Sep 042020
 
 September 4, 2020  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , ,  13 Responses »


Robert Capa Catholic church between bricks from the destroyed Jewish Ghetto Warsaw, Poland 1948

 

Bipartisan Washington Insiders Plan for Chaos if Trump Wins Election (Webb)
Trump: Americans Who Died in War Are ‘Losers’ and ‘Suckers’ (Atl.)
The Trump Era Sucks and Needs to Be Over (Matt Taibbi)
If Dems Win In 2020, It’s Virtually Impossible For GOP Ever To Win Again (PJW)
Cuomo Admin Accused Of Stonewalling Over COVID19 Nursing Home Deaths (NYP)
DOJ Conducting “Very Big” Voter Fraud Investigations – Barr (ET)
DOJ To File Antitrust Charges Against Google Within Weeks (ZH)
In the Worst of Times, the Billionaire Elite Plunder Working Class America (CP)
US Court: NSA Mass Surveillance Program Exposed By Snowden Was Illegal (DW)
Capitalism Isn’t Working. Here’s An Alternative (Varoufakis)
Eulogy to David Graeber (Steve Keen)

 

 

60 days to go till November 3 and hunting season is open. Smear’s the word. It’ll be so ugly many people will just turn away in disgust. Many others will keep staring at it the way people stare at traffic accidents.

 

 

Bradykinin give us even more incentive to roll out rapid tests, HCQ, zinc, vitamin D in huge quantities. What are we waiting for?

 

 

 

 

 

 

Taleb and Bar-Yam

 

 

Whitney Webb is one of multiple voices discussing the Transition Integrity Project (TIP). Bipartisan in this case means: anti-Trump. Basically, all these war scenarios claim that if Biden doesn’t win big, there’ll be war in the streets. They sort of openly advocate for that.

Bipartisan Washington Insiders Plan for Chaos if Trump Wins Election (Webb)

A group of Democratic Party insiders and former Obama and Clinton era officials as well as a cadre of “Never Trump” neoconservative Republicans have spent the past few months conducting simulations and “war games” regarding different 2020 election “doomsday” scenarios. Per several media reports on the group, called the Transition Integrity Project (TIP), they justify these exercises as specifically preparing for a scenario where President Trump loses the 2020 election and refuses to leave office, potentially resulting in a constitutional crisis. However, according to TIP’s own documents, even their simulations involving a “clear win” for Trump in the upcoming election resulted in a constitutional crisis, as they predicted that the Biden campaign would make bold moves aimed at securing the presidency, regardless of the election result.

This is particularly troubling given that TIP has considerable ties to the Obama administration, where Biden served as Vice President, as well as several groups that are adamantly pro-Biden in addition to the Biden campaign itself. Indeed, the fact that a group of openly pro-Biden Washington insiders and former government officials have gamed out scenarios for possible election outcomes and their aftermath, all of which either ended with Biden becoming president or a constitutional crisis, suggest that powerful forces influencing the Biden campaign are pushing the former Vice President to refuse to concede the election even if he loses. This, of course, gravely undercuts the TIP’s claim to be ensuring “integrity” in the presidential transition process and instead suggests that the group is openly planning on how to ensure that Trump leaves office regardless of the result or to manufacture the very constitutional crisis they claim to be preventing through their simulations.

Such concerns are only magnified by the recent claims made by the 2016 Democratic presidential candidate and former Secretary of State under Obama, Hillary Clinton, that Biden “should not concede under any circumstances.” “I think this is going to drag out, and eventually I do believe he will win if we don’t give an inch, and if we are as focused and relentless as the other side is,” Clinton continued during an interview with Showtime a little over a week ago. The results of the TIP’s simulations notably echo Clinton’s claims that Biden will “eventually” win if the process to determine the election outcome is “dragged out.”

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The for now (but don’t hold your breath on that one) ultimate smear piece, based exclusively on anonymous sources. All it says has been denied by not anonymous sources, who were actually present, like Trump himself, and Sarah Sanders, but that’s not the point. The point is smear; that’s how this will be fought.

Trump: Americans Who Died in War Are ‘Losers’ and ‘Suckers’ (Atl.)

Trump remained fixated on McCain, one of the few prominent Republicans to continue criticizing him after he won the nomination. When McCain died, in August 2018, Trump told his senior staff, according to three sources with direct knowledge of this event, “We’re not going to support that loser’s funeral,” and he became furious, according to witnesses, when he saw flags lowered to half-staff. “What the fuck are we doing that for? Guy was a fucking loser,” the president told aides. Trump was not invited to McCain’s funeral.

(These sources, and others quoted in this article, spoke on condition of anonymity. The White House did not return earlier calls for comment, but Alyssa Farah, a White House spokesperson, emailed me this statement shortly after this story was posted: “This report is false. President Trump holds the military in the highest regard. He’s demonstrated his commitment to them at every turn: delivering on his promise to give our troops a much needed pay raise, increasing military spending, signing critical veterans reforms, and supporting military spouses. This has no basis in fact.”)

[..] On Memorial Day 2017, Trump visited Arlington National Cemetery, a short drive from the White House. He was accompanied on this visit by John Kelly, who was then the secretary of homeland security, and who would, a short time later, be named the White House chief of staff. The two men were set to visit Section 60, the 14-acre area of the cemetery that is the burial ground for those killed in America’s most recent wars. Kelly’s son Robert is buried in Section 60. A first lieutenant in the Marine Corps, Robert Kelly was killed in 2010 in Afghanistan. He was 29. Trump was meant, on this visit, to join John Kelly in paying respects at his son’s grave, and to comfort the families of other fallen service members.

But according to sources with knowledge of this visit, Trump, while standing by Robert Kelly’s grave, turned directly to his father and said, “I don’t get it. What was in it for them?” Kelly (who declined to comment for this story) initially believed, people close to him said, that Trump was making a ham-handed reference to the selflessness of America’s all-volunteer force. But later he came to realize that Trump simply does not understand non-transactional life choices. “He can’t fathom the idea of doing something for someone other than himself,” one of Kelly’s friends, a retired four-star general, told me. “He just thinks that anyone who does anything when there’s no direct personal gain to be had is a sucker. There’s no money in serving the nation.”

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Would things be better if Trump were gone? The only alternative is having Hillary and Pelosi and Schiff in charge. Is that an improvement?

The Trump Era Sucks and Needs to Be Over (Matt Taibbi)

The question, “What is Trump thinking?” is the wrong one. He’s not thinking, he’s selling. What’s he selling? Whatever pops into his head. The beauty of politics from his point of view, compared to every other damn thing he’s sold in his life — steaks, ties, pillows, college degrees, chandeliers, hotels, condominiums, wine, eyeglasses, deodorant, perfume (SUCCESS by Trump!), mattresses, etc. — is that there’s no product. The pitch is the product, and you can give different pitches to different people and they all buy. In 2016 Trump reeled in the nativist loons and rage cases with his opening rants about walls and mass deportations, then slowly clawed his numbers up with the rest of the party with his “softening” routine.

Each demographic probably came away convinced he was lying to the other, while the truth was probably more that he was lying to all of them. Obviously there are real-world consequences to courting the lowest common denominator instincts in people, but to Trump speeches aren’t moral acts in themselves, they’re just “words that he is saying,” as long-ago spokesperson Katrina Pierson put it. In this sense the Republican Party’s 2020 platform is genius: there isn’t one, just a commitment to “enthusiastically support the President’s America-first agenda,” meaning whatever Trump says at any given moment. If one can pull back enough from the fact that this impacts our actual lives, it’s hard not to admire the breathtaking amorality of this, as one might admire a simple malevolent organism like a virus or liver fluke.

Trump blew through the Republican primaries in 2015-2016. His opponents, a slate of mannequins hired by energy companies and weapons contractors to be pretend-patriots and protectors of “family values,” had no answer for his insults and offer-everything-to-everyone tactics. Like most politicians, they’d been protected their whole lives by donors, party hacks, and pundits who’d turned campaigns into a club system designed to insulate paid lackeys from challenges to their phony gravitas. Trump had no institutional loyalty to the club, shat all over it in addition to its silly frontmen, and walked to the nomination.

[..] The paradox ensnaring America since November, 2016 is that Trump never intended to govern, while his opponents never intended to let him try. In an alternate universe where a post-election Donald had enough self-awareness to admit he was out of his depth, and the D.C. establishment agreed to recognize his administration as legitimate for appearances’ sake, Trump might have escaped four years with the profile of a conventionally crappy president, or perhaps a few notches below that — way below average, maybe, but survivable. Instead it was decided even before he was elected that admitting the president was the president was “normalizing” him. Normally no news is good news, and the anchorman is encouraged to smile on a day without war, earthquakes, terror attacks, or stock market crashes.

Under Trump it became taboo to have a slow news day. A lack of an emergency was a failure of reporting, since Trump’s very presence in office was crisis.

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The ruling class.

If Dems Win In 2020, It’s Virtually Impossible For GOP Ever To Win Again (PJW)

Professor Angelo M. Codevilla warns that if the Democrats win the 2020 elections, it would be “virtually impossible for conservatives ever to win again.” Codevilla, who is professor emeritus of International Relations at Boston University, made the prediction in a review published by the Claremont Review of Books for Michael Anton’s new book The Stakes: America at the Point of No Return. The book makes the argument that although some Americans may be disappointed in Trump’s performance, voting for him again is absolutely crucial for the republic’s survival because “this country’s ruling class would use control of the presidency to hurt us in our private and public lives for having dared to reject their mastery.” Importing non-citizens who are then given the vote, as well as institutionalizing elections by mail, which would give those who count the votes the power, would ‘guarantee disaster’ for the country, according to Codevilla.


He then issues a stark warning; It’s game over permanently for Republicans if Trump loses in 2020. “Should the Democrats win, the ruling Left – which includes just about everyone who controls American government and society’s commanding heights – is ready, willing, and eager to implement plans that would make it virtually impossible for conservatives ever to win national elections again,” writes Codevilla. The professor also cautions that Democrats’ stated refusal to concede to Donald Trump, which was recently amplified by Hillary Clinton, could manifest itself in “one or more blue state governors to refuse to certify that state’s electors to the Electoral College, so as to prevent the college from recording a majority of votes for the winner.” This threatens to set off a “systemic crisis” that could lead to a civil war “less like the American Civil War of the 19th century and more like the horror that bled Spain in the 20th.”

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It’ll be ready on November 5th. No, the joke is not lost on us. That’s two whole months for what nursing homes are by law obliged to tally on a daily basis. It shouldn’t even take two hours.

Cuomo Admin Accused Of Stonewalling Over COVID19 Nursing Home Deaths (NYP)

A government watchdog group is accusing Gov. Andrew Cuomo’s administration of sitting on data that would provide the full death tally of nursing home residents from the coronavirus. The Empire Center for Public Policy accuses the state Health Department of stalling on compliance with a Freedom of Information Law request seeking the information. Currently, New York’s tally of nursing home fatalities only counts those residents who died or are presumed to have died from COVID-19 inside those facilities. The figure excludes potentially thousands of nursing home residents who were transported to hospitals for treatment and died a few days later.

“The state Health Department is offering a new explanation for why it won’t provide the full death toll of coronavirus in nursing homes: it can’t find the records,” said Bill Hammond, a health analyst for the Empire Center who submitted the legal request for the data in early August. In a response letter sent to Hammond on Monday, the department said it could not yet fulfill the request “because a diligent search for relevant documents is still being conducted.” “We estimate that this Office will complete its process by November 5, 2020. The Department will notify you in writing when/if the responsive materials are available for release or if the time needed to complete your request extends beyond the above date,” said the department’s record access officer, Rosemary Hewig.

The delayed compliance in releasing information in response to legal requests has been a common practice of government agencies, with officials often saying they are still conducting a “diligent search” for records. “In this case, however, a search of any kind should not be necessary,” Hammond said in a blog post. He said the department’s Health Emergency Response Data System (or HERDS) has required nursing homes to file daily reports throughout the pandemic — including counts of all residents who die from coronavirus, both within the facilities or hospitals or elsewhere. “Those numbers are the basis for the partial count that the department does make public – which stood at 6,639 as of Aug. 29, but omits potentially thousands of residents who died in hospitals,” Hammond said.

Hammond said the “unusual methodology” is used by few if any other states and gives the public a “distorted picture of the pandemic.” “It makes it hard to compare New York to other states, or to gauge the merits of particular policies, such as the Health Department’s much-debated March 25 directive compelling nursing homes to accept coronavirus-positive patients being discharged from hospitals,” he said. The Justice Department is looking at whether the policies of New York and three other states contributed to COVID-19 nursing home deaths.

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And you thought hanging chads were controversial…

DOJ Conducting “Very Big” Voter Fraud Investigations – Barr (ET)

The Department of Justice is conducting several “very big” voter fraud investigations in multiple states, Attorney General William Barr told CNN in an interview aired on Sept. 2. “I know there are a number of investigations right now, some very big ones, in states,” Barr said in response to a question about how many voter fraud indictments the Department of Justice (DOJ) has brought on his watch. Barr said he did not know the exact number. At least 32 people have been criminally convicted of voter fraud in 2019, according to a database maintained by the conservative Heritage Foundation think tank. The attorney general made the remarks as part of a tense exchange with CNN anchor Wolf Blitzer about mail-in voting.

Barr has repeatedly said that mass mail-in voting is an invitation for voter fraud and coercion. Blitzer pressed the attorney general for evidence that this will be the case in 2020. Barr pointed to a recent conviction in Texas over 1,700 fraudulent ballots and noted that widespread evidence isn’t available because the United States has never attempted an election with the kind of massive access to mail-in voting available in 2020. At least 83 percent of American voters, or roughly 100 million people, will be able to vote by mail in the 2020 election, according to a tally by The Washington Post. “We haven’t had the kind of widespread use of mail-in ballots as being proposed,” Barr said.

“We’ve had absentee ballots from people who request them from a specific address. Now what we’re talking about is mailing them to everyone on the voter list, when everyone knows those voter lists are inaccurate.” Barr referenced the findings of a nonpartisan Commission on Federal Election Reform, co-chaired by former President Jimmy Carter and former Secretary of State James Baker, which determined in 2005 that mail-in voting creates the potential for voter fraud and opens the door to coercion if activists or party workers are allowed to handle ballots. Carter recently issued a statement to point out that the commission’s key finding was that states should invest in more research on mail-in voting. The former president encouraged states to invest resources to expand voting by mail.

More than 43 percent of likely American voters would not trust in the integrity of an election if all voters automatically received ballots or ballot request forms by mail, according to an Epoch Times National Poll conducted in late August. “This is playing with fire,” Barr said. “We’re a very closely divided country here and people have to have confidence in the results of the election and the legitimacy of the government. And people trying to change the rules to this methodology—which as a matter of logic is very open to fraud and coercion—is reckless and dangerous,” Barr said.

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Bill Barr Busy.

DOJ To File Antitrust Charges Against Google Within Weeks (ZH)

The Department of Justice will is preparing to slap Google with an antitrust case over the next several weeks, according to the New York Times – which insists, based on five sources, that Attorney General Bill Barr “overruled career lawyers who said they needed more time to build a strong case against one of the world’s wealthiest, most formidable technology companies.” The Times is suggesting, based on leaks, that Barr is rushing the case for political purposes and the charges are premature. “The Google case could also give Mr. Trump and Mr. Barr an election-season achievement on an issue that both Democrats and Republicans see as a major problem: the influence of the biggest tech companies over consumers and the possibility that their business practices have stifled new competitors and hobbled legacy industries like telecom and media.” -NYT

Some 40 lawyers working on a DOJ antitrust inquiry into Google parent Alphabet were reportedly told to wrap up their work by the end of this month, according to three of the five leakers, who we’re guessing are part of the 40-lawyer team – as “most of the 40-odd lawyers who had been working on the investigation opposed the deadline.” Others said they would not sign the complaint, while several left the case over the summer.

