Mar 262018
 
 March 26, 2018  Posted by at 9:22 am Finance Tagged with: , , , , , , , , , , , ,  


Opening night of the movie ‘Grand Hotel’ on Times Square at Astor Theater, New York 1932

 

Dear America: Please Stop This Shit. Signed, The Rest Of The World. (CJ)
Asian Shares Battered As Trade War Fears Sap Sentiment (R.)
US-China Trade Deficit Is Set To Keep On Rising – Stephen Roach (CNBC)
US Seeks Deal With China in Bid to Avert Trade War (BBG)
US and South Korea Reach Agreement on Trade, Tariffs (BBG)
EU Defends Controversial Juncker Aide Promotion (AFP)
EU Antitrust Chief Keeps Open Threat To Break Up Google (R.)
EU Leaders Host Turkish President Erdogan For Uneasy Summit (R.)
Labour Moves to Prevent ‘No-Deal’ Brexit as Blair Seeks EU Vote (BBG)
Facebook Approached Australian Political Parties To Microtarget Voters (ZH)
Glory Days (Eric Peters)
Nearly Half Of Japanese Think Abe Should Quit Over Land Sale Scandal (R.)
Malaysia: Up To 10 Years’ Jail, Hefty Fines For Publishers Of ‘Fake News’ (R.)
China Regulator Bans TV Parodies Amid Content Crackdown (R.)
Kim Dotcom Wins Human Rights Tribunal Case, Says Extradition Bid ‘Over’ (NH)
Global Warming Puts Nearly Half Of Species In Key Places At Risk (CNN)

 

 

Caitlin Johnstone. Is right.

Dear America: Please Stop This Shit. Signed, The Rest Of The World. (CJ)

They want you arguing over who should and shouldn’t be called a terrorist based on what ideology you subscribe to and what color the latest killer’s skin was. They do not want you talking about the way the label “terrorist” itself is being used to justify unconstitutional detentions, torture, mass surveillance, and wars. They want you arguing over whether to support the Democrats because the Republicans will take civil rights away from disempowered groups or Republicans because the Democrats will take away your guns and force you to bake gay wedding cakes. They don’t want you talking about the fact that both parties advance Orwellian surveillance, neoliberal exploitation and neoconservative bloodshed in a good cop/bad cop extortion scheme to keep Americans cheerleading for their own enslavement.

They want you arguing about whether Trump did or did not collude with Russia. They do not want you looking at what preexisting agendas the CNN/CIA Russia narratives are advancing and who stands to benefit from them. They want everyone fighting over table scraps while they pour unfathomable riches into expanding and bolstering their empire. They psychologically brutalize you with propaganda day in and day out, and then expect you to look to them for protection from the phantoms they invented. They don’t want you paying attention to the growing number of signs that the current administration is gearing up for a major military bloodbath which may lead our species into a third and final world war. They want you talking about Stormy Daniels instead.

[..] Please stop this shit, America. If the US war machine goes after Iran or Russia it will likely mean a world war against multiple nuclear-armed countries, which could very easily send our species the way of the dinosaurs should a nuke get deployed in the fog of war. We don’t have time to focus on Stormy fucking Daniels.

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Cool down.

Asian Shares Battered As Trade War Fears Sap Sentiment (R.)

Global markets were shaken when U.S. President Donald Trump moved to slap tariffs on Chinese goods, on top of import duties on steel and aluminum, prompting a defiant response from Beijing. But E-Mini futures for the S&P 500 brushed off the gloom on Monday to leap 0.6% on reports the United States and China have quietly started negotiating to improve U.S. access to Chinese markets. The United States also agreed to exempt South Korea from steel tariffs, imposing instead a quota on steel imports as the two countries renegotiate their trade deal. “If we do start to hear more favorable news from the U.S. administration and indeed from the Chinese side over the next few trading sessions, then we may see a sharp reversal of the recent moves in the market,” said Nick Twidale at Rakuten Securities Australia.

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The curse of the reserve currency.

US-China Trade Deficit Is Set To Keep On Rising – Stephen Roach (CNBC)

Washington’s trade imbalance with Beijing – the stated motivation behind President Donald Trump’s punitive tariffs — will continue expanding in the years ahead, according to Yale University’s Stephen Roach. America’s trade deficits with China and other countries fundamentally reflect “the fact that we don’t save enough,” said Roach, a former Morgan Stanley Asia chairman. “When you don’t save and you want to spend and grow, you import surplus savings from abroad and you run these massive balance of payments and trade deficits to attract the foreign capital,” he told CNBC Monday at the annual China Development Forum. “That’s the way it’s always worked.”

The Trump administration budget deficits are “going to push our savings rate lower and if anything, our trade deficits are going to get bigger in the years ahead, including the one probably with China.” Reducing the U.S. trade deficit is one of Trump’s top policy goals – he’s argued that it hurts American job creation and weighs on overall growth. But many economists, including Roach, say trade imbalances are not a good metric for economic health since they are influenced by a variety of macroeconomic factors. “The bilateral trade deficit in the U.S. is really pretty meaningless,” Roach said.

And Trump’s $1.5 trillion tax cut, which was signed into law in December, is unlikely to change the status-quo. The fiscal stimulus package “is going to take debt-to-GDP ratios up by 1 to 2 %age points a year, relative to what they otherwise would have been,” Roach said. “For an economy like the United States, where the savings rate is already low, that’s going to push our savings rate even lower. So, we’re going to have to keep importing the surplus savings and running these balance of payments deficits to square the circle.”

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“..stop forced technology transfer..”

US Seeks Deal With China in Bid to Avert Trade War (BBG)

Treasury Secretary Steven Mnuchin said he’s optimistic the U.S. can reach an agreement with China that will avert the need for President Donald Trump to impose tariffs on at least $50 billion of goods from the country. “We’re having very productive conversations with them,” Mnuchin said on “Fox News Sunday,” when discussing talks with China. “I’m cautiously hopeful we reach an agreement.” Trump on Thursday also directed Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the U.S. views as strategic. He has said he also wants a $100 billion decrease in the U.S. trade deficit with China.

A day after Trump’s announcement, which led to a selloff in global markets, China unveiled tariffs on $3 billion of U.S. imports in response to steel and aluminum duties ordered by Trump earlier this month. The White House then declared a temporary exemption for the European Union and other nations on those levies, making the focus on China clear. Though Beijing’s actions so far are seen by analysts as measured, there may be more to come.

China is conducting research on further lists of U.S. imports subject to tariffs, which are likely to cover airplanes, computer chips and the tourism industry, China Daily reported on Saturday, citing Wei Jianguo, a former vice commerce minister. Mnuchin said the two countries agree on reducing the deficit to some degree and are trying to “to see if we can reach an agreement as to what fair trade is for them to open up their markets, reduce their tariffs, stop forced technology transfer.” The U.S. will proceed with tariffs “unless we have an acceptable agreement that the president signs off on,” Mnuchin said Sunday. “We’re not afraid of a trade war, but that’s not our objective,” he said. “In a negotiation you have to be prepared to take action.”

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First hurdle out of the way.

US and South Korea Reach Agreement on Trade, Tariffs (BBG)

The U.S. and South Korea reached an agreement on revising their six-year-old bilateral trade deal, and the U.S. said it wouldn’t impose President Donald Trump’s tariffs on steel imports from its ally in Asia. The two countries reached agreement “in principle” on the trade deal known as Korus, South Korea’s trade ministry said in a statement on Monday. While Korea avoids the steel tariff, shipments of the metal to the U.S. will be limited to a quota of about 2.7 million tons a year, according to the statement. Trump repeatedly criticized the trade deal with South Korea, calling it a “job-killer” that had increased the bilateral trade deficit. While he had pushed for it to be revised and threatened tariffs, there were also concerns that trade tensions would create a wedge between the allies just as the presidents of both nations look to meet with North Korean leader Kim Jong Un.

The announcement came after Treasury Secretary Steven Mnuchin said U.S. Trade Representative Robert Lighthizer reached “a very productive understanding.” “We expect to sign that agreement soon,” Mnuchin said on the “Fox News Sunday” program, calling it “an absolute win-win.” The quota is unlikely to hurt South Korea’s steel exports as sales to the U.S. account for 11% of total steel shipments overseas, the South Korean ministry said. The quota is set at 70% of the average of steel sales to the U.S. during 2015-2017.

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Europe makes its decisions behind close backroom doors.

EU Defends Controversial Juncker Aide Promotion (AFP)

The European Commission on Sunday insisted the controversial promotion of President Jean-Claude Juncker’s top aide and enforcer was “in full compliance” with rules despite a growing cronyism row. The commission, the EU’s powerful executive arm, said there was nothing untoward about the elevation of Juncker’s former chief of staff Martin Selmayr to the post of secretary general, at the head of the EU’s 30,000-strong civil service. The scandal has gained momentum in recent weeks with the European Parliament launching an investigation and warning the affair risks fuelling eurosceptics around the continent. But the commission insisted Selmayr’s appointment was above board and made with the full backing of all EU commissioners.

“The decision was taken by the college of commissioners unanimously, in full compliance with the staff regulations and the rules of procedure of the commission,” the commission said in a written response to a list of 134 questions posed by MEPs. The row centres on what critics say was effectively an instantaneous double promotion for the 47-year-old Selmayr, Juncker’s former chief of staff, on February 21. During a single meeting of commissioners, Selmayr was made first deputy secretary general and then just minutes later secretary general when the incumbent, Alexander Italianer, suddenly announced his retirement. The commission confirmed that Juncker had known of Italianer’s plan to retire as early as 2015 and had told Selmayr about it.

But it rejected claims that Juncker and Selmayr had cooked up a plan in November last year to bounce the German into the secretary general role. It said that technically Selmayr had not been promoted, as he remains on the same civil service grade as before, and that he had taken a pay cut in switching jobs. As well as the parliamentary probe, the EU ombudsman, which investigates allegations of malpractice in European institutions, has also confirmed it has received two complaints about the matter and is analysing them. Sophie in ‘t Veld, a leading liberal member of the European Parliament, said earlier this month the affair “destroys all the credibility of the EU as a champion of integrity and transparency”.

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Expand it to Facebook?

EU Antitrust Chief Keeps Open Threat To Break Up Google (R.)

The European Union holds “grave suspicions” about the dominance of internet giant Google and has not ruled out breaking it up, according to a warning by the EU’s antitrust chief, Britain’s Telegraph reported on Sunday. European Commissioner for Competition Margrethe Vestager reckons the threat to split Google into smaller companies must be kept open, the newspaper said. Google currently faces new EU rules on its commercial practices with smaller businesses that use its services.

Late last year, Vestager said more cases against Google were likely in the future, after the European Commission slapped a record €2.4 billion ($2.97 billion) fine on the world’s most popular internet search engine and told the firm to stop favoring its shopping service. The European Commission is in the process of drafting a new regulation aimed at regulating e-commerce sites, app stores and search engines to be more transparent in how they rank search results and why they delist some services.

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They should stop his forays into Syria, Iraq. They won’t. He’s got them by the balls.

EU Leaders Host Turkish President Erdogan For Uneasy Summit (R.)

The European Union holds an uneasy summit with Turkey on Monday, when it is likely to provide Ankara with fresh cash to extend a deal on Syrian refugees but deflect Turkish demands for deeper trade ties and visa-free travel to Europe. With the bloc critical of what it considers to be Turkish President Recep Tayyip Erdogan’s growing authoritarianism at home and his intervention in Syria’s war, Brussels had hesitated to agree to the summit. But host Bulgaria viewed the meeting at the Black Sea port of Varna as a rare chance for dialogue with the country that remains a candidate for EU membership despite years of stalled talks.

EU leaders also cited Turkey’s importance as a NATO ally on Europe’s southern flank and in curbing immigration to Europe from the Middle East and Africa. “I am looking with mixed feelings towards the Varna summit because the differences in views between the EU and Turkey are many,” said European Commission President Jean-Claude Juncker, who will represent the bloc along with European Council President Donald Tusk. “It will be a frank and open debate, where we will not hide our differences but will seek to improve our cooperation,” Juncker told reporters on Friday after a two-day EU summit that discussed Turkey.

At that meeting in Brussels, leaders condemned what they said were Turkey’s illegal actions in a standoff over eastern Mediterranean gas reserves with bloc members Greece and Cyprus. But in a familiar pattern of public recrimination, Turkey’s minister for EU affairs, Omer Celik, said Ankara viewed the summit as “an important opportunity to move our relations forward” and that he expected “the same positive and constructive approach from the EU.” Erdogan will seek more money for Syrian refugees, a deeper customs union and progress in talks on letting Turks visit Europe without visas, a Turkish foreign ministry spokesman said.

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Why there’s a new wave of “Corbyn is an antisemite” going around.

Labour Moves to Prevent ‘No-Deal’ Brexit as Blair Seeks EU Vote (BBG)

The U.K. Labour Party said it is seeking an amendment to key Brexit legislation to prevent Britain leaving the European Union without a deal, as former premier Tony Blair renewed his own call for a second referendum. “If Parliament rejects the Prime Minister’s deal, that cannot give licence to her, or the extreme Brexiteers in her party, to allow the U.K. to crash out without an agreement,” Labour’s Brexit spokesman, Keir Starmer, will say in a speech on Monday, according to extracts emailed by his party. “That would be the worst of all possible worlds.”

As Starmer plots to bind Theresa May’s Conservative government to negotiating a smooth exit from the European Union, former Labour leader Blair will say that Parliament should get to vote on the planned future relationship with the EU and then the electorate should “make the final judgment” ahead Britain’s scheduled departure from the bloc on March 29 next year. Starmer’s bid to rewrite the EU Withdrawal Bill throws up a new hurdle to the premier’s plans. While she’s repeatedly said she wants to reach an agreement with the bloc, May maintains that exiting without one is better than accepting a bad deal. A majority of lawmakers in both houses of Parliament oppose a hard Brexit.

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Talk your way out of this one, Mark.

Facebook Approached Australian Political Parties To Microtarget Voters (ZH)

In the wake of a massive data harvesting scandal, it has emerged that Facebook approached at least two major Australian political parties during the final weeks of their 2016 election in order to help them “microtarget” voters using a powerful data matching tool, reports the Sydney Morning Herald. Facebook offered “advanced matching” as part of their so-called Custom Audience feature to both the conservative (if not confusingly named) Liberal Party, as well as the “democratic socialist” Labor Party. The tool promised to allow the parties to compare data they had collected about voters – such as names, birth dates, phone numbers, postcodes and email addresses – and match that information to Facebook profiles.

The combination of data sets would then allow political parties to target Australian swing voters with custom tailored ads over Facebook, which advertised a 17% increase in matching rates using a beta version of the service provided to the Liberal Party. Fairfax Media reports that while the conservative Liberal Party turned Facebook down over concerns that sending voter data overseas to Facebook servers would violate the Privacy Act and the Electoral Act, the Labor Party took Facebook up on their offer.

Asked specifically whether Labor used the tool, a Labor spokesman said in a statement: “A range of different campaign techniques and tools are used for campaigning, from doorknocking to phone banking to online. Labor works with different groups to get our message out, including social media platforms like Facebook.” “All of our work is in complete compliance with relevant laws, including the Commonwealth Electoral Act, which makes it a criminal offence to misuse information on the electoral roll.”

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“Today’s internet companies suck in free customer data through the front door, and sell it out the back door. The greater the flow, the higher the profits. They’re dominant. They’ll soon be regulated.”

Glory Days (Eric Peters)

“May Day 1975 marked the start of Wall Street deregulation,” said the historian. “Banks and brokerages flourished thereafter, expanding their power and political influence.” 1998 marked peak deregulation with Clinton’s repeal of Glass-Steagall. “Pump and dump schemes of all sorts propagated; Wolf of Wall Street excesses. Then came the dot com IPO madness which led to Sarbanes Oxley.” The final debauchery was exposed in 2008, and led to sweeping Dodd-Frank financial regulation. “Wall Street’s been in lock-down ever since.” “The 1996 Telecom Act protected America’s nascent internet companies,” continued the historian. AOL started in 1985. Netscape launched in 1993, went public in 1995. Amazon launched in 1994. Yahoo 1995. Facebook 2004. YouTube 2005.

“The Act protected them from liability for anything republished on their sites.” They were too weak to withstand such liability and needed nurturing to foster innovation. “But Facebook has a $460bln market cap. It’s not responsible for what it publishes but the NY Times is. That’s now preposterous.” “When Wall Street lacked regulation, any product, no matter how absurd, was welcomed through the front door and pumped out to clients through the back door,” explained the historian. “The greater the flow, the higher the profits. Those were the glory days.” Then regulations raised costs, stymied product development, crushed the profit model. “Today’s internet companies suck in free customer data through the front door, and sell it out the back door. The greater the flow, the higher the profits. They’re dominant. They’ll soon be regulated.”

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Shinzo is addicted to power. But he said he would leave.

Nearly Half Of Japanese Think Abe Should Quit Over Land Sale Scandal (R.)

Nearly half of Japanese voters believe Prime Minister Shinzo Abe should quit to take responsibility over a cronyism scandal and cover-up that have sent his support sliding, according to an opinion poll released on Monday. Suspicions have arisen about a sale of state-owned land at a huge discount to a nationalist school operator with ties to Abe’s wife, Akie, setting off the biggest political crisis Abe has faced since returning to power in 2012 and prompting protestors to call almost nightly for him to quit.

Abe has denied that either he or his wife intervened in the sale or were involved in altering documents related to the deal, in which mention of his and Akie’s names were removed. According to a public opinion survey covered by the liberal Asahi newspaper at the weekend, 48% of those polled said Abe and his government should quit, compared to 39% who said that wasn’t necessary.

