Sep 132019
 
 September 13, 2019  Posted by at 9:44 am Finance Tagged with: , , , , , , , , , , ,  7 Responses »


Marc Chagall The watering trough 1925

 

The Dogs in the Street Know (Craig Murray)
Speaker Bercow Warns Boris Johnson Against Disobeying Brexit Law (BBC)
Former FBI Deputy Director Andrew McCabe Must Face Criminal Charges (CNBC)
US House Panel Wants Boeing To Allow Employee Interviews On 737 MAX (R.)
US Pressures Israel To Drop China ‘Belt And Road’ Investments (ZH)
Huawei CEO Offers To License 5G Technology To American Companies (F.)
Mnuchin Says 100-Year Treasury Bond Possible (R.)
US Justice Department To Release Name Of Shadowy Figure In 9/11 Case (R.)
Trump’s Taliban Talks Led by Neocon Operation Cyclone Agent (MPN)
Palace Revolt at the ECB, Legitimacy of Policy out the Window (WS)
The New ECB QE Is A Mistake. Here Is What It Should Have Done (Lacalle)

 

 

A Scotsman taking down the Queen.

The Dogs in the Street Know (Craig Murray)

There are some very obvious facts in British politics which nobody seems to be saying. Joanna Cherry stated in her successful court case that “the dogs in the street know” that the real reason that Boris Johnson had prorogued parliament was to prevent parliament from having an effective say on the outcome of Brexit. The documents that the government was forced to produce to the Scottish Courts proved beyond any shadow of a doubt that was indeed Johnson’s motive. So why are we expected to believe that what you knew and I knew, what Joanna Cherry knew, what the very dogs in the street knew, was not known to the Queen?

Do we really believe that the Queen was “misled” and that she and her courtiers were the only people in the entire country who actually believed that Johnson just wanted the longest prorogation for 89 years to prepare a really good Queen’s speech? Are we really expected to believe that the Queen had not noticed that Brexit was at a crucial stage and the effect that prorogation would have on parliament’s say in the process? This is obviously complete and utter nonsense. The Queen has better sources of information than any of us and knew exactly what was happening. She was not “misled” by Boris Johnson, she was his ally in a common purpose. She absolutely understood both the context and the effect of the prorogation. All this utter nonsense about the Queen being “lied to” and “misled” is part of this strange myth of the ultimate goodness of authority which is a recurring theme in human societies.

Peasants died under the knout while building the Trans-Siberian railway thinking “if only the good Tsar knew.” The Queen is not a naive figure of Christ like innocence taken in by Boris Johnson, she is an ultra wealthy woman of very conservative views embedded in a social circle dominated by very rich and reactionary people. To repeat what I have repeatedly explained, it was unconstitutional for the Queen to appoint Boris Johnson in the first place when it was plain as a pikestaff that he could not command a parliamentary majority. That initial crime (and I use the word advisedly) was compounded by the decision to prorogue parliament to enable her no majority Prime Minister to govern. In a sane world we should be getting out the pitchforks. Instead people are tut-tutting about the poor Queen being misled.

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Prior to his election to Speaker, Bercow was a longtime member of the Conservative Party.

Speaker Bercow Warns Boris Johnson Against Disobeying Brexit Law (BBC)

John Bercow has vowed “creativity” in Parliament if Boris Johnson ignores the law designed to stop a no-deal Brexit. The Commons Speaker also said in a speech that the only possible Brexit was one backed by MPs. A new law, passed before the suspension of Parliament, forces the PM to seek a delay until 31 January 2020, unless a deal or no-deal exit is approved by MPs by 19 October. The PM has said he would rather be “dead in a ditch” than ask for a delay. Delivering a lecture in London, Mr Bercow said: “Not obeying the law must surely be a non-starter. Period.” He said it would be a “terrible example to set to the rest of society”.


“The only form of Brexit which we will have, whenever that might be, will be a Brexit that the House of Commons has explicitly endorsed,” he said. “Surely, in 2019, in modern Britain, in a parliamentary democracy, we – parliamentarians, legislators – cannot in all conscience be conducting a debate as to whether adherence to the law is or isn’t required.” He called it “astonishing” that “anyone has even entertained the notion”. If the government comes close to disobeying the Act, the MP said that Parliament “would want to cut off such a possibility and do so forcefully”. “If that demands additional procedural creativity in order to come to pass, it is a racing certainty that this will happen, and that neither the limitations of the existing rule book nor the ticking of the clock will stop it doing so,” he added.

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Hmm. Should McCabe run free?

Former FBI Deputy Director Andrew McCabe Must Face Criminal Charges (CNBC)

Former FBI deputy director Andrew McCabe has failed in his efforts to convince the Justice Department not to file potential criminal charges against him for allegedly lying to federal agents, NBC News reported Thursday. Lawyers for McCabe, who has not been charged in the case, reportedly met last month with a top Justice official the U.S. Attorney for the District of Columbia and in what were believed to be talks seeking to dissuade then from filing criminal charges. The Washington Post reported last week that federal prosecutors for months have been using a grand jury to investigate McCabe, a critic of President Donald Trump.

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They have to ASK?

US House Panel Wants Boeing To Allow Employee Interviews On 737 MAX (R.)

Congress on Thursday asked Boeing Co’s chief executive to make several employees available for interviews as part of a congressional probe into the design, development and certification of 737 MAX aircraft involved in two crashes that killed 346 people. House of Representatives Transportation Committee Chairman Peter DeFazio and Representative Rick Larsen, who chairs the aviation subcommittee, said in a statement that while Boeing has provided substantial documents and shared senior management’s perspective, “it’s important to the committee’s investigation to hear from relevant Boeing employees.”

The committee plans another Boeing hearing in the coming weeks and previously asked whistleblowers to come forward with any information about the plane’s development. Boeing has provided more than 300,000 pages of documents, a person briefed on the matter said, speaking on condition of anonymity. Boeing said in a statement it was “deeply disappointed the committee chose to release private correspondence given our extensive cooperation to date. We will continue to be transparent and responsive to the committee.”

[..] CEO Dennis Muilenburg said at an investor conference on Wednesday that the company is still targeting “early fourth quarter for getting the airplane back up in the air” but added that “ultimately return-to-service timing will be determined by the regulator.” The FAA has repeatedly said it will not certify the plane to fly again until it is safe to do so. The European Aviation and Space Agency said on Tuesday it “intends to conduct its own test flights separate from, but in full coordination with, the FAA. The test flights are not scheduled yet, the date will depend on the development schedule of Boeing.”

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If they’re pressuring Israel, they much be pressuring others too.

US Pressures Israel To Drop China ‘Belt And Road’ Investments (ZH)

As China executes on its “Belt and Road” global trade scheme, more than 130 countries who have either committed to or expressed interest in the $600 billion initiative have been hard at work expanding their infrastructure to accommodate Beijing’s ambitious plan. And while President Trump has been pounding the table in an ongoing US-China trade war, progress made on Belt and Road threatens to reduce US leverage over Beijing – putting US allies such as Israel, which extended a 25-year offer for the operation of the Haifa terminal to state-controlled Shanghai International Port Group – in a tricky position, according to Bloomberg’s Ivan Levingston.

“With national elections approaching on Sept. 17, Prime Minister Benjamin Netanyahu can ill afford to alienate the Trump administration on its signature international issue. Trump has endeared himself to Netanyahu by transferring the U.S. Embassy from Tel Aviv to Jerusalem and recognizing Israeli sovereignty in the disputed Golan Heights. Netanyahu reciprocated by naming a new Golan settlement after Trump and praising the American leader for, among other things, quitting the Iranian nuclear accord. “Over the years, Israel has been blessed to have many friends who sat in the Oval Office, but Israel has never had a better friend than you,” Netanyahu told the president during a March trip to the White House. An October Pew study found that 69% of Israelis had confidence in Trump’s performance as president, and many of Netanyahu’s campaign ads prominently feature the U.S. leader.” -Bloomberg

Of note, China is currently Israel’s second-largest trading partner with around $11.5 billion in annual transactions in 2018, according to the report. Meanwhile, the United States has pressed Israel to create a buffer with China in the interest of national security – which would look something like the Committee on Foreign Investment in the US (the same one that rubber-stamped Russia’s purchase of 20% of America’s Uranium). “Israel and Israeli companies are quickly coming to the realization that it’s going to be difficult to sustain business as usual in work with China while keeping the United States as the primary partner,” said Daniel Shapiro, Barack Obama’s US ambassador to Israel.

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How is Huawei linked to Belt & Road?

Huawei CEO Offers To License 5G Technology To American Companies (F.)

Zhengfei Ren, the CEO and founder of Huawei offered an olive branch to the Trump administration: License the Chinese telecommunications giant’s 5G technology to American companies, with the caveat that the U.S. government ““the U.S. side has to accept us at some level for that to happen.” Currently, the use of Huawei equipment is banned from U.S. networks over concerns that it could be used by the Chinese government as a method to spy or disrupt telecom systems. The offer [..] would essentially allow the U.S. to finally get in the race for 5G supremacy which is now dominated by Chinese firms Huawei and ZTE, Ericsson of Sweden and Nokia from Finland.


“Huawei is open to sharing our 5G technologies and techniques with U.S. companies, so that they can build up their own 5G industry. That would create a balanced situation between China, the U.S. and Europe,” told Ren to the newspaper. [..] Ren added that the U.S. companies would be allowed to modify as they see fit the software code used to run any of Huawei’s 5G equipment or even change it and use their own. [..] Ren added that the American licensees will be able to sell their 5G equipment based on Huawei’s intellectual property anywhere in the world, except in China.

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“We are going to start with 50 years, and if the answer is, 50-years is successful, we’ll consider 100-year bonds..”

Mnuchin Says 100-Year Treasury Bond Possible (R.)

U.S. Treasury Secretary Steven Mnuchin on Thursday said the United States will issue 50-year bonds if there is “proper demand,” a moved aimed at “derisking” the government’s $22 trillion of debt and locking in low interest rates. “We are going to start with 50 years, and if the answer is, 50-years is successful, we’ll consider 100-year bonds,” Mnuchin said in an interview with New York Times’ DealBook and streamed online live, adding that he began looking into the possibility of ultra-long U.S. bonds two years ago. The longest-dated U.S. Treasury currently is 30 years.


U.S. President Donald Trump has proposed a different fix for the rising cost of the record U.S. debt, calling on Wednesday on the “boneheads” at the Federal Reserve to reduce interest rates to below zero so as to reduce interest-rate payments. The Fed is widely expected to cut interest rates by a modest quarter of a percentage point next week when U.S. rate-setters meet. Fed Chair Jerome Powell and other policymakers see U.S. economic conditions as still generally favorable despite a global slowdown and a still-unresolved U.S.-China trade war, and they have consistently pushed back against the notion of negative rates or of setting rates to cater to political pressure.

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Is something moving?

US Justice Department To Release Name Of Shadowy Figure In 9/11 Case (R.)

The U.S. Justice Department on Thursday said it would release the name of an individual sought by people who are suing the government of Saudi Arabia for alleged involvement in the Sept. 11, 2001, hijacking attacks. U.S. prosecutors in New York said in a court filing that Attorney General William Barr had decided not to invoke state secrets and will share the person’s name with attorneys involved in the case. The decision could help victims of the Sept. 11 attacks and their family members, who charge in a long-running lawsuit that the Saudi government supported the hijackers who crashed jet liners into the World Trade Center, the Pentagon and a Pennsylvania field, killing nearly 3,000 people.


The Saudi government has repeatedly denied involvement in the attacks. The Saudi embassy in Washington did not immediately respond to requests for comment on Thursday. The case, filed in 2003, received a boost in 2016 when Congress passed a law making it easier to sue foreign governments for alleged involvement in terrorism. The plaintiffs have been trying to obtain redacted material from a 2012 FBI report which indicated the agency was investigating two Saudi officials, Omar al-Bayoumi and Fahad al-Thumairy, and said there was evidence that a third, unnamed party had ordered them to help the hijackers. Attorneys will now get to learn the name of that person, though their identity will remain under seal.

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Scary people.

Trump’s Taliban Talks Led by Neocon Operation Cyclone Agent (MPN)

John Bolton wasn’t the only veteran of the conflict in Afghanistan now charged with resolving it. Nor was he the only PNAC veteran in the Trump administration. U.S. Special Representative for Afghanistan Reconciliation Zalmay Khalilzad, the top American official in the negotiations, was a PNAC charter member and has been quietly overseeing the destruction of Afghanistan for most of his political career — longer than the Taliban has existed as an organization. Khalilzad worked closely with late National Security Advisor Zbigniew Brzezinski, who took a leading role in Operation Cyclone under President Carter. The secret CIA program pumped the Afghan Mujahideen up with cash, weapons, training, and jihadist school books.

The Brooklyn-based Al-Kifah Afghan Refugee Center — a front for Maktab al-Khidamat, an organization co-founded by Osama bin Laden — would become key to this endeavor. Brzezinski’s aim, as he stated, was to give the Soviets their own Vietnam quagmire. Back then, his message to the Mujahideen fighters that would become al-Qaeda and the Taliban was: “Your cause is right and God is on your side.” Even after the devastating attacks of September 11, Brzezinski defended the decision to support the Mujahideen in the name of defeating the Soviet Union.

The United States’ support for the Mujahideen in Afghanistan, and later Bosnia, was intended to bleed the Soviet Union. It is no surprise that the same leeches — the Taliban and al-Qaeda — that were trained by the United States, would turn on their masters. In the case of the Taliban, clinging on to the U.S. for nearly two decades, slowly sucking away all the while. In the case of al-Qaeda, the attacks on the World Trade Center dealt massive blows. The end-game tactics mirror the CIA’s philosophy in training the Mujahideen against the USSR. U.S officials like Khalilzad would spend decades in luxurious buildings in and around Washington while the people of Afghanistan would continue to suffer nearly another two decades of conflict because of their policies.

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Wolf Richter sees the ECB falling to bits. Wonder what Lagarde is doing these days.

Palace Revolt at the ECB, Legitimacy of Policy out the Window (WS)

ECB President Mario Draghi, who is on his way out, will, as we’re learning more and more, do anything to push his agenda and make it stick at the ECB long after he leaves, but whatever his agenda may be, it’s clearly unrelated to the European economy which has been buckling under the consequences of his agenda: the destructive weight of negative interest rates and QE. And in the process, he is destroying the legitimacy of the ECB’s policy. The latest incident was on Thursday. During the press conference following the ECB’s policy meeting, he lied to reporters, claiming that the “consensus was so broad there was no need to take a vote,” when in fact he had a revolt on his hand during the meeting by the presidents of the national central banks that represented half of the economy of the Eurozone, and by members of the Executive Board.

Among the key policy changes the ECB announced on Thursday was the restart of QE to the tune of €20 billion a month and a tiny 10-basis point cut in its deposit rate, from the old negative -0.4% to the new negative -0.5%. The announcement also included a provision to help banks – which have been getting re-crushed by these idiotic negative interest rates – to survive those negative interest rates: the ECB would exempt part of the banks’ deposits at the ECB from negative rates in a two-tier system. It was the QE portion of the decision that had triggered the unprecedented revolt during the meeting. “Officials with knowledge of the matter” told Bloomberg that during the contentious meeting, the members of the Governing Council and of the Executive Board who vigorously opposed the restart of QE included but was not limited to:

• Jens Weidmann, President of the Bundesbank • Francois Villeroy de Galhau, Governor of the Bank of France • Klaas Knot, President of the Dutch central bank • Ewald Nowotny, Governor of the Austrian central bank • Ardo Hansson, Governor of the Bank of Estonia • Sabine Lautenschlaeger, Member of the Executive Board • Benoit Coeure, Member of the Executive Board. The countries of the five heads of the national central banks, from Weidmann to Hansson, account for about half of the economy of the Eurozone. They opposed the restart of QE, but there was no vote – which is common in ECB proceedings when there is a consensus. But there was no consensus. And Draghi simply imposed his agenda.

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Mistake perhaps. But hardly an honest one, if you read Wolf Richter’s piece above. The ECB IS the mistake.

The New ECB QE Is A Mistake. Here Is What It Should Have Done (Lacalle)

The ECB is creating a dangerous bubble and should not have cut rates by 10bps nor added a new purchase program of €20 billion per month. 1) Eurozone states are already financing themselves at negative rates. There is no need for lower rates and this disguises real risk. This has saved governments more than 1 trillion euro in interest expenses. 2) The ECB has not abandoned its stimulus. It repurchases all maturities, launched a liquidity injection (TLTRO) in March 2019 and balance sheet stands at almost 40% of eurozone GDP. 3) Excess liquidity is 1.7 trillion euro. More liquidity does not lead agents to spend/invest more. There is no higher solvent credit demand because monetary policy perpetuates overcapacity and zombifies the economy. Share of zombie companies has soared c30% since 2013 (BIS).

4) Interest rates are already negative. This has caused a 23 billion euro loss for banks (according to Scope Ratings) and a worrying rise in junk debt demand. 5) There is no evidence of a need for more credit growth. Rather the opposite. The ECB believes the eurozone problem is one of excess saving and lack of demand when it is of excess debt and oversupply. 6) Negative rates zombify the economy and are a massive transfer of wealth from savers and productive sectors to the indebted and inefficient. 7) The ECB already accumulates a disproportionate amount of sovereign debt as well as corporate bonds of issuers that never had a problem financing themselves at low rates. This disguises risk and creates an enormous bubble.

8) The problem of the eurozone is not one of lack of stimuli, but an excess of them. Governments burden the productive private sector with higher taxes and unnecessary regulations, so economic surprise falls despite massive stimulus. 9) When this fails or -even worse- explodes, central planners will likely blame “markets” or “lack of stimulus” to repeat. 10) Saying that negative rates are “demanded” by investors is a sad excuse. Financial repression leads economic agents to take more risk for lower yields and central banks go from lenders of last resort to enablers of financial bubbles.

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Sep 122019
 


Joan Miro Montroig, la iglesia y el pueblo 1918

 

 

Ok, the mailing lists still don’t work, and now the site layout is skewed too after a WordPress update. Lovely. Apologies. Working on it.

 

 

How the UK Security Services Neutralised The Guardian (Declassified)
The Consequences of the Bush-Era Assault on Civil Liberties (Taibbi)
No-Deal Brexit Papers Warn Of Shortages And Riots (BBC)
£8 Billion Bet on No Deal Crash-Out by Boris Johnson’s Leave Backers (Byline)
ECB To Turn Stimulus Taps Back On To Prop Up Ailing Economy (R.)
Ridiculous EU Commissioner Roles Show Why People Hate Brussels Bureaucracy (RT)
Trump Blasts ‘Mr. Tough Guy’ Bolton (Hill)
Three Bolton Aides Resign From Trump White House After His Exit (Hill)
Investors Concerned Over China’s Capital Controls, Lack Of Transparency (SCMP)
The Rich Can’t Get Richer Forever, Can They? (New Yorker)

 

 

Excellent from Declassified on how and why the Guardian started setting up vicious smear campaigns of Assange, Jeremy Corbyn and others.

How the UK Security Services Neutralised The Guardian (Declassified)

On 20 July 2013, GCHQ officials entered The Guardian’s offices at King’s Cross in London, six weeks after the first Snowden-related article had been published. At the request of the government and security services, Guardian deputy editor Paul Johnson, along with two others, spent three hours destroying the laptops containing the Snowden documents. The Guardian staffers, according to one of the newspaper’s reporters, brought “angle-grinders, dremels – drills with revolving bits – and masks”. The reporter added, “The spy agency provided one piece of hi-tech equipment, a ‘degausser’, which destroys magnetic fields and erases data.”

Johnson claims that the destruction of the computers was “purely a symbolic act”, adding that “the government and GCHQ knew, because we had told them, that the material had been taken to the US to be shared with the New York Times. The reporting would go on. The episode hadn’t changed anything.”

Yet the episode did change something. As the D-Notice Committee minutes for November 2013 outlined: “Towards the end of July [as the computers were being destroyed], The Guardian had begun to seek and accept D-Notice advice not to publish certain highly sensitive details and since then the dialogue [with the committee] had been reasonable and improving.” The British security services had carried out more than a “symbolic act”. It was both a show of strength and a clear threat. The Guardian was then the only major newspaper that could be relied upon by whistleblowers in the US and British security bodies to receive and cover their exposures, a situation which posed a challenge to security agencies.

