Sep 012018
 
 September 1, 2018  Posted by at 8:47 am Finance Tagged with: , , , , , , , ,  


Pablo Picasso Portrait of Daniel-Henry Kahnweiler 1910

 

Delaying NAFTA Deal Is Actually A Win-Win-Win (R.)
The Bank That Nearly Broke Europe (Tooze)
Rebel Leader Alexander Zakharchenko Killed In Explosion In Ukraine (G.)
US Ready To Boost Arms Supplies To Ukraine (G.)
Bad Faith Nation (Kunstler)
Saudi Arabia Hints At Plan To Turn Qatar Into An Island (AFP)
Brazil’s Top Electoral Court Votes Down Lula Candidacy (AFP)
Brexit: Entering The Final Phase (RTE)
The Terrible Human Cost Of Greece’s Bailouts (Coppola)
India Introduces Free Health Care – For Its 500 Million Poorest People (NW)

 

 

But the pending Mexico government change could change that.

Delaying NAFTA Deal Is Actually A Win-Win-Win (R.)

Delaying a revamped North American Free Trade Agreement is actually a win-win-win. Canada and the United States will keep talking despite missing a Friday deadline to conclude trade talks. Negotiators will need to move quickly to avoid the risk of fresh demands from the next Mexican government. But getting a deal that all sides can sell is more important. The mood was tense on Friday as U.S. President Donald Trump acknowledged having told Bloomberg he wasn’t going to make any concessions to his northern neighbor. The United States had already shut the Canadians out of talks for weeks while it negotiated with the Mexican government.

On Monday, Trump hailed a U.S.-Mexico deal on certain NAFTA provisions and threatened auto tariffs on Canada if it didn’t capitulate by the end of the week. Ottawa and Washington also appeared to remain far apart on certain issues. Trump has slammed Canadian tariffs of up to 270 percent on dairy imports. Canada objects to the U.S. demand to eliminate dispute panels for anti-dumping complaints. That’s why it’s encouraging that both sides will continue negotiations next week. The Friday deadline was set because of the 90-day notice period Congress needs before a deal can be concluded. Meeting it would enable Mexican President Enrique Peña Nieto to sign the pact before he leaves office at the end of November.

But the parties have some wiggle room because the deal text doesn’t have to be released until the end of September. Trump gave notice to Congress on Friday that a trade pact with Mexico would be concluded by the end of November, and Canada could join “if it is willing.” Yet Trump’s threat to do a deal with Mexico alone rings hollow because Congress has signaled it would reject a bilateral deal.

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In-deep on Trichet and all his arrogance.

The Bank That Nearly Broke Europe (Tooze)

The ECB often deals with critics by pointing to its limited mandate. But in responding to this crisis, Trichet far overstepped those bounds. His aim was nothing less than regime change. He was trying to use the crisis to force the completion of the still-incomplete constitution of the single currency zone—on conservative terms. He wanted Europe’s politicians to agree to binding fiscal rules, to establish a bond market stabilisation fund independent of the ECB, a fund that would keep the ECB forever clear of any obligation to stand behind public debt. Until the politicians fell into line, he would support the market only in extremis. Playing with fire, the ECB unleashed a conflagration.

When in the spring of 2011 Greece’s centre-left Pasok government suggested that it might be safer to write down or restructure some of its debt, Trichet did not just stonewall—he sought to silence the debate by threatening that if Athens publicly broached the issue, the ECB would cut off the funding lifeline to its banks. In the name of protecting the reputation of Europe’s sovereign borrowers, Trichet made himself into an intransigent defender of creditor interest.

And when market pressure was not enough, Trichet did not hesitate to step across the boundary that notionally separated the central bank from national governments; he issued instructions to the governments of Ireland, Spain and Italy, demanding spending cuts, tax increases and changes to labour law that reached deep into their internal affairs. Trichet used the ECB’s “independence,” and the threat of the bond market, to dictate terms to elected governments.

No such tough medicine was dished out to Europe’s banks, which should, like their American counterparts, have been forced to recapitalise in 2008-2009, even if that meant shareholders had to suffer. When the debts of Ireland’s banks threatened to tip its government over the edge, Trichet still refused point blank to countenance “bailing in” their private creditors to sharing the pain.

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Russia provocation. Which set of warmongers did it? US or Kiev?

Rebel Leader Alexander Zakharchenko Killed In Explosion In Ukraine (G.)

The leader of a Kremlin-backed separatist republic in war-torn eastern Ukraine has been killed in a blast that tore through a cafe close to his official residence in Donetsk. Alexander Zakharchenko, 42, was named prime minister of the so-called Donetsk People’s Republic (DNR) in November 2014. The DNR’s official news agency confirmed his death and said the republic’s finance minister, Alexander Timofeev, was injured when the explosive device went off in the Separ café in the centre of Donetsk. The bomb was planted in a nearby vehicle, Ukrainian media reported.

Zakharchenko is the latest in a series of separatist leaders to have been assassinated during the ongoing conflict in eastern Ukraine, where more than 10,000 people have died since fighting broke between Kremlin-backed separatists and pro-Ukrainian government forces in 2014, according to UN figures. More than 1.5 million people have been displaced by the fighting. Vladimir Putin called the killing a “dastardly” act that aimed to destabilise the fragile peace in the region and the Russian president expressed his condolences to Zakharchenko’s family.

The Russian foreign ministry was quick to react, accusing the Ukrainian government of ordering the “terrorist attack”, although Putin’s later statement did not blame Kiev for the killing. The Ukrainian security service chief, Igor Guskov, said Zakharchenko’s death could have been the result of infighting between rival separatist factions or an operation by Russian special forces. Kiev has previously accused Russia of killing separatist figures who refuse to obey Kremlin orders.

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Big mistake. Russia has no room to back down.

US Ready To Boost Arms Supplies To Ukraine (G.)

Washington is ready to expand arms supplies to Ukraine in order to build up the country’s naval and air defence forces in the face of continuing Russian support for eastern separatists, according to the US special envoy for Ukraine. In an interview with the Guardian, Kurt Volker said there was still a substantial gap between the US and Russia over how a United Nations peacekeeping force could be deployed to end the four-year war, and predicted that Vladimir Putin would wait for presidential and parliamentary elections in Ukraine next year before reconsidering his negotiating position. However, Volker argued that time was not on Putin’s side. He insisted pro-western, anti-Russian sentiment was growing in Ukraine with every passing month.

And he made clear that the Trump administration was “absolutely” prepared to go further in supplying lethal weaponry to Ukrainian forces than the anti-tank missiles it delivered in April.= “They are losing soldiers every week defending their own country,” said Volker, a former US ambassador to Nato. “And so in that context it’s natural for Ukraine to build up its military, engage in self-defense, and it’s natural to seek assistance and is natural that other countries should help them. And of course they need lethal assistance because they’re being shot at.” He added: “We can have a conversation with Ukraine like we would with any other country about what do they need. I think that there’s going to be some discussion about naval capability because as you know their navy was basically taken by Russia. And so they need to rebuild a navy and they have very limited air capability as well. I think we’ll have to look at air defence.”

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“..Mr. Trump slip-sliding towards Hubrisville like some ass-clown pol in a Coen Brothers’ movie..”

Bad Faith Nation (Kunstler)

Radiating anger and, at times, actual malice, Mr. Trump presented exactly the lack of couth that drives his hypothetically more refined “blue” enemies up a tree. His rhetorical skills have not improved since 2016, but his demagogic self-confidence soars as he unwittingly launches himself into a one-man Space Force flying too close to the sun, claiming that he has magically made America great again, mission accomplished! Even the live audience of Hoosier clods appeared strangely restive and unconvinced after an hour of this bellowing, and one got a sense of Mr. Trump slip-sliding towards Hubrisville like some ass-clown pol in a Coen Brothers’ movie about to be run out of the grange hall on a rail.

His error: taking “ownership” of a financialized economy of hallucinated markets run by out-of-control algo robots into a twilight zone of default and insolvency. The “red” and “blue” constituencies at war with each other are essentially the losers and winners in this depraved system. When the hallucination dissolves, the winners will be the new losers and the old losers will be looking to string them up. That scenario remains to be played out as we say our official goodbyes to summer this holiday weekend and turn the corner into portentous autumn. On the “blue” side of things, mendacity rules as usual lately, especially in the Deep State septic abscess that the Russia probe has become.

Department of Justice official Bruce Ohr, twice demoted but still on the payroll, went into a closed congressional hearing and apparently threw everybody but his mother under the bus, laying out an evidence trail of stupendous, flagrant corruption in that perfidious scheme to un-do the election results of 2016. Most amazingly, it was revealed that Mr. Ohr had not been called to testify by special counsel Robert Mueller nor by the federal prosecutor John Huber, who is charged with investigating the FBI / DOJ irregularities surrounding the Russia probe. It is amazing because Mr. Ohr is precisely the pivotal figure in what now looks like an obvious conspiracy to politically weaponize the agencies against the Golden Golem. An awful lot of people have some ‘splainin’ to do on that one, starting with the Attorney General and his deputy. Who will put it to them?

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Planning another invasion?!

Saudi Arabia Hints At Plan To Turn Qatar Into An Island (AFP)

A Saudi official hinted Friday the kingdom was moving forward with a plan to dig a canal that would turn the neighbouring Qatari peninsula into an island, amid a diplomatic feud between the Gulf nations. “I am impatiently waiting for details on the implementation of the Salwa island project, a great, historic project that will change the geography of the region,” Saud al-Qahtani, a senior adviser to Crown Prince Mohammed bin Salman, said on Twitter. The plan, which would physically separate the Qatari peninsula from the Saudi mainland, is the latest stress point in a highly fractious 14-month long dispute between the two states.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and trade ties with Qatar in June 2017, accusing it of supporting terrorism and being too close to Riyadh’s archrival, Iran — charges Doha denies. In April, the pro-government Sabq news website reported government plans to build a channel -– 60 kilometres (38 miles) long and 200 metres wide –- stretching across the kingdom’s border with Qatar. Part of the canal, which would cost up to 2.8 billion riyals ($750 million), would be reserved for a planned nuclear waste facility, it said. Five unnamed companies that specialise in digging canals had been invited to bid for the project and the winner will be announced in September, Makkah newspaper reported in June.

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Corruption rules.

Brazil’s Top Electoral Court Votes Down Lula Candidacy (AFP)

A majority of Brazil’s top electoral court shot down late Friday the candidacy of popular leftist Luiz Inacio Lula da Silva in the country’s upcoming presidential vote, telling the jailed former leader he cannot participate in October’s critical election. The vote punctuated a gripping case that has roiled the country for months, with Lula, 72, remaining the top contender among Brazilians to lead Latin America’s largest economy — despite sitting behind bars since April for accepting a bribe. In an extraordinary session the Superior Electoral Court dashed Lula’s hopes after hours of debate, with the judges voting an overwhelming 6-1 against him.

Shortly thereafter, the former president’s Workers’ Party (PT) vowed to “fight with all means” to secure candidacy for the leftist icon. “We will present all appeals before the courts for the recognition of the rights of Lula provided by law and international treaties ratified by Brazil,” said the party in a statement. “We will defend Lula in the streets, with the people, because he is a candidate of hope.” Lula’s case was a last-minute addition to the court session. The result was expected, but the vote of Judge Edson Fachin, the second to speak, had momentarily rekindled suspense. He relied on Lula’s recent backing from the UN Human Rights Committee, which ruled that the former leader cannot be disqualified from the elections as his legal appeals are ongoing.

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With full deadlock.

Brexit: Entering The Final Phase (RTE)

As we head into September, the assessment of EU officials and diplomats is that August has come and gone with little to show for it. Yes, there has been the publication of over 50 technical notices on a no-deal Brexit, and a flurry of trips to European capitals by Theresa May, Foreign Secretary Jeremy Hunt, and Business Secretary Greg Clark. But there has been no movement from London on the key issues, because the paralysis in the House of Commons still holds. “Objectively in the British system nothing has changed,” says one EU diplomat. “They’re still deeply divided.” As Fleet Street was trumpeting a change of heart on Brexit, the Japanese electronic giant Panasonic quietly announced it was shifting its European headquarters from the UK to the Netherlands.

In a statement the company blamed “potential fiscal obstacles by the application of different rules and regulations between the UK and EU.” So where do things stand? There are just under seven weeks before the European Council in October. In that time Theresa May will have to conclude the Withdrawal Agreement, and reach agreement on a political declaration on the future relationship that will sit alongside the divorce treaty. On the Withdrawal Treaty there are three outstanding issues. The first is on governance – how the EU and UK will resolve their differences in the future. The second is on Geographical Indicators – will the UK respect some 3,000 sensitive EU products such as Champagne and Feta cheese and not start producing their own under those names.

The third, and biggest, obstacle is the Irish backstop. The most recent proposal from London to replace to the European Commission’s draft legal text on the backstop dates back to 7 June. It suggested a Temporary Customs Arrangement (TCA) and a UK-wide backstop that would expire around the end of 2020, when a new trade arrangement would – presumably – take effect. London’s subsequent qualification of the TCA was that the Chequers White Paper would definitively rule out the need for the backstop. That solution is not definitive enough for Dublin or the other member states. A backstop is still needed in the Withdrawal Agreement. So, the deadlock remains.

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One of the world’s best healthcare systems has been gutted.

The Terrible Human Cost Of Greece’s Bailouts (Coppola)

Some people justify Greece’s terrible depression and severe fiscal austerity on the grounds that they are necessary to “reform” the Greek economy. Others even argue that Greeks “deserve” poverty and deprivation. They had a massive party at other people’s expense, after all. Now, it’s payback time. I have heard a lot of this recently. So I am grateful to the medical journal The Lancet for providing me with some ammunition to fire at those who want to play “blame the Greeks”, or who believe that the austerity inflicted on Greek was both mild and necessary, or who simply can’t see the humans behind the numbers. The Lancet has published an analysis of changes in life expectancy in Greece during the recent crisis. It is heavy on numbers and light on anecdote, but even so, it makes grim reading.

Greek mortality has worsened significantly since the beginning of the century. In 2000, the death rate per 100,000 people was 944.5. By 2016, it had risen to 1174.9, with most of the increase taking place from 2010 onwards. Greece’s mortality increase stands in stark contrast to global death rates, which fell during this time. Even in Western Europe, where death rates rose slightly overall, no other country experienced a deterioration on this scale. Cyprus, Greece’s close neighbour, also experienced some worsening of mortality rates around the time of its financial crisis and recession, but not on the scale of Greece. Among the countries included in the study, Greece’s case appears to be exceptional.

But what is causing these additional deaths? The report says it varies with age: “…adverse effects of medical treatment, self-harm, and several types of cancer stood out as consistently increasing in Greece across all ages… Within specific age groups, other causes are apparent, with rapid increases in deaths due to neonatal haemolytic disease and neonatal sepsis in children younger than 5 years, and prominent increases in self-harm among adolescents and young adults. Greek adults aged 15–49 years had increased mortality due to HIV, several treatable neoplasms, all types of cirrhosis, neurological disorders (eg, multiple sclerosis, motor neuron disease), chronic kidney disease, and most types of cardiovascular disease except for ischaemic heart disease and stroke.”

Let me translate this piece of medical jargon into plain English: • Newborn babies are dying of completely treatable conditions. • Adolescents and young adults are killing themselves. • Adolescents and adults are dying of diseases associated with poor diet, alcohol abuse and smoking, and of treatable illnesses.

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That’s the entire EU.

India Introduces Free Health Care – For Its 500 Million Poorest People (NW)

The Indian government will pay for health care for around 500 million of its poorest citizens, with Prime Minister Narendra Modi declaring that the country can reach its potential only with a healthy population. During a speech to mark the country’s independence day on Wednesday, Modi said, “It is essential to ensure that we free the poor of India from the clutches of poverty due to which they cannot afford health care,” The Times of India reported. The National Health Protection Mission—also known as “Modicare”—will give impoverished families health insurance coverage of up to $7,100 every year. This may not seem a lot by American standards, but in a country where the annual per capita income is just over $1,900, it will make a massive difference to those who cannot afford private treatment.

Public hospitals in India offer free, but less sophisticated, care. The system is strained to the point of collapse, with hospitals struggling to secure enough beds and staff to care for the sick. The lack of access for rural communities—where 66 percent of Indians live—forces people to travel many hours to reach urban facilities if they want treatment. This means the private medical sector cares for the majority of India’s patients and charges them accordingly. When the project was announced in February, then-Finance Minister Arun Jaitley declared it the “world’s biggest government-funded health care program.” According to the mission’s chief executive officer, Indu Bhushan, “This is going to be a game changer.” Medical costs are one of the primary causes of poverty in India. Around 63 million Indians fall into poverty each year because of health care bills, and 70% of all charges are paid directly by patients.

Read more …

Aug 112018
 
 August 11, 2018  Posted by at 8:50 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh Ward in the hospital in Arles 1889

 

Why Has The Turkish Lira Slumped To A Record Low? (Ind.)
Why Turkey Is Doomed In Two Charts (ZH)
Turkish Lawyers Want To Arrest US Troops at Incirlik Air Base (Ditz)
US Jury Orders Monsanto To Pay $290mn To Cancer Patient Over Weed Killer (AFP)
Lawsuits Accuse Tesla’s Musk Of Fraud Over Tweets, Going-Private Proposal (R.)
Chinese Media Keep Up Drumbeat Of Criticism Of US (R.)
China’s Japanese Lesson For Fighting Trump’s Trade War (F.)
Anything-Goes-and-Nothing-Matters (Jim Kunstler)
ECB Says Waiver For Greek Debt Revoked, Effective Aug. 21 (K.)
UK Home Office Accused Of Betrayal Over Child Refugees (Ind.)
Judge Encouraged By US Plan To Reunite Separated Immigrant Families (R.)

 

 

Turkey was already in dire straits, like all EM’s after the dollar strenghtened and the Fed hiked rates. Difference is: Turkey is the most vulnerable of them all.

Why Has The Turkish Lira Slumped To A Record Low? (Ind.)

The Turkish lira has slumped to a record low against the US dollar this week. On Friday it was down by as much as 17% before recovering slightly. At one stage on Friday afternoon one dollar bought 6.9 lira. In January a dollar bought just 3.7 units of the Turkish currency. That means it has lost around 44% of its value against the dollar this year. The lira is now the world’s worst performing currency in 2018, overtaking crisis-hit Argentina. And things have got worse very rapidly this month. The currency has experienced 12 straight days of decline. The currency rout has hit the country’s bond market. The yield on 10-year Turkish debt has jumped close to 20%, making it much more expensive for the Ankara government to borrow.

There is also concern about the exposure of European banks such as BNP Paribas, UniCredit and BBVA to borrowers in Turkey. Their share prices were down around 3% on Friday. If Turkish borrowers are not hedged against the collapsing lira the fear is that they could default on their foreign currency loans, forcing European banks to make expensive loan write-offs. For the same reason Turkish banks could also be in trouble given the amount of foreign currency lending they have undertaken.

[..] The proximate cause is a diplomatic row with the US over the detention in Turkey of US pastor Andrew Brunson. Brunson was arrested in October 2016 accused of aiding an organisation which the Turkish government says was behind a failed coup attempt that year. Last month Donald Trump called Brunson’s detention “a total disgrace” and the Washington administration announced last week that Turkey’s duty-free access to the US market is being reviewed, which could hit $1.66bn of annual Turkish imports.

On Friday Trump also tweeted that he was doubling steel tariffs on Turkish steel imports, writing: “Our relations with Turkey are not good at this time!” But there are underlying causes too. Investors’ confidence in the economic competence of the Turkish authorities has been eroding for some time. The country has a large current account gap, equivalent to 7% of GDP last year. That means the economy is heavily reliant on foreign money inflows. Inflation has also soared to 15%, three times the central bank’s 5% target. Such figures are not particularly unusual for an emerging market economy like Turkey, but President Recep Tayyip Erdogan’s slide into capricious authoritarianism has made investors doubt whether he can handle the crisis in a rational way.

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Turkey has simply borrowed too much.

Why Turkey Is Doomed In Two Charts (ZH)

Goldman’s Caesar Maasry this morning [..] notes the biggest vulnerability staring both Emerging and Frontier Markets, namely their external funding needs, and notes that while EM funding needs are completely covered by reserves (meaning the likelihood of USD debt crises is extremely limited), “Turkey’s funding needs are more like Frontier Markets, and in the same ballpark as the needs of Latin America economies in the 1980s and Asia in the 1990s.”

He then notes that floating vs. fixed exchange rates are an important difference compared with the EM crises of yesteryear, but adds that the starting point for Turkey’s recent volatility is that these USD funding needs are extremely significant, much more so than other EMs, and are also the reason for why the market has finally started paying attention to Turkey as a result of foreign bank exposure to Turkey, because should these foreign inflows stop, the entire Turkish economy is in danger of a sudden freeze.

And, as the chart below shows, while Turkey is technically considered an emerging market, where it makes a sharp break with convention is that its external funding need is greater than the average Frontier Market. Should these inflows stop, as a result of a loss of confidence in the country, all bets are off.

But wait there’s more, because as JPMorgan showed 2 months ago, Turkey faces a secondary threat in addition to its gaping current account deficit: a massive and growing debt load. If foreign buyers of Turkish debt go on strike, or if Turkey is unable to rollover near-term maturities, watch how quickly the currency crisis transforms into a broad economic collapse.

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They’re going to make it all about the 2016 ‘coup’. That fires up the people.

Turkish Lawyers Want To Arrest US Troops at Incirlik Air Base (Ditz)

A group of lawyers aligned to Turkish President Recep Tayyip Erdogan has filed formal charges against a number of US Air Force officers who are stationed at Turkey’s Incirlik Air Base. The complaint accuses them of having ties to terrorist groups, and of being in league with the banned Gulenist organization. Since the failed 2016 military coup, Erdogan has blamed cleric Fethullah Gulen for plots against him, and has been targeting any and all perceived enemies, accusing them of being in league with Gulen. This is the first time US troops, let alone US troops inside Turkey, have faced such charges.

Analysts say they believe the charges are a direct response to last week’s imposition of sanctions against two Turkish cabinet members by the US. The sanctions were imposed in protest of Turkey’s detention of American pastor Andrew Brunson, who has been held since 2016 on accusations of Gulenist ties. The criminal complaint names Cols. John C. Walker, Michael H. Manion, David Eaglen, David Trucksa, Lt. Cols. Timothy J.Cook, Mack R. Coker, and Sgts. Thomas S Cooper and Vegas M. Clark. Air Force officials said they were “aware” of the complaint but would not comment beyond that.

The Air Force also praised their relationship with “our Turkish military partners,” though as US-Turkey tensions continue to rise, as they have in recent years, it’s not at all clear how long the US will be able to use the Incirlik base for its military operations in the Middle East. The lawyers, on the other hand, demanded the government halt all flights out of Incirlik to keep the US officers from fleeing the country, and called on the government to raid the base and seek to capture the officers.

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They’re going to appeal until the cows come home.

US Jury Orders Monsanto To Pay $290mn To Cancer Patient Over Weed Killer (AFP)

A California jury ordered chemical giant Monsanto to pay nearly $290 million Friday for failing to warn a dying groundskeeper that its weed killer Roundup might cause cancer. Jurors unanimously found that Monsanto – which vowed to appeal – acted with “malice” and that its weed killers Roundup and the professional grade version RangerPro contributed “substantially” to Dewayne Johnson’s terminal illness. Following eight weeks of trial proceedings, the San Francisco jury ordered Monsanto to pay $250 million in punitive damages along with compensatory damages and other costs, bringing the total figure to nearly $290 million. “The jury got it wrong,” the company’s vice president Scott Partridge told reporters outside the courthouse.

