the Russia investigation with no redactions, as well as specific pages from the FBI’s FISA surveillance warrant application on former Trump campaign aide Carter Page, and interviews with the DOJ’s Bruce Ohr. nFour days later, however, Trump said over Twitter that the Justice Department – then headed by Attorney General Jeff Sessions (while the Russia investigation was headed up by Deputy AG Rod Rosenstein) – told him that it might have a negative impact on the Russia probe, and that key US allies had asked him not to release the documents.

“I met with the DOJ concerning the declassification of various UNREDACTED documents,” Trump tweeted. “They agreed to release them but stated that so doing may have a perceived negative impact on the Russia probe. Also, key Allies’ called to ask not to release. Therefore, the Inspector General has been asked to review these documents on an expedited basis. I believe he will move quickly on this (and hopefully other things which he is looking at). In the end I can always declassify if it proves necessary. Speed is very important to me – and everyone!”

That key ally turns out to have been the UK, according to the New York Times., which reported last September that their concern was over material which “includes direct references to conversations between American law enforcement officials and Christopher Steele,” the former MI6 agent who compiled the infamous “Steele Dossier.” We now know, of course, that Steele had extensive contact with Bruce and Nellie Ohr in 2016, while Bruce was the #4 official at the Obama DOJ, and Nellie was working for Fusion GPS – the opposition research firm hired by Hillary Clinton and the DNC to produce the infamous Steele Dossier.

Read more …

“Mr. Mueller himself may well be subject to prosecution for destroying evidence and, yes, obstruction of justice…”

Blowback Is a Harsh Mistress (Kunstler)

The Thinking Class behind the bad faith Resistance is about to be beaten within an inch of its place in history with an ugly-stick of reality as The Narrative finally comes to be fairly adjudicated. The Mueller Report was much more than just disappointing; it was a comically inept performance insofar as it managed to overlook the only incidence of collusion that actually took place: namely, the disinfo operation sponsored by the Hillary Clinton campaign in concert with the highest officials of the FBI, the Department of Justice, State Department personnel, the various Intel agencies, and the Obama White house for the purpose of interfering in the 2016 election.


It will turn out that the Mueller Investigation was just an extension of that felonious op, and Mr. Mueller himself may well be subject to prosecution for destroying evidence and, yes, obstruction of justice. John F. Kennedy once observed that “life is unfair.” It is unfair, perhaps, that a TV Reality Show huckster, clown, and rank outsider beat a highly credentialed veteran of the political establishment and that he flaunts his lack of decorum in the Oval Office. But it happens that he was on the side of the truth in the RussiaGate farrago and that happens to place him in a position of advantage going forward.

Read more …

The empire destroying lives to uphold a narrative. It no longer matters what these crazies say, and they know it. The public swallows anything thrown at them. Collusion, Assange, Butina, these are all fictional stories, but today they dictate the headlines and dominate the airwaves. Butina is accused of “Ambitious conspiracy”. When she was 22.

Marina Butina Sentenced To 18 Months In Prison (ZH)

Accused Russian spy Marina Butina has been sentenced to 18 months in prison on Friday after pleading guilty to acting as an unregistered agent of a foreign government, the Hill reports. Butina, who was arrested in 2018, pled guilty to the charges in late. 2018. She will only serve nine months, as the judge knocked nine months off her sentence for time served. Prosecutors had recommended that she serve an additional 18 months, while her lawyers had asked for no prison time and her immediate deportation. Butina wasn’t mentioned in the Mueller report. Before her sentencing hearing on Friday, Butina pleaded with the judge for leniency, RT reports.


“My parents discovered my arrest on the morning news they watch in their rural house in a Siberian village,” she told the court. “I love them dearly, but I harmed them morally and financially. They are suffering from all of that. I destroyed my own life as well. I came to the United States not under any orders, but with hope, and now nothing remains but penitence.” Butina arrived in the US on a student visa in 2016 and became active in pro-gun circles. During the investigation into Russian interference that followed Trump’s electoral triumph, she was accused of working with the Russian government to infiltrate the Republican Party and National Rifle Association. Moscow and President Putin have denied any connection with her.

Read more …

Corbyn still clings to his dreams of an independent left-wing Britain. But matters haven’t stood still for the past 3 years.

Labour Party In ‘Complete Meltdown’ Over Final Say (Ind.)

Jeremy Corbyn is under growing pressure over his party’s position on a second Brexit referendum after a leaked draft of a campaign leaflet included no mention of a Final Say vote. The Labour leader faced an angry backlash over the flyer, with MPs saying it had triggered “complete meltdown” in the party and left pro-EU MPs “utterly furious”. As the row deepened, 75 MPs and 14 MEPs wrote to Labour’s governing body to demand that “a clear commitment” to another referendum be included in the party’s manifesto for next month’s European parliament elections. Mr Corbyn’s top team is split on whether Labour should support a second referendum. Several senior shadow cabinet ministers want the party to support a public vote on any Brexit deal passed by parliament, but Mr Corbyn’s inner circle say he only supports a referendum on the government’s deal or to avoid a no-deal outcome.


Other shadow ministers oppose another public poll entirely. In their letter to the National Executive Committee (NEC), the MPs and MEPs said Labour had “a clear opportunity to win these elections” if it fully supports a Final Say vote. They wrote: “These elections are about the kind of Europe we want to live in, and we can’t make a convincing case in them without being clear about Brexit. Labour has already, rightly, backed a confirmatory public vote. The overwhelming majority of our members and voters support this, and it is the democratically established policy of the party. “Our members need to feel supported on doorsteps by a clear manifesto that marks us out as the only viable alternative to Nigel Farage’s Brexit Party.

Read more …

First, you just have a wall. The next day, you have a wall worth a million dollars.

London Extinction Rebellion Mural is a Banksy (G.)

A Banksy collector and expert believes a mural that appeared at Extinction Rebellion’s Marble Arch base overnight is an authentic piece by the Bristolian street artist. John Brandler, who owns a dozen pieces by Banksy is convinced the artwork – which features the slogan “From this moment despair ends and tactics begin” next to a young girl sitting on the ground holding an Extinction Rebellion logo – is an original because of its execution and theme. The art dealer and gallerist said: “I’m convinced about the one in London for two reasons: it’s a topic that he would support, and it’s a continuation of the Port Talbot piece that appeared in December 2018.

“The name in the corner is not important, the signature is the work. And this is a Banksy. It’s a wonderful statement and a beautiful piece.” The work appeared at the site which had been occupied by climate activists since protests began in the capital almost two weeks ago. A spokesperson for Westminster council confirmed the work was being investigated but had not been authenticated yet. “We’re aware of the possible Banksy which appeared in Marble Arch overnight. Our officers are looking into this,” he said. Banksy has not confirmed whether the painting is legitimate, and his press team did not respond to a request for comment.

Read more …

Gallup does really bad surveys.

Greeks The Most Stressed People Worldwide – Gallup (K.)

Greeks are the most stressed people in the world, according to the results of the Gallup 2019 Global Emotions report conducted on a sample of 150,000 people in 140 countries. According to the poll, which was conducted last year, 59 percent of Greeks said they “experienced a lot of stress yesterday,” putting Greece at the top of the chart for the third consecutive year. After Greece on the list are the Philippines, Tanzania and Albania. The same poll asked respondents about their negative experiences and participants from Chad, Nigeria, Sierra Leone, Iraq and Iran polled the highest. The survey also polled anger levels with Armenians topping the chart, followd by Iraqis, Iranians and Palestinians. The five countries recording the most positive experiences are Paraguay, Panama, Guatemala, Mexico and El Salvador.

Read more …

“Does anyone really think the US is going to favour Brazil?” Lula asked. “Americans think of themselves first, second, third, fourth, fifth – and if there’s any time left over they think about Americans.”

Brazil Governed By ‘Lunatics’ And US ‘Lackeys’ – Lula (G.)

Brazil is being governed by “a bunch of lunatics” and United States “lackeys” who have shattered its international reputation, former president Luiz Inácio Lula da Silva has claimed in his first interview since being jailed one year ago. Lula, Brazil’s president from 2003 and 2011, surrendered himself to police last April after being convicted on corruption charges he disputes. The 73-year-old leftist had been forbidden from giving face-to-face interviews until Friday, when two Brazilian journalists were allowed to visit him at his prison in southern Brazil following a lengthy legal battle.

Lula told them Brazil needed to undergo period of “self-reflection” after what he described as the “crazy” fake news and hate-filled election of far-right populist Jair Bolsonaro last year. “What we can’t have is this country being run governed by a bunch of lunatics. The country doesn’t deserve this and above all the people do not deserve this.” “Brazil is adrift – so far he doesn’t know what to do,” he added of Bolsonaro, who took office in January and has suffered a turbulent opening act in power. Lula said he profoundly regretted “the disaster that is taking place in this country” and criticised Brazil’s dramatic tack towards Washington under Bolsonaro.

“I’ve never seen a [Brazilian] president salute the American flag. I’ve never seen a president go around saying, ‘I love the United States, I love it!’” Lula said of Bolsonaro, who paints himself as a “tropical Trump” and last month travelled to the United States to tout his close relations with the US president. “You should love your mother, you should love your country. What’s all this about loving the United States? “Does anyone really think the US is going to favour Brazil?” Lula asked. “Americans think of themselves first, second, third, fourth, fifth – and if there’s any time left over they think about Americans. And these Brazilian lackeys go around thinking the Americans will do anything for us.”

Read more …

Funny that AFP headline said they won vs oil companies. But in reality they beat Lenin Moreno trying to sell them off to the US, like he did Assange. There is SOME decency left in Ecuador.

Ecuador Amazon Tribe Win First Victory Against Government, Oil Companies (AFP)

Ecuador’s Waorani indigenous tribe won their first victory Friday against big oil companies in a ruling that blocks the companies’ entry onto ancestral Amazonian lands for oil exploration activities. After two weeks of deliberations, a criminal court in Puyo, central Ecuador, accepted a Waorani bid for court protection in Pastaza province to stop an oil bidding process after the government moved to open up around 180,000 hectares for exploration. The lands are protected under Ecuador’s constitution that establishes the “inalienable, unseizable and indivisible” rights of indigenous people “to maintain possession of their ancestral lands and obtain their free adjudication.” Crucially, however, the wealth in the subsoil is owned by the state.


The constitution also enshrines the need for prior consultation on any plans to exploit the underground resources, given the probable environmental and cultural impacts on tribal communities. The state reached an agreement with the Waorani over oil exploration in 2012, but the tribe’s leaders say they were duped. The judges ordered the government to conduct a new consultation, applying standards set by the Inter-American Court of Human Rights, based in San Jose. The ruling “has created a significant precedent for the Amazon,” said Lina Maria Espinosa, attorney for the plaintiffs, outside court. “It has been demonstrated that there was no consultation and that the state violated the rights of this people, and therefore of other peoples.”

Read more …

 

 

Mar 082019
 
 March 8, 2019  Posted by at 10:39 am Finance Tagged with: , , , , , , , , , , , , , ,  


Pablo Picasso Visage 1928

 

Paul Manafort Sentenced To 47 Months In Prison (ZH)
ECB’s Surprise Policy Moves Send Shivers Through Global Stock Markets (MW)
US Dollar Hits 52-Week High on New ECB Stimulus (WS)
China Exports Fall 20.7% In February; Trade Data Much Weaker (CNBC)
China’s February Trade Surplus With US Narrows Sharply To $14.72 Billion (R.)
US Households See Biggest Decline In Net Worth Since Financial Crisis (CNBC)
Fed QE Unwind Reaches $501 Billion, Balance Sheet Falls Below $4 Trillion (WS)
Germany Won’t Ban Huawei, Says Ready To Oppose US Pressure (RT)
May Urges EU To Agree Brexit Backstop Changes (BBC)
Corbyn Backtracks On Final Say Referendum (Ind.)
British Life Expectancy Falls By Six Months (G.)
Default Or Exit: A Battle Between Italy And The EU Is Inevitable (OR)
Blackout Darkens Much Of Venezuela (AFP)
This Jew Tells Speaker Pelosi: “You May Well Prove Ilhan Omar Correct” (Cohen)
Chelsea Manning Risks Jail To Fight WikiLeaks Grand Jury (SP)

 

 

Shimon Prokupecz from the courtroom: “Judge tells the courtroom that Manafort is not being sentenced for anything related to the Special Counsel’s investigation into Russian interference. Ellis said “He is not before the court for anything having to do with colluding with the Russian government”

So what’s the Guardian headline? “Trump-Russia figure Paul Manafort jailed”.

Paul Manafort Sentenced To 47 Months In Prison (ZH)

In a surprise decision that stands as a slap in the face to Special Counsel Robert Mueller, Judge Ellis handed Paul Manafort a surprisingly light sentence of 47 months -or just under four years in prison – rejecting federal sentencing guidelines that recommended Manafort face up to 24 years in prison – a sentence that would have effectively condemned him to die in jail. Manafort was also fined $50,000 (equivalent to a few of Manafort’s bespoke suits) and ordered to pay restitution of $25 million. At this rate, Manafort might be out before Mueller finally wraps up his probe.

Early in the trial, Manafort appeared headed for a stiff sentence despite showing up in court in a wheelchair and green prison jumpsuit. Initially, after a lengthy review of Manafort’s charges, Ellis, who presided over Manafort’s August trial, said he would reject his lawyers’ request for leniency and accused the former Trump campaign executive of not being entirely forthcoming with the court about his finances. Furthermore, he refused to give him credit for accepting responsibility for his crimes, and also rejected his lawyers’ argument that the fact that Manafort hadn’t been found complicit in Russian collusion detracted from the charges for which he was convicted. When it came time for their statement, prosecutors told the judge Manafort offered little meaningful help during his 50 hours of meetings with investigators, and that the main reason he spent so much time with investigators was because he had lied.

But when it came his turn to speak, Manafort sounded genuinely contrite, telling the judge he felt “humiliated and ashamed” for what he’d done, and that the last two years had been “the most difficult years for my family and I.” “I appreciate the fairness of the trial you conducted,” he said. “My life is professionally and financially in shambles.” In the first indication that the sentence would be lighter than many had anticipated, the judge told Manafort and the court that he felt the federal sentencing guidelines were too stiff, and that Manafort had led an “otherwise blameless” life. Ellis recommended that Manafort – who is reportedly suffering from gout and other unspecified health issues – serve his sentence in a Cumberland, Maryland prison camp. He also credited him with nine months already served.

Read more …

The power of central banks is destructive in every possible sense.

ECB’s Surprise Policy Moves Send Shivers Through Global Stock Markets (MW)

Mario Draghi has been grumbling about the deleterious side effects of trade tensions and other geopolitical worries for months, but the ECB’s surprise policy moves in the face of a slowing global economy appeared to bring the danger home to investors. Stocks on Wall Street fell alongside European equities, underlining rising worries among investors that weakness in the global economy could prove to be a drag on U.S. growth. While analysts had expected the ECB president to strike a dovish tone, policy makers went much further than anticipated.

First, the ECB extended its so-called forward guidance on ultralow interest rates, saying it doesn’t expect to begin lifting them until at least early 2020. That’s compared to its earlier plan to leave them on hold at least through the end of this summer. Second, the ECB launched its third iteration of a program of cheap loans — known as targeted long-term refinancing operations, or TLTROs — to eurozone banks. It all came as ECB staff slashed their macroeconomic forecasts, including reducing the outlook for 2019 GDP growth to 1.1% from a previous 1.7% and signaling that inflation will take even longer to reach the central bank’s target of near but just below 2%. Price stability is the ECB’s sole policy mandate.

Draghi’s comments on the economy were getting the blame from analysts and investors for a decline in European and, in part, U.S. stocks. The pan-European Stoxx Europe index ended 0.4% lower, while on Wall Street, the S&P 500 and the Dow Jones Industrial Average ended with a loss of more than 200 points, or 0.8%, after declining 320 points at its session low. European government bonds rallied and the euro extended a decline versus the U.S. dollar.

Read more …

Draghi just scared friend and foe. Get rid of him, and his job. The damage is unthinkable.

US Dollar Hits 52-Week High on New ECB Stimulus (WS)

The Dollar Index (DXY), which tracks the dollar against the euro, yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc, and which is dominated by the euro, jumped 0.83% to 97.71 at the moment, hitting at least briefly its 52-week high, as the euro slumped 1.1% against the dollar, following the ECB’s announcement earlier today. But it wasn’t just a one-day event for the dollar, but an eight-day rally in an uptrend that started in early February. The real worry is the economy in the Eurozone – despite the fabulous stimulus the ECB has heaped on it for years, including a brutal negative-interest-rate policy and massive QE that has inflated the ECB’s balance sheet to over 40% of Eurozone GDP (by comparison, the Fed’s balance sheet is down to 19.5% of US GDP).

The Eurozone economy is deteriorating rapidly. In the post-meeting press conference today, ECB president Mario Draghi announced that the ECB had slashed its economic growth forecast for the Eurozone to 1.1% for 2019, a sharp cut from its forecast of 1.7% growth at the December meeting, and down from its 1.9% growth forecast last summer. “Incoming data have continued to be weak, in particular in the manufacturing sector, reflecting the slowdown in external demand compounded by some country and sector-specific factors,” the statement says.

Instead of admitting that its radical experimental monetary policies were a colossal error as the economic growth is now dwindling despite or because of the stimulus, and instead of gradually raising its policy rates above the rate of inflation to end its brutal “financial repression,” and instead of shedding the bonds on its balance sheet to push up long-term interest rates and force a restructuring of the bogged-down European economy so that it would liquidate or restructure the debts of zombie companies and lighten the load of restructured companies to allow them to have a fresh start – all of it at investors expense – the ECB does the opposite.

It promises new bank liquidity programs in the Eurozone which is already drowning in central-bank liquidity, to get banks to lend more to these zombie companies and keep them from restructuring their debts.

Read more …

When did that big Party meeting end?

China Exports Fall 20.7% In February; Trade Data Much Weaker (CNBC)

China on Friday reported worse than expected trade data for the month of February, customs data showed amid Beijing’s trade dispute with the U.S. Dollar-denominated exports plunged 20.7 percent for the month of February from a year ago, missing economists’ expectations of a 4.8 percent decline, according to a Reuters poll. January exports had risen 9.1 percent from a year ago. Dollar-denominated imports fell 5.2 percent in February from a year ago, missing economists’ forecast of a 1.4 percent fall. January imports had fallen 1.5 percent on-year. China’s February trade balance was also significantly weaker than expected at $4.12 billion. Economists polled by Reuters had expected the overall trade balance to come in at $26.38 billion.

The country’s trade balance in January had been $39.16 billion. China’s politically sensitive trade surplus with the U.S. narrowed sharply to $14.72 billion in February from $27.3 billion in January. Although the 20.7 percent decline in Chinese exports for the month of February was a “big number” and the market will be “clearly disappointed,” the negative number should not come as a surprise as investors have been expecting a slowdown both globally and in China, said Sarah Lien, director and client portfolio manager at Eastspring Investments. “There are a lot of headwinds; there’s a lot of moving parts in market,” Lien told CNBC.

Read more …

So no currency manipulation needed?

China’s February Trade Surplus With US Narrows Sharply To $14.72 Billion (R.)

China’s trade surplus with the United States narrowed to $14.72 billion in February, from $27.3 billion in January, customs data showed on Friday. For January-February combined, China’s trade surplus with the U.S. stood at $42.1 billion. China’s large trade surplus with the United States has long been a sore point with Washington, and is at the center of a bitter dispute between the two countries. In 2018, the two governments imposed tit-for-tariffs on goods worth hundreds of billions of dollars.

Read more …

Do note: what wealth there is, or is measured, sits in real estate and stocks, the very two biggest bubbles blown by the Fed. Net worth my donkey.

US Households See Biggest Decline In Net Worth Since Financial Crisis (CNBC)

Americans’ net worth fell at the highest level since the financial crisis in the fourth quarter of 2018 as sliding stock market prices ate into the household balance sheet. Net worth dropped to $104.3 trillion as the year came to an end, a decrease of $3.73 trillion from the third quarter, according to figures released Thursday by the Federal Reserve. The fall amounted to a drop of 3.4 percent. Much of the slide came due to Wall Street’s woes, as the stock market suffered a precipitous decline that started in October and briefly reached bear market status. Equities skidded as investors began to fear that the Fed would keep raising interest rates even as economic conditions began to deteriorate. By the time the market drop ended in late December, households saw $4.6 trillion worth of equity value deteriorate.

The decline was offset somewhat by a $300 billion increase in real estate value. The overall move was the second-highest quarterly dollar drop since the Fed began tracking the statistic. Overall, financial assets totaled just more than $85 trillion at the end of the year, while real estate value was $29.2 trillion. Household net worth has been rising strongly since the crisis and is up 73 percent since 2009. After suffering their worst Christmas Eve in history, stocks staged a turnaround and ultimately saw their best two-month start to a year since at least 1991. The Dow Jones Industrial Average is off about 1.6 percent in March though still up more than 9 percent year to date.

Read more …

Cui bono.