“Some argued this summer in a memo that ran hundreds of pages that they could bring a strong case but needed more time, according to people who described the document. Disagreement persisted among the team over how broad the complaint should be and what Google could do to resolve the problems the government uncovered. The lawyers viewed the deadline as arbitrary. While there were disagreements about tactics, career lawyers also expressed concerns that Mr. Barr wanted to announce the case in September to take credit for action against a powerful tech company under the Trump administration. But Mr. Barr felt that the department had moved too slowly and that the deadline was not unreasonable, according to a senior Justice Department official.” -NYT

Barr has shown a “deep interest” in the Google investigation, requesting regular briefings on the DOJ case, and “taking thick binders of information about it on trips and vacations and returning with ideas and notes.” The Times notes that antitrust action against Google has bipartisan support from a coalition of 50 states and territories, though Democrats and Republican state attorneys general conducting their own investigations are split on how to move forward. Republicans have accused Democrats of slow-walking the work in order to bring charges under a potential Biden administration, while Democrats have accused Republicans of wanting Trump to receive credit – a disagreement which could limit the number of states participating in prosecuting the Silicon Valley giant.

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But but, I read Jeff Bezos lost $9 billion yesterday!

In the Worst of Times, the Billionaire Elite Plunder Working Class America (CP)

In the midst of a global pandemic, unprecedented economic collapse, mass unemployment, hunger and desperation, the stock market is booming and the richest of the rich are richer than ever before. Since March, more than 58 million people in the U.S. have filed for unemployment. The Internal Revenue Service now predicts that the U.S. economy will have almost 40 million fewer jobs in 2021 than they predicted before the pandemic, as a result of the prolonged economic depression. As it becomes widely recognized that the economy is not going to “bounce right back” into full activity – even when coronavirus cases do eventually decline – and that the current depression will continue for a long time, companies are doing anything they can to drive their stock prices higher.

Desperate to maintain their profits, many large corporations are planning massive layoffs and acknowledging that currently furloughed workers are not going to have jobs to come back to. The Wall Street Journal reports that a recent study found, “nearly half of U.S. employers that furloughed or laid off staff because of COVID-19 are considering additional workplace cuts in the next 12 months.” The companies say low-paid workers will be the first to be cut. Twice as many workers had their pay cut by July 1 as during the Bush-Obama recession that began in 2009, according to the Washington Post. More than 10 million private sector workers have had their wages cut or been forced to work part-time. Car company Tesla forced all workers to take a 10 percent pay cut from mid-April until July. In the same period, Tesla stock skyrocketed, and CEO Elon Musk’s net worth has now quadrupled from $25 billion to over $100 billion.

Business software company Salesforce announced record sales levels one day and layoffs of 1,000 workers the next. The company’s stock rose 26 percent. Among small businesses, another study found that 50 percent of all small-business employees who were furloughed since March are still without work. Twenty-eight percent are still furloughed; 22 percent have been permanently laid off. Even in the government’s rigged and severely undercounted unemployment statistics, the number of people who have been unemployed 15-26 weeks is nearly double what it was at the height of the 2009 recession — and exponentially higher than at any other time since the Great Depression of the 1930s.

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So the entire NSA brass must all move to Russia now? And Edward can come back home? Or is exposing an illegal program more illegal than said program itself?

US Court: NSA Mass Surveillance Program Exposed By Snowden Was Illegal (DW)

A US federal appeals court on Wednesday ruled that the controversial National Security Agency (NSA) surveillance program exposed by whistleblower Edward Snowden was illegal. The ruling stopped short of calling the program unconstitutional. The US Court of Appeals for the Ninth Circuit said that the program, under which the NSA collected and analyzed bulk data provided by telecommunications companies, was in violation of the Foreign Intelligence Surveillance Act and could have been unconstitutional.= “Seven years ago, as the news declared I was being charged as a criminal for speaking the truth, I never imagined that I would live to see our courts condemn the NSA’s activities as unlawful and in the same ruling credit me for exposing them,” said Snowden, who fled to Russia after exposing the program, on Twitter.


“And yet that day has arrived.” He still faces charges of espionage in the US. After initially denying that the intelligence agency collected information on Americans, officials maintained that the spying helped the country combat domestic extremism. The most popular case cited was that of four California residents — Basaaly Saeed Moalin, Ahmed Nasir Taalil Mohamud, Mohamed Mohamud, and Issa Doreh — who have been convicted of funding the Al-Shabaab extremist group in Somalia. NSA’s domestic spying program helped get this conviction, which will not be impacted by the latest ruling. However, human rights organizations like the American Civil Liberties Union have hailed the ruling as “a victory for our privacy rights.”

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“..the pandemic stripped away the veneer of politics to reveal the boorish reality underneath: that some people have the power to tell the rest what to do.”

Capitalism Isn’t Working. Here’s An Alternative (Varoufakis)

Before 2020, politics seemed almost like a game, but with Covid came the realisation that governments everywhere possessed immense powers. The virus brought the 24-hour curfew, the closure of pubs, the ban on walking through parks, the suspension of sport, the emptying of theatres, the silencing of music venues. All notions of a minimal state mindful of its limits and eager to cede power to individuals went out of the window. Many salivated at this show of raw state power. Even free-marketeers, who had spent their lives shouting down any suggestion of even the most modest boost in public spending, demanded the sort of state control of the economy not seen since Leonid Brezhnev was running the Kremlin. Across the world, the state funded private firms’ wage bills, renationalised utilities and took shares in airlines, car makers, even banks. From the first week of lockdown, the pandemic stripped away the veneer of politics to reveal the boorish reality underneath: that some people have the power to tell the rest what to do.

[..] Suppose we had seized the 2008 moment to stage a peaceful hi-tech revolution that led to a postcapitalist economic democracy. What would it be like? To be desirable, it would feature markets for goods and services since the alternative – a Soviet-type rationing system that vests arbitrary power in the ugliest of bureaucrats – is too dreary for words. But to be crisis-proof, there is one market that market socialism cannot afford to feature: the labour market. Why? Because, once labour time has a rental price, the market mechanism inexorably pushes it down while commodifying every aspect of work (and, in the age of Facebook, our leisure too).

Can an advanced economy function without labour markets? Of course it can. Consider the principle of one-employee-one-share-one-vote underpinning a system that, in Another Now, I call corpo-syndicalism. Amending corporate law so as to turn every employee into an equal (though not equally remunerated) partner is as unimaginably radical today as universal suffrage was in the 19th century. In my blueprint, central banks provide every adult with a free bank account into which a fixed stipend (called universal basic dividend) is credited monthly. As everyone uses their central bank account to make domestic payments, most of the money minted by the central bank is transferred within its ledger. Additionally, the central bank grants all newborns a trust fund, to be used when they grow up.

People receive two types of income: the dividends credited into their central bank account and earnings from working in a corpo-syndicalist company. Neither are taxed, as there are no income or sales taxes. Instead, two types of taxes fund the government: a 5% tax on the raw revenues of the corpo-syndicalist firms; and proceeds from leasing land (which belongs in its entirety to the community) for private, time-limited, use.

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RIP

Eulogy to David Graeber (Steve Keen)

Oh David! @davidgraeber. . They say only the good die young, but why did you have to be one of them? There’s even more bullshit in the world now that you are no longer with us. It was a pleasure to know you, and it is a tragedy to say goodbye.


David was special for many, many reasons. The first I’ll mention is what I expect is the foundation of David’s appeal to Nika: his trusting innocence. There was a boyish openness and lack of ego in David that made you trust him, because you could. He was, at the same time, extremely intelligent and extremely funny. He had a nervy aspect, very befitting of someone raised in New York. But he was fundamentally funny, and looked on the world with a sense of bemusement, and all the while, incisive insight. He was intrinsically an anthropologist, in that he was capable of living amongst people and seeing their customs more clearly than they could themselves, while all the while celebrating those aspects, the good and the bad, because they were his people as well.

There was a selflessness to David too. There wasn’t an ounce of David’s body that was in it for David’s benefit alone. Well, he enjoyed his pleasures, but they could never be had at the expense of another person. That made him someone you could trust with your life. On top of that, he was an excellent if sometimes rambling speaker, whose charisma attracted support which was worth giving. David, I believe, came up with the slogan “We’re the 99%”. David, I believe, developed Occupy Wall Street’s voting system, which was a very powerful form of democracy that still respected the rights of the minority. He was a true leader in large part because he didn’t want to be.

He was also an excellent historian of money and debt. If you haven’t read Debt: the first 5000 Years, buy a copy and do so. It’s such a pity that David won’t be here to chronicle the start of its next 5000 Years. That’s the other thing: the suddenness. I knew David wasn’t feeling well—I’d exchanged a few messages with Nika where David’s health came up. Maybe it was Covid—I still don’t know. I won’t speculate. But it is so bloody awful to lose such a brilliant, lovely, funny, warm human being. It’s the unkindest cut of all that 2020 has managed to deliver.

Now we know why we speak of 20:20 vision, and 20:20 hindsight. We thought it was an ophthalmologist’s crazy numbering system. In fact, it was a warning from a time traveller.

Nassim Taleb – David Graeber

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We try to run the Automatic Earth on donations. Since ad revenue has collapsed, your support is now an integral part of the process.

Thank you for your ongoing support.

 

 

“As humans we are fragile biological entities who will die unless we take care of each other”

– David Graeber

 

 

Support the Automatic Earth in virustime.

 

Aug 042019
 


Julie Edgley Immature white tailed eagle.

 

An Economy Based on Plunder (PCR)
Economics Is A Failing Discipline Doing Great Harm (Simms)
Joe Biden To Millennials: Stop Complaining (HPo)
Dominic Cummings: UK Lawmakers Can’t Stop No-Deal Brexit (R.)
Justice Dept Bill Comes Due For Russiagate Costs (RT)
Celebrities, Royals, Politicians Fear Release Of Jeffrey Epstein Files (Tel.)
California Scrubs Controversial Kamala Harris-Era Arrest Reports
America’s Elites: Fractured and At Odds with Each Other (Crooke)
We Must Change Food Production To Save The World (G.)
The Sea Eagle Has Landed – Centuries After It Disappeared (G.)

 

 

Two mass shootings in the US, Iran seizes another tanker and police in France and Hogn Kong chase protesters. Must be Sunday.

Well, yes, it’s been about plunder for as long as our ‘civilization’ exists. We prefer to use other terms, that’s all.

An Economy Based on Plunder (PCR)

Capitalists have claimed responsibility for America’s past economic success. Let’s begin by setting the record straight. American success had little to do with capitalism. This is not to say that the US would have had more success with something like Soviet central planning. Prior to 1900 when the frontier was closed, America’s success was a multi-century long success based on the plunder of a pristine environment and abundant natural resources. Individuals and companies were capitalized simply by occupying the land and using the resources present. As the population grew and resources were depleted, the per capita resource endowment declined.

America got a second wind from World War I, which devastated European powers and permitted the emergence of the US as a budding world power. World War II finished off Europe and put economic and financial supremacy in Washington’s hands. The US dollar seized the world reserve currency role from the British pound, enabling the US to pay its bills by printing money. The world currency role of the dollar, more than nuclear weapons, has been the source of American power. Russia has equal or greater nuclear weapons power, but it is the dollar not the ruble that is the currency in which international payments are settled. The world currency role made the US the financial hegemon.

This power together with the IMF and World Bank enabled the US to plunder foreign resources the way vanishing American resources had been plundered. We can conclude that plunder of natural resources and the ability to externalize much of the cost have been major contributors right through the present day to the success of American capitalism. [..] Essentially, capitalism is a plunder mechanism that generates short-run profits by externalizing long-run costs. It exhausts natural resources, including air, land, and water, for temporary profits while imposing most of its costs, such as pollution, on the environment.

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And economics is designed to justify the plunder.

Economics Is A Failing Discipline Doing Great Harm (Simms)

[..] neoclassical economics has so deeply entrenched the notion that markets are better than all other ways of organising life, that decisions escape rational scrutiny. Academic economists will tell you that their discipline offers a far more complex picture of the world. But, at the policy level, what tilts a spending decision one way or the other is the simple power of the seeming “folk wisdom” that markets are best. It becomes the rule of thumb. They might look less good if the assumptions on which the equilibrium models that got us here were more widely known. The idea of perfect markets under perfect competition, for example, asks us to believe in a world where everybody knows everything, there are an infinite number of companies, no barriers to setting up a business, where any product can stand in for any other (say, a banana for a tractor) and, crucially, there are no “externalities” (economic speak for “consequences”) from production or consumption.


All models use a few simplifying assumptions, but those underpinning mainstream economics more often distort and detach from reality. It’s one of the reasons why students have rebelled, forming groups to demand that universities take a more pluralistic approach to teaching economics. Katie Kedward left a banking job in the City for ethical reasons and sought a degree that would make sense of economics. Despairing at the unreality of mainstream courses, she found a rare exception: a master’s in ecological economics at the University of Leeds. The course, though, isn’t even taught in the economics department but the School of Earth and Environment. That’s why new groups are emerging to promote heterodox economics, which draws on the insights of the study of complexity, neuro and behavioural science, ecology, feminism and the core economy of family, mutualism and community.

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Yeah, don’t just sit there, do something instead. Like seize Joe’s wealth.

Joe Biden To Millennials: Stop Complaining (HPo)

Former Vice President Joe Biden has a message for the millennial generation: Stop complaining if you aren’t going to engage with politics. The 2020 Democratic presidential contender stood by the skepticism he expressed last year when asked about young adults’ belief that they face outsize hurdles to secure housing and pay off debt. “I have no empathy for it. Give me a break,” Biden said in January 2018. Asked to explain what he meant, Biden began talking about his personal experience growing up with “very modest means” and how he felt upon learning about a study that found relatively few young people today would consider running for political office.

“We have an obligation to get engaged,” Biden said at Saturday’s AFSCME forum, co-moderated by HuffPost. “You all have an obligation to get engaged.” “Don’t tell me how bad it is. Change it. Change it. Change it,” he said. He added: “My generation did it.” = Biden drew some criticism the first time he went after millennials, more than a year before he announced his candidacy. Conservative New York Times opinion writer and climate denier Bret Stephens later sided with Biden in a column criticizing the millennial generation, which Stephens said specializes in “histrionic self-pity and moral self-righteousness.”

As HuffPost’s Michael Hobbes reported in 2017, there is a large amount of research and data that paints a bleak financial future for young people, many of whom are already reporting that they’re finding themselves priced out of the housing market. Although Biden has consistently polled highest among the wide field of 2020 Democratic presidential contenders, his supporters skew older and more moderate. At the forum, he went on to say, “I just don’t want people telling me on a college campus, ‘Oh, woe is me, I’ve got it so bad.’ … Come on.”

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Checkmate?

Dominic Cummings: UK Lawmakers Can’t Stop No-Deal Brexit (R.)

Lawmakers will be unable to stop a no-deal Brexit on Oct. 31 by bringing down Britain’s government in a vote of no confidence next month, Prime Minister Boris Johnson’s top aide has advised, according to the Sunday Telegraph. Dominic Cummings, one of architects of the 2016 campaign to leave the European Union, told ministers that Johnson could schedule a general election after the Oct. 31 Brexit deadline if he loses a vote of no confidence in parliament, the newspaper said, citing sources. Johnson has promised to lead Britain out of the EU on Oct. 31 with or without a deal but has a working majority of just one after his Conservative Party lost a parliamentary seat on Friday.


Some of his lawmakers have hinted they would vote against him to prevent a no-deal Brexit — a rising prospect that has sent the pound tumbling to 30-month lows against the dollar over the last few days. Lawmakers are unable to table a motion of no confidence before next month because the House of Commons is in recess until Sept. 3. “(Lawmakers) don’t realise that if there is a no-confidence vote in September or October, we’ll call an election for after the 31st and leave anyway,” Cummings was quoted by one of the Sunday Telegraph’s sources as saying. Johnson has said he would prefer to the leave the EU with a deal but has rejected the Irish backstop — an insurance policy to prevent the return of a hard border between the Irish Republic and Northern Ireland — which the EU says is key to any agreement.

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“..the special counsel’s office spent $25 million digging for Russian infiltrators in the White House.”