[..] In 2018, however, The Guardian’s attempted vilification of Assange was significantly stepped up. A new string of articles began on 18 May 2018 with one alleging Assange’s “long-standing relationship with RT”, the Russian state broadcaster. The series, which has been closely documented elsewhere, lasted for several months, consistently alleging with little or the most minimal circumstantial evidence that Assange had ties to Russia or the Kremlin. [..] The string of Guardian articles, along with the vilification and smear stories about Assange elsewhere in the British media, helped create the conditions for a deal between Ecuador, the UK and the US to expel Assange from the embassy in April.

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Security Services rule the world.

The Consequences of the Bush-Era Assault on Civil Liberties (Taibbi)

A judge last week ruled the federal government’s Terrorist Screening Database (TSDB), which secretly categorized more than 1 million people as “known or suspected terrorists,” is unconstitutional. Like a number of “War on Terror” reforms instituted in the Bush years, the TSDB’s unconstitutionality was obvious from its inception. Indeed, the very idea that we needed to “take the gloves off” in our post-9/11 “State of Exception” was an original selling point of some of these programs.

The TSDB is cousin to the No-Fly List (a different and more restrictive list ruled unconstitutional in 2014), the Distribution Matrix (the drone assassination program also known as the “Kill List”), the STELLAR WIND warrantless surveillance program, multiple expansions of the Foreign Intelligence Surveillance Act, the broadened use of National Security Letters to obtain private data without warrant, the “Enhanced Interrogation” program the rest of the world calls torture, and countless other War on Terror initiatives that were and are clear violations of the spirit of the constitution.

[..] The Kill List, the TSDB, and all the secret surveillance programs pose the same problem: they exist more or less completely apart from meaningful public oversight. They’re bureaucratic states within states. For instance, part of the PATRIOT Act governing the issue of National Security Letters (NSLs) – by which the FBI can demand that private companies turn over subscriber information, billing records, and other private data – allows the government to place gag orders on recipients of such letters. Because of this, we only have a faint idea of what NSLs look like. In one rare case, a man named Nicholas Merrill balked and sued when his company was issued a National Security Letter. In that case, the government argued that even releasing the existence of the letter would compromise national security.

This is frightening given that a) no courts need to approve the issuance of such letters, and b) the quantity of such demands is massive. Over a ten-year period, the government reportedly issued over 300,000 NSLs, at one point reaching a pace of 60,000 issued per year. The Merrill case in 2015 represented the first time a gag order was lifted on one of these operations. The recent watchlist lawsuit should remind us we’re assassinating, torturing, snooping on, and blacklisting people all over the world, by means of a continually expanding federal bureaucracy that exists outside of any specific mission, and refuses to recognize the oversight authority of courts or congress.

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They’re ignoring Parliament. Risky strategy. Especially since a first court has now declared prorogation is unlawful. Before Supreme Court next week.

No-Deal Brexit Papers Warn Of Shortages And Riots (BBC)

Riots on the streets, food price rises and reduced medical supplies are real risks of the UK leaving the EU without a deal, a government document has said. Ministers have published details of their Yellowhammer contingency plan, after MPs voted to force its release. It outlines a series of “reasonable worst case assumptions” for the impact of a no-deal Brexit on 31 October. Labour leader Jeremy Corbyn said the paper confirmed the PM “is prepared to punish those who can least afford it”.


Michael Gove, one of Boris Johnson’s senior cabinet colleagues who has been given responsibility for no-deal planning, said “revised assumptions” will be published “in due course alongside a document outlining the mitigations the government has put in place and intends to put in place”. However, ministers have blocked the release of communications between No 10 aides about Parliament’s suspension. Mr Gove said MPs’ request to see e-mails, texts and WhatsApp messages from Dominic Cummings, Boris Johnson’s chief aide, and eight other advisers in Downing Street were “unreasonable and disproportionate”. Publishing the information, he added, would “contravene the law” and “offend against basic principles of fairness”.

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“Under the Ministerial Code, Government ministers must have “no actual or perceived conflicts of interest”.

£8 Billion Bet on No Deal Crash-Out by Boris Johnson’s Leave Backers (Byline)

From the financial data publicly available, Byline Times can reveal that currently £4,563,350,000 (£4.6 billion) of aggregate short positions on a ‘no deal’ Brexit have been taken out by hedge funds that directly or indirectly bankrolled Boris Johnson’s leadership campaign. Most of these firms also donated to Vote Leave and took out short positions on the EU Referendum result. The ones which didn’t typically didn’t exist at that time but are invariably connected via directorships to companies that did. Another £3,711,000,000 (£3.7 billion) of these short positions have been taken out by firms that donated to the Vote Leave campaign, but did not donate directly to the Johnson leadership campaign.


Currently, £8,274,350,000 (£8.3 billion) of aggregate short positions has been taken out by hedge funds connected to the Prime Minister and his Vote Leave campaign, run by his advisor Dominic Cummings, on a ‘no deal’ Brexit. Does this £8 billion bet explain why the Prime Minister has said that he would rather “die in a ditch” before asking the EU for an extension? Is it the reason why Johnson is willing to defy the Benn Act that stops a ‘no deal’ Brexit? Is the £8 billion any kind of motivation to prorogue Parliament? Under the Ministerial Code, Government ministers must have “no actual or perceived conflicts of interest”. But what could be a bigger conflict of interest than those bankrolling the Prime Minister also having a vast financial interest in a catastrophe for Britain?

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How big will Draghi be?

ECB To Turn Stimulus Taps Back On To Prop Up Ailing Economy (R.)

The European Central Bank is set to unveil fresh stimulus measures on Thursday to prop up the ailing euro zone economy, but its exact moves are far from certain and a decision that underwhelms markets risks pushing up borrowing costs. With other major central banks easing monetary policy, Germany at risk of falling into recession and inflation expectations sliding, ECB President Mario Draghi has all but promised more support, putting all of the bank’s remaining tools in play. However Draghi, who hands over the leadership of the central bank to Christine Lagarde at the end of October, will face push back from more conservative members of his Governing Council.


Some policymakers have voiced concerted, public opposition to more radical stimulus measures, particularly the restarting of bond purchases, known as quantitative easing. Also, Draghi’s dovish talk has raised investors’ expectations so high that it will be difficult to fully deliver on them, leaving the ECB at risk of disappointing. This could see market interest rates increase, rather than fall. While the ECB has a wide range of policy instruments at its disposal, each comes with complications, from questionable efficacy and big side effects.

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No, seriously, they have a “Commissioner for Protecting our European Way of Life”

Ridiculous EU Commissioner Roles Show Why People Hate Brussels Bureaucracy (RT)

Ursula von der Leyen has unveiled her new team of EU Commissioners. Their job descriptions and responsibilities are nebulous, oddly overlapping and bound to cause confusion. This is European bureaucracy at its worst.
Most Europeans pay scant attention to the detailed inner workings of Brussels politics, precisely because of the bewildering nature of its bloated bureaucracy. Von der Leyen, the EU Commission President, has gone and made it worse. The former German defense minister has steered away from traditional ministerial titles and opted for more Orwellian-sounding names – the kind you need to google to decipher what they actually mean.


Instead of getting a commissioner for dealing with defense or foreign policy, for instance, we are getting a “Commissioner for a Stronger Europe in the World.” There will also be a “Commissioner for Inter-institutional Relations and Foresight” who will apparently deal with policy-making and regulation and a “Commissioner for an Economy that Works for People.” It’s all very ‘Ministry of Truth’-esque. One particular title has backfired spectacularly. The “Commissioner for Protecting our European Way of Life” will be dealing, partially, with immigration policy. The name has already been slammed as “fascist,” “grotesque” and, my favorite, an “infelicitous semantic choice” due to the alleged implication that Europeans need to be “protected” from immigrants.

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Riddance. Good.

Trump Blasts ‘Mr. Tough Guy’ Bolton (Hill)

President Trump blasted his former national security adviser John Bolton from the White House on Wednesday, saying he had been fired after making “some very big mistakes” and that he did not get along with others in the administration. In a public rebuke of a top aide that would have been extraordinary before the Trump White House, Trump said Bolton had “set us back” and that the adviser had disagreed with the president on various national security issues. He slammed a mistake Bolton made early in his tenure at the White House when he discussed a “Libyan model” in the context of North Korea — which that country took as a sign that its leadership could meet the fate of former Libyan strongman Moammar Gadhafi.


While he insisted he had gotten along with the adviser, he also ridiculed Bolton for getting the United States involved in the Iraq War. “So, John is somebody that I actually got along with very well. He made some very big mistakes,” Trump said a day after his abrupt ousting of Bolton. He said the “Libyan model” remark had set back talks with North Korea and was “not a good statement to make.” “And it set us back, and frankly he wanted to do things — not necessarily tougher than me — You know John’s known as a tough guy. He’s so tough he got us into Iraq … but he’s actually somebody I had a very good relationship with. But he wasn’t getting along with people in the administration that I consider very important.”


Bolton to spend more time with his family

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What kind of job is that anyway?

Three Bolton Aides Resign From Trump White House After His Exit (Hill)

Three aides to national security adviser John Bolton are resigning from the White House a day after news broke of Bolton’s high-profile departure from the Trump administration, Reuters reported. According to the news agency, the White House received resignations on Wednesday from the trio of staffers, who have reportedly worked with Bolton for years: Bolton’s former spokesman, Garrett Marquis; his former communications director, Sarah Tinsley; and Christine Samuelian, who served as Bolton’s scheduler. Marquis said in a statement obtained by Reuters Wednesday that “it was an honor to serve my country, and I wish the president and the administration success moving forward.”


The Hill has not yet confirmed the departures with the White House. The departures came a day after Trump announced that he had fired Bolton via Twitter, citing disagreements they had over “many of his suggestions.” “I informed John Bolton last night that his services are no longer needed at the White House. I disagreed strongly with many of his suggestions, as did others in the Administration, and therefore I asked John for his resignation, which was given to me this morning,” Trump said in a pair of tweets on Tuesday morning.

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If you can’t get your money out, why invest?

Investors Concerned Over China’s Capital Controls, Lack Of Transparency (SCMP)

China’s biggest investment fair was intended to project the image that the country is fully open for business, but instead it has been dominated by foreign firms complaining that local governments are still making it a difficult place to operate. Delegates in Xiamen this week suggested that local governments are ignoring advice from Beijing as it aims to increase market access and level the playing field with domestic companies, meaning that the implementation of reforms to make it easier for foreign firms to operate in China still have not gone far enough. As it undergoes pressures caused in the most part by the trade war with the United States, Beijing is redoubling its efforts to woo investment by lavishing promises of fair treatment on foreign investors and giving VIP treatment to the likes of Telsa CEO Elon Musk.

But capital controls that restrict the flow of money into and out of the country, as well as lack of transparency in the bidding processes involving local governments, were among specific concerns raised during a panel discussion at the annual China International Fair for Investment and Trade. “In the past, when it comes to tenders and bidding, everyone would immediately turn to the company identity. This happened very often. This is a foreign company, that is a state company and this is a private company,” said Wang Jie, vice-president of Schneider Electric China, which manufactures and distributes electrical components. “Sometimes it’s not explicit, but it would be like, ‘This is an important project, maybe it isn’t appropriate for a foreign company.’”

[..] Zhou Bing, vice-president for Dell Greater China, said that it is important to have more flexibility in cross-border capital flows to boost trade, with China currently maintaining strict controls that can effectively shut off outflows. This can prove to be a major disadvantage for overseas investors who want to know that they can transfer their money out of China after it has been invested. “We are a typical company in the processing trade business here,” said Zhou, referring to a company that imports components into China to assemble them into finished goods before being exported. “So, it means there’s massive amount of capital flowing in and out [of China]. Right now, it’s still relatively smooth, but in the long term, do we want to keep our capital in China, do we keep our profit in China? It depends on how open the policy is.”

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It’s not just America, the whole world should think this over. Inequality doesn’t last.

The Rich Can’t Get Richer Forever, Can They? (New Yorker)

In 1831, Alexis de Tocqueville, at the age of twenty-five, was sent by France’s Ministry of Justice to study the American penal system. He spent ten months in the United States, dutifully visiting prisons and meeting hundreds of people, including President Andrew Jackson and his predecessor, John Quincy Adams. On his return to France, he wrote a book about his observations, “Democracy in America,” the first volume of which was published in 1835. Many of the observations have weathered well (he noted, for instance, how American individualism coexisted with conformism). Others have not. For example, Tocqueville, who was the youngest son of a count, was deeply impressed by how equal the economic conditions in the United States were. It was, at the time, an accurate assessment.


The United States was the world’s most egalitarian society. Wages in the young nation were higher than in Europe, and land in the West was abundant and cheap. There were rich people, but they weren’t super-rich, like European aristocrats. According to “Unequal Gains: American Growth and Inequality Since 1700,” by the economic historians Peter H. Lindert and Jeffrey G. Williamson, the share of national income going to the richest one per cent of the population was more than twenty per cent in Britain but below ten per cent in America. The prevailing ideology of the country favored equality (though, to be sure, only for whites); Americans were proud that there was a relatively small gap between rich and poor. “Can any condition of society be more desirable than this?” Thomas Jefferson bragged to a friend.

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Sep 112019
 
 September 11, 2019  Posted by at 9:22 am Finance Tagged with: , , , , , , , , ,  2 Responses »


Robert Frank White Tower, New York 1948 (Frank died yesterday, aged 94)

 

 

To everyone used to receiving Automatic Earth posts in their email, I’m sorry but since Saturday they’re suddenly bouncing again en masse. This makes me very tired by now, but I’ll look for a solution. I suspect there may be a connection between this and Google accusing me of violating their rules, without telling me what rules I’m supposed to have violated.

 

 

Trump Fires National Security Adviser John Bolton (Ind.)
‘You’re Fired!’ Trump Cuts Loose Of His Dog Of War (George Galloway)
In A Fracturing World, Central Banks Still Stuck Together (R.)
European Banks Paid ECB €23 Billion Since 2014… And Now Face Disaster (ZH)
Brexit’s Puppet Master Has More Strings To Pull (R.)
Ireland, Boris Johnson Both Eye Return To EU’s Original Brexit Backstop (Ind.)
Johnson Can’t Escape The Clutches Of May’s Zombie Brexit Deal (Behr)
Israel PM Netanyahu Vows To Annex Occupied Jordan Valley (BBC)
Netanyahu’s Jordan Valley Annexation Pledge Is a PR Stunt (RT)
California Passes Landmark Gig Economy Rights Bill (BBC)
‘One America News’ Claims Defamation In $10 Million Suit vs Rachel Maddow (ZH)

 

 

There are still people who are sad to see him go.

Trump Fires National Security Adviser John Bolton (Ind.)

Donald Trump said he fired John Bolton, writing in a tweet he “disagreed strongly with many of his suggestions” and adding he would announce a replacement for his hawkish national security adviser sometime next week. “I informed John Bolton last night that his services are no longer needed at the White House,” the president wrote on Tuesday. “I disagreed strongly with many of his suggestions, as did others in the Administration, and therefore I asked John for his resignation, which was given to me this morning.” “I thank John very much for his service,” he added. “I will be naming a new National Security Advisor next week.” Mr Bolton then tweeted a statement of his own shortly after the president’s announcement, writing: “I offered to resign last night and President Trump said, ‘Let’s talk about it tomorrow.'”


Mr Bolton also reportedly told CNN’s Robert Costa shortly after his dismissal: “Let’s be clear, I resigned, having offered to do so last night.” The reason for Mr Bolton’s departure was not immediately clear, although it has been suggested that he disagreed with the president’s aborted plan to hold peace talks with the Taliban at Camp David this week, days before the 18th anniversary of the 9/11 attacks. Mr Bolton was also an outspoken advocate of regime change in Iran. Although Mr Trump unilaterally withdrew the United States from the nuclear deal that his predecessor Barack Obama signed with Tehran, he is known to oppose military action in the Middle East.

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“So, farewell then, John Bolton. You killed a lot of folks. Thanks to God and President Trump you will kill no more.”

‘You’re Fired!’ Trump Cuts Loose Of His Dog Of War (George Galloway)

The blowing up of Donald Trump’s attempt to end the 18-year Afghan War was the straw which broke the camel’s back for the US president, who on Tuesday fired his national security adviser John Bolton.
Trump’s attempt to bring to a close the longest war in US history – longer, in fact, than their direct involvement in WWI, WWII and the Vietnam War put together – was to be his own “Camp David moment.” It would have mimicked both Carter and Clinton’s “triumphs” there with Arafat and Begin and Arafat and Rabin (neither of which have in fact turned out to be triumphs but were wonderful photo-ops).

Bolton’s rearguard action and the Taliban’s killing of a single US soldier there in the week of the summit brought the Camp David caper crashing down, much to the president’s fury, and prompted Secretary of State Mike Pompeo to boast that the US had killed a thousand Taliban in the previous 10 days. But it was not one damn thing, but one damned thing after another, which has caused the final forking of the “bureaucratic tape-worm” John Bolton, who has slithered through every right-wing administration in living memory.

[..] John Bolton, like so many others, was a “chicken-hawk,” always ready to fight to the last drop of somebody else’s blood. He evaded the draft during the Vietnam War because as he said himself “I didn’t want to die face down in a South East Asian rice paddy.” Nothing wrong with that, if he hadn’t continued to “support” the war and wave off to the paddy-fields the 58,000 Americans who did die, face-down, in the war he dodged. So, farewell then, John Bolton. You killed a lot of folks. Thanks to God and President Trump you will kill no more.


Kevin Lamarque | Reuters

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But what if they start competing?

In A Fracturing World, Central Banks Still Stuck Together (R.)

The last time major central banks shifted gears together, it was a cooperative move to keep the financial crisis of a decade ago from becoming a full-bore, worldwide depression. Now, a new round of global ratecutting risks taking on a competitive edge as policymakers try to stay ahead of rising trade tensions, a volatile investment climate, and a shift in the political mood from shared support for globalization to a more zero-sum battle over a slower-growing world economy.

[..] If the Fed and ECB do as expected at their upcoming meetings, BOJ officials will be torn between how a stressed financial system may respond to ever lower rates, and how Japanese exporters may be damaged if the yen rises in value as a result of the actions of those other central banks. European officials, disappointed that elected leaders haven’t spent aggressively to boost economic growth, are sparring over how much lower already negative rates can go without causing problems, how expansive other ECB programs should become, and what good any of it might do. At the Fed, policymakers are split over whether to cut a lot, a little or not at all.

In each case, officials are reckoning with the fact that their economies and financial systems have become so tied together that fully independent policymaking, insofar as it ever was possible, may be a thing of the past. “We really thought monetary policy had things under control,” and would be able to offset whatever programs elected leaders chose to pursue, even a trade war, said Tara Sinclair, an economics professor at George Washington University. “Does that work in a super low interest rate world and in a very integrated world?” when central banks may have lost much of their traditional influence over the domestic economy.

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What purpose does the ECB serve?

European Banks Paid ECB €23 Billion Since 2014… And Now Face Disaster (ZH)

Earlier this morning, there was an added wobble in European bond prices after an unconfirmed MNI report said the ECB could delay the launch of QE on Thursday and make it data dependent. While skeptics quickly slammed the story, saying it was just a clickbait by MarketNews … it does highlight just how sensitive the bond market is to an announcement of aggressive easing by the ECB when it meets on Thursday, Sept 12, where consensus generally expects a significant easing package, including a -20bp rate cut (followed by -10bp cut later on), coupled with roughly €30 billion in sovereign debt QE for 9-12 months, coupled with enhanced forward guidance.

There is just one problem: while it is unclear if any further easing by the ECB will do anything to stimulate the Eurozone economy, one thing is certain – further easing will only cripple Europe’s banks. In fact, as Goldman writes in its ECB preview, “further rate cuts are a very uncomfortable prospect for the [banking] sector” and estimates that a -20bp cut could lead to an aggregate €5.6bn (-6%) profit cut for 32 €-banks under the bank’s coverage; worse, a further -10bp cut, as per GS macro forecasts, increases the hit to -10% (-€8.3 bn). Overall, 19 banks in Goldman’s coverage face a >10% EPS cut, and 8 banks face as much as a 20% EPS hit.

Then there is Europe’s head on collision with a recession: the weakening rate outlook has been accompanied by >20% fall in €-bank shares (SX7E) since 2H18 and -4% cuts to their consensus Net Interest Incomes (for 2020E). According to Goldman, so far ~40% of the share price decline could be explained by NII cuts; the rest falls into the ‘other’ domain, “where political risk features notably.” Here is the problem in one sentence, and chart: since negative rates were introduced in 2014, European Banks have paid €23BN to the ECB!

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“He is one of the smartest people I have ever worked with. He thinks several steps ahead, thrives on chaos and has sat in a bunker for three years thinking about this: so what is he going to do?”