Fed QE Unwind Reaches $501 Billion, Balance Sheet Falls Below $4 Trillion (WS)

Over the next few months, the Fed is expected to announce its new plan for its balance sheet. Meanwhile, as we’re riveted to the edge of our seat, the old plan continues on autopilot, and February was one of the few months when the Treasury “roll-off,” as Chairman Jerome Powell likes to call it, hit the “caps.” In February, the Fed shed $57 billion in assets, according to the Fed’s balance sheet for the week ended March 6, released this afternoon. This slashed the assets on its balance sheet to $3,969 billion, the lowest since December 2013. Via its “balance sheet normalization,” the Fed has now shed $501 billion. And since peak-balance-sheet at the end of 2014, the Fed has shed $547 billion:

During peak-balance-sheet at the end of 2014, total assets ($4.52 trillion) amounted to 26% of GDP. Today’s assets amount to 19.4% of GDP. In the years before QE started, the balance sheet ran around 6% of GDP. By comparison, the ECB’s balance sheet assets now exceed 40% of GDP, and the Bank of Japan’s assets amount to 101% of GDP. February’s drop of $57 billion is larger than the scheduled QE unwind that is capped at $50 billion. But the Fed has other activities that impact the balance sheet. QE revolved around Treasury securities and mortgage-backed securities (MBS). And so does the QE unwind.

[..] On February 15, three issues of Treasury securities on the Fed’s balance sheet totaling $43.5 billion matured. On February 28, three issues totaling $12.5 billion matured. This brought the total for the month to $56 billion – above the cap of $30 billion. So the Fed reinvested $26 billion in new Treasury securities and allowed $30 billion of Treasuries to “rolled off” the balance sheet without replacement. This reduced the total balance of Treasury securities by $30 billion, to $2,175 billion, the lowest since December 2013 – and down by $290 billion since the QE unwind began. This has whittled down the Treasuries acquired during the infamous “QE Infinity” by about one-third:

Read more …

When it comes to things like 5G networks, which cross borders, the rest of Europe has little choice but to follow Germany.

Germany Won’t Ban Huawei, Says Ready To Oppose US Pressure (RT)

Germany does not intend to prevent Chinese tech giant Huawei from developing 5G networks, the country’s economy minister said, adding that the EU stands ready to defend its interests, should a trade war with Washington escalate. Berlin will not pre-emptively ban any specific companies from bidding for contracts to develop the country’s next generation 5G mobile network, despite immense pressure from the United States to ostracize Huawei, Peter Altmaier said on Thursday evening, during a debate on ZDF television. “No, we will not want to exclude any company,” he stressed, explaining that the government is capable of implementing enough safeguards to protect Germany’s future networks.

Ignoring Washington’s earnest ‘concerns’ that, through Huawei systems, the Chinese government is planning to spy on the entire world, German authorities produced a list of telecom security requirements on Wednesday. Part of the new German rules requires certifying any security-related components with Germany’s IT security agency. The 5G network “may only be sourced from trustworthy suppliers whose compliance with national security regulations and provisions for the secrecy of telecommunications and for data protection is assured,” Germany’s Economic Ministry and the Federal Network Agency said in their guidelines. Thus Huawei, which has recently sued the US government demanding to see any proof behind their claims, can participate in the tendering process if it meets the requirements set out by Berlin.

Read more …

3 weeks to D-Day. Cue blame game.

May Urges EU To Agree Brexit Backstop Changes (BBC)

Theresa May will urge the EU to help get her Brexit deal through the Commons by agreeing legally binding changes to the controversial backstop. On Friday, she will say the EU’s actions will “have a big impact on the outcome” when MPs vote on it next week. But Labour’s Sir Keir Starmer said it was now “clear” the PM “will not be able to deliver the changes she promised to her failed Brexit deal”. The EU says the UK must come forward with new ideas to break the deadlock. The UK is due to leave on 29 March.

Mrs May will visit workers in Grimsby, Lincolnshire, on Friday, days before the second “meaningful vote” in the Commons on the withdrawal deal she has negotiated with the EU. She will tell them: “Just as MPs will face a big choice next week, the EU has to make a choice too. “We are both participants in this process. It is in the European interest for the UK to leave with a deal. “We are working with them but the decisions that the European Union makes over the next few days will have a big impact on the outcome of the vote.”

Read more …

Has Corbyn done anything not wrong?

Corbyn Backtracks On Final Say Referendum (Ind.)

Labour has admitted it will not support a new referendum on Brexit in all circumstances, in a major blow to those in the party campaigning for one. Sources close to the Labour leadership confirmed that the party is not advocating a referendum on anything other than a “damaging Tory Brexit” and will not support one if Britain leaves the EU on terms that Labour backs. The Independent has learnt that the issue was the subject of a row between Mr Corbyn’s shadow ministers that pitted Keir Starmer and Emily Thornberry against Brexit-backing frontbenchers led by Jon Trickett. As it dawned on Labour Remainers today, a prominent MP who backs the People’s Vote campaign warned that a failure of the party to follow through on the pledge to back a new referendum would be seen as a “betrayal”.

It comes as deputy leader Tom Watson is in the process of forming a new “social democrat” group within the party, while eight MPs have quit the party, in large part over Brexit policy, to form the new Independent Group. Labour said last week that it would support a vote on any “credible” exit plan passed by parliament, and shadow ministers took to the airwaves to promise to demand a “confirmatory referendum” on “whatever deal may or may not pass through parliament”. However, sources have now told The Independent that the party will only support a referendum on a “damaging Tory Brexit” deal. Crucially, it is understood that Labour does not consider this to include the type of arrangement being proposed by former Conservative ministers Sir Oliver Letwin and Nick Boles, who Mr Corbyn held talks with yesterday. Their plan would keep the UK in the single market and a customs union with the EU.

Read more …

This should panic the country like nothing else. But instead all the talk is Brexit and they’re signaling the advantages for pension schemes of people dying younger.

British Life Expectancy Falls By Six Months (G.)

British adults’ life expectancy has been cut by six months in the biggest reduction in official longevity forecasts. The Institute and Faculty of Actuaries, which calculates life expectancy on behalf of the UK pension industry, declined to speculate on why longevity is deteriorating for men and women in England and Wales. Some analysts, however, blame austerity and cuts in NHS spending, others point to worsening obesity, dementia and diabetes. The institute said it now expects men aged 65 to die at 86.9 years, down from its previous estimate of 87.4 years, while women who reach 65 are likely to die at 89.2 years, down from 89.7 years. The actuaries said the evidence of slowing life expectancy that first emerged around 2010-11 is “a trend as opposed to a blip”. Falling longevity has accelerated.

Last year’s analysis cut forecasted life expectancy by two months. This year it took off another six months. Compared with 2015, projections for life expectancy are now down by 13 months for men and 14 months for women. Flat or falling longevity has major implications for health, finance and government policy. The state pension age is planned to rise to 68 in 2037, and the government has floated the idea of increasing it to 70 but will come under pressure to backtrack if longevity drops. [..] Pension companies have already begun to cash in on falling expectations. This week Legal & General said it was releasing £433m of the reserves it holds to pay future pensions because of the reductions in longevity expectations.

Read more …

European parliament elections in May. That will bring a lot into the open.

Default Or Exit: A Battle Between Italy And The EU Is Inevitable (OR)

There is a dual Italian crisis brewing in the European Union. On the one hand, it is a political, or even geopolitical, crisis. Italy is undermining the unity of the European Union; blocking the EU’s recognition of those behind the coup in Venezuela as the legitimate authority; preventing the expansion of sanctions against Russia; and even supporting the ‘yellow vest’ movement in France, which is arousing the anger of the French government. On the other hand, the crisis is economic in nature. Italy is once more sliding into a recession (economic growth was negative in the country); Italian banks are again facing financial problems; and the business media has already estimated that the Italian economic crisis could blow up the entire European banking system.

There is a strong possibility that the EU’s leaders will soon be faced with a choice: try to save Italy (and the whole of Europe) from yet another crisis or set an example by punishing the Italian government for the country’s independent economic and foreign policies. In turn, Italian Prime Minister Giuseppe Conte’s government will most likely have its own dilemma to deal with: bow down and sell its principles to get help from Brussels or go all out and regain Italian independence. The choice will not be easy and either decision will be painful. Neither ending to this Italian drama could really be called happy. As this headline in The Telegraph quite rightly notes: “Crisis brewing in Italy will lead to default, exit from the euro, or both.”

[..] To really understand the Italian problem, it should be borne in mind that, as a member of the European Union and the eurozone, Italy does not have full national sovereignty, especially when it comes to economic matters. It does not control the monetary policy of the European Central Bank and cannot even prepare a budget in line with the wishes of its own government or parliament without the risk of running into sanctions or fines from the European Commission. What’s more, Italian eurosceptic politicians suspect that the European Commission (in which the main roles belong to people hand-picked by Germany, France and the US) is punishing Italy and literally strangling its economy because of a political dislike of the Italian government’s geopolitical actions.

Read more …

If this happens more often it won’t be a coincidence.

Blackout Darkens Much Of Venezuela (AFP)

Most of Venezuela plunged into darkness on Thursday evening as a blackout served up more misery for people enduring an economic crisis that has fueled a potent challenge to President Nicolas Maduro’s rule. The socialist government quickly blamed the outage affecting 23 of the country’s 24 states on what it called sabotage of a major hydroelectric dam. In Caracas, traffic lights went out and the subway system ground to a halt, triggering gridlock in the streets and huge streams of angry people trekking long distances to get home from work. The blackout in the capital was total and hit at 4:50 pm (2050 GMT), just before nightfall. Caracas is one of the world’s most crime-ridden cities so people set out for home early, well before the sun went down.

Commerce was shut down because most transactions are done with debit or credit cards. Hyperinflation has rendered the local currency, the bolivar, almost worthless. Telephone services and access to the internet were also knocked out. The capital’s international airport was hit, according to social media posts from would-be travelers. A Copa Libertadores football game in the city of Barquisimeto was postponed. As night set in, the nationwide outage dragged on and some people in Caracas banged pots and pans – a traditional Latin American method of letting off steam. About seven hours after the mess started, the lights did come back on in some buildings in eastern Caracas.

Read more …

But campaign finance!

This Jew Tells Speaker Pelosi: “You May Well Prove Ilhan Omar Correct” (Cohen)

Speaker Nancy Pelosi is reportedly still considering a symbolic “show vote” in Congress on an anti-Semitism and “hate” resolution – which would offer all the authenticity and honesty of a Soviet show trial. If Pelosi proceeds, it will prove Rep. Ilhan Omar’s point about the inordinate influence wielded over Congress by the “Israel-right or-wrong”/AIPAC lobby and its power to stifle criticism of Israel. The anti-Omar resolution, whether mentioning Omar or not, was originated by two Democrats who are among Congress’s most longstanding pro-Israel diehards: Eliot Engel and Nita Lowey. Both endorsed Bush’s Iraq invasion. Both opposed Obama’s Iran nuke deal. Both supported Trump’s move of the U.S. embassy to Jerusalem.

I’m a proud Jew raised in a liberal family that supported civil rights and human rights. My experience growing up during the 1950s and 1960s was typical of many Jewish Americans. Like many Jews with this background, I’ve grown increasingly ashamed of Israel. For 40 years, Israel has been ruled mostly by a series of right-wing governments – more and more openly racist and abusive of Palestinian rights. It’s not the land of tree-planting, kibbutzim and “a country treating its Arab minority nicely” that we were sold as youngsters. That’s why a large number of proud Jewish Americans – raised to believe in civil liberties and open discussion – are appalled by the campaign to muzzle Rep. Ilhan Omar, as well as Speaker Pelosi’s role in it. We’re also appalled that human-rights-abusing Israel is virtually off-limits to debate.

[..] Rep. Omar has made a simple and undeniable point – that AIPAC (American Israel Public Affairs Committee) and the funding it [receives] influences exert extraordinary power over Congress. Disputing that point is flat-earther terrain. The Capitol Hill farce of an “anti-hate” resolution would provide still more evidence on behalf of her argument.

Read more …

We lock up our best, brightest and bravest. It’s the only way we can continue on our present paths. But there should be a big Hollywood movie in the works about Chelsea Manning as a role model for all young Americans.

Chelsea Manning Risks Jail To Fight WikiLeaks Grand Jury (SP)

Chelsea Manning will face a closed contempt hearing after she refused to answer questions during proceedings held by a grand jury in Alexandria, Virginia, that is investigating WikiLeaks. The WikiLeaks grand jury investigation has been ongoing in some form or another in Alexandria since at least December 2010. It was convened by the Justice Department in response to disclosures Manning made to WikiLeaks in 2010, when she was an intelligence analyst for the United States Army. What Manning disclosed exposed war crimes, diplomatic misconduct, and other instances of wrongdoing and questionable conduct by U.S. government officials. But she arrested, subject to a court-martial, and convicted of violating the Espionage Act and other related offenses.

She received a 35-year sentence and was released after six years in military prisons because a grassroots campaign successfully pressured President Barack Obama to commute her sentence. “A judge will consider the legal grounds for my refusal to answer questions in front of a grand jury. The court may find me in contempt and order me to jail,” Manning stated. On March 6, Manning appeared before the grand jury after she was granted immunity for her testimony. “All of the substantive questions pertained to my disclosures of information to the public in 2010—answers I provided in extensive testimony during my court-martial in 2013. I responded to each question with the following statement: ‘I object to the question and refuse to answer on the grounds that the question is in violation of my First, Fourth, and Sixth Amendment, and other statutory rights.’”

Manning added, “In solidarity with many activists facing the odds, I will stand by my principles. I will exhaust every legal remedy available. My legal team continues to challenge the secrecy of these proceedings, and I am prepared to face the consequences of my refusal.” She could face up to 18 months in jail if she is found “in contempt” of court. A legal attempt to quash the subpoena prior to her appearance before the grand jury was rejected by a federal judge on March 5. Grand juries can be empaneled for 18 months, or if they are “special” grand juries, they may last up to 36 months. Over the past eight years, the grand jury has presumably gone through multiple iterations, either being renewed or relaunched.

According to a report from the Washington Post, the grand jury is interested in whether WikiLeaks editor-in-chief Julian Assange solicited Manning to disclose documents. Manning testified during her court-martial about accounts linked to WikiLeaks, or WLO, that she communicated with. It is possible she communicated with Assange, but they never exchanged identifying information. “No one associated with the WLO pressured me into giving more information. The decisions that I made to send documents and information to the WLO and the website were my own decisions, and I take full responsibility for my actions,” Manning asserted. The grand jury would like to try and poke holes in Manning’s testimony to try and build a case against Assange and possibly other staff members of WikiLeaks.

Read more …

Jan 072019
 
 January 7, 2019  Posted by at 10:54 am Finance Tagged with: , , , , , , , , , , , ,  


Berthe Morisot Julie and her boat 1884

 

China Has a Dangerous Dollar Debt Addiction (Balding)
China Drops Hints Of Trade Pain Ahead (BV)
US and China To Resume Trade Talks With Both Eager For Compromise (G.)
May To Hold Parliamentary Brexit Vote On January 15 (R.)
Theresa May Pleads For EU To Give Ground And Rescue Brexit Deal (G.)
Germany and Ireland Step Up Efforts To Find Brexit Border ‘Fix’ (G.)
Average UK Unsecured Household Debt Hits Record £15,400 (G.)
UK Car Sales Record Biggest Fall Since Financial Crisis (R.)
France’s Macron Reeling As Tough Stance Against ‘Yellow Vests’ Backfires (R.)
The Euro: A Mindless Idea – Ashoka Mody (Spiked)

 

 

$1.2 trillion will have to be rolled over this year. There are $90 billion of offshore renminbi deposits in Hong Kong available to buy dollars. Good luck.

China Has a Dangerous Dollar Debt Addiction (Balding)

China’s foreign debt has been rising rapidly, and that’s becoming an increasingly big problem — for the country and, potentially, the world. Officially, China lists its outstanding external debt at $1.9 trillion. For a $13 trillion economy, that’s not a major amount. But focusing on the headline number significantly understates the underlying risks. Short-term debt accounted for 62% of the total as of September, according to official data, meaning that $1.2 trillion will have to be rolled over this year. Just as worrying is the speed of increase: Total external debt has increased 14% in the past year and 35% since the beginning of 2017. External debt is no longer a trivial slice of China’s foreign-exchange reserves, which stood at just over $3 trillion at the end of November, little changed from two years earlier. Short-term foreign debt increased to 39% of reserves in September, from 26% in March 2016.

The true picture may be more precarious. China’s external debt was estimated at between $3 trillion and $3.5 trillion by Daiwa Capital Markets in an August report. In other words, total foreign liabilities could be understated by as much as $1.5 trillion after accounting for borrowing in financial centers such as Hong Kong, New York and the Caribbean islands that isn’t included in the official tally. Circumstances aren’t moving in China’s favor. The nation’s companies rushed to borrow in dollars when there was a 3% to 5% spread between Chinese and U.S. interest rates and the yuan was expected to strengthen. Borrowing offshore was cheaper and offered the additional bonus of likely currency gains. Now, the spread in official short-term yields has shrunk to near zero and the yuan has been depreciating for most of the past year. Refinancing debt in dollars has become harder, and more risky.

Beijing’s policies have exacerbated the buildup of foreign debt. To promote Xi Jinping’s Belt and Road Initiative, the president’s landmark foreign policy endeavor, China has been borrowing dollars on international markets and lending around the world for everything from Kenyan railways to Pakistani business parks. With this year and 2020 being the peak years for repayments, China faces dollar funding pressure. To repay their dollar debts, Chinese firms will either have to draw from the central bank’s foreign-exchange reserves (a prospect Beijing is unlikely to allow) or buy dollars on international markets. This creates a new set of problems. There are only 617 billion yuan ($90 billion) of offshore renminbi deposits in Hong Kong available to buy dollars. If China was to push firms to bring debt back onshore, this would necessitate significant outflows that would push down the yuan’s value against the dollar.

Read more …

More trickle down fails.

China Drops Hints Of Trade Pain Ahead (BV)

While a cut in the reserve requirement ratio, China’s fifth in a year, was not surprising, the 100-basis point shift that started off 2019 was larger than anticipated. Of course, demand for cash tends to spike around this time of year, due to both the Chinese New Year holiday and tax deadlines, but the economy is cooling uncomfortably fast. Official figures may show growth slowed to 6.3% in the fourth quarter, Standard Chartered reckons. Friday’s announcement adds to other easing measures: People’s Bank of China officials last month announced a new policy tool to encourage lenders to disburse their cash more widely. The “targeted medium-term lending facility” will make cheaper funding available to banks that the PBOC judges to be doing their part by lending more to small companies.

It’s certainly not full-blown monetary stimulus yet; the central bank has not fired its heavier artillery, such as a benchmark rate cut. The market has also been kept waiting for reductions to cost of borrowing from the PBOC’s more important channel, its regular medium-term lending facility. But the overall direction of travel is clear, and both recent moves point to structural issues that worry pessimists: the extra liquidity pumped into the system does not seem to be translating into more loans for smaller companies, which may signal deeper problems with capital allocation, not to mention the private sector’s nervousness about politics in 2019.

All of this is bad news for Beijing’s trade negotiators, when they hold talks with U.S. counterparts face-to-face this week. As the pain mounts, they may be pushed to yield more in order to gain relief. They could, for example, agree to formally drop the controversial “Made in China 2025” plan, or to announce concrete measures to beef up enforcement of intellectual property rights. Trump said on Sunday that weakness in China’s economy will push officials to negotiate. He may be right.

Read more …

Tariffs rose Jan 1. It’s getting urgent.

US and China To Resume Trade Talks With Both Eager For Compromise (G.)

US officials arrived in China for the first face-to-face negotiations since a 90-day truce was declared in a trade war between Washington and Beijing, in the hope of ending a bruising confrontation between the world’s two largest economies. Hopes that the sixth round of negotiations between the two sides could yield a breakthrough helped Asian shares rise on Monday, combined with optimism about the state of the global economy on the back of strong US jobs figures on Friday. In Tokyo, the Nikkei soared more than 3% and there were also strong positive moves in Shanghai, Hong Kong and Sydney. US and Chinese trade representatives were set to hold talks on Monday and Tuesday.

After failing to reach an agreement in December when Donald Trump and Xi Jinping met, both sides agreed to suspend tariff increases while holding discussions on technology transfers, as well as intellectual property theft and cybersecurity. If no agreement is reached, US tariffs on $200bn of Chinese goods will increase in March to 25% from the current 10%. Trump said on Sunday that China was under pressure to do a deal amid signs of a slowdown in its economy. “I think China wants to get it resolved. Their economy’s not doing well. I think that gives them a great incentive to negotiate,” he said. “China’s slowdown is occurring across the board, affecting almost every industry and region,” said Scott Kennedy, a trade expert focused on China at the Center for Strategic and International Studies. “Resolving the trade war or at least finding some common ground with Washington will be needed to fully restore confidence,” he said.

Read more …

Whatever the outcome, chaos guaranteed. You can jot down next Tuesday night in your agenda for that.

May To Hold Parliamentary Brexit Vote On January 15 (R.)

Prime Minister Theresa May will hold a delayed parliamentary vote on her Brexit deal on Tuesday, January 15, the BBC reported on Monday, citing government sources. May was forced to pull the vote on her deal in December after she said it would be defeated by a large majority. The government had previously said the vote would be held in the week of January 14. May said on Sunday that Britain would be in uncharted territory if her Brexit deal is rejected by parliament, despite little sign that she has won over sceptical lawmakers.

Read more …

In case you were still wondering who will be blamed.

Theresa May Pleads For EU To Give Ground And Rescue Brexit Deal (G.)

Theresa May is preparing to make another desperate plea to EU leaders to offer a concession on the Irish backstop as she attempts to win over Brexiters who have vowed to vote down the government’s deal. The prime minister on Sunday promised to hold the meaningful vote in parliament in the week beginning 14 January despite growing opposition from Conservative backbenchers and the Democratic Unionist party, whose votes are required to push the deal through parliament. As MPs prepare to return to Westminster with the crucial Commons vote looming on the withdrawal agreement, Downing Street insisted that new compromises could still be won from Europe that would ensure the safe passage of May’s plan.