Justice Dept Bill Comes Due For Russiagate Costs (RT)

Nearly two years of fruitlessly hunting for collusion between US President Donald Trump’s campaign and the Russian government cost the country $31.7 million, the Justice Department has revealed. The cost of special counsel Robert Mueller’s 22-month probe was released in a Justice Department accounting report on Friday. While the last six months of the investigation, which concluded in May with Mueller’s resignation, cost “only” $6.5 million as he began sending prosecutors home and writing up the 448-page report, turning the full force of the country’s investigative apparatus against a president and his campaign isn’t cheap. From May 2017 to September 2018, the special counsel’s office spent $25 million digging for Russian infiltrators in the White House.

Some $2.4 million of the last phase’s expenses would have been spent anyway on Department salaries, according to the report, but the itemized breakdown provides an interesting window into the bureaucratic swamp that produced the pricey nothingburger. “Transportation of Things” may have cost just $229, but Justice Department employees billed the government for $235,812 to work out of the special counsel’s office instead of their own offices (filed under “Travel and Transportation of Persons”). While the special counsel investigation infamously turned up no proof of the promised Russian collusion, that did not stop Trump’s political opponents from attempting to reframe the expensive endeavor as a victory – based on the handful of process crimes levied against Trump associates – or a “roadmap to impeachment,” since Mueller did not explicitly say Trump should not be prosecuted and outlined 10 potential scenarios of obstruction of justice.

Adding insult to injury, several key “facts” in the report have already been proven wrong or misleading, such as the identity of Konstantin Kilimnik, who Mueller described as having links to Russian intelligence but who was actually a US State Department asset. And last month, a federal judge found that Mueller had utterly failed to prove that the company running the “troll farm” that supposedly committed “sweeping and systematic” interference in US elections on behalf of the Russian government had any government connections at all.

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Who’s powerful enough to remain hidden?

Celebrities, Royals, Politicians Fear Release Of Jeffrey Epstein Files (Tel.)

In Room 270, the records management unit, on the second floor of an imposing granite and marble courthouse in lower Manhattan, 167 documents totaling more than 2,000 pages are being kept under lock and key. But they are about to be unsealed and made public – making a host of important people around the world, including celebrities, politicians and royals, very nervous. The files contain explosive allegations in the case of Giuffre v Maxwell, in which Virginia Giuffre, a woman who claims to have been Jeffrey Epstein’s teenage “sex slave”, sued Ghislaine Maxwell, a British socialite and the billionaire’s former girlfriend, for defamation.

The case was settled in May 2017 on the eve of the trial but the details were not disclosed and the final judgment and supporting documents were sealed, with the court noting the “highly sensitive nature of the underlying allegations.” According to other court documents that have been published, Ms Giuffre has made allegations of sexual abuse against “numerous prominent American politicians, powerful business executives, foreign presidents, a well known Prime Minister, and other world leaders.” An appeal to unseal the rest of the documents was launched by the Miami Herald newspaper, which has spearheaded media investigations into Epstein. It was rejected three times. But last month the US Court of Appeals for the Second Circuit ordered their release, ruling that the public’s right to know outweighed the privacy rights of the high-profile individuals named.

It what may be an indication of the fame of those individuals, the judges made a striking plea to the media to “exercise restraint” in reporting the allegations about to come to light. They also allowed parties involved to apply for minor redactions, delaying the release. Another delay is possible as Miss Maxwell has launched an appeal to keep the documents sealed, her lawyers arguing that a full release would trigger a “furious feeding frenzy.” They wrote: “Plaintiff Giuffre made numerous allegations of sexual, if not criminal, conduct against a wide range of third parties. Because of the media no reference to anyone in this case is benign: a reference to any person is toxic and lethal to that person’s reputation. Facts and truth are all but irrelevant.”


Prince Andrew, Virginia Roberts Giuffre and Ghislaine Maxwell in 2001

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Have you no shame?

California Scrubs Controversial Kamala Harris-Era Arrest Reports (ZH)

The California Department of Corrections and Rehabilitation has scrubbed arrest records from Sen. Kamala Harris’s controversial tenure as the state’s top law enforcement official, according to the Washington Free Beacon. The purge was conducted during a ‘routine website redesign,’ removing public access to several key incarceration reports. Twice a year, the CDCR releases information about the number of new individuals incarcerated in the California prison system as part of its “Offender Data Points” series. These reports provide important information on demographics, sentence length, offense type, and other figures relevant to criminal justice and incarceration.

Until recently, these reports were publicly available at the CDCR’s website. A search using archive.org’s Wayback Machine reveals that as of April 25, 2019—the most recent indexed date—ODP reports were available dating back to the spring of 2009. As of August 2019, the same web page now serves only a single ODP report, the one for Spring 2019. The pre-2019 reports have been removed. -Washington Free Beacon During the Democratic debates on Wednesday night, Rep. Tulsi Gabbard (D-HI) excoriated Harris’s record as California Attorney General, rattling off a laundry list of ‘inconvenient’ facts – such as the 1,500-plus Californians Harris sent to prison for marijuana-related offenses, blocking evidence that would have freed an innocent man from death row until forced to do so by the courts, and using prison inmates as cheap labor. Harris did not refute any of Gabbard’s statements.

The now-scrubbed records were used by the Free Beacon in prior reporting – “specifically the finding that more than 120,000 black and Latino Californians were sent to prison while she was in the State A.G.’s office.” A CDCR employee claims that the changes have nothing to do with Harris’s campaign, and were instead prompted by California law AB 434 which ‘sets standards for web accessibility.’

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Reeks too much of fear-mongering to me. Alastair Crooke can theorize all he wants.

America’s Elites: Fractured and At Odds with Each Other (Crooke)

Something is ‘up’. When two Financial Times columnists – pillars of the western Establishment – raise a warning flag, we must take note: Martin Wolf was first off, with a piece dramatically headlined: The looming 100-year, US-China Conflict. No ‘mere’ trade war, he implied, but a full-spectrum struggle. Then his FT colleague Edward Luce, pointed out that Wolf’s “argument is more nuanced than the headline. Having spent part of this week among leading policymakers and thinkers at the annual Aspen Security Forum in Colorado,” Luce writes, “I am inclined to think Martin was not exaggerating. The speed with which US political leaders of all stripes have united behind the idea of a ‘new cold war’ is something that takes my breath away. Eighteen months ago the phrase was dismissed as fringe scaremongering. Today it is consensus.”

A significant shift is underway in US policy circles, it seems. Luce’s final ‘take’ is that “it is very hard to see what, or who, is going to prevent this great power rivalry from dominating the 21st century”. It is clear that there is indeed now a clear bi-partisan consensus in the US on China. Luce is surely right. But that is far from being the end of it. A collective psychology of belligerence seems to be taking shape, and, as one commentator noted, it has become not just a great-power rivalry, but a rivalry amongst ‘Beltway’ policy wonks to show “who has the bigger dick”.

And quick to demonstrate this, at Aspen (after others had unveiled their masculinity on China and Iran), was the US envoy for Syria (and deputy US National Security Adviser), James Jeffrey: A US policy boiled down to one overriding component: ‘hammering Russia’. “Hammering Russia” (he insisted repeatedly), will continue until President Putin understands there is no military solution in Syria (he said with heightened verbal emphasis). Russia falsely assumes that Assad has ‘won’ war: “He hasn’t”, Jeffrey said. And the US is committed to demonstrating this fundamental ‘truth’.

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We must change it to preserve our own mental health.

We Must Change Food Production To Save The World (G.)

Attempts to solve the climate crisis by cutting carbon emissions from only cars, factories and power plants are doomed to failure, scientists will warn this week. A leaked draft of a report on climate change and land use, which is now being debated in Geneva by the Intergovernmental Panel on Climate Change (IPCC), states that it will be impossible to keep global temperatures at safe levels unless there is also a transformation in the way the world produces food and manages land. Humans now exploit 72% of the planet’s ice-free surface to feed, clothe and support Earth’s growing population, the report warns. At the same time, agriculture, forestry and other land use produces almost a quarter of greenhouse gas emissions.

In addition, about half of all emissions of methane, one of the most potent greenhouse gases, come from cattle and rice fields, while deforestation and the removal of peat lands cause further significant levels of carbon emissions. The impact of intensive agriculture – which has helped the world’s population soar from 1.9 billion a century ago to 7.7 billion – has also increased soil erosion and reduced amounts of organic material in the ground. In future these problems are likely to get worse. “Climate change exacerbates land degradation through increases in rainfall intensity, flooding, drought frequency and severity, heat stress, wind, sea-level rise and wave action,” the report states. It is a bleak analysis of the dangers ahead and comes when rising greenhouse gas emissions have made news after triggering a range of severe meteorological events.

[..] The new IPCC report emphasises that land will have to be managed more sustainably so that it releases much less carbon than at present. Peat lands will need to be restored by halting drainage schemes; meat consumption will have to be cut to reduce methane production; while food waste will have to be reduced. Among the measures put forward by the report is the proposal of a major shift towards vegetarian and vegan diets. “The consumption of healthy and sustainable diets, such as those based on coarse grains, pulses and vegetables, and nuts and seeds … presents major opportunities for reducing greenhouse gas emissions,” the report states.

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First since 1780.

The Sea Eagle Has Landed – Centuries After It Disappeared (G.)

Sea eagles have returned to the Isle of Wight 239 years after they were last seen there. Six chicks brought from Scotland were taken to the island last month as part of a programme to reintroduce the birds to England’s south coast. Also known as white-tailed eagles, the birds will be released into the wild in the next few weeks. Over the next five years 60 young sea eagles – which grow to have a wingspan of up to 2.4 metres (8ft) and are Britain’s largest bird of prey – will be released on the island in a programme approved by Nature England. It is hoped the birds will begin breeding there by 2024.


“Sea eagles were once a common sight in England and southern Europe but were lost centuries ago,” said Roy Dennis, who has pioneered the reintroduction of the birds to Britain. “This project aims to reverse that situation by restoring them to their ancestral nesting places.” Dennis added that the last pair of sea eagles in England bred on Culver Cliff on the Isle of Wight in 1780. A spokesperson for Forestry England said the new chicks had been doing well since their arrival and that once their health had been checked they would be released into the wild at several different locations in the next few weeks.


White tailed eagle. Photo:Arturo de Frias Marques

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Assange: The persecution

 

 

 

 

 

Jan 252019
 
 January 25, 2019  Posted by at 10:59 am Finance Tagged with: , , , , , , , , , , , ,  7 Responses »


Giuseppe Arcimboldo Four elements – Fire 1566

 

Trump, Pence, Pompeo Star In The Pirates Of The Caribbean (Galloway)
US Pulls Out Venezuela Staff, Urges Americans to Leave (G.)
Venezuela’s Juan Guaidó Offers Nicolás Maduro Amnesty If He Goes Quietly (G.)
US Seeks To Divert Crucial Oil Revenue From Maduro (Ind.)
Don’t Criticize Trump — We Need Him, Dutch Prime Minister Says (CNBC)
UK Firms Ramp Up Stockpiling Due To Brexit Disruption Fears (Ind.)
UK MPs Drop Plan To Table Cross-Party ‘People’s Vote’ Amendment (G.)
The Financial Secret Behind Germany’s Green Energy Revolution (Ellen Brown)
Davos Elites Fear They’re On A Toboggan Ride To Hell (Pol.eu)
CO2 Levels Expected To Rise Rapidly In 2019 (Ind.)

 

 

Yes, Jimmy Carter once called Venezuela’s election process “the best in the world” when he was there as an observer. But in March 2018, the opposition called on the UN not to send any observers as that would only legitimize the process. So now the US picks an unelected puppet.

Trump, Pence, Pompeo Star In The Pirates Of The Caribbean (Galloway)

Even though Chavez was one of the most electorally successful politicians on the planet in a democratic process described by former US president Jimmy Carter as “the best in the world,” US presidents Bush, Obama and Trump routinely called him a dictator. Before they drop the bombs, they drop the narrative, of course. And the disinformation bombardment in Venezuela has been one of the longest bombing runs in history. Massive sums of US money have been spent on media distortion, subversion, sabotage, military coups, and threats of invasion throughout the Chavez-Maduro era. The gold-toothed Venezuelan emigres who fled to Miami with their ill-gotten gains have long been effectively a coup in the making.

The recruitment of neighboring Colombia into “associate membership” of NATO, the propeling of Brazil’s Bolsonaro (another NATO applicant) to power, and plans for US military bases there have all been in preparation for this day. Although many such crimes have been committed across all continents for centuries by the US, none have constituted such comic-opera gangsterism as this latest – more ‘Bugsy Malone’ than ‘The Godfather.’ An almost random figure whose name was largely unknown until this week has disdained to put himself up for election as president of the republic, instead pronouncing himself to actually be the president, and has even sworn himself in! All the “experts” on Syria, Ukraine and Russia are scrambling to studios, practicing in the taxi how to say his name.

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Most Americans would be working in the oil industry. Sure, let them leave. And then watch prices at the pump.

US Pulls Out Venezuela Staff, Urges Americans to Leave (G.)

The US state department has urged its citizens to “strongly consider” leaving Venezuela and ordered out non-emergency government staff as the head of the country’s armed forces warned of a civil war sparked by a US-backed “criminal plan” to unseat Nicolás Maduro. In a live address to the nation on Thursday, the defence minister, Vladimir Padrino, accused the Venezuelan opposition led by Juan Guaidó, the United States and regional allies such as Brazil of launching an attempted coup against Maduro that risked bringing “chaos and anarchy” to the country. “We are here to avoid, at all costs … a conflict between Venezuelans. It is not civil war, a war between brothers that will solve the problems of Venezuela. It is dialogue,” said Padrino.

In a significant blow to Venezuela’s newly energized opposition, the defence minister declared unwavering support for “our commander-in-chief, the citizen Nicolás Maduro”. “We members of the armed forces know well the consequences [of war], just from looking at the history of humanity, of the last century, when millions and millions of human beings lost their lives,” Padrino added, flanked by the top brass of Venezuela’s armed forces. Further bolstering Maduro’s position, the Russian president, Vladimir Putin, spoke to the Venezuelan leader by telephone and issued his first comments on the crisis, which he insisted was “provoked from abroad”, according to a Kremlin statement.

On Thursday night, Guaidó used his first TV interview since the crisis to offer Maduro and his inner circle amnesty if they agreed to a peaceful transition. The 35-year-old said he was determined to bring Maduro’s “dictatorship” to an end, stabilise his economically devastated nation and organise free elections “as soon as possible”.

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He went into hiding before making his offer. C’mon, let’s get serious. A mini-coup failed miserably, the army stands pat, time for a fresh story to fill the papers.

Venezuela’s Juan Guaidó Offers Nicolás Maduro Amnesty If He Goes Quietly (G.)

Venezuela’s embattled president, Nicolás Maduro, and his inner circle could be granted an amnesty if he agrees to relinquish power and submit to a peaceful political transition, his opposition challenger Juan Guaidó has said. In a high-stakes political gamble, Guaidó on Wednesday declared himself Venezuela’s legitimate interim president and was quickly recognised as such by powers including the United States, Brazil, Canada and Colombia. On Thursday British foreign secretary, Jeremy Hunt, said his government believed Guaidó was “the right person to take Venezuela forward” but China, Russia and Turkey all backed Maduro, who claims he is the victim of a coup attempt masterminded by the US. The US state department has now urged US citizens to “strongly consider” leaving Venezuela and ordered out non-emergency government staff.

[Guaidó] indicated Maduro – who was sworn in for his second six-year term on 10 January despite a storm of international condemnation – could himself be offered an amnesty if he agreed to step aside. “This amnesty, these guarantees are on the table for everyone who is prepared to put themselves on the side of the constitution in order to recover the democratic order,” he said. “In periods of transition similar things have happened [before],” Guaidó told the broadcaster Univisión, pointing to previous pardons in Chile and Venezuela in the 1970s and 1950s. “We cannot discount any element,” he added, insisting that such a move would not represent either impunity or forgetting.

Maduro – who has vowed to resist what he calls a “gringo” plot to unseat him – has given little public hint he will accept such an offer although addressing the supreme court in Caracas on Thursday he insisted: “I’m ready for dialogue, for understanding, for negotation, for agreement.” However, in the same speech Maduro also attacked Guaidó, accusing him of being a pawn in a US-backed plot to destroy the leftist Bolivarian revolution he inherited after Hugo Chávez’s death in 2013. “Will we legitimise a puppet government imposed from abroad? We will allow our constitution to be violated … ? No!” said Maduro, blaming what he branded an attempted coup on Donald Trump’s “madness”.