Brexit’s Puppet Master Has More Strings To Pull (R.)

Cummings, who alongside fellow campaigner Matthew Elliott, drove Vote Leave to victory in the 2016 referendum is cast by allies as a ruthless strategist who cares little for the conventions of traditional British politics. He provoked a row inside Westminster when he sacked a 27-year-old adviser to finance minister Sajid Javid. The adviser, Sonia Khan, was escorted by armed police from Downing Street without Javid’s knowledge. Former Prime Minister John Major cast Cummings as an overmighty “political anarchist” who should be sacked as Johnson’s de-facto chief of staff before he poisoned British politics beyond repair.

Cummings’s response? “Trust the people” – a slogan used by government advisers to cast Johnson’s Brexit-supporting team as the true servants of the people fighting a London political and financial elite that wants to thwart their will. Foreign Secretary Dominic Raab said on Monday that the United Kingdom was in dangerous territory as voters were concluding that parliament was hindering Brexit. He said the government would respect the law but that interpretations of the law can sometimes be complex. “At this point, our view is that resignation is the most likely,” U.S. investment bank JPMorgan said. “In our view, neither seeking to defy the law, nor encouraging the EU not to grant an extension, are likely to succeed.”

The Cabinet Manual, which sets out the laws, rules and conventions on the operation of government, says if the prime minister resigns on behalf of the government then Queen Elizabeth will invite the person who appears most likely to be able to command the confidence of lawmakers to serve as prime minister and form a government. A Conservative Party lawmaker said he thought Johnson would resign soon after the EU summit, ensuring that he is not blamed for any delay to Brexit. “The question is: what has Cummings got up his sleeve?” said a former Conservative adviser. “He is one of the smartest people I have ever worked with. He thinks several steps ahead, thrives on chaos and has sat in a bunker for three years thinking about this: so what is he going to do?”

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“..the Northern Ireland-only backstop..”

Ireland, Boris Johnson Both Eye Return To EU’s Original Brexit Backstop (Ind.)

The British and Irish governments are both eyeing a return to the EU’s original Brexit backstop plan, rejected by Theresa May, as a way of breaking the deadlock, reports suggest. The so-called “Northern Ireland-only” backstop was rejected by the former prime minister during talks because it put a customs and regulatory border down the Irish sea – a move strongly opposed by the DUP and many Tories. It was replaced in the withdrawal agreement by the current UK-wide backstop – which was rejected by Brexiteers for another reason: because it could tie the whole UK to the EU customs union indefinitely.

[..] In an interview with the Irish Times, Ireland’s EU commissioner Phil Hogan – who is set to be put in charge of trade talks with the UK – said the direction of travel was towards the old backstop. “Yes,” he replied when asked whether it was back on the agenda. “The taoiseach has indicated in the last 24 hours that the Northern Ireland-only backstop is quite an interesting idea to revisit.” He added: “I remain hopeful that the penny is finally dropping with the UK that there are pragmatic and practical solutions can actually be introduced into the debate at this stage – albeit at the eleventh hour – that may find some common ground between the EU and the UK.” British officials in Brussels flatly deny that there is any intention to return to the original backstop. A UK spokesperson said that “any deal must involve the abolition of the anti-democratic backstop”.

[..] A return to something resembling the Northern Ireland-only backstop could ultimately make sense politically for Mr Johnson, given he may no longer have to rely on DUP votes for a majority after a general election – if he wins a majority, as polls suggest is possible. The DUP’s opposition to a border in the Irish sea would no longer be as much of an issue. The change would also technically allow Mr Johnson to claim he had ditched the current backstop, which he has put down as a red line. Whether moving back to a Northern Ireland-only situation would be accepted by Tory Brexiteers as satisfactory is another matter.

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Affable Boris vs Bullying Boris.

Johnson Can’t Escape The Clutches Of May’s Zombie Brexit Deal (Behr)

One reason to suppose that Johnson is malleable on the detail is that on 29 March he voted for May’s deal – the same one he denounces as an affront to democracy. The hypocrisy is not surprising, but it does illuminate that tension in Johnson’s self-image, between the wannabe statesman and the Trump tribute act. One enjoys the hobnobbing with world leaders at global summits, the other is an accomplice in vandalising the architecture of a rules-based international order.

The same tension is expressed in domestic politics. There is affable Boris who thought he could charm his way to an elegant Brexit solution, unify his party and woo the country with a healing message. He was barged aside by bullying Boris who purges dissent from his party and stokes division in the country. One belongs to the old Tory party that venerated stability and reached out to liberal voters. The other leads a new revolutionary leaver party, recruiting admirers of Nigel Farage for a nationalist insurgency.

The Downing Street calculation appears to be that a majority is most easily won by stripping the Conservative party down and reassembling it as something unconservative. Johnson will run as a populist tribune, the man who would rather be “dead in a ditch” than surrender to tricky continentals and their Westminster collaborators. It might work. Current polling doesn’t offer much of a guide when the vital choices have been punted to the end of October. That doesn’t leave much time for the prime minister to tweak May’s Brexit deal and, in defiance of all the odds, persuade a hostile parliament to vote for it. But that doesn’t mean he has given up on the idea.

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Election time.

Israel PM Netanyahu Vows To Annex Occupied Jordan Valley (BBC)

Israeli PM Benjamin Netanyahu has vowed to annex part of the occupied West Bank if he is returned to office next week. He would apply “Israeli sovereignty over the Jordan Valley and northern Dead Sea”, a policy certain to be backed by the right-wing parties whose support he would need for a coalition. Palestinian diplomat Saeb Erekat said such annexation moves would “bury any chance of peace”. Israel has occupied the West Bank since 1967 but stopped short of annexation. Mr Netanyahu, who leads the right-wing Likud party, is campaigning ahead of general elections next Tuesday. Polls suggest Likud is neck-and-neck with the opposition centrist Blue and White party and may struggle to form a governing coalition.


Palestinians claim the whole of the West Bank for a future independent state. Mr Netanyahu has previously insisted that Israel would always retain a presence in the Jordan Valley for security purposes. In a televised speech the PM said: “There is one place where we can apply Israeli sovereignty immediately after the elections. “If I receive from you, citizens of Israel, a clear mandate to do so… today I announce my intention to apply with the formation of the next government Israeli sovereignty over the Jordan Valley and northern Dead Sea.” Mr Netanyahu also said he would annex all Jewish settlements in the West Bank, but this would need to wait until the publication of US President Donald Trump’s long-awaited plan for a peace agreement between Israelis and Palestinians.

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“..he could be indicted as early as mid-October..”

Netanyahu’s Jordan Valley Annexation Pledge Is a PR Stunt (RT)

Israeli leader Benjamin Netanyahu has been desperate to drum up voter support across various sections of the Israeli population as the September 17 election inches closer, and his most recent pledge to annex the Jordan Valley, a part of the occupied West Bank, is no more than yet another empty campaign promise, political and defense commentator Amir Oren told RT. “He cannot annex any inch of the occupied territories… the most important [reason] is that peace with Egypt and with Jordan is based upon the UN Security Council resolution 242 from November of 1967 forbidding the acquisition of territories by force.”


Netanyahu knows that risking the collapse of the entire regional security system is a “non-starter,” and his grand announcement is merely a “way to focus attention on himself,” Oren argued. The PR stunt is also aimed at helping Netanyahu to rebrand himself as a strong leader able to deal with the Iran ‘menace’ and the Palestinian issue, as most recently he has been making headlines for the allegations of corruption he faces. “He is trying to shift attention from his corruption scandals, he could be indicted as early as mid-October, he wants people to talk about himself as a world-class leader in league with Putin and Trump.”

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The gig economy is an even hollower term than the service economy.

California Passes Landmark Gig Economy Rights Bill (BBC)

Lawmakers in California have passed a law that paves the way for gig economy workers to get holiday and sick pay. Assembly Bill 5, as its known, will affect companies such as Uber and Lyft, which depend on those working in the gig economy. Some estimates suggest costs for those firms would increase by 30% if they have to treat workers as employees. But opponents of the bill say it will hurt those that want to work flexible hours. The business models of gig economy companies are already under strain – Uber lost more than $5bn in the last quarter alone.


Some estimates suggest that having to treat workers as employees, rather than independent contractors, could increase costs by as much as 30%. Uber and rival ridesharing service Lyft joined forces to push back again the bill. They suggested a guaranteed minimum wage of $21 per hour instead of the sweeping changes the bill would bring. But that pledge wasn’t enough to sway California’s Senate, and the state’s governor Gavin Newsom is expected to soon sign the bill into law.

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High time someone takes Maddow to court, but Sputnik is not a strong point.

‘One America News’ Claims Defamation In $10 Million Suit vs Rachel Maddow (ZH)

Conservative television network One America News (OAN) is suing Rachel Maddow for $10 million after she referred to the network as “paid Russian propaganda”. OAN filed the defamation suit in federal court in San Diego, according to AP. OAN is a small, family owned conservative network that is based in San Diego and has received favorable Tweets from the President. It is seen as a competitor to Fox News. OAN’s lawsuit claims that Maddow’s comments were retaliation after OAN President Charles Herring accused Comcast of censorship. The suit said that Comcast refuses to carry its channel because “counters the liberal politics of Comcast’s own news channel, MSNBC.”

It was about a week after Herring e-mailed a Comcast executive when Maddow opened her show by referring to a Daily Beast report that claimed an OAN employee also worked for Sputnik News, which has ties to the Russian government. Maddow said: “In this case, the most obsequiously pro-Trump right-wing news outlet in America really literally is paid Russian propaganda. Their on-air U.S. politics reporter is paid by the Russian government to produce propaganda for that government.” Except Maddow, likely still upset from spending 3 years trying to promulgate a Russian hoax that didn’t exist, didn’t quite get her facts straight. Big surprise.

OAN said in its lawsuit that while reporter Kristian Rouz was associated with Sputnik News, he worked solely as a freelancer for them and was not a staff employee of OAN. And the lawsuit includes a statement from Rouz stating that while he has written some 1,300 articles over the past 4 and a half years for Sputnik, he has “…never written propaganda, disinformation, or unverified information.

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Aug 262019
 
 August 26, 2019  Posted by at 9:10 am Finance Tagged with: , , , , , , , ,  11 Responses »


Marc Chagall The Smolensk newspaper 1914

 

Yield Curve Screams “Recession” as Trade War Picks Up Steam (Mish)
China’s Yuan Slumps To 11-Year Low, Stocks Fall As Trade War Escalates (R.)
Trump Says China Called Twice To Restart Trade Talks (MW)
China Willing To Resolve Trade Dispute With US Via Dialogue (R.)
Mnuchin: If China Agreed To Fair Relationship, We’d Sign ‘In A Second’ (CNBC)
Hong Kong Police Arrest 36 After Running Battles With Protesters (R.)
Australia’s Big Banks Gear Up For Capital Raising Rush (R.)
Why The Next ECB Stimulus Plan May Fail (Lacalle)
Britain Can ‘Easily Cope’ With No-Deal Brexit, Claims Boris Johnson (G.)
Has Anyone Loved Being Prime Minister As Much As Boris Johnson? (Peston)
England’s Homeless Children Problem (ZH)
English Police Could Patrol Northern Ireland Border After No-Deal Brexit (RT)

 

 

To think that until recently this was not considered possible at all.

Yield Curve Screams “Recession” as Trade War Picks Up Steam (Mish)

Futures pick up where they left off Friday with equity prices and bond yields lower. Sunday Evening Futures: • Equities Down • Gold Up • Treasury Yields Down As of 1:36 AM Central on Monday morning, the 30-year long bond is a record low 1.942%. It’s now inverted 17.8 basis points with the Fed Funds rate. The 5-year note is a whopping 78.4 basis points inverted. Few seem to believe it, but the yield curve is now screaming recession.

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“The impact of the new tariffs on China’s economic growth will be sizeable..”

China’s Yuan Slumps To 11-Year Low, Stocks Fall As Trade War Escalates (R.)

China’s yuan slumped to a fresh 11-year low against the dollar on Monday and stocks fell as the Sino-U.S. trade war sharply escalated, threatening to inflict more damage on the world’s largest economies and weigh further on global growth. In Hong Kong, a weekend flare-up in violence during anti-government protests added to pressure on share prices. The onshore yuan fell 0.6% in early trade to 7.15 per dollar, its weakest since February 2008 and its second biggest one-day drop of the month. The offshore yuan fell to a record low of 7.1850, before regaining some ground to around 7.1595.


The Chinese authorities have allowed the tightly-managed yuan to fall some 3.6% so far this month as trade tensions between Beijing and Washington worsened, sparking fears of a global currency war. It was trading around 7.1419 by 0330 GMT. On Friday, U.S. President Donald Trump announced an additional duty on some $550 billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. goods. “This tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become,” Louis Kuijs, of Oxford Economics, wrote in a note late on Sunday. “The impact of the new tariffs on China’s economic growth will be sizeable,” he said.

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China denies.

Trump Says China Called Twice To Restart Trade Talks (MW)

In a comment that moved financial markets, President Donald Trump on Monday said serious negotiations with China will begin after the U.S. received two “very good calls” from Beijing. “China called last night our top trade people and said let’s get back to the table,” the president said after meeting Egyptian President Abdel-Fattah el-Sissi. “I have great respect for it.” Trump said “we are going to start talking very seriously.” He says the Chinese want to make a deal and he thinks one will finally be reached. Trump says he’ll say more about China later Monday.


China’s foreign ministry meanwhile said it wasn’t aware of any such calls and that a U.S.-China decoupling will lead to market chaos, according to wire reports. After the Dow Jones Industrial Average DJIA, -2.37% dropped 623 points on Friday, U.S. stock futures were higher in the early hours of Monday morning. The dollar rose against the Japanese yen. Europe stocks were a bit weaker, with trading light with the U.K. market closed for a holiday.

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All has to be said in a way that avoids losing face.

China Willing To Resolve Trade Dispute With US Via Dialogue (R.)

Chinese Vice Premier Liu He said on Monday that China is willing to resolve its trade dispute with the United States through calm negotiations and resolutely opposes the escalation of the conflict, a state-backed newspaper reported. Liu, China’s top trade negotiator, was speaking at a tech conference in Chongqing in southwest China, the Chongqing Morning Post reported. The comments come after U.S. President Donald Trump last week announced an extra 5% duty on some $550 billion of Chinese goods, the latest tit-for-tat move announced hours after China unveiled its retaliatory tariffs on $75 billion worth of U.S. products.

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“They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation..”

Mnuchin: If China Agreed To Fair Relationship, We’d Sign ‘In A Second’ (CNBC)

American Treasury Secretary Steven Mnuchin doubled down on the White House’s latest punch in the U.S.-China trade war by calling out Beijing for unfair trade practices. “We do not have free trade with them,” Mnuchin said Sunday on the sidelines of the G-7 meeting in France. “It’s a one way street: They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation with China. If China would agree to a fair and balanced relationship, we would sign that deal in a second,” he added.


“Sometimes you’ve got to take stern measures,” White House economic advisor Larry Kudlow said alongside Mnuchin, adding that American companies should heed the president’s call to leave China. “Come home to America, we’ve got the best tax system, we’ve got the best regulatory system, it’s an easy place to make money, the best technology in the world. Come home. That’s what the president is saying,” Kudlow said. Before leaving for the G-7, U.S. President Donald Trump said he would raise existing duties on $250 billion in Chinese products to 30% from 25% on Oct. 1. Additionally, he said, tariffs on another $300 billion of Chinese goods, which start to take effect on Sept. 1, will now be 15% instead of 10%.

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Protesters are escalating because their demands are ignored.

Hong Kong Police Arrest 36 After Running Battles With Protesters (R.)

Hong Kong police said on Monday they arrested 36 people, the youngest aged 12, after violence during anti-government demonstrations escalated as protesters hurled Molotov cocktails at security forces who responded with water cannon and tear gas. Sunday’s protests saw some of the fiercest clashes yet between police and demonstrators since protests escalated in mid-June over a now-suspended extradition bill that would have allowed Hong Kong people to be sent to mainland China for trial. Police fired water cannon and volleys of tear gas in running battles with brick-throwing protesters on Sunday, the second day of violent clashes in the Chinese-ruled city.

Six officers drew their pistols and one officer fired a warning shot into the air, police said in a statement. “The escalating illegal and violent acts of radical protesters are not only outrageous, they also push Hong Kong to the verge of a very dangerous situation,” the government said in a statement.

More demonstrations are planned in the days and weeks ahead, including a rally at Hong Kong’s Cathay Pacific Airways headquarters on Wednesday to protest against perceived “white terror”, a common expression to describe anonymous acts that create a climate of fear. Cathay has emerged as the biggest corporate casualty of the protests after China demanded it suspend staff involved in, or who support, the anti-government demonstrations that have plunged the former British colony into a political crisis. The protests also pose the gravest popular challenge to Chinese President Xi Jinping since he took power in 2012, with Beijing eager to quell the unrest ahead of the 70th anniversary of the founding of the People’s Republic of China on Oct 1.

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Bubbling below the surface.

Australia’s Big Banks Gear Up For Capital Raising Rush (R.)

Australia’s biggest banks are expected to cut dividend payments and tap bond markets for more funding to cope with tougher capital requirements as regulators look to safeguard the sector from future market volatility, according to analysts and bankers. This week, Commonwealth Bank of Australia Chief Executive Matt Comyn and Chief Financial Officer Alan Docherty will finalise a roadshow with Australian equity investors before holding similar meetings in New York next month as well as London and Hong Kong. The bank traditionally meets with investors following its full-year results and the presentations have often preceded CBA tapping the bond markets. However, the meetings this year come as Australia’s banks are under increasing pressure to boost their capital.


Last week, the Australian Prudential Regulation Authority (APRA) said local banks would only be allowed to have 25% of their tier one capital – core funds held to help absorb losses – exposed to international operations or related parties from January 2021, down from the current 50%. That means banks such as Australia and New Zealand Banking Group face higher costs because they will have to fund each unit separately. The news came on top of another decision by APRA last month ruling that Australian banks would need to raise an extra A$50 billion ($33.8 billion) of so-called “tier two” bonds – riskier instruments that suffer losses before tier one capital is touched – by 2024 as part of its new total loss absorbing capital rules.

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“..all this happens amidst an unprecedented chained stimulus.”

Why The Next ECB Stimulus Plan May Fail (Lacalle)

When many analysts tell us that Europe “is not so bad” or that “it is only a slowdown,” they ignore that all this happens amidst an unprecedented chained stimulus. The results are not only extremely poor, but they are also deeply worrying. According to Morgan Stanley, the European Central Bank could be preparing a new repurchase program of between 2.2 and 3.3 billion euros. Not only buying back bonds from governments, but also from banks and companies. What for? Even Italy – in the midst of a political crisis – has negative real sovereign bond yields. The sovereign debt of all the eurozone countries shows negative yields in two-year maturity and negative as well going up to seven years. Germany has just launched a 30-year bond at -0.11%.

Is it really necessary to artificially depress yields even more? In the eurozone there are already fourteen junk bonds listed with negative yields and high-risk bonds of banks and companies are listed with ridiculous returns of 3-4%. The problem of the eurozone is not lack of liquidity, when excessive liquidity reaches 1.8 trillion euros, or low rates when they are already negative,. The eurozone problem is precisely the constant practice of using monetary policy as a perverse incentive to maintain structural imbalances. Monetary policy works as a huge transfer of wealth from savers and productive sectors of the eurozone to inefficient governments and unproductive sectors that are constantly refinanced, zombifying the economy, putting obstacles to productivity and technological change.

The stimulus chain described above can be summed up in the phrase: a huge subsidy to low productivity. Here is the debate. Why has it worked in the US and not in Europe? First, because it is not true that the United States owes its improvement to quantitative easing. In a report by Stephen Williamson for the Federal Reserve, he already warned that “there is no relationship between greater economic activity and quantitative easing.” The US economy is the most dynamic, open and least dependent on bank financing of the world’s leading countries. The Federal Reserve never accounted for 100% of the demand for government bonds, it always kept an eye on the secondary market. The ECB became seven times the bond supply, according to Deutsche Bank.

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Blaming the EU will not work.

Britain Can ‘Easily Cope’ With No-Deal Brexit, Claims Boris Johnson (G.)

Britain could “easily cope” with a no-deal Brexit, which would be the fault of EU leaders’ “obduracy”, Boris Johnson claimed at the summit of G7 countries in France, as he continued to resist mounting pressure to spell out his own plans for breaking the deadlock. “I think we can get through this, this is a great, great country, the UK, we can easily cope with a no-deal scenario,” Johnson insisted in Biarritz, as he made his debut on the international stage as prime minister with a series of bilateral meetings with world leaders including Donald Trump, the EU council president Donald Tusk and Indian prime minister Narendra Modi. Johnson said preparations for no deal were being ramped up to help secure an agreement, but also “so that if and when we are forced by the obduracy by our European friends to come out on 31 October without a deal that things are as smooth as they can possibly be”.