The hope of new developments came as opposition to the prime minister’s deal hardened. The hurdles facing May include: • Brexiters say the government faces a disaster if it fails to ditch the current deal, with DUP deputy leader Nigel Dodds describing the Irish backstop as “toxic”. • EU sources say talks to be held in Dublin on Tuesday between Leo Varadkar and Germany’s foreign minister, Heiko Maas, will not seek to reopen negotiations over the 585-page withdrawal agreement. • Senior MPs including Yvette Cooper and Nicky Morgan are launching a parliamentary campaign to rewrite government legislation to block a no-deal Brexit. • Chris Patten, the former Conservative Party chairman, called for a second referendum on the UK’s decision to leave the EU. • More than 200 MPs have signed a letter calling for Theresa May to rule out a no-deal Brexit. Tory ex-minister Dame Caroline Spelman, who organised the letter with Labour’s Jack Dromey, said the group had been invited to see the prime minister on Tuesday.

In an interview on Sunday, May said the vote, which was due to be held last month and postponed, would go ahead next week, as she sought further clarification from the EU to address MPs’ concerns. She also said she would look at giving parliament a greater say in how the UK’s future relationship would be negotiated, but refused to say exactly what that might be. Asked if there had been any changes she could offer to backbenchers who were expected to vote down her deal, she told BBC1’s Andrew Marr Show: “What we will be setting out over the next few days are assurances in three areas: first are measures specific to Northern Ireland; the second is a greater role for parliament as we take these negotiations forward into the next stage for our future relationship; and third – and we are still working on this – is further assurances from the European Union to address the issues that have been raised.”

Whitehall sources insisted that a compromise could still be found with the EU and that further planned announcements will be made this week that would win over MPs opposed to the deal. “We will be working flat out. There will be further contacts with the EU leaders. The issue of the backstop is not yet over,” the source said.

Read more …

“The EU cannot now give another concession ahead of the vote because if the deal isn’t ratified, it means any new concessions will simply be banked again to no benefit at all. It would be pointless.”

Germany and Ireland Step Up Efforts To Find Brexit Border ‘Fix’ (G.)

Germany’s foreign affairs minister is to fly to Dublin on Tuesday for Brexit talks as relations with Ireland intensify in an attempt to find a “fix” that will help Theresa May get the EU withdrawal agreement ratified. Heiko Maas will address an annual gathering of Ireland’s global diplomatic corps and take part in an unofficial fourth round of talks between Ireland and German leaders since Thursday. He will make the address in English, with a large German media contingent accredited, a reflection of how significant his speech is deemed back in Berlin. Last week the taoiseach, Leo Varadkar, had a lengthy telephone call with Angela Merkel. He then flew to Munich to address a meeting of her coalition partners, the CSU, and on Friday met the Germany chancellor’s successor as CDU leader, Annegret Kramp-Karrenbauer, for discussions on Brexit and the future of Europe.

The emerging Irish-German nexus on the Irish border backstop “fix” is being seen as significant in Irish political circles, where people also point to the fact that Varadkar speaks German and has a good working relationship with Merkel. They point out it was Merkel, not the taoiseach, who requested the phone call with Varadkar last Thursday. The talks lasted 40 minutes and were, according to Varadkar, “an opportunity to kind of brainstorm a bit as to what we could do to assist prime minister Theresa May in securing ratification of the withdrawal agreement”. But informed EU sources say Brexiters should not raise their hopes of a reopening of negotiations. The “fix” will be further details in the political declaration on the future relationship and not the 585-page withdrawal agreement. “That is locked,” said one EU source.

There is deep frustration that the British cannot see how far the EU went to break the impasse on the Irish border talks, yielding to May’s demands for a UK-wide customs arrangement. One EU source said: “The EU was totally opposed to this in 2017 and again in March and June in 2018. It then emerged out of the tunnel in the autumn as the solution, but the Brexiters did not see it for what it was – a major concession. [..] “They are now looking for more concessions, but they just can’t be given. The Brits banked this major concession and just did nothing with it. People can’t understand why it wasn’t sold as a victory for May. “The EU cannot now give another concession ahead of the vote because if the deal isn’t ratified, it means any new concessions will simply be banked again to no benefit at all. It would be pointless.”

Read more …

That’s about $20,000. Not including mortgages and student loans.

Average UK Unsecured Household Debt Hits Record £15,400 (G.)

Britain’s household debt mountain has reached a new peak, with UK homes now owing an average of £15,385 to credit card firms, banks and other lenders, according to the TUC. The trade union body said household debt rose sharply in 2018 as years of austerity and wage stagnation forced households to increase their borrowing. The TUC said in its annual report on the nation’s finances that the amounts owed by British households rose to a combined £428bn in the third quarter of 2018. Each household owed £886 more than it did 12 months previously, it said. The figures do not include outstanding mortgage debts but do include student loans.

The level of unsecured debt as a share of household income is now 30.4%, the highest level it has ever been at. It is well above the £286bn peak in 2008 before the financial crisis, the TUC said. That figure also included student loans, but tuition fees then were £3,000 a year compared with up to £9,250 now. [..] The TUC general secretary, Frances O’Grady, said: “Household debt is at crisis level. Years of austerity and wage stagnation has pushed millions of families deep into the red. The government is skating on thin ice by relying on household debt to drive growth. A strong economy needs people spending wages, not credit cards and loans.”

Read more …

They’re going to stay home?!

UK Car Sales Record Biggest Fall Since Financial Crisis (R.)

British new car sales in 2018 fell at their fastest rate since the global financial crisis a decade ago, hit by a slump in demand for diesel, stricter emissions rules and waning consumer confidence due to Brexit, according to an industry body. Demand dropped by nearly 7% last year to 2.37 million vehicles, the largest fall since registrations nosedived 11.3% in 2008, preliminary data from the Society of Motor Manufacturers and Traders (SMMT) showed. A nearly 30% drop in demand for diesel was the most significant factor in the decline. Diesel has been pummelled since the Volkswagen emissions cheating scandal of 2015, prompting a crackdown and higher levies.

But the industry also warned that Britain’s departure from the European Union due at the end of March risks the future of a sector which employs over 850,000 people and has been one of Britain’s few manufacturing success stories since the 1980s. “It’s still hard to see any upside to Brexit,” said SMMT Chief Executive Mike Hawes. “Everyone recognises that Brexit is an existential threat to the UK automotive industry and we hope a practical solution will prevail,” he said, calling for lawmakers to back Prime Minister Theresa May’s deal to guarantee a transition period. [..] After record highs in 2015 and 2016, demand fell in 2017 and some analysts see car demand as a leading indicator which could be a harbinger for future economic performance. Britain’s economy slowed to a crawl at the end of 2018, the housing market is stalling and lending to consumers growing at its slowest pace in nearly four years, according to data released on Friday.

Read more …

Macron is not just a fool himself, he’s surrounded by them as well. His spokesman after fleeing his office out of a back door as protesters invaded the courtyard and smashed up several cars said: “It wasn’t me who was attacked.” “It was the Republic.”.

Because the government is the Republic. The population is not.

France’s Macron Reeling As Tough Stance Against ‘Yellow Vests’ Backfires (R.)

Emmanuel Macron intended to start the new year on the offensive against the ‘yellow vest’ protesters. Instead, the French president is reeling from more violent street demonstrations. What began as a grassroots rebellion against diesel taxes and the high cost of living has morphed into something more perilous for Macron – an assault on his presidency and French institutions. The anti-government protesters on Saturday used a forklift truck to force their way into a government ministry compound, torched cars near the Champs Elysees and in one violent skirmish on a bridge over the Seine punched and kicked riot police officers to the ground.

The French authorities’ struggle to maintain order during the weekend protests raises questions not just over policing tactics but also over how Macron responds, as he prepares to bring in stricter rules for unemployment benefits and cut thousands of public sector jobs. On Sunday evening, Macron wrote on Twitter: “Once again, the Republic was attacked with extreme violence – its guardians, its representatives, its symbols.” His administration had hardened its stance against the yellow vests after the protest movement appeared to have lost momentum over the Christmas holidays.

The government would not relent in its pursuit of reforms to reshape the economy, government spokesman Benjamin Griveaux said on Friday, branding the remaining protesters agitators seeking to overthrow the government. Twenty-four hours later, he was fleeing his office out of a back door as protesters invaded the courtyard and smashed up several cars. “It wasn’t me who was attacked,” he later said. “It was the Republic.”

Read more …

“There is a Euro, which is a single currency in an incomplete monetary union, with a set of fiscal rules that are evidently economically illiterate..”

The Euro: A Mindless Idea – Ashoka Mody (Spiked)

[..] most serious of all is the notion of common economic development as a basis for Europe. It was briefly true after the Treaty of Rome in 1957, which opened up the borders, but the momentum ran out within two decades. You open borders, but once they’re open, there’s not a lot more you can do. Even the gains from the so-called Single Market are very limited beyond a certain point. Every economist understands that. On the Euro, there was never any question that it was a bad idea. Nicholas Kaldor, an economist at Cambridge University, wrote in March 1971 that a single currency was a terrible idea, both as economics and as politics. And Kaldor has been proven right time and again.

But the entire European establishment just ignores every subsequent warning from well-regarded economists, and produces defensive counternarratives. For example, I often hear that Europe needs fixed exchange rates in order to have a Single Market. Why? Germany is trading a lot with Poland, Hungary and the Czech Republic, which are in the Single Market, but have different currencies. These fluctuate, but the trade continues apace. You don’t need a single currency for a Single Market.

spiked: When did your critique of the European project emerge? Was it during your involvement in the Irish bailout? Mody: When I finished at the IMF I planned to write a book on the Euro crisis. And I began writing it as an IMF economist would – what happened before the crash, the bubble, the bubble bursting, the panic, the fact it wasn’t well managed, and so on. But I soon realised that something wasn’t right here. And so I spent two years tracing the history of the Euro, and asking the question: what brought the Euro into existence in its current form? You see, it is not just that there is a Euro. There is a Euro, which is a single currency in an incomplete monetary union, with a set of fiscal rules that are evidently economically illiterate – and nobody questions the fact that they are economically illiterate, that they lack a necessary fiscal backstop and the necessary fiscal union. So why does it exist?

Read more …

Dec 182018
 


Titian The rape of Europe 1560-62

 

It took me a while to decide which word(s) best define the past year and the next one, but I think this is pretty much it. 2018 was chaotic more than anything else, and that chaos will give rise to mayhem in 2019.

What I think is striking is that this is true across the board, in all walks of life so to speak. In finance, in politics, in energy markets, in ecological matters, and perhaps most of all in the ways all these topics are being covered by what once were trusted media.

I’m going to have to come back to all these topics separately, so it’s promising to be a very busy holiday season, but it’s also good to try and put them together in one place, if only to show how interconnected everything is. And how futile it is to look at the economy without seeing its connection to energy flows and ecosystems. And vice versa.

 

In finance and economics, we’ve seen an avalanche of falling numbers recently, in stock prices, bond prices, housing, across the globe, and obviously that evokes a lot of comments in the financial press. But that press, and bankers investors on their own, still talk about markets.

However, as I wrote in April 2018, if there is no price discovery, and there isn’t, there ARE NO markets, and it would be good and beneficial if many more people absorb that simple reality. Many more so-called traders and investors would be a start, but by no means enough. Lots more people who have nothing to do with the ‘markets’ should understand why there is no such thing anymore.

As long as you limit it to stock and bond markets, it may appear fine that people don’t understand. But as soon as you acknowledge there are no housing markets either for the exact same reasons, the story changes considerably. Because then it becomes clear that all -former- markets, bar none, have been eviscerated by central bank policies that sought to prop up banks, often highly successfully so, which they knew could only happen at the expense of communities and societies.

We’ve ended up with scores of mom and pop ‘investors’ who own hugely overpriced stocks and homes, while their pensions funds hold zillions ‘worth’ of bonds and also increasingly stocks. The link between pensions and AAA-rate assets was pulverized in the process. That looks set to continue, and worsen, in 2019. But that may be just the look of things. Because there really are no markets, there is no price discovery.

What is still there is a lot of talk about whether the Fed -and other central banks- will raise rates further or not, or will stop or continue their asset buying schemes. Central banks are the only game in town, there are no markets, nobody knows what anything is really worth because the Fed etc. took the discovery process beyond their reach.

And now all those financial ‘subjects’ are sitting on all this stuff that only appears to have value, and that value hinges exclusively on what Draghi, Kuroda, Yellen and now Jay Powell have decided things are worth. And yes, it does make matters appear okay, but because they can’t do QE forever, all of those values will need to be re-assessed by actual markets once Powell et al. are either thrown out or decide for themselves to leave the arena.

It won’t be pretty, it will be devastating. It’s impossible to say if it will come to a head in 2019, because the Fed can lower rates a bit again after its recent rate hikes and prop up the zombie for longer. Then again Draghi can’t do that anymore since he’s already in negative rate territory, and while the euro could fall to parity with the USD as a consequence, there’s a limit to that too.

Anyway, more on that later.

 

Energy and ecology seem to become more intertwined as we go along, though that may well be a trompe oeil, trick of the eye. Still, if you see and read what people have to say about things like the big COP24 event in Katowice last week, it’s obvious that the 2nd law of Thermodynamics is a hard one to internalize. Because that law seems to say that the use of energy, period, produces waste, while all these mostly well-meaning folk are merely focusing on shifting between energy sources.

There is surprisingly little attention for not using energy in the first place, which the 2nd Law appears to stipulate is the only way to stop the rot. And it’s entirely feasible to build homes that use 70-80% less power to heat and cool, or to design a transport system in a city that saves that much energy.

But the ‘leaders’, politicians and business people, prefer to address solar panels and wind turbines that allow for the amount of energy used to fall only moderately, which when combined with the economic growth that nobody questions, will lead to the use of ever more energy.

And I get that, you need to shrink your present economies, and the models they’re based on, in order to save the planet. I’m not so much talking about climate change, since the earth is a system so complex we should really be very cautious about deriving any conclusions about it from simplified models, but the species extinction reported in 2018 is another, and more immediately convincing, story.

Still, conferences like COP24, or its predecessor COP21 which I wrote about 3 years ago in CON21, are not just entirely useless, they move everything backward that all the worried boys and girls are so worried about.

The movers and shakers of the world all owe their positions to the economies, and therefore the levels of energy use, that the worried people now want to move away from. And then they turn to the same movers and shakers to make that happen. Sorry, no can do. All you’ll get is lip service from people looking for money and power, who are not interested in being proved wrong if they are.

Today’s climate discussion is a road to nowhere where down the line there’ll be nobody left to talk to and no birds singing. You yourself probably won’t be there either. There is not one politician who will volunteer to give up their power if that could save the world their children will have to live in. They’ll come up with a story where their position is save and so is that world, and they’re more than likely to believe it.

 

As for the media, the tale gets darker fast. It didn’t start in 2018, but it did become a lot more outspoken. As I’ve said before, there are three targets for the former trusted sources of impartial news, even as those sources rapidly become more partial as we move forward. And that of course has to do with their new business model I wrote about a lot: writing negative stories about Donald Trump became an obvious source of revenue well before he was president.

Once he was elected, the media doubled down. They wrote against Trump at first thinking he would be beaten in the GOP primaries, then some more when he faced Hillary, then because they didn’t like him in the White House, and finally because he turned out to be the business proposition that quite literally kept them alive. What was it, over 100,000 new subscribers for the NYT a MONTH at a certain point?! Would CNN and Rachel Maddow even exist anymore without the Donald?

But that also means that the MSM cannot report anything positive about the man, with the exception of a bombing campaign in a faraway sandbox, and that is pretty crazy. No matter where you stand politically, not even Trump can do everything wrong, but CNN, MSNBC, WaPo,NYT et al can’t say it out loud, because their new readers and viewers want negative stories.

I’m not at all a Trump fan, I find it insane that America can’t find a single person among its 320 million inhabitants who could better represent it, but I also saw well over two years ago that the reporting on Trump was so biased someone had to restore at least some balance. And if that was to be me, so be it.

It’s like the entire US -and UK- press has become the National Enquirer, where the questions of truth or accuracy have become, and/or always was, a complete afterthought, irrelevant to whatever is actually published. And the readers and viewers caught inside the echo chamber will never know any better than that that is what the world really looks like.

It’s the ‘old’ media’s response to the threat of social media, a fight they cannot possibly win in the end, but not one they will relinquish easily; it will be the end of them. So there’s Trump, and then there’s Russia and Julian Assange. And there’s a live shooting practice going on in which all three are fair game.

According to two reports published just yesterday in the NY Times and the BBC, African Americans and French Yellow Vests were targeted by Russian bots, trolls, give them a name. What these once trusted media no longer understand, or don’t care about, is that they are effectively saying that African Americans and Yellow Vests are all so stupid and so unconvinced and unconvincing in their political convictions that a bunch of poorly defined Russians made them throw their votes away from Hillary Clinton and towards Trump.

Like African Americans have no opinions and therefore in the end no functioning brains. Like their f*king robots, some inferior lifeform. Is there anything you can say that is more racist than that? I come up empty. And I understand Kanye.

And that the ‘Russians’ caused tens of thousands of Frenchmen and -women to put on a yellow vest and protest Macron’s dismantling of -very- long-standing labor rights and taxation ‘reforms’ that benefit the rich French elite. You cannot insult two such vast yet diverse groups of people, who seem to have little if anything in common, African Americans and Yellow Vests, you cannot insult them more or worse than such reports do.

And they simply don’t see it. In their view, and which they -rightly by now- trust their public will eat up like hot cakes, their 24/7 anti-Trump and anti-Russia campaigns have been so convincing that they can basically say anything at all by now. If Trump or the Russians deny, that’s just what they would do if they were guilty. Assange can’t deny anything at all, they’ve totally silenced him. They being the US deep state in liaison with the MSM.

 

That’s how we’re about to enter 2019, how we’re about to move from chaos to mayhem. It is scary not just because of what we see happening today, but even more because we’ve never seen anything remotely like it. Sure, US media, any country’s media, have always supported government strategic lies in times of warfare or other tensions.

But an overall campaign against a sitting president, comprised of dozens of articles a day consisting of mere allegations and rumors, let alone the same against a state nuclear power arguably mightier than the US itself, and a journalist who’s the only one in his profession who’s actually done what journalists should do, not the well-paid follow the party line thing going on at the MSM, all this is unprecedented.

And given what we’ve seen in 2018 in the realm of banned social media accounts, in a wider sense of the word, we can only wonder how much worse the censorship can get in the mayhem year of 2019.

Can the Automatic Earth, and for instance our friends at Zero Hedge, only continue to exist next year if we agree to increasingly become the poodles of the ruling political classes, intelligence services, and their press masters and lackeys?

It’s starting to look that way. So in closing, I want to call on you to support us by donating a Christmas gift, and preferably a recurring one all through the 2019 mayhem year, so we know we can continue to present you with an alternative to the ‘appropriate’ information you’re ‘supposed’ to be receiving.

It’s later than you think.

 

 

Nov 132018
 
 November 13, 2018  Posted by at 10:10 am Finance Tagged with: , , , , , , , , , , , , , ,  


Vincent van Gogh Peasant burning weeds 1883

 

Dow Plunges 600 Points As Apple Leads Tech Rout (CNBC)
The Economic Consequences Of Debt (Roberts)
The Fed Supports Capital In Its Eternal War With Labor (Hunt)
China State Banks Selling Dollars In FX Market To Arrest Yuan Losses (R.)
Goldman Sachs Down Most In 7 Years On 1MDB, ‘Fear Of The Unknown'(BBG)
Banking Consolidation In Europe Is ‘Inevitable’ – UBS Chief (CNBC)
China Scours Social Media, Erases Thousands Of Accounts (R.)
Working to Protect the World from Bananas (Epsilon)
Turkey, France Spar Over Khashoggi Killing (AFP)
US Federal, State Elections Still In Flux (R.)
Rock the Vote (Kunstler)
Crucifying Julian Assange (Chris Hedges)
Stan Lee Leaves a Legacy as Complex as His Superheroes (DB)

 

 

“..the FANG trade is dead and the market is struggling to find a replacement.”

Dow Plunges 600 Points As Apple Leads Tech Rout (CNBC)

The Dow Jones Industrial Average fell 602 points on Monday after a big decline in Apple shares, a rise in the U.S. dollar and lingering worries about global trade weighed on investor sentiment. Monday’s losses bring the Dow’s decline over the past two sessions to 804 points; it closed at 25,387.18. The tech-heavy Nasdaq Composite pulled back 2.8 percent to 7,200.87 and fell back into the correction territory it first entered during the October market rout. The S&P 500 dropped 2 percent to 2,726.22 as financials tanked, led by Goldman Sachs. In late-afternoon trading, the major indexes hit their lows of the day after Bloomberg News reported the White House was circulating a draft report on auto tariffs. Shares of General Motors turned negative following the report.

Apple shares tanked by 5 percent after Lumentum Holdings, which makes technology for the iPhone’s face-recognition function, cut its outlook for fiscal second quarter 2019. Lumentum CEO Alan Lowe said one of its largest customers asked the company to “materially reduce shipments” for its products. Shares of Lumentum plunged 33 percent. The decline in Apple pressured the broader technology sector. The Technology Select Sector SPDR dropped 3.5 percent. Alphabet and Amazon shares pulled back 2.7 percent and 4.3 percent, respectively. Amazon shares fell into bear-market territory, down about 20 percent from its 52-week high. [..] Peter Boockvar, chief investment officer at Bleakley Advisory Group, said “the FANG trade is dead and the market is struggling to find a replacement.”