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See what I said on CITGO yesterday.

US Seeks To Divert Crucial Oil Revenue From Maduro (Ind.)

Mr Trump’s national security adviser, the hawkish John Bolton, revealed the US was seeking to ensure Venezuelan oil revenue goes to Mr Guaido, and not Mr Maduro, who was sworn in for a second term just two weeks ago following an election most of the opposition boycotted. If the US were able to enact such a move it would add further pressure to the embattled Venezuelan leader, whose country’s already ailing economy heavily depends on its oil revenues. “What we’re focusing on today is disconnecting the illegitimate Maduro regime from the sources of his revenues,” Mr Bolton told reporters at the White House, according to Reuters. “We think [it is] consistent with our recognition of Juan Guaido as the constitutional interim president of Venezuela that those revenues should go to the legitimate government.”

Of potentially vital importance, earlier on Thursday, the nation’s military leadership declared its support for Mr Maduro and told the US not to interfere. In a televised speech on Thursday, defence minister Vladimir Padrino Lopez said Mr Maduro was the country’s “legitimate president” and that the opposition was seeking to carry out a “coup”. “I warn the people that there is a coup underway against our democracy and our president Nicolas Maduro,” Mr Padrino said, according to Telesur. “As soldiers, we work for peace and not for war.” He added: “Those of us who lived through the coup of 2002 have it etched into our minds, we never thought we’d see that again, but we saw it yesterday.

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Rutte’s been in office for so long he gets to have an own view.

Don’t Criticize Trump — We Need Him, Dutch Prime Minister Says (CNBC)

President Donald Trump has found support from an unlikely source in Europe — Dutch Prime Minister Mark Rutte — who told CNBC that the president could be a catalyst for much-needed reforms. “The U.S. has voted and Trump is the president and maybe he will be re-elected … So we have to work with him, and I think he is an opportunity,” Rutte told CNBC’s Geoff Cutmore at the World Economic Forum in Davos, Switzerland. “He is an opportunity to make changes to some of those multilateral institutions that we hold dearly, like the World Trade Organization (WTO) which is not functioning very well. Or take the United Nations or European Union — there are many issues to solve,” he added.

“So my point would be instead of thinking ‘oh we would have liked Hillary Clinton to win,’ or ‘I wish (former President Barack) Obama was still there,’ but guys Trump is president, make use of his presidency and his critique of those international institutions is sometimes very valid.” Trump has made himself unpopular in most European circles for his criticism of hallowed, well-established institutions such as the NATO and the WTO (Trump threatened to pull the U.S. out of both) and the European Union (which Trump said was formed in order to take advantage of the U.S. in terms of trade). He has also threatened to impose tariffs on European goods and cars; hardly the policies that would make most liberal politicians, like Mark Rutte, warm to Trump. “In this world, international structures are absolutely necessary, but sometimes it vexes me when I hear the white wine-sipping elite in Amsterdam saying ‘Trump is very wrong,'” Rutte said

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Sounds very late. 9 weeks left?!

UK Firms Ramp Up Stockpiling Due To Brexit Disruption Fears (Ind.)

UK companies have ramped up stockpiling ahead of Brexit as export opportunities for manufacturers weakens, according to new research from Lloyds Bank. The lender’s international trade index shows that export growth fell to its weakest level in almost three years in the fourth quarter of 2018. Exports of consumer goods held up well, Lloyds said, but the transport sector was hit by changing emissions regulations and new rules about diesel vehicles. Exports in the service sector fell in the last three months of 2018, bringing to an end three four years of growth.

Political uncertainty at home and abroad, along with weakening economic growth in key markets, were cited as the drivers for the export downturn. Meanwhile, the data showed that UK manufacturers had increased stockpiling efforts over recent months due to the threat of shortages and disruption posed by Brexit. The UK Manufacturing PMI Index for purchases of stocks jumped up to 53.7 for the month of December, from 51.1 in the previous month. Gwynne Master, managing director and global head of trade for Lloyds Bank Global Transaction Banking, said: “We should be mindful of the impact of fluctuating trading conditions and global and domestic political uncertainty on the UK’s exporters.

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The only thing that really made sense. Because it breaks party lines. Gone.

UK MPs Drop Plan To Table Cross-Party ‘People’s Vote’ Amendment (G.)

A cross-party amendment to push for a second EU referendum will not be tabled in the Commons as it would have little chance of being passed without formal support from Labour, the MPs organising it have announced. Sarah Wollaston, the Conservative MP who has led efforts on a so-called “people’s vote” amendment, said that without the backing of Jeremy Corbyn, “at the moment we would not have the numbers”. However, the Liberal Democrats have tabled a similar amendment and have called for Labour to back the idea. Speaking outside parliament alongside the Labour MPs Luciana Berger and Chuka Umunna, Wollaston urged Corbyn to think again. “We would like to appeal again to him to give his unequivocal backing to a people’s vote, in which case we could make progress,” she said.

Labour has not ruled out supporting a second referendum and the party is keeping its options open. There is disquiet among some of its MPs and shadow ministers that backing such an option could anger leave-backing Labour voters. Wollaston argued that a second referendum was still the best option to end the Brexit deadlock. “People have a right to change their minds, and the mandate from the first referendum – over two years ago and based on entirely unrealistic promises and outright lies – has expired.” But without Labour backing, she said, “that amendment could not pass, and so with great regret we will not be laying that amendment”.

Berger said that with 30 scheduled Commons sittings left before the current Brexit date, there was “an urgent need for leadership”. “Regrettably, the Labour leadership won’t commit to an achievable policy,” she said. “And yet we know that the majority of Labour voters, supporters and members want a final say on any Brexit deal. At a time when Labour should be championing a people’s vote, the leadership avoids answering that call.”

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That revolution is overhyped, but the US and German public bank story is good.

The Financial Secret Behind Germany’s Green Energy Revolution (Ellen Brown)

KfW’s role in implementing government policy parallels that of the Reconstruction Finance Corporation (RFC) in funding the New Deal in the 1930s. At that time, U.S. banks were bankrupt and incapable of financing the country’s recovery. President Franklin D. Roosevelt attempted to set up a system of 12 public “industrial banks” through the Federal Reserve, but the measure failed. Roosevelt then made an end run around his opponents by using the RFC that had been set up earlier by President Herbert Hoover, expanding it to address the nation’s financing needs.

The RFC Act of 1932 provided the RFC with capital stock of $500 million and the authority to extend credit up to $1.5 billion (subsequently increased several times). With those resources, from 1932 to 1957 the RFC loaned or invested more than $40 billion. As with KfW’s loans, its funding source was the sale of bonds, mostly to the Treasury itself. Proceeds from the loans repaid the bonds, leaving the RFC with a net profit. The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms and much more; it funded all of this while generating income for the government.

The RFC was so successful that it became America’s largest corporation and the world’s largest banking organization. Its success, however, may have been its nemesis. Without the emergencies of depression and war, it was a too-powerful competitor of the private banking establishment; and in 1957, it was disbanded under President Dwight D. Eisenhower. That’s how the United States was left without a development bank at the same time Germany and other countries were hitting the ground running with theirs.

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Just ignore these people. They have nothing. They’re the past.

Davos Elites Fear They’re On A Toboggan Ride To Hell (Pol.eu)

Populists movements around the world, left and right, disagree in detail but are united around one big idea: The political and economic elites running modern societies are very powerful people who know what they are doing. What they are doing is often bad — greedy, exploitative, short-sighted — but they are doing it with purpose and confident control. A different possibility, however, hung in the alpine air this week at the annual convening of elites here at the World Economic Forum: These alleged masters of the universe came off nearly as perplexed and anxious about the future as the populist forces inveighing against them.

They have money. They have entourages. They have commanding views, both literal (from mountain chalets here) and metaphorical (from government offices and CEO suites back home). That doesn’t mean they have a clue. Foreboding about the future was a prevailing theme at this year’s Davos, sometimes even with dash of dystopian prophecy. This brooding was accompanied often, in speeches and interviews, by a rueful acknowledgment that government leaders are desperately improvising — often with bleak results — to meet the political crises of the moment, much less the long-term technological and climatological challenges of the age. In key Western capitals, governance is failing. China is exploiting. Global temperatures are rising.

Tech titans are groveling. Prospects for economic downturn are rumbling. Little wonder that, instead of triumphant optimism about the forces of globalization sometimes associated with Davos, some voices here made it sound like modern life is on a toboggan ride to hell. “Everybody agrees that there are dark clouds on the horizon, and there are risks,” said United Nations Secretary-General António Guterres, in an address here Thursday.

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Due to the 1,500 private jets in Davos.

CO2 Levels Expected To Rise Rapidly In 2019 (Ind.)

This year will see one of the biggest CO2 surges in more than six decades of measurements, according to the Met Office. Rising emissions due to the world’s continued appetite for fossil fuels will combine with reduced absorption of greenhouse gas by withering grasslands and forests. Describing the prediction as “worrying and compelling”, scientists said it was an urgent reminder that the time to cut out carbon is now. CO2 levels will be at a record high once again after emissions reached unprecedented levels last year, dashing hopes the world had finally hit “peak carbon”. Besides fossil fuels pumping out the harmful gas, natural weather fluctuations will exacerbate the problem as they hamper the ability of carbon sinks to store it. In 2019 an upward swing in tropical Pacific Ocean temperature will make many regions warmer and drier.

As drought sets in and plants dry out, they will be less capable of sucking CO2 from the atmosphere, and massive deforestation in places like the Amazon is making this problem even worse. The new predictions were based on monitoring at the Mauna Loa observatory in Hawaii, which has registered a 30 per cent increase in the concentration of CO2 since 1958. “Carbon sinks have saved us from what has already happened – the future rise would have been about double if it wasn’t for the sinks. So we are lucky they exist, to be honest,” Professor Richard Betts of the Met Office Hadley Centre told The Independent. “But the sinks themselves are affected by the climate, and that’s an important thing because it shows that as climate change continues in the future it may affect their strength.”


Forecast CO2 concentrations at the Mauna Loa station for 2019 (orange), along with previous forecast concentrations and the real observed data (Met Office)

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Jun 182017
 


Thomas Cole Destruction of Empire 1836

 

The Conflicts Forum, directed by former British diplomat and MI6 ‘ranking figure’ Alastair Crooke, sent me another unpublished article by Alastair and asked if the Automatic Earth would publish it. But of course. Previous articles by Alastair published here are: ‘End of Growth’ Sparks Wide Discontent in October 2016, Obstacles to Trump’s ‘Growth’ Plans in November 2016 and What is this ‘Crisis’ of Modernity? in January 2017.

Here’s Alastair again:

 

 

Alastair Crooke: David Stockman routinely refers to President Trump as the ‘Great Disrupter’. But this is not a bad quality, he insists. Rather, it is a necessary one: Stockman argues (my paraphrasing) that Trump represents the outside force, the externality, that tips a ‘world system’ over the brink: It has to tip over the brink, because systems become too ossified, too far out on their ‘branch’ to be able to reform themselves. It does not really matter so much, whether the agency of this tipping process (President Trump in this instance), fully comprehends his pivotal role, or plays it out in an intelligent and subtle way, or in a heavy-handed, and unsubtle manner. Either serve the purpose. And that purpose is to disrupt.

Why should disruption be somehow a ‘quality’? It is because, during a period when ‘a system’ is coming apart, (history tells us), one can reach a point at which there is no possibility of revival within the old, but still prevailing, system. An externality of some sort – maybe war, or some other calamity or a Trump – is necessary to tip the congealed system ‘over’: thus, the external intrusion can be the catalyst for (often traumatic) transformational change.

Stockman puts it starkly: “the single most important thing to know about the present risk environment [he is pointing here to both the political risk as well as financial risk environment], is that it is extreme, and unprecedented. In essence, the ruling elites and their mainstream media megaphones have arrogantly decided that the 2016 [US Presidential] election was a correctible error”.

But complacency simply is endemic: “The utter fragility of the latest and greatest Fed bubble could not be better proxied than in this astounding fact. To wit, during the last 5,000 trading days (20 years), the VIX (a measure of market volatility) has closed below 10 on just 11 occasions. And 7 of those have been during the last month! … That’s complacency begging to be monkey-hammered”, Stockman says.

Former Presidential candidate, Pat Buchanan concurs: “President Trump may be chief of state, head of government and commander in chief, but his administration is shot through with disloyalists plotting to bring him down.

We are approaching something of a civil war where the capital city seeks the overthrow of the sovereign, and [to achieve] its own restoration. Thus far, it is a nonviolent struggle, though street clashes between pro- and anti-Trump forces are increasingly marked by fistfights and brawls. Police are having difficulty keeping people apart. A few have been arrested carrying concealed weapons.

That the objective of this city is to bring Trump down, via a deep state-media coup, is no secret. Few deny it.”

The extraordinary successful ‘manufacture’ and ‘parachuting-in’ of Macron into the French Presidential election by the French élite, precisely has given to the globalised Deep State (including their US counterparts), renewed confidence that Europe and America’s slide towards ‘populism’, is indeed a ‘correctable error’. European élites now can barely contain their revived schadenfreude at the Brexiters’ and at the Populists’ presumed discomfort (see here).

 


Thomas Cole Consummation of Empire 1836

 

But despite the palpable danger to the integrity of the political system itself, Stockman notes, “it is no inconsiderable understatement to suggest that the S&P 500 at 2440 is about as fragile as the ‘market’ has ever been.

Any untoward pinprick could send it into a tailspin … Doug Kass said it best in his recent commentary: “Over history, as we have learned, a Minksy Moment develops when investor sentiment becomes complacent after long periods of prosperity and the data is ignored, and doesn’t seem to matter anymore, as I wrote in “It’s a ‘Bohemian Rhapsody’ Market: Nothing Really Matters … to investors.” In short, the market has become ‘zombie’ (in the sense of residing within a psychological defence mechanism – as, when to contemplate the alternative – simply is too threatening to the psyche) [emphasis added].

Daniel Henninger, in a Wall Street Journal op-ed, writes: “Donald Trump’s election has caused psychological unhingement in much of the population. But the Trump phenomenon only accelerated forces that were plummeting in this direction before the 2016 election…

“Impossible to miss, though, is how jacked up emotional intensity has become in American politics. The campaign rallies of both Mr. Trump and Bernie Sanders often sat on the edge of violence. Reporters describe political town hall meetings as full of “angry” voters. Shouting down the opposition in these forums or on campus has been virtually internalized as standard behavior. Refusal to reason is the new normal. And then, the unreason is euphemized as free speech.

Explaining away these impulses as a routine turn of the populist political cycle is insufficient. Something more permanent is happening.”

It is not, of course just the markets which are threatened by unperceived risk. Trump shall not be forgiven for challenging the sacrosant meme of a world divided between (good) ‘liberal’ democracies (led by the US and its European allies) and (bad) illiberal autocracies (led today, by President Putin’s Russia): by snubbing Nato and withdrawing from the Paris climate agreement, Professor Michael Klare writes, “we’ve been told, President Trump is dismantling the liberal world order created by Franklin D Roosevelt at the end of World War II”.

 


Thomas Cole Destruction of Empire 1836
 

An offence, it seems, against something somehow sacral: recently, US comedienne Kathy Griffin posted a video of herself holding the bloody, severed head of Donald Trump. “But that wasn’t the end of it” Henninger notes. “We may assume that as Ms. Griffin was creating her video, the artists at New York’s Public Theatre, were rehearsing their production of Julius Caesar, the one in which Central Park audiences watch ‘Caesar’ as a blond-haired Donald Trump, who is pulled down from a podium by men in suits, and assassinated with plunging knives … Whatever once fastened the doors of people’s minds to something secure and stable has become unhinged.”

Mike Vlahos (Professor at the US Naval War college and John Hopkins) tells us that, as a military historian and global strategist, he became curious to know just why it is that ‘world systems’ do ‘come apart’. His first, intuitive sense was that their collapse generally was brought about by some massive external force such as war, pestilence or famine, and by the concomitant mass migrations of peoples.