Johnson claimed food shortages – one of the risks outlined in the leaked Operation Yellowhammer documents on no-deal planning – were “highly unlikely”, and offered a “guarantee” that patients would be able to access medicines unhindered. The prime minister said that in the event of no deal the UK would withhold much of the £39bn financial settlement agreed by Theresa May – and insisted it was up to the EU27 to avert that eventuality. “If we come out without an agreement it is certainly true that the £39bn is no longer, strictly speaking, owed,” he said “There will be very substantial sums available to our country to spend on our priorities. It’s not a threat. It’s a simple fact of reality.”

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Robert Peston was once a serious journalist. What is this, the elites are closing ranks?

Has Anyone Loved Being Prime Minister As Much As Boris Johnson? (Peston)

I’ve learned only one thing at the G7 summit of big rich countries here in Biarritz: Boris Johnson absolutely loves being Prime Minister. There’s little of the conspicuous sense of duty that weighed on the shoulders of Theresa May, Gordon Brown and Sir John Major. Nor is there that unnerving claim to embody the spirit of a nation that Tony Blair and Margaret Thatcher perhaps made too often and believed too much. There’s a touch of David Cameron’s Old Etonian entitlement, the idea that it would be odd if he weren’t PM. But mostly Johnson simply seems to be having fun – whether by pointing a joshing finger at the imperious president of France or telling an incredulous President of the EU that they agree on absolutely everything.


Johnson’s bonhomie is all the more odd because the UK – as his advisers remind him continuously – is in the grips of the most acute peacetime crisis for generations, over how and even whether to leave the EU, and Johnson’s grip on power is almost non-existent, with no majority in Parliament and fratricide in his own Tory party as unremarkable as shaking hands. But in Johnson we have the clown prince of prime ministers, who – for the first time in years, or perhaps ever – plainly thinks he is home. His interlocutors – Emmanuel Macron, Donald Tusk, Justin Trudeau – all laugh. With him or at him? I am not sure that matters, in that he seems to cheer them up.

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Feel-good Boris.

England’s Homeless Children Problem (ZH)

New estimates from the Children’s Commissioner’s Office for England have revealed that, in addition to the official figure for child homelessness of 124 thousand, there are thought to be around 92 thousand children ‘sofa surfing’ in the country. Statista’s Martin Armstrong notes that the report, ‘Bleak Houses’ also found that the temporary accommodation of families and children is often not fit for human habitation with shipping containers, office blocks and B&Bs being re-purposed to house them.

Commenting on the findings, Children’s Commissioner Anne Longfield said: “It is a scandal that a country as prosperous as ours is leaving tens of thousands of families in temporary accommodation for long periods of time, or to sofa surf.” On the reasons for the current situation, Polly Neate, chief executive of charity Shelter blamed “a cocktail of punitive welfare policies, a woeful lack of social homes and wildly expensive private rents mean this is frighteningly commonplace.”

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Oh no.

English Police Could Patrol Northern Ireland Border After No-Deal Brexit (RT)

Despite a wealth of history suggesting that it’s a very bad idea, UK politicians have reportedly devised detailed plans to deploy English police officers in Northern Ireland in the event of a no-deal Brexit. According to a report in The Sunday Times, the plans would first see approximately 300 Scottish police drafted in to support the Police Service of Northern Ireland (PSNI) as a preliminary step. However, if tensions between the unionist and nationalist communities boil over or civil unrest erupts, officers from English forces will be deployed in the province.


A source at London’s City Hall told the newspaper: “All the police forces have agreed to give support to Northern Ireland. It is a concern. Thankfully it wouldn’t affect too many London officers, but we would be there. Imagine it: officers from the mainland in Northern Ireland. Bloody hell.” Unsurprisingly the report has triggered alarm bells in Northern Ireland and Ireland with many people worrying that it could incite anger among Irish nationalists and endanger the fragile peace in the region. “English police on the Irish border. What could go wrong? Don’t remember this on the referendum ballot paper or being debated in 2016? In the week we have remembered Mo Mowlam I despair at such a reckless attitude to hard-won peace,” Labour MP Anna Turley said.

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Aug 022019
 


Pablo Picasso Bathers with a toy boat 1937

 

The Giant Sucking Sound of Financial Repression (WS)
Dutch Bank ING Warns Against Further ECB Money Printing (R.)
Trump’s $300 Billion China Tariff Threat Sends Markets Into Tailspin (G.)
Rate Cut Odds Surge After Tariff Announcement (ZH)
US Tariffs Risk Reviving Chinese Zombies (R.)
The EU Has New People In Charge. It’s Not Good News For US Tech Firms (CNBC)
EU Governments Seek Name For IMF Head (R.)
Boris Johnson’s Commons Working Majority Cut To One (BBC)
Expecting Ireland To Be Servile Is Part Of A Long British Tradition (G.)
Irish Peace Is Too Precious To Be Squandered By The Brexit Ultras (G.)
Boeing To Change 737 MAX Flight-Control Software To Address Flaw (R.)
Rachel Maddow Ratings Tank After Collusion Narrative Implodes (Ryan)

 

 

The war on savings and pensions continues unabated. Central banks are in so deep there’s no way out anymore. But what happens when you want to, or have to, retire?

The Giant Sucking Sound of Financial Repression (WS)

It’s called interest-rate repression. Or more poetically, financial repression. It’s where central banks manipulate interest rates down to where investments with little credit risk, such as Treasury securities, FDIC-insured savings accounts and CDs, pay little or no interest, or pay less interest than the rate of inflation. People such as savers and retirees, and institutions such as pension funds, that depend on this cash flow have lost their income stream. In addition, the purchasing power of their principal is getting gradually wiped out by inflation. How much money are we talking about? In the US alone, this interest rate repression impacts nearly $40 trillion. This includes savings products, Treasury securities, municipal bonds, and high-grade corporate debt.

$40 Trillion with a T. A 2% reduction across the board cuts this income by $800 billion a year. And this has had an impact. Central banks have accomplished this interest-rate repression by pushing short-term rates to zero or below zero, and by buying bonds and other assets to push long-term rates down too. These were emergency measures during the Financial Crisis that have become the “new normal,” as it has been called. This new normal has been going on for over a decade now. Other central banks, including the ECB and the Bank of Japan, pushed their policy rates below zero. This, in addition to vast asset buying binges by those central banks, produced $13 trillion in negative yielding bonds. But that’s a different universe of idiocy that we’re not going to get into today. We’re going to stick to US conditions.

To the Fed’s credit, it is the only major central bank that has raised its policy-rate target a bit, from near-zero to a range between 2.25% and 2.5%, which are still historically low rates. But it is under immense pressure by Wall Street and by the White House to cut rates again. So now we have this situation where short-term Treasury yields are low, and long-dated Treasury yields are even lower. How much money are we talking about here? Let’s see. There are $22 trillion in Treasury securities. They’re held by individuals and institutions, including insurance companies, pension funds, and the Social Security Trust Fund. Then there is high-grade corporate debt. The category of triple-A to single-A-rated debt is about $3.3 trillion. These yields have been pushed down too.

Then there are $3.8 trillion in municipal bonds outstanding. Many of them trade below US Treasury yields. For example, the GO bonds of California, which is not exactly a paragon of fiscal rectitude. During trading last Thursday, the California 10-year yield was 1.76%. This was about one-third of a percentage point below the US Treasury 10-year yield of 2.08% on the same day. Then there are $9.4 trillion in savings products, mostly savings accounts and CDs at banks. There are also about $3 trillion in checking accounts, payroll accounts, etc., but they’re not included here. These are just savings products. So let’s add these categories up: They amount to $39 trillion.

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“There is no shortage of money in the market.”

Dutch Bank ING Warns Against Further ECB Money Printing (R.)

Ralph Hamers made his plea as central banks redouble efforts to keep the cost of borrowing at historic lows to buoy the economy, a policy that weighs on bank profits and makes it costly to hold deposits. “I don’t think QE is a recipe to support an uncertain environment,” Hamers told journalists, referring to so-called quantitative easing to print fresh money. “There is no shortage of money in the market.” Although bankers have previously made similar complaints, Hamers’ blunt comments carry weight because his bank is one of Europe’s largest, with 38 million customers. ING, the largest Dutch bank, cautioned on Thursday that rock-bottom interest rates would pressure future earnings, as it announced a 1.4 billion euro net profit in the second quarter of the year.


“Looking ahead, we expect that persistently low interest rates will put pressure on net interest income,” Hamers said, referring to the bank’s chief earnings pillar from activities such as lending. European Central Bank President Mario Draghi has all but pledged to loosen monetary policy further amid a continued economic deterioration of Europe’s euro currency bloc, still grappling with the aftermath of a debt crisis. Officials recently told Reuters that an interest rate cut in September appeared certain, while government bond buys were also likely. Draghi recently said the outlook looked bleak as a global trade war hit Europe’s manufacturers.

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Did he do it to push Powell?

Trump’s $300 Billion China Tariff Threat Sends Markets Into Tailspin (G.)

Donald Trump’s surprise decision to escalate the trade war with tariffs on another $300bn of Chinese goods has sent global financial markets into a tailspin. After sharp falls on Wall Street in the wake of the US president’s announcement on Twitter on Thursday, Asian share prices plummeted on Friday morning as growing hopes that the world’s two economic superpowers would be able to reach a deal were dashed. In Tokyo the Nikkei was down 2.3%, with a similar fall in Hong Kong and Shanghai. The Kospi was down 0.8% in Seoul while in Sydney the benchmark ASX200, which passed its pre-global financial crisis all-time high on Tuesday, fell 0.3%. On the commodities markets the price of Brent crude oil plunged 7%, its biggest fall for four years, although it recovered 2.5% on Friday to $62.01.


Trump’s decision was also likely to increase the chances of another cut in US interest rates with the prospect of worsening trade with China forcing the Federal Reserve to loosen monetary policy again in September. It follows Wednesday’s 0.25% reduction, which was widely seen as not being enough to please the president who has been very vocal in calling for lower rates to boost the economy. As a signal of lower rates to come, the 10-year US bond yield fell almost 12 basis points on Thursday to 1.902%, hitting the lowest level since Trump won the presidential election in November 2016. The US dollar also fell and stockmarkets in Europe and the US were braced for a turbulent last day’s trading of the week. The FTSE100 is set to drop 1% at the opening and the Dow 0.3%.

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“It’s very logical to conclude that if trade tensions increase, given what Powell said, that would be something he would look at to evaluate a further cut.”

Rate Cut Odds Surge After Tariff Announcement (ZH)

Earlier today, we wrote a post titled “What Would It Take For The Fed To Not Cut Again?”, with Goldman providing a stylized answer, although in retrospect, the post should have been titled “What Would It Take For The Fed To Cut Again”, as that is what the market was far more concerned about after yesterday’s hawkish Powell press conference. In any case, Goldman hinted at the one specific catalyst that could force the Fed to cut more: “We also see risks in the other direction, especially on a significant escalation of tariffs against China.” To this, we said that “if an acceleration in the trade war with China is what the Fed will need to cut more, it’s pretty clear what that means for the chances of any trade deal between Washington and Beijing, since even Trump now understands that if he keeps escalating trade war with China, Powell will have no choice but to eventually cut to 0% (and lower).”

Just a few hours later, we were proven right in suggesting that an escalation in the trade war is inevitable and imminent when Trump tweeted that he would hike tariffs on $300BN in Chinese imports to 10% starting September 1, ending the tentative ceasefire with Beijing with a bang, and sending risk prices sharply lower. And yes, while Trump did suffer a modest drop in his favorite polling indicator – i.e., the stock market – which “cratered” as much as 1.5% below its all time high – far more importantly Trump also called Powell’s bluff, and effectively forced the Fed to prepare for more rate cuts as the trade war with China – which Powell explicitly highlighted as a condition that would result in more easing – is set to escalate further.

Late today, Bloomberg confirmed as much noting that traders “fixated on a timeline in which Powell seems to suggest cooling trade tensions reduced the need for future rate reductions — and a day later Trump revs the tensions back up”, just as we said he would. “It fits the pattern of a president bent on getting the central bank to submit, many thought”, the Bloomberg authors concluded. “Powell was very careful to say that he was looking at three things, one of which was global growth and the extent to which that is risked by trade tensions,” said Ellen Hazen, senior vice president and portfolio manager for F.L. Putnam, which has $2.2 billion under management. “It’s very logical to conclude that if trade tensions increase, given what Powell said, that would be something he would look at to evaluate a further cut.” Precisely, hence our prediction first thing this morning.

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Really? Xi is going to build more bridges to nowhere?

US Tariffs Risk Reviving Chinese Zombies (R.)

President Donald Trump is threatening new levies on $300 billion of Chinese goods entering the United States, after Shanghai talks proved inconclusive this week. That might not prod Chinese officials into striking a deal, but it is likely to raise some unwelcome zombies. Trump is among those who claim the Chinese economy is on the brink of the abyss. And it’s true that as a truce in trade negotiations gets more elusive the country’s business community is being forced to price in a new status quo. Their country has stumbled into a cold war with the world’s largest economy, a nuclear-armed military colossus that controls the world’s foremost trading currency. But a $13 trillion economy growing at 6.2% is hardly imploding, and a country where private consumption makes up roughly two-fifths of nominal GDP has padding against a downturn in trade.


Tensions exacerbate economic problems of China’s own making, though. There is a massive stack of non-performing debt incurred by government banks that mis-allocated capital after the global financial crisis. And there are still plenty of inefficient state-backed companies that compete with China’s private sector, driving down profitability across the board. If the new 10% tariffs kick in on Sept. 1 as Trump threatened on Thursday, President Xi Jinping may re-open a playbook that reformist officials have been trying to close. The central government has already pushed localities to ramp up infrastructure spending, and there may be more to come. Construction investment creates jobs immediately, and the government can order banks to lend, and order state firms to build.

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Trump won’t like this.

The EU Has New People In Charge. It’s Not Good News For US Tech Firms (CNBC)

New officials at the heart of the EU will likely keep America’s big tech firms under close scrutiny, experts have told CNBC. The European Commission — the EU’s executive arm — has fined companies such as Google for disrespecting its competition rules, it’s asked Ireland to collect unpaid taxes from Apple and is currently investigating Amazon. It has also proposed different laws that seek to limit online content and there’s little evidence that anything will change under the EU’s new leadership. Dexter Thillien, a senior industry analyst at Fitch Solutions, told CNBC via telephone Wednesday that Europe is keen to continue to be seen as the global leading force in tech regulation. Thillien explained that Europe saw a loophole in global tech regulation and felt the need to act.


“Europeans have all the negatives but none of the positives,” he said, referring to the fact that Europe has not created any large tech firms but has had to deal with the presence of Silicon Valley behemoths. “The European Commission has become more assertive making big tech companies pay their fair share of taxes. If anything, the incoming Commission looks even more determined to do so,” Florian Hense, an economist at Berenberg, told CNBC via email. Ursula von der Leyen, the president-elect of the Commission, said during a speech earlier this month that “if (tech companies) are making these profits by benefiting from our education system, our skilled workers, our infrastructure and our social security, if this is so, it is not acceptable that they make profits, but they are barely paying any taxes because they play our tax system.”

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A European under Washington’s thumb.

EU Governments Seek Name For IMF Head (R.)

European Union finance ministers are set on Friday to choose the bloc’s candidate to lead the International Monetary Fund from a list of four names, a spokeswoman for the French government said. The list includes Jeroen Dijsselbloem, the Dutch former head of euro zone finance ministers; Nadia Calvino, the Spanish economy minister; Olli Rehn, the Finnish central bank governor; and Bulgaria’s World Bank chief executive Kristalina Georgieva. Mario Centeno, the Portuguese chairman of euro zone finance ministers, said on Thursday he was pulling out of the race “in this stage of the process”, adding that he would be available if needed for a compromise solution.


Britain did not field a candidate because it could not come up with a name on time, a European official said. It had been expected to name a candidate and the deadline was extended by a few hours on Thursday to allow it to do so. France is leading the process to select a European candidate. The top job at the Washington-based global lender has historically been filled by a European. Outgoing IMF head Christine Lagarde is taking over from Mario Draghi as European Central Bank president.

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is that enough to push through a no-deal Brexit?

Boris Johnson’s Commons Working Majority Cut To One (BBC)

The Liberal Democrats have won the Brecon and Radnorshire by-election, leaving new PM Boris Johnson with a Commons working majority of just one. Jane Dodds overturned an 8,038 majority to beat incumbent Conservative Chris Davies by 1,425 votes. Mr Davies stood again after being unseated by a petition following his conviction for a false expenses claim. It was the first electoral test for Mr Johnson just eight days after becoming prime minister. It is the quickest by-election defeat for any new prime minister since World War Two.


Now, with the thinnest possible working majority, he will have to rely heavily on the support of his own MPs and his confidence-and-supply partners the DUP to get any legislation passed in key votes. It was also a bad night for Labour, whose vote share dropped by 12.4% as it was beaten into fourth place by the Brexit Party. The result means the Lib Dems now have 13 MPs. Ms Dodds, who is the Welsh Liberal Democrat leader, said: “My very first act as your new MP when I get to Westminster will be to find Mr Boris Johnson, wherever he’s hiding, and tell him to stop playing with the future of our community and rule out a no-deal Brexit.”

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“Paddy should know his place..”

Expecting Ireland To Be Servile Is Part Of A Long British Tradition (G.)

Boris Johnson’s approach to Ireland is part of an ignoble tradition in British politics. At its heart is the false assumption that superiority in resources and military prowess equates to a superiority in intellectual power and moral rectitude. In short, the idea that might is right and that, ultimately, Paddy should know his place. This assumption shaped and even, at times, dominated, policy on Ireland for centuries before independence. It runs through 19th-century British depictions of the Irish as incapable of self-government, unreliable, lazy and inferior. For Benjamin Disraeli, a British prime minister who shares some personal characteristics with the current incumbent, the Irish were “wild, reckless, indolent, uncertain and superstitious”.

Most obviously, this sense of superiority and a refined “moral” stance was clearly manifest in government policy during the Great Famine of 1845-49, which caused the deaths of more than one million people on the island of Ireland. This consistently damaging strain of thought continued into the 20th century, with British military and economic power often used crudely to address deep-rooted political conflicts in Ireland, which refused, and continue to refuse, to allow for simple solutions. Ireland, the thinking went, should be the handmaiden for glorious Britannia – and this servile position is for Ireland’s own benefit and ultimately serves Irish interests.

Of course, within this particular strain of British political thought, the history of violence and tragedy in Ireland is sometimes portrayed as a product of Irish recalcitrance – a tendency towards disorder and conflict that fails to recognise the beneficence of British policy on the island. Britain, it is often suggested, is a guarantor of Irish stability, addressing and suppressing the inherent conflicts in Irish society, rather than a highly disruptive force that has often recklessly pursued its own interests at a serious cost to its nearest neighbour.

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“Tories of influence” told him privately that Leo Varadkar, Ireland’s taoiseach “isn’t bright” and “the Irish will blink”.

Irish Peace Is Too Precious To Be Squandered By The Brexit Ultras (G.)

In The Ultras, the brutal, brilliant novel by Eoin McNamee set during the Troubles, the protagonist (based on the real-life undercover British intelligence officer Robert Nairac) finds himself in the company of dangerous men like himself. The Ultras plot terrible events and create dark polities while forcing everyone else to live with their consequences. “Ultra meaning beyond,” wrote McNamee. “Ultra meaning extreme.” The so-called war cabinet formed by the new British prime minister, Boris Johnson, and whose course the maverick arch-Brexiteer Dominic Cummings now charts, of course bears no resemblance to the characters in the war of the Ultras imagined by McNamee.

But the sheer velocity and ferocity of their opening salvoes about crashing out of the EU with no deal on October 31 unless the backstop – the insurance policy to avoid a hard border in Ireland – is abolished, raise the kind of alarm that we in Ireland have not felt since the dark years of the Troubles. The political fear is that this new breed of “Brexit Ultras” (Johnson’s cabinet with Nigel Farage’s Brexit party snapping at its heels) could deliberately pursue a no-deal EU exit at the expense of a volatile Irish peace. The sabre-rattling and pre-emptive blame-shifting of course is intended to shore up political support in the UK ahead of a possible general election, but also to intimidate Ireland into abandoning the backstop while shaking the unity of the EU27.