Read more …

I’m partial to the last graph. It shows an undeniable long term trendline.

The Economic Consequences Of Debt (Roberts)

The relevance of debt growth versus economic growth is all too evident as shown below. Since 1980, the overall increase in debt has surged to levels that currently usurp the entirety of economic growth. With economic growth rates now at the lowest levels on record, the growth in debt continues to divert more tax dollars away from productive investments into the service of debt and social welfare. It now requires nearly $3.00 of debt to create $1 of economic growth.

Another way to view the impact of debt on the economy is to look at what “debt-free” economic growth would be. In other words, without debt, there has actually been no organic economic growth.

In fact, the economic deficit has never been greater. For the 30-year period from 1952 to 1982, the economic surplus fostered a rising economic growth rate which averaged roughly 8% during that period. Today, with the economy expected to grow at just 2% over the long-term, the economic deficit has never been greater.

But it isn’t just Federal debt that is the problem. It is all debt. When it comes to households, which are responsible for roughly 2/3rds of economic growth through personal consumption expenditures, debt was used to sustain a standard of living well beyond what income and wage growth could support. This worked out as long as the ability to leverage indebtedness was an option. The problem is that when rising interest rates hit a point where additional leverage becomes problematic, further economic cannot be achieved. Given the massive increase in deficit spending by households to support consumption, the “bang point” between rates and the economy is likely closer than most believe.

Read more …

The Fed must step back as wages rise.

The Fed Supports Capital In Its Eternal War With Labor (Hunt)

For 46 years, from 1951 to 1997, we were no more and no less rich than our economy grew. Which makes sense. That’s the neutral vision of monetary policy, where you’re not trying to pull forward future growth through leverage and easy money in order to create more wealth today. For the past 20 years, however, we have had a series of wealth bubbles – first the Dot-Com bubble, then the Housing Bubble, and today the Financial Asset Bubble – that have made us richer than our economy grows. Each of these bubbles was intentionally “blown” by the Fed through monetary policy. That’s the tried and true method of creating a wealth bubble in the modern age of fiat money – you artificially lower the cost of money to encourage borrowing and leverage, which in turn pulls future growth into the present. It’s a neat trick so long as you can keep it going.

But that’s the problem, of course. The Fed can’t keep it going, not if it wants to satisfy its raison d’etre, which is to keep inflation bottled up, particularly wage inflation. Once wage inflation starts to pick up, the Fed ALWAYS stops blowing bubbles. Why? Because the Fed, like every central bank, was created to support Capital in its eternal war with Labor. It’s in the name. They are bankers. I know that sounds all Marxist and conspiratorial and all that, but it’s really not. It’s very straightforward. It’s Alexander Hamilton, not Karl Marx. In case you haven’t noticed, wage inflation has started to pick up. The Fed has stopped blowing this Financial Asset Bubble. Then isn’t the inescapable conclusion that we are now inevitably heading back to that GDP growth line? And if that IS the conclusion, then how bad could it get for investors?

Read more …

A very ominous sign.

China State Banks Selling Dollars In FX Market To Arrest Yuan Losses (R.)

Major state-owned Chinese banks were seen selling dollars at around 6.97 per dollar in the onshore spot foreign exchange market in early trade on Tuesday, three traders said, in an apparent attempt to arrest sharp losses in the local currency. The onshore spot market opened at 6.9681 per dollar, weakening to a low of 6.9703 at one point in early deals. “Big banks were selling (dollars) to defend the yuan,” said one of the traders. The move by the state-run banks helped the yuan recover to 6.9550. The onshore spot yuan was trading at 6.9645 as of 0237 GMT.

Traders attributed the sharp morning losses in the yuan to broad strength in the U.S. dollar, which hit 16-month highs against a basket of six other major currencies. They also suspect the authorities are keen to prevent the yuan from weakening too sharply before U.S. President Donald Trump and his Chinese counterpart President Xi Jinping’s meeting later this month. The two countries’ leaders plan to meet on the sidelines of a G20 summit, in Argentina at the end of November for a high-stakes talk.

Read more …

The Squid got hungry.

Goldman Sachs Down Most In 7 Years On 1MDB, ‘Fear Of The Unknown'(BBG)

Goldman Sachs Group’s reputation is facing one of its biggest crises of the decade – and now its shares are, too. Since prosecutors implicated a trio of Goldman Sachs bankers in a multi-billion-dollar Malaysian fraud early this month, investors have endured an almost daily drip of news on the firm’s ties to the scandal. The barrage culminated on Monday (Nov 12) as Malaysia’s finance minister demanded a “full refund”, tipping Goldman’s shares into their biggest drop since 2011. Across Wall Street, analysts expressed surprise over the dive, noting the bank – which hasn’t been charged with wrongdoing – can probably stomach any payment that might be extracted in the case. Instead, some said, the decline appeared to be due to a combination of concern over the persistently harsh spotlight and uncertainty about what’s to come.

It was also a generally bad day in US markets. “It’s not so much the dollar amount,” said Mr Gerard Cassidy at RBC Capital Markets. “It’s more that we don’t know all of the facts yet; we don’t know all of the important points to the story at this time. It’s the fear of the unknown.” On Nov 1, at least three senior Goldman Sachs bankers were publicly implicated by the US Department of Justice in a multi-year criminal enterprise that included bribing officials in Malaysia and elsewhere and laundering hundreds of millions of dollars. The firm has said it’s cooperating with the investigations and may face “significant” fines. [..] The Malaysia probe focuses on the country’s scandal-plagued state investment company, 1Malaysia Development Bhd and the US$6.5 billion it raised in 2012 and 2013. Goldman Sachs handled the deals, reaping almost US$600 million in fees.

Read more …

“..technology will make the sector more “effective and more efficient.”

Banking Consolidation In Europe Is ‘Inevitable’ – UBS Chief (CNBC)

The European banking system needs consolidation and “as time goes by, it will become more and more inevitable,” the head of one of the largest banks in Europe told CNBC on Tuesday. Often investors, policy-makers and other industry experts refer to fragmentation as one of the biggest hurdles to European banks. UBS chief Sergio Ermotti told CNBC that the issue is “not sustainable.” “That’s something that as time goes by will become more and more inevitable, is part of the solutions. For sure consolidation needs to happen, in particular in Europe, where we see a lot of fragmentation that it is not sustainable,” Ermotti told CNBC’s Joumanna Bercetche. He further added that technology will make the sector more “effective and more efficient.”

Read more …

Self-media: social media not run by government.

China Scours Social Media, Erases Thousands Of Accounts (R.)

China’s top cyber authority has scrubbed 9,800 social media accounts of independent news providers deemed to have posted sensational, vulgar or politically harmful content on the Internet, it said late on Monday. China’s strict online censorship rules have tightened in recent years with new legislation to restrict media outlets, surveillance measures for media sites and rolling campaigns to remove content deemed unacceptable. The Cyberspace Administration of China (CAC) said in a statement that the campaign, launched on Oct. 20, had erased the accounts for violations that included “spreading politically harmful information, maliciously falsifying (Chinese Communist) party history, slandering heroes and defaming the nation’s image.”

CAC also summoned social media giants, including Tencent’s Wechat and Sina-owned Weibo, warning them against failing to prevent “uncivilized growth” and “all kinds of chaos” among independent media on their platforms. “The chaos among self-media accounts has seriously trampled on the dignity of the law and damaged the interests of the masses,” CAC said. The term “self-media” is mostly used on Chinese social media to describe independent news accounts that produce original content but are not officially registered with the authorities.

Read more …

Despair no more. Big Brother is here.

Working to Protect the World from Bananas (Epsilon)

The main story is the increased pace and arc of the Chinese system overall, not the ‘play-by-play’. With technology, even totalitarian surveillance technology, there typically is no ‘big bang’, just a bunch of independent systems coming on line, getting adopted over time, then getting networked together, resulting in a series of subtle shifts in personal behavior, and then a tipping point. Having watched this system come on line for nearly 20 years, the deployment of the Chinese technology-driven domestic surveillance system was pretty limited even up until 2010, but has been absolutely rip-roaring and accelerating over the last five years thanks to the same driving forces of most other tech advances since 2010:

• Ubiquitous handheld connected device • App adoption • Cheap sensors (inc. cameras) • Cheap massive data storage • Sophisticated statistical algorithms • Leaps forward in compute power and cost. All of these advances are so powerful for surveillance with its inherent big, unstructured data characteristics that I think we are now really close to an inflection point where the system is starting to really work in a functional day-to-day way, which will then lead to a behavioral tipping point. I don’t think the main story is that controversial at this point, i.e., I don’t think anyone, even the Chinese government, denies this system is being built, the intention of it, or that it is starting to work in a practical way.

Therefore, I think the more interesting story in many ways is the sub-story of the willful ignorance of the main story by the West. I was at an event last week where a new fancy think tank on AI ethics based here in San Francisco was presenting and expounding their tenet of “Working to protect the privacy and security of individuals”, whilst simultaneously welcoming Baidu into their organization. I’m sorry, but that’s like “Working to protect the world from bananas” while signing up Del Monte as a member. Bananas. With hypocritical sprinkles. And a big ignorant cherry on top.

Read more …

They’ve all heard the tapes, but not one of them talks about the content.

Turkey, France Spar Over Khashoggi Killing (AFP)

Turkey on Monday lashed out at “unacceptable” and “impertinent” comments by the French foreign minister who accused President Recep Tayyip Erdogan of playing a “political game” over the murder of Jamal Khashoggi. Erdogan said on Saturday that Turkey had shared recordings linked to the Saudi journalist’s murder last month with Riyadh, the United States, France, Britain and other allies, without giving details of the tapes’ specific content. In an interview with France 2 television on Monday, French Foreign Minister Jean-Yves Le Drian said he “for the moment was not aware” of any information transmitted by Ankara. Asked if the Turkish president was lying, he said: “It means that he has a political game to play in these circumstances.”

His comments provoked fury in Ankara. “We find it unacceptable that he accused President Erdogan of ‘playing political games’,” the communications director at the Turkish presidency, Fahrettin Altun, told AFP in a written statement. “Let us not forget that this case would have been already covered up had it not been for Turkey’s determined efforts.” Turkish Foreign Minister Mevlut Cavusoglu responded even more sharply, saying that his French counterpart’s accusations amounted to “impertinence”. “It does not fit the seriousness of a foreign minister,” he said, accusing Le Drian of “exceeding his authority”.

[..] Altun said Ankara had shared evidence linked to the murder with officials from a large number of countries and that France was “no exception”. “I confirm that evidence pertaining to the Khashoggi murder has also been shared with the relevant agencies of the French government,” he said. A representative of French intelligence listened to the audio recording and examined detailed information including a transcript on October 24, he added.

Read more …

The US is incapable of building a strong election system. How disgraceful is that?

US Federal, State Elections Still In Flux (R.)

Democrats took control of the U.S. House of Representatives in the Nov. 6 elections and Republicans held onto a majority in the U.S. Senate, but more than a dozen races remain undecided nearly a week later. The outcomes of two Senate races, 13 House seats and two governorships had yet to be settled on Monday. The results of Arizona’s U.S. Senate race became clear on Monday, when Democratic candidate Kyrsten Sinema declared victory and Republican candidate Martha McSally conceded after multiple media outlets called the race for Sinema. Florida ordered a recount in the race where Democratic Senator Bill Nelson trailed his Republican challenger, Florida Governor Rick Scott.

Florida also ordered a recount for its gubernatorial race, while the winner of the governor’s race in Georgia remained uncertain, with a December runoff still possible. In one of Mississippi’s U.S. Senate races, Republican Senator Cindy Hyde-Smith and her Democratic challenger, Mike Espy, will contest a runoff on Nov. 27 after neither won a majority. Vote tallies continue to trickle in for the 13 U.S. House races that appear too close to call, and there is no consensus among media outlets and data provider DDHQ that a victor has emerged. Democrats held narrow leads in eight of those races, according to unfinished tallies compiled by DDHQ.

Read more …

“.. C-Span will be livelier and more colorful than the WWE Wrestlemania round-robin, midget division.”

Rock the Vote (Kunstler)

It warmed my heart to read in The Wall Street Journal that Hillary Clinton is preparing to re-enter the Washington DC swamp from her deluxe exile in the woods of Chappaqua, New York, and make another run for the White House — though it’s hard to calculate how many porters in sandals and loincloths will be required to lug all her baggage around the campaign trail. Will hubbie hit the hustings with her? That would be rich. I can just imagine the pussy-hatted legions shrieking #MeToo at every stop. Surely there is no better way to put the Democratic Party out of its misery. The post-election melodramas in Georgia and Florida grind on, despite the various rules and laws about deadlines for certifying ballots and accounting for their origin.

What is a ballot after all but a mere scrap of paper, easily reproducible, and interchangeable. Sometimes, they make strange journeys out of election headquarters in trucks and SUVs, seeking fun and excitement, and they have been known to mysteriously turn up by the hundredweight in broom closets where they retreat to caucus. Only one thing is certain: the ballot fiasco is a billable hours bonanza for DC lawyers arriving on the scene to sort things out — which they may not manage anyway. If the vote count somehow remains in favor of the provisional winners — Republicans Rick Scott, Ron DeSantis (Fla), and Brian Kemp (Ga) — you can be sure we’ll be in a frenzy of sore loserdom that will make the Medieval ergot outbreaks of yore look like episodes of Peewee’s Playhouse.

If the provisional votes get overturned, the attorneys billable hours will quickly exceed the national debt, and we’ll find ourselves in a new era where the free citizens of this republic can‘t be trusted to the simple task of counting ballots, or even holding elections in the first place. [..] Meanwhile, the new Democratic majority congress prepares to ramp up its longed-for multi-committee inquisition against Trump and Trumpism, and the Republican Senate will counter-punch with binders of criminal referrals against the superstars of the Resistance. C-Span will be livelier and more colorful than the WWE Wrestlemania round-robin, midget division.

Read more …

The role of the MSM demands much more scrutiny.

Crucifying Julian Assange (Chris Hedges)

Assange was once feted and courted by some of the largest media organizations in the world, including The New York Times and The Guardian, for the information he possessed. But once his trove of material documenting U.S. war crimes, much of it provided by Chelsea Manning, was published by these media outlets he was pushed aside and demonized. A leaked Pentagon document prepared by the Cyber Counterintelligence Assessments Branch dated March 8, 2008, exposed a black propaganda campaign to discredit WikiLeaks and Assange.

The document said the smear campaign should seek to destroy the “feeling of trust” that is WikiLeaks’ “center of gravity” and blacken Assange’s reputation. It largely has worked. Assange is especially vilified for publishing 70,000 hacked emails belonging to the Democratic National Committee (DNC) and senior Democratic officials. The Democrats and former FBI Director James Comey say the emails were copied from the accounts of John Podesta, Democratic candidate Hillary Clinton’s campaign chairman, by Russian government hackers. Comey has said the messages were probably delivered to WikiLeaks by an intermediary. Assange has said the emails were not provided by “state actors.”

The Democratic Party—seeking to blame its election defeat on Russian “interference” rather than the grotesque income inequality, the betrayal of the working class, the loss of civil liberties, the deindustrialization and the corporate coup d’état that the party helped orchestrate—attacks Assange as a traitor, although he is not a U.S. citizen. Nor is he a spy. He is not bound by any law I am aware of to keep U.S. government secrets. He has not committed a crime.

Read more …

Enough controversy for ten.

Stan Lee Leaves a Legacy as Complex as His Superheroes (DB)

He was born Stanley Martin Lieber in the Bronx. For nearly 22 years, beginning almost immediately after graduating from DeWitt Clinton High School, he labored in obscurity as a writer, editor, and art director in a publishing industry just one cultural rung above pornography: comic books. And then, in 1961, he became one of the pivotal 20th century figures who elevated comics into the first draft of American pop culture. Stan Lee, who died Monday, November 12 at age 95, is synonymous with Marvel Comics. Nearly every movie released by Hollywood upstart-turned-juggernaut Marvel Studios can trace part of its creative origins to Lee. (The exceptions are the Captain America, Guardians of the Galaxy, and forthcoming Captain Marvel franchises.)

Among people who shaped the legacy of the Disney company, which purchased Marvel in 2009 for $4 billion, Lee is probably second only to Walt Disney himself. George Lucas is third because of the debts Star Wars owes to the comics creations of Lee’s greatest creative partner and bitterest foe, Jack Kirby. Lee’s legacy at Marvel is immortal. But so too is the debate and controversy over what that legacy specifically is. In some quarters in comics, and especially to devotees of Kirby, Stan Lee is a supervillain–a man who stole credit, and corresponding fortunes, from the people who truly shaped Marvel creatively in the ’60s, relegating them to also-ran obscurity.

Aspects of that critique, uncomfortably, have merit. Lee had a maestro’s instincts for what we now call branding, and it cast a shadow long enough to keep his Marvel collaborators in darkness. In press interviews, his endless public appearances, and his own writing, Lee portrayed himself as the driver of the Marvel Universe, rendering artists like Kirby and Spider-Man co-creator Steve Ditko as afterthoughts.

Read more …

Oct 122018
 
 October 12, 2018  Posted by at 9:22 am Finance Tagged with: , , , , , , , , , , , ,  


M. C. Escher Order and chaos 1950

 

Donald Trump is Right About the Fed (Whalen)
Stocks Could Fall 40% To 50% To Reach Fair Value – Yusko (CNBC)
4 Pillars of Debt in Danger of Collapse (Nomi Prins)
The Dollar and its Discontents (Eichengreen)
China September Exports Surge, Creating Record Surplus With US (R.)
Facebook, Twitter Purge More Dissident Media Pages (CJ)
Italian Parliament Approves Controversial New Spending Targets (AP)
Turks Had Saudi Consulate Bugged With Audio (ZH)
Journalist’s Disappearance Hardens Congress Stance On Saudi Arms Deals (R.)
More Than A Million UK Residents Live In ‘Food Deserts’ (G.)

 

 

Chris Whalen on the absence of price discovery.

Donald Trump is Right About the Fed (Whalen)

President Donald Trump has been criticizing the Federal Open Market Committee for raising interest rates. The reaction of the US equity markets is self explanatory. But while the economist love cult in the Big Media may take umbrage at President Trump’s critique of the central bank, in fact Trump is dead right. First, the Fed’s actions in terms of buying $4 trillion in Treasury debt and mortgage paper has badly crippled the value of the fixed income market as a measure of risk. The Treasury yield curve no longer accurately describes the term structure of interest rates or risk premiums. This means that the Treasury yield curve is useless as an indicator of or guide for policy. Nobody at the Federal Reserve Board understands this issue or cares.

Second, Operation Twist further manipulated and distorted the Treasury market. By selling short-term paper and buying long dated securities, the Fed suppressed long-term interest rates, again making indicators like the 10-year Treasury bond useless as an measure of risk. Without QE 2-3 and Operation Twist, the 10-Year Treasury would be well over 4% by now. Instead it is 3% and change and will probably rally to test 3% between now and year end. Third is the real issuing bothering President Trump, even if he cannot find the precise words, namely liquidity. We have the illusion of liquidity in the financial markets today. Sell Side firms are prohibited by Dodd-Frank and the Volcker Rule from deploying capital in the cash equity and debt markets. All bank portfolios are now passive. No trading, no market making. There is nobody to catch the falling knife.

The only credit being extended today in the short-term markets is with collateral. There is no longer any unsecured lending between banks and, especially, non-banks. As we noted in The Institutional Risk Analyst earlier this week, there are scores of nonbank lenders in mortgages, autos and consumer unsecured lending that are ready to go belly up. Half of the non-bank mortgage lenders in the US are in default on their bank credit lines. As in 2007, the model builders at the Fed in Washington have no idea nor do they care to hear outside opinions. If you understand that the Fed’s previous “extraordinary” policy actions have the effect of understating LT interest rates by at least a percentage point, then you know why President Trump is howling like a wounded hound. Nobody understands the danger of leverage better than a real estate developer.

Read more …

But nobody says it’ll take 70-80%. Why?

Stocks Could Fall 40% To 50% To Reach Fair Value – Yusko (CNBC)

Investors should brace themselves for a significant stock market correction, as well as a recession in the first half of next year, investor Mark Yusko warned on Thursday. In fact, he says, fair value for equities would be down about 40 percent to 50 percent. However, that doesn’t necessarily mean the stock market will have to go to fair value, Yusko said. “If interest rates keep normalizing, if liquidity keeps falling, if earnings go to where I think they are going to go, which is lower, I think we are going to have a meaningful correction,” the founder and chief investment officer at Morgan Creek Capital said on CNBC’s “Power Lunch.”

Yusko, a noted stock picker who took first place in Portfolios with Purpose’s fantasy stock-picking contest in 2016, predicts a recession in the first or second quarter of 2019. “Things are paying out now just like they did in 2000, 2001, 2002,” he said. In the back part of 2000, the stock market went down, 2001 brought a recession, and in 2002 the stock market took a big turn down. “It’s just going to be painful for a while to adjust this overvaluation,” Yusko added. [..] Yusko also questioned whether the economy is really strong. “We had one good quarter. We’ve been sub 2 percent [economic growth] for six years,” he said. Plus, forecasts are that GDP is going to be lower than expectations in the third quarter and even lower in the fourth quarter, and there are bad demographics and bad debt, he added.

Read more …

“..there’s now even less reason to believe the Fed will raise rates at the next meeting in December.”