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They’re all seeking to ban anything they don’t like.

Wonder who’s going to decide which news is fake. How about the Skripal case? Stormy Daniels? Corbyn is an anti-semite?

Malaysia: Up To 10 Years’ Jail, Hefty Fines For Publishers Of ‘Fake News’ (R.)

Malaysian Prime Minister Najib Razak’s government tabled a bill in parliament on Monday outlawing “fake news”, with hefty fines and up to 10 years in jail, raising more concerns about media freedom in the wake of a multi-billion dollar graft scandal. The bill was tabled ahead of a national election that is expected to be called within weeks and as Najib faces widespread criticism over the scandal at state fund 1Malaysia Development Berhad (1MDB). Under the Anti-Fake News 2018 bill, anyone who published so-called fake news could face fines of up to 500,000 ringgit ($128,140), up to 10 years in jail, or both.

“The proposed Act seeks to safeguard the public against the proliferation of fake news whilst ensuring the right to freedom of speech and expression under the Federal Constitution is respected,” it said. It defines fake news as “news, information, data or reports which is or are wholly or partly false” and includes features, visuals and audio recordings. The law, which covers digital publications and social media, also applies to offenders outside Malaysia, including foreigners, as long as Malaysia or a Malaysian citizen were affected.

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“.. in violation of socialist core values..”

China Regulator Bans TV Parodies Amid Content Crackdown (R.)

China’s media regulator is cracking down on video spoofs, the official Xinhua new agency reported, amid an intensified crackdown on any content that is deemed to be in violation of socialist core values under President Xi Jinping. The decision comes after Xi cemented his power at a recent meeting of parliament by having presidential term limits scrapped, and the ruling Communist Party tightened its grip on the media by handing control over film, news and publishing to its powerful publicity department. Xinhua said video sites must ban videos that “distort, mock or defame classical literary and art works”, citing a directive from the State Administration of Press, Publication, Radio, Film and Television on Thursday.

Reuters separately reviewed a copy of the directive, which was unusually labeled “extra urgent”. Industry insiders say the sweeping crackdown on media content, which has been gaining force since last year, is having a chilling effect on content makers and distributors. “It means a lot of content makers will have to transition and make their content more serious. For ‘extra urgent’ notice like this, you have to act immediately,” said Wu Jian, a Beijing-based analyst. “Those who don’t comply in time will immediately be closed down,” Wu said.

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On Twitter: “Let’s see how ‘speculative’ and ‘premature’ my recent Obama affidavit is after we get access to all the puzzle pieces.”

Kim Dotcom Wins Human Rights Tribunal Case, Says Extradition Bid ‘Over’ (NH)

The Human Rights Tribunal has ruled that the Attorney-General broke the law by withholding information from Kim Dotcom, which he says means his extradition case is “over”. In July 2015, Mr Dotcom sent an urgent information privacy request to all 28 Ministers of the Crown as well as almost all Government departments, asking for personal information they had on him, including under his previous names. Nearly all the requests were transferred to the Attorney-General Chris Finlayson, who declined the Megaupload founder’s requests on the grounds that they were “vexatious” and trivial. The Solicitor-General also said Mr Dotcom had not provided sufficient reasons for urgency.

On Monday, the Human Rights Tribunal ruled that the Attorney-General unlawfully withheld information from Mr Dotcom, meaning he perverted the course of justice. The Government and Ministers have been ordered to comply with the original requests and supply all relevant documents to Mr Dotcom. Mr Dotcom was awarded damages for loss of benefit and loss of dignity. In a series of celebratory tweets, Mr Dotcom claimed this decision meant his extradition case is “over”. He has threatened former Prime Minister Sir John Key with legal action, and said he will see everyone involved in the so-called “Mega Conspiracy” in court. He has also called for the immediate resignation of the Privacy Commissioner.

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If temperature rise is kept below 2ºC “only” 25% of species will be lost.

Global Warming Puts Nearly Half Of Species In Key Places At Risk (CNN)

About half of all plants and animals in 35 of the world’s most biodiverse places are at risk of extinction due to climate change, a new report claims. “Hotter days, longer periods of drought, and more intense storms are becoming the new normal, and species around the world are already feeling the effects,” said Nikhil Advani, lead specialist for climate, communities and wildlife at the World Wildlife Fund (WWF). The report, a collaboration between the University of East Anglia, the James Cook University, and the WWF, found that nearly 80,000 plants and animals in 35 diverse and wildlife-rich areas – including the Amazon rainforest, the Galapagos islands, southwest Australia and Madagascar – could become extinct if global temperatures rise. The 35 places were chosen based on their “uniqueness and the variety of plants and animals found there,” the WWF said.

“The collected results reveal some striking trends. They add powerful evidence that we urgently need global action to mitigate climate change,” the report said. A corresponding study was also published by the scientific journal Climate Change. If temperatures were to rise by 4.5 degrees Celsius, animals like African elephants would likely lack sufficient water supplies and 96% of all breeding ground for tigers in India’s Sundarbans region could be submerged in water. However, if temperature rise was kept to below 2 degrees Celsius – the global target set by the landmark Paris Climate Accord in 2015 – the number of species lost could be limited to 25%. “This is not simply about the disappearance of certain species from particular places, but about profound changes to ecosystems that provide vital services to hundreds of millions of people,” the WWF said in its report.

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Nov 032017
 
 November 3, 2017  Posted by at 8:59 am Finance Tagged with: , , , , , , , , ,  


Edward S. Curtis Tipi in the snow 1908

 

Social Security Can Never Run Out Of Money – Just Ask Alan Greenspan (BI)
Inside Hillary Clinton’s Secret Takeover of the DNC (Donna Brazile)
Jay Powell – A Quiet Leader (DDMB)
Why Would Anyone Want The Fed Job? (Crudele)
The Borrower Is The Slave To The Lender (Lance Roberts)
US Manufacturing Worker Productivity Crashes Most In 8 Years (ZH)
Bitcoin Is the ‘Very Definition’ of a Bubble – Credit Suisse CEO (BBG)
One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week (MBV)
The Hidden Danger Bulls Are Missing (Rickards)
As Credit Booms, Citi Says Synthetic CDOs May Reach $100 Billion (BBG)
China Issues Guidelines On Overseas Investment Amid Crackdown On Deals (R.)
US Spends $250 Million Per Day For The War On Terror (TeleS)
Barcelona Council Says Catalan Government Legitimate, Independence Is Not (CN)
Kim Dotcom Wins Settlement From New Zeland Police Over 2012 Dawn Raid (NZH)
Monsanto Halts Launch Of Chemical After Farmers Complain Of Rashes (R.)

 

 

“The United States can pay any debt it has because it can always print money to do that, so there is zero probability of default.”

Social Security Can Never Run Out Of Money – Just Ask Alan Greenspan (BI)

I asked Kelton why, given her counterintuitive argument that deficits don’t really matter, Americans should take her word for it. Her reply: Don’t. Instead, listen to what Alan Greenspan, the prominent Republican former Federal Reserve chairman who is a purported deficit hawk, had to say on the matter. In March 2005, he was pressed by a young congressman named Paul Ryan about the need for privatizing Social Security because of the prospect of a looming “entitlements crisis.” Greenspan replied rather bitingly that there was no such thing or even a remote possibility. “I wouldn’t say that the pay-as-you-go benefits are insecure in the sense that there’s nothing to prevent the federal government to create as much money as it wants and pays it to somebody,” Greenspan told an incredulous Ryan. “The question is how do you set up a system that assures that the real assets are created which those benefits are employed to purchase.

So it’s not a question of security — it’s a question of the structure of the financial system.” That’s what Democrats should be saying, rather than regurgitating the old Republican rouse — which even the GOP is willing to abandon when it’s convenient — about a looming government debt crisis that never comes. “Instead of repeating talking points that reinforce the idea that Social Security is somehow financially unsustainable, Democrats should play Greenspan’s remarks on a loop. They should call attention to what Greenspan said — under oath — about the program’s long-term sustainability,” Kelton said. “Instead of accepting the premise that Social Security is in trouble, Democrats should accept Greenspan’s challenge — put forward an agenda that will do more to promote future growth than anything the Republicans are offering.”

The financial crisis was instructive on this count. Many critics of both the federal government’s fiscal stimulus and the Federal Reserve’s bond purchases worried that the country was getting so deep into debt that one of two things was bound to happen: a crisis in the Treasury market or a bout of runaway inflation. Nine years into the recovery, Treasury yields remain near historic lows and inflation is not only contained but remains worryingly low. That last point is key: It’s not that folks like Kelton and Baker believe there is no risk to government spending. They simply argue that the only risks are the misallocation of resources and inflation — not some amorphous “debt crisis” or default of the sort some politicians and market analysts have shouted about.

Unlike Greece, which actually did default on its debt because of a lack of control over its own currency, the US could default only by choice. Trump flirted with that choice once as a candidate — but quickly backed away from the threat after he realized the catastrophic market and economic consequences such a debacle would have. In August 2011, after the US’s credit rating was downgraded for the fist time following a prolonged impasse over the US debt ceiling, Greenspan was asked during a “Meet the Press” interview about the issue of “unfunded liabilities” and “entitlements.” His response again spoke volumes: “The United States can pay any debt it has because it can always print money to do that, so there is zero probability of default.”

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Quite a reversal. Brazile was fired from CNN a year ago when it was discovered she fed the Clinton campaign debate questions. Still, what a mess. Will they clean it up or try to ignore?

Inside Hillary Clinton’s Secret Takeover of the DNC (Donna Brazile)

When I got back from a vacation in Martha’s Vineyard I at last found the document that described it all: the Joint Fund-Raising Agreement between the DNC, the Hillary Victory Fund, and Hillary for America. The agreement—signed by Amy Dacey, the former CEO of the DNC, and Robby Mook with a copy to Marc Elias—specified that in exchange for raising money and investing in the DNC, Hillary would control the party’s finances, strategy, and all the money raised. Her campaign had the right of refusal of who would be the party communications director, and it would make final decisions on all the other staff. The DNC also was required to consult with the campaign about all other staffing, budgeting, data, analytics, and mailings. I had been wondering why it was that I couldn’t write a press release without passing it by Brooklyn. Well, here was the answer.

When the party chooses the nominee, the custom is that the candidate’s team starts to exercise more control over the party. If the party has an incumbent candidate, as was the case with Clinton in 1996 or Obama in 2012, this kind of arrangement is seamless because the party already is under the control of the president. When you have an open contest without an incumbent and competitive primaries, the party comes under the candidate’s control only after the nominee is certain. When I was manager of Gore’s campaign in 2000, we started inserting our people into the DNC in June. This victory fund agreement, however, had been signed in August 2015, just four months after Hillary announced her candidacy and nearly a year before she officially had the nomination.

I had tried to search out any other evidence of internal corruption that would show that the DNC was rigging the system to throw the primary to Hillary, but I could not find any in party affairs or among the staff. I had gone department by department, investigating individual conduct for evidence of skewed decisions, and I was happy to see that I had found none. Then I found this agreement. The funding arrangement with HFA and the victory fund agreement was not illegal, but it sure looked unethical. If the fight had been fair, one campaign would not have control of the party before the voters had decided which one they wanted to lead. This was not a criminal act, but as I saw it, it compromised the party’s integrity.

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We’ll go with Danielle DiMartino Booth for now. Powell’s no PhD, and not a Yellen clone. But he’s been at the Fed for 5 years already, which doesn’t make him an obvious agent for change.

Jay Powell – A Quiet Leader (DDMB)

The sheer breadth of Powell’s experience is refreshing compared to what we’ve had for the past 30 years. Powell has a deep understanding of the law and politics. He worked in the Treasury Department under Nicholas Brady and was confirmed as Undersecretary of the Treasury under George H.W. Bush. His background in politics and the experience he has had at the Fed thus far have prepared him well for his role as liaison to Congress and the White House. Powell’s experience as an investment banker was critical in his carrying out the investigation and sanctioning of Salomon Brothers. Understanding the entirely different type of politics that exists in big banks will bode well for his capacity to regulate the banks. This attribute especially will dilute the power traditionally exerted by the NY Fed in recent years, a District that has a long history of conflicts of interest vis-à-vis the banks it regulates.

A stronger regulator as Fed chair in the years leading up to the financial crisis. At the Carlyle Group, Powell founded and ran the Industrial Group within the Buyout Fund. A separate missing characteristic among Fed leaders for the past 30 years has been a woeful lack of understanding as to how Fed policy effects corporations and the decisions CEOs and CFOs make driven by Fed policy, the most obvious of which has been debt-financed share buybacks at the expense of capital expenditures. Some in the media have questioned Powell’s being the wealthiest individual at the Fed. That is an extremely strong attribute. In his work between 2010 and 2012 at a bipartisan think tank, Powell worked for a salary of $1 per year to carry out his mission to raise the debt ceiling. His wealth affords him the luxury of having no preset agenda. His history of working for his country to its best end exemplifies that he is at the Fed because he truly believes he is doing a greater good in servicing his country.

Powell’s work on Too Big to Fail banks also speaks to his ability to be independent and objective in his approach to regulating big banks with deep-pocketed lobbyists who hold huge sway over politicians. If he is willing to go up against the biggest banks, he will hopefully prove to be a leader cast in the mold of William McChesney Martin, the longest serving Fed Chairman famous for testifying to Congress that it was the Fed’s job to take away the punch bowl just as the party gets going. [..] His experience in the financial markets suggests he will be less apt to keep rates too low for too long as has been the case with his three predecessors. Powell was not in favor of the third round of QE, but voted for its nevertheless. This is his biggest black eye and why market participants perceive him to be as dovish as they do.

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Savings and pensions need higher rates, fast. But…

Why Would Anyone Want The Fed Job? (Crudele)

No matter who is appointed, the next Fed chairman has a problem. Right now, the economy is looking healthy. The stock market is booming. Consumer confidence is high. Home prices are soaring. And some economic indicators seem to say, “Happy days are here again.” Just Wednesday, for instance, the Atlanta Federal Reserve raised its forecast for economic growth in the fourth quarter to a booming 4.5% annual rate. The nation’s gross domestic product, the standard for measuring economic growth, rose at a healthy 3% annual rate in the third quarter. That 3% figure was puzzling because hurricanes should have stunted growth, which means that number might be revised downward once better-quality statistics come in.

Or it could mean that growth is darn good, despite the weather. Nevertheless, the 4.5% estimate for the fourth quarter — on top of the 3% growth in the July to September quarter — is going to force whoever ends up running the Fed to seriously consider raising interest rates faster than usual. But that’s where it gets tricky. Once rates increase, the economy could slow because borrowing costs will rise for both consumers and companies. When the cost of borrowing money increases, people and companies tend to cut back on spending. But there’s another possible twist that could complicate the job of the next Fed boss even more. The relatively impressive growth in the third-quarter GDP and the even better performance in the fourth quarter could turn out to be another fake-out.

The GDP, for instance, rose by a 4.6% annual rate in the second quarter of 2014 and by a 5.2% rate in the third quarter of that year, only to collapse back to subpar growth in the next eight quarters. Also, the New York Fed, which is more influential, doesn’t agree with the Atlanta Fed. It had current GDP at closer to 3%. With all that’s going on, why would anyone want the Fed job?

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When anyone tells you the economy has recovered, show them any of these graphs.

The Borrower Is The Slave To The Lender (Lance Roberts)

Despite the bullish economic optics, the reality for the majority of Americans is they simply have not yet recovered from the financial crisis. As the chart below shows, while savings spiked during the financial crisis, the rising cost of living for the bottom 80% has outpaced the median level of “disposable income” for that same group. As a consequence, the inability to “save” has continued.

I discussed previously the problem of rising debt. Beginning in 1990, the gap between the “standard of living” and real disposable incomes went negative with the resultant “gap” filled through the use of debt. However, since the financial crisis, this has no longer been the case. I modified the previous chart with the savings rate which tells the same story, as the cost of living began outpacing incomes the difference came from savings, and a continuous increase in debt. Again, despite the temporary uptick in the savings rate following the financial crisis, the real cost of living continues to erode the middle class.

You can see the erosion of the savings rate more clearly when you look at the rate of Personal Consumption Expenditure (PCE) growth as compared to debt growth. As spending and debt accelerated, the savings rate declined. More importantly, in 2000 the growth rate of debt sharply accelerated above PCE growth. This debt-fueled consumption, however, has not led to stronger rates of economic growth.

Debt is a negative thing for the borrower. It has been known to be such a thing even in biblical times as quoted in Proverbs 22:7: “The borrower is the slave to the lender.” Debt acts as a “cancer” on an individual’s wealth as it siphons potential savings from income as those funds are diverted to debt service. Rising levels of debt means rising levels of debt service which reduces actual disposable personal incomes that could be saved or reinvested back into the economy. The mirage of consumer wealth has been a function of surging debt levels. “Wealth” is not borrowed but “saved” and as shown in the chart below, this is a lesson that too few individuals have learned. The reality is that since “savings” are the cornerstone of economic growth longer-term, as savings provide for productive investment and lending, it should be of NO surprise that, as shown in the next chart, there is a very high correlation between the savings rate, GDP, and PCE.

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What happens when you don’t make stuff anymore.

US Manufacturing Worker Productivity Crashes Most In 8 Years (ZH)

US worker productivity rose at 3.0% QoQ in Q3 – the best since 2014.

Unit labor costs rose at 0.5% annualized rate in Q3 (est. 0.4%) following 0.3% pace in Q2. Output rose at a 3.8% rate following 3.9%. Hours worked rose at a 0.8% pace after 2.4%. The latest figure compares with a 1.2% average over the period spanning 2007 to 2016. Weak productivity helps explain why companies are reluctant to raise workers’ wages, even as profit margins have improved. However, among manufacturers, productivity crashed 5% QoQ – the biggest drop since Q1 2009, when the economy was in recession – after rising 3.4% in Q2. Let’s hope that is storm-related.