Johnson, a California groundskeeper diagnosed in 2014 with non-Hodgkin’s lymphoma — a cancer that affects white blood cells — says he repeatedly used a professional form of Roundup while working at a school in Benicia, California. “I want to thank everybody on the jury from the bottom of my heart,” Johnson, 46, said during a press conference after the verdict. “I am glad to be here; the cause is way bigger than me. Hopefully this thing will get the attention it needs.” Johnson, who appeared to be fighting back sobs while the verdict was read, wept openly, as did some jurors, when he met with the panel afterward. [..] Robert F. Kennedy Jr — an environmental lawyer, son of the late US senator and a member of Johnson’s legal team — hugged Johnson after the verdict.

“The jury sent a message to the Monsanto boardroom that they have to change the way they do business,” said Kennedy, who championed the case publicly. [..] Johnson’s team expressed confidence in the verdict, saying the judge in the case had kept out a mountain of more evidence backing their position. “All the efforts by Monsanto to put their finger in the dike and hold back the science; the science is now too persuasive,” Kennedy said, pointing to “cascading” scientific evidence about the health dangers of Roundup. “You not only see many people injured, you see the corruption of public officials, the capture of agencies that are supposed to protect us from pollution and the falsification of science,” Kennedy said. “In many ways, American democracy and our justice system was on trial in this case.”

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Better come clean.

Lawsuits Accuse Tesla’s Musk Of Fraud Over Tweets, Going-Private Proposal (R.)

Tesla Inc and Chief Executive Elon Musk were sued twice on Friday by investors who said they fraudulently engineered a scheme to squeeze short-sellers, including through Musk’s proposal to take the electric car company private. The lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion transaction that valued the company at $420 per share, and that “funding” had been “secured.” In one of the lawsuits, the plaintiff Kalman Isaacs said Musk’s tweets were false and misleading, and together with Tesla’s failure to correct them amounted to a “nuclear attack” designed to “completely decimate” short-sellers.

The lawsuits filed by Isaacs and William Chamberlain said Musk’s and Tesla’s conduct artificially inflated Tesla’s stock price and violated federal securities laws. [..] Short-sellers borrow shares they believe are overpriced, sell them, and then repurchase shares later at what they hope will be a lower price to make a profit. Such investors have long been an irritant for Musk, who has sometimes used Twitter to criticize them. Musk’s Aug. 7 tweets helped push Tesla’s stock price more than 13 percent above the prior day’s close. The stock has since given back more than two-thirds of that gain, in part following reports that the U.S. Securities and Exchange Commission had begun inquiring about Musk’s activity.

Musk has not offered evidence that he has lined up the necessary funding to take Tesla private, and the complaints did not offer proof to the contrary. But Isaacs said Tesla’s and Musk’s conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices.

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For domestic consumption only?

Chinese Media Keep Up Drumbeat Of Criticism Of US (R.)

China’s state media continued a barrage of criticism of the United States on Saturday as their tit-for-tat trade war escalated, while seeking to reassure readers the Chinese economy remains in strong shape. Commentaries in the People’s Daily, China’s top newspaper, likened the United States to a bull in a China shop running roughshod over the rules of global trade and said that China was “still one of the best-performing, most promising and most tenacious economies in the world.” The commentaries come as trade tensions between the two countries intensify. China said this week it would put an additional 25% tariffs on $16 billion worth of U.S. imports in retaliation against levies on Chinese goods imposed by the United States.

One commentary accused the United States of “rudely trampling on international trade rules” and not taking into account China’s lowering of tariffs and continued opening of its economy, among other things. “People of insight are soberly aware that so-called ‘America first’ is actually naked self-interest, a bullying that takes advantage of its own strength, challenges the multilateral unilaterally, and uses might to challenge the rules,” it read. Another commentary argued that the Chinese economy was stable and was expected to remain so. In the second half of this year, “comprehensive deepening of reforms will continuously produce benefits.” It said China could take steps to boost domestic demand while continued to cut corporate taxes and fees.

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Excellent history lesson.

China’s Japanese Lesson For Fighting Trump’s Trade War (F.)

Japan recorded its first post-war trade surplus with the U.S. in 1965 on the back of rapidly expanding export-oriented manufacturing. It continued to mount in the following two decades, peaking in 1986 at 1.3% of America’s GDP, according to IMF data. America started to grumble in the early 1970s about Japan’s rising trade surplus. But its was the dramatic increase in the world price of oil in the aftermath of the oil shocks of the 1970s that triggered the American trade war against Japan. The lightening rod was Japan’s auto exports. Post oil shocks, fuel efficient and well made Japanese cars rapidly gained market share in the U.S. at the expense of American auto makers.

By 1979, Chrysler, then one of the largest American auto makers, was about to fold. It needed a $1.5 billion bailout loan from the government to avoid bankruptcy. Suddenly, there was a crescendo of complaints about Japan’s unfair trade practices jeopardizing America’s national security and putting American workers out of work. Sound familiar? Between 1976 to 1989, the U.S. launched 20 investigations under Section 301 of the U.S. Trade Act of 1974 (the very same Section 301 that the Trump administration is now invoking) against Japan’s exports to the U.S., not only in autos, but also in steel, telecom, pharmaceutical, semiconductors, and others. The Japanese government backed down and agreed to a series of oxymoronically termed “voluntary restraints” on exports on all the disputed items.

When America’s trade deficit with Japan failed to decline despite such voluntary restraints, the U.S. government then pressured Japan to import more from the U.S. Again, the Japanese government accommodated America’s demand by loosening monetary policy to encourage more domestic consumption. Japanese domestic consumption did rise, especially in the property market, fueled by rising debts based on low interest rates, but didn’t do much to increase imports from America. This led to the third and last act of the trade war. The U.S. government accused Japan of manipulating its currency, keeping the yen’s exchange rate low against the U.S. dollar, thus giving Japanese exporters an unfair advantage. Japan was coerced to appreciate its currency at the Plaza Accord in September 1985.

This was the agreement engineered by the U.S. as the chief currency manipulator with Japan, France, West Germany, and the U.K. as accomplices to varying degrees of reluctance, to jointly depreciate the U.S. dollar against the yen and the German mark. As far as currency manipulation goes, the Plaza Accord worked. Between 1985 and 1988, the yen appreciated 88% against the U.S. dollar, according to data from the U.S. Federal Reserve. Still, America’s trade deficit with Japan did not go away. But by then it had also become irrelevant. Years of ultra-loose monetary policy created massive asset bubbles in Japan, most notably in its stock and property markets; and this bubble economy burst in 1989.

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“.. we haven’t had any trouble from them Grenadian bastards ever since.”

Anything-Goes-and-Nothing-Matters (Jim Kunstler)

Our President, who I like to call the Golden Golem of Greatness for his role in restoring this limping nation to something like a 1947 Jimmy Stewart movie — all Christmas and kittens — might be accused of overplaying the sanctions blame-game in order to demonstrate to our own Deep State how much he doesn’t love Russia and its leader, Mr. Putin, a verified agent of Satan. Next thing you know, Mr. Trump will don evangelical robes and hurl bibles at a photo of Vladimir P on Don Lemon’s CNN show. That’ll get Ole Horseface Mueller off his back, won’t it? And those pesky Dem-Progs drooling for impeachment.

Alas, this sanctions gambit may lead to serious consequences — a nearly unthinkable outcome in our culture of Anything-Goes-and-Nothing-Matters. Mr. Putin responded to the latest sanctions talk by saying he might withdraw Russia’s ambassador from Washington. (I’m not even sure what he’s still doing there, since the Michael Flynn incident established the new notion in DC that speaking to ambassadors from foreign lands is somehow against the law.) If you read a little history, you may notice that the withdrawal of diplomats is usually one of the last political acts before war.

We need a war with Russia, right? Well, it’s possible that the Deep State’s factotums want one — since they’ve been hollering about the wickedness of Russia at a deafening pitch for two years now. I’m wondering just what their fantasy of this war might be. Anything like the great victory over Grenada back in 1983, our most successful military venture since the surrender of Japan in 1945? Code-named Operation Urgent Fury, this campaign against one of the Caribbean’s most dangerous nations, took only four days to wrap up — and notice, we haven’t had any trouble from them Grenadian bastards ever since.

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The economic war on Greece continues unabated.

ECB Says Waiver For Greek Debt Revoked, Effective Aug. 21 (K.)

The European Central Bank announced on Friday it is revoking a waiver on Greek bonds, with the decision coming into effect on August 21, a day after the country will officially exit from its third bailout program. ECB’s waiver allows Greek debt to be accepted as collateral for regular auctions of ECB cash, despite the junk rating of the country’s bonds. Removing it will shut the lenders’ access to cheap funding. Since Greece will no longer be in an adjustment program, the criteria for accepting the waiver will no longer apply. “From that date (Aug. 21), the conditions for the temporary suspension of the Eurosystem’s credit quality thresholds in respect of marketable debt instruments issued or fully guaranteed by the Hellenic Republic … will no longer be fulfilled,” the bank said in a press release.

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The whole Anglosphere is run by sociopaths.

UK Home Office Accused Of Betrayal Over Child Refugees (Ind.)

The Home Office has been accused of “betraying” child refugees and leaving vulnerable young people stranded in Europe because of failings in its flagship relocation scheme. Under the Dubs amendment, a limited number of unaccompanied minors across Europe are supposed to be brought to the UK and placed in local authority care. But The Independent has learnt that some youngsters relocated to Britain have been counted towards the capped total despite already having the right to be in the country under family reunification laws. Ministers have admitted that children who arrive under the Dubs scheme but are then reunited with family members still count towards the final target of 480, saying placing them with relatives was a decision for local authorities, not the Home Office.

Charities and politicians warn that this means the scheme is leaving children and teenagers stranded on the continent when they should be given refuge in the UK, describing it as a “cruel and callous” means of circumventing the amendment. Safe Passage, which supports child refugees, knows of two children transferred under Dubs who were reunited with a family member in Britain either immediately or shortly after arriving, and therefore would have been eligible to enter the country anyway. The charity said there were likely to be more similar cases. Meanwhile, thousands of lone minors remain stranded in Europe, scores of who are sleeping rough in northern France. Only around 250 of Dubs places have been filled two years after the amendment was passed.

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Just make sure you don’t entirely make it the ACLU’s responsibility.

Judge Encouraged By US Plan To Reunite Separated Immigrant Families (R.)

A federal judge on Friday said he was encouraged by a new U.S. plan to reunite parents and children who had been separated at the U.S.-Mexican border under President Donald Trump’s now-abandoned “zero tolerance” policy toward illegal immigrants. The reunification plan set forth in a Thursday night court filing described several processes to locate parents who had been removed from the country, determine their intentions for their children, and ensure that children remain safe. “There’s no question the government has put in a great deal of thought into this,” U.S. District Judge Dana Sabraw in San Diego said at a hearing. Sabraw also said the plan “appears to be a very good one, a sound one, at least from a broad-brush perspective.”

The plan provided that the government would resolve concerns about the children’s safety and parentage. It also called for the government to work with the American Civil Liberties Union and foreign governments to locate parents and determine their wishes, and arrange travel documents and transportation for children when parents opt for reunification. Sabraw has been monitoring the government’s progress in reuniting 2,551 children with their parents since ordering their reunifications on June 26. The ACLU had brought a lawsuit that led to Sabraw’s reunification order. Many of those separated had crossed the border illegally, while others had sought asylum at a border crossing.

[..] Sabraw gave the ACLU the weekend to study the plan and discuss its concerns with the government, and bring unresolved issues to his attention by Monday morning. He also praised the government and ACLU for “really working collaboratively, which is absolutely essential” for reunifications. The judge’s comments marked a change from a week earlier, when he called the government’s progress in reunifying families “unacceptable.” Roughly 559 of the 2,551 children remain in federal custody, down from 572 a week earlier, according to a separate Thursday court filing. They included 386 whose parents had been removed from the country, that filing said.

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Jul 252018
 
 July 25, 2018  Posted by at 8:19 am Finance Tagged with: , , , , , , , , , , ,  


Ivan Aivazovsky Lake Maggiore 1892

 

Trump Downbeat Ahead Of Trade Talks With EU (R.)
Trump’s $12 Billion Aid For Farmers Risks Unintended Consequences (CNBC)
ECB To Hold Steady Amid Heightened Risks Of A Trade War (CNBC)
Alphabet May Become The Berkshire Hathaway Of The Internet Age (CNBC)
Brexit: Raab ‘Sidelined’ As May Takes Control Of EU Negotiations (G.)
“Cliff Edge” Brexit Threatens $34 Trillion of Derivative Contracts (DQ)
UK Ministers Set To Be Given New Powers To Block Foreign Takeovers (G.)
Offshore Owners Of British Property To Be Forced To Reveal Names (G.)
The Greedy Little Nation That Sold Its Soul For House Prices (MB)
When America Was Ruled by a King (Davis)
Moon-Strzok No More, Lisa Page Spills the Beans (McGovern)
Novichok Victim Found Substance Disguised As Perfume In Sealed Box (G.)
US Intelligence Community as a Collapse Driver (Dmitry Orlov)
Holiday Hunger Should Be The Shame Of This Government And It Isn’t (G.)

 

 

The EU doesn’t have a lot of room to move. It’s made of tariffs, barriers and subsidies.

Trump Downbeat Ahead Of Trade Talks With EU (R.)

U.S. President Donald Trump took a pessimistic view of talks with European Commission President Jean-Claude Juncker set for Wednesday aimed at averting a trade war. In a tweet on Tuesday night, Trump said both the United States and the European Union should drop all tariffs, barriers and subsidies. “That would finally be called Free Market and Fair Trade!” Trump said. “Hope they do it, we are ready – but they won’t!” he said. Trump has accused the EU of unfair trade practices and has threatened to raise tariffs on cars imported from the bloc.

European Trade Commissioner Cecilia Malmstrom, who will accompany Juncker, said last week that the EU was preparing a list of U.S. products to hit if the United States imposed the tariffs. Juncker will not arrive in Washington with a specific trade offer, the commission said on Monday. “I do not wish to enter into a discussion about mandates, offers because there are no offers,” Commission spokesman Margaritis Schinas told a news conference in Brussels. White House economic adviser Larry Kudlow has said he expected Juncker to come with a “significant” trade offer.

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EU agriculture is built on enormous subsidies. No way they can let much of that go. Imagine the protests in France. Perhaps countries, but certainly continents should focud on producing their own food, not export it. But then the tiny Netherlands is the 2nd biggest tomato exporter in the world. That’s quite an applecart to upset.

Trump’s $12 Billion Aid For Farmers Risks Unintended Consequences (CNBC)

According to the statement from the USDA, the administration “will take several actions to assist farmers in response to trade damage from unjustified retaliation.” The plan authorizes the agency to spend “up to $12 billion in programs, which is in line with the estimated $11 billion impact of the unjustified retaliatory tariffs on U.S. agricultural goods. These programs will assist agricultural producers to meet the costs of disrupted markets.” “Our farmers, our producers, they don’t want bailouts,” Simon Wilson, executive director of the North Dakota Trade Office, told CNBC’s “Closing Bell” on Tuesday. “They don’t want this help in the short term. They want long-term stability.”

Wilson added, “A lot of people have been hurt, so that’s a lot of money that’s going to have to be shared.” Payments under the largest part of the federal government’s relief plan would be targeted to producers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs. Some experts have warned in the past that government aid or new subsidies could distort or disrupt markets and ultimately have negative consequences for the agriculture industry. That also includes the possibility it could lead to more retaliation on other agricultural exports.

In any event, Glauber said the program is likely to be taken as “producer support” and appears to be targeted toward a drop in the market price of certain commodities, meaning it could get counted against the U.S. commitments from the WTO. “We’ve run pretty low levels of [producer] support in recent years, but it will certainly raise a lot of eyebrows and will make people look at those calculations very, very carefully,” said Glauber. “It also will look at the way we formulate those programs very, very carefully.”

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With Brexit and Trump in its face, the ECB is pretty much stuck.

ECB To Hold Steady Amid Heightened Risks Of A Trade War (CNBC)

After a surprisingly dovish meeting in June, the European Central Bank (ECB) is expected to strike a more balanced tone this week, given heightened uncertainties for the global economy. The focus will be on the ECB‘s assessments of these risks at its meeting Thursday, with investors concerned of the acute risk of a trade war escalation. “We expect Mario Draghi to aim for a ‘Goldilocks’ tone at the July 26 press conference — not too hawkish, not too dovish,” said Mark Wall, the chief economist at Deutsche Bank, in a research note. “The ECB only recently made a commitment to unchanged rates for the next year to lean against trade and volatility risks and avoid an unwarranted tightening of financial conditions.”

The ECB has committed itself to stop buying new bonds at the end of this year, but the onus clearly now is on the reinvestment of these purchases (as part of its crisis-era stimulus program) and its refined rate guidance. The euro zone’s central bank pledged to keep its key interest rate at minus 0.4 percent “at least through the summer of 2019” during its last meeting. The risks now are that the ECB is unwinding its monetary stimulus right at a time when the economy could head south. For now, its seems the ECB is convinced the region’s economy will remain resilient.

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Building empires.

Alphabet May Become The Berkshire Hathaway Of The Internet Age (CNBC)

Alphabet CEO Larry Page has long admired Warren Buffett’s business acumen in creating the industrial and investment conglomerate Berkshire Hathaway. And now analysts and investors are noticing Alphabet’s investments in emerging disparate businesses are starting to bear fruit — including YouTube, autonomous cars and cloud computing — drawing comparison to Berkshire Hathaway’s success. The internet giant reported better-than-expected second-quarter earnings Monday, driving Alphabet shares to a new all-time high the following day. It generated adjusted earnings per share of $11.75 versus the Wall Street consensus of $9.59 for the quarter. Alphabet also posted a $1.06 billion gain in its equity investments for the time period.

“Our investments are driving great experiences for users, strong results for advertisers, and new business opportunities for Google and Alphabet,” said Ruth Porat, CFO of Alphabet and Google in the earnings press release Monday. As a result one well-known investor believes Alphabet has a shot of being the Berkshire Hathaway of tomorrow. “What I’m really talking about is the diversified nature of what [Alphabet is] building away from the ad platform, in much the same way as Berkshire reinvested the float from insurance premiums into other investments. I guess I am also talking in terms of longevity, not just size,” Josh Brown said in an email Tuesday. “This quarter witnessed a host of Google’s other investments throwing off profits. Larry and Sergey were very open about their intention to create something Berkshire-like when they first announced the new structure and Alphabet.”

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She can’t escape a second vote anymore. If you have 2.5 years, and you waste the first two, that’s what happens. It’s just the illusion of control.

Brexit: Raab ‘Sidelined’ As May Takes Control Of EU Negotiations (G.)

Theresa May has taken back control of crucial negotiations with Brussels from her new Brexit secretary just hours after the government published its white paper on withdrawing from the EU. The prime minister announced she would now lead the crunch talks with the EU while Dominic Raab, who was appointed two weeks ago, would be left in charge of domestic preparations, no-deal planning and legislation. The move was swiftly characterised as a “sidelining” of the Brexit secretary by No 10’s Europe unit, led by May’s chief Brexit adviser, Olly Robbins, with the prime minister also taking officials from his department. In a written statement on the last sitting day of the Commons before the summer recess, May said: “I will lead the negotiations with the European Union, with the secretary of state for Exiting the European Union deputising on my behalf.

“Both of us will be supported by the Cabinet Office Europe Unit and with this in mind the Europe Unit will have overall responsibility for the preparation and conduct of the negotiations, drawing upon support from DExEU and other departments as required.” Robbins, appearing alongside Raab at the Commons’ Brexit committee, said: “The overall strategy for the conduct of these negotiations, she regards very much as her personal responsibility, now with the secretary of state very close at hand.” Raab described the changes as a “shifting of the Whitehall deckchairs” and said there would now be “one team, one chain of command” but pointed out that there would be “full assertion of ministerial accountability”.

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I’d swear it’s more. It’s dominoes.

“Cliff Edge” Brexit Threatens $34 Trillion of Derivative Contracts (DQ)

A messy, no-deal Brexit could throw 48 million insurance contracts and £26 trillion ($34 trillion) of derivatives deals into confusion. Nausicaa Delfas, head of international strategy at the Financial Conduct Authority (FCA), told delegates at a CityUK and Bloomberg event that there were “cliff-edge” risks due to uncertainty over the legality of financial contracts extending beyond the planned Brexit date, in March. The UK government has already passed regulations that would allow European banks and insurers to maintain their UK operations under current rules after Brexit. So far, the EU has refused to reciprocate, even on a temporary basis.

The EU has also ruled out extending passporting rights to UK financial institutions after Brexit. These rights allow UK-based institutions to sell financial products from the City to investors in the 27 other EU member states. Brussels has also turned down the UK government’s latest proposal for a system of “advanced equivalence” between British and EU financial services. If the EU continues to reject a temporary permissions regime and no cooperative Brexit deal is signed by the March 29 deadline, big doubts could be raised about the viability of certain derivatives contracts. And that could seriously disrupt an already highly volatile, deeply opaque, largely unregulated $600-trillion dollar industry.

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Cue Trump.

UK Ministers Set To Be Given New Powers To Block Foreign Takeovers (G.)

Ministers will have the power to block foreign takeovers across all sectors of the British economy on national security grounds under new government proposals designed to protect some of the UK’s most important and technically advanced businesses. The business secretary, Greg Clark, wants to widen the scope of the current system, which is limited to large transactions and certain industries such as defence, to cover all UK firms including small businesses as he seeks to keep vital firms and technologies out of foreign ownership. The proposals, which will be subject to a 12-week consultation, will allow ministers to halt or unwind takeovers and even the smallest asset sales that could be deemed to jeopardise Britain’s national security.

Potential targets under the new rules are likely to be Chinese and Russian takeovers of defence-related industries. Technology firms, including cybersecurity businesses that already have links with the Ministry of Defence, or are viewed as crucial to the development of the UK’s financial and commercial defence systems, are also expected to top the list of ministers’ national security concerns. Clark allowed the £74m takeover of the handset maker Sepura by the Hytera Corporation of China last year, making it only the second review of a transaction on national security grounds in 18 months, after the MoD raised concerns this month over the sale of Northern Aerospace to a Chinese buyer. The Competition and Markets Authority later cleared the Northern Aerospace transaction, by which time it had lapsed.

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Why would you want faceless foreigners owning your real estate?

Offshore Owners Of British Property To Be Forced To Reveal Names (G.)

Offshore owners of British property will be forced to reveal their true identities or face jail sentences and unlimited fines under draft laws that aim to end the UK’s reputation as a high-risk jurisdiction for money laundering. The legislation follows years of scandals involving the acquisition of high-value UK property by offshore companies, and concerns that a lack of regulation was allowing corrupt money into the housing market. The National Crime Agency said three years ago that overseas criminal gangs were using British property transactions to launder billions of pounds in corrupt funds. Parliament’s foreign affairs committee went further earlier this year, saying that corrupt Russian funds laundered through the UK, including via property, posed a threat to national security.

Under the new legislation, overseas companies that own UK properties will be required to identify their true owners on a publicly available register. The government said the register was part of a wider crackdown on money laundering in the property sector, and would make it easier for law enforcers to seize criminal assets. The anonymous ownership of property via offshore companies is perfectly legal, but it has also been a subject of concern for housing campaigners concerned about an influx of foreign money forcing up house prices.

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If it’s any consolation: you’re not alone.

The Greedy Little Nation That Sold Its Soul For House Prices (MB)

There was a time when Australia’s housing bubble was not much more than a curiosity. Contained mostly to Sydney it seemed it would pass with a little pop and be forgotten. Then there was a time when the bubble went national. And suddenly the little pop was going to be a big pop so monetary and fiscal policy began to distort in support of it. Next there was a time when moral hazard became so great that the bubble grew to engulf all policy and media, marginalising an entire generation from home ownership. Politicians routinely lied to cover the collapse in evidence based policy-making.