4 Pillars of Debt in Danger of Collapse (Nomi Prins)

Last month I was in a series of high-level meetings with members of Congress and the Senate in Washington. While there’s been major news about the Supreme Court, my discussions were on something that both sides of the aisle are coming to consensus over. You see, issues that impact your own bottom line are way more about economics than they are about politics. On Capitol Hill, leaders know that. They also know that voters react to what impacts their money. That’s why, behind the scenes, I’ve been discussing issues focused on protecting the economy. Behind closed doors, we’ve been working on how to shield the economy from Too Big to Fail banks and how the U.S. can better fund infrastructure projects. These are initiatives that all politicians should care about.

Underneath the surface of the economy is a financial system that is heavily influenced by the Federal Reserve. That’s why political figures and the media alike have all tried to understand what direction the system is headed. Also last week I joined Fox Business at their headquarters to discuss the economy, the Fed and what they all mean for the markets. On camera, we discussed this week’s Federal Reserve meeting and the likely outcomes. Off camera, we jumped into a similar discussion that those in DC have pressed me on. Charles Payne, the Fox host, asked me what I thought of new Fed chairman, Jerome Powell, in general. Payne knew that I view the entire central bank system as a massive artificial bank and market stimulant.

What I told him is that Powell actually has a good sense of balance in terms of what he does with rates, and the size of the Fed’s book. He understands the repercussion that moving rates too much, too quickly, or selling off the assets, could have on the global economy and the markets. Savvy investors know that if the U.S. economy falters, because everything is connected, it could reverberate on the world. That’s why I could forecast that the Fed would raise rates by 25 basis points last week ahead of time. And they did. However, there’s now even less reason to believe the Fed will raise rates at the next meeting in December.

Read more …

Could USD lose its position in just 5-10 years?

The Dollar and its Discontents (Eichengreen)

It is worth recalling how the dollar gained international prominence in the first place. Before 1914, it played essentially no international role. But a geopolitical shock, together with an institutional change, transformed the dollar’s status. The geopolitical shock was World War I, which made it hard for neutral countries to transact with British banks and settle their accounts using sterling. The institutional change was the Federal Reserve Act, which created an entity that enhanced the liquidity of markets in dollar-denominated credits and allowed US banks to operate abroad for the first time. By the early 1920s the dollar had matched and, on some dimensions, surpassed sterling as the principal vehicle for international transactions.

This precedent suggests that 5-10 years is a plausible time frame over which the US could lose what Valéry Giscard d’Estaing, then France’s finance minister, famously called the “exorbitant privilege” afforded it by issuing the world’s main international currency. This doesn’t mean that foreign banks and companies will shun the dollar entirely. US financial markets are large and liquid and are likely to remain so. US banks operate globally. In particular, foreign companies will continue to use dollars in transactions with the US itself.

But in an era of US unilateralism, they will want to hedge their bets. If the geopolitical shock of Trump’s unilateralism spurs an institutional innovation that makes it easier for European banks and companies to make payments in euros, then the transformation could be swift (as it were). If Iran receives euros rather than dollars for its oil exports, it will use those euros to pay for merchandise imports. With companies elsewhere earning euros rather than dollars, there will be less reason for central banks to hold dollars in order to intervene in the foreign exchange market and stabilize the local currency against the greenback. At this point, there would be no going back.

Read more …

Before more tariffs kick in.

China September Exports Surge, Creating Record Surplus With US (R.)

China reported on Friday an unexpected acceleration in export growth in September and a record trade surplus with the United States, which could exacerbate an already-heated dispute between Beijing and Washington. September exports rose 14.5 percent from a year earlier, Chinese customs data showed. That blew past forecasts for an 8.9 percent increase in a Reuters poll and was well above August’s 9.8 percent gain. Growth in imports for September instead showed a moderate slowdown to 14.3 percent from 19.9 percent in August, slightly missing analysts’ forecast of a 15.0 percent growth.

China’s trade surplus with the United States widened to a record in September despite wider application of U.S. tariffs, an outcome that could push President Donald Trump to turn up the heat on Beijing in their trade dispute. The politically-sensitive surplus was $34.13 billion in September, surpassing the record of $31.05 billion in August. China’s export data has been surprisingly resilient to tariffs, possibly because companies ramped up shipments before broader and stiffer U.S. duties went into effect.

Read more …

Is it election time?

Facebook, Twitter Purge More Dissident Media Pages (CJ)

Facebook has purged more dissident political media pages today, this time under the pretense of protecting its users from “inauthentic activity”. In a statement co-authored by Facebook Head of Cybersecurity Nathaniel Gleicher (who also happens to be the former White House National Security Council Director of Cybersecurity Policy), the massive social media platform explained that it has removed “559 Pages and 251 accounts that have consistently broken our rules against spam and coordinated inauthentic behavior.”

This “inauthentic behavior”, according to Facebook, consists of using “sensational political content -regardless of its political slant- to build an audience and drive traffic to their websites,” which is the same as saying they write about controversial things, and posting those political articles “in dozens of Facebook Groups, often hundreds of times in a short period, to drum up traffic for their websites.” In other words, the pages were removed for publishing controversial political content and trying to get people to read it. Not for writing “fake news”, but for doing what they could to get legitimate indie media news stories viewed by people who might want to view it.

[..] Two of the most high-profile pages which were shut down have probably been seen at some point by any political dissident who uses Facebook; the Free Thought Project, which had 3.1 million followers, and Anti-Media, which had 2.1 million. [..] As if that wasn’t creepy enough, some of the accounts purged by Facebook appear to be getting censored on Twitter as well, bringing back memories of the August cross-platform coordinated silencing of Alex Jones. The aforementioned Anti-Media has now been suspended from Twitter just hours after tweeting about being removed from Facebook, along with one of its top writers Carey Wedler, and a Unicorn Riot activist named Patti Beers who had more than 30,000 Twitter followers has just been removed from both sites as well.

Read more …

“EU rules do not allow the ECB to help a country unless this has already agreed on a rescue “program”..

Italian Parliament Approves Controversial New Spending Targets (AP)

Italy’s parliament approved on Thursday deficit-raising spending targets, defying markets and Italy’s eurozone partners who had been pressing for changes. The parliamentary vote clears the proposals to be forwarded to the European Commission for review. But the document already has been criticized as unrealistic by the parliament’s own budget office and the Bank of Italy. The new spending targets are set to raise Italy’s deficit to 2.4 per cent of GDP next year. In a slight softening, Italy’s leaders pledged to lower the deficit in the subsequent two years. But that has done little to assuage concern over the boost in spending to meet a raft of campaign promises made by the two populist parties that formed the governing coalition, and the impact it will have on Italy’s high public debt.

Also on Thursday, five senior sources told Reuters that the European Central Bank won’t come to Italy’s rescue if its governments or bank sector run out of cash unless the country secures a bailout from the European Union. Italy has seen its borrowing costs surge on financial markets since its new government unveiled plans to increase its budget deficit, defying EU rules and reawakening concerns about its huge pile of public debt. The sources, attending an economic summit in Indonesia, said Italy could still avoid a debt crisis if its government changed course but should not count on the central bank to tame investors or prop up its banks.

This is because EU rules do not allow the ECB to help a country unless this has already agreed on a rescue “program” – political jargon for a bailout in exchange for belt-tightening and painful economic reforms, an option the Italian government has firmly rejected. Any attempt to circumvent those rules would damage the ECB’s credibility beyond repair and undermine acceptance of the monetary union in creditor countries, such as Germany, the sources said. “It’s a test-case to show Europe and its mechanisms work,” said one of the sources on the sidelines of the IMF’s annual meetings in the Indonesian resort town of Nusa Dua.

Read more …

You don’t need 15 guys to kill someone.

Turks Had Saudi Consulate Bugged With Audio (ZH)

The Washington Post has provided further details on its prior reporting that US intelligence knew full well that Saudi Arabia was seeking to lure the now disappeared and allegedly murdered journalist Jamal Khashoggi to its embassy in Istanbul in order detain or kill him. In an interesting new revelation the Post speculates based on intel sources that the whole October 2nd incident may have been an attempted “rendition” gone wrong. As more damning evidence emerges showing a Saudi “hit team” of 15 military and intelligence individuals murdered Khashoggi and chopped up his body to carry out of the country, there now appears a strong consensus that the order may have come straight from the top, most likely from crown prince Mohammed bin Salman (MbS) himself.

Middle East Eye, for example, concludes based on WaPo’s prior report, “Saudi Arabia’s Crown Prince Mohammed bin Salman, the country’s de facto ruler, ordered an operation targeting journalist and US resident Jamal Khashoggi… citing US intelligence intercepts.” What’s more is that NBC now reports that the Turks had the Saudi consulate bugged with listening devices before the disappearance and what now appears to be gruesome murder — which suggests Turkey is currently in possession of an audio recording of the alleged killing.

Read more …

Yeah, right..

Journalist’s Disappearance Hardens Congress Stance On Saudi Arms Deals (R.)

The disappearance of Saudi journalist Jamal Khashoggi has hardened resistance in the U.S. Congress to selling weapons to Saudi Arabia, already a sore point for many lawmakers concerned about the humanitarian crisis created by Yemen’s civil war. Even before Turkish reports said Khashoggi was killed at a Saudi consulate in Istanbul, Democratic U.S. lawmakers had placed “holds” on at least four military equipment deals, largely because of Saudi attacks that have killed Yemeni civilians. President Donald Trump was wary of halting arms sales over the case, saying on Thursday the kingdom would just move its money into Russia and China.

[..] An informal U.S. review process lets the top Republicans and Democrats on the Senate Foreign Relations and House Foreign Affairs Committees stall major foreign arms deals if they have concerns such as whether weapons would be used to kill civilians. Corker said he recently told a defense contractor not to push for a deal with the Saudis, even before the Khashoggi case. “I shared with him before this happened, please do not push to have any arms sales brought up right now because they will not pass. It will not happen. With this, I can assure it won’t happen for a while,” Corker said. While details of all the blocked Saudi deals were not immediately available, one was the planned sale of hundreds of millions of dollars worth of high-tech munitions to Saudi Arabia and the United Arab Emirates.

Read more …

“She occasionally gets a taxi but finds that depletes her food budget. “A taxi is a meal..”

More Than A Million UK Residents Live In ‘Food Deserts’ (G.)

More than a million people in the UK live in “food deserts” – neighbourhoods where poverty, poor public transport and a dearth of big supermarkets severely limit access to affordable fresh fruit and vegetables, a study has claimed. Nearly one in 10 of the country’s most economically deprived areas are food deserts, it says – typically large out-of-town housing estates and deprived inner-city wards served by a handful of small, relatively expensive corner shops. Public health experts are concerned that these neighbourhoods – which are often also “food swamps” with high densities of fast-food outlets – are helping to fuel a rise in diet-related conditions such as obesity and diabetes, as well as driving food insecurity.

The most deprived areas include Marfleet in Hull, Hartcliffe in Bristol, Hattersley in Greater Manchester, Everton in Liverpool and Sparkbrook in Birmingham. Eight of Scotland’s 10 most deprived food deserts are in Glasgow, and three of Wales’s nine worst are in Cardiff. The study, by the Social Market Foundation thinktank and food company Kellogg’s, says poor, elderly and disabled people are disproportionately affected, as they cannot afford or are physically unable to travel to large supermarkets.

Food deserts are defined by the report as neighbourhoods of between 5,000-15,000 people served by two or fewer big supermarkets. In “normal” areas of this size there are typically between three and seven large food stores, it says. Small shops are less likely to sell fresh or healthy food. The report cites Lisa Cauchi, a mother of eight in Salford, in the north-west of England, who said the nearest reliable source of affordable fresh fruit and vegetables was a big supermarket half an hour’s walk away. She occasionally gets a taxi but finds that depletes her food budget. “A taxi is a meal,” she said.

Read more …

Aug 192018
 
 August 19, 2018  Posted by at 8:36 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Portrait of Ambroise Vollard 1910

 

Anatomy of a Crisis: A Strong Dollar and Disappearing Liquidity (Palisade)
Speculators Will Make Hay From Great Australian Economic Crash (Steve Keen)
Judge Rules FBI Must Address Measures Taken To Verify Steele Dossier (ZH)
White House Counsel “Cooperating Extensively” With Obstruction Probe (ZH)
Erdogan Says US Has Launched ‘Attempted Economic Coup’ (Ind.)
No-Deal Brexit May Force Rethink Of Vote – Ex-Civil Service Head (PA)
Putin Urges Europe To Help Rebuild Syria So Refugees Can Return (AFP)
Ecuador Slams Door On Venezuelans (BBC)
The Un-Celebrity President (WaPo)
Britain Has One Last Chance To Save Endangered Species (G.)

 

 

When liquidity vanishes the dollar rises.

Anatomy of a Crisis: A Strong Dollar and Disappearing Liquidity (Palisade)

Since March – the dollar’s rallied over 7%. And it’s caused the Emerging Markets to implode. But the bigger problem is what lies ahead. And that’s a global dollar shortage – which the mainstream continues to ignore. . . I’ve touched on this a couple months back. Wondering when the mainstream would start to realize that the stronger the dollar gets – the more pressure global economies will feel. I wrote. . . “This is going to cause an evaporation of dollar liquidity – making the markets extremely fragile. Putting it simply – the soaring U.S. deficit requires an even greater amount dollars from foreigners to fund the U.S. Treasury. But if the Fed is shrinking their balance sheet, that means the bonds they’re selling to banks are sucking dollars out of the economy (the reverse of Quantitative Easing which was injecting dollars into the economy). This is creating a shortage of U.S. dollars – the world’s reserve currency – therefore affecting every global economy.”

Since then, things have only gotten worse. . . First: Jerome Powell – the Fed Chairman – issued a statement at the end of June that they would actually increase the amount of rate hikes over the next two years. This means they’re tightening even faster. Second: the U.S. Treasury increased their debt-borrowing needs to the highest since the financial crisis – which was over a decade ago. Therefore, they will need even more dollars to fund their spending. “The department expects to issue $329 billion in net marketable debt from July through September, the fourth-largest total for that quarter on record and higher than the $273 billion estimated in April [a 17% increase], the Treasury said in a report Monday. The department’s forecast for the October-December quarter is $440 billion, bringing the second-half borrowing estimate to $769 billion, the highest since $1.1 trillion in July-December 2008…”

And third: China’s growth is slowing down. Meanwhile the Emerging Markets are draining their U.S. dollar reserves even faster because of the strengthening dollar. So, in summary: as global dollar liquidity continues drying up, there will be a wave of ‘risky’ positions being dumped and ‘dollar disease’ (selling assets to raise dollars to pay back debts) worldwide. . . What we know is true from Economics-101 is that the lower the supply and the greater the demand equals a higher price. And as the pool of USD keeps drying up – then the price of the dollars must rise. This translates into higher offshore dollar funding (higher interest rates). Which is killing dollar indebted countries and corporations – like Turkey today.

[..] I think future financial historians will scratch their heads wondering why markets today continued discounting this serious dollar-shortage problem. The easy money years post-2008 fueled a massive debt bubble – causing asset prices all over to rise. But the market isn’t expecting the tight money years today to cause asset prices to fall. It’s like they think that drinking alcohol today will make them feel good – but don’t believe they’ll be hungover tomorrow. So, what’s next? I believe the U.S. dollar will continue rallying because of all that I mentioned above. As Hedge Funds, institutions, and investors continue unloading their Emerging Market positions – things will only get worse.

Read more …

Housing bubble vs stock market bubble. Pick your fave toxin.

Speculators Will Make Hay From Great Australian Economic Crash (Steve Keen)

For years, Australia has been seen as the goose which laid the golden egg for workers, migrants and investors. Ironically, as America’s casino closes, it will eventually end up as a speculator’s paradise.\ The performance of the Australian stock market relative to its American equivalent since the Global Financial Crisis (GFC) shows the difference between a country where Quantitative Easing (QE) – the buying of bonds by the central bank to drive bond prices up and interest rates down, and thus encourage firms to invest and financial institutions to buy shares – was practiced and one where it was not. It’s both a warning about what could happen when the Fed starts to unwind QE, and a perverse opportunity to profit when Australia’s central bank, the RBA (Reserve Bank of Australia) inevitably starts its own QE program.

Since Australia avoided the GFC, and its rate of economic growth has been twice as fast as America’s post-crisis (an average 2.7 percent per year, versus 1.3 percent for the US), you might expect Australia’s stock market to have done better than America’s. In fact, it’s performed much worse: the main Australian index, the ASX, still hasn’t returned to its mid-2000s peak, while the US S&P500 has more than doubled its pre-crash level, and it’s almost four times as high as it was in the deepest depths of 2009. The timing of the US stock market recovery is instructive: it began in February 2009, just three months after the Federal Reserve began “QE1” (the first of three episodes of Quantitative Easing), when it promised to net buy bonds from the financial sector to the tune of $1 trillion per year ($80 billion per month).

With the Fed buying a trillion bucks worth of bonds every year, thus giving the financial sector one trillion in cash per year in place of its interest-earning bonds, the only place the financial sector could stash that dough in search of a return was the stock market. This was the intention of the policy of course: to drive share prices higher in order to stimulate the economy. Aside from the fact it’s made the wealthier even wealthier as a direct effect of government policy, and cost far more than a direct boost to the poor would have done, it’s worked a treat: according to Robert Shiller’s “Cyclically Adjusted Price to Earnings Ratio,” it’s driven America’s stock market to its second-highest peak in history, higher than the 1929 bubble, second only to the DotCom maximum in 2000, and more than twice its long-term average.

Read more …

Can’t hide behind declassified docs.

Judge Rules FBI Must Address Measures Taken To Verify Steele Dossier (ZH)

The FBI has been dealt a major blow after a Washington DC judge ruled that the agency must respond to a FOIA request for documents concerning the bureau’s efforts to verify the controversial Steele Dossier, before it was used as the foundation of a FISA surveillance warrant application and subsequent renewals. US District Court Judge Amit Mehta – who in January sided with the FBI’s decision to ignore the FOIA request, said that President Trump’s release of two House Intelligence Committee documents (the “Nunes” and “Schiff” memos) changed everything.

Considering that the FBI offered Steele $50,000 to verify the Dossier’s claims yet never paid him, BuzzFeed has unsuccessfully tried to do the same to defend themselves in a dossier-related lawsuit, and a $50 million Soros-funded investigation to continue the hunt have turned up nothing that we know of – whatever documents the FBI may be forced to cough up regarding their attempts to verify the Dossier could prove highly embarrassing for the agency. “[I]f Mr. Steele could get solid corroboration of his reports, the F.B.I. would pay him $50,000 for his efforts, according to two people familiar with the offer. Ultimately, he was not paid.” -NYT

What’s more, forcing the FBI to prove they had an empty hand will likely embolden calls to disband the special counsel investigation – as the agency’s mercenary and politicized approach to “investigations” will be laid all the more bare for the world to see. Then again, who knows – maybe the FBI verified everything in the dossier and it simply hasn’t leaked. That said, while the FBI will likely be forced to acknowledge the documents thanks to the Thursday ruling, the agency will still be able to try and convince the judge that there are other grounds to withhold the records.

In January, Mehta blessed the FBI’s decision not to disclose the existence of any records containing the agency’s efforts to verify the dossier – ruling that Trump’s tweets about the dossier didn’t require the FBI and other intelligence agencies to act on records requests. “But then the ground shifted,” writes Mehta of Trump declassifying the House memos. “As a result of the Nunes and Schiff Memos, there is now in the public domain meaningful information about how the FBI acquired the Dossier and how the agency used it to investigate Russian meddling.” [..] “It remains no longer logical nor plausible for the FBI to maintain that it cannot confirm nor deny the existence of documents,” Mehta wrote.

Read more …

Doesn’t feel like McGahn has tons of dirt.

White House Counsel “Cooperating Extensively” With Obstruction Probe (ZH)

Update: Trump has commented on the story, saying he allowed McGahn “and all other requested members of the White House Staff” to fully cooperate with the Special Counsel. He also notes that the White House has given over one million pages of documents adding “No Collusion, No Obstruction. Witch Hunt!”

White House counsel Donald McGahn II, has been quietly cooperating “extensively” with special counsel Robert Mueller in his probe of possible collusion between the Trump campaign and Russia, according to an explosive New York Times report published Saturday afternoon. Sources told the Times that McGahn has had at least three voluntary interviews with Mueller’s team totaling 30 hours, in which he discussed accounts of multiple episodes at the center of Mueller’s probe into whether President Trump obstructed justice, as well as the president’s furor toward the Russia investigation and the ways in which he urged McGahn to respond to it. For a lawyer to share so much with investigators scrutinizing his client is unusual.

Lawyers are rarely so open with investigators, not only because they are advocating on behalf of their clients but also because their conversations with clients are potentially shielded by attorney-client privilege, and in the case of presidents, executive privilege. Among the episodes McGahn reprotedly discussed with investigators is Trump’s firing last year of former FBI Director James Comey and the president’s repeated urging of Attorney General Jeff Sessions to claim oversight of the special counsel despite his recusal from Russia probes. McGahn was also centrally involved in Trump’s attempts to fire the special counsel, Robert Mueller, himself which investigators might not have discovered without him.

Read more …

Downgrades add to the downfall.

Erdogan Says US Has Launched ‘Attempted Economic Coup’ (Ind.)