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Insert your opinion here: “From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,..”

Bitcoin Is the ‘Very Definition’ of a Bubble – Credit Suisse CEO (BBG)

The speculation around bitcoin is the “very definition of a bubble,” Credit Suisse CEO Tidjane Thiam said as the currency exceeded $7,000 for the first time. “From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,” he said at a news conference in Zurich Thursday. He added that in the history of finance, such speculation has “rarely led to a happy end.” The digital currency got new impetus this week after CME, the world’s largest exchange owner, said it plans to introduce bitcoin futures by the end of the year, citing pent-up demand from clients. That pushes bitcoin closer to the mainstream by making it easier to trade without the hassles of owning bitcoin directly. Other bankers are also sounding warnings about the currency.

JPMorgan Chase CEO Jamie Dimon has called bitcoin “a fraud” that will eventually blow up. UBS Chairman Axel Weber said last month that bitcoin has no “intrinsic value” because it’s not secured by underlying assets. Bankers also are steering clear of bitcoin for fear that criminals could use its anonymity to hide their activities, Thiam said. “Most banks in the current state of regulation have little or no appetite to get involved in a currency which has such anti-money laundering challenges,” he said. While bitcoin remains a no-go with the industry, banks are racing to develop blockchain, the technology underpinning the currency. Thiam said blockchain may have many applications in banking. Credit Suisse is among more than 100 banks are working within the R3, a consortium created to find ways to use blockchain as to track money transfers and other transactions.

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It’s by design, and that remains worrisome.

One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week (MBV)

Bitcoin’s incredible price run to break over $6,000 this year has sent its overall electricity consumption soaring, as people worldwide bring more energy-hungry computers online to mine the digital currency. An index from cryptocurrency analyst Alex de Vries, aka Digiconomist, estimates that with prices the way they are now, it would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually as they compete to solve increasingly difficult cryptographic puzzles to “mine” more Bitcoins. That’s about as much as Nigeria, a country of 186 million people, uses in a year. This averages out to a shocking 215 kilowatt-hours (KWh) of juice used by miners for each Bitcoin transaction (there are currently about 300,000 transactions per day).

Since the average American household consumes 901 KWh per month, each Bitcoin transfer represents enough energy to run a comfortable house, and everything in it, for nearly a week. On a larger scale, De Vries’ index shows that bitcoin miners worldwide could be using enough electricity to at any given time to power about 2.26 million American homes. Expressing Bitcoin’s energy use on a per-transaction basis is a useful abstraction. Bitcoin uses x energy in total, and this energy verifies/secures roughly 300k transactions per day. So this measure shows the value we get for all that electricity, since the verified transaction (and our confidence in it) is ultimately the end product. Since 2015, Bitcoin’s electricity consumption has been very high compared to conventional digital payment methods. This is because the dollar price of Bitcoin is directly proportional to the amount of electricity that can profitably be used to mine it.

As the price rises, miners add more computing power to chase new Bitcoins and transaction fees. It’s impossible to know exactly how much electricity the Bitcoin network uses. But we can run a quick calculation of the minimum energy Bitcoin could be using, assuming that all miners are running the most efficient hardware with no efficiency losses due to waste heat. To do this, we’ll use a simple methodology laid out in previous coverage on Motherboard. This would give us a constant total mining draw of just over one gigawatt. That means that, at a minimum, worldwide Bitcoin mining could power the daily needs of 821,940 average American homes. Put another way, global Bitcoin mining represents a minimum of 77KWh of energy consumed per Bitcoin transaction.

Even as an unrealistic lower boundary, this figure is high: As senior economist Teunis Brosens from Dutch bank ING wrote, it’s enough to power his own home in the Netherlands for nearly two weeks. As goes the Bitcoin price, so goes its electricity consumption, and therefore its overall carbon emissions. I asked de Vries whether it was possible for Bitcoin to scale its way out of this problem. “Blockchain is inefficient tech by design, as we create trust by building a system based on distrust. If you only trust yourself and a set of rules (the software), then you have to validate everything that happens against these rules yourself. That is the life of a blockchain node,” he said via direct message.

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“Earnings are likely to fall short of expectations, which can lead to a correction. Once that happens, multiples can shrink as well. Soon you’re in a full-scale bear market with stock prices down 20% or more.”

The Hidden Danger Bulls Are Missing (Rickards)

Bull markets in stocks seem unstoppable right up until the moment they stop. Then comes a rapid crash-and-burn phase. Is there ever any warning that a collapse is about to happen? Of course there is. Analysts warn about it all the time and provide mountains of data and historical evidence to back up their analysis. The problem is that everyone ignores them! You can talk about the dangers represented by CAPE ratios, margin levels, computerized trading, persistent low volatility and complacency all you want, but nothing seems to slow down this bull market. Yet there is one thing that can stop a bull market in its tracks, and that’s corporate earnings. The simplest form of stock market valuation is to project earnings, apply a multiple and, voilà, you have a valuation. Multiples are already near record highs, so there’s not much room for expansion there.

The only variable left is projected earnings and that’s where Wall Street analysts are having a field day ramping up stock prices. Earnings did grow significantly in 2017 on a year-over-year basis, but that’s mainly because earnings were weak in 2016, so the year-over-year growth was relatively easy. Now comes the hard part. How do you expand earnings again in 2018 when 2017 was such a strong year? Wall Street just uses a simple extrapolation and says next year will be like this year, only better! But there is every reason to doubt that extrapolation. This is from a recent Bloomberg article:

“Ominously, Weekly Leading Index growth turned down early this year and is now at a 79-week low. Such cyclical downturns have historically telegraphed [growth-rate cycle] GRC downturns. That shows very clearly that economic growth is about as good as it gets and that a fresh growth slowdown may be on the way… ” “Over time, we find that stock price corrections — big and small — have historically clustered around GRC downturns. In other words, the risk of corrections rises around economic slowdowns… Today, there are rising rates, with quantitative tightening about to begin. This will take place during an economic slowdown, implying a likely downswing in corporate profit growth, delivering a proverbial one-two punch.”

Earnings are likely to fall short of expectations, which can lead to a correction. Once that happens, multiples can shrink as well. Soon you’re in a full-scale bear market with stock prices down 20% or more. That’s without even considering a war with North Korea and all of the dangers others have already mentioned. This may be your last clear chance to lighten up on listed equity exposure before the bubble bursts.

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Complex derivatives. What do they make you remember?

As Credit Booms, Citi Says Synthetic CDOs May Reach $100 Billion (BBG)

The comeback in complex credit derivatives blamed for exacerbating the global financial crisis is picking up pace. That’s according to new research this week from Citigroup, one of the biggest arrangers of so-called synthetic collateralized debt obligations. Sales of the products may jump to as much as $100 billion this year from about $20 billion in 2015, Citigroup analysts wrote in an Oct. 31 report. While investors suffered billions of dollars in losses on similar bets a decade ago, the leverage offered by synthetic CDOs is luring back buyers in an era of low yields and dwindling volatility. “It would seem as if the low spread-low vol environment, similar to back in 2006-2007 (when investors couldn’t get enough of levered synthetic tranches) has revived some interest in portfolio credit risk,” Citigroup analysts led by Aritra Banerjee wrote.

“Investors may not have necessarily wanted to add leverage, but, simply put, they have had to, given the lack of alternatives.” While post-crisis deals are typically tied to corporate credit as opposed to the mortgage debt that helped spur the credit crunch, the return of synthetic CDOs is likely to generate unease among investors who worry that markets are too frothy. The controversial product’s resurgence coincides with a boom in other types of credit wagers, including options on credit derivative indexes and exchange-traded funds that provide quick and easy access to a broad swath of credit. There are some key differences in today’s synthetic CDOs versus the pre-crisis vintage. Citigroup said it has created over 50 “full capital structure” deals in recent years, which vary from the single-tranche bespoke deals that dominated before and just after the crunch.

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“China’s non-financial outbound direct investment (ODI) fell 41.9% in January-September from a year earlier to $78.03 billion. For September alone, it plummeted 42.5% on-year to $9.31 billion..”

China Issues Guidelines On Overseas Investment Amid Crackdown On Deals (R.)

After years of rapid growth, China’s outbound investment has slumped so far in 2017 as authorities crack down on “irrational” overseas deals which are suspected of being used to bypass capital controls and move money offshore, pressuring the yuan currency. The draft regulations, released to the public to solicit feedback until Dec. 3, aim to improve oversight, safeguard national security and increase support, according to a post on the website of the National Development and Reform Commission (NDRC). Some administrative hurdles, such as a rule requiring that Chinese companies investing over $300 million overseas seek approval from the state planner, would be reduced or removed under the new rules, the post said.

At the same time, the new rules would also increase oversight on investments by overseas subsidiaries of Chinese companies, as well as for investments in sensitive sectors and countries, it said. Sensitive projects listed in the rules include those in countries that are at war, that do not have diplomatic ties with China or where investment is restricted by China’s commitments to international treaties, resolutions or requirements. Media organizations, weapons manufacturing, companies involved in multi-national water resources exploitation or those that China’s national macro policies restrict investment in were listed as sensitive sectors. A full list of sensitive areas would be released by the state planner in future, it said.

Punishments for companies that use dishonest measures to invest overseas, engage in unfair competition or damage national security will be increased, the rules said. The statement said that the new draft builds on previous regulations released in 2014. China’s non-financial outbound direct investment (ODI) fell 41.9% in January-September from a year earlier to $78.03 billion. For September alone, it plummeted 42.5% on-year to $9.31 billion, according to Reuters calculations.

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As Americans live paycheck to paycheck. Problem is, both parties support this lunacy.

US Spends $250 Million Per Day For The War On Terror (TeleS)

The Department of Defense’s “cost of war” report suggests that the U.S. has spent $250 million per day for the past 16 years on ‘defense.’ According to a newly published United States Department of Defense (DoD) “cost of war” report, U.S. taxpayers have shelled out $1.46 trillion for war since September 11, 2001, when the War on Terror began. This amounts to around $250 million per day. The report was published by the Federation of American Scientists Secrecy News blog and covers the period of September 11, 2001 to mid-2017. As the report notes, nearly $1.3 trillion of the total cost spent on the Iraq and Afghanistan wars alone. On top of this, continuing operations in Afghanistan and the U.S.-led air campaign in Iraq and Syria has totalled $120 billion.

U.S. President Donald Trump promised to rebuild America’s military which he sees as less extravagant than it ever has been. “Our active-duty armed forces have shrunk from 2 million in 1991 to about 1.3 million today,” he said in a speech. “The Navy has shrunk from over 500 ships to 272 ships during this same period of time. The Air Force is about one-third smaller than 1991. Pilots flying B-52s in combat missions today. These planes are older than virtually everybody in this room.” Part of Trump’s plan to ‘rebuild’ the U.S.’ military is to make sure that the military is “funded beautifully.” The Trump administration has proposed a $603 billion defense budget, which well exceeds the cap of $549 billion, and would require the U.S. Congress to make spending cuts in other areas.

In July, the House of Representatives approved $696.5 billion in defense spending, which includes a base budget of $621.5 billion and $75 billion in ‘Overseas Contingency Operations dollars’, commonly referred to as ‘war money’. Conversely, the Senate passed a $640 billion base defense budget with a $60 billion allocation for war money. Both versions of the budget well exceed the Trump administration’s proposal, making this defense budget, by far, the largest defense budget in U.S. history. While the U.S.’ current and proposed military spending is massive, the DoD’s “cost of war” report did not take into account other collateral costs of war, including veteran’s benefits and other related costs.

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Will Belgium extradite Puidgemont? 8 of his ministers are already in jail.

Barcelona Council Says Catalan Government Legitimate, Independence Is Not (CN)

Barcelona City Council has declared that the government dismissed by Spain after the application of Article 155 is “legitimate,” although it does not recognize Catalonia as an official republic. After meeting on Thursday, the council approved the proposal put forth by pro-independence party Esquerra Republicana (ERC) to “recognize the government that emerged from the polls on September 27 as the legitimate government of Catalonia,” with votes in favour from Barcelona en Comú (BeC), ERC, PDeCAt, and the anti-capitalist party CUP. Votes against came from the Socialists (PSC), the Catalan People’s Party (PP), and Ciutadans (Cs).

CUP also proposed a motion to “recognize the proclamation of the Catalan Republic approved by the Parliament of Catalonia on October 27.” Although this motion received support from ERC, PDeCAT, and the CUP, it received more votes against from BeC, Cs, PSC, and PP. Alfred Bosch, president of ERC warned that “the fact that the Catalan government has been dismissed, and its powers passed on to the Spanish government, will have an effect on Barcelona.” Barcelona’s mayor, Ada Colau, received criticism from CUP representative María José Lecha, who said the mayor cannot be “neutral or equidistant” in the face of the judicial persecution of the October 1 referendum, and that she must side either with “the oppressor or the oppressed.”

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What a story this still is.

Kim Dotcom Wins Settlement From New Zeland Police Over 2012 Dawn Raid (NZH)

Kim Dotcom and his former wife Mona have accepted a confidential settlement from the police over the raid which saw him arrested, saying he did so to protect their children and because the Government “recently changed for the better”. He said that their previous desire to see accountability had been trumped by wanting to “do what was best for our children” by bringing an end to the court case. The settlement came after a damages claim was filed with the High Court over what was considered an “unreasonable” use of force when the anti-terrorism Special Tactics Group raided his $30 million mansion in January 2012. The raid was part of a worldwide FBI operation to take down Dotcom’s Megaupload file-sharing website which was claimed to be at the centre of a massive criminal copyright operation.

Dotcom and three others were arrested and await extradition to the United States on charges which could land them in prison for decades. The NZ Herald has learned earlier settlements were reached between police and others arrested, including Bram van der Kolk and Mathias Ortmann. It was believed their settlements were six-figure sums and it is likely Dotcom would seek more as the main target in the raid. He was also the focus of risk assessments used to justify the use of the anti-terrorism squad which carried out a helicopter assault at dawn. Those assessments included photographs of Dotcom carrying shotguns – pictures taken while clay pigeon shooting – and descriptions of him as violent despite a lack of evidence to support the claim.

The court challenge also questioned “visual surveillance” which had not been authorised by the court. Evidence has emerged in court hearings of police watching the Dotcom Mansion from neighbouring properties, and scouting the mansion interior with a hidden camera carried on to the property by a local police officer on a goodwill meeting the day before the raid.

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Ban it. Ban the whole industry. We cannot afford this to continue. Let’s feed ourselves without poisoning ourselves in the process.

Monsanto Halts Launch Of Chemical After Farmers Complain Of Rashes (R.)

Monsanto put on hold the launch of a chemical designed to be applied to crop seeds on Wednesday following reports it causes rashes on people, in the latest instance of complaints about a company product that was approved by U.S. environmental regulators. Monsanto froze plans for commercial sales of the product called NemaStrike, which can protect corn, soybeans and cotton from worms that reduce yields. The company said it conducted three years of field tests across the United States in preparation for a full launch and that more than 400 people used it this year as part of a trial. The delayed launch of what Monsanto calls a blockbuster product is another setback for the company, which is already battling to keep a new version of a herbicide on the market in the face of complaints that it damaged millions of acres of crops this summer.

“There have been limited cases of skin irritation, including rashes, that appear to be associated with the handling and application of this seed treatment product,” Brian Naber, U.S. commercial operations lead for Monsanto, said in a letter to customers about NemaStrike. Some users who suffered problems may not have followed instructions to wear protective equipment, such as gloves, company spokeswoman Christi Dixon said. The company expected NemaStrike to launch across up to 8 million U.S. crop acres in fiscal year 2018, Chief Executive Hugh Grant said on a conference call last month. The product was “priced at a premium that reflects its consistent yield protection” against worms known as nematodes, he said.

The U.S. Environmental Protection Agency (EPA) did extensive evaluations of the product before approving it for use, according to Monsanto, which has described NemaStrike as “blockbuster technology.” [..] “The technology is effective and can be used safely when following label instructions,” Monsanto said. The EPA last year approved use of Monsanto’s new version of a weed killer using a chemical known as dicamba on crops during the summer growing season.Problems have also emerged with the herbicide since the agency’s approval. Farmers have complained it evaporates and drifts from where it is applied, causing damage to crops that cannot resist it.

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Mar 082017
 
 March 8, 2017  Posted by at 9:10 am Finance Tagged with: , , , , , , , , , , , ,  


Dorothea Lange A Family Of Mexican Migrants, On The Road In California 1936

 

Wikileaks ‘Vault 7’, Largest Ever Publication Of Confidential CIA Docs (ZH)
Snowden: What The Wikileaks Revelations Show Is “Reckless Beyond Words” (ZH)
WikiLeaks Releases Trove of Alleged CIA Hacking Documents (NYT)
Wikileaks: CIA Capable Of Cyber “False Flag” Attack To Blame Russia (TAM)
CIA Contractor on #VAULT7 Leak: ‘There is Heavy Shit Coming Down’ (RF)
US Trade Deficit Jumps To Five-Year High On Imports (R.)
China Posts Rare Trade Deficit As February Imports Surge in Yuan Terms (R.)
Why Are Europe’s Small Central Banks Stocking Up Foreign Money? (WSJ)
Dispel The Economic Myths That Hold Women Back (Ann Pettifor)
Austerity Is A Feminist Issue (G.)
The Women’s Protest That Sparked The Russian Revolution (G.)
Vacant Homes Are A Global Epidemic (BD)
There’s No Housing Bubble in Australia, Heads of Big Banks Say (BBG)
Australian Lenders Are Handing Out Mortgages Like Confetti (LF)
Greece’s Still-Falling GDP Dispels Creditors’ “Recovery” Myth (Prime)
Tax Weary Greek Employers Pay In Kind As Creditor Demands Rise (BBG)
America’s Forgotten History of Illegal Deportations (Atlantic)

 

 

It’s obvious there is only one story today, which ironically(?!) blows the whole Trump-Russia accusation narrative to bits, even though of course Russia gets the blame for this too in all sorts of corners. But the files are reported to have been ‘out there’ for a while, in the hands of hackers and possible foreign agencies. The CIA spent a huge wad of taxpayer money on this, and then lost it all. It’s early days to say what this will mean for the agency’s abilities, and the nation’s safety, as well as that of American citizens, but it’s not good. Question is: who’s going to investigate how this could have happened? (Snowden and Kim Dotcom could)… And who’s going to repair the damage done? Anyone could be spying on your phone and your TV by now, not just the CIA -as if that wouldn’t be bad enough.