But when he and his students completed their research, he concluded that though these factors had often played an important part, they were not the prime cause of the system coming apart. Rather, he identified a number of key triggers:

· The élites became stratified, and politics frozen
· The peoples’ allegiance became taken for granted, at the same time that the élites chose to ignore threats to the peoples’ way of life
· Social mobility declined, and change is fiercely resisted
· Rather, élites work to maximize their wealth and status.
· Elite authority becomes excessively militarized – and justified as ‘saving civilization’.

He concludes from this study, “the situation that we inhabit today […] here in the imperial city in Washington DC, is that it is absolutely hollowed out … it is incapable of offering anything to its own people, the American people … I think we have reached a point where there is no possibility of revival within the current system that exists. The current system is set upon … is determined to eat itself out in a kind of civil war that is coming, and at the end of that, it will be done, will be finished”.

“The Methoni, one of the great nations of the late Bronze Age, had this same problem with the élites and the 1% that we have today, and they were overthrown. That’s 3300 years ago, and it keeps happening again and again. And the very structure of the decadent relationships in late periods where élites refuse to accommodate, refuse to adapt, refuse to be sensitive to needs of the larger whole of society, means this has to happen. There has to be an overthrow … for things eventually to get better, to be renewed. In other words, you can’t renew from within”.

Is this the situation today? The pre-conditions that Professor Vlahos relates, in terms of élite hubris, self-regard, and disdain for the real concerns of people are there (the polarization of US society at the US election provides the empirical evidence for this). And Stockman, in calling Trump the ‘Great Disrupter’ plainly implies that he might be precisely the ‘externality’ (coming from outside the élite) – that might tip things ‘over’. This surely is what Stockman means when he warns about ‘the present risk environment’ being extreme.

Of course, the usual retort is that Trump offers no coherent alternative conceptual vision for the future, but only seized successfully upon a number of key insights: the power of cultural nationalism, the pain felt by the casualties of globalism, the impact of a hollowed-out US economy, and the need to put America first. This is true. These insights do not constitute a vision for the future, but why should one expect that, from the ‘Disrupter’? His ‘agency’ is that of catalyst, not that of final ‘constructor’. That comes later.

 


Thomas Cole Desolation of Empire 1836

 

So, from whence does ultimate societal renewal come? The classic answer is that after ‘disruption’ nothing much is left standing amidst the (metaphoric) ruins of whatever stood as the reigning ‘modernity’. Historically, renewal was effected through a communal ‘reaching back’- beyond the roots of whatever represented the contemporary crisis – to delve back, deep into the archetypal cultural history of a people. The rummaging in collective memory, allows a narrative to shape, about why the present ‘hurt’ befell its people, and to bring forward, transformed into contemporary meaning, some ‘solution’: a new meta-historical understanding.

Plainly, this (a type of spiritual renewal) is not President Trump’s ‘bag’. (Steve Bannon’s the more so, perhaps?)

What does all this mean in practical terms? First, it suggests that most of us still prefer not to address the stark reality that “the objective of this city (DC), is to bring Trump down, via a deep state-media coup” and the bitter political trench warfare, which this portends. We prefer to rest in complacency, (as zombies for now), until a crisis squarely hits us – in a personal way.

Secondly, thoughts of an easy return to the status quo ante (such as via Vice-President Pence standing-in), is problematic (Macron’s election in France notwithstanding). Since the élites (all of them), have, in their ‘war’ against ‘populists’ and deplorables, totally lost legitimacy and authority for a substantive part of their populations. And they will not – cannot – adapt. For, that is their nature. This is the moment, Professor Vlahos notes, when a system – i.e. US operational governance – begins to ‘come apart’. Individuals, cabals within government, whole departments of state, look to their own self-awarded ‘authority’, rather than to that of the government as mandated by the electorate.

Thus we have this past week, the Senate voting 97-2 to impose further sanctions on Russia. Another wrench jammed into Trump’s foreign policy wheels – and explicitly conceived to paralyse and impede the President.

Thirdly, the intent is – like some Amazonian reptile venom – to ‘bite’ him with so much innuendo and assorted investigations and further allegations, that Trump, like the reptile’s victim, remains awake – but incapable of moving a muscle: A true zombie, in fact, as the reptile feeds on its living corpse.

Fourth, this zombified US President, will shortly face the requirement to negotiate with Congress an exit from a bubbling financial sphere soaring upwards, whilst a moribund real economy trails downwards – under pressure from the fast-approaching debt-ceiling deadline. The Senate’s slap at the President’s face with the Russia sanctions vote suggests it is more likely that he will be tossed another spanner: this time aimed at the wheels of the ‘Trump reflation’ programme.

What other insights might history offer? Two, perhaps: Professor Vlahos, during his discussion with John Batchelor, the latter points out that, even at the very moment that the hub of the Roman Empire already had fallen apart, the collapsing Empire was celebrated the most, when it was imitated at the furthest edges of Empire: by the peoples of Gaul and Germany, for example. Are we not seeing the same today, in Europe, as Merkel and Macron vow to keep the liberal, globalist values of the American Empire alive — at the edges of the American Empire — in Europe?

And lastly, the constituency that historically led renewal? Professor Vlahos: “The Roman legions, the Czarist armies, the German Imperial armies and the Ottoman armies”.

The Pentagon élites should note well.

 

 

Oct 082016
 
 October 8, 2016  Posted by at 9:34 am Finance Tagged with: , , , , , , , , , ,  4 Responses »


DPC Royal Street, New Orleans 1900

US Consumer Borrowing Rises by Most in Nearly a Year (BBG)
US Consumer Credit Has Second Biggest Jump On Record (ZH)
US Payrolls Up 156K, Missing Expectations, Unemployment Rate Rises To 5.0% (ZH)
EU Leaders Line Up To Insist UK Will Pay A High Price For Brexit Stance (G.)
Worries Deepen That Globalization Is Hitting the Skids (WSJ)
Worries Grow That China Faces a Perilous Property Bubble (WSJ)
EU Imposes Import Duties Of Up To 73.7% On Cheap Chinese Steel (G.)
He’ll Likely Lose – But Trump Is The Final Warning To Elites (G&M)
Why Does This Happen on My Vacation? -The Trump Tapes (Scott Adams)
Hounds Hot On The Heels Of Poachers In Rhino Country (G.)
New Zealand Child Poverty A Source Of Deep Concern: UN (G.)
UN Watchdog Demands Saudis Stop Child Executions (AFP)

 

 

No deleveraging: Household debt rises 8.5% annualized.

US Consumer Borrowing Rises by Most in Nearly a Year (BBG)

Household borrowing increased in August at the fastest pace in almost a year, led by a jump in loans for school and automobile purchases. The $25.9 billion increase, or an annualized 8.5%, followed a revised $17.8 billion gain the prior month, Federal Reserve figures showed Friday. The median projection called for a $16.5 billion advance. Non-revolving credit, which includes car and educational loans, also posted the largest advance since September of last year. Steady hiring and income growth may be making Americans more willing to borrow, helping to sustain consumer spending and the economic expansion.

Non-revolving credit increased $20.2 billion, while revolving debt rose $5.6 billion during the month, the Fed’s report showed. Lending by the federal government, mostly for student loans, climbed $18.7 billion in August on an unadjusted basis as students prepared to return to school for the fall semester. The Fed’s consumer credit report doesn’t track debt secured by real estate, such as home equity lines of credit and home mortgages.

Read more …

Tyler on the household debt topic, delving a bit deeper, as in beyond seasonal adjustments.

US Consumer Credit Has Second Biggest Jump On Record (ZH)

It will likely not come as a big surprise that at a time when US personal savings are once again declining, perhaps as a result of soaring health insurance costs, that US consumers are forced to borrow increasingly more to make ends meet. And, as expected, the latest consumer credit report confirmed this, when moments ago the Federal Reserve announced that in August, total US credit surged by $25.9 billion on a seasonally adjusted basis, smashing expectations of a $16.5 billion increase, and the third biggest monthly jump since 2001.[..] what was perhaps most interesting is that on a non-seasonally adjusted basis, when removing the artificial Arima-X-13 seasonal factors, August consumer credit soared by a near record $46.8 billion, an absolute outlier month, and surpassed just once in history.

So for all those who, still, erroneous claim that US consumers are deleveraging, show them this chart, because the scramble if not so much into revolving debt then certainly into government-funded auto and student loans, is unlike anything ever seen. And speaking of just those two kinds of debt, here they are broken out: they have both never been higher.

Read more …

Last big jobs report before the elections (November’s will come too late to make much difference) is mixed, but certainly not very good.

US Payrolls Up 156K, Missing Expectations, Unemployment Rate Rises To 5.0% (ZH)

With Wall Street all bulled up on the economy, expecting a print of 175K while the whipser number was decidedly higher, and closer to 200K thanks to Goldman’s optimism, moments ago the BLS reported that in September the US created only 156K jobs, missing expectations, and down from the upward revised 167K in August, leaving the question of whether the Fed will hike imminently, unanswered. However, offsetting the September miss, last month’s disappointing print of 151K was revised to 167K. At the same time, the change in total nonfarm payroll employment for July was revised down from +275,000 to +252,000. With these revisions, employment gains in July and August combined were 7,000 less than previously reported.

Over the past 3 months, job gains have averaged 192,000 per month. The household survey employment number of 151.968MM was 354K bigger than last month, and pushed the annual increase higher by 2.0%, the biggest since March 2016. The unemployment rate, at 5.0%, and the number of unemployed persons, at 7.9 million, changed little in September, up 0.1% from August and the highest in 6 months. Both measures have shown little movement, on net, since August of last year. The participation rate rose by 0.1% t 62.9% as people not in the labor force declined by 207K.

Read more …

Which should make Britons very happy to leave that bunch of mobsters behind. Even if their own new ‘leaders’ are just as bad. But those you can vote out next time around.

EU Leaders Line Up To Insist UK Will Pay A High Price For Brexit Stance (G.)

Britain and the EU appear more bitterly divided over Brexit than at any time since the referendum, with European leaders ramping up their rhetoric after Theresa May signalled she would seek a clean break with the bloc. The prime minister’s Conservative conference speech, in which she indicated Britain would prioritise immigration control and restore the primacy of UK law to become an “independent, sovereign nation” without full access to the single market, drew a sharp response from continental capitals. In Paris, François Hollande said Britain must suffer the consequences of its decision. “The UK has decided to do a Brexit. I believe even a hard Brexit,” he said. “Well, then we must go all the way through the UK’s willingness to leave the EU. We have to have this firmness.”

If not, “we would jeopardise the fundamental principles of the EU”, the French president said on Thursday night. “Other countries would want to leave the EU to get the supposed advantages without the obligations.. There must be a threat, there must be a risk, there must be a price.” Hollande’s message was underlined on Friday by the president of the European commission, Jean-Claude Juncker, who said the 27 remaining member states must not give an inch in exit negotiations. “You can’t have one foot in and one foot out,” he said. “We must be unyielding on this point.” Britain risked “trampling everything that has been built” over six decades of European integration, he said.

In Berlin, Angela Merkel rammed home the same point. “If we don’t insist that full access to the single market is tied to complete acceptance of the four basic freedoms, then a process will spread across Europe whereby everyone does and is allowed what they want.”

Read more …

Turns out, globalization is just another religion. Hilarious that the CEO of United Parcel Service is quoted; yes, we understand they are all for ‘free’ trade, it’s what their business is based on.

Worries Deepen That Globalization Is Hitting the Skids (WSJ)

Global finance ministers and central bankers are descending on Washington this week with a central concern in mind: fear that the modern age of globalization is hitting a wall. Last year’s $646 billion in foreign direct investment in rich economies represents a 40% drop from the peak before the financial crisis. International lending, as measured by cross-border banking claims at the Bank for International Settlements, is down nearly $2.6 trillion, or 9%, over the past two years. International trade this year will grow at the slowest pace since 2007, according to the World Trade Organization, which has slashed its forecast for growth in global trade volumes to 1.7% in 2016 from a previous estimate in April of 2.8%.

Imports among the world’s 20 largest economies have fallen as a share of their GDP for four consecutive years, and growth in demand for shipping containers fell to 4% this year after four decades of double-digit expansion. As financial officials gather in the U.S. capital this week at semiannual meetings of the IMF and the World Bank, there is widespread concern that this global malaise could worsen if nations intentionally turn inward. Too many politicians are backing trade barriers in a misguided effort to boost national growth in the short term, said Roberto Azevedo, director general of the WTO. “The medicine that is being often prescribed is protectionism, and that is exactly the kind of medicine that is going to hurt the patient, not help him,” he said.

The head of the IMF, Christine Lagarde, also expressed concern over rising protectionism around the world, including in the U.S. “Curbing free trade would be stalling an engine that has brought unprecedented welfare gains around the world over many decades,” she said. The slower-than-expected economic activity is feeding a cycle of banks pulling back from international risk, companies hesitant to invest in new production, and governments issuing regulations—often linked to national security—favoring domestic producers. “Now that we’re in this 2% [growth] range in the U.S. and less than that in other countries, people are clinging more to the past and thinking more how to protect versus embracing the future,” said David Abney, CEO of United Parcel Service.

Read more …

“The reality speaks of morbid financial excess..” (BTW, two WSJ articles in a row that start with Worries, some that deepen, others grow -same thing)

Worries Grow That China Faces a Perilous Property Bubble (WSJ)

The latest buying frenzy began late last year, when Mr. Xi set a national goal of reducing the number of unsold homes in 2016. In the following months, cities rushed to relax home-purchase curbs that were put in place to discourage speculation during the last housing boom. Beijing also made it easier for homebuyers to access credit. The Chinese leadership’s hope was that modest borrowing by families and individuals would boost property sales and cut inventory, aiding related industries such as construction that, all told, account for about a fifth of China’s gross domestic product. It hasn’t gone as planned. Too much investment went into housing, economists say, aided by a series of central-bank easing measures since late 2014.

Government data show more than a third of new loans in the first half of 2016 went to housing. By comparison, an average 17.4% of new loans went to housing between 2010 and 2015, according to BNP Paribas. “The reality speaks of morbid financial excess,” said Harrison Hu at RBS. In July, six major cities showed home-price gains of more than 20% from the prior year; in August, 10 cities did. In the coastal city of Xiamen, prices skyrocketed 44.3%. Average new home prices across 70 Chinese cities in August rose far less, 7.5%, suggesting that many smaller cities are still struggling with too much inventory.

Chinese households’ leverage, meanwhile, is fast rising to dangerous levels. A study by China’s Haitong Securities shows that total home loans are expected to make up 30% China’s GDP this year, up from less than 20% three years ago. That is higher than Japan’s level during its property-bubble years in the late 1980s. One moderating factor: Most Chinese households pay down payments equal to about a third of the home’s value, making homeowners less vulnerable to price drops.

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Yeah, about that globalization thing… You know, protectionism and all that…

EU Imposes Import Duties Of Up To 73.7% On Cheap Chinese Steel (G.)

The European Union has slapped tariffs of up to 73.7% on Chinese steel after manufacturers were forced to cut jobs due falling prices and demand for the material amid an influx of cheap imports from Asia. Thousand of job have already been lost in the steel industry in Britain in the last year with thousands more at risk as the sector remains under pressure. Industry leaders have partly blamed the squeeze on the sector on China’s dumping of cheap steel in Europe as it struggles to find buyers for its products domestically. The EU has agreed to impose import duties of between 13.2% and 22.6% on Chinese hot-rolled steel, which is used in pipelines and gas containers, and 65.1% and 73.7% on heavy plates, which are used in civil engineering projects.

The state of the steel industry became part of the debate about Britain’s future in the EU before the referendum in June, with Brexiters claiming that the country would be better able to protect workers and introduce tariffs on Chinese imports if it voted to leave. UK Steel, the industry trade body, welcomed the speed at which the new EU tariffs had been introduced but warned that the levy on hot-rolled steel was not high enough, which could hurt Port Talbot, the biggest steelworks in Britain. Dominic King, head of policy and external affairs at UK Steel, said: “The speed at which tariffs have been imposed on dumped steel from China by the EU is very welcome. However, while we hope the tariffs for heavy plate are robust enough to ensure free and fair trade, the proposed levels for hot-rolled steel are not high enough, which might encourage China to continue dumping it on to the EU market.”