Turkey’s president has accused America of launching an “attempted economic coup” as the country’s currency continues to reel following US economic sanctions. Recep Tayyip Erdogan told thousands of supporters in Ankara: “Today some people are trying to threaten us through the economy, through interest rates, foreign exchange, investment and inflation. “We are telling them: we’ve seen your games, and we are challenging you.” And, in a clear swipe at US president Donald Trump he added: “We did not and will not surrender to those who act like a strategic partner but make us a strategic target.”

[..] As the two countries have clashed, the lira’s value has plummeted: it has now dropped 38 per cent against the dollar since the beginning of the year. On Friday, ratings agencies Standard & Poor and Moody’s downgraded Turkey’s credit rating closer to “junk” status, pointing to currency fluctuations and concerns over central bank independence. A spokesman for Standard & Poor said: “The downgrade reflects our expectation that the extreme volatility of the Turkish lira and the resulting projected sharp balance of payments adjustment will undermine Turkey’s economy. We forecast a recession next year.” He added the agency was predicting that the country’s inflation will hit a potential 22 per cent over the next four months.

Read more …

When temperatures start dropping, reality will loom.

No-Deal Brexit May Force Rethink Of Vote – Ex-Civil Service Head (PA)

Britain may have to rethink the decision to leave the EU if the government is unable to strike a Brexit deal with Brussels, a former head of the civil service has said. Bob Kerslake said the consequences of a no-deal exit would be so serious that the UK parliament would have to consider whether it could allow it to go ahead. Lord Kerslake, who has been advising Labour on preparing for government, said that at the very least the article 50 process – under which the UK is set to leave the bloc on 29 March next year – would have to be paused. In those circumstances, the European commission would almost certainly insist on some “re-examination” of the original decision to leave, he said.

His comments came as the government prepares to publish a series of technical notes on preparations for a no-deal Brexit across dozens of areas of British life, from farming to financial services. Kerslake said the measures were “too little, too late” and that the government had not allowed itself enough time to prepare for such an outcome. He told the the BBC Radio 4’s Today programme: “The consequences of a no deal would be so serious as I think parliament would have to seriously consider whether it could contemplate this. “The question people need to ask themselves is, is this a risk that they think we should be taking?

“If the government can negotiate a good deal, then so be it. But if they can’t and we end up in this position, then we have to reopen the question of whether we go forward with Brexit at all. It is not too late to do that. “A pause to reflect would certainly be necessary. I think that is a pretty high probability now. “But I think that pause would need to include – and I suspect this would be insisted on by the commission – some re-examination of the decision itself.”

Read more …

The only thing that makes sense.

Putin Urges Europe To Help Rebuild Syria So Refugees Can Return (AFP)

Russian president Vladimir Putin has called on Europe to contribute to the reconstruction of Syria to allow millions of refugees to return home. “We need to strengthen the humanitarian effort in the Syrian conflict,” he said on Saturday, ahead of a meeting with his German counterpart Angela Merkel at the government retreat of Meseberg Palace, north of Berlin. “By that, I mean above all humanitarian aid to the Syrian people, and help the regions where refugees living abroad can return to.” There were 1 million refugees in Jordan, the same number in Lebanon, and 3 million in Turkey, Putin said.

Germany has accepted hundreds of thousands of migrants since 2015 – the height of the migration crisis – which has weakened Angela Merkel politically and split the European Union. “This is potentially a huge burden for Europe,” Putin said. “That’s why we have to do everything to get these people back home,” he added, emphasising the need to restore basic services such as water supplies and healthcare.

Read more …

More refugees. Great.

Ecuador Slams Door On Venezuelans (BBC)

Ecuador has brought in new rules to stop Venezuelan migrants entering the country without a passport, leaving many stranded in neighbouring Colombia. Thousands of Venezuelans fleeing their country’s economic and political crisis have been crossing into Ecuador from Colombia using only identity cards. Most are heading south to join family members in Peru and Chile. Colombia has protested against the move, saying vulnerable people will be trapped on its side of the border. In a separate incident, residents of a Brazilian town attacked a Venezuelan migrant camp on Saturday and drove the occupants back across the border. Venezuela has suffered for years from high inflation and the chronic shortage of food and medicines.

More than a million Venezuelan migrants have entered Colombia in the past 15 months, according to official estimates, and more than 4,000 have been arriving at Ecuador’s border every day. Many have been walking or hitching rides for weeks and are exhausted by the time they reach the frontier. [..] With the flow of Venezuelan migrants causing tensions across the region, Peru’s government announced immigration measures similar to Ecuador’s on Friday. Passport requirements for Venezuelans will begin on 25 August. In February, Colombian President Juan Manuel Santos announced a tightening of border controls, resulting in thousands of Venezuelans rushing to crossing points. Brazil, which neighbours Venezuela, has also expressed concerns and temporarily closed the border earlier this month. Violence has flared in the border state of Roraima where thousands of Venezuelans live in precarious accommodation.

Read more …

“Carter has been an ex-president for 37 years, longer than anyone else in history.”He used those years to redeem himself.

The Un-Celebrity President (WaPo)

Jimmy Carter finishes his Saturday night dinner, salmon and broccoli casserole on a paper plate, flashes his famous toothy grin and calls playfully to his wife of 72 years, Rosalynn: “C’mon, kid.” She laughs and takes his hand, and they walk carefully through a neighbor’s kitchen filled with 1976 campaign buttons, photos of world leaders and a couple of unopened cans of Billy Beer, then out the back door, where three Secret Service agents wait. They do this just about every weekend in this tiny town where they were born — he almost 94 years ago, she almost 91. Dinner at their friend Jill Stuckey’s house, with plastic Solo cups of ice water and one glass each of bargain-brand chardonnay, then the half-mile walk home to the ranch house they built in 1961.

On this south Georgia summer evening, still close to 90 degrees, they dab their faces with a little plastic bottle of No Natz to repel the swirling clouds of tiny bugs. Then they catch each other’s hands again and start walking, the former president in jeans and clunky black shoes, the former first lady using a walking stick for the first time. The 39th president of the United States lives modestly, a sharp contrast to his successors, who have left the White House to embrace power of another kind: wealth. Even those who didn’t start out rich, including Bill Clinton and Barack Obama, have made tens of millions of dollars on the private-sector opportunities that flow so easily to ex-presidents.

When Carter left the White House after one tumultuous term, trounced by Ronald Reagan in the 1980 election, he returned to Plains, a speck of peanut and cotton farmland that to this day has a nearly 40 percent poverty rate. The Democratic former president decided not to join corporate boards or give speeches for big money because, he says, he didn’t want to “capitalize financially on being in the White House.” Presidential historian Michael Beschloss said that Gerald Ford, Carter’s predecessor and close friend, was the first to fully take advantage of those high-paid post-presidential opportunities, but that “Carter did the opposite.” Since Ford, other former presidents, and sometimes their spouses, routinely earn hundreds of thousands of dollars per speech. “I don’t see anything wrong with it; I don’t blame other people for doing it,” Carter says over dinner. “It just never had been my ambition to be rich.”

Read more …

One field where EU regulation is very harmful.

Britain Has One Last Chance To Save Endangered Species (G.)

Ministers may have only 12 months to rescue Britain’s degraded environment and to save its endangered birds and animals. That is the stark conclusion of Michael Clarke, chief executive of the RSPB, who has warned that parliamentary bills – to be published over the next year – will have to make crucial changes to the way our farms and fisheries are run if the wildlife and landscape of the nation are to be rescued from their dangerously depleted condition. “We are on a cusp, and if we fail to act decisively we will pay the price in coming years,” Clarke told the Observer last week. The three forthcoming bills – on agriculture, on fisheries and on the environment – will replace the EU legislation that currently controls our farming, fishing industry and the quality of our air, water and wildlife.

The government has yet to announce what these bills will contain. However, conservationists such as Clarke now fear there is a real risk that one or all of these new pieces of legislation will fail to provide the necessary powers to restore our crisis-hit environment. “Since 1980, across Europe 420 million individual birds have disappeared from the countryside thanks to the practices of modern agriculture,” said Clarke. And that staggering drop is matched by an even more catastrophic decline in insect life over the same period of time, he added. “For years, we could see the lack of insects on our windscreens on summer evenings. It was a smoking gun but there was no hard data – until recent research in Germany showed there had been a 75% decline in its flying insects, figures since matched by Dutch and some UK data. The insects have gone – and so have 420 million birds.”

[..] As to the causes of these declines, the intensification and spread of agriculture and changes in land use take most of the blame – with the EU common agricultural policy (CAP) being considered a particularly destructive agent in this process. The CAP stresses the importance of agricultural output above all else and has helped destroy the homes and food sources of countless birds, animals and insects, said Clarke. Crucially, as Britain prepares to withdraw from the CAP and the EU, the nation has a once-in-a-generation opportunity to put right this damage, said Clarke. About £3bn a year is spent on British farming through CAP, he pointed out.

Read more …

Aug 032018
 
 August 3, 2018  Posted by at 12:31 pm Finance Tagged with: , , , , , , , , , ,  


George Caleb Bingham The verdict of the people 1854

 

 

It’s been a while since we last heard from Dr. D, but here he’s back explaining why neither gold nor the yuan nor cryptocurrencies can or will replace the dollar as the reserve currency, but together they just might:

 

 

Dr. D: “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” –Ogden Nash

Over the last year or two there’s been discussion about the U.S. Federal spending moving beyond $4 TRILLION dollars, and whether a $1+ trillion dollar annual deficit, on top of a $20 Trillion national debt – Federal only – is sustainable. It isn’t.

“What can’t go on, doesn’t” is the famous quote of economist Herbert Stein. Since a spiraling deficit of $1 trillion deficit on a $20 trillion debt can’t go on, what will we replace it with when it very soon doesn’t? Historically gold. Whatever gold exists in the nation’s coffers, whether one coin or 8,000 tons, is used to as the national wealth, and fronted by paper to re-boot the currency. With some additions such as oil and real estate, this was the solution in Spain, France, Germany, and the Soviet Union among hundreds of fiat defaults. Why? Because at a time of broken promises — real goods, commodities that can be seen, touched, and used – are the tangible proof of wealth, requiring no trust, and from which the human trust system of paper and letters of credit can be rebuilt.

But in these complicated, digital times perhaps that’s too simplistic. Perhaps we have grown smarter than all our fathers and this time it will be different. Will it really be the same? Let’s look at how the system works now.

Before WWI, the world was on the gold standard. This had variations, exceptions, corruptions, but on the whole there was gold in the back that was fronted by paper promises issued by private banks. The paper moved, the promises were delivered by telegraph and telephone, and the gold remained in the vaults. It was only when men felt unsure of the truth of the promise they could and did demand delivery, called the bluff, and the bank did – or ominously didn’t – deliver the gold, and thereby keep the paper system in line with reality, with real wealth, and with the economy. This method kept men and nations honest, mostly.

The main part is that the gold didn’t move: it stayed in the same vaults and its ownership changed, just like today. It didn’t matter how much gold existed: it simply changed price, just like today.

All this changed after WWI. The nations had so impoverished themselves that they could no longer repay their real debts and restore their currencies following a 1,000 year tradition of inflating during wars and deflating after. The deflation was too high for Britain and France even while removing the total wealth of Germany, and they began to cheat, double-counting the gold on their books to relieve the pressure. And so the non-gold system began. With other causes, the inflation of this change began to be felt through the Roaring 20’s, until when the phantom money was called on – as was tradition when people began to suspect that the paper they owned was no longer backed with adequate real goods – the illusion popped.

The inflation was shown to be a fraud supported by the highest powers in government and finance, and the real economy withdrew their lack of trust until the matter was fixed. It wasn’t. As the system was fundamentally unchanged and no trust was restored, the rich were protected and law and property rights were trampled in a decade of Tom Joads, the economy never recovered. Although destroying half the nations on earth restored the real balance between paper fantasy and real production, the unemployment that never existed before WWI was never cured and has continued, ever worsening to this day. But note: before, during, and after the Depression, there was the same amount of gold. The gold did nothing, it was meaningless, only the paper promises over it expanded and contracted.

With the systemic dishonesty still in place preventing the books from matching the real wealth and production, the economy soon returned to a diseased state. While gold was illegal for men to own, the rich do as they please and as tradition, removed the gold of the United States to hold them to truth and honesty from printing too much fake money for guns and butter. They withstood the 12 year bank run until, in 1971, they folded, having lost 2/3s of the national savings, gold.

 

The world was now in uncharted territory. Much more than they never returned to honesty and a gold standard after WWI, they never attempted it after WWII, going to the -Bretton Woods” standard: the world would use the US$ as the standard, and the US$ would be backed with their 20,000 tonnes of gold. Now there was no gold, no gold standard, only unbacked US$ paper, a debt you could neither call on nor prove. As Nixon’s Treasury Secretary Connally said: “the dollar may be our currency, but it’s your problem.’

Inflation started immediately, and as the U.S. still resisted re-establishing physical trust, the connection between the books and reality, they quickly spiraled into South American malaise and high inflation, as seen in the gold price. From $20/oz, or rather a dollar value of 0.029, the dollar ran to 0.0011 – 1/26th of its former price — and looked to disappear altogether. This was not unexpected as fiat currencies on average live 40 years before collapsing. If you take 1941 as the start date, the unbacked US$ would have collapsed in 1981, exactly when it did. What to do? How to re-start the system without having to actually reform, give up war, be honest, and return to trust?

Henry Kissinger had the plan. As no one on earth was on the gold standard – not really – the US$ had only two legs, its worldwide use and military force. He made use of them both by demanding the Saudis accept only US$ for oil transactions. Although U.S. production was diminishing, the U.S. and Saudi Arabia were still the two largest oil producers at that time. Most other nations imported oil, especially Europe.

To have assurity of access to that oil — and not run afoul of the U.S. military – they needed to keep a substantial portion of their national accounts in US$, or more technically U.S. Treasury debt, sparking not just the ability, but the REQUIREMENT of a massive U.S. deficit. Kissinger just discovered social media: the truth that virtual things have value simply because other people use them. This was for all practical purposes the first virtual currency, existing only in room-sized mainframes in central banks worldwide. The world’s currency now looked like this:

 


(Courtesy of Dr. Willie)

A virtual currency backed by nothing, based on the usage in trade. But that isn’t a full chart and isn’t meant to be. On the side, back in the corners, the US$ was still convertible to gold for the “right kind of people”, using delivery in NY and London to banks in Switzerland. The volumes of US$ grew to trillions while the gold component withered to billions, yet still the Saudis banked billions in gold before it was recently stolen from their Swiss accounts, lawsuits pending. Why? Because there is still no trust between nations and billionaires who have a long history of cheating each other. The gold-in-hand safety valve existed to retain some trust, however distant, in the now-digital system.

 

“Gold is a currency. It is still, by all evidence, a premier currency, where no fiat currency, including the dollar, can match it.” –Alan Greenspan, 2014 interview of the Council on Foreign Relations.

So is the system still gold backed with gold as the “premier”, that is, first, real, and primary currency as Greenspan said? You tell me:


Apart from the Iraq war, the price of oil has been stable for 50 years. In 1950, two silver dimes would buy a gallon of gas. In 2018 two silver dimes are worth $2.22, or the price of a gallon of gas, minus the new taxes. Meanwhile the US$ value has dropped steadily:


Doesn’t that mean that it’s still gold and not the dollar that is the standard, the “store of value”, and the “reserve currency”, however unspoken? If not and it’s a relic, a rounding error we cannot return to, why, as Ben Bernanke was asked, do all the banks and nations still own it?

 

Back to the $20,000,000,000,000 debt the U.S. as reserve currency was REQUIRED to issue, it’s now been 40 years since 1978: what happens when the U.S. Dollar disappears as all fiat currencies do? Because it seems we would have to do something. It may be that even before 1988, people already knew this conversion, this transfer, must happen roundabout 2018:

If the old currency burns as predicted 30 years ago, what next? Will it be replaced by a gold coin or a “zero” coin, chained under the fleur-de-lis? It would seem the new currency must be trusted, which is the original problem, must be a replacement in trade, and must be large enough to handle what are now multi-billion trade and multi-trillion Forex flows. Is the answer gold? Well yes…and no. Certainly China thinks so:

And Russia:


And for that matter Germany and Holland and even Texas, who have repatriated their gold back home. But there’s one little problem:

These are the official western gold reserves; however, while the gold base remained stable, the overall financial system has expanded. This can be seen in all paper assets, but a good example can be found here:

That’s what? A 20,000-fold rise? And this is only marking “credit”, not equities or cash. We are indeed in an inflationary period: inflation in assets owned by the 1%. How out of line is this? Here’s the kindred chart in productive terms, GDP:

A 9-fold increase in ability versus 20,000-fold increase in promises. Sounds like someone won’t get paid. And you know what bankers and economists call that?

Default. Massive, system ending default, the size of WWI or the Great Depression. That’s how fiat standards end.

How big would that be? Here are some relative sizes:

Actually, that’s pretty understated. Derivatives in 2018 may be as much as $2 QUADRILLION. No one knows. Compare to this:

$3 Trillion in gold. Now that’s “official” gold and we already showed that “official” Chinese gold is 4,000 tonnes when it may be as high as 30,000 tonnes, but the principle is the same: gold is wildly smaller than the needs of the financial system. Or is it? In previous financial inflations…which I just showed we have had since 1971, in 20,000x scale…gold simply rose until it became the right size.

It’s perfectly simple. Gold rises 20,000 times or however much it must to re-back the system. It always has before, even in 1979 when the price rocketed from $35 to $880 where US debt to gold holdings ratio stabilized at a very reasonable 10:1…the classic level of fractional reserve trust. If China officially owns 5,000 tonnes, and Russia 2,000, with the west also 15,000 collectively, we have 22,000 tonnes over what BusinessInsider says is $160 Trillion in assets, and you get $7.27B/tonne or $226,000/oz.

That’s a 188x increase. 1979 was a 25x increase on an awful lot less trouble, inflation, and fraud. That’s only 7x larger. Is that unreasonable? With 40 years of inflation and very little comparative rise in gold, why shouldn’t it catch up as it did in 1979? So gold will rise and we’ll have a $200,000 gold standard? That’s what will happen?

Not so fast. We COULD have a gold standard, and China, Russia and other major nations appear ready to do so if necessary, but remember we didn’t return to the gold standard last time either. Instead, we cheated and moved to a digital standard stored in ancient mainframes. Why wouldn’t we just cheat again? Back to this:

The two problems in the original chart are trust and price. The price must restore a connection between reality -real value and real production- and price; and the “reserve currency”, the medium of exchange, must be a trusted agent or method. Why would we need coins in our pockets to make that happen? For that matter, why would we need banks, who have widely proven to be the most corrupt, untrustworthy element in the whole system? We can’t go to a new system if it’s the same as the old: that’s WHY the system failed and cycles from gold to silver, silver to paper, paper to gold. We can’t go from paper to paper, that won’t work; but we also can’t so easily go to gold, asking an 800-fold increase since 2000. It would have the same disruptions Weimar had that brought Hitler, or the Jacobins had that brought Napoleon, or that Venezuela has today. And why should we? There’s no need.

The chart above has the US/Saudi oil as the critical mass of trade that allows the US$ reserve. But that isn’t necessarily true today. Today the mass of trade is in goods to and from China. But China isn’t large enough, deep enough, or trusted enough to be the new world currency. And why should they? The reserve currency is what just hollowed out and bankrupted the United States: they would just be imitating our faults. We’d also be moving from one untrusted, unbacked currency to another, and history says that doesn’t happen. So why don’t we do this:


(Courtesy Dr. Willie)

China demands not US Treasuries in NY as collateral to ship goods as presently, and not Yuan bonds, but gold bullion posted in their hot new Shanghai market, which allows physical delivery on demand. This bullion never moves as collateral, but is simply posted by one party then released on delivery. Shanghai is already larger than London, and the largest banks are already in China, which probably has the largest economy. The West and their banks are a has-been: we’re only admitting to a reality that happened years ago.

This solves our two problems: how do we know we’re returning to fair trade, like-for-like? Real goods on container ships are trading for real goods in vaults. How do we know it’s fair, mostly? You can convert the Yuan-sponsored, gold trade note to physical delivery from Shanghai, a thing which is no longer truly possible in London and NY. Will this reversion increase the gold price? Probably. How much? Every number is a state secret, but assuming the 10:1 ratio the United States showed in 1980, let’s say it’s 1:10 of our $226,000 number above or $22,600/oz. That’s reasonable, practicable, and neither stops business nor starts wars. We can do it today, and given China, Russia, Japan, Asia, Australia, and even London appear to be joining China’s AIIB front bank, I would say it already IS happening.

Which leads to one more problem. Certainly TODAY you can take gold delivery in Shanghai, but as London, NY, and the Saudis discovered, the first thing that happens once you build a system of trust is to close the doors and cheat on it. How do we know the gold is there? Even though Shanghai is a “third party” allowing delivery, who’s to say they will be tomorrow? The banks are notorious for “hypothecating”, doubling, tripling the gold on their books with accounting fraud backed by the full faith and credibility of governments, and no one’s in the mood for trusting the Chinese any more than Wells Fargo or DeutscheBank. That would drop us back to a hard gold standard, a $220,000 price, a halt to world trade, and possible world war we were trying to avoid. We need an accounting method that is better trusted and can’t be gamed. How to fix it?

 

The gold in Shanghai has a chain of custody, no different from “London Deliverable” standards we have today. An original audit, adjusted for receipts and deliveries is all we need. Which is where we add the blockchain. With it, Shanghai cannot double the gold on their books like Europe did in 1922 or the CME does today, marking it both received and loaned, because the blockchain only allows one position, one state at a time. Gold assayed and entered by refiner is tagged to a kilo, and you can follow that kilo bar through the system, not with double counts and vanishing, ever-changing serial numbers as the Federal Reserve and the GLD ETF showed.