And this is just the first part. Wikileaks has announced more from where this came from.

Wikileaks ‘Vault 7’, Largest Ever Publication Of Confidential CIA Docs (ZH)

A total of 8,761 documents have been published as part of ‘Year Zero’, the first in a series of leaks the whistleblower organization has dubbed ‘Vault 7.’ WikiLeaks said that ‘Year Zero’ revealed details of the CIA’s “global covert hacking program,” including “weaponized exploits” used against company products including “Apple’s iPhone, Google’s Android and Microsoft’s Windows and even Samsung TVs, which are turned into covert microphones.”

WikiLeaks tweeted the leak, which it claims came from a network inside the CIA’s Center for Cyber Intelligence in Langley, Virginia.

Among the more notable disclosures which, if confirmed, “would rock the technology world“, the CIA had managed to bypass encryption on popular phone and messaging services such as Signal, WhatsApp and Telegram. According to the statement from WikiLeaks, government hackers can penetrate Android phones and collect “audio and message traffic before encryption is applied.”

Another profound revelation is that the CIA can engage in “false flag” cyberattacks which portray Russia as the assailant. Discussing the CIA’s Remote Devices Branch’s UMBRAGE group, Wikileaks’ source notes that it “collects and maintains a substantial library of attack techniques ‘stolen’ from malware produced in other states including the Russian Federation.

“With UMBRAGE and related projects the CIA cannot only increase its total number of attack types but also misdirect attribution by leaving behind the “fingerprints” of the groups that the attack techniques were stolen from. UMBRAGE components cover keyloggers, password collection, webcam capture, data destruction, persistence, privilege escalation, stealth, anti-virus (PSP) avoidance and survey techniques.”

As Kim Dotcom summarizes this finding, “CIA uses techniques to make cyber attacks look like they originated from enemy state. It turns DNC/Russia hack allegation by CIA into a JOKE

But perhaps what is most notable is the purported emergence of another Snowden-type whistleblower: the source of the information told WikiLeaks in a statement that they wish to initiate a public debate about the “security, creation, use, proliferation and democratic control of cyberweapons.”  Policy questions that should be debated in public include “whether the CIA’s hacking capabilities exceed its mandated powers and the problem of public oversight of the agency,” WikiLeaks claims the source said.

The FAQ section of the release, shown below, provides further details on the extent of the leak, which was “obtained recently and covers through 2016”. The time period covered in the latest leak is between the years 2013 and 2016, according to the CIA timestamps on the documents themselves. Secondly, WikiLeaks has asserted that it has not mined the entire leak and has only verified it, asking that journalists and activists do the leg work.

Among the various techniques profiled by WikiLeaks is “Weeping Angel”, developed by the CIA’s Embedded Devices Branch (EDB), which infests smart TVs, transforming them into covert microphones. After infestation, Weeping Angel places the target TV in a ‘Fake-Off’ mode, so that the owner falsely believes the TV is off when it is on. In ‘Fake-Off’ mode the TV operates as a bug, recording conversations in the room and sending them over the Internet to a covert CIA server.

As Kim Dotcom chimed in on Twitter, “CIA turns Smart TVs, iPhones, gaming consoles and many other consumer gadgets into open microphones” and added ” CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand, including via Windows update”

Dotcom also added that “Obama accused Russia of cyberattacks while his CIA turned all internet enabled consumer electronics in Russia into listening devices. Wow!”

Julian Assange, WikiLeaks editor stated that “There is an extreme proliferation risk in the development of cyber ‘weapons’. Comparisons can be drawn between the uncontrolled proliferation of such ‘weapons’, which results from the inability to contain them combined with their high market value, and the global arms trade. But the significance of “Year Zero” goes well beyond the choice between cyberwar and cyberpeace. The disclosure is also exceptional from a political, legal and forensic perspective.”

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“…first public evidence US [Government] secretly paying to keep US software unsafe”

Snowden: What The Wikileaks Revelations Show Is “Reckless Beyond Words” (ZH)

While it has been superficially covered by much of the press – and one can make the argument that what Julian Assange has revealed is more relevant to the US population, than constant and so far unconfirmed speculation that Trump is a puppet of Putin – the fallout from the Wikileaks’ “Vault 7” release this morning of thousands of documents demonstrating the extent to which the CIA uses backdoors to hack smartphones, computer operating systems, messenger applications and internet-connected televisions, will be profound. As evidence of this, the WSJ cites an intelligence source who said that “the revelations were far more significant than the leaks of Edward Snowden.”

Mr. Snowden’s leaks revealed names of programs, companies that assist the NSA in surveillance and in some cases the targets of American spying. But the recent leak purports to contain highly technical details about how surveillance is carried out. That would make them far more revealing and useful to an adversary, this person said. In one sense, Mr. Snowden provided a briefing book on U.S. surveillance, but the CIA leaks could provide the blueprints. Speaking of Snowden, the former NSA contractor-turned-whistleblower, who now appears to have a “parallel whisteblower” deep inside the “Deep State”, i.e., the source of the Wikileaks data – also had some thoughts on today’s CIA dump.

In a series of tweets, Snowden notes that “what @Wikileaks has here is genuinely a big deal”, and makes the following key observations “If you’re writing about the CIA/@Wikileaks story, here’s the big deal: first public evidence USG secretly paying to keep US software unsafe” and adds that “the CIA reports show the USG developing vulnerabilities in US products, then intentionally keeping the holes open. Reckless beyond words.” He then asks rhetorically “Why is this dangerous?” and explains “Because until closed, any hacker can use the security hole the CIA left open to break into any iPhone in the world.” His conclusion, one which many of the so-called conspiratorial bent would say was well-known long ago: “Evidence mounts showing CIA & FBI knew about catastrophic weaknesses in the most-used smartphones in America, but kept them open – to spy.”

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“..WikiLeaks, which has sometimes been accused of recklessly leaking information that could do harm, said it had redacted names and other identifying information from the collection. It said it was not releasing the computer code for actual, usable weapons “until a consensus emerges on the technical and political nature of the C.I.A.’s program and how such ‘weapons’ should be analyzed, disarmed and published.”

WikiLeaks Releases Trove of Alleged CIA Hacking Documents (NYT)

In what appears to be the largest leak of C.I.A documents in history, WikiLeaks released on Tuesday thousands of pages describing sophisticated software tools and techniques used by the agency to break into smartphones, computers and even Internet-connected televisions. The documents amount to a detailed, highly technical catalog of tools. They include instructions for compromising a wide range of common computer tools for use in spying: the online calling service Skype; Wi-Fi networks; documents in PDF format; and even commercial antivirus programs of the kind used by millions of people to protect their computers. A program called Wrecking Crew explains how to crash a targeted computer, and another tells how to steal passwords using the autocomplete function on Internet Explorer. Other programs were called CrunchyLimeSkies, ElderPiggy, AngerQuake and McNugget.

The document dump was the latest coup for the antisecrecy organization and a serious blow to the C.I.A., which uses its hacking abilities to carry out espionage against foreign targets. The initial release, which WikiLeaks said was only the first installment in a larger collection of secret C.I.A. material, included 7,818 web pages with 943 attachments, many of them partly redacted by WikiLeaks editors to avoid disclosing the actual code for cyberweapons. The entire archive of C.I.A. material consists of several hundred million lines of computer code, the group claimed. In one revelation that may especially trouble the tech world if confirmed, WikiLeaks said that the C.I.A. and allied intelligence services have managed to compromise both Apple and Android smartphones, allowing their officers to bypass the encryption on popular services such as Signal, WhatsApp and Telegram. According to WikiLeaks, government hackers can penetrate smartphones and collect “audio and message traffic before encryption is applied.”

Unlike the National Security Agency documents Edward J. Snowden gave to journalists in 2013, they do not include examples of how the tools have been used against actual foreign targets. That could limit the damage of the leak to national security. But the breach was highly embarrassing for an agency that depends on secrecy. Robert M. Chesney, a specialist in national security law at the University of Texas at Austin, likened the C.I.A. trove to National Security Agency hacking tools disclosed last year by a group calling itself the Shadow Brokers. “If this is true, it says that N.S.A. isn’t the only one with an advanced, persistent problem with operational security for these tools,” Mr. Chesney said. “We’re getting bit time and again.”

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No ‘evidence’ (and remember none was provided to date) of Russian spying is the least bit credible anymore after today.

Wikileaks: CIA Capable Of Cyber “False Flag” Attack To Blame Russia (TAM)

According to a Wikileaks press release, the 8,761 newly published files came from the CIA’s Center for Cyber Intelligence (CCI) in Langley, Virginia. The release says that the UMBRAGE group, a subdivision of the center’s Remote Development Branch (RDB), has been collecting and maintaining a “substantial library of attack techniques ‘stolen’ from malware produced in other states, including the Russian Federation.” As Wikileaks notes, the UMBRAGE group and its related projects allow the CIA to misdirect the attribution of cyber attacks by “leaving behind the ‘fingerprints’ of the very groups that the attack techniques were stolen from.”

In other words, the CIA’s sophisticated hacking tools all have a “signature” marking them as originating from the agency. In order to avoid arousing suspicion as to the true extent of its covert cyber operations, the CIA has employed UMBRAGE’s techniques in order to create signatures that allow multiple attacks to be attributed to various entities – instead of the real point of origin at the CIA – while also increasing its total number of attack types. Other parts of the release similarly focus on avoiding the attribution of cyberattacks or malware infestations to the CIA during forensic reviews of such attacks. In a document titled “Development Tradecraft DOs and DON’Ts,” hackers and code writers are warned “DO NOT leave data in a binary file that demonstrates CIA, U.S. [government] or its witting partner companies’ involvement in the creation or use of the binary/tool.” It then states that “attribution of binary/tool/etc. by an adversary can cause irreversible impacts to past, present and future U.S. [government] operations and equities.”

While a major motivating factor in the CIA’s use of UMBRAGE is to cover it tracks, events over the past few months suggest that UMBRAGE may have been used for other, more nefarious purposes. After the outcome of the 2016 U.S. presidential election shocked many within the U.S. political establishment and corporate-owned media, the CIA emerged claiming that Russia mounted a “covert intelligence operation” to help Donald Trump edge out his rival Hillary Clinton.[..] the U.S. intelligence community’s assertions that Russia used cyber-attacks to interfere with the election overshadowed reports that the U.S. government had actually been responsible for several hacking attempts that targeted state election systems.

For instance, the state of Georgia reported numerous hacking attempts on its election agencies’ networks, nearly all of which were traced back to the U.S. Department of Homeland Security. Now that the CIA has been shown to not only have the capability but also the express intention of replacing the “fingerprint” of cyber-attacks it conducts with those of another state actor, the CIA’s alleged evidence that Russia hacked the U.S. election – or anything else for that matter – is immediately suspect. There is no longer any way to determine if the CIA’s proof of Russian hacks on U.S. infrastructure is legitimate, as it could very well be a “false flag” attack.

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“..we come to find out the same people who told us the Russians were our enemy, revealing corruption and depravity on a monumental scale via the Podesta emails, they were, in fact, the ones spying on us all along – both lying and mocking us like Lords in a fiefdom.”

CIA Contractor on #VAULT7 Leak: ‘There is Heavy Shit Coming Down’ (RF)

Everything that Wikileaks has revealed over the past year has hurt both the integrity and honor of the United States. The question you have to grapple with, is it well deserved? After all, living inside of a vast and powerful empire has its benefits. As the empire expands, so does the wealth of its citizens. But it hasn’t worked out that way, has it? The CIA deep staters have turned their guns on the people they serve – using third world banana republic tactics to silence opposition, take down regimes not beholden to their world view, using advanced technology to both spy and monitor on American citizens – infringing on our civil rights like nothing we’ve ever seen before. The reason for the populist uprising and the lack of equanimity amongst those traditionally supportive of the CIA lies in the improper distribution of the spoils of war. There aren’t any.

All the average American has received from $10 trillion in Obama inspired deficit spending is American casualties of war, jobs lost to cheaper labor overseas, expensive oil prices, expensive healthcare, and run away education costs – along with a sundry of social disturbances that have people fed up. While the elite flaunt hedonistic lifestyles, eschewing basic decency for the perverse, normies get more of the same old bullshit. After electing a true agent of change in Donald Trump, the people are laughed at and impugned by the elitist media. Their President is set upon by ‘permanent government’ officials in the intelligence agencies – whose only goal is to derail and destroy his term before it even begins.

Then we come to find out the same people who told us the Russians were our enemy, revealing corruption and depravity on a monumental scale via the Podesta emails, they were, in fact, the ones spying on us all along – both lying and mocking us like Lords in a fiefdom. Here’s Fox News reporting on the latest scandal to hit the wires, #VAULT7 Fox New sources inside the CIA said the agency was running around like headless chickens, saying ‘there is heavy shit coming down.’

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US exports are plunging. 10.7% to Germany, 13.4% to China.

US Trade Deficit Jumps To Five-Year High On Imports (R.)

The U.S. trade deficit jumped to a near five-year high in January as cell phones and rising oil prices helped to push up the import bill, suggesting trade would again weigh on economic growth in the first quarter. The Commerce Department said on Tuesday the trade gap increased 9.6% to $48.5 billion, the highest level since March 2012. The deficit was in line with economists forecasts. December’s trade shortfall was unrevised at $44.3 billion. When adjusted for inflation, the trade deficit rose to $65.3 billion from $62.0 billion in December. Both the inflation-adjusted exports and imports were the highest on record in January.

The wider trade gap added to weak data such as housing starts, consumer and construction spending in suggesting the economy struggled to regain momentum early in the first quarter after growth slowed to a 1.9% annualized rate in the final three months of 2016. The economy grew at a 3.5% pace in the third quarter. Trade cut 1.7 percentage points from GDP in the fourth quarter. The Atlanta Fed is forecasting GDP rising at a 1.8% rate in the first quarter. The dollar was trading marginally higher, while prices for U.S. government bonds were little changed. U.S. stock index futures were slightly lower. The Trump administration is eyeing trade as it seeks 4% annual GDP growth. President Donald Trump has vowed sweeping changes to U.S. trade policy, starting with pulling out of the 12-nation TPP.

[..] The bulk of the increase in the trade-weighted value of the greenback occurred in the final months of 2016 and will probably take a while to reflect in the trade data. Exports to Germany tumbled 10.7%. A Trump trade adviser has accused Germany of unfairly benefiting from a weak euro. Shipments of goods to China, also singled out by the Trump administration, dropped 13.4%. The politically sensitive U.S.-China trade deficit increased 12.8% to $31.3 billion in January, while the trade gap with Germany fell 8.0% to $4.9 billion. The United States also saw its trade deficit with Mexico shrink 10.1% to its lowest level since July 2015.

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We need to see: 1) dollar terms and 2) Lunar New Year distortions.

China Posts Rare Trade Deficit As February Imports Surge in Yuan Terms (R.)

China unexpectedly posted a rare trade deficit in February as imports surged far more than expected to feed a months-long construction boom, driven by commodities from iron ore and copper to crude oil and coal. Imports in yuan-denominated terms surged 44.7 percent from a year earlier, while exports rose 4.2 percent, official data showed on Wednesday. That left the country with a trade deficit of 60.63 billion yuan ($8.79 billion) for the month, the General Administration of Customs said. Customs has not yet published dollar-denominated trade figures, on which most economists and investors base their forecasts and analysis. Apart from currency fluctuations, higher commodity prices and the timing of the long Lunar New year holidays early in the year also may have distorted the data.

Most of China’s commodity imports grew strongly in volume terms from a year earlier, but dipped from January. Still, economists say the upbeat readings reinforced a growing view that economic activity in China and globally picked up in the first two months of the year. That could give China’s policymakers more confidence to press ahead with oft-delayed and painful structural reforms such as tackling a mountain of debt. Containing the risks from years of debt-fueled stimulus and heavy spending has been a major focus at the annual meeting of China’s parliament which began on Sunday.

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They know something?!

Why Are Europe’s Small Central Banks Stocking Up Foreign Money? (WSJ)

Europe’s smaller central banks are loading up on foreign currencies at rates usually associated with periods of intense global stress, highlighting the fragile underpinnings of the global economic recovery despite the recent upbeat mood in financial markets. Switzerland’s holdings of foreign assets jumped last month at their fastest pace in over two years as its central bank fought the strong franc, which weakens exports and inflation. The Czech central bank intervened in January on a massive scale to maintain its currency target against the euro. Denmark has also stepped up its foreign-currency purchases to keep the krone from strengthening too much. These central banks are showing crisis-like behavior to protect their currencies even in the absence of obvious trouble. This exposes them to losses if their currencies fail to weaken on their own.