Finally, we come to today. When notions of managing the macro-economic levers of an economy now boil down to just one thing: • low interest rates to prevent the housing bubble bursting; • fiscal repair to prevent the bubble bursting, and • mass immigration to prevent the bubble bursting even though it is crushing living standards and gutting wages. [..] It’s all so bizarre. All we need to do is cut immigration and let house prices fall. There’ll be a period of adjustment while wages and the currency correct but it won’t be too bad. We’ll still be on the doorstep of Asia. The students and tourists will still come, in greater numbers than ever as we get cheaper, but they’ll also go home not pressuring living standards.

Broader tradables (40% of the economy) will boom. Commodity income will surge, lifting the Budget. Our maginalised youth will have much greater opportunities to advance their global opportunities as Dutch Disease ends. Incomes will ultimately be much more sustainable. Then we can all move on with a much healthier economy, polity, society and strategic outlook. The alternative is to sell our freedom to China, our standards of living to a few rich developers, our politics to carpet baggers and our society to fractious class wars. Just for higher house prices. If a more ignominious fate awaited any nation in history then I’m not aware of it.

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Did the US go down with Elvis? And in the same way?

When America Was Ruled by a King (Davis)

America emerged out of darkness and light – a proto-nation clouded by the genocide of native Americans and the enslavement of transshipped Africans but brilliantly shot through with shafts of luminescence – the liberal ideals of European philosophers such as Locke and Hume.The alternate red and white stripes of its flag have thus come to echo a nation born in the blood of its innocent victims yet ennobled, in parallel, by the spirit of the Enlightenment. Yet even after its ideals were enshrined in The Declaration of Independence, The Constitution and the Bill of Rights, the country continued to countenance slavery, the trading of domestic, purpose-bred Africans and the brutal killing of native peoples and their vibrant communities.

Today, the historic and contemporary horrors of the American nation are ground together with its liberal principles (in some mythic bedrock mortar) to produce a culture that proclaims its goodness to its people and to the world, yet is visibly marbled with the evils of state violence against refugees and minorities, the economic oppression of a population paradoxically made comatose through over-consumption and the global havoc wreaked by its Imperial killing machine. It is this grand chiaroscuro that Eugene Jarecki explores in The King, 2018, his new documentary on the life, death and after-life of Elvis Presley, now in select release following its acclaimed debuts at the film festivals in Sundance and Cannes.

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The FBI as a Shakespearean comedy.

Moon-Strzok No More, Lisa Page Spills the Beans (McGovern)

Former FBI attorney Lisa Page has reportedly told a joint committee of the House of Representatives that when FBI counterintelligence official Peter Strzok texted her on May 19, 2017 saying there was “no big there there,” he meant there was no evidence of collusion between the Trump campaign and Russia. It was clearly a bad-luck day for Strzok, when on Friday the 13th this month Page gave her explanation of the text to the House Judiciary and Oversight/Government Reform Committees and in effect threw her lover, Strzok, under the bus. Strzok’s apparent admission to Page about there being “no big there there” was reported on Friday by John Solomon in the Opinion section of The Hill based on multiple sources who he said were present during Page’s closed door interview.

Strzok’s text did not come out of the blue. For the previous ten months he and his FBI subordinates had been trying every-which-way to ferret out some “there” — preferably a big “there” — but had failed miserably. If Solomon’s sources are accurate, it is appearing more and more likely that there was nothing left for them to do but to make it up out of whole cloth, with the baton then passed to special counsel Robert Mueller. The “no there there” text came just two days after former FBI Director James Comey succeeded in getting his friend Mueller appointed to investigate the alleged collusion that Strzok was all but certain wasn’t there.

Robert Parry, the late founder and editor of Consortium News whom Solomon described to me last year as his model for journalistic courage and professionalism, was already able to discern as early as March 2017 the outlines of what is now Deep State-gate, and, typically, was the first to dare report on its implications. Parry’s article, written two and a half months before Strzok texted the self-incriminating comment to Page on there being “no big there there,” is a case study in professional journalism. His very first sentence entirely anticipated Strzok’s text: “The hysteria over ‘Russia-gate’ continues to grow … but at its core there may be no there there.”

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And entire article from the Guardian without blaming Russia. Wow. Story still makes little sense. Why does this guy get to talk, when the Skripals are still nowhere to be found?

Novichok Victim Found Substance Disguised As Perfume In Sealed Box (G.)

The British man poisoned with the nerve agent novichok has claimed the substance that killed his girlfriend and left him critically ill came in a bottle disguised as a legitimate perfume in a sealed box. Charlie Rowley claimed his partner, mother-of-three Dawn Sturgess, fell ill within 15 minutes of spraying the bottle, which he said he had found, on to her wrists at his home in Amesbury, Wiltshire. In his first interview since he was discharged from hospital, Rowley told ITV News: “I do have a memory of her spraying it on her wrists and rubbing them together. “I guess that’s how she applied it and became ill.

I guess how I got in contact with it is when I put the spray part to the bottle … I ended up tipping some on my hands but I washed it off under the tap. “It was an oily substance and I smelled it and it didn’t smell of perfume. It felt oily. I washed it off and I didn’t think anything of it. It all happened so quick. “Within 15 minutes, Dawn said she had a headache. She asked me if I had any headache tablets. In that time she said she felt peculiar and needed to lie down in the bath. I went into the bathroom and found her in the bath, fully clothed, in a very ill state.”

Counter-terrorism detectives are working on the theory that the poisoning of Rowley and Sturgess at the end of last month is directly linked to the poisoning of the Russian spy Sergei Skripal and his daughter, Yulia, in Salisbury in March. Experts from the top secret research facility at Porton Down in Wiltshire are trying to establish if the novichok was from the same batch. But if Rowley is correct about the perfume bottle being boxed and sealed, it may undermine the line of inquiry that the novichok that he and Sturgess came into contact with had been discarded by the attackers of the Skripals. It also opens up the possibility that there may yet be more novichok that has not been found in Wiltshire.

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“Intelligence”. Always good to see Dmitry.

US Intelligence Community as a Collapse Driver (Dmitry Orlov)

In today’s United States, the term “espionage” doesn’t get too much use outside of some specific contexts. There is still sporadic talk of industrial espionage, but with regard to Americans’ own efforts to understand the world beyond their borders, they prefer the term “intelligence.” This may be an intelligent choice, or not, depending on how you look at things. First of all, US “intelligence” is only vaguely related to the game of espionage as it has been traditionally played, and as it is still being played by countries such as Russia and China. Espionage involves collecting and validating strategically vital information and conveying it to just the pertinent decision-makers on your side while keeping the fact that you are collecting and validating it hidden from everyone else.

In eras past, a spy, if discovered, would try to bite down on a cyanide capsule; these days torture is considered ungentlemanly, and spies that get caught patiently wait to be exchanged in a spy swap. An unwritten, commonsense rule about spy swaps is that they are done quietly and that those released are never interfered with again because doing so would complicate negotiating future spy swaps. In recent years, the US intelligence agencies have decided that torturing prisoners is a good idea, but they have mostly been torturing innocent bystanders, not professional spies, sometimes forcing them to invent things, such as “Al Qaeda.” There was no such thing before US intelligence popularized it as a brand among Islamic terrorists.

Most recently, British “special services,” which are a sort of Mini-Me to the to the Dr. Evil that is the US intelligence apparatus, saw it fit to interfere with one of their own spies, Sergei Skripal, a double agent whom they sprung from a Russian jail in a spy swap. They poisoned him using an exotic chemical and then tried to pin the blame on Russia based on no evidence. There are unlikely to be any more British spy swaps with Russia, and British spies working in Russia should probably be issued good old-fashioned cyanide capsules (since that supposedly super-powerful Novichok stuff the British keep at their “secret” lab in Porton Down doesn’t work right and is only fatal 20% of the time).

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A country in downfall.

Holiday Hunger Should Be The Shame Of This Government And It Isn’t (G.)

As the summer holidays begin, many families look forward to breaks away from home, in the UK and abroad. Yet for thousands of families, the six-week school break is characterised not by play schemes and day trips in the sun, but acute financial stress, hunger and malnourishment, due to the absence of free school meals for children on low incomes that costs a family £30-£40 a week. With three million children at risk of hunger during the school holidays, the Trussell Trust has warned that food bank use spikes each summer. And last year, 593 organisations running holiday clubs across the UK provided more than 190,000 meals to over 22,000 school-aged children.

Feeding Britain, the charity set up by two Labour MPs, Emma Lewell-Buck and Frank Field, expects to provide meals for 27,000 children in 79 clubs across England this summer. In pilots in 2017, it provided a total of 43,314 meals in holiday fun clubs across eight areas, including Birkenhead, South Shields and Cornwall, in the summer holidays and October half term. Feeding Britain works with existing local charities, community groups, councils and others in the community providing funding and toolkits on how to run and roll out pilots, and creates networks for practical support. The clubs run in community centres, church halls, schools, children’s centres, libraries and parks, and they host games and activities for children, alongside breakfast, lunches, and lessons about food and nutrition for the young attendees.

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Jun 222018
 
 June 22, 2018  Posted by at 8:08 am Finance Tagged with: , , , , , , , , , , , , ,  


Wassily Kandinsky Yellow-Red-Blue 1925

 

Could China’s Next Target Be the US Housing Market? (Forsyth)
Next Central Bank Puts QE Unwind on the Calendar (WS)
Eurogroup Deal For Greece Clinched After Marathon Session (K.)
IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)
Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)
Greek GDP Is Low, But Food Prices Are High (K.)
EU Is Getting Ready For No-Deal Brexit – Juncker (G.)
Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)
Energy Is The Primary Driver Of The Economy (EI)
Italy To Pick Up Migrants, Impound German Charity Ship (R.)
People Donate Millions To Help Separated Families (AP)
2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)
Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)
India Is Facing Its Worst-Ever Water Crisis (ZH)

 

 

They can’t really sell Treasuries. MBS, though…

Could China’s Next Target Be the US Housing Market? (Forsyth)

While so much attention is focused on foreign purchases of Treasuries, the big action has been in U.S. agencies, most of which consist of mortgage-backed securities from government-sponsored Ginnie Mae, Fannie Mae, and Freddie Mac. In April, overseas investors bought $20 billion of agencies, bringing their 12-month total to $186 billion, or over $100 billion more than Treasuries. Asia accounted for $160 billion of those purchases, including $24 billion from China. U.S. corporations also get key support for their borrowing habit from abroad. Foreign investors bought $128 billion of corporate bonds in the latest 12 months, although just $1.6 billion in April. As for equities, overseas investors bought $82 billion ($6 billion in the latest month).

The numbers show that, even more than Uncle Sam, U.S. home borrowers depend on the kindness of strangers. China could retreat from bolstering the American housing market merely not reinvesting the monthly MBS interest and principal payments, resulting in a stealth tightening of mortgage credit. The housing market is already in the doldrums, as May’s weaker-than-expected existing home sales at an annual rate of 5.43 million, 100,000 less than forecast and below April’s 5.45 million annual pace. That disappointing home sales pace comes with unemployment at just 3.8%. But with single-family home prices up 5.2% from a year ago, home sales are sluggish. A further push up in mortgage rates, already at seven-year highs, would further crimp this key sector of the U.S. economy.

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Do we see nerves there?

Next Central Bank Puts QE Unwind on the Calendar (WS)

Markets were surprised today when the Bank of England took a “hawkish” turn and announced that three out of nine members of its Monetary Policy Committee – including influential Chief Economist Andrew Haldane, who’d been considered dovish – voted to raise the Bank Rate to 0.75%, thus dissenting from the majority who kept it at 0.5%. This dissension, particularly by Haldane, communicated to the markets that a rate hike at the next meeting in August is likely. The beaten-down UK pound jumped. But less prominent was the announcement about the QE unwind. Like other central banks, the BoE heavily engaged in QE and maintains a balance sheet of £435 billion ($577 billion) of British government bonds and £10 billion ($13 billion) in UK corporate bonds that it had acquired during the Brexit kerfuffle.

Before it starts shedding assets on its balance sheet, however, the BoE wants to raise the Bank Rate enough to where it can cut it “materially” if needed, “reflecting the Committee’s preference to use Bank Rate as the primary instrument for monetary policy,” as it said. In this, it parallels the Fed. The Fed started its QE unwind in October 2017, after it had already raised its target range for the federal funds rate four times. The BoE’s previous guidance was that the QE unwind would start when the Bank Rate is “around 2%.” Back in the day when this guidance was given, NIRP had broken out all over Europe, and pundits assumed that the BoE would never be able to raise its rate to anywhere near 2%, and so the QE unwind could never happen.

Today the BoE moved down its guidance about the beginning of the QE unwind to a time when the Bank Rate is “around 1.5%.” The Fed’s target range is already between 1.75% and 2.0%. The Fed leads, other central banks follow. And by August 2, the BoE’s Bank Rate may be at 0.75%. From that point forward, the QE unwind may only be three rate hikes away.

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Many headlines talk about debt relief. But that’s not what this is. It’s just another bunch of loan extensions and a €15 billion new loan. There will be many more years of austerity and creditor oversight. No, the bailout has not been completed.

Eurogroup Deal For Greece Clinched After Marathon Session (K.)

After several hours of negotiations, Greek officials and representatives of the country’s international creditors reached an agreement on securing the sustainability of the country’s debt in the early hours of Friday. Greece is to receive a loan tranche of 15 billion euros (3.3 billion euros of which would be used to pay off part of the country’s debt to the ECB and IMF), European officials said. Greece will also get a 10-year extension for the repayment of its European Financial Stability Facility (EFSF) loans and an additional grace period of 10 years on interest payments. The extension of the repayment period of the EFSF loans and the size of the final bailout tranche had been a sticking points in the talks.

These two issues were the focus of several trilateral meetings between Greek Foreign Minister Euclid Tsakalotos and his French and German counterparts, Bruno Le Maire and Olaf Scholz. At a press conference announcing the details of the deal, European Economic and Financial Affairs Commissioner Pierre Moscovici spoke of a “historical moment for Greece” and said a new chapter was beginning for the country. He expressed “great satisfaction” in seeing Greece emerge from eight years of financial support.

“Tonight’s Eurogroup agreement achieves what we have been calling for, a credible, upfront set of measures, which will meaningfully lighten Greece’s debt burden, allow the country to stand on its own two feet, and reassure all partners and investors,” he said. Eurogroup President Mario Centeno struck a similar note. “This is it,” he said. “After eight long years, the Greek bailout has been completed.”

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The IMF has caved on debt relief. Even though it knows it must be accorded.

IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)

The IMF welcomed on Friday a deal on debt relief for Greece reached by Athens’ euro zone creditors saying it will improve debt sustainability in the medium term, but maintained reservations on the long term. Euro zone finance ministers earlier on Friday offered Greece a 10-year deferral and maturities extension on a large part of past loans as well as 15 billion euros in new credit to ensure Athens can stand on its own feet after it exits its third bailout in August. “The additional debt relief measures announced today will mitigate Greece medium-term financing risks and improve medium term debt prospects,” the IMF managing director Christine Lagarde told a news conference.

But she added that the fund will not join the expiring 86-billion-euro bailout as the time “has run out”, and maintained “reservations” on the long term sustainability of the Greek debt, which runs until 2060. The fund will begin assessing the sustainability of the Greek debt “as early as next week”, Lagarde said, adding that the fund will remain engaged in Greece and will participate to the monitoring of the Greek economic performance and reforms after the end of the program.

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“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece..”

Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)

Germany has earned around 2.9 billion euros in profit from interest rate since the first bailout for Greece in 2010. This is the official response of the Federal Government to a request submitted by the Green party in Berlin. The profit was transmitted to the central Bundesbank and from there to the federal budget. The revenues came mainly due to purchases of Greek government bonds under the so-called Securities Markets Program (SMP) of the European Central Bank (ECB). Previous agreements between the government in Athens and the eurozone states foresaw that other states will pay out the profits from this program to Greece if Athens would meet all the austerity and reform requirements.

However, according to Berlin’s response, only in 2013 and 2014 such funds have been transferred to the Greek State and the ESM. The money to the euro bailout landed on a seggregated account. As the Federal Government announced, the Bundesbank achieved by 2017 about 3.4 billion euros in interest gains from the SMP purchases. In 2013, approximately 527 million euros were transferred back to Greece and around 387 million to the ESM in 2014. Therefore, the overall profit is 2.5 billion euros. In addition, there are interest profits of 400 million euros from a loan from the state bank KfW.

“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece,” said Greens household expert Sven Christian Kindler said and demanded a debt relief for Greece. “It can not be that the federal government with billions of revenues from the Greek interest the German budget recapitalize,” Kindler criticized. “Greece has saved hard and kept its commitments, now the Eurogroup must keep its promise,” he stressed.

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And here’s why the Greek recovery story is simply falsehood.

Greek GDP Is Low, But Food Prices Are High (K.)

Greeks may be among the poorest citizens in the European Union, but that does not mean low prices for basic products and services in this country. According to figures published on Wednesday by Eurostat, Greece was the 17th most expensive country among the 28 EU member-states last year, with the general price level standing at 84 percent of the EU average. However, in the most basic category – food – price levels in Greece stood above the bloc’s average, having a significant negative impact on living standards. Eurostat figures had shown on Tuesday that the per capita GDP in Greece in 2017 amounted to just 67 percent of the EU average, while real private consumption stood 23 percent below the EU mean rate.

A key role in food prices remaining at such high levels – in spite of the decade-long crisis – has been played by a succession of hikes in the value-added tax: From a 9 percent rate on food imposed in 2009, many food products now bear a VAT rate of 24 percent, making Greece the 13th most expensive country for food across the bloc. High indirect taxes also explain the particularly high prices in tobacco and alcoholic beverages in Greece, which make this country the 12th most expensive in the EU in this category.

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A hard Brexit will be very unpretty. Airbus talked today about moving 14,000 jobs out of the UK. And they won’t be the last.

EU Is Getting Ready For No-Deal Brexit – Juncker (G.)

The EU needs to be realistic about the dangerous state of the Brexit negotiations and is preparing to deploy its trillion-pound budget to cushion the bloc from the prospect of a no-deal scenario, the European commission president has warned. With the two sides still far apart on the “hardest issues”, just days from a crunch leaders’ summit in Brussels, Jean-Claude Juncker told the Irish parliament on Thursday he was stepping up preparations for a breakdown in talks, and even drafting plans aimed at keeping the peace in Northern Ireland. The problem of avoiding a hard border with the Republic – said by the Irish taoiseach, Leo Varadkar, to be akin to a “riddle wrapped in an enigma” – is threatening to thwart all attempts to make progress on a wider deal.

With Theresa May refusing to countenance what Juncker described as the bloc’s “bespoke and workable solution”, of the Northern Ireland effectively staying in the customs union and single market, it was crucial for the 27 EU member states to prepare for the worst outcome, the commission president said. Juncker told Irish MPs and senators in a joint session of parliament in Dublin: “With pragmatism comes realism. As the clock to Brexit ticks down, we must prepare for every eventuality, including no deal. This is neither a desired nor a likely outcome. But it is not an impossible one. And we are getting ready just in case.

“We will use all the tools at our disposal, which could have a cushioning impact. The new long-term budget for our union from 2021 onwards has an in-built flexibility that could allow us to redirect funds if the situation arose. “We will also earmark €120m (£105m) for a new peace programme which has done so much in breaking down barriers between communities in Northern Ireland and the border counties.”

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More things coming to an end in Britain.

Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)

The United Kingdom, widely considered to be the birthplace of the modern incarnation of the public-private partnership (PPP), in which private firms are contracted to complete and manage public projects, could be one of the first countries to jettison the model. The collapse in January of 200-year old UK infrastructure group Carillion, whose outsized role in delivering public services earned it the moniker “the company that runs Britain,” has fueled concerns that other big outsourcing groups could soon follow in its doomed footsteps. Last week the CEO of Interserve, another large outsourcing group, revealed that the government has given the firm a red rating as a strategic supplier, meaning it has “significant material concerns” about the company’s finances.

Fears are growing that Carillion was not a one-off episode but rather the swan song of a deeply flawed and dying business model. Those fears were hardly assuaged by the release this week of a damning parliamentary report into the UK government’s practice of outsourcing public projects through so-called Private Finance Initiatives (PFIs). PFI deals were invented in 1992 by the Conservative government and then enthusiastically rolled out by the subsequent Labour government. The schemes usually involved large-scale public buildings such as new schools and hospitals which were previously funded by the UK Treasury. Under PFI they were put out to tender with bids invited from developers who put up the investment to build new schools, hospitals or other schemes and then leased them back.

[..] The Treasury’s incapacity to measure the actual benefits of PFI should be of grave concern to British taxpayers given that the interest rate of private-sector debt — these projects are debt financed — can be as much as 2 to 3.75 percentage points higher than the cost of government borrowing. Even if the government doesn’t enter into any new PFI-type deals, it will pay private companies £199 billion, including interest, between April 2017 until the 2040s for existing deals, in addition to some £110 billion already paid. That’s for 700 projects worth around £60 billion. British taxpayers could clearly “get a much better deal,” the report concludes.

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John Lounsbury posted this talk by Steve from late 2016 again. And why not? Economics denies the role of energy…

Energy Is The Primary Driver Of The Economy (EI)

Economic theory has failed to incorporate the role of energy in production for two centuries since the Physiocrats, according to Prof. Steve Keen. In this video he derives a production function that includes energy in an essential manner. It implies that economic growth has been driven by the increase in the energy throughput capabilities of machinery. Prof. Keen argues that all economic gain can be traced to the use of energy which we receive at no cost from the sun. Capital and labor participate in the economy only by use of this energy.

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The Dutch play a strange role in this.

Italy To Pick Up Migrants, Impound German Charity Ship (R.)

Italy appeared to relent on Thursday after at first refusing to accept 226 migrants on board a German charity rescue ship, saying later in the day it would take them in but would impound the vessel. Anti-immigrant interior minister Matteo Salvini initially said the Dutch-flagged ship Lifeline should take the people it plucked from the Mediterranean to the Netherlands and not Italy. But transport minister Danilo Toninelli, who oversees the coastguard, later said it was unsafe for the 32-metre vessel to travel such a great distance with so many people on board. “We will assume the humanitarian generosity and responsibility to save these people and take them onto Italian coastguard ships,” Toninelli said in a video posted on Facebook.

Earlier this month Salvini pledged to no longer let charity ships bring rescued migrants in Italy, leaving the Gibraltar-flagged Aquarius stranded at sea for days with more than 600 migrants until Spain offered them safe haven. The Dutch government denied responsibility for the vessel, something Toninelli said Italy would investigate. The Italian coastguard would escort Lifeline “to an Italian port to conduct the probe” and impound the ship, he said. Also on Thursday, the German charity Sea Eye which operates another Dutch-flagged ship, the Seefuchs, said in a statement it was ending its sea rescue mission after the Dutch government told them that it was no longer responsible for the vessel.

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Please make sure it’s spent well.

People Donate Millions To Help Separated Families (AP)

In an outpouring of concern prompted by images and audio of children crying for their parents, hundreds of thousands of people worldwide are donating to nonprofit organizations to help families being separated at the U.S.-Mexico border. Among those that have generated the most attention is a fundraiser on Facebook started by a Silicon Valley couple, who say they felt compelled to help after they saw a photograph of a Honduran toddler sobbing as her mother was searched by a U.S. border patrol agent. The fundraiser started by David and Charlotte Willner had collected nearly $14 million by Wednesday afternoon.