Europe, with its own demons to face, has its red lines too and will not sacrifice the single market or its external borders, or jeopardise the wider integrity of the European project. Ireland, and the fragile peace process that has been built over the past 20 years, falls between these two positions. And while it is still early days for the Johnson premiership, we have a deteriorated state of Anglo-Irish relations following his ascent to power. How real is the damaging rhetoric emanating from London and the anti-Irish tropes spewing from much of the British media? David Yelland, the former editor of the Sun, revealed that he had been shocked when “Tories of influence” told him privately that Leo Varadkar, Ireland’s taoiseach “isn’t bright” and “the Irish will blink”. “It seems, amazingly, that this is the actual policy of HMG under Johnson,” tweeted Yelland. “They are anti-Irish, arrogant, dangerous and wrong.”

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Well, actually, they’re going to change hardware: a second flight control computer and a second angle-of-attack sensor. Both of which are altready on board, but not used.

Boeing To Change 737 MAX Flight-Control Software To Address Flaw (R.)

Boeing Co plans further changes to the software architecture of the 737 MAX flight-control system to address a flaw discovered after a test in June, two people briefed on the matter said late on Thursday. The redesign, first reported by the Seattle Times, involves using and receiving input from both flight control computers rather than one. The move comes in response to an effort to address a problem discovered in June during a Federal Aviation Administration(FAA) simulator test. This is on top of earlier announced changes to take input from both angle-of-attack sensors in the MCAS anti-stall system linked to two deadly crashes that led to a global grounding of the plane.


Boeing still hopes to complete the software redesign by the end of September to submit to the FAA for approval, the sources said. For decades, 737 models have used only one of the flight control computers for each flight, with the system switching to the other computer on the following flight, according to people familiar with the plane’s design. The FAA said in June that it had identified a new risk that would need to be addressed before the plane could be ungrounded. Under a scenario where a specific fault in a microprocessor caused an uncommanded movement of the plane’s horizontal tail, it took pilots too long to recognize a loss of control known as runaway stabilizer, a Boeing official said at the time.

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Crazy bag lady.

Rachel Maddow Ratings Tank After Collusion Narrative Implodes (Ryan)

Once a shining beacon of hope for Russiagate true believers, it looks like Rachel Maddow has left her best days behind her; MSNBC’s conspiracy queen has seen her show plummet to fifth place in cable news ratings. What happened? You rise fast and fall hard in the fickle world of television. Just last April, Maddow overtook Fox News’ Sean Hannity to claim the title of most-watched host across cable news. She had become a reliable source for Russigate aficionados to get their daily dose of crazy. Sadly for Maddow, the latest data released by Nielsen shows her show in fifth place with a total audience of 2.4877 million viewers for July – behind Hannity, Tucker Carlson, Laura Ingraham and The Five (all Fox News shows).


For context, in January this year, Maddow still boasted an audience of nearly 3.3 million, which means she shed around 800,000 viewers in just six months. Maddow was also in fifth place among viewers in the 25-54 age range – the group most-favored by advertisers. Ouch. Once dubbed “the smartest person on TV” by Forbes (really), this is certainly not the big payoff Maddow was expecting, having dedicated three years of her career to breathlessly covering every twist and turn in the anticlimactic Trump-Russia “collusion” drama.

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Ship with dolphins.Wall painting from Akrotiri, Thera island (Santorini), Greece.17th century BC.

 

 

 

 

 

Aug 012019
 
 August 1, 2019  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , , , ,  8 Responses »


Piet Mondriaan Trees by the Gein at Moonrise 1908

 

Jerome Powell Finds Another Way To Please Nobody (R.)
The Fed’s Massive Debt for Equity Swap (RIA)
Mario Draghi Lays Out Plan For A Dangerous Round Of Stimulus (Sinn)
PBOC Keeps Powder Dry After Fed Rate Cut, But More Easing Expected (R.)
Bank of England To Lean Against Market Rate Cut Bets As Brexit Nears (R.)
Capitalism Is Part Of Solution To Climate Crisis, Says Mark Carney (G.)
UK’s Biggest Financial Scandal Bites Its Biggest Bank – Again (Coppola)
Jeffrey Epstein Could Spend At Least A Year In Jail Before Trial (F.)
James Comey’s Next Reckoning Is Imminent — This Time For Leaking (Solomon)
Judge’s Ruling Throws Huge Spanner Into Assange Extradition Proceedings (Can.)
Beijing Orders Arabic, Muslim Symbols Taken Down (R.)

 

 

A lot of seemingly serious people are commenting on the bad theater the Democratic debate has become. Nothing better to do with your lives?! It doesn’t matter what any of the ‘candidates’ says or does, the DNC will pull another Bernie 2016. It’s bad theater, it’s cheap, you’re being had, and everyone who watches it should watch themselves instead.

Yeah, just like the central banks. To clean up the US economy, you have to take -most of- the Fed’s powers away. To clean up US politics, you have to burn down the DNC. Or Trump will win forever.

Jerome Powell Finds Another Way To Please Nobody (R.)

The Federal Reserve has turned. The U.S. central bank on Wednesday cut its target overnight interest cost by a quarter percentage point, to a range of 2% to 2.25%. For some, like U.S. President Donald Trump, that’s surely not enough. For others – and going by most economic statistics – it’s too much. Fed Chairman Jerome Powell has found another way to please nobody. The last federal-funds rate reduction was in 2008, as the financial crisis cut deep. It then bounced along near zero for seven years before Powell’s predecessor, Janet Yellen, oversaw the start of a period of gradual rate hikes in late 2015. Since a quarter-point hike last December, the Fed had held steady at 2.25%-2.5%, until now.

The proximate causes of the move are external – mainly the threat to economic activity from Trump’s confrontational stance on trade. It’s a telling irony that a president who claims the Fed is damping the benefits of his policies by holding rates too high is providing one of the few reasons for the U.S. central bank to cut them. Wednesday’s modest move by the Federal Open Market Committee surely won’t satisfy him. Yet seen through the lens of the Fed’s dual mandate – full employment and stable prices – everything is still humming as the longest expansion in U.S. history enters its second decade, with economic growth steady, unemployment at historic lows and inflation tame. Prices increased just 1.4% in the year to June by the personal consumption expenditures measure, released on Tuesday.

The Fed would prefer inflation nearer its 2% target but that’s a somewhat flimsy rationale for lower rates given the backdrop. A significant minority of traders, meanwhile, expected a half-point cut, according to CME data, so they’ll be disappointed, too – even though buoyant stock and credit markets are hardly crying for help. Two of Powell’s colleagues also dissented, preferring not to cut rates, so they’re unhappy for a different reason.

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As everyone is staring at a 25 bps cut, here’s where the action is. An economy distorted beyond recognition.

The Fed’s Massive Debt for Equity Swap (RIA)

Since QE began, nearly 30% of the new corporate debt issued was used for stock buybacks. Putting the pieces of the mosaic together, it is fair to say the most intense corporate debt-for-equity swap in recorded history was enabled by the Fed via monetary policy and the federal government through tax-cuts. This is symptomatic of a variety of issues that have been created by prolonged extraordinary monetary policy. In the same way that corporate behavior has been seriously altered as described above, every central bank in the developed world has undertaken even more extreme measures to foster growth, dictating that the behavior of market participants transform in some manner.


The chart below is a stark reminder of how the Fed has changed the natural order of the corporate debt market. Over the past 25 years, when corporate debt loads became onerous, investors required higher yields and wider spreads to compensate them for the added risks. Today, despite the extreme amount of corporate leverage and the low quality of corporate credit, junk spreads remain near all-time lows. As shown below and highlighted by the red arrow, the long-standing correlation between leverage and high yield spreads is broken.

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Making sure Lagarde must stick with the program. Draghi is the craziest of them all.

Mario Draghi Lays Out Plan For A Dangerous Round Of Stimulus (Sinn)

Expectations – and, for many economists, rather bad ones – have been confirmed: the European Central Bank has decided to inflate the eurozone. Following the ECB’s latest policy meeting on 25 July, the outgoing president Mario Draghi made it clear that the bank’s seemingly harmless inflation target of 1.9% will in fact be the basis for a new phase of expansionary monetary policy over the next few years. This will go well beyond the ECB’s stimulus measures to date and is likely to pose further risks to the European economy. We should remember that the Maastricht treaty assigned the ECB the single, non-negotiable goal of maintaining stable prices, which, if taken literally, would mean an inflation rate of zero.

This is very different from the mandate given to other central banks. The introduction of the euro, however, caused interest rates in southern Europe to fall, leading to an inflationary bubble that raised annual price growth to well over 2% in some countries. The ECB’s governing council then argued that the goal of price stability could not be achieved exactly and also pointed to several measurement errors that complicate policymaking. So, the authorities said, they would tolerate average inflation of up to 2% for the eurozone as a whole. The governing council did not fancy a restrictive monetary policy aimed at reducing inflation, as it gave only little weight to the risk of reducing competitiveness in some countries and did not want to slow down countries in stagnation such as Germany.

Then came the euro crisis. With inflation plummeting, the ECB turned the still-tolerable upper limit for the inflation rate into its target. Suddenly, it was argued, the bank would seek to achieve inflation of “close to, but below 2%”. Draghi even went before the television cameras to claim in all seriousness that this was the ECB’s mandate. And now, at the end of his term of office, Draghi is seeking to bind his successor, Christine Lagarde, to a council decision that will force her to aim for 1.9% inflation with a symmetrical concern about potential deviations. In plain language, this means the ECB will try to achieve this figure on average over time, netting out future above-average inflation rates with below-average inflation in recent years.

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Xi demands total control. Trump wants Powell to make him look good, Xi demands that tripled and cubed. And he gets no dissent.

PBOC Keeps Powder Dry After Fed Rate Cut, But More Easing Expected (R.)

China’s central bank kept its main policy rates on hold on Thursday, opting not to follow an overnight benchmark rate cut by the U.S. Federal Reserve as policymakers wait to see if earlier support measures start to stabilize the economy. But market watchers say continued support is still needed, and expect more modest forms of policy easing from the People’s Bank of China (PBOC) in coming months if pressure on the economy persists. Amid mounting worries about risks to global growth, the Fed lowered its benchmark rate by a quarter-point on Wednesday, as expected, but the head of the U.S. central bank ruled out a long series of cuts.


Though China’s central bank does not always follow the Fed’s moves in lockstep, some analysts had thought a token PBOC cut, likely in one of its short-term rates, was a possibility. However, no move was apparent by midday on Thursday. The PBOC refrained from daily open market operations (OMOs) early in the session, saying banking system liquidity was “reasonably ample”. “The PBOC skipped OMOs and hence there was no rate adjustment,” said Frances Cheung, head of Asia macro strategy at Westpac in Singapore. “The market may need to wait until mid-August when the next tranche of medium term lending facility (MLF) matures to see if there is any action. Arguably they can adjust policy parameters anytime, and are not constrained by any meeting schedule, but we see no pressure on OMO rates.”

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No-deal Brexit is a big headache for Carney. He still has a full three months to go after Halloween. It will be messy.

Bank of England To Lean Against Market Rate Cut Bets As Brexit Nears (R.)

The Bank of England is likely to push back on Thursday against investors who bet that it will follow other central banks and cut rates in the coming months, even as the risk of a messy Brexit darkens growth prospects. Economists polled by Reuters are almost certain that the BoE’s Monetary Policy Committee will vote 9-0 to keep rates on hold at 0.75%. But it is less clear how Governor Mark Carney will tackle the challenge posed by a possible no-deal Brexit. New Prime Minister Boris Johnson has said he will take Britain out of the European Union on Oct. 31 without a transition deal if Brussels does not rewrite the deal it hammered out with his predecessor Theresa May.


The risk of a disruptive no-deal Brexit that could push Britain into a recession means interest rate futures now price in an almost 90% chance of a 25 basis point rate cut before Carney steps down at the end of January. The U.S. Federal Reserve reduced its main interest rate by a quarter of a percentage point on Wednesday, and the European Central Bank is expected to take similar action next month, as both battle a slowdown driven by the U.S.-China trade conflict. But the BoE says Britain is a special case. Chief economist Andy Haldane highlighted last week how British rates had not risen to anything like the extent they had in the United States, while Britain’s job market and inflation were much more buoyant than in the euro zone.

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Carney wrote that article with Michael Bloomberg talking about how to make a profit off of disaster. And here again: ..there will be great fortunes made along this path aligned with what society wants.” Dangerous.

Capitalism Is Part Of Solution To Climate Crisis, Says Mark Carney (G.)

Capitalism is “very much part of the solution” to tackling the climate crisis, according to the governor of the Bank of England, Mark Carney. Challenged in an interview by the Channel 4 News presenter Jon Snow over whether capitalism itself was fuelling the climate emergency, Carney gave a strident defence of the economic system predicated on private ownership and growth but said companies that ignored climate change would “go bankrupt without question”. “Capitalism is part of the solution and part of what we need to do,” he said in the interview broadcast on Wednesday.

The economist, who previously worked for Goldman Sachs, said he recognised the costs of ignoring climate change were rising, but stressed there were increasing opportunities for “doing something about it”, and that capital would shift in this direction. “Now there is $120tn of capital behind that framework that is saying to companies: ‘Tell us how you are going to manage these risks’ – that’s the first thing,” Carney said.

“The second thing the capitalist system needs to do is to manage the risks around climate change, be ready for the different speeds of the adjustment. And then the most important thing is to move capital from where it is today to where it needs to be tomorrow. The system is very much part of the solution.” He added: “Companies that don’t adapt – including companies in the financial system – will go bankrupt without question. [But] there will be great fortunes made along this path aligned with what society wants.”

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Corrupt to the core.

UK’s Biggest Financial Scandal Bites Its Biggest Bank – Again (Coppola)

To the surprise of markets and the chagrin of shareholders, the U.K.’s largest lender, Lloyds Banking Group, has reported disappointing profits for the second quarter of 2019. And no, it’s not because of Boris Johnson’s antics or the prospect of no-deal Brexit. It’s the final flourish of a much older issue – the U.K.’s long-running PPI scandal. Lloyds has had to take an additional provision of £550m ($670m) to cover a flurry of new PPI claims. This reduced its half-year profit to a paltry £2.2bn ($2.7bn). The share price dropped 5% on the news. Mis-selling of payment protection insurance (PPI) is by far the U.K.’s biggest financial scandal.

The Financial Conduct Authority (FCA) says that since January 2011, British banks and financial institutions have paid out £37.5bn ($45.73bn) in compensation to customers who were wrongly sold PPI insurance. Lloyds Banking Group alone accounts for more than half of this total. The origins of the scandal date back to the 1990s, when financial institutions in the U.K. started selling PPI on lending products including mortgages, car loans and credit cards. PPI was meant to cover loan interest and repayments if the customer became unable to pay, for example due to illness or unemployment. As it was highly profitable for lenders and insurance companies, it was, unsurprisingly, heavily promoted. By 2005, there were an estimated 20 million PPI contracts in existence with annual gross premiums of over £5bn ($6.1bn).

PPI was expensive: premiums could raise the cost of a loan by up to 50%. And it mostly didn’t work. In 2005, the U.K.’s Citizens’ Advice Bureau (CAB) complained that there were so many exclusion clauses in the contracts and administrative barriers to claiming that many people couldn’t make successful claims. Furthermore, the CAB reported, people were being sold policies that they did not need or were unsuitable for them.

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Over a million pages of evidence. Ghislaine Maxwell must have bought an industrial scale shredder.

Jeffrey Epstein Could Spend At Least A Year In Jail Before Trial (F.)

A Wednesday court hearing determined that Jeffrey Epstein’s trial for two federal counts of sex trafficking and conspiracy will begin no sooner than June 8, 2020, while his lawyers requested more time to prepare “a case of this magnitude.” Prosecutors said in the hearing that bringing the case to trial quickly is in the public’s interest. Epstein’s lawyer, Martin Weinberg, said they expect to review more than one million pages of evidence while preparing his case. Given the large amount of evidence, Epstein’s team asked for his trial to begin in September 2020, after Labor Day.


Wednesday’s hearing was Epstein’s first court appearance after a possible suicide attempt, and a day after he was reportedly served a new lawsuit from a woman claiming he raped her as a 15-year-old. He showed no signs of injuries, specifically bruising on his neck, from the potential suicide attempt. Epstein is being held in a Manhattan jail without bail, and will likely remain there until his trial begins next year. If convicted, he could spend up to 45 years in prison.

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Horowitz was ready to go. Barr said too soon.

James Comey’s Next Reckoning Is Imminent — This Time For Leaking (Solomon)

The Justice Department’s chief watchdog is preparing a damning report on James Comey’s conduct in his final days as FBI director that likely will conclude he leaked classified information and showed a lack of candor after his own agency began looking into his feud with President Trump over the Russia probe. Inspector General (IG) Michael Horowitz’s team referred Comey for possible prosecution under the classified information protection laws, but Department of Justice (DOJ) prosecutors working for Attorney General William Barr reportedly have decided to decline prosecution — a decision that’s likely to upset Comey’s conservative critics.

Prosecutors found the IG’s findings compelling but decided not to bring charges because they did not believe they had enough evidence of Comey’s intent to violate the law, according to multiple sources. The concerns stem from the fact that one memo that Comey leaked to a friend specifically to be published by the media — as he admitted in congressional testimony — contained information classified at the lowest level of “confidential,” and that classification was made by the FBI after Comey had transmitted the information, the sources said. Although a technical violation, the DOJ did not want to “make its first case against the Russia investigators with such thin margins and look petty and vindictive,” a source told me, explaining the DOJ’s rationale.

But Comey and others inside the FBI and the DOJ during his tenure still face legal jeopardy in ongoing probes by the IG and Barr-appointed special prosecutor John Durham. Those investigations are focused on the origins of the Russia investigation that included a Foreign Intelligence Surveillance Act (FISA) warrant targeting the Trump campaign at the end of the 2016 election, the source said.

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It all hinges on Julian helping -and failing- Chelsea (Bradley) find an identity to hide behind.

Judge’s Ruling Throws Huge Spanner Into Assange Extradition Proceedings (Can.)

A US judge has ruled that WikiLeaks was fully entitled to publish the Democratic National Congress (DNC) emails, which means no law was broken. The ruling is highly significant as it could impact upon the US extradition proceedings against WikiLeaks founder Julian Assange, as well as the ongoing imprisonment of whistleblower Chelsea Manning. On 30 July, federal judge John G. Koeltl ruled on a case brought against WikiLeaks and other parties in regard to the alleged hacking of DNC emails and concluded that: “If WikiLeaks could be held liable for publishing documents concerning the DNC’s political financial and voter-engagement strategies simply because the DNC labels them ‘secret’ and trade secrets, then so could any newspaper or other media outlet.”

In other words, if WikiLeaks is subject to prosecution, then every media outlet in the world would be. The judge argued that: “[T]he First Amendment prevents such liability in the same way it would preclude liability for press outlets that publish materials of public interest despite defects in the way the materials were obtained so long as the disseminator did not participate in any wrongdoing in obtaining the materials in the first place.” Significantly, the judge added that it’s not criminal to solicit or “welcome” stolen documents, and how: “A person is entitled to publish stolen documents that the publisher requested from a source so long as the publisher did not participate in the theft.”

[..] Greg Barns, a barrister and longtime adviser to the Assange campaign, told The Canary: “The Court, in dismissing the case, found that the First Amendment protected WikiLeaks’ right to publish illegally secured private or classified documents of public interest, applying the same First Amendment standard as was used in justifying the The New York Times publication of the Pentagon Papers. That right exists, so long as a publisher does not join in any illegal acts that the source may have committed to obtain that information. But that doesn’t include common journalistic practices, such as requesting or soliciting documents or actively collaborating with a source. So this case is important in restating what is and is not protected under the First Amendment. But does it have implications for the extradition hearing? Well it certainly helps to remind the courts in the UK that the First Amendment protection is very broad.”

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Moving backward.

Beijing Orders Arabic, Muslim Symbols Taken Down (R.)

Authorities in the Chinese capital have ordered halal restaurants and food stalls to remove Arabic script and symbols associated with Islam from their signs, part of an expanding national effort to “Sinicize” its Muslim population. Employees at 11 restaurants and shops in Beijing selling halal products and visited by Reuters in recent days said officials had told them to remove images associated with Islam, such as the crescent moon and the word “halal” written in Arabic, from signs. Government workers from various offices told one manager of a Beijing noodle shop to cover up the “halal” in Arabic on his shop’s sign, and then watched him do it.