It also raises doubts as to how long they can keep this up in an era when economic and political uncertainties appear to be a lasting feature of the world economy. “There is a little bit of survivor behavior,” said Peter Rosenstreich, head of market strategy at Swissquote Bank. “They’ve been protecting their currencies so long and it’s hard to give up that defensive position.” The Swiss National Bank said Tuesday its foreign exchange reserves swelled nearly 25 billion Swiss francs ($24.63 billion) last month to 668 billion francs, the biggest rise since December 2014, the month before the Swiss abandoned a cap on the franc’s value. The pile of foreign reserves is greater than Switzerland’s entire gross domestic product. “It’s quite bizarre. You’d think at some time you’d run out of surprises,” said Stefan Gerlach, chief economist at BSI Bank in Zurich and a former deputy governor at Ireland’s central bank.

[..] Central banks accumulate foreign reserves when they purchase assets denominated in other currencies, using freshly created money. They do this to weaken their currencies, protecting exports and giving a boost to inflation. Foreign reserves can waver slightly due to changes in currency values, but big increases like Switzerland’s signal aggressive intervention. This tool has gained traction in recent years as official rates have turned negative in Denmark and Switzerland and are near zero in the Czech Republic.

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A few good articles for International Women’s Day. Pettifor’s insistence that households are not like governments is important.

Dispel The Economic Myths That Hold Women Back (Ann Pettifor)

There are two economic myths that fail the interests of women. The first is the fallacy that government budgets conform to “the household analogy”: that, as with family budgets, a state’s outgoings cannot exceed its income. The second is that “there is no money” for the services women use and need. On the first, the public are told that cuts in spending and in some benefits, combined with rises in income from taxes will – just as with a household – balance the budget. Even though a single household’s budget is a) minuscule compared to that of a government; b) does not, like the government’s, impact on the wider economy; c) does not benefit from tax revenues (now, or in the foreseeable future); and d) is not backed by a powerful central bank. Despite all these obvious differences, government budgets are deemed analogous (by economists and politicians) to a household budget.

To understand why the government/household analogy is false it is important to understand that the balance of the government budget, unlike that of a household, is entirely a function of the wider economy. If the economy slumps (as in 2008-9) and the private sector weakens, then like a see-saw the public sector deficit, and then the debt, rises. When private economic activity revives (thanks to increased investment, employment, sales etc) tax revenues rise, unemployment benefits fall, and the government deficit and debt follow the same downward trajectory. So, to balance the government’s budget, efforts must be made to revive Britain’s economy, including the indebted private sector.

Because government spending (unlike a household’s spending) has a big impact on the economy, governments can use loan-financed investment to expand tax-generating employment – both public (for example, nurses and teachers) and private sector employment (construction workers). Both nurses and construction workers will return a large part of their incomes into the economy through spending, benefitting the private sector. Thanks to the multiplier effect, that spending will generate VAT and corporation tax revenues – for repaying government debt. George Osborne believed that government spending cuts would be offset by a rise in private sector confidence, inspired by a government “getting its house in order”. But that did not happen.

As many of us predicted, government spending cuts contracted the economy further. Economic activity (investment, sales, employment) was weaker than expected. Even when employment revived, lower wages and insecure, part-time work meant that income and corporate taxes were lower than expected. So government borrowing did not fall. As a result, public debt as a share of GDP was higher than expected. In the meantime, massive harm had been done to public sector services and those employed in the sector – while the economy endured the slowest post-crisis recovery in history. And it was women who largely paid the price.

One woman can be said to have given the phrase “there is no money” much credibility. In her 1983 speech to the Conservative party conference, Margaret Thatcher declared that: “The state has no source of money, other than the money people earn themselves. If the state wishes to spend more it can only do so by borrowing your savings, or by taxing you more … There is no such thing as public money. There is only taxpayers’ money.” Today this framing of the debate is at odds with reality. After the financial crisis, the Bank of England injected £1,000bn into the private finance sector to prevent systemic economic failure. And after the shock of the Brexit vote, the Bank unveiled the “Term Funding Scheme” as part of a £170bn “stimulus package” aimed at the private finance sector. The money was “public money” offered at a historically low interest rate – to bankers. It was not raised by cutting spending, and it was not raised from “your taxes”, even while its issue was backed by Britain’s taxpayers.

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Good points.

Austerity Is A Feminist Issue (G.)

Women are massively more affected by budget cuts than men, says the Labour peer. They are more likely to be single parents, earn less and work part time than their male counterparts. She argues the government must replace ‘gender-neutral’ budgeting with economic policies that put women first.

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100 years ago.

The Women’s Protest That Sparked The Russian Revolution (G.)

The first day of the Russian revolution – 8 March (23 February in the old Russian calendar) – was International Women’s Day, an important day in the socialist calendar. By midday of that day in 1917 there were tens of thousands of mainly women congregating on the Nevsky Propsekt, the principal avenue in the centre of the Russian capital, Petrograd, and banners started to appear. The slogans on the banners were patriotic but also made forceful demands for change: “Feed the children of the defenders of the motherland”, read one; another said: “Supplement the ration of soldiers’ families, defenders of freedom and the people’s peace”. The crowds of demonstrators were varied. The city’s governor, AP Balk, said they consisted of “ladies from society, lots more peasant women, student girls and, compared with earlier demonstrations, not many workers”. The revolution was begun by women, not male workers.

In the afternoon the mood began to change as female textile workers from the Vyborg side of the city came out on strike in protest against shortages of bread. Joined by their menfolk, they swelled the crowds on the Nevsky, where there were calls for “Bread!” and “Down with the tsar!” By the end of the afternoon, 100,000 workers had come out on strike, and there were clashes with police as the workers tried to cross the Liteiny bridge, connecting the Vyborg side with the city centre. Most were dispersed by the police but several thousand crossed the ice-packed river Neva (a risky thing to do at -5C) and some, angered by the fighting, began to loot the shops on their way to the Nevsky. Balk’s Cossacks struggled to clear the crowds on the Nevsky. They would ride up the demonstrators, only to stop short and retreat. Later it emerged that they were mostly young reservists who had no experience of dealing with crowds.

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How to kill a city part 829.

Vacant Homes Are A Global Epidemic (BD)

Runaway real estate speculation has been filling global capitals with vacant homes, creating artificial shortages in the world’s most sought after cities. The “shortage” has made local home owners wealthy overnight, but it comes at the cost of turning lively cities into empty shells. The city of Paris has decided it’s had enough, and implemented a tax in 2015. They didn’t quite get the results they wanted, so they’re now tripling the tax to 60%. Paris has been trying to deal with vacant property owners for some time. Despite warnings that the city will have to take action, the number of vacant homes is growing. There’s now 107,000 vacant homes, representing 7.5% of all residential dwellings in the city according to France’s INSEE. Deputy Mayor Ian Brossat told Le Monde that 40,000 of those vacant homes aren’t even connected to the electrical grid.

Local developers have argued that more new construction is the solution. However Brossat argues “In a city as dense as Paris, where it is very difficult to build, controlling the occupancy of housing is strategic.” It appears the city believes they have 107,000 reasons more construction is not the solution. Paris implemented a tax recently, but it didn’t quite produce the desired outcome. Starting in 2015 the city elected to tax vacant homes the equivalent of 20% of the fair market value of rent. On January 30 this year, they decided to triple that amount to 60%. The idea isn’t to punish those fortunate enough to own a second (or twelfth) home. They’re trying to discourage speculation and promote a healthy rental market.

Paris’ 107,000 empty homes might seem like a lot, but it’s becoming strangely normal around the world. New York City had a whopping 318,831 vacant units in 2015. It’s a hot topic in Sydney, where 118,499 vacant units were counted in 2013. Heck, London considers it a critical issue, and they “only” have 22,000 empty homes. There’s a massive numbers of vacant homes across the globe, but only Paris has decided to take aggressive action to tackle it. Growing populations have barely put a dent in the vacant homes in global real estate capitals. The amount of speculation has been scaling with demand, which is a curious paradox. This signifies an issue that’s more complex than just a basic supply and demand problem.

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And you can’t call it perjury. But look at the article below this one.

There’s No Housing Bubble in Australia, Heads of Big Banks Say (BBG)

Soaring home prices in Australia’s biggest cities don’t necessarily mean the country is in the grip of a housing bubble, according to the heads of the nation’s biggest banks. Testifying before a parliamentary committee, the chief executives of National Australia, Westpac and Commonwealth Bank of Australia all said that while they are worried about elements of the housing market, prices aren’t over-inflated. “I would draw the distinction between a speculative bubble in prices and prices beyond what fundamentals would justify,” Westpac’s Brian Hartzer told the committee in Canberra Wednesday. A bubble isn’t occurring in Sydney or Melbourne, where house prices have risen the most, he said.

“There are increasing risks, but I still believe the answer is no,” National Australia Bank’s Andrew Thorburn said when asked if houses in Sydney and Melbourne are overpriced. Commonwealth Bank, the nation’s largest mortgage lender, is “lending at levels we are comfortable with” across Australia, CEO Ian Narev told the committee when he testified Tuesday. The bank chiefs were appearing in front of the committee, which was set up by the government to ward off calls for a more far-reaching inquiry into the financial industry, for the second time within six months. The banks have been under pressure from opposition parties after a series of scandals in their insurance and wealth divisions and concern they failed to pass on the full benefits of central bank interest-rate cuts to borrowers.

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“Boosting leveraged demand to make housing affordable makes no sense.”

Australian Lenders Are Handing Out Mortgages Like Confetti (LF)

In the thrall of irrational exuberance, Australia is experiencing a debt-financed housing bubble. In our two major cities of Sydney and Melbourne, the housing markets are out of control due to the rapid acceleration of debt enabled by lenders issuing remarkable amounts of mortgages. Household debt to income ratios for the states of NSW and VIC suggest this to be the case. Australian lenders are handing out mortgages like confetti – why? It demonstrates banks and non-bank lenders are quite willing to issue risky mortgages to applicants who will not have the long-term financial capability to repay. Lenders are indeed taking on these excessive risks. Throwing everything but the kitchen sink is today the common approach governments take to ensure housing prices continually rise given their fear of the political and economic damage caused by falling prices.

Governments engaged in co-buying and co-owning housing with FHBs stimulates debt accumulation and hence prices. The VIC government, for instance, is attempting to provide a large gift to current residential land owners and lenders at the cost of FHBs acquiring mortgages they cannot afford to service over the long-run. This is done through the proposed shared equity model whereby the government acquires 25% of the home price. To make matters worse, the VIC government is also cutting stamp duty for FHBs and doubling the FHOB (for new properties in regional areas); both in theory have the effect of boosting housing prices. The VIC government cannot allow housing prices in Melbourne and the rest of Victoria decline significantly because it will suffer the same adverse impact that Dublin and Ireland experienced last decade.

The problems are the same and the end result will be the same. Unfortunately, just like the federal government, the VIC government is stuck. Implementing policies on the demand and supply sides to reduce land prices will cause a great deal of pain to all stakeholders: governments, lenders, homeowners, investors, including employees – many may lose their jobs if debt growth craters and removes a considerable portion of demand from the economy. Government has dug itself into a hole but instead of assessing a way out, it simply continues to dig, hoping to kick the can down the road long enough for the next party in power to deal with the problems. Both the LNP and ALP at the federal and state levels have refused to deal with the issues at hand, and prefer to enslave a generation of Aussies to the most profitable and high-risk banking system in the western world.

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As I’ve been saying forever. Recovery is unpossible in Greece.

Greece’s Still-Falling GDP Dispels Creditors’ “Recovery” Myth (Prime)

The latest GDP figures for Greece, relating to Q4 of 2016, are disastrous. For Greece first and foremost, but also for the credibility of the EU and IMF’s failed harsh austerity (but on the EU side no-debt-cancellation) policy. Far from evidencing the long-promised recovery, they show a new decline in GDP – both on the previous quarter (after seasonal adjustment) and year on year. In fact, the economy has been broadly stagnant at a low level since 2013. In constant volume terms, GDP fell by over 27% from (peak) Q2 2007 to Q4 2013, and in Q4 2016 it was 0.3% smaller than in Q4 2013. In Q4 it was only marginally higher than the post-crisis record low to date, Q3 2015. This chart from Elstat (the Greek Statistical Office) shows the development of GDP over the last decade:

What is more extraordinary is that current price (i.e. nominal) GDP has fallen even further than real GDP over the decade – by 28.5% From 2008 to 2016, GDP fell quarter-on-quarter in no fewer than 27 out of 36 quarters, of which two in 2016. [..] there has been some modest improvement, with unemployment in November 2016 about 66,000 lower than a year before, and employment up by about 50,000. But employment is still 200,000 below its 2011 level. The unemployment rate remains a disastrous 23%, which reminds one of chronic European levels in the 1920s and 1930s:

The Financial Times’ Mehreen Khan yesterday (6 March) described the current state of negotiations towards the absurd requirement of a contractionary 3.5% of GDP budget surplus (i.e. after interest): “Progress on the country’s €86bn rescue deal has stuttered this year following a standoff between the EU and IMF over the level of austerity, reforms and debt relief baked into Greece’s three-year programme. Bailout monitors however returned to Athens last week to ensure the left-wing Greek government was making steps towards legislating for around €2bn in tax and pension measures that will help the country meet a surplus target of 3.5 per cent of GDP from 2018. Approval of the second review would unlock around €6bn in rescue cash for the economy.”

And ah yes, as Jeroen Dijsselbloem, Chair of the Eurogroup finance ministers, put it on 20th February, in an interview with CNBC (h/t Professor Helen Thompson ): “…anyone who wants to talk about crisis can talk to someone else because the Greek economy is gradually recovering and what we need to do is to strengthen that and give that more opportunity and that is what I’m trying to do.” Alas, Mr Dijsselbloem comes from the Dutch Labour Party, not the conservatives, and here symbolizes all that is so profoundly wrong with the Eurozone’s economic policy and ideology. It’s high time he looked again at that table of unemployment in the 1930s – and the terrible ordeal imposed on the Dutch working class.

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The creditors force Greek companies into contortionist tricks just to survive. There is such a thing as too much tax.

Tax Weary Greek Employers Pay In Kind As Creditor Demands Rise (BBG)

When Maria’s employer, a large communications company in Athens, gave her additional tasks at one of its new units, it told her she wouldn’t be paid for the work in euros. “I was informed that this extra payment of 150 euros per month would be in coupons that I can use in supermarkets,” said the 45-year-old, declining to provide her last name for fear of losing her job. Payments in kind are among practices companies are using in Greece as they seek to cap payroll costs, undermining efforts to balance the books of the country’s cash-strapped social security system. As creditors push the government to boost its budget surplus, companies avoiding payroll charges and effectively expanding the shadow economy are making the task harder. By some estimates, the so-called black market already accounts for as much as a quarter of Greece’s economy.

“Such practices help companies to avoid social contributions, but the burden for the economy is huge,” said Panos Tsakloglou, a professor at the Athens University of Economics and Business. “Less contributions for pensions means more budget transfers to them which then leads to more austerity measures to meet fiscal targets, measures that will probably hit pensioners.” Greek officials have been meeting in Athens with representatives of the euro area and IMF to set out the policies the country must undertake to unlock more bailout loans. The government foresees an accord in March or early April, but the scale of pending issues raises concerns they may be politically hard to sell at home. Greece has agreed to target for a budget surplus before interest payments equal to 3.5% of GDP for 2018, which could mean more belt-tightening.

Prime Minister Alexis Tsipras’s government finds itself between a rock and a hard place as it tries to appease creditors while avoiding mass protests. After an anemic recovery, the Greek economy shrank again in the fourth quarter, raising the specter of growing tensions at home even as European creditors and the IMF push for more austerity. With an economy that has shrunk by more than a quarter in the last seven years, Greece has an unemployment rate of 23%, close to a historic high. Creditors, meanwhile, are demanding greater labor-market flexibility that would make it easier for companies to hire and fire people. They want the threshold of collective dismissals to be doubled to 10% and demand that Athens not revoke any of the measures legislated during the crisis.

[..] For overtaxed Greek companies, dodging social security contributions through payments in kind has become a way to make ends meet. According to the latest available data from the Organisation for Economic Co-operation and Development, the average single worker in Greece faced a tax wedge of 39.3% compared with an average of 35.9% among developed economies. About half of the burden falls upon employers. “We do not have the exact picture,” said Nasos Iliopoulos, an official in Greece’s Labor Ministry. “But it is clear that it is not legal to replace payments with coupons. It is only permitted to give coupons as an extra bonus. Companies are seeking to gain from lower social contributions and also from not paying for extra working hours.”

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There’s nothing new.

America’s Forgotten History of Illegal Deportations (Atlantic)

It was a time of economic struggle, racial resentment and increasing xenophobia. Installed in the White House was a president who had never before held elected office. A moderately successful businessman, he promised American jobs for Americans—and made good on that promise by slashing immigration by nearly 90 percent. He wore his hair parted down the middle, rather than elaborately piled on top, and his name was Herbert Hoover, not Donald Trump. But in the late 1920s and early 1930s, under the president’s watch, a wave of illegal and unconstitutional raids and deportations would alter the lives of as many as 1.8 million men, women and children—a threat that would seem to loom just as large in 2017 as it did back in 1929.

What became colloquially known as the “Mexican repatriation” efforts of 1929 to 1936 are a shameful and profoundly illustrative chapter in American history, yet they remain largely unknown—despite their broad and devastating impact. So much so that today, a different president is edging towards similar solutions, with none of the hesitation or concern that basic consciousness would seem to require. [..] Back in Hoover’s era, as America hung on the precipice of economic calamity—the Great Depression—the president was under enormous pressure to offer a solution for increasing unemployment, and to devise an emergency plan for the strained social safety net. Though he understood the pressing need to aid a crashing economy, Hoover resisted federal intervention, instead preferring a patchwork of piecemeal solutions, including the targeting of outsiders.