Read more …

I don’t think Trump will lose. But good perspective, from Canada.

He’ll Likely Lose – But Trump Is The Final Warning To Elites (G&M)

Donald Trump will probably lose the election. But he is a final warning. Unless political elites of both the left and the right become more humble, unless they once again ask themselves how their agendas will play in Peoria, the next rough beast might slouch over the corpse of the republic. “Will it play in Peoria?” goes back to the days of vaudeville. The city of 115,000 in central Illinois was once considered the ultimate focus group, the embodiment of Middle America, the place to test a joke or a soda or a social policy to learn what white folks without a fancy degree thought of it. Back in the day, you knew better than to defy the settled judgment of this ultimate test market. You went as far as Peoria would let you, and no further.

But we grew impatient. You have to fight Jim Crow, whatever Peoria thinks. Free trade will lift most boats, even if it swamps a few. The environment is too precious, and at too much risk, to go slow. Lower taxes and less red tape will help the economy grow, even if it profits some more than others. The left wanted social justice, protection for minorities, a cleaner environment. The right wanted lower taxes and trade deals. Despite the rhetoric, each accommodated the other. Republicans left the Democrats’ progressive policies largely intact; Democrats learned to embrace, or at least reluctantly accept, globalization. And everybody knew what was really going on in Washington. A tax break for you. A subsidy for me. You take care of my client and I’ll take care of yours. Deal? Then let’s celebrate. We’ll expense it.

What did the guy on the line think about this? The wife at Wal-mart? The folks at the ball park? No one really cared. Yeah, politicians chased their vote. But respect them, even defer to their collective wisdom? Not so much. The accommodation between left and right started unravelling in the 1980s. The Bork confirmation. The Thomas confirmation. Contract with America. Impeaching Bill Clinton. Iraq. Obama. The Tea Party. Gay marriage. And now the Democrats want to replace a black president with a woman? A CLINTON? Meanwhile, Peoria is hurting. The city is home to Caterpillar. But the heavy-equipment giant has outsourced most of its work force overseas or to so-called right-to-work states.

But what does Washington care? The left worries more about combatting global warming than about blue-collar workers with bad backs and no jobs. The right promises to retrain them, but somehow never gets around to it. The laid-off boys in the bars of Peoria blame the illegals, the only ones even more voiceless than themselves. They seethe at the Wall Street suits who destroyed the economy and got off scot-free. And what the hell is transgender, anyway? They look at their daughter’s report card. She’s only getting Cs. What future is there for anyone who’s only getting Cs?

Read more …

How wrong is Dlibert’s alter ego? “It is fair to assume that Bill and Hillary are about to experience the worst weeks of their lives.”

Why Does This Happen on My Vacation? -The Trump Tapes (Scott Adams)

By now you know about the Access Hollywood recording in which Donald Trump said bad things eleven years ago. Many of my readers asked me to weigh in. I’ll give you my thoughts, in no particular order.

1. If this were anyone else, the election would be over. But keep in mind that Trump doesn’t need to outrun the bear. He only needs to outrun his camping buddy. There is still plenty of time for him to dismantle Clinton. If you think things are interesting now, just wait. There is lots more entertainment coming.

2. This was not a Trump leak. No one would invite this sort of problem into a marriage.

3. I assume that publication of this recording was okayed by the Clinton campaign. And if not, the public will assume so anyway. That opens the door for Trump to attack in a proportionate way. No more mister-nice-guy. Gloves are off. Nothing is out of bounds. It is fair to assume that Bill and Hillary are about to experience the worst weeks of their lives.

4. If nothing new happens between now and election day, Clinton wins. The odds of nothing new happening in that timeframe is exactly zero.

5. I assume that 75% of male heads of state, including our own past presidents, are total dogs in their private lives. Like it or not, Trump is normal in that world.

6. As fictional mob boss Tony Soprano once said in an argument with his wife, “You knew what you were getting when you married me!” Likewise, Trump’s third wife, Melania, knew what she was getting. It would be naive to assume Trump violated their understanding.

7. Another rich, famous, tall, handsome married guy once told me that he can literally make-out and get handsy with any woman he wants, whether she is married or not, and she will be happy about it. I doubted his ridiculous claims until I witnessed it three separate times. So don’t assume the women were unwilling. (Has anyone come forward to complain about Trump?)

8. If the LGBTQ community wants to be a bit more inclusive, I don’t see why “polyamorous alpha male serial kisser” can’t be on the list. If you want to label Trump’s sexual behavior “abnormal” you’re on shaky ground.

9. Most men don’t talk like Trump. Most women don’t either. But based on my experience, I’m guessing a solid 20% of both genders say and do shockingly offensive things in private. Keep in mind that Billy Bush wasn’t shocked by it.

10. Most male Hollywood actors support Clinton. Those acting skills will come in handy because starting today they have to play the roles of people who do not talk and act exactly like Trump in private.

11. I’m adding context to the discussion, not condoning it. Trump is on his own to explain his behavior.

12. Clinton supporters hated Trump before this latest outrage. Trump supporters already assumed he was like this. Independents probably assumed it too. Before you make assumptions about how this changes the election, see if anyone you know changes their vote because of it. All I have seen so far is people laughing about it.

12. I hereby change my endorsement from Trump to Gary Johnson, just to get out of the blast zone. Others will be “parking” their vote with Johnson the same way. The “shy Trump supporter” demographic just tripled.

13. My prediction of a 98% chance of Trump winning stays the same. Clinton just took the fight to Trump’s home field. None of this was a case of clever strategy or persuasion on Trump’s part. But if the new battleground is spousal fidelity, you have to like Trump’s chances.

14. Trump wasn’t running for Pope. He never claimed moral authority. His proposition has been that he’s an asshole (essentially), but we need an asshole to fight ISIS, ignore lobbyists, and beat up Congress. Does it change anything to have confirmation that he is exactly what you thought he was?

Read more …

Stop bombing teh Middle East and send your troops to protect Afrian wildlife. Much better use of force. May actually save mankind instead of destroying it.

Hounds Hot On The Heels Of Poachers In Rhino Country (G.)

“I am ready to die for conserving the rhino,” says Wisdom Makhubele. But the brave young ranger now has another weapon in the war against rhino poaching: the extraordinary nose of tracking hounds. The trained dogs can run poachers to ground far faster than people, sometimes even being set free in packs and followed from helicopters. The new canine training unit at the Southern African Wildlife College (SAWC), near Acornhoek, opened earlier this year and dogs have already brought armed poachers to heel in Kruger national park, the epicentre of the rhino poaching crisis. At least 6,000 African rhinos have been slaughtered by poachers since 2008, to fuel the soaring demand for its horn in Asia, where it is highly valued as a supposed tonic and status symbol.

The rhino poaching epidemic across Africa has exploded in recent years, with annual increases in killings every year since 2009: 1,338 were slaughtered in 2015. It was a hot topic at the major wildlife trade summit in Johannesburg this week, where an attempt by Swaziland to legalise rhino horn trade was defeated. South Africa hosts more than 90% of the 20,000 surviving white rhinos and almost half the 4,800 remaining black rhinos and saw a slight dip in the slaughter in 2015, the first decrease in nine years. Over 70% of the rhino kills occur in Kruger and a sign on the way into the park reads “Poachers will be poached”. Dogs have been used for camp security for years, but the escalating poaching crisis has found them a new role.

“They are awesome – they are instinctive to tracking,” says Johan van Straaten, manager of the dog unit, which has been funded by WWF Nedbank Green Trust. “All these dogs can track, it’s in their genes. But we train them to track the scent we want. These dogs are imprinted on human scent, like narcotics dogs are on drugs.” [..] Being a ranger in the war on poaching can be deadly – more than 1,000 rangers were killed around the world in the last decade and many more injured. The danger follows the rangers home too. “They are targets and their families can be targets, that’s for certain,” says van Straaten. Makhubele comes from a local village. “People there know me and some of them are poachers, but I am not afraid,” he says. “This [rhino population] is our legacy and we have to look after it.”

Read more …

New Zealanders must stand up against their government. It’s very much your shame too.

New Zealand Child Poverty A Source Of Deep Concern: UN (G.)

The UN has said in a damning report that it is deeply concerned about New Zealand’s persistently high rates of child poverty. Unicef says 300,000 children – a third of New Zealand’s child population – now live below the poverty line. This is a rise of 45,000 in a year. Government representatives travelled to Geneva last month to present the country’s progress on its commitment to protecting the rights of the child to the UN. The UN committee’s report acknowledges widespread public debate and media attention on child poverty in New Zealand, but expresses serious concern about the government’s failure to address the issue systematically.

“The committee is deeply concerned about the enduring high prevalence of poverty among children,” the report says, highlighting “the effect of deprivation on children’s right to an adequate standard of living and access to adequate housing, with its negative impact on health, survival and development, and education”. The report expresses particular concern about the number of Maori and Pasifika children living in deprived circumstances. Both groups are disproportionately represented in child poverty statistics.

It calls for “urgent measures to address disparities in access to education, health services and a minimum standard of living for Maori and Pasifika children and their families” and says more effort should be invested in preserving Maori children’s cultural identity. The government of the National party is urged to take a systematic approach to tackling child poverty, and to establish a “national definition” to measure child poverty, something it has repeatedly refused to do. The Green party co-leader Metiria Turei welcomed the UN report. “The national government has repeatedly denied the seriousness of the problem and deserves the criticism it has received from the committee,” she said. “And that means thousands on NZ children are missing out on their chance for a decent life, especially Maori and Pasifika children.”

Read more …

What is more sickening, that the Saudis do this, or that we insist on continuing to call them our friends? “..the stoning, amputation and flogging of children..” does not belong in our world.

UN Watchdog Demands Saudis Stop Child Executions (AFP)

UN rights experts demanded Friday that Saudi Arabia immediately overturn laws allowing for the execution of children, and for punishments of minors including stonings, amputations and flogging. In a report on the plight of children in the wealthy Gulf state, a UN committee took Riyadh to task for allowing minors to be sentenced as adults, including to harsh corporal punishment and even the death penalty. The United Nations Committee on the Rights of the Child also criticised what it called Saudi Arabia’s systematic discrimination against girls, who are not considered full subjects, and who can be married off as early as nine years of age.

In its report, the committee expressed its “deepest concern” that Saudi Arabia “tries children above 15 years as adults and continues to sentence to death and to execute persons for offences that they allegedly committed when they were under the age of 18”. The committee, which is composed of 18 independent experts who monitor the implementation of the UN Convention on the Rights of the Child, pointed to a number of cases where minors had been sentenced to death. It said that at least four of the 47 people executed on January 2 this year were under 18 when they were sentenced to death.

And it demanded that Riyadh “immediately halt the execution” of those currently on death row who allegedly committed their crimes when they were minors, including Ali Mohammed Baqr al-Nimr, Abdullah Hasan al-Zaher, and Salman Bin Ameen Bin Salman Al-Qureish. Committee chairman Benyam Mezmur told reporters Saudi Arabia was only one of five countries, alongside China, Iran, Pakistan, and the Maldives, where child rights experts had ever needed to raise concerns about executions. “This is a very, very serious issue,” he said. The committee also demanded that Saudi Arabia immediately repeal laws permitting “the stoning, amputation and flogging of children”.

Read more …

Oct 072016
 


Andre Kertesz Bumper cars at amusement park in Neuilly-sur-Seine, near Paris 1930

I read a lot, been doing it for years, about finance and affiliated topics (a wide horizon of them), which means I’ve inevitably seen a wholesale lot of nonsense fly by. But for some reason, and I think I know why, Q3 2016 has been gunning for a top -or bottom- seat in that regard, and Q4 is looking to do it one better/worse.

Apart from the fast increasingly brainless political ‘discussions’ that don’t deserve the name, in the US and UK and beyond, there are the transnational organizations, NATO, IMF, EU and all those things, all suffocating in their own hubris, things I’ve dealt with before in for instance Globalization Is Dead, But The Idea Is Not and Why There is Trump. But none of it still seems to have trickled through anywhere that I can see.

The end of growth exposes the stupidity and ignorance of all but (and even that’s a maybe) a precious few (of our) ‘leaders’. There is no other way this could have run, because an era of growth simply selects for different people to float to the top of the pond than a period of contraction does. Can we agree on that?

‘Growth leaders’ only have to seduce voters into believing that they can keep growth going, and create more of it (though in reality they have no control over it at all). Anyone can do that. So ‘anyone’ who’s sufficiently hooked on power games will apply.

‘Contraction leaders’ have a much harder time; they must convince voters that they can minimize the ‘suffering of the herd’. Which is invariably a herd that no-one wants to belong to. A tough sell.

Any end to growth will and must therefore inevitably change the structure of a democracy, any democracy, any society for that matter. It will lead to new leaders, and new parties, coming to the front. And it should not surprise anyone that some of these new leaders and parties will question the very structure of the democracy they are part of, if only because that structure is already undergoing change anyway.

The tight connection between an era of economic growth (and/or contraction) and the politicians that ‘rule’ during that era is reflected in Hazel Henderson’s“economics is nothing but politics in disguise”.

 

On the one hand you have the incumbent class seeking to hold on to their waning power, churning out false positive numbers and claiming that theirs is the only way to go (just more of it), and on the other hand you have a loose affiliation – to the extent there’s any affiliation at all- of left and right, individuals and parties, who smell change that they can use to their own benefit.

They just mostly don’t know how to use it yet. But they’ll find out, or some of them will. Blaming people and groups of people for what’s gone wrong will be a major way forward, because it’s just so easy. It’s another reason why the incumbents class, the traditional parties, will go the way of the dodo: they will be blamed, and rightly so in most cases, for the fall of the economic system.

That’ll be the number one criteria: if you’re -perceived as- part of the old guard, you’re out. Not at the flick of a switch, but nevertheless the rise of Trump and Farage and all those folks has been much faster than just about anyone would have thought possible until very recently.

They feed on discontent, but they can do so only because that discontent has been completely ignored by the ruling classes everywhere. Which has a lot to do with the rulers in all these instances we see pop up now still being well-off, while the lower rungs of societies definitely are not.

Moreover, if most people still had comfortable middle-class lives, the dislike of immigrants and refugees would have been so much less that Trump and Wilders and Le Pen and Alternative for Deutschland could never have ‘struck gold’. It’s the perception that the ‘new’ people are somehow to blame for one’s deteriorating living conditions that makes it fertile ground for whoever wants to use it.

And since the far left can’t go there, the right takes over by default. Bernie Sanders and Jeremy Corbyn have brave ideas on redistribution of wealth, but there is still too much resistance, at the moment, to that, from the incumbent class and their voters, to have much chance of getting anywhere.

Of course the traditional right wing smells the opportunity too, so Hillary (yeah, she’s right wing) and Theresa May and Sarkozy and Merkel are all orchestrating sharp turns to the right, away from their once comfortable seats in the center. They all sense that power will not be emanating from the center going forward, and it’s power, much more than principles, that they are after.

 

But enough about politicians and their parties, who can and will all be voted out of power. Much harder to get rid of will be the transnational organizations, like the EU and IMF (there are many more), though they represent the ‘doomed construction’ perhaps even more than mere local or national power-hungries. The leading principle is simple: What has all the centralization led to? To today’s contracting economies.

To that end, let’s just tear into a recent random Bloomberg piece on this week’s IMF meeting, and the ‘expert opinions’ on it:

Existential Threat To World Order Confronts Elite At IMF Meeting

Policy-making elites converge on Washington this week for meetings that epitomize a faith in globalization that’s at odds with the growing backlash against the inequities it creates. From Britain’s vote to leave the EU to Donald Trump’s championing of “America First,” pressures are mounting to roll back the economic integration that has been a hallmark of gatherings of the IMF and World Bank for more than 70 years. Fed by stagnant wages and diminishing job security, the populist uprising threatens to depress a world economy that IMF Managing Director Christine Lagarde says is already “weak and fragile.”

The calls for less integration and more trade barriers also pose risks for elevated financial markets that remain susceptible to sudden swings in investor sentiment , as underscored by recent jitters over Deutsche Bank’s financial health. “The backlash against globalization is manifesting itself in increased nationalistic sentiment, against the outside world and in favor of increasing isolation,” said Louis Kuijs at Oxford Economics in Hong Kong, a former IMF official. “If we lose consensus on what kind of a world we want to have, the world will probably be worse off.”