“They said this is foreign culture and you should use more Chinese culture,” said the manager, who, like all restaurant owners and employees who spoke to Reuters, declined to give his name due to the sensitivity of the issue. The campaign against Arabic script and Islamic images marks a new phase of a drive that has gained momentum since 2016, aimed at ensuring religions conform with mainstream Chinese culture. The campaign has included the removal of Middle Eastern-style domes on many mosques around the country in favor of Chinese-style pagodas. China, home to 20 million Muslims, officially guarantees freedom of religion, but the government has campaigned to bring the faithful into line with Communist Party ideology.

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Jul 252019
 
 July 25, 2019  Posted by at 9:32 am Finance Tagged with: , , , , , , , , ,  7 Responses »


Piet Mondriaan Trafalgar Square 1939-43

 

Trump Cheers As Michael Moore Blasts ‘Frail’ Mueller (AFP)
Donald Trump Vetoes Bills Prohibiting Arms Sales To Saudi Arabia (AP)
Nothing Matters: It’s Like the Whole Market Has Gone Nuts (WS)
Mnuchin Says Amazon ‘Destroyed’ US Retail Sector (R.)
Boeing Says It Could Halt Production Of 737 Max After Grounding (G.)
Jeffrey Epstein Found Injured In Jail Cell (R.)
Embattled Governor Of Puerto Rico Resigns After Protests (AFP)
With Finger On Trigger, ECB Aims At More Stimulus (R.)
Deutsche Bank Faces A -Much- Smaller, Poorer Future (Coppola)
California Condor Comes Back From The Dead (NPR)

 

 

There are still people calling for impeachment after Mueller’s horror show yesterday. Saw both AOC and Rob Reiner do just that. The somewhat more awake amongst us merely feel sorry for the old man, but that goes too far. He put himself in that position. He’s never delivered any proof of Russian meddling, but that doesn’t appear to bother many. He refused to talk to Assange just so that meddling narrative could be kept alive.

But the biggest takeaway from the hearing must be that Mueller didn’t write his own report, something that became glaringly obvious when he didn’t know what Fusion GPS was. Mueller has just been the face of an investigation that was conducted by others. He is the supposed hero who’s ideal as the front for such a thing. But the thing is hollow and empty.

There were far too many things Mueller said were not in his purview (he said that 16 times) of which at least some certainly were. Moreover, as several members of Congress pointed out, Mueller got far too close to ignoring the presumption of innocence. Trump does not have to prove he’s innocent, Mueller had to prove he’s guilty – and failed.

Trump Cheers As Michael Moore Blasts ‘Frail’ Mueller (AFP)

In a rare meeting of minds Wednesday between two opposing American political voices, Michael Moore earned plaudits from President Donald Trump when the liberal filmmaker blasted former special counsel Robert Mueller’s “stumbling” congressional testimony. Moore, a frequent Trump critic who has also warned of the Democratic Party’s failure to resonate with working-class America, let loose on Mueller as he testified in often halting fashion before Congress about Russian election interference and possible connections to Trump and his 2016 campaign. “A frail old man, unable to remember things, stumbling, refusing to answer basic questions,” Moore said in a scathing tweet after Mueller appeared uncertain and asked for several questions to be repeated during some of the most closely watched congressional hearings of the year.

“I said it in 2017 and Mueller confirmed it today — All you pundits and moderates and lame Dems who told the public to put their faith in the esteemed Robert Mueller — just STFU from now on,” he added, using a crass acronym that includes an expletive. Trump seized on the famed documentarian and Academy Award winner’s fury, retweeting the post and adding his observation that “Even Michael Moore agrees that the Dems and Mueller blew it!” Mueller, 74, appeared reluctant to take the gloves off as he sat for hours in hearings before two House panels, often sounding dispassionate and unsteady.

At times lawyerly and assured, he was also dull and sluggish, declining to stray beyond the confines of his report or to push back aggressively on his Republican questioners and light the fireworks that several Democrats no doubt had been looking for. “Trump must be gloating in ecstasy,” tweeted Moore, director of films like “Bowling for Columbine” and “Roger & Me.” “Not because of the failure that is Robert Mueller — his Report is still a damning document of crimes by Trump — but because Trump understands the power of the visual, and he understands that the Dems aren’t street fighters and that’s why he’ll win.”

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If the Dems wouldn’t waste so much time and credility with Russiagate, they could protest this. And sure, Pelosi tries, but they are not a believable anti-war party.

Donald Trump Vetoes Bills Prohibiting Arms Sales To Saudi Arabia (AP)

Donald Trump has vetoed a trio of congressional resolutions aimed at blocking his administration from selling billions of dollars of weapons to Saudi Arabia and the United Arab Emirates. The secretary of state, Mike Pompeo, last month cited threats from Iran as a reason to approve the $8.1bn arms sale to the two US allies in the Gulf. Saudi Arabia is an enemy of Iran and tension has mounted between the UAE and Tehran over several issues, including the UAE’s coordination with US efforts to curb what it calls Iran’s malign activities in the region. But Trump’s decision in May to sell the weapons in a way that would have bypassed congressional review infuriated lawmakers. In a pushback to Trump’s foreign policy, Democrats and Republicans banded together to pass resolutions to block the weapons sale.


The White House had argued that stopping the sale would send a signal that the US did not stand by its partners and allies, particularly at a time when threats against them were increasing. The arms package included thousands of precision-guided munitions, other bombs and ammunition and aircraft maintenance support. Anger has been mounting in Congress over the Trump administration’s close ties to the Saudis, fuelled by the high civilian casualties in the Saudi-led war in Yemen – a military campaign the US is assisting – and the killing of the US-based columnist Jamal Khashoggi by Saudi agents. Trump’s decision in May to sell the weapons further inflamed the tensions. “The president’s shameful veto tramples over the will of the bipartisan, bicameral Congress and perpetuates his administration’s involvement in the horrific conflict in Yemen, which is a stain on the conscience of the world,” the House speaker, Nancy Pelosi, said in a statement.

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Let’s start a casino and call it a market.

Nothing Matters: It’s Like the Whole Market Has Gone Nuts (WS)

You see, Tesla is different. It just reported another doozie, a loss of $408 million in the second quarter, after its $702 million loss in the first quarter, for a total loss in the first half of $1.1 billion. In its 14-year history, it has never generated an annual profit. It has real and popular products and surging sales, but it subsidizes each of those sales with investor money. And here’s where it’s different this time: investors don’t care. They dig how the company has been consistently overpromising and underdelivering. They dig the chaos at the top. They dig everything that should scare them off.

Yeah, its shares plunged 11% afterhours today, but that takes those shares only down to where they’d been on May 1. Big deal. Shares are down 32% from the peak. But their peak should have been a small fraction of that. Even today, the company is still valued at over $40 billion. Tesla lacks a viable business model in the classic sense. Its business model is a new business model of just burning investor cash that it raises via debt and equity offerings on a near-annual basis because investors encourage it to do that, and love it for it, and eagerly hand it more money to burn, and they’re rewarding each other by keeping the share price high. It’s just a game, you see. And nothing else matters.

Then there is Boeing. It just reported the largest quarterly loss in its history of $2.9 billion due to a nearly $5-billion charge related to its newest bestselling all-important 737 Max, two of which crashed, killing 346 people, due to the way the plane is designed. The flight-control software that is supposed to mitigate this design issue is not working properly. And a software fix that is acceptable to regulators remains elusive. The plane has been grounded globally since March. No one, especially not the regulators, can afford a third crash. So today, Boeing announced that it may further cut production of the plane or suspend it altogether if the delays continue to drag out. This is big enough to start impacting US GDP.

[..] But here we go: From 2013 through Q1 2019, Boeing has blown a mind-boggling $43 billion on share buybacks (buyback data via YCharts): Blowing these $43 billion on share buybacks has caused Boeing to have a “total equity” of a negative $5 billion. In other words, it has $5 billion more in liabilities than in assets. This company is out of wriggle room. If it can’t borrow enough money to make payroll, it’s over.

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Shouldn’t he wait for the DOJ investigation?

Mnuchin Says Amazon ‘Destroyed’ US Retail Sector (R.)

U.S. Treasury Secretary Steven Mnuchin said on Wednesday that online giant Amazon.com Inc “destroyed the retail industry across the United States.” Mnuchin said he looked forward to hearing the results of a Justice Department probe, announced on Tuesday, into whether big U.S. technology firms engage in anticompetitive practices, the strongest sign yet that the Trump administration is stepping up its scrutiny of Big Tech. “If you look at Amazon, although they’re certain benefits to it, they’ve destroyed the retail industry across the United States,” Mnuchin told CNBC. “I don’t have an opinion other than I think it’s absolutely right the attorney general is looking into these issues and I look forward to listening to his recommendations to the president.”


Amazon defended itself, saying that 90% of all sales occur in brick-and-mortar stores. “Today, independent sellers make up more than 58% of physical gross merchandise sales on Amazon, and their sales have grown twice as fast as our own, totaling $160 billion in 2018,” a spokesman for Amazon said. A Justice Department spokesman declined to say on Tuesday which companies it would scrutinize under the antitrust probe, but said the review would consider concerns raised about “search, social media, and some retail services online” – an apparent reference to Google, Amazon, Facebook, and potentially Apple.

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No more parking spaces left.

Boeing Says It Could Halt Production Of 737 Max After Grounding (G.)

Boeing said it could halt production of the 737 Max jet on Wednesday as it reported the company’s largest ever quarterly loss following two fatal accidents involving the plane. The company lost $2.9bn in the three months to the end of June, compared to a profit of $2.2bn for the same period last year. Sales fell 35% to $15.8bn. Chief executive Dennis Muilenburg said production of the plane could be slowed or halted if regulators do not move to lift the ban on the plane. The 737 Max was Boeing’s best selling aircraft until the fleet was grounded worldwide in March following crashes in Indonesia and Ethiopia. In January Boeing’s executives said the Max was the fastest selling plane in its history and the company expected to deliver between 895 and 905 airplanes this year.


Now it has become the most costly plane in Boeing’s history. Boeing has predicted that the Max will be flying again by the end of the year, but this month the Wall Street Journal reported that government and industry officials believe a return date of January 2020 is more likely. On a call with analysts Muilenburg said the company may have to consider slowing or halting production if there are further delays in getting the plane back into the skies. Boeing is still producing 42 of its 737 jets a month and plans to boost that rate to 57 next year. But if there are further setbacks, Muilenberg said: “We might need to consider possible further rate reductions or other options including a temporary shutdown of the Max production.”

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It got him out of jail…

Jeffrey Epstein Found Injured In Jail Cell (R.)

Jeffrey Epstein, the financier facing charges of sex trafficking involving dozens of underage girls, was found unconscious in a Manhattan jail cell with injuries to his neck, media reported late on Wednesday, citing unidentified sources. Epstein was found by guards sprawled on the floor of cell at the Metropolitan Correctional Center on Wednesday, media reported. Some media reported that his face appeared blue. The billionaire financier was taken to hospital, the New York Post reported, but it was unclear where he was taken or what his condition was. It was not clear how he suffered his injuries. Epstein was recently denied bail, a move his lawyers plan to appeal according to a court notice made public on Tuesday.


Epstein was expected to ask the 2nd U.S. Circuit Court of Appeals to overturn the judge’s July 18 rejection of his request to remain under house arrest in his $77 million mansion on Manhattan’s Upper East Side. Epstein has pleaded not guilty to the charges and the appeal for bail was expected. His lawyer Reid Weingarten did not immediately respond to requests for comment. A spokesman for U.S. Attorney Geoffrey Berman in Manhattan declined to comment. The charges, concerning alleged misconduct from at least 2002 to 2005, were announced more than a decade after Epstein pleaded guilty to state prostitution charges in Florida. In denying him bail, U.S. District Judge Richard Berman in Manhattan said the government had shown by clear and convincing evidence that Epstein would pose a danger to the community if released pending trial.

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Impressive.

Embattled Governor Of Puerto Rico Resigns After Protests (AFP)

Puerto Rico’s embattled governor Ricardo Rossello announced his resignation late Wednesday following two weeks of massive protests triggered by the release of a chat exchange in which he and others mocked gays, women and hurricane victims. “I announce that I will be resigning from the governor’s post effective Friday, August 2 at 5 pm,” Rossello said, in a video statement posted on the government’s Facebook page. As soon as the video ended, a joyous commotion and cries of “ole ole ole” were heard from protesters who had rallied since the afternoon at the gates of the governor’s mansion.


“I trust that Puerto Rico will continue united and move forward as it always has,” Rossello said. “And I hope that this decision will serve as a call for citizen reconciliation.” Rossello said that Justice Secretary Wanda Vazquez would temporarily succeed him. Puerto Ricans had waited expectantly for the announcement throughout the day, as rumors of the governor’s forthcoming resignation swirled.

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Christine Lagarde is stuck even before she takes the job. There is no way out of ultra-low rates.

With Finger On Trigger, ECB Aims At More Stimulus (R.)

The European Central Bank is all but certain to ease policy further on Thursday, with the biggest question whether it staggers its moves over several months or opts for a big bang. With inflation stuck well below its target and the U.S. Federal Reserve already in easing mode, the ECB has flagged more stimulus, hoping to prop up confidence amid a steady flow of bad news that threatens to unravel years of unprecedented support. It could cut interest rates, perhaps while also helping banks offset the costs to them, restart a recently shuttered bond-buying program or raise the bar for any future tightening of monetary policy.


But with economic data relatively stable there is little urgency to deliver a comprehensive package this week, suggesting the ECB could take its time to prepare the measures and wait for the Fed to set its own course. This will be crucial for determining the euro’s exchange rate against the dollar, presently the single most-watched variable for ECB policymakers. Having stoked easing expectations already, ECB President Mario Draghi will have to deliver at least something on Thursday. If nothing else, he is likely to unveil revamped interest rate guidance that makes it clear a rate cut is coming and that rates will stay at record lows for much longer than the ECB had previously expected.

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As I said: all they can do is to prolong the agony.

Deutsche Bank Faces A -Much- Smaller, Poorer Future (Coppola)

Deutsche Bank has issued its results for the second quarter of 2019. They make grim reading. The bank reported a headline loss of €3.1bn ($3.44bn), which it said was due to “charges relating to strategic transformation” of €3.4bn ($3.78bn). But both net income of £231m ($256.67m) and underlying profits of €441m ($490m) were significantly down on the same quarter in 2018. The restructuring announced earlier this month has yet to impact fully. The “capital release unit” into which the bank plans to put €74bn ($82.22bn) of poorly-performing and non-strategic assets and business lines, including its entire equities trading division, is not yet up and running, and although headcount is about 4,500 lower than it was a year ago, the latest round of sackings doesn’t yet show up in the redundancy costs.


Restructuring costs themselves therefore only contribute €50m ($55.56m) to the headline loss. A further €350m ($388.89m) comes from junking software and service contracts that will no longer be needed because of the restructuring. But by far the largest part of the headline loss arises from impairment of goodwill to the tune of €1bn ($1.11bn) and a €2bn ($2.22bn) reduction in the value of the bank’s deferred tax asset. This may sound like accounting gobbledegook, but it sends a very important message. Deutsche Bank’s management has admitted the bank will never return to the profitability of the past. When the restructuring is complete, it will be a much smaller, poorer bank.

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Let’s end with something positive.

California Condor Comes Back From The Dead (NPR)

The California condor, North America’s largest bird, once ruled the American Southwest and California’s coastal mountains. The vulture-like bird was revered by Native Americans and was believed to contain spiritual powers. Hundreds of years later, its future seemed all but certain. Defying odds, conservation efforts brought the species back and prevented it from joining the dodo in extinction. Now, condor reintroduction celebrates a milestone: Chick No. 1,000 has hatched. In the 1980s, fewer than two dozen condors were left in the world. Conservationists rounded up the remaining condors and began breeding them in captivity.

According to the International Union for Conservation of Nature, the condor became critically endangered in the 20th century — one classification behind extinct in the wild. The decline came from poaching, habitat destruction and lead poisoning as condors scavenged for carrion containing lead shots. Today, more than 300 California condors exist in the wild. Including captivity breeding programs, there are more than 500 in the world, says Tim Hauck, the condor program manager at the Peregrine Fund.

The 1,000th successful birth signifies an optimistic future for the condor recovery mission. “We’re seeing more chicks born in the wild than we ever have before,” Hauck told NPR’s Scott Simon. “And that’s just a step towards success for the condor and achieving a sustainable population.” The hatchling is currently in Zion National Park — it emerged from its shell in May, but its survival was just confirmed in July. The chick, whose sex cannot be identified without a blood test, will be ready to fledge — or take flight — for the first time in November. If the chick successfully leaves the nest, it can expect to grow up to have a 10-foot wingspan. The bird’s average lifespan is 60 years, one of the world’s longest-living bird species.


Photo by National Park Service – AP

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Jul 082019
 


Pablo Picasso Guernica [Study] II 1937

 

Deutsche Bank Retreat Depends On Uber Optimism (R.)
The Deutsche Bank As You Know It Is No More (ZH)
ECB Member Says Stimulus Package Could Come This Month If Needed (CNBC)
Trump Was ‘Only One’ To Help Prosecutor In 2009 Epstein Case (ZH)
Trump Says Migrant Detention Centers To Open To Media (AFP)
Trump Calls Ocasio-Cortez ‘Evita’ In New Book American Carnage (G.)
Nancy Pelosi Dismisses AOC, Omar, Tlaib, Pressley As Just ‘Four People’ (NW)
Protests Pile Pressure On Hong Kong’s Already-Stressed Youth (AFP)
Boris Johnson: I’ll Make UK ‘Match Fit’ For No-Deal Brexit (G.)
UK Ministers Challenge Court Ruling On Saudi Arabia Arms Sales (G.)
Swedish Prosecutors: ‘It’s Not on the Cards’ To Interview Assange (21CW)
Greek Conservatives Take Charge In Landslide Win (R.)

 

 

Writing about Deutsche without mentioning derivatives is nonsense.

Deutsche Bank Retreat Depends On Uber Optimism (R.)

Any cocksure child knows that owning up to mistakes is part of growing up. By that metric, Deutsche Bank is just beginning to mature. Boss Christian Sewing on Sunday effectively called time on the lender’s multi-decade attempt to create a global investment bank with a swingeing plan to shrink its trading unit and put 288 billion euros of assets into runoff. But the retreat depends on friendly markets and an absence of blunders. Germany’s biggest bank by assets is admitting what investors had long guessed: its target for a return on tangible equity of 4% in 2019 was a mirage and its profit-munching investment bank needs deeper restructuring.

To effect the latter, Sewing plans to shut down equities trading entirely and downsize Deutsche’s rates and fixed income businesses. The slimmer bank would have total adjusted expenses of 17 billion euros by 2022 – down from 23.5 billion euros last year – and a 70% cost-to-income ratio. That implies revenue of more than 24 billion euros, or just 1 billion euros less than in 2018. Such relative self-assurance was breezily backed up with reference to the “high quality and low risk nature” of the assets Deutsche is shedding. That begs the question of why those assets are surplus to requirements. Regulators are easing the transition to what should be a less risky institution: Deutsche is lowering its minimum common equity Tier 1 capital ratio to 12.5%, 50 basis points lower than before.

Even so, the plan depends on some rosy assumptions. Equities sales and trading brought in nearly 2 billion euros of revenue last year. Fixed income trading accounted for 5.3 billion euros. Deutsche believes resurgent corporate, advisory and asset management divisions will help partly make up for a projected 2.5 billion euros in lost income. But the fact that annual revenue in those businesses actually shrunk year-on-year in 2018 does not bode well.

Read more …

It can still blow up.

The Deutsche Bank As You Know It Is No More (ZH)

The bank which only a decade ago dominated equity and fixed income and sales trading and investment banking across the globe, and was Europe’s banking behemoth, is no more. On Sunday afternoon, in a widely telegraphed move, Deutsche Bank announced that it was exiting its equity sales and trading operation, resizing its once legendary Fixed Income and Rates operations and reducing risk-weighted assets currently allocated to these business by 40%, slashing as many as 20,000 jobs including many top officials, and creating a €74 billion “bad bank” as part of a reorganization which will cost up to €7.4 billion by the end of 2022 and which will result in another massive Q2 loss of €2.8 billion, as the bank hopes to slash costs by €17 billion in 2022, while ending dividends for 2019 and 2020 even as it hopes to achieve all this without new outside capital.