According to former California State Senator Joseph Dunn, who in 2004 began an investigation into the Hoover-era deportations, “the Republicans decided the way they were going to create jobs was by getting rid of anyone with a Mexican-sounding name.” “Getting rid of” America’s Mexican population was a random, brutal effort. “For participating cities and counties, they would go through public employee rolls and look for Mexican-sounding names and then go and arrest and deport those people,” said Dunn. “And then there was a job opening!” “We weren’t rounding up people who were Canadian,” he added. “It was an absolutely racially-motivated program to create jobs by getting rid of people.”

[..] The so-called repatriation effort was, in large part, a misnomer, given the fact that as many as sixty percent of those sent to “home” Mexico were U.S. citizens: American-born children of Mexican-descent who had never before traveled south of the border. (Dunn noted, “I don’t know how you can repatriate someone to a country they’ve not been born or raised in.”) “Individuals who left at 5, 6 and 7 years old found themselves in Mexico dealing with process of socialization, of learning the language, but they maintained an American identity,” said Balderrama. “And still had the dream to come back to ‘my country.’”

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Feb 202017
 
 February 20, 2017  Posted by at 10:13 am Finance Tagged with: , , , , , , , , ,  


Henri Cartier Bresson Moscow Metro 1954

 

Seven Years of Demanding The Impossible in Greece (MP)
Cost Of Greece, Troika Impasse Over Numbers Is Adding Up (K.)
Pre-Departure Migrant Camps Planned For Greek Islands (K.)
Democrats Suggest Invoking The 25th Amendment Unless Trump “Gets A Grip” (ZH)
Greenspan Blames Productivity Decline For Political, Economic Crises (BI)
S&P 500 Earnings Stuck at 2011 Levels, Stocks up 87% Since (WS)
The Nasty Little Secret About Housing Affordability (ABC.au)
The Unthinkable Just Happened in Spain (DQ)
Kim Dotcom Loses New Zealand Extradition Case But Claims Major Victory (NZH)
UK Vegetable Shortage A Sign Of Things To Come (G.)
Fukushima Aborts Latest Robot Mission Radiation At “Unimaginable” Levels (ZH)
Tulsi Gabbard vs. ‘Regime Change’ Wars (Wright)
UN Envoy Questions US Engagement On Syria (AFP)
Kaziranga: The Park That Shoots People To Protect Rhinos (BBC)

 

 

A glimpse of the madness bestowed upon Greece. You might think this settles it, that the IMF is going to back off. You would be wrong.

Seven Years of Demanding The Impossible in Greece (MP)

In a recent presentation of his book, Laid Low, which examines the IMF’s role in the eurozone crisis, author and journalist Paul Blustein disclosed a memo dated May 4, 2010, from the IMF’s then head of research Olivier Blanchard, to Poul Thomsen, who headed the Greek mission at the time. In his missive, Blanchard warned that the cumulative fiscal adjustment of 16 %age points being demanded of Greece in such a short period of time and with such a high level of frontloading had never been achieved before. According to Blanchard, not only was the task unprecedented, but Greece was being asked to achieve the impossible in unfavourable external circumstances, when everyone was barely recovering from the 2008 global financial crisis and without any other policy levers (low interest rates or exchange rate adjustment).

Blanchard foresaw what became a reality only about a year later: Even with “perfect policy implementation” the programme will be thrown off track rather quickly and the recession will be deeper and longer than expected, he warned. Blanchard’s scepticism and warnings were ignored. Instead, political limitations took hold of the decision-making process and domestic-focussed calculations pushed Greece into trying to achieve the impossible. This week, the former IMF chief economist admitted on Twitter that although he was not the one that leaked the memo he was not unhappy that the truth has been revealed because “it is seven years and still there is no clear/realistic plan” for Greece.

Athens is currently under pressure to adopt another 2% of GDP in new fiscal measures, which relate to the tax-free threshold and pension spending. Since 2010, Greece has adopted revenue-raising measures and spending cuts that are equivalent to more than a third of its economy and more than double what Blanchard had described as unprecedented almost seven years ago.

The Greek economy has been burdened with €35.6 billion in all sorts of taxes on income, consumption, duties, stamps, corporate taxation and increases in social security contributions. When totting all this up, it is remarkable that the economy still manages to function. During the same period, the state has also found savings of €37.4 billion from cutting salaries, pensions, benefits and operational expenses. Discretionary spending is now so lean that even the IMF argues that in certain areas it needs to increase if Greece is to meet the minimum requirements in the provision of public services. When this misery started, Greece had to correct a primary deficit of €24 billion. But the painful fiscal adjustment Greeks have had to endure had turned out to be three times as much. The IMF’s Thomsen, now the director of its European Department, recently argued that Greece doesn’t need any more austerity but brave policy implementation. Somehow, though, the discussion has ended up being about finding another €3.5 billion in taxes and cuts to pension spending. Bravery is nowhere to be seen.

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The cuts have hit Greek consumer spending so severely that a recovery is no longer possible. And without a recovery, the Troika demands will get more severe, rinse and repeat.

Cost Of Greece, Troika Impasse Over Numbers Is Adding Up (K.)

Another week of back-and-forth between Greece and its lenders seems to have brought us no closer to an agreement between all the parties involved in the country’s bailout. Monday’s Eurogroup meeting may produce some progress, but the complexity of the situation facing Athens, the eurozone and the IMF means it is likely that any forward movement will involve inching, rather than hurtling, towards an agreement. One of the key areas of disagreement is Greece’s fiscal performance. The government insists that the primary surplus for 2016 provides all the evidence needed that there should be no concerns about Greece meeting its fiscal targets in the coming years. Finance Ministry estimates put the primary surplus for 2016 at 2% of gross domestic product, against a target of 0.5%.

In an interview with Germany’s Bild newspaper last week, Finance Minister Euclid Tsakalotos suggested that last year’s primary surplus is actually 1.7 %age points above the target, ie 2.2% of GDP in total. On Friday, reports indicated that government officials believe the final figure, which is not due to be announced until April, will be around 3% of GDP. There is skepticism on the creditors’ side. Even before we get to debating how large last year’s primary surplus was, some of those who are lending Greece money are not convinced that enough of the overperformance is structural and that much of it may be driven by one-off occurrences. It will require further scrutiny of the final data to come up with a definitive answer to this question. The director of the IMF’s European Department, Poul Thomsen, told another German newspaper, Handelsblatt, last week that the Fund may revise its fiscal forecasts for Greece once it has last year’s statistics at its disposal.

This is crucial because the volume of measures being demanded of Greece by the institutions has been set at 3.6 billion euros largely due to the fact that the IMF believes Greece will fall short of the 3.5% of GDP primary surplus target it has been set for an, as yet, unspecified period after 2018. Athens hopes that if the IMF rethinks its figures, this may lead to a lower volume of measures being demanded and the first step in the grand bargain between the government and the institutions being taken. However, there are several added layers of complexity that have to be addressed. For example, the IMF does not only have doubts about the structural nature of Greece’s primary surplus, it also has lingering reservations about the reliability of the fiscal data coming out of Athens.

“Lack of fiscal transparency was clearly one of the factors that led to Greece finding itself in a difficult spot in 2010,” IMF Managing Director Christine Lagarde said in response to a question when she spoke at the Atlantic Council on February 8. “A lot has been improved but I’m not sure that the job is entirely completed. We are still seeing frequent revisions of some of those numbers. Everybody revises, let’s face it… but it’s a fact that Greece revises quite often and with significant variations.”

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People or cattle?

Pre-Departure Migrant Camps Planned For Greek Islands (K.)

Greek authorities are planning the creation of pre-departure detention facilities on the eastern Aegean islands, where thousands of migrants and refugees remain stranded, so as to accelerate returns to Turkey. According to officials from the Citizens’ Protection Ministry, the biggest%age of new arrivals over the past few months are from countries without a refugee profile: Pakistan, Morocco, Afghanistan and Bangladesh. Significant numbers also arrived from Egypt, the Dominican Republic, Tunisia, Nigeria and Libya. Officials say that the creation of closed-structure facilities, each with a capacity of 150-200 people, is key to taking some of the pressure off the islands of Lesvos, Chios, Samos, Kos and Leros, which have borne the brunt of the influx.

The mayors of these five islands are expected to travel to Brussels in early March to meet with Europe’s Migration Commissioner Dimitris Avramopoulos to voice their concerns. During a tour of these islands last week, the EU’s special envoy on migration, Maarten Verwey, said that the aim was to cut current numbers by half by the end of April. According to official figures, some 14,600 migrants and refugees are currently accommodated at official facilities on the islands. In comments made during the visit, Verwey, who is also the coordinator for the implementation of the EU-Turkey agreement to stem migrant flows, repeated that these detention facilities would be “temporary.”

Sources suggest that authorities have almost finalized plans for facilities on Samos, Lesvos and Kos, while looking for spaces on Leros and Chios. The plans have met with resistance from locals. Since the beginning of 2017, authorities have reportedly deported 160 individuals from Pakistan, 150 from Iraq, 70 from Algeria, 30 from Afghanistan, 25 from Morocco and 20 from Bangladesh. Police said 60 Syrians had left Greece voluntarily.

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Regime change. Who’s crazy now?

Democrats Suggest Invoking The 25th Amendment Unless Trump “Gets A Grip” (ZH)

After questioning President Trump’s sanity earlier in the week, it appears Democrats have found another narrative to cling to – invoke the 25th Amendment unless Trump “gets a grip.” With a growing number of Democrats openly questioning President Trump’s mental health. Rep. Earl Blumenauer (D-Ore.) in a floor speech this week called for a review of the Constitution’s procedures for removing a president. He warned the 25th Amendment of the Constitution falls short when it comes to mental or emotional fitness for office. Sen. Al Franken (D-Minn.) during a weekend interview with CNN’s “State of the Union” said that “a few” Republican colleagues have expressed concern to him about Trump’s mental health. And Rep. Ted Lieu (D-Calif.) plans to introduce legislation that would require the presence of a psychiatrist or psychologist in the White House.

[..] So, what’s Article 4 to the 25th Amendment? In the abstract, the amendment itself is about presidential succession, and includes language about the power of the office when a president is incapacitated. But Digby recently highlighted the specific text of growing relevance: “Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.”

What does that mean exactly? Well, it means Congress isn’t the only institution that can remove a president from office between elections. Under the 25th Amendment, a sitting vice president and a majority of the executive branch’s cabinet could, on their own, agree to transfer power out of the hands of a sitting president. At that point, those officials would notify Congress, and the vice president would assume the office as the acting president. And what if the challenged president wasn’t on board with the plan to remove him/her from the office? According to a recent explainer, “If the president wants to dispute this move, he can, but then it would be up to Congress to settle the matter with a vote. A two-thirds majority in both houses would be necessary to keep the vice president in charge. If that threshold isn’t reached, the president would regain his powers.”

All of this comes up in fiction from time to time, and in all likelihood, Americans will probably never see this political crisis play out in real life. And that’s probably a good thing: by all appearances, the intended purpose of the constitutional provision was to address a president with a serious ailment – say, a stroke, for example – in which he or she is alive, but unable to fulfill the duties of the office. In other words, for the first time, the concept of a “soft palace coup” has been officially brought up on public media; we expect such speculation will only get louder. The ball is now in Trump’s court.

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“Populism is not a philosophy or a concept, like socialism or capitalism, for example. Rather it is a cry of pain, where people are saying: Do something. Help!”

Greenspan Blames Productivity Decline For Political, Economic Crises (BI)

Alan Greenspan, the former chairman of the US Federal Reserve whose low-interest policies (some say) helped inflate the dot-com and mortgage bubbles of 2000 and 2008, did a fascinating interview with Gold Investor recently. In it, Greenspan produced an incredibly cogent explanation of the role that reduced long-term productivity has had in fuelling populism, Brexit and Trump. Before we deliver Greenspan’s quote, some background: “Productivity” is one of the least-sexy areas of macroeconomics, even though right now it is one of the biggest issues bedevilling it. Here’s a chart from the Resolution Foundation showing the phenomena:

The “productivity puzzle” is this: The amount investors get in return, in aggregate, for investing in new workers is in long-term decline. Productivity growth is in decline globally and heading toward zero. This is counterintuitive because new technology ought to make workers more productive and more efficient. A single employee with a laptop can do more today than a roomful of secretaries, mathematicians, and writers could in the 1960s. We ought to be getting more bang for our bucks. Fix productivity, and you fix everything, economists believe – including GDP growth, workers’ pay, investment returns, and so on. But instead we’ve got stagnating incomes, low growth, and low productivity for money invested. The productivity decline isn’t a complete mystery, of course. We know it is a mixture of deflationary forces, an aging population, excessive debt, and increased inequality. But putting that all together in a simple, elegant way is tough. That’s why this answer from Greenspan is so good. He was asked whether he was concerned about Stagflation.

“We have been through a protracted period of stagnant productivity growth, particularly in the developed world, driven largely by the aging of the ‘baby boom’ generation. Social benefits (entitlements in the US) are crowding out gross domestic savings, the primary source for funding investment, dollar for dollar. The decline in gross domestic savings as a share of GDP has suppressed gross non-residential capital investment. It is the lessened investment that has suppressed the growth in output per hour globally. Output per hour has been growing at approximately 0.5% annually in the US and other developed countries over the past five years, compared with an earlier growth rate closer to 2%.

That is a huge difference, which is reflected proportionately in GDP and in people’s standard of living. As productivity growth slows down, the whole economic system slows down. That has provoked despair and a consequent rise in economic populism from Brexit to Trump. Populism is not a philosophy or a concept, like socialism or capitalism, for example. Rather it is a cry of pain, where people are saying: Do something. Help!”

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Seek shelter.

S&P 500 Earnings Stuck at 2011 Levels, Stocks up 87% Since (WS)

The S&P 500 stock index edged up to an all-time high of 2,351 on Friday. Total market capitalization of the companies in the index exceeds $20 trillion. That’s 106% of US GDP, for just 500 companies! At the end of 2011, the S&P 500 index was at 1,257. Over the five-plus years since then, it has ballooned by 87%! These are superlative numbers, and you’d expect superlative earnings performance from these companies. Turns out, reality is not that cooperative. Instead, net income of the S&P 500 companies is now back where it first had been at the end of 2011. Hype, financial engineering, and central banks hell-bent on inflating asset prices make a powerful fuel for stock prices. And there has been plenty of all of it, including financial engineering.

Share buybacks, often funded with borrowed money, have soared in recent years. But even that is now on the decline. Share buybacks by the S&P 500 companies plunged 28% year-over-year to $115.6 billion in the three-month period from August through October, according to the Buyback Quarterly that FactSet just released. It was the second three-month period in a row of sharp year-over-year declines. And it was the smallest buyback total since Q1 2013. Apple with $7.2 billion in buybacks in the quarter, GE with $4.3 billion, and Microsoft with $3.6 billion topped the list again. Still, despite the plunge in buybacks, 119 companies spent more on buybacks than they’d earned in the quarter. On a trailing 12-month basis, 66% of net income was blown on buybacks.

Alas, net income has been a problem. By now, with 82% of the S&P 500 companies having reported their results for Q4 2016, earnings rose 4.6% year-over-year, according to FactSet. It’s the second quarter in a row of year-over-year earnings growth, after six quarters in a row of earnings declines. For the entire year 2016, earnings edged up 0.4% from 2015. And revenue inched up 2.4% – in a year when inflation, as measured by the Consumer Price Index, rose 2.8%.

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“..Australians are in hock to the tune of more than $1.4 trillion on housing. That’s a hell of a lot of debt just to keep the wind and rain out.”

The Nasty Little Secret About Housing Affordability (ABC.au)

There’s a nasty little secret about housing affordability. For all the furrowed brows, the sombre looks and the public handwringing from policy makers, no-one is actually serious about fixing the problem because they all fear the potential fallout. The Government is running in circles on the issue while the Reserve Bank is praying the mess will slowly evaporate over time. It’s become a regular event; a politician conjures up an outlandish idea to again make housing affordable to the masses. If it’s not a cash splash to first home buyers, it’s a harebrained scheme to allow younger Australians to dip into their superannuation. Last week, it was a plan to force banks to lower lending standards. In each case, the net effect would be to lift demand and raise the cost of housing. Unfortunately, at this point in the economic cycle, there are only two mechanisms that could solve the social and political issue of our time.

The first is for housing prices to experience a dramatic fall. And the second is for wages to rise substantially. The first comes with a nasty side-effect: it would create economic chaos and send many of our banks to the wall. Achieving, or at least promising, the second might get you elected but ultimately would prove disastrous with spiralling inflation and, you guessed it, a probable spike in housing prices. Both are unthinkable. A crash could be catastrophic because our banks essentially have morphed into glorified building societies, with the bulk of their earnings geared towards residential mortgages. The two biggest lenders, Commonwealth and Westpac, have around 60% of their loan books devoted to housing.

Real estate is baked into the Australian psyche. We talk about it ad nauseam, owners obsess over upgrades and renovations and those outside the owners’ club fret about how to enter. All up, Australians are in hock to the tune of more than $1.4 trillion on housing. That’s a hell of a lot of debt just to keep the wind and rain out. Of that, more than half a trillion is on loan to property investors.

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Bankers going to court.

The Unthinkable Just Happened in Spain (DQ)

Untouchable. Inviolable. Immunity. Impunity. These are the sort of words and expressions that are often associated with senior central bankers, who are, by law, able to operate more or less above the law of the jurisdictions in which they operate. Rarely heard in association with senior central bankers are words or expressions like “accused”, “charged” or “under investigation.” But in Spain this week a court broke with that tradition, in emphatic style. As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel Ángel Fernández Ordóñez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy.