Can it be cheated? All systems can be cheated, that’s the nature of men. But it makes it much harder, hard enough to establish adequate trust in banks and governments that otherwise would go to war. Will it be tied to Bitcoin? Yes, but no differently than it will be tradable to the Thai bhat or the ruble. With near-zero cost conversions, all currencies, crypto or otherwise, will be far more interchangeable and thus to some extent identical. They may even disappear, as happened when Jackson closed the 2nd central bank 182 years ago and the nation essentially moved to private currencies.

What will happen to the Dollar? It will still exist, but in some new, revised form. But the US$ today is transferring 3% of the nation’s wealth from the poor to the rich via inflation. Do we really want to keep it? And if it’s not a store of value and it’s already not the reserve currency — we just showed it’s a diluted proxy for gold and oil — why should the reformed US$ be any different? The dollar will be our national currency, still diluted and still referring to the real currency: gold, the attached Trade Note, and its crypto accounting. Until the next fraud and next crisis, perhaps in 2058.

 

And that’s the long story of how we leave the present debt-backed U.S. paper dollar and move to a Yuan-sponsored gold trade note that is a gold-backed cryptocurrency. In some ways we already have. Watch and see as they have the public opening of a structure planned and established years ago.

 

 

Jul 302018
 
 July 30, 2018  Posted by at 9:13 am Finance Tagged with: , , , , , , , , , , , ,  


Salvador Dali Meditative rose 1958

 

Julian Assange’s Fate Is Being Decided At The Moment (ZH)
The Dollar Will Continue To Surge, Crush Emerging Markets Stocks (F.)
China’s Yuan Hits 13-Month Low On Weaker Fixing And Depreciation Bets (R.)
The Chinese Economy Is Held Together By Capital Controls (Peters)
Beijing To Shut 1,000 Manufacturing Firms By 2020 (R.)
Hedge Fund Manager Steve Eisman Bets Against Tesla (MW)
This Is What A No-Deal Brexit Actually Looks Like (Dunt)
As US Pushes For Mideast Peace, Saudi King Reassures Allies (R.)
Support For Macron & Merkel’s Coalitions Plunges To Record New Lows (RT)
IMF Reiterates Call For Greece To Meet Pledges (K.)
Number Of Migrants Prevented By Turkey To Reach Europe Increases 60% (An.)
Worms Frozen In Permafrost For Up To 42,000 Years Come Back To Life (ST)
Greece Fire Death Toll At 91, 25 Remain Missing (K.)

 

 

Ecuador refusing to meet Assange’s lawyers is not a good sign.

Julian Assange’s Fate Is Being Decided At The Moment (ZH)

Ecuador is holding high level discussions with Britain over the fate of Julian Assange, who has been living in the Ecuadorian embassy in London since 2012 after being granted political asylum, according to comments made by President Lenin Moreno to Spain’s El Pais daily newspaper. “The issue of Mr. Assange is being treated with the British government and I understand that we have already established contact with Mr. Assange’s lawyers so we can find a way out.” Not true, says Assange’s Attorney Carlos Poveda in a Sunday LaJournada article retweeted by the official WikiLeaks Twitter account. “The defense of Julian Assange is concerned about the contradictions of the government of Ecuador, which claims to be seeking a solution to the asylum of the founder of Wikileaks through dialogue, with all parties, but refuses to meet with their lawyers, said Carlos Poveda, one of the activist’s lawyers.” -LaJournada (translated)

“We have followed very closely the statements of President Lenin Moreno both in the United Kingdom and Spain,” said Poveda. “And I must warn that even the legal team that presides (the former judge of the Spanish Supreme Court) Baltasar Garzón requested a hearing to meet in London or Madrid, but they told him that Moreno’s schedule was full during the whole tour.” In other words – Moreno is talking out of both sides of his mouth while feigning a new found concern for Assange’s fate (after referring to the WikiLeaks founder as a “hacker”, “an inherited problem” and a “stone in the shoe”). “We know how (Moreno) addresses the issue , said Poveda, who said that the president’s statements leave us confused. In relation to the recent declarations of the Ecuadorian agent chief executive, of which his government is in “permanent” communication with London and with the legal team of Assange, Poveda maintained that that does not happen.” -LaJournada (translated)

Read more …

It’s much worse for Brazil and Turkey than it is for China.

The Dollar Will Continue To Surge, Crush Emerging Markets Stocks (F.)

A robust greenback is excellent for the U.S. economy because it attracts capital into the economy. More capital will result in yet more growth. But at the same time, the strong dollar is a nightmare for emerging markets because investors take their capital away and send it to the U.S. Emerging markets include lesser developed economies such as China, Russia, Brazil, and India. The result of this change in the value of the dollar has been falling values for stocks in emerging markets. The Vanguard FTSE Emerging Markets ETF (VWO), which tracks a basket of emerging markets stocks, has lost more than 6% this year while the S&P 500 gained more than 5%, according to data from Yahoo Finance. The figures do not include dividends.

Unfortunately, for those invested in emerging markets the rally of the greenback is probably not over yet. Friday morning we learned that U.S. growth in the second quarter hit 4.1%, according to the government’s first estimate. Meanwhile, growth in the single currency area of Europe, the so-called eurozone, has limped along at less than 1% for the last decade. The latest reading was a paltry 0.4%, according to data from Tradingeconomics.com that you can see here. Japan’s economy, the third largest in the world, is contracting, according to the latest reading. That differential in growth, between the U.S. and other developed economies, should be enough to keep cash flowing into the U.S. and away from other economies.

Read more …

Mixed blessings. A weaker yuan has benefits, too.

China’s Yuan Hits 13-Month Low On Weaker Fixing And Depreciation Bets (R.)

China’s yuan fell to a fresh 13-month low against the dollar on Monday, weighed by a much weaker central bank fixing and expectations the Chinese currency has further to fall as U.S. trade tensions worsen. In addition to developments in the global trade environment, investors are focusing on the amount of liquidity policy makers have injected into the financial system. “Together with announcements by the People’s Bank of China (PBOC) that will ease credit conditions, and a more gradual shift in the monetary stance over the last two months, this represents a significant change towards more accommodative policy,” analysts at Moody’s said in a note.

Prior to market opening, the PBOC lowered the midpoint rate to 6.8131 per dollar, largely matching market forecasts, 189 pips or 0.28 percent weaker than the previous fix of 6.7942 last Friday. In the spot market, the onshore yuan opened at 6.8159 per dollar and eased to a low of 6.8401 before changing hands at 6.8353 at midday, 213 pips weaker than the previous late session close and 0.33 percent softer than the midpoint. The onshore spot yuan hit its lowest intraday level since June 27, 2017. The offshore yuan was trading 0.10 percent weaker than its onshore counterpart at 6.8422 per dollar as of midday.

Read more …

“The Chinese are dying to get their money out.”

The Chinese Economy Is Held Together By Capital Controls (Peters)

“Russia at its very worst is a moderate threat to the US,” said the investor. “They have modest regional ambitions. They’re mischievous. But plenty of countries don’t do what we want.” If they wanted to nuke us, they would’ve during the Cold War. “China is the real strategic threat. They’ve coopted much of the US political and financial system,” he said. “Wall Street makes a ton of money from China.” No one that matters makes money from Russia. “It’s so telling that everyone is in hysterics over Russia. It’s a distraction that makes you wonder if the Chinese aren’t enabling or pushing the narrative.”

“The best way to bring Beijing to its knees is by running a tight monetary policy in the US,” continued the same investor. “China has the world’s most overleveraged, fragile financial system.” In 2008, China’s total debt-to-GDP was 140%. It is now roughly 300%, while GDP is slowing. “The economy is held together by capital controls. If those fail, the whole system fails.” The capital flight in 2015/16 cost the government $1trln in reserves, and that was with ultra-dove Yellen in charge. Imagine what would have happened with Volcker at the helm. “The Chinese are dying to get their money out.”

“Engineering a decade of rolling Chinese financial crises would be the most effective foreign policy the US could run,” continued the same investor. Forget about the South China Sea, don’t bother with more aircraft carriers, just let Beijing try to cope with their financial system. “And we’re 80% of the way there – we instigated a trade war, implemented a massive fiscal stimulus, which created the room to raise interest rates,” he said. “The combined policy mix makes capital want to leave at the same time it makes the dollar more attractive and effectively shuts down new investment inflows to China.”

Read more …

That’s just the city itself.

Beijing To Shut 1,000 Manufacturing Firms By 2020 (R.)

China’s capital Beijing will shut around 1,000 manufacturing firms by 2020 as part of a program aimed at curbing smog and boosting income in neighboring regions, state media said on Monday. Beijing will focus on dynamic, high-tech industries and withdraw from “ordinary” manufacturing, the Communist Party paper People’s Daily reported, citing a recent policy document published by the Beijing municipal government. The city has already rejected registration applications from 19,500 firms, and shut down or relocated 2,465 “ordinary” manufacturers, the paper said.

China launched a plan to improve coordination in the smog-prone Beijing-Tianjin-Hebei region in 2014 amid concerns that competition between the three jurisdictions was wasting resources and creating overcapacity and pollution. It plans to strip Beijing of manufacturing and heavy industry, as well as relocating universities and some government departments into Hebei’s new economic zone of Xiongan. The government also wants to create an integrated transport network and unify standards in areas such as welfare and education to make Hebei, known for its heavy industry, more attractive for investors. An official with Hebei province earlier this year said the plan has helped drive average incomes in Hebei up 41 percent since 2013, although they are still only half the level in Beijing.

Read more …

‘..being smart’s not enough you gotta execute and he’s got execution problems.’

Hedge Fund Manager Steve Eisman Bets Against Tesla (MW)

‘Look, Elon Musk is a very, very smart man but there are a lot of smart people in this world, and being smart’s not enough you gotta execute and he’s got execution problems.’ That is the view of Steve Eisman, the hedge-fund manager and investor who garnered prominence on Wall Street for his bets against dicey mortgage products engineered by some of the world’s biggest banks. Now Eisman is betting against Elon Musk’s Tesla Inc. because, as he put it during a Friday interview on Bloomberg TV, he doesn’t see value in the company and doesn’t believe Tesla is doing enough in autonomous driving. “I don’t see the value in Tesla,” Eisman said. “We’re short Tesla,” meaning he is betting that the price of the company’s shares will fall over time.

Eisman said Tesla’s quarterly results could be pivotal for the electric-car manufacturer whose polarizing founder has been ensnared in a series of controversies in recent weeks and has been described by critics as a distraction for Tesla. [..] For his part, Eisman finds more appeal in betting on General Motors, which he says would benefit if autonomous driving takes off and has emerged as a well-run institution after the 2007-09 financial crisis. “The one stock in my portfolio which I say hasn’t worked yet but has the potential for a big home run is General Motors.” Eisman garnered fame after his story of subprime mortgage glory was told in Michael Lewis’s “The Big Short,” where he wagered correctly that arcane mortgage securities would eventually rock the financial system to its very core.

Read more …

Sometimes one thinks they do it on purpose.

This Is What A No-Deal Brexit Actually Looks Like (Dunt)

March 30th 2019 becomes Year Zero. Overnight, British meat products cannot be imported into the EU. To bring these types of goods in, they have to come from a country with an approved national body whose facilities have been certified by the EU. But there has been no deal, so there’s no approval. This sounds insane. After all, British food was OK to enter Europe with minimal checks on March 29th, so why not on March 30? Nothing has changed. The reason is that food is potentially very dangerous, so we have strict systems in place for it. Imagine that right now someone is eating a burger made from the meat of a cow with a neurodegenerative disease, like BSE. This is what happened in Britain in the late-80s and led to the deaths of 177 people.

Tomorrow’s tabloid front pages will ask certain very important questions. Where did the meat come from? Was it produced domestically or imported? Who was responsible for its production, transport and storage? The people responsible will be hauled in front of cameras and Commons select committees. Ministers will have to give statements to parliament. The press will demand that heads roll. The BSE outbreak almost brought down the government. That’s how severe these threats are. And there are plenty more around, including foot and mouth, avian flu, and African swine fever, plus those that do not exist yet. This is why the certification system for food coming into Europe is so stringent and detailed.

After Brexit, we will fall out of the eco-system of EU rules, agencies and courts and become an external country. That means certification requirements will apply to us too. Certificates are approval stamps, designed per product and country, documenting the fact that it meets the various standards for human health and animal welfare. Say a container full of pork loins is sent from Leeds to Amsterdam after Brexit day. It will need to be signed off by a vet to say that the meat was slaughtered, stored, quality assured, sealed and despatched in a certain manner, with appropriate documentation proving compliance. This will be a cold splash of water to the face for Britain.

Read more …

A preposterous headline of course. But interesting that the king whistles MBS back.

As US Pushes For Mideast Peace, Saudi King Reassures Allies (R.)

Saudi Arabia has reassured Arab allies it will not endorse any Middle East peace plan that fails to address Jerusalem’s status or refugees’ right of return, easing their concerns that the kingdom might back a nascent U.S. deal which aligns with Israel on key issues. King Salman’s private guarantees to Palestinian President Mahmoud Abbas and his public defense of long-standing Arab positions in recent months have helped reverse perceptions that Saudi Arabia’s stance was changing under his powerful young son, Crown Prince Mohammed bin Salman, diplomats and analysts said. This in turn has called into question whether Saudi Arabia, birthplace of Islam and site of its holiest shrines, can rally Arab support for a new push to end the Israeli-Palestinian dispute, with an eye to closing ranks against mutual enemy Iran.

“In Saudi Arabia, the king is the one who decides on this issue now, not the crown prince,” said a senior Arab diplomat in Riyadh. “The U.S. mistake was they thought one country could pressure the rest to give in, but it’s not about pressure. No Arab leader can concede on Jerusalem or Palestine.” Palestinian officials told Reuters in December that Prince Mohammed, known as MbS, had pressed Abbas to support the U.S. plan despite concerns it offered the Palestinians limited self-government inside disconnected patches of the occupied West Bank, with no right of return for refugees displaced by the Arab-Israeli wars of 1948 and 1967. Such a plan would diverge from the Arab Peace Initiative drawn up by Saudi Arabia in 2002 in which Arab nations offered Israel normal ties in return for a statehood deal with the Palestinians and full Israeli withdrawal from territory captured in 1967.

Read more …

Shaky grounds.

Support For Macron & Merkel’s Coalitions Plunges To Record New Lows (RT)

The people’s dissatisfaction with the leading EU governments appears to be rising, as fresh polls show a record decline in the ratings of French President Emmanuel Macron and of German Chancellor Angela Merkel’s ruling coalitions. Support for Merkel’s conservative Christian Democratic Union (CDU) and its sister party, Bavaria’s Christian Social Union (CSU), has gone down to its lowest level since 2006, an Emnid poll, published by Bild am Sonntag, has revealed. The CDU/CSU are currently polling at 29 percent, their lowest result in 12 years. Merkel’s party came out tops in the country’s federal election in September 2017 with 33 percent of the vote. Such a situation is worrying for CSU, which seems to be at risk of losing its absolute majority in Germanys’ largest state of Bavaria after the regional election in October.

The survey provided no explanation for the results, but Merkel’s coalition nearly fell apart in June over a rift caused by the migrant crisis. [..] Meanwhile, in France, Macron also “has beaten his own anti-record,” the Journal du Dimanche wrote, commenting on the results of the survey, carried out for the outlet by Ifop. Support for the French President has fallen from 41 to 37 percent in the period between July 18 and 27, the research revealed. It’s the worst ratings the 40-year-old has had since he became French president in May 2017, claiming 66.1% percent of the vote in a run-off against Marine Le Pen. Macron’s previous worst result was recoded in August 2016, when he was backed by 40 percent of the French population.

Read more …

This devolves into Beckett and Ionesco. Meaningless.

IMF Reiterates Call For Greece To Meet Pledges (K.)

The IMF is due to publish its Article IV Report on the course of the Greek economy on Tuesday. This will include the much anticipated Debt Sustainability Analysis, which was carefully examined at a meeting last Friday, with the board confirming the medium-term sustainability of the Greek debt as well as the need for the government to remain committed to reforms. The IMF’s executive board spent about an hour pouring over the contents of the report and the reform course that Greece needs to pursue in the post-program period. Fund sources told the Athens-Macedonian News Agency on Friday that the Article IV Report’s timing is important – even if it is a routine process – as it comes a few days before the completion of the European Stability Mechanism’s program next month.

ANA-MPA added that the board acknowledged the achievement of significant results by Greece, but also stressed there should be no complacency and that it is necessary for the country to implement its pledges so that the sacrifices already made do not go to waste. Another issue addressed at the meeting was that of bad loans in Greece, with several IMF board members expressing doubts over the high targets set for the reduction of nonperforming exposures.

Read more …

But arrivals are also up vs last year.

Number Of Migrants Prevented By Turkey To Reach Europe Increases 60% (An.)

The number of migrants held trying to reach Europe from Turkey using illegal routes has increased by 60 percent this year, according to data from the Coast Guard Command. A total of 14,470 migrants were held in the first seven months of this year, especially in the Aegean Sea, as well as in Turkey’s southern Mediterranean Sea and the northern Black Sea, the data revealed. This figure was 9,152 during the same period in 2017. According to the data, most migrants prefer to use the illegal routes in Aegean Sea to cross into Europe as a number of Greek islands are located close to Turkish coasts. A total of 13,336 irregular migrants used the Aegean Sea to cross into Greece this year, the data revealed.

Among the irregular migrants intercepted by Turkey so far this year, 1,640 were held in January, 1,363 in February, 1,849 in March, 2,534 in April, 3,398 in May, 1,925 in June, and 1761 in first 29 days of July. Coast Guard data shows 54 irregular migrants lost their lives this year while the figure was 20 during the same period in 2017. In March 2016, the EU and Turkey reached an agreement to stop irregular migration through the Aegean Sea, and improve the conditions of more than 3 million Syrian refugees in Turkey. Turkey hosts some 3.5 million Syrians – more than any other country in the world.

Read more …

Hope?!

Worms Frozen In Permafrost For Up To 42,000 Years Come Back To Life (ST)

Nematodes moving and eating again for the first time since the Pleistocene age in major scientific breakthrough, say experts. The roundworms from two areas of Siberia came back to life in Petri dishes, says a new scientific study. ‘We have obtained the first data demonstrating the capability of multicellular organisms for longterm cryobiosis in permafrost deposits of the Arctic,’ states a report from Russian scientists from four institutions in collaboration with Princetown University. Some 300 prehistoric worms were analysed – and two ‘were shown to contain viable nematodes’. ‘After being defrosted, the nematodes showed signs of life,’ said a report today from Yakutia, the area where the worms were found.

‘They started moving and eating.’ One worm came from an ancient squirrel burrow in a permafrost wall of the Duvanny Yar outcrop in the lower reaches of the Kolyma River – close to the site of Pleistocene Park which is seeking to recreate the Arctic habitat of the extinct woolly mammoth, according to the scientific article published in Doklady Biological Sciences this week. This is around 32,000 years old. Another was found in permafrost near Alazeya River in 2015, and is around 41,700 years old. Currently the nematodes are the oldest living animals on the planet. They are both believed to be female.

Read more …

It has taken PM Tsipras a full week to visit the area today, only some 25km from his office.

Greece Fire Death Toll At 91, 25 Remain Missing (K.)

Fire officials in Greece have raised the death toll from a wildfire that raged through a coastal area east of Athens to 91 and reported that 25 people are missing six days after blaze. Before the national fire service updated the official number of fatalities Sunday night, it had stood at 86. Greek officials previously had not provided a tally of the people reported missing. The fire sped flames through the village without warning on July 23. A database maintained by the Center for the Research on the Epidemiology of Disasters in Brussels shows it as the deadliest wildfire in Europe since 1900. The vast majority of victims died in the fire itself, though a number drowned in the sea while fleeing the flames. Dozens of volunteer divers, some of them retired Navy Seals, kept searching the sea on Sunday looking for the bodies of more possible victims.

Read more …

May 082018
 


Franco Fontana Praga 1967

 

Emerging Market Currencies Feel The Heat As US Economy Brightens (SCMP)
Two-Thirds Of Americans Believe It’s A Good Time To Buy A Home (MW)
Obamacare Premiums May Soar As Much As 91% Next Year (ZH)
Which Hunt? (Jim Kunstler)
The Donald’s Fabulous Fiscal Folly, Wall Street’s Wile E. Coyote (Stockman)
Trump To Unveil Iran Decision Tuesday; Europeans Move His Way (R.)
State Dept.: Giuliani Doesn’t Speak For US On Foreign Policy (AP)
Are You in a BS Job? In Academe, You’re Hardly Alone (David Graeber)
Theresa May Faces Renewed Turmoil Over Brexit Options (G.)
Shocks From Australian Banks’ Inquiry May Squeeze A Nation (R.)
“Creating Wealth” Through Debt (Michael Hudson)
Australia Pledges Millions To Help Save The Koala (AFP)
Glyphosate-Based Weedkillers Much More Toxic Than Their Active Ingredient (G.)

 

 

Feels like someone is trying not to let the US dollar rise too fast.

Emerging Market Currencies Feel The Heat As US Economy Brightens (SCMP)

A stream of broadly upbeat US economic data is opening up fissures in the foreign exchange markets. Market participants are recognising that the balance of risk is changing. Emerging markets, which have enjoyed substantive capital inflows, will not be immune to this process, and certain currencies are already feeling the heat. Emerging markets were major beneficiaries of inward capital flows last year, as evidenced in data from the Bank for International Settlements on 30 April. Overall “foreign currency credit continued to grow during 2017, with US dollar credit rising by 8% to US$11.4 trillion and euro credit by 10% to €3 trillion (US$3.57 trillion),” the bank wrote. US dollar credit to emerging market economies rose by 10% to US$3.67 trillion in the year to end-2017, it added.