The Willners, who have a 2-year-old daughter, set up the “Reunite an immigrant parent with their child” fundraiser on Saturday hoping to collect $1,500 — enough for one detained immigrant parent to post bond — but money began pouring in and within days people had donated $5 million to help immigrant families separated under the Trump administration’s “zero-tolerance” policy that criminally prosecutes all adults caught crossing the border illegally. “What started out as a hope to help one person get reunited with their family has turned into a movement that will help countless people,” the couple said in a statement released by a spokeswoman Wednesday. The couple, who were early employees at Facebook, declined to be interviewed.

“Regardless of political party, so many of us are distraught over children being separated from their parents at the border.” The money collected from more than 300,000 people in the United States and around the world will be given to the Refugee and Immigrant Center for Education and Legal Services, or RAICES, a Texas nonprofit that that offers free and low-cost legal services to immigrants.

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South Korean President Moon Jae-in doesn’t sit still.

2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)

North and South Korean officials are meeting to arrange the first reunions in three years between families divided by the 1950-53 Korean War. Friday’s meeting at the North’s Diamond Mountain resort comes as the rivals take reconciliation steps amid a diplomatic push to resolve the North Korean nuclear crisis. Seoul’s Unification Ministry said the meeting will discuss ways to carry out an agreement on the reunions made at a summit between North Korean leader Kim Jong Un and South Korean President Moon Jae-in. The two summits between Kim and Moon have opened various channels of peace talks between the Koreas, including military talks for reducing tensions across their tense border and sports talks for fielding combined teams at the upcoming Asian Games in Indonesia.

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Even if we don’t shoot them, we find other ways to kill them off.

Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)

High levels of tourism can lead to a dramatic reduction in the number of cheetahs able to raise their young to independence, new research has found. A study in Kenya’s Maasai Mara savannah found that in areas with a high density of tourist vehicles, the average number of cubs a mother cheetah raised to independence was just 0.2 cubs per litter – less than a tenth of the 2.3 cubs per litter expected in areas with low tourism. Dr Femke Broekhuis, a researcher at Oxford University and the author of the study, surveyed cheetahs in the reserve between 2013 and 2017 to assess how the frequency of tourist vehicles affected the number of cheetah cubs that survived to adulthood.

“During the study there was no hard evidence of direct mortality caused by tourists,” such as vehicles accidentally running over cubs, Broekhuis said. “It is therefore possible that tourists have an indirect effect on cub survival by changing a cheetah’s behaviour, increasing a cheetah’s stress levels or by minimising food consumption.” Broekhuis said she has seen as many as 30 vehicles around a single cheetah at the same time. “The most vehicles that we recorded at a cheetah sighting was 64 vehicles over a two-hour period,” she said.

Too many tourist vehicles can reduce a cheetah’s hunting success rate, the study suggests, and even if the hunt is successful, the disturbance from tourists could cause a female to abandon her kill, making her less likely to be able to provide for her young. Broekhuis said it was “crucial that strict wildlife viewing guidelines are implemented and adhered to,” and suggested limiting the number of vehicles around a cheetah to five and not allowing them to get any closer than 30 metres.

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The shape of things to come.

India Is Facing Its Worst-Ever Water Crisis (ZH)

India is facing its worst-ever water crisis, with some 600 million people facing acute water shortage, a government think-tank says. The Niti Aayog report, which draws on data from 24 of India’s 29 states, says the crisis is “only going to get worse” in the years ahead. Around 200,000 Indians die every year because they have no access to clean water, according to the report. And as The BBC reports, many end up relying on private water suppliers or tankers paid for the by the government. Winding queues of people waiting to collect water from tankers or public taps is a common sight in Indian slums. Indian cities and towns regularly run out water in the summer because they lack the infrastructure to deliver piped water to every home.

• 600 million people face high-to-extreme water stress. • 75% of households do not have drinking water on premise. 84% rural households do not have piped water access. • 70% of our water is contaminated; India is currently ranked 120 among 122 countries in the water quality index. India faces more than one problem – all compounding the nation’s crisis: Droughts are becoming more frequent, creating severe problems for India’s rain-dependent farmers (~53% of agriculture in India is rainfed17). When water is available, it is likely to be contaminated (up to 70% of our water supply), resulting in nearly 200,000 deaths each year.

Interstate disagreements are on the rise, with seven major disputes currently raging, pointing to the fact that limited frameworks and institutions are in place for national water governance. And that means massive problems lie ahead… 40% of the Indian population will have no access to drinking water by 2030 with 21 cities running out of groundwater by 2020 – affecting 100 million people which will cut 6% from GDP by 2050. What remains alarming is that the states that are ranked the lowest – such as Uttar Pradesh and Haryana in the north or Bihar and Jharkhand in the east – are also home to nearly half of India’s population as well the bulk of its agricultural produce.

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Jun 152018
 
 June 15, 2018  Posted by at 8:10 am Finance Tagged with: , , , , , , , , , , , , ,  


OR LIGHT Compassion 2018

 

Argentina’s Peso Collapses Even Further Despite $50 Billion IMF Bailout (WS)
ECB Calls Halt To Quantitative Easing, Despite ‘Soft’ Euro (G.)
Japan’s Central Bank Dials Down Inflation View, Complicates Stimulus-Exit (R.)
Powell Orchestrates a Masterful Move (DDMB)
The Fed Creates Problems For Itself (Macleod)
The Art of the Deal Worked On Sentosa Island (AT)
Absence of “CVID” In Joint Statement? (Hani)
Optimism (Caitlin Johnstone)
Blackstone Becomes Biggest Hotel & Property Owner in Spain (WS)
‘Tourism Pollution’: Japanese Crackdown Costs Airbnb $10 Million (G.)
Greeks Are Least Satisfied In The EU (K.)
Turkey: Even Birds Need Our Consent To Fly In The Aegean (K.)
Comey et al Just Made It More Difficult For Mueller To Prosecute Trump (Hill)
A Closer Look At Extreme FBI Bias Revealed In OIG Report (ZH)

 

 

Money has left the building.

Argentina’s Peso Collapses Even Further Despite $50 Billion IMF Bailout (WS)

Today the Argentina peso plunged another 5.5% against the US dollar. It now takes ARS 27.7 to buy $1. Over the past 16 years, the peso has gone through waves of collapses. This collapse began on April 20. The central bank of Argentina (BCRA) countered it by selling $1 billion per day of scarce foreign exchange reserves and buying pesos. The peso fell more quickly. The BCRA responded with three rate hikes, to finally 40%! On May 8, the government asked the IMF for a bailout. On May 16, after a chaotic plunge of the peso, the BCRA was able to refinance about $26 billion in maturing peso-denominated short-term debt (Lebacs) at an annual interest of 40%, and the peso bounced. It was a dead-cat bounce, however, and the peso plunged another 13% against the dollar through today.

Since April 20, the peso has plunged 27.5%. The annotated chart shows the daily moves of the collapse, and the various failed gyrations to halt it (the chart depicts the value of 1 ARS in USD). The collapse of the peso comes despite an endless series of measures to halt it. Just this week so far: On Tuesday, the BCRA decided to keep its key interest rate at 40%; and on Wednesday, the Ministry of Finance announced it would hold daily auctions to sell $7.5 billion in foreign exchange reserves and buy pesos, to prop up the peso. But it was apparently the only one buying pesos. With inflation at 25.5% and heading to 27% by year-end, according to government estimates, with a rising budget deficit, a surging current account deficit, soaring borrowing costs, and burned investors, what else is there to do?

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Not Draghi’s finest hour.

ECB Calls Halt To Quantitative Easing, Despite ‘Soft’ Euro (G.)

The European Central Bank has shrugged off evidence of a slowdown in the eurozone and announced that it will phase out the stimulus provided by its massive three-year bond-buying programme to the eurozone economy by the end of the year. Despite warning that the single currency area was going through a soft patch at a time when protectionist risks were rising, the ECB said it would wind down its bond purchases over the next six months. The ECB is currently boosting the eurozone money supply by buying €30bn of assets each month, but this will be reduced to €15bn a month after September and ended completely at the end of 2018.

The move follows strong pressure from some eurozone countries, led by Germany, that were uncomfortable about the more than €2.4tn of assets accumulated by the ECB since it launched its quantitative easing programme at the start of 2015. Mario Draghi, the ECB’s president, said at the end of a meeting of the bank’s governing council in Latvia that the QE programme had succeeded in its aim of putting inflation on course to meet its target of being below but close to 2%. Eurozone activity has accelerated markedly over the past three years, with some estimates suggesting that QE contributed 0.75percentage points a year to the average 2.25% annual growth rate.

The ECB’s statement reflected the battle between hawks and doves on the bank’s council, with the decision on QE matched by a softening of its approach to interest rates. Draghi said there would be no prospect of an increase in the ECB’s key lending rate – currently 0.0% – until next summer at the earliest. “We decided to keep the key ECB interest rates unchanged and we expect them to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path,” Draghi said.

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No, really, Abenomics is dead.

Japan’s Central Bank Dials Down Inflation View, Complicates Stimulus-Exit (R.)

The Bank of Japan maintained its ultra-loose monetary policy on Friday and downgraded its view on inflation in a fresh blow to its long-held 2% price goal, further complicating the central bank’s path to rolling back its crisis-era stimulus. Markets are on the lookout for clues from BOJ Governor Haruhiko Kuroda’s post-meeting briefing on how long the central bank could hold off on whittling down stimulus given recent disappointingly weak price growth. As widely expected, the Bank of Japan kept its short-term interest rate target at minus 0.1% and a pledge to guide 10-year government bond yields around zero%.

The move contrasts with the European Central Bank’s decision to end its asset-purchase program this year and the U.S. Federal Reserve’s steady rate increases, which signaled a break from policies deployed to battle the 2007-2009 financial crisis. “Consumer price growth is in a range of 0.5 to 1%,” the BOJ said in a statement accompanying the decision. That was a slightly bleaker view than in the previous meeting in April, when the bank said inflation was moving around 1%. The BOJ stuck to its view the economy was expanding moderately, unfazed by a first-quarter contraction that many analysts blame on temporary factors like bad weather.

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He just likes the attention.

Powell Orchestrates a Masterful Move (DDMB)

Federal Reserve Chairman Jerome Powell has taken the first steps in remaking the central bank in his “plain-English” image, which can only be a good thing for financial markets. Earlier this week, news leaked that the central bank was considering holding a press conference following each Federal Open Market Committee meeting instead of after every other one like it does now. The reports set off a mini-storm. Speculation rose the Fed would implement this new policy immediately, which could mean the central bank was considering accelerating the pace of interest-rate increases as soon as August. After all, investors had become accustomed to the Fed only making a major policy move at meetings followed by a press conference. Now, every meeting would be “live.”

But in a masterful move, Chairman Jerome Powell managed to confirm the policy while also putting financial markets at ease. Rather than announcing the change in the official statement outlining the Fed’s plan to raise its target for the federal funds rate for the seventh time since December 2015, Powell waited until the start of his press conference to drop the bomb, noting that the policy wouldn’t start until January. Here’s Powell’s reasoning: “My colleagues and I meet eight times a year and take a fresh look each time at what is happening in the economy and consider whether our policy needs adjusting. We don’t put our interest rate decisions on auto-pilot because the economy can always evolve in unexpected ways.

History has shown that moving interest rates either too quickly or too slowly can lead to bad economic outcomes. We think the outcomes are likely to be better overall if we are as clear as possible about what we are likely to do and why. To that end, we try to give a sense of our expectations for how the economy will evolve and how our policy stance may change. As Chairman, I hope to foster a public conversation about what the Fed is doing to support a strong and resilient economy. And one practical step in doing so is to have a press conference like this after every one of our scheduled FOMC meetings. We’re going to do that beginning in January. That will give us more opportunities to explain our actions and to answer your questions.

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“..the unsustainable excesses of unprofitable debt created by suppressing interest rates..”

The Fed Creates Problems For Itself (Macleod)

Since Hayek’s time, monetary policy, particularly in America, has evolved away from targeting production and discouraging savings by suppressing interest rates, towards encouraging consumption through expanding consumer finance. American consumers are living beyond their means and have commonly depleted all their liquid savings. But given the variations in the cost of consumer finance (between 0% car loans and 20% credit card and overdraft rates), consumers are generally insensitive to changes in interest rates. Therefore, despite the rise of consumer finance, we can still regard Hayek’s triangle as illustrating the driving force behind the credit cycle, and the unsustainable excesses of unprofitable debt created by suppressing interest rates as the reason monetary policy always leads to an economic crisis.

The chart below shows we could be living dangerously close to another tipping point, whereby the rises in the Fed Funds Rate (FFR) might be about to trigger a new credit and economic crisis. Previous peaks in the FFR coincided with the onset of economic downturns, because they exposed unsustainable business models. On the basis of simple extrapolation, the area between the two dotted lines, which roughly join these peaks, is where the current FFR cycle can be expected to peak. It is currently standing at about 2% after yesterday’s increase, and the Fed expects the FFR to average 3.1% in 2019. The chart tells us the Fed is already living dangerously with yesterday’s hike, and further rises will all but guarantee a credit crisis.

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The view from Asia Times. Many people in that part of the world don’t understand the criticism.

The Art of the Deal Worked On Sentosa Island (AT)

Some statesmen by their sheer force of personality and unorthodox ways of politicking arouse disdain among onlookers. US President Donald is perhaps the most famous figure of that kind in world politics today. No matter what he does, Trump attracts criticism. He evokes strong feelings of antipathy among a large and voluble swathe of opinion within half of America. The making of history in a virtual solo act on his part, which is the rarest of efforts, on Sentosa Island in Singapore on Tuesday and which the world watched with awe and disbelief, will be instinctively stonewalled. Half of America simply refuses to accept the positive tidings about him coming from Singapore.

The skeptics are all over social media pouring scorn, voicing skepticism, unable to accept that if the man has done something sensible and good for his country and for world peace, it deserves at the very least patient, courteous attention. The problem is about Trump – not so much the imperative need of North Korea’s denuclearization. But western detractors – ostensibly rooting for the “liberal international order” – will eventually lapse into silence because what emerges is that North Korean leader Kim Jong-un has enough to “bite” here in the deal that Trump is offering – broadly, a security guarantee from the US and the offer of a full-bodied relationship with an incremental end to sanctions plus a peace treaty.

Succinctly put, Trump has offered a deal that Kim simply cannot afford to reject. The ending of the US-ROK military exercises forthwith; Trump’s agenda of eventual withdrawal of troops from ROK; the lure of possible withdrawal of sanctions once 20% of the denuclearization process gets underway, or once the process becomes irreversible; Trump’s hint that he has sought assurances from Japan and the ROK that they will be “generous” in offering economic assistance to the reconstruction of North Korea; China’s involvement in the crucial process – these are tangibles.

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The view from South Korea.

Absence of “CVID” In Joint Statement? (Hani)

The absence of any reference to “complete, verifiable, and irreversible dismantlement” (CVID) of North Korea’s nuclear program in the joint statement reached at US President Donald Trump and North Korean leader Kim Jong-un’s June 12 summit in Singapore is being seen by some as a “negotiation failure” on the US’s part. But an analysis of Trump’s subsequent remarks – and a reading between the lines of the Pyongyang’s official announcement – suggests the US achieved practical gains in terms of a commitment from the North in exchange for the face-saving measure of avoiding use of the “CVID” term due to possible North Korean objections to it.

To begin with, the Singapore joint statement’s language marks a step forward from the Panmunjeom Declaration of Apr. 27 in terms of the final goal of denuclearizing the Korean Peninsula. The latest statement refers to Kim having “reaffirmed his firm and unwavering commitment to complete denuclearization of the Korean Peninsula.” While the Panmunjeom Declaration referred to “realizing, through complete denuclearization, a nuclear-free Korean Peninsula,” the new statement includes the additional reference to a “firm and unwavering commitment.”

From the reference to Kim’s “firm and unwavering” commitment to denuclearization, some experts are suggesting North Korea may have agreed to verification in addition to denuclearization – in other words, that the language may be a substitute for the “verifiable” part of the CVID approach demanded by Washington. “You could see them as having used the term out of awareness of North Korea’s discomfort with the word ‘verification,’” Handong Global University professor Kim Joon-hyung said after a Korea Press Foundation debate at Singapore’s Swissotel on June 13. “It may be fair to say North Korea made a definite commitment on the implementation and verification issues,” Kim argued.

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“..while you can always count on Capitol Hill to make it incredibly easy for a president to deploy military personnel around the globe, giving that same office the power to bring troops home is a completely different matter. ”

Optimism (Caitlin Johnstone)

Off the top of my head I have a hard time thinking of anything sleazier than smearing peace talks in order to gain partisan political points, but that has indeed been the theme of the last few days when it comes to the Singapore summit. Liberal pundits everywhere have been busily circulating the narrative that Kim Jong-Un “played” Trump by getting him to temporarily halt military drills in exchange for suspended nuclear testing. It was the most fundamental beginning of peace negotiations and a slight deescalation in tensions on the Korean Peninsula, but the way they talk about it you’d think Kim had taken off from Singapore in Air Force One with the keys to Fort Knox and Melania on his lap.

I’m not sure how far up the military-industrial complex’s ass one’s head needs to be to think that one single step toward peace is a gigantic take-all-the-chips win for the impoverished North Korea, but many of Trump’s political enemies are taking it even further. Senate Democrats have introduced a bill to make it more difficult for Trump to withdraw US troops from South Korea, because while you can always count on Capitol Hill to make it incredibly easy for a president to deploy military personnel around the globe, giving that same office the power to bring troops home is a completely different matter.

Surprising no one, MSNBC’s cartoon children’s program The Rachel Maddow Show took home the trophy for jaw-dropping, shark-jumping ridiculousness with an eighteen-minute Alex Jones impression claiming that the chief architect of the Korean negotiations was none other than (and if you can’t guess whose name I’m going to write once we get out of these parentheses I deeply envy your ignorance on this matter) Vladimir Putin. [..] This president is facilitating acts of military violence and dangerous escalations around the world; anyone who isn’t relieved by the possibility of one powder keg being defused in that rampage actually has a lot more faith in Trump’s competence than they’re pretending to.

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Easy pickings.

Blackstone Becomes Biggest Hotel & Property Owner in Spain (WS)

Private equity firm Blackstone, the undisputed king of property funds, continues to bet big on global real estate. In the last week it raised $9.4 billion for Asian real estate. It was also given the green light to acquire Spain’s biggest real estate investment fund (REIT), Hispania, for €1.9 billion. The move, after its prior acquisitions, will cement its position as Spain’s biggest hotel owner and fully private landlord. Hispania’s 46 hotels, added to Blackstone’s other hotels, will turn the PE firm into Spain’s largest hotelier with almost 17,000 rooms, far ahead of Meliá (almost 11,000), H10 (more than 10,000) and Hoteles Globales (just over 9,000).

It took Blackstone just three moves to become market leader. First, it acquired the hotel group HI Partners from struggling Spanish lender Banco Sabadell for €630 million in October 2017. Then, a month ago, it bought 29.5% of the hotel chain NH Hoteles, which is currently in the hands of the Chinese conglomerate HNA. Now, by raising its stake in Hispania from 16.75% to 100%, it will take up a dominant position in one of the world’s biggest tourist markets. With this deal, it will also expand its residential property empire in Spain. Blackstone has over 100,000 real estate assets controlled via dozens of companies. Those assets include a huge portfolio of impaired real estate assets, including defaulted mortgages and real estate-owned assets (REOs).

Blackstone also owns 1,800 social housing units, which it acquired from Madrid City Hall in a controversial deal brokered by the son of former Spanish prime minister José María Aznar and former Madrid mayor Ana Botella. Blackstone paid €202 million for the apartments in 2013; they are now estimated to be worth €660 million — a 227% return in just five year! Since its purchase of the properties, Blackstone has hiked rents on the flats by 49%. Those who can’t pay have been evicted. Blackstone also played a starring role in one of the world’s biggest real estate operations of 2017, in which it payed €5.1 billion for the defaulted loans Banco Santander inherited from its shotgun-acquisition of Banco Popular.

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“..a dramatic drop in the number of Japanese properties available via Airbnb, from more than 60,000 this spring to just 1,000 on the eve of the law’s introduction.”

‘Tourism Pollution’: Japanese Crackdown Costs Airbnb $10 Million (G.)

It has become a familiar scene: tourists in rented kimonos posing for photographs in front of a Shinto shrine in Kyoto. They and other visitors have brought valuable tourist dollars to the city and other locations across Japan. But now the country’s former capital is on the frontline of a battle against “tourism pollution” that has already turned locals against visitors in cities across the world such as Venice, Barcelona and Amsterdam. The increasingly fraught relationship between tourists and their Japanese hosts has spread to the short-stay rental market. On Friday a new law comes into effect that requires property owners to register with the government before they can legally make their homes available through Airbnb and other websites.

The restriction has caused the number of available properties to plummet and has cost the US-based company millions of dollars. Thanks to government campaigns, the number of foreign tourists visiting Japan has soared since the end of a flat period caused by a strong yen and radiation fears in the aftermath of the 2011 Fukushima disaster. A record 28.7 million people visited last year, an increase of 250% since 2012. Almost seven million were from China, with visitors from South Korea, Taiwan, Hong Kong Thailand and the US taking the next five spots. By 2020, the year Tokyo hosts the Olympic Games, the government hopes the number will have risen to 40 million.

[..] Under the new private lodging law, which was supposed to address a legal grey area surrounding short-term rentals – known as minpaku – properties can be rented out for a maximum of 180 days a year, and local authorities are permitted to impose additional restrictions. The result has been a dramatic drop in the number of Japanese properties available via Airbnb, from more than 60,000 this spring to just 1,000 on the eve of the law’s introduction. The legislation has forced the firm to cancel reservations for guests planning to stay in unregistered homes after Friday and to compensate clients to the tune of about $10m.


A sign in Kyoto cautions against touching geishas, taking selfies, littering, sitting on fences and eating and smoking on the street. Photograph: Justin McCurry for the Guardian

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Surprise!

Greeks Are Least Satisfied In The EU (K.)

Greece is the least satisfied nation in the European Union, according to a Eurobarometer survey published Thursday. More specifically, the survey, conducted between March 17 and 28, showed that just 52% of Greeks said they were satisfied with their lives, compared to a 83% average for the 28-member bloc. Only 35% of Greeks surveyed said they were satisfied with the financial situation of their households, compared to 71% across the EU. A staggering 98% said the state of the country’s economy is bad while one in two Greeks said the country’s financial crisis is not over yet and that it will deteriorate even further. As for the country’s general situation, 94% said it is negative. Just 6% said the general situation was positive compared to the 51% average for EU member-states.

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Even turkeys?!

Turkey: Even Birds Need Our Consent To Fly In The Aegean (K.)

With Greece featuring prominently in Turkey’s election campaigning, Turkish Foreign Minister Mevlut Cavusoglu raised the tension a notch again Thursday, warning that not even a bird will fly over the Aegean without Ankara’s permission. Responding to criticism by Turkish ultra-nationalists that 18 islands have been “lost” to Greece in recent years, Cavusoglu said that since the crisis over the Imia islets in 1996 there have been no changes in the legal status of the Aegean. “Not only during our own rule, but before that there has been no change in the status of the Aegean. We will not allow this. Even in the case of research we will not give permission, not even to a bird in the Aegean,” he said during an interview with a Turkish radio station.

He went on to say that Turkey will make no concessions in the Aegean and Cyprus, and that Ankara will also begin gas exploration “around” the Eastern Mediterranean island. “We also have a drill,” he said. Turkey has vowed to stop Cyprus from drilling for gas and oil in its exclusive economic zone (EEZ), insisting there can be no development of the island’s natural resources without the participation of the Turkish Cypriots in the island’s Turkish-occupied north. “In the last few months we have prevented drilling and we drove the Italians away. We will not allow anyone to take away the rights of Turkish Cypriots,” he said. Cyprus government spokesman Prodromos Prodromou said that Nicosia will not be dragged into the “climate of tension” that Turkey is cultivating. He cited international law and said that Cyprus has an established EEZ. Moreover, he said the US, Russia and the European Union have all backed Cyprus’s rights.