It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV (the Spanish equivalent of the SEC in the US). The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain’s own team of inspectors that the banking group was “unviable.” Though they have so far only been called to testify, the evidence against the seven former public “servants” looks pretty conclusive. Testifying against them are two of Banco de España’s own inspectors who have spent the last two years investigating Bankia’s collapse on behalf of the trial’s presiding judge, Fernando Andreu.

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“We have won. We have won the major legal argument. This is the last five years of my life and it’s an embarrassment for New Zealand.”

Kim Dotcom Loses New Zealand Extradition Case But Claims Major Victory (NZH)

The evidence of the case has not been argued in New Zealand courts with the legal debate here being one of trying to match the crimes Dotcom and others are charged with to the crimes listed in the Extradition Act. In an interview with the Herald, Dotcom said the ruling was a “major victory” because it ruled that there was no New Zealand equivalent to the US criminal charges of copyright violation. “The major part of this litigation has been won by this judgment – that copyright is not extraditable. “They destroyed my family, destroyed my business, spied on me and raided my home and they did all of this on a civil copyright case. “We have won. We have won the major legal argument. This is the last five years of my life and it’s an embarrassment for New Zealand.”

He said it was effectively a statement from the court that neither he, his co-accused or Megaupload had broken any New Zealand laws. “Now they’re trying through the back door to say this was a fraud case. I’m confident going with this judgment to the Court of Appeal. The ruling today has created an unusual bureaucratic contradiction – the warrant which was served on Dotcom when he was arrested on January 20, 2012, stated he was being charged with “copyright” offences. Likewise, the charges Dotcom will face in the US are founded in an alleged act of criminal copyright violation. Dotcom said there were plans to take a separate court action over the arrest warrant, given it showed he had been arrested for a crime which effectively did not exist in New Zealand. “My arrest warrant, the document that kicked everything off in New Zealand, is not for fraud. In my arrest warrant, there is nothing about fraud.”

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Recognize this? “The shelves looked wonderful, perfect, almost clinical, as though invented in a lab in my absence; but there was no smell.”

UK Vegetable Shortage A Sign Of Things To Come (G.)

The UK’s clock has been set to Permanent Global Summer Time once more after a temporary blip. Courgettes, spinach and iceberg lettuce are back on the shelves, and the panic over the lack of imported fruit and vegetables has been contained. “As you were, everyone,” appears to be the message. But why would supermarkets – which are said to have lost sales worth as much as £8m in January thanks to record-breaking, crop-wrecking snow and rainfall in the usually mild winter regions of Spain and Italy – be so keen to fly in substitutes from the US at exorbitant cost? Why would they sell at a loss rather than let us go without, or put up prices to reflect the changing market? Why indeed would anyone air-freight watery lettuce across the whole of the American continent and the Atlantic when it takes 127 calories of fuel energy to fly just 1 food calorie of that lettuce to the UK from California?

The answer is that, in the past 40 years, a whole supermarket system has been built on the seductive illusion of this Permanent Global Summer Time. As a result, a cornucopia of perpetual harvest is one of the key selling points that big stores have over rival retailers. If the enticing fresh produce section placed near the front of each store to draw you in starts looking a bit empty, we might not bother to shop there at all. But when you take into account climate change, the shortages of early 2017 look more like a taste of things to come than just a blip, and that is almost impossible for supermarkets to admit. Add the impact of this winter’s weather on Mediterranean production, the inflationary pressures from a post-Brexit fall in the value of sterling against the euro, and the threat of tariffs as we exit the single market, and suddenly the model begins to look extraordinarily vulnerable.

I can remember the precise moment I first understood that we had been taken into this fantastical, nature-defying system without most of us really noticing. It was 1990 and I had been living and working with Afghan refugees in Pakistan’s North-West Frontier province for a long period. The bazaars where we bought our food were seasonal, and stocked from the immediate region. Back home on leave in the UK, I had that sense of dislocation that enables you to see your own culture as if from the outside. It was winter, but the supermarkets were full of fresh fruits and vegetables from around the world. The shelves looked wonderful, perfect, almost clinical, as though invented in a lab in my absence; but there was no smell. It was vaguely troubling in a way I couldn’t identify at the time.

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Excellent overview of the very scary latest on Fukushima from multiple sources at Zero Hedge.

Fukushima Aborts Latest Robot Mission Radiation At “Unimaginable” Levels (ZH)

Two years after sacrificing one robot, TEPCO officials have aborted their latest robot mission inside the Fukushima reactor after the ‘scorpion’ became unresponsive as it investigated the previously discovered hole where the core is believed to have melted. A “scorpion” robot sent into a Japanese nuclear reactor to learn about the damage suffered in a tsunami-induced meltdown had its mission aborted after the probe ran into trouble, Tokyo Electric Power company said Thursday. As Phys.org reports, TEPCO, the operator of the Fukushima nuclear plant, sent the remote-controlled device into the No. 2 reactor where radiation levels have recently hit record highs.

The “scorpion” robot, so-called because it can lift up its camera-mounted tail to achieve better viewing angles, is also designed to crawl over rubble inside the damaged facility. But it could not reach its target destination beneath a pressure vessel through which nuclear fuel is believed to have melted because the robot had difficulty moving, a company spokeswoman said. “It’s not immediately clear if that’s because of radiation or obstacles,” she said, adding that TEPCO is checking what data the robot was able to obtain, including images.

[..] The robot, 60 centimetres (24 inches) long, is made by Toshiba and equipped with two cameras and sensors to gauge radiation levels and temperatures. Scorpion’s mission is to take images of the situation and collect data inside the containment vessel,” TEPCO spokesman Shinichi Nakakuki said earlier. “Challenges include enduring high levels of radiation and moving on the rough surface,” he said. Radiation levels inside the reactor were estimated last week at 650 sieverts per hour at one spot, which can effectively shut down robots in hours.

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Ann Wright served 29 years in the US Army/Army Reserves and retired as a colonel. She also was a U.S. diplomat for 16 years and served in U.S. Embassies in Nicaragua, Grenada, Somalia, Uzbekistan, Kyrgyzstan, Sierra Leone, Micronesia, Afghanistan and Mongolia. She resigned in March 2003 in opposition to the war in Iraq. She has lived in Honolulu since 2003.

Tulsi Gabbard vs. ‘Regime Change’ Wars (Wright)

I support Rep. Tulsi Gabbard, D-Hawaii, going to Syria and meeting with President Bashar al-Assad because the congresswoman is a brave person willing to take criticism for challenging U.S. policies that she believes are wrong. It is important that we have representatives in our government who will go to countries where the United States is either killing citizens directly by U.S. intervention or indirectly by support of militia groups or by sanctions. We need representatives to sift through what the U.S. government says and what the media reports to find out for themselves the truth, the shades of truth and the untruths. We need representatives willing to take the heat from both their fellow members of Congress and from the media pundits who will not go to those areas and talk with those directly affected by U.S. actions.

We need representatives who will be our eyes and ears to go to places where most citizens cannot go. Tulsi Gabbard, an Iraq War veteran who has seen first-hand the chaos that can come from misguided “regime change” projects, is not the first international observer to come back with an assessment about the tragic effects of U.S. support for lethal “regime change” in Syria. Nobel Peace Laureate Mairead Maguire began traveling to Syria three years ago and now having made three trips to Syria. She has come back hearing many of the same comments from Syrians that Rep. Gabbard heard — that U.S. support for “regime change” against the secular government of Syria is contributing to the deaths of hundreds of thousands of Syrians and – if the “regime change” succeeded – might result in the takeover by armed religious-driven fanatics who would slaughter many more Syrians and cause a mass migration of millions fleeing the carnage.

[..] During the Obama administration, Rep. Gabbard spoke critically of the U.S. propensity to attempt “regime change” in countries and thus provoking chaos and loss of civilian life. On Dec. 8, 2016, she introduced a bill entitled the “Stop Arming Terrorists Act” which would prohibit the U.S. government from using U.S. funds to provide funding, weapons, training, and intelligence support to extremists groups, such as the ones fighting in Syria – or to countries that are providing direct or indirect support to those groups. In the first days of the Trump administration, Rep. Gabbard traveled to Syria to see the effects of the attempted “regime change” and to offer a solution to reduce the deaths of civilians and the end of the war in Syria. A national organization Veterans For Peace, to which I belong, has endorsed her trip as a step toward resolution to the Syrian conflict.

Not surprisingly, back in Washington, Rep. Gabbard came under attack for the trip and for her meeting with President Assad, similar to criticism that I have faced because of visits that I have made to countries where the U.S. government did not want me to go — to Cuba, Iran, Gaza, Yemen, Pakistan, North Korea, Russia and back to Afghanistan, where I was assigned as a U.S. diplomat.

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“How you square this circle, that I understand is what they are discussing in Washington..”

UN Envoy Questions US Engagement On Syria (AFP)

UN envoy Staffan de Mistura on Sunday questioned US President Donald Trump’s engagement in solving the Syrian war, just days ahead of a new round of peace talks in Geneva. “Where is the US in all this? I can’t tell you because I don’t know,” he said, adding that the new administration was still trying to work out its priorities on the conflict. The top three US priorities include fighting Islamic State jihadists, “how to limit the influence of some major regional players and how to not to damage one of their major allies in the region,” de Mistura told the Munich Security Conference. “How you square this circle, that I understand is what they are discussing in Washington,” he said. He did not say who the regional player or major ally were but the first reference appeared to be to Iran, with the second likely to be either Turkey or Saudi Arabia.

Mistura stressed that what was ultimately key was an inclusive political solution to end the six-year conflict. “Even a ceasefire with two guarantors can’t hold too long if there is no political horizon,” he said, referring to a fragile truce brokered by Russia and Turkey in December. Any political solution has to be inclusive to be credible, he said, stressing that peace talks in Astana last week organised by Russia, Turkey and Iran, and the ceasefire deal provided an opening that should be explored. The US envoy for the anti-IS coalition, Brett McGurk, acknowledged that Trump’s administration is “re-looking at everything, which is a very healthy process from top to bottom.” “We will be very selfish about protecting and advancing our interests,” he told the same forum.

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This will always remain controversial. But it’s the only way.

Kaziranga: The Park That Shoots People To Protect Rhinos (BBC)

Kaziranga National Park is an incredible story of conservation success. There were just a handful of Indian one-horned rhinoceros left when the park was set up a century ago in Assam, in India’s far east. Now there are more than 2,400 – two-thirds of the entire world population. This is where David Attenborough’s team came to film for Planet Earth II. William and Catherine, the Duke and Duchess of Cambridge, came here last year. But the way the park protects the animals is controversial. Its rangers have been given the kind of powers to shoot and kill normally only conferred on armed forces policing civil unrest. At one stage the park rangers were killing an average of two people every month – more than 20 people a year. Indeed, in 2015 more people were shot dead by park guards than rhinos were killed by poachers. Innocent villagers, mostly tribal people, have been caught up in the conflict.

Rhinos need protection. Rhino horn can fetch very high prices in Vietnam and China where it is sold as a miracle cure for everything from cancer to erectile dysfunction. Street vendors charge as much as $6,000 for 100g – making it considerably more expensive than gold. Indian rhinos have smaller horns than those of African rhinos, but reportedly they are marketed as being far more potent. But how far should we go to protect these endangered animals? I ask two guards what they were told to do if they encountered poachers in the park. “The instruction is whenever you see the poachers or hunters, we should start our guns and hunt them,” Avdesh explains without hesitation. “You shoot them?” I ask. “Yah, yah. Fully ordered to shoot them. Whenever you see the poachers or any people during night-time we are ordered to shoot them.” Avdesh says he has shot at people twice in the four years he has been a guard, but has never killed anybody. He knows, however, there are unlikely to be any consequences for him if he did.

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Aug 302016
 
 August 30, 2016  Posted by at 8:19 am Finance Tagged with: , , , , , , , , , ,  


Wynand Stanley Ice-packed Buick motor stunt, San Francisco 1922

Banks Get Ready For ‘Economic Nuclear Winter’ (CNBC)
The “Devastating” Truth Behind America’s Record Household Net Worth (ZH)
We Have Passed The Peak Of The Bubble (Maloney)
Oil Discoveries at 70-Year Low (BBG)
House Price Gloom In Canada A Lesson For Australia (AFR)
Unemployed Italians Lead Europe in Abandoning Job Hunt (BBG)
Apple Facing Back Taxes Running Into Billions Over Ireland Deal (G.)
Life After Community Death: A Food Bank (G.)
Judge: Kim Dotcom Can Livestream Legal Fight Against The US (AP)
60% Of South Asia’s Groundwater Too Contaminated To Use (AFP)
China Regulator To Curb News That Promotes ‘Western Lifestyles’ (R.)
EU Seeks To Protect Greek Statistics Office From Its Own Government (BBG)
Greek GDP Contraction In First Half 2016 Was Worse Than Thought (Kath.)
Turkey Warns Refugee Deal To Collapse Unless EU Grants Visa-Free Travel (Kath.)
6,500 Migrants Rescued Off Libya Coast Overnight By Italian Coastguard (AFP)

 

 

Beautiful Brexit as the bubble burster.

Banks Get Ready For ‘Economic Nuclear Winter’ (CNBC)

The first half of 2016 has been a roller-coaster for financial markets. A combination of uncertainties surrounding the U.K.’s vote to leave the European Union and weaker-than-expected corporate earnings results across the region means a tough second half looms. European banks, in particular, have had a very tough six months as the shock and volatility around Brexit sent banking stocks south. Major European banks like Deutsche Bank and Credit Suisse saw their shares in free-fall after the referendum’s results were announced. In the U.K., RBS was the worst-hit, with its shares plunging by more than 30% since June 24. The current uncertainty over when the U.K. will start the process of quitting the EU has banks on tenterhooks. But a source told CNBC that banks are “preparing for an economic nuclear winter situation.”

Speaking on the condition of anonymity due to the sensitive nature of the topic, a source from a major investment bank told CNBC that financial services firms have put together a strategy in place that takes into account the worst-case scenario that could happen by the end of this year. “This could mean triggering Article 50, referendum in other European nations leading to a break-up of the euro or sterling hitting below $1.20 or lower. The banks are ready for anything now,” the source said. The source further explained that the challenge in 2016 is nothing compared to when the Lehman Brothers collapsed in 2008 and the banking sector is this time a lot more resilient. “Markets hate uncertainty and the events this year have unfortunately created a lot of mystery around what is going to happen next.”

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It’s all a bubble.

The “Devastating” Truth Behind America’s Record Household Net Worth (ZH)

Every quarter, as part of its Flows of Funds statement, the Fed releases a detailed breakdown of America’s assets and liabilities, of which the most interesting section is the one dealing with US household wealth and debt, and most importantly, their net worth. The last such release in June showed that as of March 31, total US household assets rose decidedly above $100 trillion, hitting an all time high $102.6 trillion, offset by $14.5 trillion in liabilities, resulting in $88.1 trillion in household net worth. It is worth noting that of this $100+ trillion in assets, 69% was in the form of financial assets (stocks, mutual funds, pensions, deposits, etc), and only $31.5 trillion was real, tangible assets including $26 trillion worth of real estate.

[..] as Pedro da Costa points out, when one looks beneath the surface, a “devastating” picture emerges: US inequality like no-one has seen it before. To help with this peek behind the scenes, we look at the latest, just released CBO report on Trends in Family Wealth, which shows that far from equitable, US wealth has never been so skewed. The picture in question:

Here are the CBO report’s summary findings: In 2013, aggregate family wealth in the United States was $67 trillion (or about four times the nation’s gross domestic product) and the median family (the one at the midpoint of the wealth distribution) held approximately $81,000, the Congressional Budget Office estimates. For this analysis, CBO calculated that measure of wealth as a family’s assets minus its debt. CBO measured wealth as marketable wealth, which consists of assets that are easily tradable and that have value even after the death of their owner. Those assets include home equity, other real estate (net of real estate loans), financial securities, bank deposits, defined contribution pension accounts, and business equity. Debt is nonmortgage debt, including credit card debt, auto loans, and student loans, for example.

But to get to the stunning punchline, one has to read The section on How Is the Nation’s Wealth Distributed? Here is the answer: In 2013, families in the top 10% of the wealth distribution held 76% of all family wealth, families in the 51st to the 90th percentiles held 23%, and those in the bottom half of the distribution held 1%. Average wealth was about $4 million for families in the top 10% of the wealth distribution, $316,000 for families in the 51st to 90th percentiles, and $36,000 for families in the 26th to 50th percentiles. On average, families at or below the 25th percentile were $13,000 in debt.

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“These people are just absolutely dangerous. They are going to drag the entire world economy down.”

We Have Passed The Peak Of The Bubble (Maloney)

What the central banks are doing has never worked and they keep on trying – you just hit that nail a little bit harder each time because it isn’t working. They have these theories and they think that the theory is correct that this – and no matter what the results are they say well, we just didn’t do enough of it. Japan has been trying this for 30 years now and it hasn’t worked. These people are just absolutely dangerous. They are going to drag the entire world economy down. You talked about the helicopter money that is now happening in Europe and so on. That is going to be coming to the United States soon. Coming to a Central Bank near you. It always has damaging results. They don’t look at this. It is a huge wealth transfer.

The immorality of an entity and everywhere I go I take a look at – when I would go speak in Singapore or Australia, New Zealand, Malaysia, Colombia, Peru doesn’t matter – Russia – everywhere I go I take a look, I go on the websites of the central bank for that country and I start gathering information. I haven’t found a central bank that is part of the government. They are all private. Here is a private entity that is allowed to create currency and now they are buying bonds from corporations? They can buy stocks. When they write a check and they buy something, currency is created and it enters circulation. A very large portion of it is Fanny Mae and Freddy Mac stuff. It is the mortgage backed securities. And so that means that they own real estate. This private corporation is able to counterfeit and purchase real estate legally. The morality of this is insane.