Oh, but we do have consensus, Louis: Ever more people don’t want what they have now. That too is consensus. And since you said that what it takes is consensus, we should be fine then, right?!

Also, I find the term ‘elevated markets’ interesting, even if I don’t know what it’s supposed to mean. I can only guess.

In its latest World Economic Outlook released Tuesday, the fund highlighted the threats from the anti-trade movement to an already subdued global expansion. After growth of 3.2% in 2015, the world economy’s expansion will slow to 3.1% this year before rebounding to 3.4% in 2017, according to the report, keeping those estimates unchanged from July projections. The forecasts for U.S. growth were cut to 1.6% this year and 2.2% in 2017.

“We’d like to see an end to the creeping protectionism in the world and more progress on moving ahead with free-trade agreements and other trade-creating measures,” Maurice Obstfeld, director of the IMF’s research department, said in a Bloomberg Television interview with Tom Keene. Lagarde said last week that policy makers attending the Oct. 7-9 annual meeting of the IMF and World Bank have two tasks. First, do no harm, which above all means resisting the temptation to throw up protectionist barriers to trade. And second, take action to boost lackluster global growth and make it more inclusive.

I can see how a vote against the likes of Hollande, Hillary or Cameron constitutes a “the backlash against globalization”. What I don’t see is how that has now become the same as the anti-trade movement. When did Trump express any feelings against trade? Against international trade deals as they exist and are further prepared, yes.

But those deals don’t define ‘trade’ to the exclusion of all other definitions. As for ‘protectionism’, that’s just a term designed to make something perfectly fine and normal look bad. Every single society on the planet should protect its basic necessities from being controlled by foreigners, either for money or for power.

Nothing good can come of relinquishing that control for any society, ever. There‘s not a thing wrong with protecting your control of your own water and food and shelter, and these are indeed things that should never be traded or negotiated in global markets.

So claiming that ‘do no harm’ equals NOT protecting your basics is nothing but a self-serving and dangerous kind of baloney coming your way courtesy of those people whose sociopathic plush seats and plusher bank accounts depend on your ongoing personal loss of control over what you need to survive.

It’s what any ‘body’ does that has reached the limits of its growth: it starts feeding on its host. Be it a cancerous tumor, the Roman Empire or our present perennial-growth driven economic models, they’re all the same same thing because they are fueled by the same -thoughtless- principle.


Ilargi: See that upward line at the end? Well, it’s an IMF growth ‘forecast’. Which are always so wrong, and always revised downward, that you must wonder if the term ‘forecast’ is even appropriate

 

Achieving even those modest objectives may prove elusive. Free trade has become polling poison in the U.S. presidential campaign, with Democratic nominee Hillary Clinton now criticizing a trade deal with Pacific nations, which isn’t yet ratified in the U.S., that she had praised when it was being negotiated. Republican challenger Trump has lashed out at Mexico and China, threatening to slap big tariffs on imports from both nations. Rattled by the U.K.’s June vote to leave the EU, European leaders know it may just be the start of a political earthquake that’s threatening the continent’s old certainties.

In case you didn’t catch it, “..the continent’s old certainties” is a goal-seeked term. Old in this case means not older than, say, 1950, if that. Look back 100 years and “the continent’s old certainties” dress in a whole other meaning.

Next year sees elections in Germany and France, the euro area’s two largest economies, and in the Netherlands. In all three countries anti-establishment forces are gaining ground. With growing resentment of the EU from Budapest to Madrid, policy makers have described the current surge in populism as the greatest threat to the bloc since its creation out of the ashes of World War II. There are also growing signs that the union and Britain are heading for a so-called “hard exit” that would sharply reduce the bloc’s trade and financial ties with the island nation. U.K. Prime Minister Theresa May said on Oct. 2 that she’ll begin her country’s withdrawal from the EU in the first quarter of next year.

I have addressed the misleading use of the term ‘populism’ before. In its core, it simple means something like: for, and by, the people. How that can be presented as somehow being a threat to democracy is a mystery to me. They should have picked another term, but settled on this one.

And in the western media consensus, it comprises anything from Trump to Beppe Grillo, via Hungary’s Orban and Nigel Farage, Spain’s Podemos, Greece’s Syriza and Germany’s AfD. All these completely different movements have one thing only in common: they protest the failed and fast deteriorating status quo, and receive a lot of support from their people for doing that.

Because it’s the people that bear the brunt of the failure, not the leadership; even Greece’s politicians still pay themselves a comparatively lush salary.

As for Britain, it’s the textbook example of utter blindness. Those who were/are well provided for, be they politically left or right, missed out on what was happening around them so much they had no idea Brexit was a real option. And in the 15 weeks since the Brexit vote, all anyone has done in the UK is seeking to blame someone, anyone but themselves for what they all failed to see coming.

Perhaps the biggest beneficiary of free trade over the past generation, China, still restricts access to many of its key industries, with economists worried about increasingly mercantilist policies. It’s also seeking a larger role in the existing global framework, with entry of the yuan into the IMF’s basket of reserve currencies on Oct. 1 the most recent example. An all-out trade war would be a disaster for China’s economy, with Trump’s threatened tariff potentially wiping off almost 5% of its GDP, according to a calculation by Daiwa Capital Markets.

John Williamson, whose Washington Consensus of open trade and deregulation was effectively the governing ethos for the IMF and World Bank for decades, said the 2008-09 financial meltdown had undercut support for economic integration. “There was agreement on globalization before the crisis and that’s one thing that’s been lost since the financial crisis,” said Williamson, a former senior fellow at Peterson Institute for International Economics who is now retired.

The growing opposition to economic integration has been fueled by a sub-par global recovery. “Perhaps the most striking macroeconomic fact about advanced economies today is how anemic demand remains in the face of zero interest rates,” former IMF chief economist Olivier Blanchard wrote last week in a policy brief for the Peterson Institute.

These ‘experts’ seem to have an idea there’s something amiss, but they don’t have the answers. Which is impossible to come and say out loud if you’re an expert. Experts must pretend to know it all, or at least know why they don’t know. “There was agreement on globalization before the crisis”, and now it’s no longer there. That they see.

That they ain’t coming back, neither the agreement on it nor globalization itself, is a step too far for them. To publicly acknowledge, at least. That Blanchard expresses surprise about ‘anemic demand’ at the same time that interest rates are equally anemic is something else.

That both are two sides of the same coin, or at least may be, is something he should at least mention. That is to say, low rates induce deflation, though they are allegedly supposed to induce the opposite. Economists are mostly very misguided people.

 

The world economy is getting some lift after rising at an annual rate just shy of 3% in the first half of this year, according to David Hensley, director of global economics for JPMorgan. But much of the boost will come from a lessening of drags rather than from a big burst of fresh growth, said Peter Hooper at Deutsche Bank Securities, a former Federal Reserve official. Recessions in Brazil and Russia are set to come to an end, while in the U.S. cutbacks in inventories and in oil and gas drilling will wane.

Please allow me to chip in here. ‘Lessening of drags’ in a nonsense term. And so is the idea that “..recessions in Brazil and Russia are set to come to an end”. That’s all goal-seeked day-dreaming. Smoke or drink something nice with it and you’ll feel good for a few hours, but that doesn’t make it real.

“I’m characterizing the global economy as something akin to a driverless car that’s stuck in the slow lane,” said David Stockton, a former Fed official and now chief economist at consultants LH Meyer. “Everybody feels like they’re being taken for a ride but they’re pretty nervous because they can’t see anybody in control.”

I really like this one, because off the bat I thought Stockton had it all wrong. What I think is the appropriate metaphor, is not “a driverless car that’s stuck in the slow lane”, but one of those cars in a carousel at a carnival, a merry-go-round, where you can sit in it forever and you always end up in the same spot. And the only one who’s in control in the boss who hollers that you need to pay another quarter if you want to keep on riding.

Or, alternatively, and to stay at the carnival, it’s a bumper car, which allows you to hit other cars and get hit, but never to leave the rink. That’s the global economy. Not getting anywhere, and running out of quarters fast.

Still, for the first time in the past few years, Stockton said he sees a real upside risk to his forecast of continued global growth of around 3% next year. And that’s coming from the possibility of looser fiscal policy in the U.S. and Europe. In the U.S., both Clinton and Trump have pledged to boost infrastructure spending on roads, bridges and the like. In Europe, rising populism provides a powerful incentive for governments to abandon austerity ahead of the elections next year – and perhaps beyond. Whether such a shift will be enough to mollify those who have been on the losing side of globalization for decades is debatable, however.

“The consensus in policy-making circles was that more trade meant better economic growth,” said Standard Chartered head of Greater China economic research Ding Shuang, who worked at the IMF from 1997 to 2010. “But the benefits weren’t shared equitably, so now we see a round of anti-globalization, anti-free trade. “Globalization will stall for the moment, until we can find a way to share those benefits,” he added.

Globalization is done. And while we can discuss whether that’s of necessity or not, and I continue to contend that the end of growth equals the end of all centralization including globalization, fact is that globalization was never designed to share anything at all, other than perhaps wealth among elites, and low wages among everyone else.

The EU and IMF have not delivered on what they promised, in the same way that traditional parties have not, from the US to UK to basically all of Europe. They promised growth, and growth is gone. They may have delivered for their pay masters, but they lost the rest of the world.

Anything else is just hot air. But that doesn’t mean they will hesitate to use their control of the military and police to hold on to what they got. In fact, that’s guaranteed. But it would only be viable in a dictatorial society, and even then.

We are transcending into an entirely different stage of our lives, our economies, our societies. Growth is gone, it went out the window long ago only to be replaced with debt. And that’s going to take a lot of getting used to. But there’s nothing that says we couldn’t see it coming.

Sep 012016
 
 September 1, 2016  Posted by at 9:31 am Finance Tagged with: , , , , , , , , , ,  1 Response »


F.A. Loumis, Independence (Bastille?!) Day 1906

Collapse of Hanjin, World’s 7th-Biggest Shipping Line, Upsets Global Trade (R.)
Investors Miss Out On $500 Billion As Global Bond Yields Plunge (CNBC)
In Case Of Recession, The Fed Might ‘Need’ To Cut Rates To Minus 2% (CNBC)
Eurozone Core Inflation Fall Raises Prospect Of ECB Stimulus Measures (G.)
Bank of Japan Has an $84 Billion Yen Gap in Balance Sheet (BBG)
Admitting Ignorance Is Better Than Groupthink For Central Bankers (BBG)
An 809% Debt Ratio And Investors Are Serene? It Must Be China (BBG)
Austria Says Will Start ‘Conflict’ In EU About Canada Trade Deal (R.)
Apple Travesty Is A Reminder Why Britain Must Leave The Lawless EU (AEP)
UK Defined Benefit Pension Fund Deficit Grows By £100 Billion In A Month (G.)
London’s Elite ‘Pushed Out Of Exclusive Postcodes By Super Rich’ (G.)
A Third Of Africa’s Elephants Were Wiped Out In Just 7 Years (CNN)

 

 

Excellent. We’re far too independent on the idiocy of 10,000 mile shipping lines. They’re heavily polluting (in more ways than one) and entirely unnecessary.

Collapse of Hanjin, World’s 7th-Biggest Shipping Line, Upsets Global Trade (R.)

The collapse of South Korea’s Hanjin Shipping sent ripples though global trade on Thursday, as the country’s largest port turned away its ships and as some manufacturers scrambled for freight alternatives. Hanjin on Wednesday filed for court receivership after its banks decided to end financial support, and ports from China to Spain, the United States and Canada have refused entry to Hanjin vessels in what is traditionally the industry’s busiest season ahead of the year-end holidays. An official with Hanjin Shipping in Busan confirmed that its vessels were not entering the southern city’s port as container lashing providers deny service on concerns that they will not be paid. The company was also worried that the ships may be seized by creditors.

LG Electronics, the world’s No.2 maker of TVs, told Reuters it was cancelling orders with Hanjin and was seeking alternatives to ship its freight. An executive at the Korea International Freight Forwarders Association said on Wednesday he had been inundated with calls from cargo owners worried about the fate of their shipments in transit to the United States and Europe. While mobile phones and semiconductors are carried by air, other electronics like home appliances are shipped by sea. “This will have an impact on the entire industry,” the official said.

South Korea’s maritime ministry said on Wednesday that Hanjin’s woes would affect cargo exports for two or three months, with about 540,000 TEU of cargo already loaded on Hanjin vessels and facing delays. It would be difficult to find alternative ships given high seasonal demand from August to October. The ministry said it would ask local rival Hyundai Merchant Marine to supply vessels to cover some of Hanjin’s routes to the United States and Europe, while also seeking help from overseas carriers.

Read more …

How central bankers kill pensions.

Investors Miss Out On $500 Billion As Global Bond Yields Plunge (CNBC)

Investors have seen their interest income squeezed as global bond yields plunge. On the flipside, governments aren’t complaining. Relative to yields in 2011, global investors are foregoing more than $500 billion in annual income on roughly $38 trillion in sovereign debt that is outstanding, Fitch Ratings said in a report on Wednesday. “Cash flow benefits have effectively been transferred from global investors to sovereign issuers, as sovereign borrowing costs have dropped in response to central bank monetary stimulus,” Fitch said in the report. “This has posed new challenges for income-reliant investors, such as insurers and pension funds, while enabling governments to borrow at increasingly attractive rates.”

Borrowers would realize benefits only slowly, however, as bonds with higher coupon rates matured and newer bonds with lower interest rates were issued, the rating agency said. According to Fitch, investors who tended to buy assets and hold them onto maturity would have to invest new cash in bonds that paid lower interest rates, blunting the money they earned from coupon payments. Government bond yields, which move inversely to prices, have plummeted around the world as central banks in many developed economies scooped up bonds in order to provide stimulus to their economies. These purchases have sparked a scramble for government debt, enabling many countries to flog bonds while cutting the interest rates they have to pay to lure investors.

Read more …

In itself a reasonable argumant re the history of spreads, but that does not make the conclusion alright, or logical.

In Case Of Recession, The Fed Might ‘Need’ To Cut Rates To Minus 2% (CNBC)

The U.S. Federal Reserve might need to cut interest rates to as low as negative 2%, far lower than levels other global central banks have tested, a former Fed economist said. That’s what would likely be needed to engineer a recovery if the U.S. economy were to fall into a recession in the next couple of years, Marvin Goodfriend, who was an economist and policy advisor at the Federal Reserve’s Bank of Richmond from 1993-2005, told CNBC’s “Squawk Box” on Thursday. Goodfriend, who is currently a professor of economics at Carnegie Mellon University, pointed to data on the eight recessions in the U.S. since 1960.

“In eight of those recessions, the Fed had to push the short rate 2.5 percentage points below the long term rate. Today, the 10-year rate in the U.S. is 1.5%,” he noted, saying that would indicate that during the next recession, the Fed would need to cut rates as low as minus 1% at a minimum. “In five of those recessions, the Fed had to push the federal funds rate 3.5 percentage points below the 10-year bond rate,” he said. “So if that happens this time around, we would have to push the federal funds rate to minus 2%.” That’s well below where any other central banks have ventured so far. Sweden’s central bank, an early adopter of negative rates, has set its benchmark at negative 0.5%.

The Bank of Japan’s rate was set at minus 0.1% earlier this year, while the ECB, which first moved its rates into negative territory in 2014, currently has a deposit rate of negative 0.4%. The Fed funds rate has remained in positive territory, with the U.S. central bank last increasing interest rates in December of 2015, its first hike since 2006. That raised the Fed’s target rate to a range of 0.25 to 0.5%. To be sure, Goodfriend didn’t expect the Fed would be headed there anytime soon, noting that he believed the central bank should actually raise rates before the end of the year.

Read more …

More more more.

Eurozone Core Inflation Fall Raises Prospect Of ECB Stimulus Measures (G.)