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Wonder what the fallout will be.

Comey et al Just Made It More Difficult For Mueller To Prosecute Trump (Hill)

James Comey once described his position in the Clinton investigation as being the victim of a “500-year flood.” The point of the analogy was that he was unwittingly carried away by events rather than directly causing much of the damage to the FBI. His “500-year flood” just collided with the 500-page report of the Justice Department inspector general (IG) Michael Horowitz. The IG sinks Comey’s narrative with a finding that he “deviated” from Justice Department rules and acted in open insubordination. Rather than portraying Comey as carried away by his biblical flood, the report finds that he was the destructive force behind the controversy. The import of the report can be summed up in Comeyesque terms as the distinction between flotsam and jetsam.

Comey portrayed the broken rules as mere flotsam, or debris that floats away after a shipwreck. The IG report suggests that this was really a case of jetsam, or rules intentionally tossed over the side by Comey to lighten his load. Comey’s jetsam included rules protecting the integrity and professionalism of his agency, as represented by his public comments on the Clinton investigation. The IG report concludes, “While we did not find that these decisions were the result of political bias on Comey’s part, we nevertheless concluded that by departing so clearly and dramatically from FBI and department norms, the decisions negatively impacted the perception of the FBI and the department as fair administrators of justice.”

The report will leave many unsatisfied and undeterred. Comey went from a persona non grata to a patron saint for many Clinton supporters. Comey, who has made millions of dollars with a tell-all book portraying himself as the paragon of “ethical leadership,” continues to maintain that he would take precisely the same actions again. Ironically, Comey, fired FBI deputy director Andrew McCabe, former FBI agent Peter Strzok and others, by their actions, just made it more difficult for special counsel Robert Mueller to prosecute Trump for obstruction. There is now a comprehensive conclusion by career investigators that Comey violated core agency rules and undermined the integrity of the FBI. In other words, there was ample reason to fire James Comey.

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Many heads will roll at the Bureau.

A Closer Look At Extreme FBI Bias Revealed In OIG Report (ZH)

As we digest and unpack the DOJ Inspector General’s 500-page report on the FBI’s conduct during the Hillary Clinton email investigation “matter,” damning quotes from the OIG’s findings have begun to circulate, leaving many to wonder exactly how Inspector General Michael Horowitz was able to conclude: “We did not find documentary or testimonial evidence that improper considerations, including political bias, directly affected the specific investigative actions we reviewed” We’re sorry, that just doesn’t comport with reality whatsoever. And it really feels like the OIG report may have had a different conclusion at some point.

Just read IG Horowitz’s own assessment that “These texts are “Indicative of a biased state of mind but even more seriously, implies a willingness to take official action to impact the Presidential candidate’s electoral prospects.” Of course, today’s crown jewel is a previously undisclosed exchange between Peter Strzok and Lisa Page in which Page asks “(Trump’s) not ever going to become president, right? Right?!” to which Strzok replies “No. No he’s not. We’ll stop it.” Nevermind the fact that the FBI Director, who used personal emails for work purposes, tasked Strzok, who used personal emails for work purposes, to investigate Hillary Clinton’s use of personal emails for work purposes. Of course, we know it goes far deeper than that…

The Wall Street Journal’s Kimberley Strassel also had plenty to say in a Twitter thread:
1) Don’t believe anyone who claims Horowitz didn’t find bias. He very carefully says that he found no “documentary” evidence that bias produced “specific investigatory decisions.” That’s different
2) It means he didn’t catch anyone doing anything so dumb as writing down that they took a specific step to aid a candidate. You know, like: “Let’s give out this Combetta immunity deal so nothing comes out that will derail Hillary for President.”
3) But he in fact finds bias everywhere. The examples are shocking and concerning, and he devotes entire sections to them. And he very specifically says in the summary that they “cast a cloud” on the entire “investigation’s credibility.” That’s pretty damning.
4) Meanwhile this same cast of characters who the IG has now found to have made a hash of the Clinton investigation and who demonstrate such bias, seamlessly moved to the Trump investigation. And we’re supposed to think they got that one right?
5) Also don’t believe anyone who says this is just about Comey and his instances of insubordination. (Though they are bad enough.) This is an indictment broadly of an FBI culture that believes itself above the rules it imposes on others.
6) People failing to adhere to their recusals (Kadzik/McCabe). Lynch hanging with Bill. Staff helping Comey conceal details of presser from DOJ bosses. Use of personal email and laptops. Leaks. Accepting gifts from media. Agent affairs/relationships.
7)It also contains stunning examples of incompetence. Comey explains that he wasn’t aware the Weiner laptop was big deal because he didn’t know Weiner was married to Abedin? Then they sit on it a month, either cuz it fell through cracks (wow) or were more obsessed w/Trump
8) And I can still hear the echo of the howls from when Trump fired Comey. Still waiting to hear the apologies now that this report has backstopped the Rosenstein memo and the obvious grounds for dismissal.

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Jun 142018
 
 June 14, 2018  Posted by at 8:42 am Finance Tagged with: , , , , , , , , , , , , ,  


Wassily Kandinsky Free Curve to the Point – Accompanying Sound of Geometric Curves 1925

 

This Fed Grows Relentlessly More Hawkish (WS)
ECB Gets Ready To Pull The Plug On Stimulus Scheme (R.)
The ECB, Not The Fed, Is The Match That Will Spark Bond Market Volatility (MW)
China Holds Fire On Rates, Posts ‘Shockingly Weak’ Activity Growth (R.)
Riskiest Junk Bonds Completely Blow Off the Fed, Face “Sudden” Reckoning (WS)
Cryptocurrency Bloodbath Continues, Tether Accused Of Manipulating Bitcoin (MW)
The Tories’ Chaotic Brexit Has Lost The Trust Of Business – Jobs Will Go (G.)
The North Korea Summit Through the Looking Glass (Jacobin)
Italy-France Relations Collapse Amid North-African Migrant Spat (ZH)
Apple Steps Up Encrytion To Thwart Police Cracking of iPhones (AFP)
FYROM and Greece Fail To Resolve Bitter Naming Dispute (G.)
Antarctic Ice Melting Faster Than Ever (G.)

 

 

Is there anyone alive who thinks that the US, EU, global economies are strong enough to withstand large scale liquidity withdrawal?

This Fed Grows Relentlessly More Hawkish (WS)

“The economy is in great shape,” Fed Chairman Jerome Powell said today at the press conference after the FOMC meeting. Inflation as measured by the Fed’s preferred low-ball measure “core PCE” has hit the Fed’s target of 2%, and the Fed expects it to hit 2.1% by year-end. Inflation as measured by CPI jumped to 2.8%. “Job gains have been strong,” today’s statement said. The “unemployment rate has declined,” while “growth of household spending has picked up,” and “business fixed investment has continued to grow strongly.” This is no longer the crisis economy of yore. But the interest rates are still low and stimulative, befitting for a crisis economy. So something needs to be done, and it’s getting done, if “gradually.”

There were all kinds of intriguing elements in the FOMC’s increasingly hawkish but “gradual” hoopla today. By unanimous vote, the FOMC raised its target for the federal funds rate by a quarter percentage point to a range between 1.75% and 2.0%. This was expected; what’s intriguing is the unanimous vote, unlike prior rate hikes. Four rate hikes in 2018 (two more this year) are now gradually being baked in, according to the median expectation of the 15 members of the FOMC, per the infamous “dot plot” with which the Fed tries to communicate potential rate moves: One member expects 5 rate hikes in 2018; seven members expect 4 hikes; five members expect 3 hikes, and two members expect no more hikes.

At the March meeting, four rate hikes had appeared in the dot plot as a real but more distant possibility. Two more hikes this year would bring the top end of the target range to 2.5% by year-end. This shows the 2018 section of the dot plot:

Rates are expected to continue to rise, three times in 2019 and once in 2020, nudging the federal funds rate to nearly 3.5%. A presser after every meeting – oh boy. During the press conference, Powell said that, starting next January, there will be a press conference after every FOMC meeting. This idea has been mentioned a couple of times recently to prepare markets for it. Now it’s official. As in every Fed announcement, it’s no biggie, really, trust us. The move is designed to “explain our actions and answer your questions,” Powell said. It was “only about improving communications.” It didn’t mean at all that the Fed would be speeding up its rate hikes, he said.

[..] Interest paid to the banks on excess reserves gets a makeover. Banks have about $1.89 trillion in “excess reserves” on deposit at the Fed. The Fed has been paying banks interest on these excess reserves at a rate that was equal to the top of the Fed’s target range – so 1.75% since the last rate hike, which amounts to an annual rate of $33 billion of easy profits for the banks. In theory with today’s rate hike, the FOMC would also have increased the rate it pays on excess reserves to 2.0%.

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But the European economy is not ready. What now, accelerate Target2 even more?

ECB Gets Ready To Pull The Plug On Stimulus Scheme (R.)

The ECB will debate on Thursday whether to end its huge asset purchases by year-end, in what would be its biggest step towards dismantling crisis-era stimulus credited with pulling the euro zone economy out of recession. Financial investors are coming to terms with the end of a decade of easy money from the world’s top central banks, with the Federal Reserve on Wednesday raising interest rates for a seventh time in 3-1/2 years in a further shift from policies used to battle the 2007-2009 financial crisis and recession. Meeting as growth is slowing and political populism threatens to set off market turbulence, the ECB is expected to argue that its 2.55 trillion euro bond-buying scheme has done its job in bringing the 19-member currency bloc back from the brink of collapse.

Whether policymakers take the actual decision at their meeting in Riga on Thursday or hold off until July appears secondary as they have long argued that the scheme, commonly known as quantitative easing (QE), should be concluded and the policy focus shift to the expected path of interest rates. The biggest complication could be the increasingly murky economic outlook, weighed down by a developing trade war with the United States, a populist challenge from Italy’s new government and softening export demand. But these factors could actually hasten the ECB’s decision rather than hold it back as the bank has little policy firepower left and a further weakening of the outlook could make a later exit more difficult.

“We believe the ECB may be in a hurry to close the QE chapter,” Bank of America Merrill Lynch said in a note to clients. “We think this is essentially political, as the ECB would not want its monetary policy to be affected by claims of supporting or conversely impairing the new policy course in Italy.”

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Don’t forget the BOJ and China.

The ECB, Not The Fed, Is The Match That Will Spark Bond Market Volatility (MW)

Rising real interest rates haven’t yet made for a sustained pickup in Treasury volatility, leaving some investors to ask what it would take to spark some turbulence. Danielle DiMartino Booth of Quill Intelligence said the European Central Bank, and not the Federal Reserve, holds the key as it looks to set a timetable for winding down its ultra-accommodative policies. With the Federal Reserve’s shrinking balance sheet unable to offset easy global financial conditions on its own, investors should closely watch the ECB at Thursday’s meeting where the central bank is expected to discuss the end of quantitative easing, though the actual wind-down almost certainly remains several months away at the earliest. “The culmination of ECB QE will remove a bond-volatility governor,” said Booth, in a note published on Tuesday.

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And there comes China. Xi fighting the shadows is like Don Quixote and the windmills.

China Holds Fire On Rates, Posts ‘Shockingly Weak’ Activity Growth (R.)

China’s economy is finally starting to cool under the weight of a multi-year crackdown on riskier lending that is pushing up borrowing costs for companies and consumers, with data on Thursday pointing to a broad slowdown in activity in May. China’s central bank sparked concerns over the health of the economy earlier in the day when it left short-term interest rates unchanged, surprising markets which had expected it to follow a hike by the Federal Reserve, as it has tended to do. Industrial output, investment and retail sales all grew less than expected, suggesting further weakness ahead if Beijing perseveres with its crackdowns on pollution, questionable local government spending and off-balance sheet “shadow” financing.

The data, which showed the slowest investment growth in over 22 years, “was all shockingly weak by Chinese standards,” economists at Rabobank said, adding that the readings may explain the central bank’s decision to keep rates on hold. “Get ready for headlines talking about Chinese deleveraging hitting the economy – except it isn’t even deleveraging yet! China is walking more of a tightrope than markets believe – and the data underline that issue clearly,” they said. China has been walking a fine line between rolling out measures to curb financial risks and pollution and tapping the brakes so hard that business activity slows sharply.

Much of their effort so far has focused on the banking sector rather than corporate debt reduction or deleveraging – possibly explaining why China’s headline growth has been so surprisingly solid. GDP has expanded at a steady 6.8 percent for three straight quarters. But official and unofficial gauges are now showing the regulatory crackdown is starting to filter through to the broader economy, with companies complaining it is harder to get financing and a growing number of firms defaulting on bonds.

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In a world of their own.

Riskiest Junk Bonds Completely Blow Off the Fed, Face “Sudden” Reckoning (WS)

High-grade corporate bonds are “gradually” – the key word in everything the Fed says – and reluctantly coming to grips with the new era: Yields are rising and bond prices are falling. The Fed has been laboring to accomplish that. With high-grade debt, the Fed’s plan is working “gradually.” But investors in the riskiest corporate junk debt are totally blowing off the Fed. They’re floating around in their own dream world, facing a very rude awakening. In terms of high-grade corporate bonds, the sell-off has been significant, even if it’s just the beginning. The S&P index for AA-rated bonds is down 2.7% so far this year. As prices have declined, yields have surged, with the average AA yield now at 3.51%, up from around 2.2% in mid to late-2016 (data via ICE BofAML US AA Effective Yield Index):

These are the types of bonds that Apple and other large companies hold in their “cash or cash equivalent” accounts that are registered overseas, and that are now being “repatriated” and sold, and the proceeds from the sales are now being plowed into mega-share buyback programs. These corporations, once avid buyers of this high-grade corporate debt, have turned into sellers.

[..] at the riskiest end of the corporate bond spectrum, with bonds rated CCC or below (deep junk), the party that started at the end of the oil bust in February 2016 simply continued. The S&P bond index for CCC-rated bonds has risen 4.5% so far this year (compared to a 2.7% decline for AA-rated index). Since February 2016, when Wall Street decided to plow new money into junk-rated energy companies, the CCC-rated index has skyrocketed 82%. The average yield of bonds rated CCC or lower is now at 9.56%, down from 12.5% in December 2016, when the Fed got serious, and down from 22% during the peak of the oil bust. This is the lowest yield since the bygone era of “QE Infinity” in June 2014:

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“Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in bitcoin and 64% of other top cryptocurrencies..”

Cryptocurrency Bloodbath Continues, Tether Accused Of Manipulating Bitcoin (MW)

The bloodbath in the digital currency market showed no sign of abating, with all major coins trading in the red Wednesday. In the past 24-hours, a further $25 billion has been wiped off the total value of all cryptocurrencies, led by bitcoin, the world’s biggest digital currency, which reached its lowest level since Feb. 5. A single bitcoin traded to an intraday low of $6,133.31 and has since bounced to $6,280.18, down 3.8%, since Tuesday 5 p.m. Eastern Time on the Kraken Exchange. The total value of all cryptocurrencies dipped below $270 billion in late afternoon New York trading, the lowest level since April 11, according to data from CoinMarketCap. The move lower came after a research report found data that it said suggested the price of bitcoin may have been manipulated in late 2017.

In the University of Texas paper, researchers said they uncovered data that they believe shows Tether, a stable coin that is pegged to the U.S. dollar, was used to artificially push up the price of bitcoin during its late 2017 rally towards $20,000. “Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in bitcoin and 64% of other top cryptocurrencies,” wrote John M. Griffin, a finance professor and Amin Shams, a graduate student. Questions have surrounded Tether and crypto exchange Bitfinex, which were both subpoenaed by the Commodity Futures Trading Commission in 2017 seeking data on Tether and its backing of U.S. dollars. Today’s findings will bring the 11th most traded cryptocurrency back into the spotlight.

“Overall, we find that Tether has a significant impact on the cryptocurrency market. Tether seems to be used both to stabilize and manipulate bitcoin prices,” they said.

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Losing business support may prove fatal for May.

The Tories’ Chaotic Brexit Has Lost The Trust Of Business – Jobs Will Go (G.)

[..] away from parliament, and far from the tabloid front pages, a serious breach is opening up in British politics. Last week some of the most senior business leaders in Britain came out of a Brexit meeting at No 10, and promptly tore the prime minister to shreds. “We’re playing economics; [the politicians] are playing politics,” said Paul Drechsler, president of the bosses’ organisation, the Confederation of British Industry. “In the world of business, we’re frustrated. We’re angry.” An extraordinary statement, especially from an executive invited to tea and biscuits with May. If supposedly tame industrialists now talk like this, you have to wonder what sounds come out of the feral lot.

Yet the CBI’s impatience is shared by many. Once the long-haul arm of the Tory movement, the Freight Transport Association lashed out at May last week for “playing chicken with crucial parts of the British economy and the livelihoods of … 7 million Britons”. These are close friends of the Conservative party.As one senior representative of a leading business organisation says: “Over the past two years, most company bosses would never risk saying openly that Brexit is turning out to be a disaster, in case it scared off their best staff.” With fewer than 290 days before Britain formally leaves the EU, their caution is running out.

This is a far bigger story than the one on the front pages about who promised which amendment to which band of Tories. One of the fundamental relationships in the establishment is fracturing – and the consequences for government and economy could prove to be historic.

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“Not Trump” is not an identity.

The North Korea Summit Through the Looking Glass (Jacobin)

On Tuesday, as Donald Trump and Kim Jong-un shook hands for their much-anticipated summit in Singapore, one Korean reporter observed a curious episode. Koreans watching the scene unfold on a TV screen at a railway station in Seoul began applauding. Meanwhile, some nearby Western tourists, perturbed by this development, scratched their heads in confusion. “I am actually baffled to see them clapping here,” said one British tourist. There’s perhaps no better symbol of the gulf in worldwide reactions to the summit than this episode. While South Koreans cautiously celebrated a historic step in the thawing of hostilities that have hung over them for almost seventy years, the Western media seemed to look on with alarm — even anger.

Hostility to the summit, much of it from Democrats and liberals, had been a staple of press coverage in the months leading up to it, often from commentators who just a few months earlier had been panicking about exactly the opposite outcome. But it reached a fever pitch over the last few days. There was, for example, the collective hyperventilation over a symbolic arrangement of North Korean and US flags. There was MSNBC’s Nicole Wallace, who warned that the whole summit was actually a “Trumpian head fake,” a mere artifact of Trump’s “midterm strategy” and his “get out of sitting with Bob Mueller strategy.” Sue Mi Terry of the defense contractor–funded Center for Strategic and International Studies cautioned that “a peace treaty is not okay” and should “come at the end of the process” because it “undermines the justification of our troops staying in South Korea.”

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Let’s see what happens when the next ship comes.

Italy-France Relations Collapse Amid North-African Migrant Spat (ZH)

Italy has postponed high-level discussions with France on Wednesday after French President Emmanuel Macron criticized Rome for refusing to take in a migrant rescue ship full of 629 shipwrecked North Africans – forcing it to divert to Valencia, Spain. After the ship ran out of supplies, the Italian Navy agreed to escort them across the Mediterranean. “Italy’s new Economy Minister Giovanni Tria said he was cancelling a meeting with his French counterpart Bruno le Maire in Paris. The French economy ministry later said the ministers had “agreed that Mr Tria will come to Paris in the coming days”. -AFP

Italy’s decision to refuse the migrants came after their new Interior Minister, Matteo Salvini, said in early June that “the good times for illegals are over” – writing an urgent letter ordering Malta to accept the 629 migrants picked up by the non-governmental organization (NGO) ship MV Aquarius, run by the group SOS Mediterranee. Salvini called Malta the “safest port” for the passengers, advising that Rome would not offer refuge. After Malta refused leading to several days in limbo, Spain agreed to take the passengers. In response to the ordeal, French President Emmanuel Macron accused Italy of “cynicism and irresponsibility,” adding that their EU neighbor is “playing politics” with the refugees.

Meanwhile Gabriel Attal, the spokesman for Macron’s party, called Italy’s actions “nauseating”. Italian Interior Minister Matteo Salvini responded – saying on Tuesday that he would not “accept hypocritical lessons from countries that have preferred to look the other way on immigration,” and adding on Wednesay that unless France issues an “official apology” for Macron’s inflammatory comments, a Friday meeting between Italian Prime Minister Guiseppe Conte and Macron should be canceled.

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What will the police do when quantum computing gets involved?

Apple Steps Up Encrytion To Thwart Police Cracking of iPhones (AFP)

Apple said Wednesday it was strengthening encryption on its iPhones to thwart police efforts to unlock handsets without legitimate authorization. The move by Apple, the latest in an ongoing clash with law enforcement, comes amid reports of growing use of a tool known as GrayKey which can enable police to bypass iPhone security features. Apple said the new features are not designed to frustrate law enforcement but prevent any bypassing of encryption by good or bad actors. “At Apple, we put the customer at the center of everything we design,” the company said in a statement.

“We’re constantly strengthening the security protections in every Apple product to help customers defend against hackers, identity thieves and intrusions into their personal data. We have the greatest respect for law enforcement, and we don’t design our security improvements to frustrate their efforts to do their jobs. Apple said it was working a fix to mitigate the possibility of accessing data from GrayKey or similar tools. Apple said that it has a team that responds to law enforcement and national security requests 24 hours a day. But the company has been a target of some in law enforcement for rejecting efforts to allow easy access to iPhones.

Two years ago, Apple went to court to block an FBI effort to force it to weaken iPhone encryption on the device of a mass shooter in San Bernardino, California, but officials dropped the case after finding a tool to unlock the phone.

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As square pegs and round holes go, this one will linger… Greeks don’t want the name Macedonia used in any way, Skopje wants nothing else.

FYROM and Greece Fail To Resolve Bitter Naming Dispute (G.)

Governments in Skopje and Athens have faced a furious backlash as the challenge of solving one of the world’s most bitter diplomatic feuds hit home just a day after Macedonia announced it was willing to change its name. Hours after the two neighbours declaring they had reached a landmark accord that would see the tiny Balkan state rename itself the Republic of North Macedonia, the nation’s president refused point-blank to sign the deal. “My position is final and I will not yield to any pressure, blackmail or threats,” president Gjorge Ivanov, who is backed by the nationalist opposition, told a news conference in Skopje. The agreement had conceded far too much to Greece – even if its ultimate aim was the country’s future membership of Nato and the EU, he said.

The backlash came despite officials in Brussels, London and Washington reacting with unbridled enthusiasm to the breakthrough. Nato secretary general, Jens Stoltenberg welcomed the accord, saying: “This is really an historical agreement by [politicians] who have shown courage and great political leadership.” Greece has long argued that the state’s name – adopted when it broke away from Yugoslavia in 1991 – conveys thinly disguised irredentist claims on its own northern province of Macedonia. The appropriation of figures associated with ancient Greek history – not least Alexander the Great – had reinforced fears in a region prone to shifting borders.

But opposition to the deal was also pronounced in Greece. As in Skopje – where prime minister Zoran Zaev’s leftist coalition was accused of leading the country to national humiliation – prime minister Alexis Tsipras and his leftist Syriza party was also charged with surrendering cherished national rights. One newspaper ran a front-page graphic showing Tsipras, the Greek foreign minister and president being shot by firing squad for treason.

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84 scientists from 44 international organisations..

Antarctic Ice Melting Faster Than Ever (G.)

Ice in the Antarctic is melting at a record-breaking rate and the subsequent sea rises could have catastrophic consequences for cities around the world, according to two new studies. A report led by scientists in the UK and US found the rate of melting from the Antarctic ice sheet has accelerated threefold in the last five years and is now vanishing faster than at any previously recorded time. A separate study warns that unless urgent action is taken in the next decade the melting ice could contribute more than 25cm to a total global sea level rise of more than a metre by 2070. This could lead eventually to the collapse of the entire west Antarctic ice sheet, and around 3.5m of sea-level rise.