Keynesian economics isn’t even remotely plausible. But it’s what is taught all over the world. They don’t understand fundamental economics. This is the problem that we have: all economies on the planet are being run by economists that don’t understand economics. The purchasing power that is contained in currency is basically the agreement that we have as a society that we are all going to use that currency and we trust that currency and we store hours of our lives. We trade hours of our lives for currency. We work. That is the purchasing power. Then that currency measures the goods and services in a society. The true wealth.

They think that they can actually print wealth. When they print new units of currency, the only way it can get purchasing power is the moment that it is spent in the circulation – it has to steal it from somewhere else because it is empty when it comes into existence. There is no work that went into it. There are no hours of life traded for it. There is no product or service that it represents until it is spent in circulation and then it steals that purchasing power from all other units of currency. It is fraud. It is theft. They can’t actually stimulate an economy. All they can do is warp it. They can steal purchasing power from some areas of the economy and transfer it to another area of the economy pushing that area into a bubble. It is very, very disruptive.

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“EIA estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026. “ I do not.

Oil Discoveries at 70-Year Low (BBG)

Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand. With oil prices down by more than half since the price collapse two years ago, drillers have cut their exploration budgets to the bone. The result: Just 2.7 billion barrels of new supply was discovered in 2015, the smallest amount since 1947, according to figures from consulting firm Wood Mackenzie. This year, drillers found just 736 million barrels of conventional crude as of the end of last month. That’s a concern for the industry at a time when the U.S. EIA estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026.

While the U.S. shale boom could potentially make up the difference, prices locked in below $50 a barrel have undercut any substantial growth there. New discoveries from conventional drilling, meanwhile, are “at rock bottom,” said Nils-Henrik Bjurstroem at Oslo-based consultant Rystad Energy. “There will definitely be a strong impact on oil and gas supply, and especially oil.” Global inventories have been buoyed by full-throttle output from Russia and OPEC. They’ve flooded the world with oil despite depressed prices as they defend market share. But years of under-investment will be felt as soon as 2025, Bjurstroem said. Producers will replace little more than one in 20 of the barrels consumed this year, he said.

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We rapidly get used to seeing bubbles as new normal.

House Price Gloom In Canada A Lesson For Australia (AFR)

A commodity economy with record-breaking property prices, fuelled by ultra-low interest rates and Chinese buyers, raises taxes on foreign homebuyers. While the scenario is eerily similar to Australia, it is actually Canada and early signs are the property market is rapidly cooling. The unravelling could offer insight for Australians contemplating the state of the expensive local real estate market. A record one in five Canadians expect house prices to fall. The number of property price pessimists has nearly doubled since a 15% foreign buyer tax on Vancouver homes took effect on August 2. In the first two weeks since the tax came into effect, home sales fell 51% in the metropolitan area, the Real Estate Board of Greater Vancouver said.

Nanos Research chairman Nik Nanos told The Australian Financial Review that real estate was the “canary in the mine” for the Canadian economy and the foreign acquirer tax has had an immediate “chill” effect on confidence. “If we see a significant slide in confidence in real estate there will be an immediate negative knock-on effect on the Canadian economy because right now there is no energy [oil] economy to fall back on,” he said. The price of Canada’s biggest export, oil, has crashed over the past two years, much like iron ore and coal prices in Australia. Like Sydney and Melbourne, real estate prices in Canada’s most-liveable cities have surged in recent years.

A combination of low borrowing costs, strong demand, limited housing supply because of red tape and, anecdotally, foreign buyers mainly from China seeking to park their money in perceived safe havens offshore, pushed up values. Vancouver house prices soared 30% in the year ended May 31, and prices shot up 15% in Canada’s biggest city of Toronto. The median price for detached houses in Vancouver jumped to $C1.6 million.

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And you think this Union can stay together?

Unemployed Italians Lead Europe in Abandoning Job Hunt (BBG)

Going from the final quarter of 2015 through March of this year, 37% of unemployed Italians gave up their job search, while only 13% landed new work and a full half found their status unchanged. On the opposite end of the scale, very few Greeks – just 1% – gave up their job hunt while only 4% found new employment in the economically hard-pressed nation.

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Deductible from its US taxes.

Apple Facing Back Taxes Running Into Billions Over Ireland Deal (G.)

Apple could face back taxes running into billions with the European commission expected to rule against the company on Tuesday over its arrangements with the Irish government. A ruling by Margrethe Vestager, the European competition commissioner, could make Apple liable for billions of euros. Irish officials expect the commission to declare the arrangements unlawful under state aid rules. A decision against Apple and Ireland after a two-year investigation would rebuff US efforts to persuade the commission to drop its interest amid warnings about retaliation from Washington. The commission has been investigating whether Apple’s tax deals with Ireland, which have allowed the company to pay very little tax on income earned throughout Europe, amounted to state aid.

The commission opened a formal inquiry in September 2014 after publishing preliminary findings suggesting deals between Apple and Ireland in 1991 and 2007 involved state aid that was incompatible with the EU’s internal market. Apple and Ireland have denied repeatedly that they have a special deal. Tim Cook, Apple’s chief executive, has called the investigation “political crap” and said his company and Ireland would appeal against a ruling that Apple received state aid. The investment bank JP Morgan has warned that if the commission requires Apple to retroactively pay the Irish corporate tax rate of 12.5% on the pre-tax profits it collected via Ireland it could cost the company as much as $19bn.

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Of course I can’t read a story like this about a food bank in Britain without thinking about the project you and I are supporting in Greece -all over Greece. Where conditions are much worse still. I hope the Brits who read this realize that.

Life After Community Death: A Food Bank (G.)

I never expected to leave a food bank feeling optimistic. To visit a kitchen serving hundreds of free summer-holiday meals to kids who might otherwise go hungry – and come away pondering the lessons Westminster, and especially Jeremy Corbyn’s Labour party, should learn. But then, until last week, I hadn’t met the two women who run the Neo cafe. To understand what an achievement Neo is, you have to see what it’s up against. There’s the area, for a start: Birkenhead, now practically a byword for social deprivation. In parts of this town the life expectancy for baby boys is lower than in North Korea. Since the Brexit vote there’s been a boom in hand-waving commentary on “left-behind” Britain.

The columnists and studio guests should come here for a day, and see what their talking points look like as lived experience. Industrial decline? The once great shipbuilder Cammell Laird still clings on, but many of the other big employers have been wiped out. Insecure work? The usual features of an exploitative jobs market are all present, from zero-hours contracts and temp agencies to, most of all, low wages. And of course austerity, from benefit sanctions to multimillion pound cuts at Wirral council. Impose such conditions on a family and you create misery. Push them across an entire community and you get breakdown.

Widespread economic insecurity produces social instability. Relationships fail. Colin, a twentysomething on temp work, describes how his partner had to move out because “I couldn’t make my pay packet feed two”. Stop-start work makes planning budgets hard enough – it makes planning families impossible. Neighbours move in then move out, so you never know who’s living next door – and you’d all rather leave. One grandmother, Wendy, remembers how she cried on being offered a council house in Rock Ferry, the patch of town that’s home to Neo. Then Anne and Trish chip in with other problems: druggies and no-go areas, so that a kid from this estate can’t go to that one. Here, the horizons have shrunk so far that the neighbourhood can seem like a trap.

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Good. Let’s hear it.

Judge: Kim Dotcom Can Livestream Legal Fight Against The US (AP)

Internet entrepreneur Kim Dotcom will be allowed to livestream his legal bid to halt his extradition to the United States, a New Zealand judge ruled Tuesday. Dotcom and three of his colleagues are appealing a December lower-court decision which allows them to be extradited to the U.S. to face conspiracy, racketeering and money-laundering charges. If found guilty, they could face decades in jail. Dotcom’s lawyer Ira Rothken told AP he was pleased with the decision. “It provides everybody in the world with a seat in the gallery of the New Zealand courtroom,” Rothken said. “It’s democracy at its finest.” Rothken said the livestreaming would begin Wednesday on YouTube. He said there would be a 20-minute delay to prevent any evidence that was protected by the court from becoming public. The appeal is expected to last six weeks.

Justice Murray Gilbert, the New Zealand judge hearing the appeal, had asked other media about Dotcom’s request and didn’t receive any objections. Rothken said the U.S. had opposed the plan on the basis it could taint a potential jury pool and could cede court control over evidence. December’s lower-court ruling came nearly four years after the U.S. shut down Dotcom’s file-sharing site Megaupload, which prosecutors say was widely used by people to illegally download songs, television shows and movies. Megaupload was once one of the internet’s most popular sites. Prosecutors say it raked in at least $175 million and cost copyright holders more than $500 million. But Dotcom and colleagues Mathias Ortmann, Bram van der Kolk and Finn Batato argue they can’t be held responsible for people who chose to use the site for illegal purposes.

Rothken said the lower-court judge made an error of law in his ruling, and that broad safe-harbor provisions protect internet service providers from the types of charges his clients face.

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750 million people. Add China’s polluted water, and you get well over a billion.

60% Of South Asia’s Groundwater Too Contaminated To Use (AFP)

60% of the groundwater in a river basin supporting more than 750 million people in Pakistan, India, Nepal and Bangladesh is not drinkable or usable for irrigation, researchers have said. The biggest threat to groundwater in the Indo-Gangetic Basin, named after the Indus and Ganges rivers, is not depletion but contamination, they reported in the journal Nature Geoscience. “The two main concerns are salinity and arsenic,” the authors of the study wrote. Up to a depth of 200m (650ft), some 23% of the groundwater stored in the basin is too salty, and about 37% “is affected by arsenic at toxic concentrations”, they said.

The Indo-Gangetic basin accounts for about a quarter of the global extraction of groundwater – freshwater which is stored underground in crevices and spaces in soil or rock, fed by rivers and rainfall. Fifteen to twenty million wells extract water from the basin every year amid growing concerns about depletion. The new study – based on local records of groundwater levels and quality from 2000 to 2012 – found that the water table was in fact stable or rising across about 70% of the aquifer. It was found to be falling in the other 30%, mainly near highly populated areas.

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Xi trying to assert power he doesn’t have.

China Regulator To Curb News That Promotes ‘Western Lifestyles’ (R.)

China will crack down on social and entertainment news that promotes improper values and “Western lifestyles”, the country’s broadcasting regulator said, the latest effort at censorship in an already strictly regulated media environment. President Xi Jinping has embarked on an unprecedented drive to censor media that do not reflect the views of Communist Party leaders. Authorities have already issued rules limiting “foreign-inspired” television shows and put tougher penalties on the spread of rumors via social media. Social and entertainment news must be dominated by mainstream ideologies and “positive energy”, the official Xinhua news agency said late on Monday, citing the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT).

News content should not make improper jokes, defile classics, or “express overt admiration for Western lifestyles”, the regulator said in a circular, according to Xinhua. “They should also avoid putting stars, billionaires or Internet celebrities on pedestals”, and not advocate overnight fame or hype family disputes, Xinhua said. China’s legislature this week is also reviewing a draft law that would require film industry workers to maintain excellent “moral integrity”, after recent cases in which celebrities had been arrested for drug offences and prostitution, Xinhua said in a separate report. Xi has been explicit that media must follow the party line, uphold the correct guidance on public opinion and promote “positive propaganda”. The term “positive energy” is a catch phrase that has been favored by China’s propaganda and internet authorities under Xi, referring to content that is morally uplifting and patriotic.

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A curious case of Brussels intervention. There’s nary a soul in Greece who doubts that Georgiou greatly exaggerated the Greek budget deficit in 2009 in order to make an EU bailout inevitable. Now the EU wants to label Greece’s scrutiny of this as “political interference in administrative matters”. But matters such as these can be investigated in simple ways: an objective look at the numbers. That’s not politics, but accounting. Thing is, if Georgiou did this, it was in collusion with the EU.

EU Seeks To Protect Greek Statistics Office From Its Own Government (BBG)

Greece’s finance chief said the next international aid payout to the country may be delayed as the European Union stepped up warnings about domestic political meddling in the Greek state. Finance Minister Euclid Tsakalotos raised the possibility of the government in Athens failing to qualify on time for a €2.8 billion disbursement due in September from the euro area. That’s what remains of a €10.3 billion tranche that finance ministers approved in principle three months ago. “If there is a delay, it’ll be days not weeks,” Tsakalotos told Bloomberg News in Brussels on Monday before a meeting with EU Economic Affairs Commissioner Pierre Moscovici. “Part of the reason for the meeting is to discuss the process to ensure there aren’t delays.”

Slipping timetables have been a regular feature of loan payouts to Greece since it first turned to the euro area and the IMF for a rescue in 2010. Now in it’s third bailout, the country faces continued creditor warnings about backsliding on overhauls that are a condition for aid. The European Commission sent the latest salvo to Athens, saying on Monday that criticism of the former head of Greece’s statistical agency by allies of Prime Minister Alexis Tsipras risks undermining the credibility of Greek fiscal data. The commission, the EU’s executive arm, said the Greek government must push ahead under its aid program with commitments to curb political interference in administrative matters.

“The commission has long urged the implementation of the pillar of the program related to the modernization of the Greek state and public administration,” Margaritis Schinas, chief spokesman at the 28-nation body, told reporters in Brussels. “This also includes the need to depoliticize the Greek administration.” The political controversy centers on Andreas Georgiou, who faces felony charges in Greece for reporting a 2009 budget deficit that was more than five times the EU limit and that unleashed the euro-area debt crisis. The EU has vouched for data submitted by the Hellenic Statistical Authority under Georgiou from 2010 to 2015 and validated by EU statistics office Eurostat.

Greek Minister of State Nikos Pappas, Tsipras’s closest aide, asked publicly in early August whether Georgiou inflated the spending gap to force the country into a rescue. Avgi, a newspaper affiliated with Tsipras’s anti-austerity Syriza party, labeled Georgiou an “executioner” in an Aug. 4 editorial.

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And the Troika ensures it can only go downhill from here.

Greek GDP Contraction In First Half 2016 Was Worse Than Thought (Kath.)

The contraction of the Greek economy in the first half of the year has turned out to be greater than originally estimated. The revised data released on Monday by the Hellenic Statistical Authority (ELSTAT) recorded a bigger drop in GDP on an annual basis, which will make it even more difficult for the government to meet the fiscal targets set for this year. Using previously unavailable data, ELSTAT has now calculated that first quarter GDP declined by 1% and not 0.8% year-on-year, while in the April-June period it fell by 0.9% and not 0.7% as originally thought.

That was the fourth consecutive quarter with a GDP contraction. Consumer spending fell 1.9% in the second quarter on an annual basis, exports of goods and services contracted 11.4% (with goods increasing 2.98% and exports dropping 26.5%), while imports declined 7.1%. Gross capital investments posted a 7% increase. On a quarterly basis, consumer expenditure dropped 0.2% from the first quarter, investment rose 1%, exports fell 1% and imports shrank 0.4%, ELSTAT data showed.

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Any attempt at granting visa-free travel now would break up the EU.

Turkey Warns Refugee Deal To Collapse Unless EU Grants Visa-Free Travel (Kath.)

In an interview with Kathimerini published on Tuesday, Turkish Foreign Minister Mevlut Cavusoglu has warned the EU that if it doesn’t grant Turkish citizens via-free travel to Europe by October “at the latest,” then Ankara will not continue implementing a deal struck in March with Brussels to stem the flow of migrants to Europe. “Despite the fact that irregular migration in the Aegean is now under control, we do not see the EU keen on delivering its promises,” he said, insisting that Turkey cannot continue on its own to stop irregular migration toward the EU while the latter does not assume its obligations. “We expect visa liberalization for Turkish citizens at the latest in October 2016,” said Cavusoglu, who was on an unofficial visit to Crete yesterday and held talks with his Greek counterpart Nikos Kotzias, stressing the potential to further develop Greek-Turkish relations.

Visa liberalization was one of the conditions set by Turkey to sign up to the agreement, which was criticized by human rights groups, to stop the influx of migrant arrivals to Europe which reached more than a million last year. “We did our share in this cooperation… We have prevented new loss of lives and crushed migrant smuggling rings.” The EU missed a deadline late June for the granting of visa-free travel for Turks, saying it had not met all 72 pre-conditions set by Brussels to grant visa-fee travel. The EU also demanded Ankara review its anti-terrorism law. Ankara refused, saying it is critical in its fight against Islamic State and Kurdish militants.

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Numbers are rising again. This will stop only when we stop bombing and squeezing these people.

6,500 Migrants Rescued Off Libya Coast Overnight By Italian Coastguard (AFP)

Around 6,500 migrants were rescued off the coast of Libya, the Italian coastguard said, in one of its busiest days of life-saving in recent years. Dramatic images of one operation showed about 700 migrants crammed onto a fishing boat, with some of them jumping off the vessel in life jackets and swimming towards rescuers. A five-day-old baby was among those rescued along with other infants and was airlifted to an Italian hospital, according to Doctors Without Borders (MSF), which took part in operations.

“The command centre coordinated 40 rescue operations” that included vessels from Italy, humanitarian organisations as well as the EU’s border agency Frontex, saving 6,500 migrants, the coastguard wrote on Twitter. “We’ve been particularly busy today,” a spokesman for the Italian coastguard told AFP. On Sunday more than 1,100 migrants were rescued in the same area. The total number of arrivals in Italy this year now stands at 112,500, according to the UN’s refugee agency and the coastguard, slightly below the 116,000 recorded by the same point in 2015.

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