“Today we have announced the most fundamental transformation of Deutsche Bank in decades. We are tackling what is necessary to unleash our true potential: our business model, costs, capital and the management team. We are building on our strengths. This is a restart for Deutsche Bank – for the long-term benefit of our clients, employees, investors and society”, CEO Christian Sewing said in a statement. “In refocusing the bank around our clients, we are returning to our roots and to what once made us one of the leading banks in the world. We remain committed to our global network and will help companies to grow and provide private and institutional clients with the best solutions and advice for their respective needs – in Germany, Europe and around the globe. We are determined to generate long-term, sustainable returns for shareholders and restore the reputation of Deutsche Bank.”

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This is actually also about Deutsche.

ECB Member Says Stimulus Package Could Come This Month If Needed (CNBC)

France’s central bank governor hasn’t ruled out more stimulus for the euro zone coming as early as this summer, ahead of Christine Lagarde’s installment as the new president of the European Central Bank (ECB). Mario Draghi, the current president, laid out the groundwork for his successor in a recent speech where he cleared the path for much more stimulus in the euro zone, which could take the form of another large scale bond-buying program. Many market watchers saw this as Draghi tying his successor — now due to be Lagarde in November — to his path of easy monetary policy. But François Villeroy de Galhau, France’s central bank governor and a member of the Governing Council at the ECB, said a stimulus program could be launched before that, if needed.


“If we speak about monetary policy we have several Governing Councils to come, in the next month, including with Mario Draghi. And if and when needed, there must be no doubt about our determination to act and our capacity to act,” he told CNBC’s Annette Weisbach on Saturday at an economic conference in Aix-en-Provence in southern France. “We look at the markets, but we are not market dependent, we are data dependent. And if we look at the economic signals there is a continuing slowdown but there also significant wage increases … significant job creation on both sides of the Atlantic. So let us wait for our next Governing Council, and there are several to come, to assess the data and then to decide.”

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Mike Cernovich got this ball rolling (again).

Trump Was ‘Only One’ To Help Prosecutor In 2009 Epstein Case (ZH)

With the Saturday arrest of billionaire financier Jeffrey Epstein on charges of sex-trafficking minors – days after a judge ordered that nearly 2,000 documents be made public following a 2017 court motion originally brought by filmmaker and author Mike Cernovich, the internet is once again abuzz with speculation over who exactly might be implicated by the new evidence. Epstein pleaded guilty to one count of soliciting prostitution from a 14 year old girl in 2008 for which he served 13 months in jail in a sweetheart deal with the DOJ brokered by current Labor Secretary Alex Acosta. The sealed records appeal, meanwhile, stemmed from a separate 2015 defamation lawsuit in New York brought by Epstein victim Virginia Roberts Giuffre against British socialite Ghislaine Maxwell. Giuffre says Maxwell helped Epstein traffic herself and other underage girls to sex parties at the billionaire pedophile’s many residences.

The case was settled in 2017 and the records were sealed – leading to an appeal by Cernovich, who was later joined by the Miami Herald and several other parties including lawyer Alan Dershowitz – who seeks to clear his name in connection with Epstein’s activities. And while Democrats have suggested that the new evidence may implicate President Trump – who once called Epstein a “Terrific guy” who “likes beautiful women as much as I do, and many of them are on the younger side” (yet reportedly kicked the billionaire pedophile out of his Mar-a-Lago club for trying to recruit an underage girl) others are focusing on the Clintons.

A the NY Post detailed in 2016, Epstein and the Clintons are “close”. “Epstein has spent the bulk of his adult life cultivating relationships with the worlds most powerful men. Flight logs show that from 2001 to 2003, Bill Clinton flew on Epsteins private plane, dubbed The Lolita Express by the press, 26 times. After Epsteins arrest in July 2006, federal tax records show Epstein donated $25,000 to the Clinton Foundation that year.” And what about Trump? Following a 2018 financial settlement between Florida attorney Bradley Edwards – who represented one of Epstein’s accusers, only to be later sued by Epstein, Edwards said that Donald Trump was the ‘only person’ who provided assistance when Edwards served subpoenas and notices to high-profile individuals connected to Epstein.

Edwards: The only thing that I can say about President Trump is that he is the only person who, in 2009 when I served a lot of subpoenas on a lot of people, or at least gave notice to some pretty connected people, that I want to talk to them, is the only person who picked up the phone and said, let’s just talk. I’ll give you as much time as you want. I’ll tell you what you need to know, and was very helpful, in the information that he gave, and gave no indication whatsoever that he was involved in anything untoward whatsoever, but had good information. That checked out and that helped us and we didn’t have to take a deposition of him in 2009.

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But the story sells so many papers!

Trump Says Migrant Detention Centers To Open To Media (AFP)

US President Donald Trump on Sunday said migrant detention centers that have come under criticism for overcrowding and poor conditions will be opened to visits by journalists. “I’m going to start showing some of these detention centers to the press. I want the press to go in and see them,” Trump told reporters in Morristown, New Jersey. “We’re going to have some of the press go in because they’re crowded, and we’re the ones who were complaining about their crowding,” he added. His comments came after The New York Times and The El Paso Times on Saturday published an article describing a Border Patrol station in Clint, Texas as filled with hundreds of children wearing filthy clothing and packed into disease-ridden cells – a story Trump called a “hoax.”


“The stench of the children’s dirty clothing was so strong it spread to the agents’ own clothing — people in town would scrunch their noses when they left work. The children cried constantly,” the article said. “One girl seemed likely enough to try to kill herself that the agents made her sleep on a cot in front of them, so they could watch her as they were processing new arrivals.” The article echoed a Department of Homeland Security (DHS) watchdog report released last week warning of “dangerous overcrowding” in multiple detention facilities, which hold thousands of migrants seeking to remain in the United States, most of whom are fleeing violence and poverty in their Central American homes.

Read more …

See my article last night.

Trump Calls Ocasio-Cortez ‘Evita’ In New Book American Carnage (G.)

In American Carnage, Trump says he first saw Ocasio-Cortez during her primary against Crowley, while watching TV with political advisers. “I see a young woman,” he says, “ranting and raving like a lunatic on a street corner, and I said: ‘That’s interesting, go back.’” Alberta then says Trump “became enamored” and “starstruck” by Ocasio-Cortez. “I called her Eva Perón,” Trump says. “I said, ‘That’s Eva Perón. That’s Evita.” Alberta writes that Trump, whom he interviewed for the book in late 2018, “places a comically exotic emphasis on the nickname: Ah-vit-tah.” He also reports that Trump treated Ocasio-Cortez’s victory over Crowley as a chance to remind his advisers he is “good at talent. I spotted talent. She’s got a certain talent.”


Trump does row back on his praise, telling Alberta: “She’s got talent. Now, that’s the good news. The bad news: she doesn’t know anything. She’s got a good sense, an ‘it’ factor, which is pretty good, but she knows nothing. But with time, she has real potential.” Ocasio-Cortez has become one of the most recognised Democrats in the US. Her youth and her socialist policies, her candor and her canny use of social media have proved powerful tools in making a place for herself in the Democratic party and as a leading critic of Trump. Trump has criticized her in return but has also shown apparent fondness. For example, in April he said that although the Green New Deal would not prove an electoral winner, it was the work of “a young bartender” – a reference to Ocasio-Cortez’s job before politics – whom he called “a wonderful young woman”.

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Trump compliments AOC and Pelosi disses her. Winning.

Nancy Pelosi Dismisses AOC, Omar, Tlaib, Pressley As Just ‘Four People’ (NW)

Speaker of the House Nancy Pelosi dismissed progressive congresswomen Alexandria Ocasio Cortez (D-N.Y.), Rashida Tlaib (D-Mich.), Ilhan Omar (D-Minn.) and Ayanna Pressley (D-Mass.) as just “four people” this week after the Democratic party split over a $4.6 billion border bill passed by the Republican-led Congress. Pelosi told the New York Times, in an interview published Saturday, that despite their large amount of social media fans, the four freshman lawmakers still only get one vote each. “All these people have their public whatever and their Twitter world,” Pelosi said, referring to the four freshman lawmakers. “But they didn’t have any following. They’re four people and that’s how many votes they got.”

Pelosi’s comments come after the four, collectively referred by some as “the squad,” voted against the House’s version of the spending package, which passed on a 230-195 vote, to tackle issues at the southern U.S.-Mexico border. Later, the House moved to approved a Senate-passed border funding bill. Ocasio-Cortez spoke out against Pelosi last week for deciding that the House should approve the legislation without first trying to make changes. “Under no circumstances should the House vote for a McConnell-only bill w/ no negotiation with Democrats. Hell no,” the 29-year-old congresswoman tweeted about the Senate version of the bill, which will provide $4.6 billion in funding for operations at the southern border, but without aspects many House Democrats had hoped to include.

“That’s an abdication of power we should refuse to accept. They will keep hurting kids if we do.” In an earlier tweet, the self-described Democratic socialist pointed out that despite some Democrats offering “crucial amendments to protect children and families,” the bill failed to be negotiated with them. “None are even being considered,” she added.

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Mood.

Protests Pile Pressure On Hong Kong’s Already-Stressed Youth (AFP)

Hong Kong’s protests have ratcheted up already high stress levels among young people as they despair for their future under Beijing’s heel in a city where anger has long simmered over inequality and sky-high property prices, experts warn. The international financial hub has been rocked by a month of huge peaceful protests as well as a series of separate violent youth-led confrontations sparked by a proposed law that would have allowed extraditions to mainland China. Compared to the huge optimism-tinged pro-democracy “Umbrella Movement” rallies in 2014, the recent protests have been darker and more desperate, culminating in the storming of parliament last Monday by hundreds of young, masked demonstrators.

The movement has also taken on a distinctly funereal tone, publicly mourning at least four people who have taken their own lives in recent weeks after leaving political messages. Experts stress that most suicides have complex, multiple triggers and have warned that depicting the four as “martyrs” to the protestors’ cause risks encouraging copycat acts. An army of social workers, counsellors and other volunteers have mobilised across the city to address a spike in demand for mental health services. “These students are gambling their youth to defend this place, it’s very fragile,” said Roy Kwong, a pro-democracy lawmaker with a social work background who has been praised for trying to keep demonstrators from harm.

Winnie Ng, a counsellor and drama therapy practitioner who has volunteered in recent weeks, said many young Hong Kongers were under huge stresses before the latest protests. She pointed to huge inequality in the cramped city, the world’s most unaffordable property market, a pro-Beijing local government that has faced down demands for greater freedoms and the failure of the 2014 protests. “I personally think when everything in life is related to politics, it pushes life in Hong Kong into a very dejected state,” Ng told AFP. “Many people really can’t see hope”.

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Better get rid of him, Britain. He’s clueless.

Boris Johnson: I’ll Make UK ‘Match Fit’ For No-Deal Brexit (G.)

Boris Johnson has pledged to get the UK “match fit for no deal” to ensure it can leave the EU on 31 October “come what may”. The Conservative leadership frontrunner said there would be “no second chances” as he stressed that the Halloween deadline was real, “not fake”, in a comment aimed at his rival Jeremy Hunt. Johnson’s commitment to stick to the deadline comes after he was warned that more than 30 Tories could rebel to block a no-deal Brexit if he tried to force it through parliament. Writing on the BrexitCentral website, Johnson took aim at Hunt, who referred to 31 October as a “fake deadline”, before later admitting he should have described his rival’s commitment to leave on that date as a “fake promise”.

Johnson said: “We need a change of direction. That’s why we must treat 31 October as a real deadline for leaving the EU, come what may, not a fake one.” He restated his promise to protect the rights of EU citizens in the UK and to put the £39bn divorce settlement in a state of “creative ambiguity” to use as leverage to secure another deal. Under his plan, discussions about the thorny issue of the Irish border would be put into the talks on the future trading relationship. “If our friends feel they cannot agree, then we will be match fit for no deal,” he said. The UK would have the “fiscal firepower” to provide cash to support business and farmers affected by a no-deal Brexit.

Johnson also signalled that the UK would be prepared to tear up red tape and slash taxes. “We will be free to substantially diverge on tax and regulation,” he said. “I have had enough of being told that we cannot do it – that the sixth biggest economy in the world is not strong enough to run itself and go forward in the world.” Johnson, the frontman for the Vote Leave campaign, said he felt a “deep sense of personal responsibility for Brexit”, adding: “This is it. No second chances.” “We can choose more of the same, or we can choose change: delivering Brexit on 31 October, uniting the country and beating [Jeremy] Corbyn.”

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No morals whatsoever.

UK Ministers Challenge Court Ruling On Saudi Arabia Arms Sales (G.)

Ministers have asked the courts to set aside a landmark ruling that British arms sales to Saudi Arabia are unlawful, a legal manoeuvre that prompted Jeremy Corbyn to accuse the Conservatives of prioritising military exports over civilian lives. The government has applied for a stay of last month’s judgment pending an appeal, according to Campaign Against Arms Trade, which is fighting the case, at a time when conflict between the Saudis and Houthi rebels in Yemen has intensified. That appears to contradict assurances given to MPs by Liam Fox, the international trade secretary, that Saudi arms sales would be halted after the ruling pending a review. At the time, 57 export licences were under consideration.


Corbyn said: “This makes a mockery of their own commitment to halt all new sales while a review takes place into civilian casualties. Nothing could be clearer: the government’s priority is to sell arms, not to protect the rights and lives of Yemeni people.” Thousands of civilians have been killed since the civil war in Yemen began in March 2015. Indiscriminate bombing by a Saudi-led coalition is blamed for about two-thirds of the 11,700 civilian deaths in direct attacks. At the time of the ruling, Fox told MPs that while the government considered the implications, “we will not grant any new licences for export to Saudi Arabia and its coalition partners which might be used in the conflict in Yemen”.

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And still I see not a single Swede protesting this cruel absurdity. Who are you people? How do you sleep?

Swedish Prosecutors: ‘It’s Not on the Cards’ To Interview Assange (21CW)

Swedish prosecutors have this week announced that for the time being they will not be issuing a European Investigation Order (EIO) to interview Julian Assange, founder of Wikileaks. According to Sweden’s Deputy Director of Public Prosecutions, Eva-Marie Persson,”…it is currently not on the cards to issue a European investigation order…” For now, they will be analysing evidence before making a decision regarding procedure. So, how is it possible she is now not in a position to interview him – yet two months ago she requested his detention so that she could issue a European Arrest Warrant (EAW) against him and start an extradition process?

If Swedish prosecutors are to follow through with this latest investigation attempt, it will have been the third time that Assange will have been interviewed by Swedish authorities for what is essentially the same inquiry. If Persson is not in a position to proceed with an EIO, how can it have been practical or proportionate for her in May to have pursued his detention for the purpose of extraditing him to Sweden from the UK? According to the 2014 legislation by the European Court of Justice, authorities not in a position to prosecute do not require an EAW, but should carry out investigation through an investigation order. In fact, a Swedish court called the Swedish prosecutor’s request for Assange’s detention disproportionate and refused to grant it on June 3rd, suggesting that at least some judges and authorities are deferring to the European Court regarding EAW issuance and proportionality.

It simply does not make sense that one minute it’s full steam ahead with talk about arrest and extradition and the next, ‘Well, we’ll keep you posted.’ Is this how the Swedish prosecuting authority works? Or is that how it works for Julian Assange? There is only one logical conclusion from the latest development: the Swedish prosecutors were not in a position to prosecute Assange yet attempted to have him extradited anyway. This surely makes a mockery of the attempts by human rights organisations and the European Court to stop the ongoing abuse of the EAW.

How can they claim they needed to start procedures for extradition while at the same time have no immediate intention to interview? Is it not the case that this type of calculated misuse of the EAW back in 2010, followed by an obstructive application of the law is what led to Assange being held in arbitrary detention in the Ecuadorian embassy for seven years? Again, Swedish authorities failed to interview him for years while hanging the threat of extradition over him, a situation which was ruled on by the United Nations Working Group on Arbitrary Detention (UNWGAD) as de facto incarceration.

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Fascist Golden Dawn out, Varoufakis in. Good. The EU has a meeting on Greece planned for this afternoon, and they will tell the new PM to bend over and wait for it. Empty promises got him elected. But then, that was true for Tsipras as well. I personally think there’s far too much poverty in this country to insert a right winger and expect that to go down peacefully.

Twitter comments: “.. it’s not the annihilation of left/centre-left Syriza that many were predicting or hoping for. They are polling around 32%. In 2015, they won with 35%. If anything, they managed to retain their base and win back voters from the EU elections a month ago (24%).

Pollsters say many Golden Dawn voters opted for the far-right nationalist Hellenic Solution. They will have 10 lawmakers in the new parliament. Their leader, Kyriakos Velopoulos, is known in Greece for selling “genuine” letters written by Jesus.”

Greek Conservatives Take Charge In Landslide Win (R.)

Greece’s opposition conservatives returned to power with a landslide victory in snap elections on Sunday, and Prime Minister elect Kyriakos Mitsotakis said he had a clear mandate for change, pledging more investments and fewer taxes. The win appeared driven by fatigue with years of European Union-enforced belt-tightening, combined with high unemployment, after the country almost crashed out of the euro zone at the height of its financial travails in 2015. Mitsotakis said in a televised address that the election outcome gave him a strong and clear mandate to change Greece. “I am committed to fewer taxes, many investments, for good and new jobs, and growth which will bring better salaries and higher pensions in an efficient state,” Mitsotakis said.


Tsipras said he respected the will of the Greek people. “Today, with our head held high we accept the people’s verdict. To bring Greece to where it is today we had to take difficult decisions (with) a heavy political cost,” he told journalists. Tsipras took over from the conservatives in 2015 as Greece was at the peak of a financial crisis which had ravaged the country since 2010. Initially vowing to resist deeper austerity, he was forced into signing up to another bailout months after his election, a decision which went down badly with voters. The handover will take place on Monday, after Mitsotakis’s swearing in as new Prime Minister.


– Blue=New Democracy 39.85%
– Pink=SYRIZA 31.53%

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Jun 192019
 


Gustave Courbet The village maidens 1852

 

I intentionally start writing this mere minutes away from Fed chair Jay Powell’s latest comments. Intentionally, because the importance ascribed to those comments only means we have gotten so far removed from what capitalism and free markets are supposed to be about, that it’s pathetic. The comments mean something for rich socialists, but nothing for the man in the street. Or, rather, they mean that the man in the street will get screwed worse for longer.

And it’s not just the Fed, all central banks have it and do it. They play around with rates and definitions and semantics until the cows can never come home again. And they have such levels of control over their respective societies and economies that the mere use of the word “markets” should result in loud and unending ridicule. There are no markets, because there is no price discovery, the Fed and ECB and BOJ got it all covered. Any downside risks, that is.

But it doesn’t, because the people who pretend they’re in those markets hang on central banks’ every word for their meal tickets. These are the same people we once knew as traders and investors, but who today function only as rich socialists sucking the Fed’s teats for ever more mother’s milk.

Our economic systems have been destroyed by our central bankers. Who pretend they’re saving them. And we all eat it up hook line and sinker. Because the rich bankers and their media have no reasons to counter Fed or ECB actions and word plays, and because anyone who’s not a rich banker or investor is kept by the media from understanding those reasons.

 

What the Fed and ECB have done, and the BOJ, between Greenspan and Bernanke and Yellen and Powell and Draghi and Kuroda, is they have made it impossible for economies to let zombies go to die as they should. They have instead kept those zombies, banks, corporations, alive to the point where they are today a very big live threat to those economies, and growing. Look at Deutsche Bank.

How healthy do you think your economy can be if all the wealthy people are focused on whether Powell uses the word “patient” or not in his notes? Why would a vibrant company or entrepreneur give a flying damn about whether he does or not use a certain word? There is no reason.

But we have let our central banks take over, and that’s what they did. And it will be very hard to take back that power, but we will have to. Because central banks, while pretending to guard over the entire economy, in fact only protect the interests of commercial banks, and rich “investors”. And then tell you it’s the same difference.

There’s a case to be made that Paul Volcker was right when he raised US interest rate in the 1980s, but after Volcker it’s only been one big power and money grab for Wall Street, starting with Alan Greenspan and the housing bubble he blew. The Oracle my behind.

 

Japan is only just beginning to assess the damage Kuroda and Abenomics have done, and that’s at a point where both these men are still in power, and hell bent on doing more of the same. Something all central banks have in common; there are very few tools in their boxes, so they just repeat and repeat even as they fail. And that failure, by the way, is inevitable.

The Bank of Japan by now owns half the country, and they just want to do more. Kuroda’s plan to get rid of deflation was to force the Japanese to spend their money/savings. But the fully predictable result was that the grandmas did the exact opposite: they clued into the fact that if he wanted that, they had reason to be afraid, and so they sat on their money. And now it’s ten years later.