Prof Andrew Shepherd, from Leeds University and a lead author of the study on accelerating ice loss, said: “We have long suspected that changes in Earth’s climate will affect the polar ice sheets. Thanks to our satellites our space agencies have launched, we can now track their ice losses and global sea level contribution with confidence.” He said the rate of melting was “surprising.” “This has to be a cause for concern for the governments we trust to protect our coastal cities and communities,” Shepherd added. The study, published in Nature, involved 84 scientists from 44 international organisations and claims to be the most comprehensive account of the Antarctic ice sheet to date.

It shows that before 2012, the Antarctic lost ice at a steady rate of 76bn tonnes per year – a 0.2mm per year contribution to sea-level rise. However since then there has been a sharp increase, resulting in the loss of 219bn tonnes of ice per year – a 0.6mm per year sea-level contribution. The second study, also published in Nature, warns that time is running out to save the Antarctic and its unique ecosystem – with potentially dire consequences for the world. The scientists assessed the probable state of Antarctica in 2070 under two scenarios. The first in which urgent action on greenhouse gas emissions and environmental protection is taken in the next few years, the second if emissions continue to rise unabated and the Antarctic is exploited for its natural resources.

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Jun 122018
 
 June 12, 2018  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , ,  


Henri Matisse The pink studio 1911

 

Trump And Kim Sign “Comprehensive” Letter To End Historic Summit (ZH)
Dennis Rodman Cries As He Hails Trump-Kim Summit: ‘I’m So Happy’ (G.)
Trump, Kim Meet, But Body Language Shows Some Nerves (R.)
IMF’s Lagarde Says Global Economic Outlook Darkening By The Day (R.)
If Trump Wants To Blow Up The World Order, Who Will Stop Him? (Varoufakis)
World Wrassling Diplomacy (Jim Kunstler)
Twelve Tips For Making Sense Of The World (CJ)
ECB Set To Begin The Process Of Its Easy Money-Exit (CNBC)
Corporate Executives Cash In On Stock Buybacks (CNBC)
US Net Neutrality Rules Expire, Court Battle Looms (R.)
Stranded Migrant Rescue Boat Unable To Make Voyage To Spain (Ind.)
The Last Bat: The Mystery Of Britain’s Most Solitary Animal (G.)

 

 

Went exactly as expected. No big deal. But Trump’s reeled in Kim, who will now have to deliver.

Trump And Kim Sign “Comprehensive” Letter To End Historic Summit (ZH)

Donald Trump and North Korean Leader Kim Jong Un signed what the US president described as a “very important, comprehensive” document following the conclusion of their “really fantastic” whirlwind historic summit in Singapore, the first between a US president and North Korean leader that came after decades of hostility. “The letter that we are signing is very comprehensive, and I think both sides will be very impressed with the results,” Trump said as he sat alongside the North Korean leader at a large wooden table in front of a bank of U.S. and North Korean flags to endorse the document, which however produced no new specific commitments from Pyongyang to surrender its nuclear weapons aside from broad generalities.

Speaking through an interpreter, Kim said that the two countries would “leave the past behind” in signing the “historic”agreement and that “the world will see the major change,” adding that “I would like to express gratitude to President Trump for making this meeting happen.” Trump said more information would come out “in just a little while” and did not say what the agreement entailed, but some had already managed to extract the key contents from the letter Trump held up. The letter says that the U.S. and North Korea “will join their efforts to build a lasting and stable peace regime on the Korean Peninsula,” and that North Korea “commits to work toward complete denuclearization of the Korean Peninsula.”

The pair also agree to “establish new U.S.-DPRK relations, and the two leaders “have committed to cooperate for the development of new U.S.-DPRK relations and for the promotion of peace, prosperity and security of the Korean Peninsula and of the world.” Notably, the U.S. and N. Korea agree to follow-on negotiations led by Sec. of State Mike Pompeo and a DPRK counterpart. In other words this is just the first of many summits. Speaking to reporters, Trump also said the he would “absolutely” invite Kim to the White House to continue their talks, meanwhile Kim called the document “historic” and said it would lead to a new era in the U.S.-North Korea relationship. “We had a historic meeting and decided to leave the past behind, and we are about to sign a historic document,” he said through a translator. “The world will see a major change.”

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Perspective is everything.

Dennis Rodman Cries As He Hails Trump-Kim Summit: ‘I’m So Happy’ (G.)

Kim Jong-un and Donald Trump had barely exchanged pleasantries outside the Capella hotel when their mutual friend Dennis Rodman appeared on TV to provide a characteristically bizarre sideshow to the main event in Singapore. In a rambling interview with CNN’s Chris Cuomo from Singapore, a highly emotional Rodman claimed credit for predicting that today’s summit – which seemed unlikely just months ago – would happen. Wearing a Make America Great Again baseball cap and a T-shirt bearing the name of his sponsor Potcoin, Rodman sobbed as he described his feelings about the summit and recalled the abuse he had received over his controversial visits to Pyongyang to meet Kim. “I said to everybody, the door will open,” he said.

“It’s amazing, it’s amazing, it’s amazing. When I said those things, when I went back home, I got so many death threats … and I believed in North Korea, and I couldn’t even go home, I couldn’t even go home, I had to hide out for 30 days, I couldn’t even go home. “But I kept my head high, brother, I knew things were going to change … I knew it, I was the only one. I never had no one to hear me, I had no one to see me. But I took all those bullets, I took all at that … but I’m still standing. Today is a great day for everybody, Singapore, Tokyo, China, everybody … it’s a great day. I’m here to see it. I’m so happy.”

The former NBA star is one of the few westerners to have met Kim, with whom he struck up an unlikely friendship over their shared love of basketball. Describing his meetings with Kim, Rodman said: “He’s more like a big kid, even though he’s small. He wants to come to America. He wants to enjoy his life.” Rodman said he had tried to pass on what he heard from Kim to Barack Obama but was “brushed off”.

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Reuters has called in a body language expert. Stay tuned for Aunt Mille’s take on their astrological signs. June 14 is Trump’s 72nd birthday.

Trump, Kim Meet, But Body Language Shows Some Nerves (R.)

In their first moments of meeting each other, U.S. President Donald Trump and North Korean leader Kim Jong Un both sought to project a sense of command but displayed some anxiety at the start of their high-stakes summit in Singapore. Body language experts said that in the 13 seconds or so the U.S. president held on to the hand of Kim for the first time, he projected his usual dominance by reaching out first, and patting the North Korean leader’s shoulder. Not to be outdone, Kim firmly pumped Trump’s hand, looking him straight in the eye for the duration, before breaking off to face the media.

“It wasn’t a straight-out handshake,” said Allan Pease, an Australian body language expert and author of several books on the topic, including “The Definitive Guide to Body Language”. “It was up and down, there was an argy-bargy, each one was pulling the other closer. Each guy wasn’t letting the other get a dominant grip,” he told Reuters by telephone from Melbourne. Trump and Kim are meeting in Singapore for historic talks aimed at finding a way to end a nuclear standoff on the Korean peninsula. Should they succeed, it could bring lasting change to the security landscape of Northeast Asia, like the visit of former U.S. President Richard Nixon to China in 1972 led to the transformation of China.

Ahead of the meeting, Trump had said he would be able to work out within the first minute whether his North Korean counterpart was serious about making peace. Projecting authority comes easily to Trump, who as a global leader, businessman and former television personality is well-versed in using body language effectively. He also has a height advantage over Kim. While both men walked to the library where they held their first face-to-face meeting, Trump sought to ease any tension in the air by chatting to Kim, and letting him walk slightly ahead. Trump, however, maintained control over the chat by patting Kim, and using his hand to guide him, who is almost half his age, into the room. Kim also patted Trump, in an attempt to assert control. He mainly looked down, listening, as Trump spoke, but did look up at several times during the conversation.

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She doesn’t really think that, but needs a stab at Trump for upsetting the order that gave her the seat she has.

IMF’s Lagarde Says Global Economic Outlook Darkening By The Day (R.)

IMF chief Christine Lagarde led an attack by global economic organizations on U.S. President Donald Trump’s “America First” trade policy on Monday, warning that clouds over the global economy “are getting darker by the day”. Trump backed out of a joint communique agreed by Group of Seven leaders in Canada at the weekend that mentioned the need for “free, fair and mutually beneficial trade” and the importance of fighting protectionism. The U.S. president, who has imposed import tariffs on metals, is furious about the United States’ large trade deficit with key allies. “Fair trade is now to be called fool trade if it is not reciprocal,” he tweeted on Monday.

In response, Lagarde unleashed a thinly veiled attack on Trump’s trade policy, saying challenges to the way trade is conducted were damaging business confidence, which had soured even since the weekend G7 summit. The IMF is sticking to its forecast for global growth of 3.9% both this year and next, she said, before adding: “But the clouds on the horizon that we have signaled about six months ago are getting darker by the day, and I was going to say by the weekend.” “The biggest and darkest cloud that we see is the deterioration in confidence that is prompted by (an) attempt to challenge the way in which trade has been conducted, in which relationships have been handled and in which multilateral organizations have been operating,” Lagarde said.

[..] Earlier, Germany’s economy minister said Berlin saw no immediate solution to the trade row between the United States and other major economies but remained open to talks “among friends”, seeking to head off a full-blown global trade war. As Europe’s biggest exporter to the United States, and with more than one million German jobs at stake, Germany is desperate to avoid an EU trade war with the United States. “I believe a win-win situation is still possible,” Economy Minister Peter Altmaier, one of Merkel’s closest lieutenants, told broadcaster Deutschlandfunk. “At the moment, however, it seems that no solution is in sight, at least not in the short term.”

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I thought we agreed we didn’t like the world order.

If Trump Wants To Blow Up The World Order, Who Will Stop Him? (Varoufakis)

The Trump administration is building up a substantial economic momentum domestically. First, he passed income and corporate tax cuts that the establishment Republicans could not have imagined even in their wildest dreams a few years ago. But this was not all. Behind the scenes, Trump astonished Nancy Pelosi, the Democrat’s leader in the House of Representatives, by approving every single social program that she asked of him. As a result, the federal government is running the largest budget deficit in America’s history when the rate of unemployment is less than 4%. Whatever one thinks of this president, he is giving money away not only to the richest, who of course get the most, but also to many poor people.

With demonstrably strong employment, especially among African American workers, inflation under control and the stock market still buoyant, Donald Trump has his home front covered as he travels to foreign lands to confront friends and foes. The US anti-Trump establishment prays that markets will punish his profligacy. This is precisely what would have happened if America were any other country. With a fiscal deficit expected to reach $804bn 2018 and $981bn in 2019, and with the government expected to borrow $2.34tn in the next 18 months, the exchange rate would be crashing and interest rates would be going through the roof. Except that the US is not any other country. As its central bank, the Fed, winds down its quantitative easing program by selling off its stock of accumulated assets to the private sector, investors need dollars to buy them.

This causes the number of dollars available to investors to shrink by up to $50bn a month. Add to this the dollars German and Chinese capitalists need to buy US government bonds (in a bid to park their profits somewhere safe) and you begin to see why Trump believes he will not be punished by a run either on the dollar or on government bonds. Armed with the exorbitant privilege that owning the dollar presses affords him, Trump then takes a look at the trade flows with the rest of the G7 and comes to an inescapable conclusion: he cannot possibly lose a trade war against countries that have such high surpluses with the US (eg Germany, Italy, China), or which (like Canada) will catch pneumonia the moment the American economy catches the common cold.

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“..it is hard to imagine two characters less prepared by the rigors of reality than this pair.”

World Wrassling Diplomacy (Jim Kunstler)

I’m all for world peace, and I would like to attempt to take the Kim-Trump meeting seriously, but it is hard to imagine two characters less prepared by the rigors of reality than this pair. Each has been dwelling in a magic kingdom of his own life-long. Both exhibit behaviors typical of children: sulking, threats, bluster, and mysterious mood shifts. The supposedly serious adults around Mr. Trump must be going through the Xanax like Tic-Tacs. The military attachés around the inscrutable Kim might recall the 2016 execution of two NK ministers shot to death with anti-aircraft guns for displeasing the boss — one of them for merely falling asleep during a Kim speech. Who cleaned up that mess, I wonder.

Maybe something good can come out of this improbable set-up. I expect a kind of vaudeville act: a few moments of the two principals pretending that they understand what each is saying… a hopeful communiqué announcing the blooming of a million flowers, and a fateful blowup a few hours into the honeymoon when Kim, Trump, and all the spear-carriers on both sides realize that they had no idea what they were talking about. Then, on Thursday or thereabouts the long-awaited DOJ Inspector General’s report comes out, after a going-over by the very folks at the FBI whose conduct is the subject of that review. I expect a new layer in the mighty cake baked by the white knights of the Resistance. This one will be called Redacto-Gate.

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Things that should be obvious to every 5-year old, but are not:

2. Money rewards sociopathy.

3. Wealth kills empathy.

Twelve Tips For Making Sense Of The World (CJ)

In an environment that is saturated with mass media propaganda, it can be hard to figure out which way’s up, let alone get an accurate read on what’s going on in the world. Here are a few tips I’ve learned which have given me a lot of clarity in seeing through the haze of spin and confusion. Taken separately they don’t tell you a lot, but taken together they paint a very useful picture of the world and why it is the way it is.

1. It’s always ultimately about acquiring power.
In the quest to understand why governments move in such irrational ways, why expensive, senseless wars are fought while homeless people die of exposure on the streets, why millionaires and billionaires get richer and richer while everyone else struggles to pay rent, why we destroy the ecosystem we depend on for our survival, why one elected official tends to advance more or less the same harmful policies and agendas as his or her predecessor, people often come up with explanations which don’t really hold water.

The most common of these is probably the notion that all of these problems are due to the malignant influence of one of two mainstream political parties, and if the other party could just get in control of the situation all the problems would go away. Other explanations include the belief that humans are just intrinsically awful, blaming minorities like Jews or immigrants, blaming racism and white supremacy, or going all the way down wild and twisted rabbit holes into theories about reptilian secret societies and baby-eating pedophile cabals. But really all of mankind’s irrational behavior can be explained by the basic human impulse to amass power and influence over one’s fellow humans, combined with the fact that sociopaths tend to rise to positions of power.

Our evolutionary ancestors were pack animals, and the ability to rise in social standing in one’s pack determined crucial matters like whether one got first or last dibs on food or got to reproduce. This impulse to rise in our pack is hardwired deeply into our evolutionary heritage, but when left unchecked due to a lack of empathy, and when expanded into the globe-spanning 7.6 billion human pack we now find ourselves in due to ease of transportation and communication, it can lead to individuals who will keep amassing more and more power until they wield immense influence over entire clusters of nations.

2. Money rewards sociopathy.
The willingness to do anything to get ahead, to claw your way to the top, to betray whomever you need to, to throw anyone under the bus, to step on anyone to pass them in the rat race, will be rewarded in our current system. Being willing to underpay employees, cheat the legal system, and influence legislators will be rewarded exponentially more. People with a sense of empathy are often unwilling to do such things, whereas sociopaths and psychopaths are. About four percent of the population are sociopaths, and about one percent are psychopaths, with some five to fifteen percent falling somewhere along the borderline. The less empathy you have, the further you are willing to go, and the further up the ladder you can climb.

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Don’t hold your breath.

ECB Set To Begin The Process Of Its Easy Money-Exit (CNBC)

“We never pre-commit.” This was the rule broken last week by the European Central Bank’s Chief Economist Peter Praet, one of the more dovish members of the bank’s Governing Council, as he openly said it would start to discuss the gradual exit from of its quantitative easing (QE) program this week at its meeting in Riga, Latvia. What has changed? Recent headline inflation was stronger than expected and close to the ECB’s target, mainly due to the rise in oil prices. At the same time the situation in Italy has calmed down again. But there still are risks to the growth outlook from other issues such as the U.S.-EU trade spat.

“We think a ‘flexible tapering’ announcement is more likely than an unconditional commitment to an end date for QE,” said ECB watcher Frederik Ducrozet at Pictet Wealth Management in a note. “The ECB could say that there will be ‘no further large expansion of asset purchases’ barring an unwarranted tightening of financial conditions. The modalities of QE tapering could be decided in July.” Whether the details come in June or July, the overwhelming majority of economists polled by Reuters expect the purchases to end by the end of this year. “Irrespective of whether the exit announcement is in June or July, we expect QE to end in December after a taper in (the fourth quarter) and the first policy rate hike in June 2019,” said Mark Wall, the chief economist with Deutsche Bank, in a research note.

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And it’s legal!

Corporate Executives Cash In On Stock Buybacks (CNBC)

Corporate executives are using tax cuts and share buybacks to boost their own compensation, a top regulator said Monday. Companies have announced a record-breaking level of share buybacks since Congress passed the Republican-backed tax reduction in December. Critics of the $1.5 trillion measure had worried that it would lead to big rewards for shareholders and only limited benefit to the broader economy. Robert Jackson Jr., a member of the Securities and Exchange Commission, said corporate bigwigs have been selling their shares after the buyback announcements hit, cashing in from the stock price surge that often happens after a repurchase notice.

The rules exempting companies from securities law violations for the timing and pricing of buyback announcements need to change, said Jackson, who President Donald Trump appointed earlier this year to fill a designated Democratic SEC seat. Jackson pointed out that the Dodd-Frank banking reforms passed after the financial crisis included language aimed at keeping investors informed about how executives cash out their shares, but specific rules remain in limbo. “But it’s not just that the regulations haven’t been finalized. It’s that the problem itself keeps getting worse,” he said. “You see, the Trump tax bill has unleashed an unprecedented wave of buybacks, and I worry that lax SEC rules and corporate oversight are giving executives yet another chance to cash out at investor expense.”

Indeed, buybacks totaled $178 billion during the first quarter, hit a record $171.3 billion in May alone and have seen $51.1 billion announced so far in June, according to market data firm TrimTabs. At the same time, insider selling has totaled $23.6 billion. Wall Street analysts expect full-year buybacks to total as much as $800 billion, part of what UBS recently forecast to be a $2.5 trillion tsunami of cash pumped into repurchases, dividends, and mergers and acquisitions activity.

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Sometimes you wonder how much longer for the internet as we know it.

US Net Neutrality Rules Expire, Court Battle Looms (R.)

The U.S. open internet rules expired on Monday, handing sweeping new powers to internet providers to block, throttle or offer paid “fast lanes” for web traffic, but a court battle remains ahead. The Federal Communications Commission repealed the 2015 Obama administration’s landmark net neutrality rules in December by a 3-2 vote, sparking a firestorm of criticism on social media websites, opposition from internet firms like Facebook and Alphabet, and protests among Democrats in the Republican-controlled Congress. New regulations that took legal effect Monday give internet service providers (ISPs) sweeping power to slow, block or offer “paid prioritization” to some websites as long as they disclose the practices.

The 2015 order subjected internet providers to strict regulations by the FCC, arguing consumers needed protection from internet provider practices and said internet providers could engage in “just and reasonable conduct.” FCC Chairman Ajit Pai said last week the rollback will ensure more investment by providers and will ensure “better, faster, and cheaper Internet access and more broadband competition to the American people.” FCC Commissioner Jessica Rosenworcel, a Democrat who voted against the repeal, said Monday that the decision put the FCC “on the wrong side of history, the wrong side of the law, and the wrong side of the American public.”

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Rescue the poor souls already.

Stranded Migrant Rescue Boat Unable To Make Voyage To Spain (Ind.)

A rescue boat loaded with hundreds of refugees which has been stranded in the Mediterranean Sea after Italy and Malta refused to allow the boat to dock, is unable to make the journey to Spain where the government has said it can land. Bad weather in the area is forecast to get worse, making the three-to-five-day voyage dangerous, according to French humanitarian group SOS Meiterranee France. According to the organisation, 629 migrants have been taken on board the Aquarius rescue boat, including 123 unaccompanied minors and seven pregnant women. On Monday evening the group put out a message which read: “Reaching Spain would take several days. With 629 people on board and weather deteriorating, the situation could become critical.”

“Priority must remain the safety of all survivors. It is the responsibility of the Italian maritime authorities to find a safe and fast solution for the 629 people aboard the #Aquarius.” The boat was refused entry to Italian ports after Italy’s interior minister Matteo Salvini, who is also leader of far-right party Lega Nord (Northern League) said that all Italian ports were closed to the Aquarius. In a Facebook post he called on Malta to take in the vessel. [..][ the new Spanish prime minister, Pedro Sanchez, who took office just over a week ago, then said Spain would allow the rescue vessel to dock in the city of Valencia, where the rescued migrants and refugees could finally disembark. Despite the offer, it now looks unlikely the boat will attempt to reach Spain.

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What was it, one in every 3 mammals is a bat?!

The Last Bat: The Mystery Of Britain’s Most Solitary Animal (G.)

We cannot speak of its loneliness, but it must be Britain’s most solitary animal. For the last 16 years, every winter, a male greater mouse-eared bat has taken up residence 300 metres inside a disused and exceedingly damp railway tunnel in West Sussex. The greater mouse-eared bat has been all but extinct in this country for decades. This is the only remaining one we know of. The future of the species in Britain appears to rest with one long-lived and very distinctive individual. The greater mouse-eared bat is so large that observers who first discovered it in Britain likened one to a young rabbit hanging from a wall. In flight, its wings can stretch to nearly half a metre – an astonishing spectacle in a land where bats are generally closer to the size of the rodent that inspired their old name: flittermouse.

The bat has large, mouse-like ears and its feeding habits are as striking as its size. Rather than zig-zagging through darkening skies collecting flying insects, like most bats, Myotis myotis descends earthwards, flapping its wings very slowly as it covers the ground, picking up grasshoppers, crickets, dung beetles and other flightless insects as it goes. Often, it will flop on to the ground, wings outstretched to fold over its prey. The solitary individual who spends the winters in West Sussex has never been observed in flight. Where it goes each spring is not known, and what it does is not known, nor which other animals, if any, it encounters. All that is known is that each winter the bat faithfully returns to its dark tunnel, where it hangs, almost motionless, for five months.

[..] Bats have been evolving for so long, and with so many specialised attributes, from echolocation to drastically extended forelimbs, that the order of Chiroptera – “winged hands” in Latin – accounts for one in five species of mammal. They are supremely successful animals. As one expert puts it: when you have been evolving for so long, you’ve perfected the business of being a bat. That business is becoming tricker in a human-dominated world. In older times, they were feared and despised. Modern people may be more tolerant, but even beneficent parts of society – from harvesters of renewable energy to vicars – are often hostile to bats. Energy-efficient homes seal up roof spaces where bats once roosted.

New roads – and the planned route of the HS2 railway – block traditional foraging routes. LED lighting is particularly disturbing for bats. Wind farms chop them up: according to a study published in 2016, researchers using sniffer dogs to find and retrieve bat carcasses calculated that 29 onshore windfarms killed 194 dead bats per month – a kill-rate that would dispatch 80,000 bats a year across Britain, without accounting for migrating bats taken out by the rapidly expanding rows of offshore turbines.

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May 302018
 
 May 30, 2018  Posted by at 9:07 am Finance Tagged with: , , , , , , , , , , , ,  


Wassily Kandinsky Moscow II 1916

 

Italy: No Easy Fixes For The European Central Bank (G.)
Investors Ask If ECB Has Will And Means To Save Euro From Italian Turmoil (R.)
Blanchard: Europe Should Be OK – But ‘I’m Very Worried About Italy’ (CNBC)
NIRP’s Revenge: Italian Bonds Plunge, Worst Day in Decades (WS)
Italy Could Be The Next Greece – Only Much Worse (CNBC)
“Everything Has Gone Wrong”: Soros Warns “Major” Financial Crisis Is Coming (ZH)
Soros-Backed Campaign To Push For New Brexit Vote Within A Year (G.)
Pace Of Greek Credit Contraction Increases In April (K.)
EU Plans To Boost Spending In South, Cut Funds For Eastern Europe (RT)
It’s Hard To Be An Empire (Jim Kunstler)
China Slams Surprise US Trade Announcement, Says Ready To Fight (R.)
High Number Of Workers With No Pay Raise Says Inflation Worries Overblown (MW)
industrial-Scale Beef Farming Comes To The UK (G.)
Meat And Fish Multinationals ‘Jeopardising Paris Climate Goals’ (G.)