This US-dollar dominance is critical, as the main currency moving into any markets, not just emerging markers, will also be the main mover out of them. [..] It seems an age ago now but, in June 2017, Argentina could issue a US dollar-denominated 100-year government bond receiving US$9.75 billion of orders for a US$2.75 billion issue with a coupon of 7.125%. Foreign investors had a taste for Argentina but now want out. Last Friday, with inflation in Argentina in April at 25.4%, the local central bank had to raise its benchmark interest rate to 40% in an attempt to arrest the pace of the peso’s decline. It had fallen 7.83% versus the US dollar on Thursday alone.

Friday also saw the Turkish lira hit a record low against the US dollar, beset by 11% year-on-year inflation and, among other factors, investor concerns that Turkey’s central bank could come under political pressure not to tighten monetary policy as far as they might. [..] Markets can behave like predators, pursuing what they perceive as the weakest prey first. Argentina and Turkey are currently filling that not-to-be-envied role in the wider emerging markets space. But they probably won’t be the last. Billions of US dollars of capital have flowed into emerging markets in recent years but the tide may be turning. It would be easy to just characterise Argentina and Turkey as special cases but that would be naive.

Read more …

Oh, sure. Never better.

Two-Thirds Of Americans Believe It’s A Good Time To Buy A Home (MW)

House prices are soaring and, despite warnings from some analysts, most Americans believe they will continue to soar. A majority of U.S. adults (64%) continue to believe home prices in their local area will increase over the next year, a survey released Monday by polling firm Gallup concluded. That’s up 9 percentage points over the past two years and is the highest percentage since before the housing market crash and Great Recession in the mid-2000s. The level of optimism is edging closer to the 70% of adults in 2005 who said prices would continue rising. That, of course, was less than one year before the peak of the housing market bubble in early 2006, which was largely fueled by a wave of subprime lending. (Roughly one-quarter of respondents in both 2005 and 2018 said they believed house prices would remain the same.)

In 2009, during the depths of the Great Recession, only 22% of Americans believed house prices would rise. But optimism about the housing market has made a slow recovery—along with the market itself—in the intervening years. Today, only 10% in the Gallup survey believe prices will fall. That compares to 5% who felt similarly pessimistic in 2005, just two years before the crash. Opinions vary between the West and East coasts, and renters and homeowners. Some 70% of homeowners see prices continuing to rise versus 59% of renters. Only 59% of Western residents see prices increasing, compared to a range of 65% to 68% in the other parts of the U.S. (The median sale price of a home in California is more than double that in the rest of the country.)

Read more …

About that house you were planning to buy…

Obamacare Premiums May Soar As Much As 91% Next Year (ZH)

Residents of Maryland and Virginia face double-digit percentage increases in premiums for individual Obamacare plans in 2019, according to rate requests made by insurers. The largest hikes are being sought by CareFirst, which is seeking a 64% increase in Virginia, and a whopping 91% increase in Maryland for its PPO. Other insurers are following suit in the two states, with Kaiser requesting hikes of 32% and 37% respectively, followed by CareFirst’s HMO offering. “In Maryland, CareFirst wants to raise rates by 91% on a plan covering 15,000 people, Insurance Commissioner Al Redmer Jr. said. If approved, premiums for a 40-year-old could reach $1,334 a month.” -Bloomberg

That’s over $16,000 per year for an individual plan in a state with an average personal income of $59,524. “We have folks in Maryland that are struggling, that are trying to do the right thing, and they’re paying more for their health insurance than they are for their mortgage,” Redmer said on a call with reporters. “Maryland is seeking permission from the federal government to create a reinsurance program that would use $975 million in state and federal funds over five years to lower rates. That would help only temporarily, Redmer said.” -Bloomberg “I believe we’ve been in a death spiral for a year or two,” he said, adding that a permanent solution requires Congress to fix the Affordable Care Act.

Virginia and Maryland are the first two states in which 2019 rate requests – which are subject to regulatory approval and may change – have been made public, however increases are anticipated across the country as insurers adjust to the post-ACA battle. Final premium increases will need to be approved ahead of the November 1 open-enrollment period. The hikes are being blamed in part by the expectation that the elimination of the Obamacare stipulation forcing all Americans to have health coverage would leave insurers with a smaller pool of sicker clients.

Read more …

“..the collusion of multiple intelligence agencies with social media companies and what used to be the respectable organs of the news..”

Which Hunt? (Jim Kunstler)

It was refreshing to read the response of Federal Judge T. S. Ellis III to a squad of prosecutors from Robert Mueller’s office who came into his Alexandria, Virginia, court to open the case against Paul Manafort, erstwhile Trump campaign manager, for money-laundering shenanigans dating as far back as 2005. Said response by the judge being: “You don’t really care about Mr. Manafort’s bank fraud. You really care about getting information that Mr. Manafort can give you that would reflect on Mr. Trump and lead to his prosecution or impeachment or whatever.”

Judge Ellis’s concise summation was like a spring zephyr clearing out a long winter’s fog of unreality in our national politics — the idea that Mueller’s mission has been anything but the Deep State’s ongoing crusade to nullify the 2016 election. In the meantime of the past year, Mueller has been additionally burdened by obvious misconduct in the FBI and its parent agency, the Department of Justice, which makes Mueller himself look like the instrument of a cover-up, or at least a massive organized distraction from the misdeeds of the Deep State itself.

I was never a Trump supporter or voter, but it seems to me he deserves to succeed or fail as President on his own merits (or lack of). It’s much more disturbing to me to see the runaway train that federal prosecution has turned into, along with orchestrated intrigues of FBI and DOJ officials at the highest level. These are of a piece with the creeping surveillance of all Americans, and the collusion of multiple intelligence agencies with social media companies and what used to be the respectable organs of the news, especially The New York Times, The Washington Post, and CNN — all of which are behaving like Grand Inquisitors in a medieval religious hysteria.

Read more …

Stockman does a Trump: “Simple Steve Mnuchin”.

The Donald’s Fabulous Fiscal Folly, Wall Street’s Wile E. Coyote (Stockman)

There has never been a more fiscally clueless team at the top than the Donald and his dimwitted Treasury secretary, Simple Steve Mnuchin. After reading the latter’s recent claim that financing Uncle Sam’s impending trillion dollar deficits will be a breeze, we now understand how he sat on the Board of Sears for 10-years and never noticed that the company was going bankrupt. In any event, fixing to borrow upwards of $1.2 trillion in FY 2019, Simple Steve apparently didn’t get the memo about the Fed’s unfolding QT campaign and the fact that it will be draining cash from the bond pits at a $600 billion annual rate by October. After all, no one who can do third-grade math would expect that the bond market can “easily handle” what will in effect be $1.8 trillion of homeless USTs:

“U.S. Treasury Secretary Steven Mnuchin said he’s unconcerned about the bond market’s ability to absorb rising government debt after his department said it borrowed a record amount for the first quarter. ‘It’s a very large, robust market — it’s the most liquid market in the world, and there is a lot of supply,” he said… ‘But I think the market can easily handle it.’ Then again, Simple Steve is apparently not alone in his fog of incomprehension. Even if you did get the memo—like most of the Wall Street day traders—you might still be under the delusion that the Fed is your friend and that when push comes to shove, it will put QT on ice in order to forestall any unpleasant hissy-fitting in the casino.

That is, it’s allegedly still safe to buy the dips or play the swing trade between the 50-DMA and 200-DMA because the Powell Put undergirds the latter. So never fear dear punters: At about 2615 on the S&P 500 (the current 200-DMA), the Eccles Building cavalry will ride to the rescue. That would appear to be the meaning of the chart below—except it isn’t. What it really says is that after nine years of buying the dips successfully, Wall Street has essentially deputized its own cavalry. [..] there is in our judgment 15-20% of downside before the Fed relents, but by that point it will be too late.

Read more …

China and Russia stand behind Iran.

Trump To Unveil Iran Decision Tuesday; Europeans Move His Way (R.)

President Donald Trump will announce on Tuesday whether he will withdraw from the Iran nuclear deal and a senior U.S. official said it was unclear if efforts by European allies to address Trump’s concerns would be enough to save the pact. Trump has repeatedly threatened to withdraw from the deal, which eased economic sanctions on Iran in exchange for Tehran limiting its nuclear program, unless France, Germany and Britain – which also signed the agreement – fix what he has called its flaws. The senior U.S. official said the European allies had moved significantly in Trump’s direction on what he sees as the defects – the failure to address Iran’s ballistic missile program, the terms under which international inspectors visit suspected Iranian sites, and “sunset” clauses under which some terms expire.

The official did not know, however, if the Europeans had done enough to convince Trump to remain in the deal. “The big question in my mind is does he think the Europeans have moved far enough so that we can all be unified and announce a deal? That’s one option,” said the official. “Or (does he conclude) the Europeans have not moved far enough and we say they’ve got to move more?” European diplomats said privately they expected Trump to effectively withdraw from the agreement, which was struck by six major powers – Britain, China, France, Germany, Russia and the United States – and Iran in July 2015.

[..] Under the deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), the United States committed to easing a series of U.S. sanctions on Iran and it has done so under a string of “waivers” that effectively suspend them. Under U.S. law, Trump has until Saturday to decide whether to reintroduce U.S. sanctions related to Iran’s central bank and Iranian oil exports. The reimposition of sanctions would dissuade foreign companies from doing business with Iran because they could be subject to U.S. penalties.

Read more …

The Rudy show. There won’t be a sequel.

State Dept.: Giuliani Doesn’t Speak For US On Foreign Policy (AP)

The Trump administration sought to distance itself Monday from Rudy Giuliani’s dramatic public statements about Iran and North Korea, saying that President Donald Trump’s new lawyer does not speak for the president on matters of foreign policy. Since joining Trump’s legal team last month and becoming its public face, Giuliani has raised eyebrows for a series of startling assertions not only about his legal strategy and the special counsel investigation, but also about global affairs and Trump’s policies. That spurred widespread confusion over whether the former New York mayor, now on Trump’s payroll, was disclosing information he’d been told by the president, stating U.S. government policy or merely describing his own impression of events.

“He speaks for himself and not on behalf of the administration on foreign policy,” State Department spokeswoman Heather Nauert said Monday. It was the clearest sign to date that Trump’s administration is seeking to draw a line between itself and Giuliani on matters of government policy, even as he continues to act as his spokesman on matters related to special counsel Robert Mueller’s Russia probe. It comes as Trump prepares for a series of high-stakes moments in the coming weeks on Iran, North Korea and the Mideast conflict — the type of delicate and potentially explosive regions where events can easily be upended by an errant remark by an emissary of the U.S. president. Giuliani’s perplexing and sometimes conflicting remarks have increasingly become a cause of consternation for Trump’s aides.

Asked last week whether Giuliani’s portfolio included foreign policy, White House spokeswoman Sarah Huckabee Sanders said simply, “Not that I’m aware of.” [..] Giuliani’s remarks have been watched with equal concern at the State Department, the Pentagon and other national security agencies, starting last week when he said on television that North Korea would release three Americans detained in the country. “We got Kim Jong Un impressed enough to be releasing three prisoners today,” Giuliani told Fox News. Although Trump has hinted that such a move could be coming, there has been no formal announcement by the U.S. government, which is in detailed talks with North Korea at the moment to plan a historic summit between Kim and Trump. The detainees have not yet been released as predicted by Giuliani.

Read more …

Bullshitization.

Are You in a BS Job? In Academe, You’re Hardly Alone (David Graeber)

For a number of years now, I have been conducting research on forms of employment seen as utterly pointless by those who perform them. The proportion of these jobs is startlingly high. Surveys in Britain and Holland reveal that 37 to 40% of all workers there are convinced that their jobs make no meaningful contribution to the world. And there seems every reason to believe that numbers in other wealthy countries are much the same. There would appear to be whole industries — telemarketing, corporate law, financial or management consulting, lobbying — in which almost everyone involved finds the enterprise a waste of time, and believes that if their jobs disappeared it would either make no difference or make the world a better place.

Generally speaking, we should trust people’s instincts in such matters. (Some of them might be wrong, but no one else is in a position to know better.) If one includes the work of those who unwittingly perform real labor in support of all this — for instance, the cleaners, guards, and mechanics who maintain the office buildings where people perform bullshit jobs — it’s clear that 50% of all work could be eliminated with no downside. (I am assuming here that provision is made such that those whose jobs were eliminated continue to be supported.) If nothing else, this would have immediate salutary effects on carbon emissions, not to mention overall social happiness and well-being.

Even this estimate probably understates the extent of the problem, because it doesn’t address the creeping bullshitization of real jobs. According to a 2016 survey, American office workers reported that they spent four out of eight hours doing their actual jobs; the rest of the time was spent in email, useless meetings, and pointless administrative tasks. The trend has much less effect on obviously useful occupations, like those of tailors, steamfitters, and chefs, or obviously beneficial ones, like designers and musicians, so one might argue that most of the jobs affected are largely pointless anyway; but the phenomenon has clearly damaged a number of indisputably useful fields of endeavor. Nurses nowadays often have to spend at least half of their time on paperwork, and primary- and secondary-school teachers complain of galloping bureaucratization.

Read more …

Nice going, Boris: “..the foreign secretary dismissed May’s customs partnership proposal as “crazy” “

Theresa May Faces Renewed Turmoil Over Brexit Options (G.)

Theresa May is facing renewed cross-party pressure to accept membership of the European Economic Area (EEA) or risk defeat in the Commons. Peers vote on Tuesday night on a series of amendments as officials work to try to find a deal on May’s preferred option of a customs relationship with Europe that is acceptable to Brexiters and remainers in her cabinet, as well as MPs and EU negotiators. The policy paper rejected by the inner cabinet on the Brexit subcommittee last week has been withdrawn for further work and will not be discussed at this week’s regular meeting.

A Downing Street source said: “It was agreed on Wednesday that more work needed to be done to flesh out the general principles agreed – no hard border and as frictionless trade as possible. “We realise the urgency. But as Greg Clark [the business secretary] said on Sunday, it is a crucial question to get right.” The prime minister also came under pressure from Boris Johnson, who is currently in Washington trying to persuade Donald Trump to stick with the Iran nuclear deal. In an interview with the Daily Mail, the foreign secretary dismissed May’s customs partnership proposal as “crazy” and said it would create massive bureaucracy. The scheme involves the UK levying border tariffs on imports on behalf of the EU and refunding them where the imported goods stay in Britain.

Johnson also condemned any system that prevented the UK from establishing its own trade policy and negotiating deals with non-EU countries, which is also the principle objection of Conservatives led by Jacob Rees-Mogg in the European Research Group. Meanwhile, the Irish government is concerned that many MPs and peers still believe that Dublin will back down at the last minute on the hard border. One parliamentarian who visited Westminster recently said he was surprised by how confident MPs were that there could be a frictionless border between north and south without a customs union. “Both May’s proposals for maximum facilitation and a customs partnership have been rejected by [the EU negotiator] Michel Barnier as magical thinking,” he said.

Read more …

Horse. Barn.

Shocks From Australian Banks’ Inquiry May Squeeze A Nation (R.)

Australia and New Zealand Banking Group last week said that in the wake of the Royal Commission, which has uncovered wide-spread examples of careless and at times fraudulent lending practices, it would likely be harder for customers to borrow money. And National Australia Bank said net interest margins on its all-important mortgage book were falling; while Westpac told Reuters it had recently increased scrutiny of borrowers’ living expenses, including asking them to disclose such items as gym memberships and pet insurance, when making loan assessments. The inquiry has come at a time when there was already a push for increased controls on lending and new capital requirements.

Those had helped spark a wave of divestments of cash-intensive wealth management, insurance and financial planning arms. Borrowers have begun to feel the squeeze, according to Sydney real estate agent Peter Wong, as banks dig through credit histories and ask borrowers for bigger deposits. “The residential sector has become very, very cautious and so, obviously, they’re making sure that they dot their i’s and cross their t’s, and before it wasn’t like that,” said Wong, who runs an agency in inner-city Chinatown. “I’ve got property on the market and I’ve had it on for over three months whereas previously, being a popular area, people would buy fairly quickly.”

Australia has an oligopoly banking system – Commonwealth Bank of Australia sits alongside Westpac, NAB and ANZ making up the so-called “Big Four” – which collectively dominate property, investment and business lending, giving Australians limited options when seeking credit.

Read more …

Hudson warns China not to become the west.

“Creating Wealth” Through Debt (Michael Hudson)

Western capitalism has not turned out the way that Marx expected. He was optimistic in forecasting that industrial capitalists would gain control of government to free economies from unnecessary costs of production in the form of rent and interest that increase the cost of living (and hence, the break-even wage level). Along with most other economists of his day, he expected rentier income and the ownership of land, natural resources and banking to be taken out of the hands of the hereditary aristocracies that had held them since Europe’s feudal epoch. Socialism was seen as the logical extension of classical political economy, whose main policy was to abolish rent paid to landlords and interest paid to banks and bondholders.

A century ago there was an almost universal belief in mixed economies. Governments were expected to tax away land rent and natural resource rent, regulate monopolies to bring prices in line with actual cost value, and create basic infrastructure with money created by their own treasury or central bank. Socializing land rent was the core of Physiocracy and the economics of Adam Smith, whose logic was refined by Alfred Marshall, Simon Patten and other bourgeois economists of the late 19th century. That was the path that European and American capitalism seemed to be following in the decades leading up to World War I. That logic sought to use the government to support industry instead of the landlord and financial classes.

China is progressing along this “mixed economy” road to socialism, but Western economies are suffering from a resurgence of the pre-capitalist rentier classes. Their slogan of “small government” means a shift in planning to finance, real estate and monopolies. This economic philosophy is reversing the logic of industrial capitalism, replacing public investment and subsidy with privatization and rent extraction. The Western economies’ tax shift favoring finance and real estate is a case in point. It reverses John Stuart Mill’s “Ricardian socialism” based on public collection of the land’s rental value and the “unearned increment” of rising land prices.

Read more …

A new threatened species every single day. So far this week: mountain gorillas, right whales and koalas.

Australia Pledges Millions To Help Save The Koala (AFP)

Australia unveiled on Monday a US$34 million plan to help bring its koala population back from the brink, following a rapid decline in the furry marsupial’s fortunes. The Australian Koala Foundation estimates there may be as few as 43,000 koalas left in the wild, down from a population believed to number more than 10 million prior to European settlement of the continent in 1788. “Koalas are a national treasure,” said Gladys Berejiklian, premier of New South Wales state, in announcing her government’s conservation plan. “It would be such a shame if this nationally iconic marsupial did not have its future secured.”

Habitat loss, dog attacks, car strikes, climate change and disease have taken their toll on one of Australia’s most recognisable animals. Studies show a 26% decline in the koala population in New South Wales over the last 15-20 years. The state lists the species as “vulnerable”, while in other parts of the country they are effectively extinct. Under the Aus$45 million plan, thousands of hectares will be set aside to preserve the marsupial’s natural habitat.

Read more …

The madness of it. After 44 years of active use, they’re finally being tested (!). But their formulas remain confidential business information, so they don’t even know what they’re testing.

Glyphosate-Based Weedkillers Much More Toxic Than Their Active Ingredient (G.)

US government researchers have uncovered evidence that some popular weedkilling products, like Monsanto’s widely-used Roundup, are potentially more toxic to human cells than their active ingredient is by itself. These “formulated” weedkillers are commonly used in agriculture, leaving residues in food and water, as well as public spaces such as golf courses, parks and children’s playgrounds. The tests are part of the US National Toxicology Program’s (NTP) first-ever examination of herbicide formulations made with the active ingredient glyphosate, but that also include other chemicals. While regulators have previously required extensive testing of glyphosate in isolation, government scientists have not fully examined the toxicity of the more complex products sold to consumers, farmers and others.

Monsanto introduced its glyphosate-based Roundup brand in 1974. But it is only now, after more than 40 years of widespread use, that the government is investigating the toxicity of “glyphosate-based herbicides” on human cells. The NTP tests were requested by the Environmental Protection Agency (EPA) after the International Agency for Research on Cancer (IARC) in 2015 classified glyphosate as a probable human carcinogen. The IARC also highlighted concerns about formulations which combine glyphosate with other ingredients to enhance weed killing effectiveness. Monsanto and rivals sell hundreds of these products around the world in a market valued at roughly $9bn.

Mike DeVito, acting chief of the National Toxicology Program Laboratory, told the Guardian the agency’s work is ongoing but its early findings are clear on one key point. “We see the formulations are much more toxic. The formulations were killing the cells. The glyphosate really didn’t do it,” DeVito said. [..] “This testing is important, because the EPA has only been looking at the active ingredient. But it’s the formulations that people are exposed to on their lawns and gardens, where they play and in their food,” said Jennifer Sass, a scientist with the Natural Resources Defense Council.

One problem government scientists have run into is corporate secrecy about the ingredients mixed with glyphosate in their products. Documents obtained through Freedom of Information Act requests show uncertainty within the EPA over Roundup formulations and how those formulations have changed over the last three decades. That confusion has continued with the NTP testing. “We don’t know what the formulation is. That is confidential business information,” DeVito said. NTP scientists sourced some samples from store shelves, picking up products the EPA told them were the top sellers, he said.

Read more …