 

Draghi is going to leave in a few months’ time, and he’ll lower rates even more (towards 0º Kelvin), even if he knows that’s a really bad idea (it is), because at this point it’s about his legacy (after me, the flood). Same thing that Bernanke, Yellen did, clueless intellectuals who told themselves they had a grip on this. They never came near. That’s why they were elected, for being clueless. Wall Street doesn’t want Fed heads who know.

The pivotal moment was when Bernanke said they were running into “uncharted territory”, and then never looked back and started pretending he knew where he was. He didn’t and none of them ever did since. But they have academic degrees, and they’re willing to sell their souls for money, so there you are.

 

Central banks, or let’s say handing them the powers that we have, are the worst thing we have ever invented, and that’s saying something in the age of Pompeo and Bolton and Trump and the Clintons. The latter may take us into war with Iran, or any other country from a long list, but central banks are set to destroy our societies and economies from within.

It’s real simple: your central bank does NOT serve your interests. So get rid of it. Don’t wonder whether it’ll use the word “patient” or raise or lower rates by 25 or 50 points, get rid of the entire thing. There’s nothing there that benefits you, it only ever benefits bankers.

Now, of course, if you’re a banker…..

 

Note: I knicked the headline from something Tyler Durden said yesterday, that central banks are back to square minus zero. Too good to let go. Draghi back to square one, but then again not. Central banks should be abolished.

 

 

 

 

 

Jun 162019
 


Keith Haring Untitled 1984

 

Ai Weiwei on Hong Kong and Assange (Rep.)
ECB Will Act If Inflation Expectations Are De-Anchored: de Guindos (R.)
European Banks Sink to Dec 24, 2018 Level – First Seen in 1995 (WS)
Pentagon Keeps Trump in the Dark About its Cyber Attacks on Russia (RS)
Boris Johnson’s No-Deal Brexit Plan ‘Will Trigger Early Election’ (O.)
Hundreds Dressed In Black Rally To Demand Hong Kong Leader Steps Down (R.)
Is The Caspian A Sea Or A Lake? (ZH)
Pilots Reveal Safety Fears Over Boeing’s Fleet Of Dreamliners (O.)
Record CO2 Emissions In 2018 Driven By Surging Use Of Gas (CB)
Hundreds Of Dolphins Have Died Along Gulf Coast Since February (AP)
Namibia Forced By Drought To Auction 1,000 Wild Animals (AFP)

 

 

“Julian Assange is a political prisoner. Clearly. There is no clearer definition than that.”

Interview in Italy’s La Repubblica, translation is a bit dodgy.

Ai Weiwei on Hong Kong and Assange (Rep.)

“How could he defend himself? He will not be under a clear law environment if he is taken to the US or already now as he has been holding in Europe, UK. Julian Assange is a political prisoner. Clearly. There is no clearer definition than that. What Assange did is not more than any newspaper does or publish important information that they think the people need to know. I think that if Assange is extradited, it will have huge consequences not just to it but also to the European moral or legal system. And it would completely redefine Europe as a place not caring about human rights anymore. Unfortunately this is happening all the time. But this time it will be clearly remembered as a landmark of the failure of our times.

It’s very interesting if you look at what’s happening about extradition. There are three cases about that going on in the world: Hong Kong, Assange and Huawei case, here the daughter of the founder is jailed in Canada because the US asked her extradition. I don’t know if she is a political prisoner but for sure she is part of the US strategy to limit China’s development in the world and the possibility of becoming a global leader. I’m not saying if it is right or wrong but it is fair this kind of situation. These three cases resemble a very interesting judicial challenge. At this moment after globalization the whole political structure of the world is being restored.


Now it’s starting to be challenged at the foundation of our rules, how do you readjust those rules and how to protect individuals’ freedom from the interest of state powers. That is a new task that any establishment of rule has to be concerned with. Nobody had put this together. This is an issue now embodied by different characters but actually it is one character.

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Remember: central bankers don’t have to actually understand what they do (and they don’t), they just have to make you believe they do.

ECB Will Act If Inflation Expectations Are De-Anchored: de Guindos (R.)

Longer-term inflation expectations in the euro zone need to come unstuck for the European Central Bank to provide more stimulus, ECB Vice President Luis de Guindos was quoted on Saturday as saying. With growth slowing and inflation staying well below the ECB’s target, the bank recently raised the prospect of even more stimulus, arguing that a rate cut or even more asset purchases may become necessary. “What we need to see is a de-anchoring of inflation expectations,” de Guindos told Italian newspaper Corriere della Sera when asked what the bank needed to see to provide more stimulus. “This has not yet happened, despite the fact that there has been a drop in market-based inflation expectations.”


With interest rates already at record lows and a 2.6 trillion euro ($2.9 trillion) bond purchase scheme ended just last year, analysts argue that the ECB has very little actual firepower left as its remaining tools lack significant potency. “If there is a further deterioration, then we will react,” de Guindos added. “But for now, our monetary policy stance is fully compatible with both inflation and real activity.” But de Guindos added that monetary policy is largely powerless against the impact of global trade disputes, one of the biggest drags on growth and thus inflation. “You can certainly smooth the impact with monetary policy, but you will not be able to address and fix this kind of problems with monetary policy,” he said.

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“..the introduction of negative policy rates by the European Central Bank in mid-2014 leads to more risk-taking and less lending by euro-area banks..”

European Banks Sink to Dec 24, 2018 Level – First Seen in 1995 (WS)

European bank shares – which have been getting crushed and re-crushed for 12 years – are getting re-crushed again. On Friday, the Stoxx 600 Banks index, which covers major European banks, including our hero Deutsche Bank, dropped to an intraday low of 130.5 and closed at 131.2, thereby revisiting the dismal depth of December 24, 2018 (130.8). European banks did not soar on the first trading day after Christmas, unlike other stocks. Instead they fell further and hit their multi-year low on December 27 (129). The index is down 21.5% from a year ago and 33% from January 2018:

[..] that 33% drop from January 2018 in the above chart is a minuscule dip in the long-term collapse-scenario going back to 2007. Buy and hold, indeed. Back to the level first seen in October 1995:

Part of the problem for European banks is NIRP, which was never designed to boost the real economy or make banks healthier so that they could support a vibrant economy. It was designed to boost bond prices and thereby bring yields down, which lowers the costs of borrowing for debt-sinner countries such as Italy, and allows them to borrow for free, which even Italy s government can do with maturities of up to one year. But there is a price to pay. The ECB released a paper in August 2018 where it admits that NIRP could cause a financial crisis because it’s terrible for many banks.


This is the chilling abstract of the paper: “We show that negative policy rates affect the supply of bank credit in a novel way. Banks are reluctant to pass on negative rates to depositors, which increases the funding cost of high-deposit banks, and reduces their net worth, relative to low-deposit banks. As a consequence, the introduction of negative policy rates by the European Central Bank in mid-2014 leads to more risk-taking and less lending by euro-area banks with greater reliance on deposit funding. Our results suggest that negative rates are less accommodative, and could pose a risk to financial stability, if lending is done by high-deposit banks.”

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“..those new laws are protecting American interests… by keeping the sitting president out of the loop. What a (scary) time to be alive.”

Pentagon Keeps Trump in the Dark About its Cyber Attacks on Russia (RS)

On Saturday, the New York Times published an important story about how the United States military branches are attempting to thwart and combat Russian cyber attacks on American utility networks and interference in elections. But deeper into the article, an interesting and disturbing nugget has drawn attention: The Pentagon has gone out of its way to keep President Donald Trump ignorant of certain details about the operation because of “the possibility that he might countermand it or discuss it with foreign officials.” After giving an in-depth account about the “deployment of American computer code” into Russia’s electric power grid, to work as both a warning to Russian President Vladimir Putin and a more offensive posture in the cyber warfare realm, The Times then wrote:


“Two administration officials said they believed Mr. Trump had not been briefed in any detail about the steps to place ‘implants’ — software code that can be used for surveillance or attack — inside the Russian grid. “Pentagon and intelligence officials described broad hesitation to go into detail with Mr. Trump about operations against Russia for concern over his reaction — and the possibility that he might countermand it or discuss it with foreign officials, as he did in 2017 when he mentioned a sensitive operation in Syria to the Russian foreign minister.” New laws, enacted by Congress last year, allow such “clandestine military activity” in cyberspace to go ahead without the president’s approval. So, in this case, those new laws are protecting American interests… by keeping the sitting president out of the loop. What a (scary) time to be alive.

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And then they can’t leave?!

Boris Johnson’s No-Deal Brexit Plan ‘Will Trigger Early Election’ (O.)

Boris Johnson’s attempts to appease hardline Tory Brexiters will tilt the party into a “disastrous general election” that could be just months away, senior Conservatives are warning. The runaway favourite to replace Theresa May is being told that the coalition of support set to deliver him Downing Street “won’t survive the autumn”, when he will have to decide whether to accept a deal with the EU or try to force a no-deal Brexit – a move likely to precipitate an election. Senior party figures are already warning of a “wipeout” in some parts of the country, such as Scotland and London, should it go into an election pledging to deliver a no-deal Brexit.


They believe that once in office, Johnson will either be toppled by hardline Eurosceptic MPs should he back away from no deal, or provoke an election by pursuing such a policy. With leadership contenders ruling out a coronation on Saturday, Tory critics are demanding increased scrutiny of Johnson’s Brexit plans. David Gauke, the justice secretary, said: “Boris is saying that he will definitely leave the EU by 31 October, but he is refusing to say how he will do this if parliament takes steps to stop a no-deal Brexit. Will he respond by suspending parliament? Will he seek a general election? This lack of clarity is helping him maintain a broad base of support for now but it won’t survive the autumn. This is why his position on Brexit needs to be tested thoroughly now.”

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“..if Lam was a stock he would recommend shorting her with a target price of zero. “Call it the Carrie trade.”

Hundreds Dressed In Black Rally To Demand Hong Kong Leader Steps Down (R.)

Activists set up gazebos as protesters, some carrying flowers, started to gather in sweltering summer heat to march from Victoria Park to Hong Kong’s central government offices. Beijing-backed Hong Kong Chief Executive Carrie Lam on Saturday indefinitely delayed the extradition bill that could send people to mainland China to face trial, expressing “deep sorrow and regret”. The about-face was one of the most significant political turnarounds by the Hong Kong government since Britain returned the territory to China in 1997, and it threw into question Lam’s ability to continue to lead the city. Activist investor David Webb, in a newsletter on Sunday, said if Lam was a stock he would recommend shorting her with a target price of zero.


“Call it the Carrie trade. She has irrevocably lost the public’s trust,” Webb said. “Her minders in Beijing, while expressing public support for now, have clearly lined her up for the chop by distancing themselves from the proposal in recent days.” Protest organizers are hoping more than a million people turn up for the Sunday rally, scheduled to start at 2.30pm local time, similar to numbers they estimated for a demonstration against the proposed extradition bill last Sunday. Police put that count at 240,000.

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Tyler’s headline: “How Iran Was Swindled Out Of $3.2 Trillion”. But there’s more to this story. The difference between a lake and a sea is huge for the law.

Is The Caspian A Sea Or A Lake? (ZH)

At stake is the allocation of revenues from the wider Caspian basins area, including both onshore and offshore fields, that is conservatively estimated to have around 48 billion barrels of oil and 292 trillion cubic feet (Tcf) of natural gas in proved and probable reserves. Around 41 percent of total Caspian crude oil and lease condensate and 36 percent of natural gas exists in the offshore fields, with an additional 35 percent of oil and 45 percent of gas estimated to lie onshore within 100 miles of the coast, particularly in Russia’s North Caucasus region. The remaining 12 billion barrels of oil and 56 Tcf of natural gas are believed to be variously located further onshore in the large Caspian Sea basins, mostly in Azerbaijan, Kazakhstan, and Turkmenistan. The area accounts for an average of 17 percent of the total oil production of the five littoral states that share its resources, on average totalling 2.5-2.9 million barrels per day (mbpd).

[..] the legal designation of the Caspian as either a ‘sea’ or a ‘lake’ would have far-reaching repercussions on the assignment of revenues from it. If it was designated a sea then coastal countries would apply the ‘United Nations Convention on the Law of the Sea’ (1982), in which event each littoral state would receive a territorial sea up to 12 nautical miles, an exclusive economic zone up to nautical 200 miles, and a continental shelf. In practice, this would mean that countries such as Turkmenistan and Azerbaijan would have exclusive access to offshore assets that Iran would not be able to access. If it was designated a lake – and this was the informal designation before the August agreement – then the countries could use the international law concerning border lakes to set boundaries, by which each country effectively possesses 20 percent of the sea floor and surface of the Caspian.

In the preparations for the signing of the ‘Convention on the Legal Status of the Caspian Sea’ last August, Iran had engaged lawyers to challenge the established 20 percent share that each littoral state had informally agreed upon, based on the fact that Russia should have used its own original 50 percent share to make good stakes for its former USSR states. [..] Moscow was the prime mover in having the Caspian designated as a sea, not a lake. This was on the basis that because Russia had opened up the channel from the Volga River into the Caspian to prevent the levels dropping, the Caspian no longer conformed to the legal definition of a lake, which is that it is a localised water deposit standing independent of any river that serves to feed it.

[..] “This meant, effectively, that Russia could divide up the shares as it saw fit, and the way it saw fit was to benefit its existing ally, Kazakhstan, which was assigned a 28.9 percent share, and its wished-for ally, Azerbaijan, which secured a 21 percent stake, while Russia saw a slight increase, to 21 percent, while Turkmenistan’s share goes down to 17.225 percent, as it is seen as a softer touch by Russia, and Iran’s share goes down to just 11.875 percent,” said the Iran source. “This switch from 50 percent to just over 11 percent means that Iran will lose at least US$3.2 trillion in revenues from the disputed and lost value of energy products going forward,” concluded the Iran source.

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Can’t catch a break: “we would have to fly with a burning wing for up to three hours before we could safely land..”

Pilots Reveal Safety Fears Over Boeing’s Fleet Of Dreamliners (O.)

Airline pilots have voiced fears over the safety of a fleet of Boeing aircraft after a crucial fire-fighting system has been found to have the potential to malfunction. Boeing has issued an alert to airlines using its flagship B787 Dreamliner, warning that the switch used to extinguish an engine fire has failed in a “small number” of instances. The switch also severs the fuel supply and the hydraulic fluid to prevent flames spreading. UK airlines Tui, British Airways and Virgin Atlantic operate more than 60 Dreamliners between them. The US regulator, the Federal Aviation Administration (FAA), has decided not to ground the fleet, despite admitting a “risk to the flying public”.

Pilots, however, claim that the safety of passengers and crew is being compromised. “If there was an engine fire on a transatlantic flight and the aircraft had one of the defective fire switches, then we would have to fly with a burning wing for up to three hours before we could safely land,” a pilot with a British airline told the Observer. In its alert to airlines, Boeing warns that long-term heating can cause the fire switch to stick in the locked position so it can’t be used to release the two fire extinguishers in each engine.


[..] “Boeing insists that the risk of an engine fire is very low, and that’s true, but it’s Boeing’s attitude to the risk that has upset us, especially in light of recent B737 Max issues. If the fire switch malfunctions, there’s no manual override to deploy the engine fire extinguishers and therefore no way of putting out a fire, but Boeing says that it’s fine, and the airlines agree. Such is the fear of Boeing’s power that no one dares speak out.”

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More. And more.

Record CO2 Emissions In 2018 Driven By Surging Use Of Gas (CB)

Last year saw record levels of CO2 emissions, gas and oil use, and installations of renewable energy, according to new global data from oil giant BP. Gas was the largest driver of energy-use growth in 2018, responsible for more than 40% of the increase. This, along with increased use of oil and coal, led to global CO2 emissions rising by 2% in 2018, the largest year-on-year increase in seven years. Renewable energy sources were the largest source of new electricity generation worldwide for the third year in a row, driven primarily by the growth of wind and solar generation. Wind and solar grew at their second fastest rate on record, driven by growth in China, though the growth in wind and solar generation in the US, EU, and India was slower in 2018 than in 2017.

However, there is a constantly growing gap between today’s energy use and what would be needed to meet the goals of the Paris Agreement, given that emissions must, according to scientists, reach net-zero by mid-century to avoid dangerous levels of global warming. Energy use grew in 2018 at a rate of 2.9%, the largest growth since 2010. China, the US and India accounted for more than two-thirds of global energy-use growth, with US energy use expanding at the fastest rate for 30 years. Energy use increased by 390m tonnes of oil equivalent (Mtoe) in 2018. Fossil fuels were responsible for 71% of this, while near-zero-carbon energy sources, including solar, wind, hydro and nuclear, were responsible for 29%.


Natural gas represented the single largest contributor to global energy-use growth in 2018, increasing by 5.3% compared to 2017. It alone was responsible for 40% of the increase in total energy use. Non-hydro renewables grew by 14.5% in 2018. This was the largest relative growth of any energy source, though it was still below the record growth experienced in 2017. Non-hydro renewables now represent 4% of global energy use, with all zero-carbon sources representing 15% of global energy. Oil consumption grew by 1.5% in 2018, with China and the US contributing around 85% of the growth in oil use. This growth was primarily concentrated in the transportation sector, reflecting increased vehicle ownership and miles driven.

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Oil.

Hundreds Of Dolphins Have Died Along Gulf Coast Since February (AP)

At least 279 dolphins have become stranded across much of the US Gulf Coast since the start of February, triple the usual number, and about 98% of them have died, scientists from the National Oceanic and Atmospheric Administration (Noaa) said. Scientists will investigate whether lingering effects from the 2010 BP oil spill and more immediate effects from low salinity because of freshwater flowing from high rivers and a Louisiana spillway contributed to the deaths, said Teri Rowles, coordinator for Noaa fisheries’ marine mammal health and stranding response program. BP spill effects included problems with lungs and adrenal glands, which produce stress-related hormones; blood abnormalities; and general poor condition, according to earlier reports.

Those reports said the spill contributed to the Gulf of Mexico’s largest and longest dolphin die-off. “We do know some of the health conditions … are improving, but some have been slow to improve,” Rowles said on Friday. “Reproduction in the heaviest-oiled areas continues below normal.” Erin Fougeres, administrator for the marine mammal stranding program in Noaa fisheries’ south-east region, said 23% of the dolphins stranded from Louisiana to the Florida Panhandle had sores consistent with freshwater exposure. Such lesions are “not uncommon” in the spring, according to Noaa’s website. Mississippi had 121 dolphin strandings as of Wednesday, with 89 in Louisiana, 32 in Alabama and 37 in Florida, Fougeres said.


Moby Solangi, director of the Institute of Marine Mammal Studies in Gulfport, Mississippi, put that state’s total on Thursday at 126, and said the opening of the Bonnet Carré spillway was at least partly to blame.The effects were worse for Mississippi’s dolphins than the BP spill was, he said, noting that 91 dead dolphins were found in Mississippi during all of 2010. Dolphins continued to die for years because of oil spill damage, a 2015 study reported. Freshwater exposure “doesn’t appear to be the cause of death for all animals, so that’s something we’re continuing to investigate”, Fougeres said. Rowles noted that 70% of the carcasses were too decomposed for necropsy.

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There must be better ways.

Namibia Forced By Drought To Auction 1,000 Wild Animals (AFP)

Drought-hit Namibia has authorised the sale of at least 1,000 wild animals – including elephants and giraffes – to limit loss of life and generate US$1.1 million for conservation, the authorities confirmed Saturday. “Given that this year is a drought year, the [environment] ministry would like to sell various type of game species from various protected areas to protect grazing and at the same time to also generate much needed funding for parks and wildlife management,” the environment ministry spokesman Romeo Muyunda said. The authorities declared a national disaster last month, and the meteorological services in the southern African nation estimate that some parts of the country faced the deadliest drought in as many as 90 years.

“The grazing condition in most of our parks is extremely poor and if we do not reduce the number of animals, this will lead to loss of an animals due to starvation,” Muyunda said. In April, an agriculture ministry report said 63,700 animals died in 2018 because of deteriorating grazing conditions brought on by dry weather. Namibia’s cabinet announced this week that the government would sell about 1,000 wild animals. They include 600 disease-free buffalos, 150 springbok, 65 oryx, 60 giraffes, 35 eland, 28 elephants, 20 impala and 16 kudus – all from national parks. The aim is to raise $1.1 m that will go towards a state-owned Game Products Trust Fund for wildlife conservation and parks management.


The government said there were currently about 960 buffalos in its national parks, 2,000 springbok, 780 oryx and 6,400 elephants. The auction was advertised in local newspapers from Friday. Namibia, a country of 2.4 million people, has previously made calls for aid to assist in the drought emergency that has already affected over 500,000 people.

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