 

 

“Under the Target2 system, which is the way eurozone central banks keep account of liabilities to each other, Italy already owes £442bn.”

Italy: No Easy Fixes For The European Central Bank (G.)

The last eurozone crisis was solved – or deferred – when the president of the European Central Bank, Mario Draghi, declared in July 2012 that the institution was ready to do “whatever it takes” to save the euro. Bond markets calmed down, weak banks got access to funding again and an economic recovery of sorts materialised. In terms of central bank rescue acts, it was a textbook operation. Unfortunately, there are no easy ECB fixes for the new Italian crisis. The ECB’s first problem is its own powers. Even if it were minded to try to reverse the dramatic sell-off in Italian bonds, the rules say it is only supposed to respond to emergency calls from countries that have agreed to budget conditions.

With new elections now likely in Italy in the autumn, it’s hard to see how a deal could be done. Even if a technical fudge could be found, the second problem is that the eurozone’s big powers might prefer the ECB to do nothing. Günther Oettinger, the EU’s budget commissioner, seems to believe a bout of market turmoil “might become a signal to [Italian] voters after all to not vote for populists on the right and left”. In practice, the experience might provoke a bigger vote for anti-euro parties, but the strategy seems set.

The third problem for the ECB will come if capital drains from Italian banks. In that case the ECB could in theory claim a clear need to intervene to prevent damage to eurozone banks outside Italy. But, again, there could be pressure to stay on the sidelines. Under the Target2 system, which is the way eurozone central banks keep account of liabilities to each other, Italy already owes £442bn. Any ECB-backed support for its banks would see that figure rise further, provoking fears over repayment. Note that Target2 imbalances are already a hot topic in Germany, where the Bundesbank is the single biggest creditor.

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I’m sure it has the will. Draghi’s Plunge Protection Team is working hard today, euro’s up 0.5%. The problem is that everyone knows whatever the ECB does is only a temp stopgap.

Investors Ask If ECB Has Will And Means To Save Euro From Italian Turmoil (R.)

Investors are again speculating what the ECB could do to solve the problem of a surge in Italy’s debt yields that is causing stress for Italian banks and reviving questions about a euro break up. The stakes will be huge if a repeat election in the euro zone’s third-largest economy become a de facto referendum on Italy’s membership of the euro and its role in the European Union. Italy’s economy is at least 10 times bigger than that of Greece, which needed 250 billion euros ($289 billion) of euro zone and IMF money to bail it out. If Italy needed a similar level of support, the numbers involved would be eyewatering.

Total IMF firepower would only add up to around 500 billion euros and even with the 400 billion euros that the European Stability Mechanism could conceivably get together, it still wouldn’t completely cover Italy. Perhaps it’s no wonder then that Italy’s bond markets saw their worst sell-off in 26 years on Tuesday and investors are starting to look inquisitively at the ECB. “If this continues for another couple of sessions, I think you will have to see some official (European) response,” said Saxo Bank’s head of foreign exchange strategy John Hardy. “It becomes a ‘whatever it takes’ kind of moment,” he added, recalling the promise made in 2012 by ECB President Mario Draghi to keep the euro intact.

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Inflexibility killed the cat.

Blanchard: Europe Should Be OK – But ‘I’m Very Worried About Italy’ (CNBC)

Political chaos in the euro zone’s third-biggest economy won’t be going away anytime soon, according to IMF former chief economist Olivier Blanchard, who on Tuesday issued an ominous assessment of the country. Panic roiled markets Tuesday as a political fight in Italy prompted one of its worst market sell-offs in years. Underlying investor fear was the prospect of Italy leaving the euro and others following suit, which Blanchard, now an economics professor at the Massachusetts Institute of Technology, described as more of a psychological fear than a realistic threat.

The potential concern, rather, involves Italy’s creditors, who would have to “move carefully,” the economist told CNBC’s Joumanna Bercetche in Paris. The rest of Europe may avoid a domino effect, but Italy looks to remain mired in a quagmire. “I suspect in this case the EU will do whatever is needed to prevent contagion, so I’m not terribly worried about contagion,” Blanchard said. “I’m very worried about Italy. Not worried about the rest of Europe. It will be tough, but the rest of Europe, the rest of (the) euro will be OK.” [..] “The writing was on the wall,” Blanchard said. “When you have capital mobility, and you give signals that you might not stay in the euro … then you expect investors to move, and I think that’s what we are seeing.”

Markets were already nervous about M5S and Lega’s economic plans for Italy. Though the parties did not in fact pledge to leave the euro, they signaled a disregard for the EU’s fiscal rules, such as those limiting states’ deficit levels. [..] Asked if there may be positives to the standoff in the form of EU concessions for Italy in order to prevent a pull-out, Blanchard responded, “No. I am not optimistic.” Unsurprisingly, he described himself as very bearish on the country. The best-case scenario, the economist said, would be for the winners of the next elections to provide a program that satisfies the voter base — victory is predicted for the populist parties again — but remains fiscally responsible.

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Wolf Richter is dead on: “..Italian bonds – no matter what maturity – should never ever have traded with a negative yield..”

NIRP’s Revenge: Italian Bonds Plunge, Worst Day in Decades (WS)

On Tuesday, Italian bonds had their worst day in Eurozone existence, even worse than any day during the worst periods of the 2011 debt crisis. And this comes after they’d already gotten crushed on Monday, and after they’d gotten crushed last week. And this happened even as the ECB is carrying on its QE program, including the purchase of Italian government bonds; and even as it pursues its negative-interest-rate policy (NIRP). As bond prices plunge, yields spike by definition, and the spike in the two-year yield was spectacular, going from 0.3% on Monday morning to 2.73% on Tuesday end of day:

But note that until May 26, the two-year yield was still negative as part of the ECB’s interest rate repression. On that fateful day, the two-year yield finally crossed the red line into positive territory. To this day, it remains inexplicable why the ECB decided that Italian yields with maturities of two years or less should be negative – that investors, or rather pension beneficiaries, etc., who own these misbegotten bonds, would need to pay the Italian government, one of the most indebted in the world, for the privilege of lending it money. But that scheme came totally unhinged just now. The 10-year Italian government bond yield preformed a similar if not quite as spectacular a feat. Over Monday and Tuesday, it went from 2.37% to 3.18%:

But here’s the thing: Italian bonds – no matter what maturity – should never ever have traded with a negative yield. Their yields should always have been higher than US yields, given that the Italian government is in even worse financial shape than the US government. Italy’s debt-to-GDP ratio is 131%, and more importantly, it doesn’t even control its own currency and cannot on its own slough off a debt crisis by converting it into a classic currency crisis, which is how Argentina is dealing with its government spending. The central bank of Argentina recently jacked up its 30-day policy rate to 40% to keep the peso from collapsing further. That’s the neighborhood where Italy would be if it had its own currency. But the ECB’s QE shenanigans and NIRP drove even Italian yields below zero, and so now here is NIRP’s revenge.

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Oettinger takes the prize for the biggest fool so far.

Italy Could Be The Next Greece – Only Much Worse (CNBC)

Nearly a decade after a protracted Greek debt crisis spooked global markets, a fresh round of political turmoil in Italy has revived fears about the fate of the European financial system and its common currency. This time, the numbers are a lot bigger. “Italy’s economy is 10 times larger than that of Greece, whose debt crisis shook the euro area’s foundations,” wrote Desmond Lachman, a resident fellow at the American Enterprise Institute, in a recent blog post. “The single currency is unlikely to survive in its present form if Italy were forced to exit that monetary arrangement.”

Italy’s economy has been struggling since the Great Recession years with a debt load that rivals the heavy Greek borrowing that forced massive cuts in public services there and drove Greece into a deep recession. That Italian debt crisis has become central to the ongoing political instability, as multiple governments have failed to resolve it. [..] Even if the populist parties stop short of a clear call for exiting the euro, their strength has widened the political gap with EU officials in Brussels. In an echo of the Greek debt crisis, the latest turmoil has reopened a political rift between Germany and the “peripheral” economies of Greece, Italy and Spain. That political divide will further complicate ongoing efforts to resolve Italy’s crushing debt burden.

On Tuesday, EU officials promised to respect Italian voters’ right to choose their own government, after Germany’s European commissioner said Italians should not vote for the populists. “My worry, my expectation, is that the coming weeks will show that the markets, government bonds, Italy’s economy, could be so badly hit that these could send a signal to voters not to elect populists from the left or right,” Guenther Oettinger, a German commissioner who oversees the EU budget committee, said in a German television interview.

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“..a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based.”

“Everything Has Gone Wrong”: Soros Warns “Major” Financial Crisis Is Coming (ZH)

Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations. The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.

“The EU is in an existential crisis. Everything that could go wrong has gone wrong,” he said. To escape the crisis, “it needs to reinvent itself.” “The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effectively destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality.” “We may be heading for another major financial crisis,” Soros said explicitly.

“I personally regarded the EU as the embodiment of the idea of the open society. It was a voluntary association of equal states that banded together and sacrificed part of their sovereignty for the common good. The idea of Europe as an open society continues to inspire me. But since the financial crisis of 2008, the EU seems to have lost its way. It adopted a program of fiscal retrenchment, which led to the euro crisis and transformed the eurozone into a relationship between creditors and debtors. The creditors set the conditions that the debtors had to meet, yet could not meet. This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based.”

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Interference in a country’s politics. Hmm.

Soros-Backed Campaign To Push For New Brexit Vote Within A Year (G.)

A campaign to secure a second Brexit referendum within a year and save the UK from “immense damage” is to be launched in days, the philanthropist and financier George Soros has announced. The billionaire founder of the Open Society Foundation said the prospect of the UK’s prolonged divorce from Brussels could help persuade the British public by a “convincing margin” that EU membership was in their interests. In a speech on Tuesday ahead of the launch of the Best for Britain campaign – said to have already attracted millions of pounds in donations – Soros suggested to an audience in Paris that changing the minds of Britons would be in keeping with “revolutionary times”.

Best for Britain had already helped to convince parliamentarians to extract from Theresa May a meaningful vote on the final withdrawal deal, he said, and it was time to engage with voters, and Brussels, to pave the way for the UK to stay in the bloc. It is expected to publish its campaign manifesto on 8 June. Soros, 87, said: “Brexit is an immensely damaging process, harmful to both sides … Divorce will be a long process, probably taking more than five years. Five years is an eternity in politics, especially in revolutionary times like the present. “Ultimately, it’s up to the British people to decide what they want to do. It would be better however if they came to a decision sooner rather than later. That’s the goal of an initiative called the Best for Britain, which I support.

“Best for Britain fought for, and helped to win, a meaningful parliamentary vote which includes the option of not leaving at all. This would be good for Britain but would also render Europe a great service by rescinding Brexit and not creating a hard-to-fill hole in the European budget. “But the British public must express its support by a convincing margin in order to be taken seriously by Europe. That’s what Best for Britain is aiming for by engaging the electorate. It will publish its manifesto in the next few days.”

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Recovery.

Pace Of Greek Credit Contraction Increases In April (K.)

The funding deficit is growing in the Greek economy, as there was a sharper credit contraction in April, data from the Bank of Greece showed on Tuesday. The pace of financing Greek households and enterprises stood at -1.9% last month, from -1% in March and -0.9% in February. The flow of credit turned negative by 1.2 billion euros in April from the positive amount of 217 million euros in March. The negative flow means that loans repaid outweighed those issued, after factoring in loan write-offs and sales of nonperforming loans by banks.

In practice the fresh credit issued is offset by the burden of the increased write-offs and payments mostly by enterprises. Data analysis showed that the funding flow to the economy’s basic domains last month was negative by 2.4% for industry and by 1.7% for construction. At the same time the financing rate for tourism was marginally positive at 1%, while in commerce the rate was zero, against a positive 1% in March. The sector with the lowest funding rate in comparison with last year was electricity and water, which declined 12.6%.

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Who blinked first?

EU Plans To Boost Spending In South, Cut Funds For Eastern Europe (RT)

The European Commission proposed on Tuesday increased spending of EU money on Italy and other southern member states hit by the economic and migrant crises, while reducing funds for regions in the former communist eastern countries, Reuters reports. The proposal on the 2021-2027 budget comes as Italy is facing the prospect of snap elections after the summer. The commission proposed a new methodology to distribute funds that takes into account unemployment levels and the reception of migrants, and not just economic output as previously done. This will result in a reduction of regional funds for eastern countries because they have grown faster in recent years. The budget would increase to €1.1 trillion ($1.2 trillion) from €1 trillion in the current seven-year period. A third of spending would be allocated to help reduce the gap between rich and poor regions of the bloc.

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Jim on Memorial Day.

It’s Hard To Be An Empire (Jim Kunstler)

I suppose that military prowess is all we’ve got left in the national pride bag in these times of foundering empire. Few are fooled these days by the “land of opportunity” trope when so many young people are lucky to get a part-time gig on the WalMart loading dock along with three nights a week of slinging Seaside Shrimp Trios for the local Red Lobster. Of course, there are a few choice perches in venture capital out in Silicon Valley, or concocting collateralized loan obligations in the aeries of Wall Street — but nobody is playing Aaron Copeland’s Fanfare for the Common Man to celebrate these endeavors.

There’s a macabre equivalency between our various overseas war operations and the school shootings that are now a routine feature of American daily life. The purposes are equally obscure and the damage is just as impressive — many lives ruined for no good reason. But consider more lives are lost every year in highway crashes than in the Mexican War of the 1840s and more Americans are dying each year lately of opioid overdoses than the entire death toll of the Vietnam War. America’s soul is at war with its vaunted way-of-life.

It’s hard to be an empire, for sure, but it’s even harder, apparently, to be a truly virtuous society. First, I suppose, you have to be not insane. It’s hard to think of one facet of American life that’s not insane now. Our politics are insane. Our ideologies are insane. The universities are insane. Medicine is insane. Show biz is insane. Sexual relations are insane. The arts are insane. The news media is utterly insane. And what passes for business enterprise in the USA these days is something beyond insane, like unto the swarms of serpents and bats issuing from some mouth of hell in the medieval triptychs. How do you memorialize all that?

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“..the trade renege could leave Washington dancing with itself..”

China Slams Surprise US Trade Announcement, Says Ready To Fight (R.)

China on Wednesday lashed out at Washington’s unexpected statement that it will press ahead with tariffs and restrictions on investments by Chinese companies, saying Beijing was ready to fight back if Washington was looking to ignite a trade war. The United States said on Tuesday that it still held the threat of imposing tariffs on $50 billion of imports from China and would use it unless Beijing addressed the issue of theft of American intellectual property. The declaration came after the two sides had agreed earlier this month to look at steps to narrow China’s $375 billion trade surplus with America, and days ahead of a visit to Beijing by U.S. Commerce Secretary Wilbur Ross for further negotiations.

William Zarit, chairman of the American Chamber of Commerce in China, said Washington’s threat of tariffs appeared to have been “somewhat effective” thus far. “I don’t think it is only a tactic, personally,” he told reporters on Wednesday, adding that the group does not view tariffs as the best way to address the trade frictions. “The thinking became that if the U.S. doesn’t have any leverage and there is no pressure on our Chinese friends, then we will not have serious negotiations.” [..] The Global Times said the United States was suffering from a “delusion” and warned that the “trade renege could leave Washington dancing with itself”.

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What you get with bogus claims of full employment.

High Number Of Workers With No Pay Raise Says Inflation Worries Overblown (MW)

An unusually high percentage of American workers still aren’t getting pay raises nine years after the end of the Great Recession — and that suggests the threat of inflation is still quite low. Some senior Federal Reserve officials, including Kansas City Fed President Esther George, want to raise U.S. interest rates more rapidly to head off the potential for higher wages to stoke inflation. The specter of higher rates has pushed up interest rates and acted as a drag on stocks. Yet a new report by researchers at the regional central bank George leads to suggest there’s little cause for alarm.

The Kansas City Fed researchers found that an abnormally high share of employees still in the same jobs haven’t received a pay raise in the last 12 months despite a 3.9% unemployment rate that is the lowest in almost two decades. Economists refer to the phenomenon as “wage rigidity.” [..] The rate of future wage growth in the U.S. also tends to rise more slowly than usual when a high number of people aren’t getting any raises at all, the research suggests. In the most recent 12-month period ended in April, hourly U.S. wages increased at a 2.6% rate. Normally when the unemployment rate is as low as it is now, wages tend to rise 3.5% to 4.5% year.

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What they claimed would never happen.

industrial-Scale Beef Farming Comes To The UK (G.)

Thousands of British cattle reared for supermarket beef are being fattened in industrial-scale units where livestock have little or no access to pasture. Research by the Guardian and the Bureau of Investigative Journalism has established that the UK is now home to a number of industrial-scale fattening units with herds of up to 3,000 cattle at a time being held in grassless pens for extended periods rather than being grazed or barn-reared. Intensive beef farms, known as Concentrated Animal Feeding Operations (CAFOs) are commonplace in the US. But the practice of intensive beef farming in the UK has not previously been widely acknowledged – and the findings have sparked the latest clash over the future of British farming.

The beef industry says that the scale of operations involved enables farmers to rear cattle efficiently and profitably, and ensure high welfare standards. But critics say there are welfare and environmental concerns around this style of farming, and believe that the farms are evidence of a wider intensification of the UK’s livestock sector which is not being sufficiently debated, and which may have an impact on small farmers. In contrast to large intensive pig and poultry farms, industrial beef units do not require a government permit, and there are no official records held by DEFRA on how many intensive beef units are in operation. But the Guardian and the Bureau has identified nearly a dozen operating across England. [..] The largest farms fatten up to 6,000 cattle a year.

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Stop the madness!

Meat And Fish Multinationals ‘Jeopardising Paris Climate Goals’ (G.)

Meat and fish companies may be “putting the implementation of the Paris agreement in jeopardy” by failing to properly report their climate emissions, according to a groundbreaking index launched today. Three out of four (72%) of the world’s biggest meat and fish companies provided little or no evidence to show that they were measuring or reporting their emissions, despite the fact that, as the report points out, livestock production represents 14.5% of all greenhouse gas emissions. “It is clear that the meat and dairy industries have remained out of public scrutiny in terms of their significant climate impact.

For this to change, these companies must be held accountable for the emissions and they must have credible, independently verifiable emissions reductions strategy,” said Shefali Sharma, director of the Institute for Agriculture and Trade Policy European office. The new Coller FAIRR Protein Producers Index has examined the environmental and social commitments of 60 of the world’s largest meat and fish producers and found that more than half are failing to properly document their impact, despite their central role in our lives and societies.

Many of the names in the index will be unfamiliar, but their consolidated revenues of $300bn cover around one-fifth of the global livestock and aquaculture market – roughly one in every five burgers, steaks or fish. The companies looked at by the index include giants like the Australian Agricultural Company, which has the biggest cattle herd in the world; the Chinese WH Group, the largest global pork company; or the US’s Sandersons, which processes more than 10 million chickens a week.

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May 252018
 
 May 25, 2018  Posted by at 2:20 pm Finance Tagged with: , , , , , , , , , , , ,  


René Magritte The therapeutist 1937

 

The Spanish government is about to fall after the Ciudadanos party decided to join PSOE (socialist) and Podemos in a non-confidence vote against PM Rajoy. Hmm, what would that mean for the Catalan politicians Rajoy is persecuting? The Spanish political crisis is inextricably linked to the Italian one, not even because they are so much alike, but because both combine to create huge financial uncertainty in the eurozone.

Sometimes it takes a little uproar to reveal the reality behind the curtain. Both countries, Italy perhaps some more than Spain, would long since have seen collapse if not for the ECB. In essence, Mario Draghi is buying up trillions in sovereign bonds to disguise the fact that the present construction of the euro makes it inevitable that the poorer south of Europe will lose against the north.

Club Med needs a mechanism to devalue their currencies from time to time to keep up. Signing up for the euro meant they lost that mechanism, and the currency itself doesn’t provide an alternative. The euro has become a cage, a prison for the poorer brethren, but if you look a bit further, it’s also a prison for Germany, which will be forced to either bail out Italy or crush it the way Greece was crushed.

Italy and Spain are much larger economies than Greece is, and therefore much larger problems. Problems that are about to become infinitely more painful then they would have been had the countries been able to devalue their currencies. If you want to define the main fault of the euro, it is that: it creates problems that would not have existed if the common currency itself didn’t. This was inevitable from the get-go. The fatal flaw was baked into the cake.

 

And if you think about it, today the need for a common currency has largely vanished anyway already. Anno 2018, people wouldn’t have to go to banks to exchange their deutschmarks or guilders or francs, they would either pay in plastic or get some local currency out of an ATM. All this could be done at automatically adjusting exchange rates without the use of all sorts of middlemen that existed when the euro was introduced.

Americans and British visiting Europe already use this exact same system. Governments can make strong deals that make it impossible for banks and credit card companies to charge more than, say, 1% or 0.5%, on exchange rate transactions. This would be good for all cross-border trade as well, it could be seamless.

Technology has eradicated the reason why the euro was introduced in the first place, and made it completely unnecessary. But the euro is here, and it is going to cause a lot more pain and mayhem. Any country that even thinks about leaving the system will be punished hard, even if that’s the by far more logical thing to do.

Europe is not ready to call for the end of the experiment. Because so much reputation and ego has been invested in it, and because the richer nations and their banks still benefit -hugely- from the problems the poorer face. The one country that got it right was Britain, when it decided to stay out of the eurozone.

But then they screwed up the next decision. And found themselves with the most incompetent ever group of ‘chosen few’ to handle the outcome. Still, anyone want to take out a bet on who’s going to be worse off when the euro whip comes down, Britain or for instance Italy or France? Not me. Close call is the best I can come up with.

 

The euro was devised and introduced, ostensibly, to solve problems. Problems with cross border trade between European nations, with exchange rates. But instead it has created a whole new set of problems that turn out to be much worse than the ones it was supposed to solve. That’s how and why M5S and the League got to form Italy’s government.

In Spain, if an election is called, and it looks that way, you will either get a left wing coalition or more of the Rajoy-style same. Left wing means problems with the EU, more of the same means domestic problems; the non-confidence vote comes on the heels of yet another corruption scandal for Rajoy’s party.

And let’s not forget that all economic numbers are being greatly embellished all over the continent. If you can claim with a straight face that the Greek economy is growing, anything goes. Same with Italy. It’s only been getting worse. And yeah, there’s a lot of corruption left in these countries, and yeah, Europe could have helped them solve that. Only, it hasn’t, that is not what Brussels focuses on.

Italy for now is the big Kahuna. The EU can’t save it if the new coalition is serious about its government program. But it also can’t NOT save it, because that would mean Italy leaving the euro. And perhaps the EU.

If Italian bonds are sufficiently downgraded by the markets, Mario Draghi’s ECB will no longer be permitted to purchase them. And access to other support programs would depend on doing the very opposite of what the M5S/League program spells out, which is to stimulate the domestic economy. Is that a bad idea? Hell no, it’s just that the eurozone rules forbid it.

 

The euro has entirely outlived its purpose, and then some. But it exists, and it will be incredibly painful to unravel. The new game for the north will be to unload as much of that pain as possible on the south.

Europe would have been much better off of it had never had the euro. But it does. The politicians and bankers will make sure they’re fine. But the people won’t be.

The euro will disappear because the reasons for it not to exist are much more pressing than for it to do. At least that bit is simple. The unwind will not be.

 

 

Apr 162018
 
 April 16, 2018  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , ,  


James McNeill Whistler Arrangement in Pink, Red and Purple 1883-4

 

US Stock Valuations Are At Multiyear Highs – And Multiyear Lows (MW)
Australia’s Lending Rules Are About to Batter Home Buyers (BBG)
Macron Says He Convinced Trump To Stay In Syria (AFP)
Trump Felt Misled, Angry Over Expulsion Of 60 Russian Diplomats (MW)
Comey And Mueller Have Both Fallen Into Trump’s Trap (MW)
A Third Of People Think Facebook Has A ‘Negative Impact On Society’ (MI)
Who Owns The ‘Virtual You?’ (Escobar)
How Many People Had Their Data Harvested By Cambridge Analytica? (G.)
Where Does the ECB Go From Here? (Mervyn King)
Stoltenberg Calls On NATO Allies To Provide More Support To Turkey (DS)
Detained American Pastor Goes On Trial In Turkey (AFP)
Greek-Turkish Tension ‘Not An Issue For NATO – Stoltenberg (K.)
Greece Is Back in the Spotlight (BBG)
Plastic Is Literally Everywhere: The Epidemic Attacking Australia’s Oceans (G.)

 

 

The new markets.

US Stock Valuations Are At Multiyear Highs – And Multiyear Lows (MW)

With the start of the first-quarter earnings season, U.S. stock-market investors are waiting to see whether the results point to a business environment that is thriving and supportive of the market’s rally over the past several years, or whether the move has been overdone. Turns out, both bulls and bears have data they can marshal in their favor. According to data from FTSE Russell and Thomson Reuters, the U.S. stock market was recently trading at its most expensive levels since the dot-com era, and — even after the first correction for the DJIA and the S&P 500 in about two years — it continues to trade one standard deviation above a historical range. The data is based on the forward price-to-earnings ratio for stocks, which is currently above 17, compared with the long-term average of about 15.

This measure of valuation can be seen mapped out in the following chart. The recent peak of the forward P/E represented a nearly 20-year high, per FTSE Russell.

In another potential warning sign for investors, the cyclically-adjusted price-to-earnings (CAPE) ratio gives the S&P 500 a ratio of 31.6, nearly twice its long-term mean of 16.85, and at its highest level since the dot-com era. Both of these statistics may give investors pause, as they suggest a market’s that is overstretched and could have more room to fall. However, they only tell half the story. The forward P/E comes at a time when first-quarter earnings growth isn’t just expected to be strong, but coming in at its strongest rate in years. According to FactSet, earnings for companies in the S&P 500 are estimated to grow 17.3% in the first quarter, while sales grow 10%. For both, such rates would represent the fastest pace of growth since the first quarter of 2011.

Accounting for that high level of expansion paints a very different picture for stock valuations, so much so that they go from being at or near multiyear highs, to being at multiyear lows. FTSE Russell also provided the following chart to MarketWatch, which looks at the market in terms of its PEG, or a P/E ratio that accounts for earnings growth. Based on this metric, stocks have a PEG of 1.2, which means they’re not only trading one standard deviation below their long-term average of a little more than 1.3, but also at their cheapest level since 2012.

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Really? Killing the golden eggs?

Australia’s Lending Rules Are About to Batter Home Buyers (BBG)

A toughening of lax lending standards in Australia is threatening an already-cooling property market. An inquiry into misconduct in the financial industry is likely to lead to greater regulation of the nation’s A$1.6 trillion ($1.2 trillion) mortgage market. Banks have routinely relied on an unrealistically low estimate of homebuyers’ living expenses, and a more genuine assessment of spending could reduce borrowing power by as much as 35 percent, according to UBS analysts. That would mean many new buyers simply couldn’t afford current prices – a further drag on home prices that are already falling as a seven-year property boom tails off.

“What drives house prices is credit availability,” said Sean Fenton, director at Sydney-based Tribeca Investment Partners, which manages about A$2.5 billion. “A tightening of lending standards directly impacts the ability of the marginal buyer to buy a house.” The heat is already coming out of the housing market. Prices in Sydney, the world’s second-most expensive property market, fell 2.1 percent in March from a year earlier, according to CoreLogic Inc. A year ago, annual price growth was running at almost 16 percent. The top end of the market has recorded the biggest falls, the data shows.

[..] “It’s really obvious that a lot of people have a lot of unmanageable debt,” said Karen Cox, coordinator of Sydney’s Financial Rights Legal Centre, which fielded 25,000 calls last year from people seeking financial help. “Because it’s such a benign interest rate environment, the problems can only get worse.” Based on historic income and price relationships, property prices in Sydney and Melbourne are overvalued by between 25 percent and 30 percent, according to Paul Dales, chief Australian economist at Capital Economics. For now, he’s predicting prices will just edge lower, with the crunch coming if interest rate increases coincide with tighter credit conditions. “All properties in those cities are particularly vulnerable.”

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Macron dreams big. About himself, mostly.

Macron Says He Convinced Trump To Stay In Syria (AFP)

President Emmanuel Macron asserted Sunday that Paris had convinced Donald Trump to stay engaged in Syria “for the long-term”, adding that French air strikes did not amount to a declaration of war against the regime of Bashar al-Assad. A day after France joined the United States and Britain in launching unprecedented strikes against regime targets, Macron insisted the intervention was legitimate and urged international powers to now push for a diplomatic solution to the brutal seven-year war. “We have not declared war on the regime of Bashar al-Assad,” the 40-year-old centrist said at the start of a combative TV interview, stretching nearly three hours, to mark almost a year in office.

But Macron again argued his first major military intervention as president was necessary to send a signal that the use of chemical weapons against civilians would not go unpunished. Saturday’s strikes targeted three alleged chemical weapons facilities in response to what the West says was a gas attack on the town of Douma that killed dozens of people. “We have full international legitimacy in intervening in this case,” Macron said. He said the US, France and Britain targeted “extremely precise sites of chemical weapons use” in an operation that went off “perfectly”. And he further argued the operation was legitimate despite not being sanctioned by the UN, retorting that under a 2013 UN resolution Syria was supposed to destroy its chemical weapons arsenal. As for his allies, Macron suggested France played a pivotal role in changing Trump’s mind on the need to stay involved in the conflict.

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Makes sense.

Trump Felt Misled, Angry Over Expulsion Of 60 Russian Diplomats (MW)

President Donald Trump erupted in anger when he learned the U.S. was expelling 60 Russian diplomats in March, while France and Germany were only expelling four each, the Washington Post reported late Sunday. Trump reportedly only wanted to match the number of allies’ expulsions, and not to be seen as taking the lead. Trump believed his aides misled him, the Post said. “There were curse words,” one official told the Post, “a lot of curse words.” The expulsions were the most ever by the U.S. against Russia, and came in response to a suspected Russian nerve-agent attack on a former spy and his daughter in England. Separately, the Trump administration appears ready to impose more sanctions on Russia. Nikki Haley, the U.S. ambassador to the United Nations, said Sunday that a new round of sanctions will target Russian companies that aid Syria’s chemical weapons capabilities.

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Playing on Trump’s field.

Comey And Mueller Have Both Fallen Into Trump’s Trap (MW)

If there’s any strategy in the world of President Donald Trump, it’s a simple one: Play on my field. And the Trump playing field is a salacious one. The scandals and affairs are literally too numerous to be chronicled in a single article. Large and small, Trump University to Trump Steaks, bankruptcies and legal judgements, all manner of infidelity and aberrant behavior, real or imagined. Former FBI Director James Comey and Special Counsel Robert Mueller were each charged with looking into an allegation of the most serious variety — colluding with a foreign hostile power to alter the presidential election. This week the headlines emanating from Mueller’s investigation, and Comey’s book, involve a porn star, a Playboy bunny, a pee tape, the size of Trump’s hands and a doorman with a history of fibbing apparently alleging the existence of an illegitimate child.

That is playing on Trump’s field. But wait. Isn’t it a violation of campaign law if Trump’s lawyer Michael Cohen paid off Stormy Daniels just ahead of the election? If Cohen used a home-equity loan to fund the payment, did he lie to the bank? Doesn’t it speak to Trump’s truthfulness on a variety of a matters — including alleged collusion with Russia — whether his persistent denials of engaging with prostitutes in Moscow are truthful? Doesn’t it have relevance to the question of whether payoffs were legal if Trump bought off a doorman? And didn’t Mueller actually hand off the investigation on Daniels? Yeah, sure, all of that. Those are all on the level of the Ken Starr investigation into Bill Clinton’s perjury — legal matters, yes, that aren’t really the stuff of high crimes and misdemeanors.

They’re all gotchas reinforcing what we basically knew about Trump and his behavior before the election. By contrast, the consequences of playing on Trump’s field are enormous. For Comey, baiting Trump into a reaction, which sure as water is wet came on Friday morning, will result in better book sales. But it will come at the expense of holding any future higher office. His legacy as FBI director — already tarnished for the ridiculous, torturous inconsistencies in how he handled the investigation into Hillary Clinton’s emails — is forever tarnished. Who in Washington could hire this guy? “Untruthful,” as Trump called him? No. “Slime ball?” Hmm.

Mueller, too, looks set to emerge damaged, if perhaps not as fatally. The question of whether Trump can, or should, fire him has returned. Mueller, also a former FBI director, does still have the support of both House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell to finish his investigation, and a few key Republicans, including Sen. Chuck Grassley, have expressed willingness to support legislation to protect him. But the idea of his dismissal is definitely more plausible — and, for that matter, the outrage it would generate a good bit lessened.

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“..how does it affect children, how does the platform create addiction..”

A Third Of People Think Facebook Has A ‘Negative Impact On Society’ (MI)

Here’s another bone to pick with Facebook. Nearly one-third of Americans (31.7%) think the embattled social network is having a “negative impact on society,” according to a survey conducted in recent months by CEO Mark Zuckerberg’s former personal pollster, Tavis McGinn. That view was even more widely held among respondents in Australia (33.4%), Canada (33.3%) and the U.K. (32.2%), per the results reported by Recode. The survey research was conducted on 10,000 respondents across 10 nations in January and February, prior to recent revelations that the British data firm Cambridge Analytica had improperly harvested personal data from up to 87 million Facebook users to create targeted political ads.

Facebook had already come under fire for its role in the proliferation of fake news on the platform during the 2016 election. While McGinn and his Honest Data company didn’t delve into specifics of this “negative” societal impact, the pollster had some ideas. “In the U.S. obviously we’re very focused on election interference, and in the U.K. they’ve been focused on that as well with Brexit,” he told Recode. “But there are also things like, ‘how does it affect children, how does the platform create addiction, how does the platform encourage extremism, how does the platform push American values onto other countries?’”

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Anyone but you does.

Who Owns The ‘Virtual You?’ (Escobar)

While GAFA in the US essentially controls the politics limiting the capacity for regulation, Brussels will continue to insist the only path towards healthy regulation comes from the EU. The other model is of course China. Beijing has domesticated its sprawling digital industry – which is a de facto extension of the state apparatus as well as a growing instrument of global influence. When Zuckerberg was asked whether Facebook should be broken up – the monopoly issue once again – he said that would weaken the US’s competitive advantage against China, which by the way is fast disappearing. Facebook’s customer base though is not American; it’s global. Inside the Facebook HQ, the consensus is that it is a global company.

So all these issues at stake – from monopoly to regulation to privacy – are indeed global issues. Zuckerberg dodged extremely serious questions. Who owns “the virtual you?” Zuckerberg’s response was that you own all the “content” you upload, and can delete that content any time you want. Yet the heart of the matter is the advertising profile Facebook builds on each user. That simply cannot be deleted. And the user cannot alter it in any way. The GAFA galaxy, in fact, owns you when you click accepting those massive terms and conditions of use. As argued by philosopher Gaspard Koenig, director of the GenerationLibre think tank in France, data property should logically follow the evolution of property rights, land property, financial property and property of ideas, thus replacing the current figure of the “proletarian 2.0” at the heart of the value chain of the digital economy.

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Why would the number be limited to Facebok’s users? Isn’t it clear yet? It’s everyone.

How Many People Had Their Data Harvested By Cambridge Analytica? (G.)

Statistics are a staple of journalistic accuracy issues, but rarely is a number so big, consequential and hard to verify as the number of Facebook users directly affected by the still emerging Cambridge Analytica story. Is it no more than 30 million, as Cambridge Analytica says? Fifty million, as estimated by the Observer and Guardian journalists who have done so much to disclose the issue? Or 87 million, as Facebook has ventured? Facebook’s estimate has a fine-print caveat: “We do not know precisely what data the app shared with Cambridge Analytica or exactly how many people were impacted. Using as expansive a methodology as possible, this is our best estimate of the maximum number of unique accounts that directly installed the thisisyourdigitallife app as well as those whose data may have been shared with the app by their friends.”

The numbers seem to be calculated by multiplying the number of people known as “seeders” by the average number of Facebook friends seeders are thought to have. A seeder was a Facebook user who installed certain apps that permitted the apps’ controllers to harvest data from the user and the seeder’s (unknowing) Facebook friends. The wide variation in the estimates of people affected results partly from different estimates of seeders – 185,000, 275,000, 300,000 – and different average-number-of-friends figures – 160, 180, 250, 340.

Does it matter, in the sense that it is now evident that many, many other entities – academic, commercial, governmental – could have harvested the data of users under previous Facebook policies, for which Mark Zuckerberg, the company’s ethically callow controller, apologised before committees of the US Congress last week, without apparent loss of face? A sense of perspective was given by the Harvard professor Jonathan Zittrain, a sophisticated observer of the social and democratic impacts of digital technologies: “The Cambridge Analytica dataset from Facebook is itself but a lake within an ocean, a clarifying example of a pervasive but invisible ecosystem where thousands of firms possess billions of data points across hundreds of millions of people – and are able to do lots with it under the public radar.”

[..] Is it unreasonable to wonder whether the potential dataset for the team’s work is 2 billion, the total number of Facebook users?

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Former BOE governor sees stormy days ahead. The ECB must save the euro system, and that won’t be easy.

Where Does the ECB Go From Here? (Mervyn King)

Many observers have drawn comfort from the likelihood that Germany’s new “grand coalition” and French President Emmanuel Macron will indeed reform the basic architecture of monetary union. The language will be warm and encouraging, but the substance less so. In recent months I’ve been struck by the dissonance between, on the one hand, a common French and German determination to move ahead on the principle of reform to the monetary union, and, on the other, their governments’ clashing ideas about how to do it. Macron wants a fiscal union and a finance minister for the euro area. Germany doesn’t: It insists that countries must be responsible for their own fiscal position.

The likely compromise is that any fiscal transfers will be kept as small as possible – no larger than needed to get past the immediate problem. That might suffice in reasonably normal times, but not if market confidence disappears as it did in 2010-12. At that point, the issue can no longer be fudged. As these events unfold, Draghi and his successor, due to take over in October 2019, can expect to face many tests. The rise of populist parties in southern Europe is one — but the greatest challenge is likely to come from opinion in Germany. So far, the monetary union has been good for German exporters and politicians but less so for German consumers, who’ve been denied the higher standard of living that an appreciating currency would have delivered.

[..] U.S. President Lyndon B. Johnson famously remarked about his FBI Director J. Edgar Hoover: “It’s probably better to have him inside the tent pissing out, than outside the tent pissing in.” I’ve no doubt Johnson would be strongly recommending the appointment of Jens Weidmann, the current president of the Bundesbank, and I wouldn’t be surprised if Europe’s governments see it the same way. My advice to Jens? Think twice before accepting.

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The NATO Secretary General is a dangerous man. He’s tasked with increasing NATO’s power.

Stoltenberg Calls On NATO Allies To Provide More Support To Turkey (DS)

NATO Secretary General Jens Stoltenberg drew attention to already existing NATO presence in Turkey and called on all allies to provide more support to the country. “We also provide political support, because Turkey is the NATO ally that has suffered the most from terrorist attacks. NATO immediately condemned the coup attempt that targeted Turkey’s democratic institutions,” the secretary-general said. Stoltenberg spoke to Anadolu Agency (AA) at the NATO headquarters in Brussels ahead of his official visit to Turkey on April 16. The NATO chief said the aim of his trip to Ankara is to “to prepare for the upcoming [NATO] summit in Brussels in July..”

[..] Stoltenberg said he highly values the visit to Turkey, as he sees the country it is “a highly valued and key ally for many reasons, not just for its strategic location.” He added that during the visit he will “discuss the preparations for the important summit where we will address issues like how we continue to adapt NATO to a more demanding security environment.” He said that NATO functions with the solidarity principle “one for all and all for one” and added: “We have deployed missile batteries that are augmenting the missile air defenses of Turkey. We have Italy and Spain deploying Patriot batteries and also SAMP-T batteries, and we conduct surveillance flights with our AWACS planes over Turkey. We have also increased our naval presence in the eastern Mediterranean.

[..] When asked about NATO’s approach to Turkey’s Operation Olive Branch in northwestern Syrian region of Afrin, Stoltenberg said NATO welcomed Turkey’s transparency. “We’re aware that there are some challenges related to the situation in northern Syria and around Afrin. NATO has been a platform for direct dialogue between Turkey and the U.S. We recognize Turkey’s legitimate security concerns, which we expect to be addressed in a proportionate and measured way,” NATO chief said. “We all understand that Turkey has to address these threats. We welcome that Turkey has been transparent and briefed NATO several times on the operation in Afrin, both the military operations and the humanitarian assistance.”

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Erdogan gambles on being needed by the US.

Detained American Pastor Goes On Trial In Turkey (AFP)

An American pastor Monday went on trial in Turkey on terror-related charges after spending the last one-and-a-half years behind bars, in a case that has increased friction between Ankara and Washington. Andrew Brunson, who ran a protestant church in the western city of Izmir, was detained by Turkish authorities in October 2016 and then remanded in custody. If convicted, he risks up to 35 years in jail. Brunson, wearing a white shirt and a black suit, was present in court in the town of Aliaga north of Izmir for the hearing, an AFP correspondent said. In an indication of the importance of the case for Washington, also in court were Sam Brownback, the US ambassador at large for religious freedoms, and Senator Thom Tillis.

Turkish prosecutors have charged Brunson with engaging in activities on behalf of the group led by Muslim preacher Fethullah Gulen, who Ankara says is behind the failed 2016 coup, and the Kurdistan Workers’ Party (PKK). Both are banned by Turkey as terror groups. Brunson is also accused of espionage for political or military purposes. If convicted, he faces two separate terms of 15 years and 20 years in prison, his lawyer Cem Halavurt told AFP. [..] The Brunson case has further raised the temperature of heated relations between NATO allies Turkey and the United States, with US President Donald Trump raising the issue in talks with President Recep Tayyip Erdogan. Relations are already tense over American backing for a Kurdish militia in Syria despised by Ankara and the jailing of two employees at American missions in Turkey.

Gulen, who lives in self-exile in the US state of Pennsylvania, firmly denies any role in the failed coup and says his Hizmet (Service) movement promotes a peaceful form of Islam. Turkey has sent a spate of documents to back up its repeated request for Gulen’s extradition from the United States, which has so far shown no sign of interest in expelling the preacher. In September last year, Erdogan suggested that Turkey could free Brunson if Washington handed over Gulen, raising the idea of a swap deal. “They say ‘give us the pastor’. You have a preacher (Gulen) there. Give him to us, and we will try (Brunson) and give him back,” Erdogan said then. The idea was brushed off by the United States.

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Turkey’s a neighbor of Syria. Stoltenberg will have no qualms about selling out Greece.

Greek-Turkish Tension ‘Not An Issue For NATO – Stoltenberg (K.)

The leaders of Greece and Turkey need to address the issues that have been causing tension between the two countries in recent months and this is “not an issue for NATO,” the head of the alliance of which both countries are members said on Sunday. Speaking to Turkey’s Anadolou news agency ahead of a visit to Turkey on Monday, NATO Secretary-General Jens Stoltenberg said that Greece and Turkey are “two highly valued NATO allies” and “both contribute to our collective defense.” “I expect that the differences we see on some issues are solved between Turkey and Greece in the spirit of good relations,” he added.

“In this context, I welcome that the PMs of both countries have recently held a phone conversation and that they have agreed to resolve these differences through dialogue.” Stoltenberg’s visit is planned in preparation for a crucial NATO summit in Brussels in July, “where we will address issues like how we continue to adapt NATO to a more demanding security environment,” he said. Asked to respond to criticism that NATO is not doing enough to help Turkey in its fight against terrorism, Stoltenberg said “there’s a lot of NATO presence in Turkey but I call on the allies to provide even more support.” “We also provide political support, because Turkey is the NATO ally that has suffered the most from terrorist attacks,” the alliance chief told Anadolou.

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Also about Turkey.

Greece Is Back in the Spotlight (BBG)

Consider what Greek Prime Minister Alexis Tsipras is up against. As Greece prepares to free itself from an eight-year European bailout, its 43 year-old premier is confronting challenges at home and abroad. On the domestic front: preparations for post-bailout economic life and the first general election since the end of the program, including feuds with both allies and rivals. On the foreign-policy front: increased tensions with traditional rival Turkey and regional instability stemming from a dispute over a neighboring country’s name. Tsipras’s ability to navigate through all this could determine just how stable the country and its region will be in coming years, experts say, and the European Union, the U.S. and NATO are all watching with interest.

“The worst problem for Tsipras, for the government, but also for Greece is the evolving ‘rogueness’ of Turkey,” said Aristides Hatzis, a professor of law and economics at the University of Athens. “Diminishing American influence on the region is a destabilizing factor and the stakes are very high,” Hatzis said, adding that Greece is not a primary concern for Turkey, but a part of an overall plan by President Recep Tayyip Erdogan to establish hegemony in the region. Tensions between Greece and Turkey escalated in March after two Greek soldiers, who Greece says wandered across the border during a routine patrol, were arrested by Turkey. Greece has demanded their return. Relations between Greece and Turkey, always fraught, worsened further after a Greek court declined to extradite eight Turkish soldiers allegedly involved in a military coup attempt in July 2016.

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“No location and no species is likely to remain immune for any period of time. It is ubiquitous. We are literally drowning in this stuff.”

Plastic Is Literally Everywhere: The Epidemic Attacking Australia’s Oceans (G.)

The scientific literature is awash with research documenting plastics of all sizes in every environment that’s been studied – from the deep ocean to both the Arctic and Antarctic. Microplastic is the term used to describe any piece of plastic less than 5mm wide – it’s mostly the broken-apart remnants of straws, fishing nets and all manner of other plastic items, creating trillions of tiny pieces. Dr Jennifer Lavers, a marine biologist at the Institute for Marine and Antarctic Studies at the University of Tasmania, has spent the past 15 years studying the impacts of plastics.

In 2015 Lavers travelled to one of the most remote spots on the planet – the uninhabited Henderson Island in the middle of the Pacific – to find this world heritage-listed coral atoll’s beaches strewn with an estimated 37m pieces of plastic weighing about 17 tonnes – the equivalent of less than two seconds of global plastic production. Just one washed-up fishing net, barely a decade old, was disintegrating into trillions of plastic fibres that gave the surrounding sand a lucid green splash. “You can’t prepare yourself for moments like that,” she says.

Northern Australia is a known hotspot for these so-called “ghost nets” that are left to haunt the lives of marine animals. One project, GhostNets Australia, has collected more than 13,000 nets since 2004. A study analysed 9,000 nets found in the north of Australia and estimated that they alone had probably caught between 4,866 and 14,600 turtles. “Nowhere is safe, and plastic is literally everywhere,” says Lavers. “No location and no species is likely to remain immune for any period of time. It is ubiquitous. We are literally drowning in this stuff.”

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