Speculation is growing that the European Central Bank could take action to stimulate the eurozone economy after official figures showed an easing in underlying inflation last month. Pressure on the ECB increased when the European commission’s statistical agency, Eurostat, published figures that showed core inflation in July was lower than in same month last year, despite aggressive action by the Frankfurt-based bank over the past 18 months. With concerns that the eurozone recovery was losing momentum, Eurostat said the headline rate of inflation remained unchanged at 0.2% in August. Core, or underlying inflation, which excludes energy, goods, alcohol and tobacco, fell from 0.9% in July to 0.8%.

Separate Eurostat data showed that eurozone unemployment was unchanged at 10.1% in July, the latest month for which figures are available for all 19 countries that use the euro. The jobless rate in the eurozone has fallen from 10.8% over the past year, but financial markets had been expecting the reduction to continue to 10% last month. The ECB has been using negative interest rates and quantitative easing in an attempt to increase activity and push inflation back towards its target of just below 2%. Analysts said the inflation and unemployment figures would be discussed when the ECB meets to discuss policy options next week.

Stephen Brown of consultancy Capital Economics said: “The unchanged headline inflation rate in August highlights the fact that price pressures in the eurozone remain weak and boosts the case for more monetary easing from the ECB. “With [the] survey data also pointing to a marked slowdown in growth ahead, there is a strong case for the ECB to announce further policy easing. This could come as soon as the bank’s meeting next week.”

Read more …

Abe and Kuroda won’t even take it serious.

Bank of Japan Has an $84 Billion Yen Gap in Balance Sheet (BBG)

There’s an 8.7 trillion yen ($84 billion) gap between the value of government bond holdings on the Bank of Japan’s balance sheet and their face value. While not an immediate problem because the BOJ’s income can cover the losses, the widening gap raises questions about the sustainability of the central bank’s bond purchases, which Governor Haruhiko Kuroda has said could be expanded. The costs of the central bank’s record stimulus are mounting, while its chief goal – spurring inflation to 2% – appears as far away as it was when Kuroda took the helm in 2013. The BOJ is in the midst of reviewing its policy before a board meeting later this month, but the governor has said there will be no scaling back of his monetary program.

“These numbers show the distortions of the BOJ’s current policies,” said Sayuri Kawamura, a senior economist at the Japan Research Institute in Tokyo. “The annual amortization losses are going to increase and consume the BOJ’s profits, and the risk is increasing that the bank’s financial stability will be shaken.” The bonds the BOJ owns are worth almost 326.7 trillion yen when taken at face value, but were marked at almost 335.4 trillion yen on the balance sheet in August. That gap is 42% bigger than before the introduction of negative rates in January, according to an analysis of the balance sheet and list of the bonds the central bank owns. Tadaaki Kumagai, a spokesman for the central bank, said “the BOJ releases half-yearly and yearly accounts,” while declining to comment further.

The gap exists because, unlike the Federal Reserve, the BOJ counts its bond holdings at the purchase price, minus amortization costs. This number is diverging more from the face value because the central bank’s purchases and negative rate policy are pushing up prices. The face value is what the BOJ will receive when the bonds mature. At the end of the 2015 fiscal year on March 31, the gap between the two valuations was 6.4 trillion yen and the BOJ wrote down 874 billion yen, according to documents seen by Bloomberg. That was covered by the 1.29 trillion yen in coupon income the bank received that year, a situation that may not continue indefinitely.

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Groupthink is all they have.

Admitting Ignorance Is Better Than Groupthink For Central Bankers (BBG)

If the Fed’s objective last week was to put its September meeting back into play as the potential venue for a rate increase, it can claim a partial success. Prices in the futures market show traders now see about a 34% chance of a hike on Sept. 21, up from 22% two weeks ago. But you still have to go out to December before the likelihood rises above 50%. There’s a very good reason for that market skepticism. Raising rates at a time when inflation is dormant and miles away from the central bank’s 2% target seems somewhat perverse, especially when the forecast is for prices to remain subdued for many months to come:

The Jackson Hole Symposium (and let us note in passing what a great word symposium is, adding gravitas to what would otherwise be a mere conference) was an opportunity, as the event title said, to consider “Designing Resilient Monetary Policy Frameworks for the Future.” Instead, Fischer’s comment suggests it’s business as usual at the Federal Open Market Committee, with no room at present for such innovations as changing the inflation goal or targeting nominal GDP. That’s a shame. There’s a consensus that monetary policy is becoming impotent, and that governments need to step in with fiscal stimulus. But until central banks admit that their firepower is waning, politicians can continue to evade responsibility. “You can’t expect us to do the whole job,”

Christopher Sims, a Nobel Prize-winning economist from Princeton University, said at Jackson Hole last week. “Fiscal expansion can replace ineffective monetary policy at the zero lower bound. So long as the legislature has no clue of its role in these problems, nothing is going to get done. Of course, convincing them that they have a role and there is something they should be doing, especially in the U.S., may be a major task.” Finance – particularly in an era of fractional reserve banking – is essentially a confidence trick. Depositors have to be confident their money will be there when they try to withdraw it. Businesses have to be confident that the economy is on a sound footing otherwise they won’t invest and hire. Central bankers aren’t just economists and policy makers; they’re also salespeople, selling a story.

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China is a giant debt bubble.

An 809% Debt Ratio And Investors Are Serene? It Must Be China (BBG)

Prudence dictates that a compulsive shopper who runs up a hazardous amount of debt should think about cutting the credit card in half and staying home for a while. Try telling that to China’s acquisition-hungry companies.Two prime examples were on show this week when China Evergrande Group, one of the nation’s biggest developers, and Fosun International, an expanding Shanghai-based conglomerate, reported first-half earnings. The results show just how hard it is to kick the buying habit in an environment where compliant lenders stand ready to advance seemingly unlimited sums. Total borrowings at junk-rated Evergrande jumped by 28% from the end of December to 381 billion yuan ($57 billion).

That pushed the Guangzhou-based company’s ratio of net debt to shareholders’ equity to 142%, above the average 108% for China’s overleveraged property developers, according to data compiled by Bloomberg. Count Evergrande’s perpetual bonds as debt rather than equity and even that ratio starts to look benign. The total debt to common equity ratio rose to 809% at the end of June, from 582% six months earlier. The developer added about 40 billion yuan more perpetual notes during the period. So, time to rein things in somewhat?

Not a bit of it. Evergrande wants to acquire brokerage and trust companies as well as smaller rivals, Chief Executive Officer Xia Haijun told reporters in Hong Kong Tuesday. That would be on top of more than $5 billion of purchases so far this year, including building a stake in larger developer China Vanke and acquiring a chunk of Shenyang-based Shengjing Bank. First-half profit, meanwhile, fell 23% excluding property revaluations and foreign-exchange losses.The debt buildup wouldn’t be so striking if Evergrande were acquiring cash-generating assets that can help pay down borrowings. If anything, things seem to be moving in the opposite direction.

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Good. Kill that too.

Austria Says Will Start ‘Conflict’ In EU About Canada Trade Deal (R.)

Austria is ready to confront other European Union members states over its opposition to a free trade deal with Canada, Chancellor Christian Kern said, because it sees it containing many of the same problems as one being negotiated with the United States. “This will be difficult, this will be the next conflict in the EU that Austria will trigger… We must focus on making sure… we don’t shift the power balance in favor of global enterprises,” Kern told broadcaster ORF late on Wednesday. Austria opposes a proposed free trade deal with the United States, and Kern said the deal with Canada, called the Comprehensive Economic and Trade Agreement (CETA), bore many of the same problems.

Ministers from Germany and France have also called for a halt in negotitations on the EU-U.S. deal, the Transatlantic Trade and Investment Partnership (TTIP). “We will have to see where the weaknesses of (CETA) are. Many are the same as with TTIP,” Kern, a social-democrat, said, without elaborating. Kern is expected to address issues surrounding TTIP at a news conference on Friday. There are widespread concerns in Austria that the TTIP could compromise food safety standards. Kern also opposes the idea that the agreement could allow companies to challenge government policies if they feel regulations put them at a disadvantage.

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There are multiple truths in this case. In the end, though, this is about Brussels seeking to supersede member states’ sovereign law. For that, the constitutions of 27 nations should be held to the light. I would venture that what Brussels does here, and in many other fields, violates a fair number of these constitutions. And that is not legal no matter what their respective governments say or do. That’s an issue for their judicial systems. There’s a reason why the political and judicial systems have been made separate entities.

Apple Travesty Is A Reminder Why Britain Must Leave The Lawless EU (AEP)

Europe’s Competition Directorate commands the shock troops of the EU power structure. Ensconced in its fortress at Place Madou, it can dispatch swat teams on corporate dawn raids across Europe without a search warrant. It operates outside the normal judicial control that we take for granted in a developed democracy. The US Justice Department could never dream of acting in such a fashion. Known as ‘DG Comp’, it acts as judge, jury, and executioner, and can in effect impose fines large enough to constitute criminal sanctions, but without the due process protection of criminal law. It misused evidence so badly in pursuit of the US chipmaker Intel that the company alleged a violation of human rights. Apple is just the latest of the great US digital companies to face this Star Chamber.

It has vowed to appeal the monster €13bn fine handed down from Brussels this week for violation of EU state aid rules, but the only recourse is the European Court of Justice. This is usually a forlorn ritual. The ECJ is a political body, the enforcer of the EU’s teleological doctrines. It ratifies executive power. We can mostly agree that Apple, Google, Starbucks, and others have gamed the international system, finding legal loopholes to whittle down their tax liabilities and enrich shareholders at the expense of society. It is such moral conduct that has driven wealth inequality to alarming levels, and provoked a potent backlash against globalisation. But the ‘Double Irish’ or the ‘Dutch Sandwich’ and other such tax avoidance schemes are being phased out systematically by the G20 and by a series of tightening rules from the OECD.

The global machinery of “profit shifting” will face a new regime by 2018. We can agree too that Apple’s cosy EU arrangements should never have been permitted. It paid the standard 12.5pc corporate tax on its Irish earnings – and is the country biggest taxpayers – but the Commission alleges that its effective rate of tax on broader earnings in 2014 was 0.005pc, achieved by shuffling profits into a special ‘stateless company’ with its headquarters in Ireland. “The profits did not have any factual or economic justification. The “head office” had no employees, no premises and no real activities,” said Margrethe Vestager, the EU competition chief.

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Someone will find a way to blame this on Brexit.

UK Defined Benefit Pension Fund Deficit Grows By £100 Billion In A Month (G.)

The combined deficit of the UK’s 6,000 defined benefit pension funds has grown by £100bn in the last month, bringing the total deficit to £710bn, according to a new report. The research, by the accountants PricewaterhouseCooper, found that the pension schemes have total assets of £1,450bn but are liable to pay out about £2,160bn in contractual promises to existing and former workers. Pension deficits have worsened since the EU referendum because companies use the interest rate on gilts, otherwise known as the yield, as the main tool in estimating how much they will have to pay out in pensions in the future. The lower the gilt yield, the more that companies have to set aside to meet their future costs.

The scale of the problems facing companies offering final salary pension schemes was underlined on Wednesday by the Yorkshire-based manufacturer Carclo, which issued a statement to the stock exchange to say that the recent increase in its pension deficit meant that a dividend payout to shareholders announced in June and due to be paid in October could not now go ahead. Carclo, which is based near Leeds and employs about 1,300 people making plastics and LED products, said in its statement: “If the corporate bond yield remains at its current low level then this will result in a significant increase in the group’s pension deficit.” It said this would have the effect of “extinguishing the company’s available distributable reserves”. The announcement immediately wiped almost 15% off the company’s share price.

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How to kill a city, Chapter 826.

London’s Elite ‘Pushed Out Of Exclusive Postcodes By Super Rich’ (G.)

London’s traditional elite, such as lawyers, architects and academics, are being pushed out of their enclaves in Mayfair, Chelsea and Hampstead by an influx of global super rich investors, causing a chain reaction of gentrification across the capital, according to research by the London School of Economics. An influx of extremely wealthy overseas buyers is leading the old elite to sell up and move from London’s most exclusive postcodes and buy in areas they previously considered undesirable, said Dr Luna Glucksberg, of the LSE’s International Inequalities Institute. This displacement of old money and affluent middle class professionals is in turn pricing neighbourhoods in south and east London out of the reach of average Londoners and threatening to push those on low incomes to the margins of the city and beyond, she added.

“The changes happening at the top end of the market are real, and although they do not affect large numbers of people directly, the ripple effects they generate do resonate across London,” Glucksberg said. “In terms of the impact on London as a whole, this represents a very different kind of ‘trickle down’ effect from what politicians across the spectrum have long argued would be the benefit of the ‘super rich moving into our city’,” said Glucksberg. “Affordability for average Londoners in the rest of the city is likely to become an even more difficult issue to solve.” The trend was contributing to dramatic house price rises in areas ranging from Battersea and Clapham to Acton, as the old elite bought property there with the significant profits – usually in the millions – made from selling up to the global uber wealthy, the researcher found.

“The study shows that the wealthy individuals and families that live in London’s most exclusive areas no longer feel able to compete at the top end of the capital’s property market,” said the researcher. “Instead they feel like they are being pushed out of elite neighbourhoods. For the first time, this elite group are buying flats for their children in areas they never would have previously considered.”

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We need the death penalty for poachers and buyers, the entire chain, not just in Africa but everywhere, also in China and Japan. If they don’t comply, no more trade and full isolation.

A Third Of Africa’s Elephants Were Wiped Out In Just 7 Years (CNN)

Scanning Botswana’s remote Linyanti swamp from the low flying chopper, elephant ecologist Mike Chase can’t hide the anxiety and dread as he sees what he has seen too many times before. “I don’t think anybody in the world has seen the number of dead elephants that I’ve seen over the last two years,” he says. From above, we spot an elephant lying on its side in the cracked river mud. From a distance it could be mistaken for a resting animal. But the acrid stench of death hits us before we even land. Up close, it is a horror. He was a magnificent bull right in his prime, 45 to 50 years old. To get at his prized ivory tusks, poachers hacked off his face. Slaughtered for their ivory, the elephants are left to rot, their carcasses dotting the dry riverbed; in just two days, we counted the remains of more than 20 elephants in a small area.

Visitors and managers at the tourist camps here are frequently alarmed by the sound of gunshots nearby. And Chase worries that if Botswana can’t protect its elephants, there’s little hope for the species as a whole. Chase, the founder of Elephants Without Borders (EWB), is the lead scientist of the Great Elephant Census, (GEC) an ambitious project to count all of Africa’s savannah elephants – from the air. Before the GEC, total elephant numbers were largely guesswork. But over the past two years, 90 scientists and 286 crew have taken to the air above 18 African countries, flying the equivalent of the distance to the moon – and a quarter of the way back – in almost 10,000 hours.

Prior to European colonization, scientists believe that Africa may have held as many as 20 million elephants; by 1979 only 1.3 million remained – and the census reveals that things have gotten far worse. According to the GEC, released Thursday in the open-access journal PeerJ, Africa’s savannah elephant population has been devastated, with just 352,271 animals in the countries surveyed – far lower than previous estimates. Three countries with significant elephant populations were not included in the study. Namibia did not release figures to the GEC, and surveys in South Sudan and the Central African Republic were postponed due to armed conflict. In seven years between 2007 and 2014, numbers plummeted by at least 30%, or 144,000 elephants.

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Aug 142016
 


Harris&Ewing Goat team, Washington, DC 1917

Silicon Valley May Get Hit By China’s ‘Virtual Reality’ Economy (CNBC)
High-Risk ‘Shadow’ Credit in China Put at $2.9 Trillion by IMF (BBG)
Insanity, Oddities and Dark Clouds in Credit-Land (AM)
The Next President Should Forgive All Student Loans (TIME)
The Big Idea about Private Debt (Steve Keen)
How to Break the Power of Money (Korten)
TTIP: The Suicide of Nations (PCR)
How Global Elites Forsake Their Countrymen (Noonan)
Megaupload’s Dotcom To Seek A Review Of US Court’s Forfeiture Ruling (R.)
A Year After The Crisis Was Declared Over, Greece Is Still Spiralling Down (G.)
The Greek Crisis Will Flare Up Again. And Why Should It Not? (G.)
Aid and Attention Dwindling, Refugee Crisis Intensifies in Greece (NYT)
Germany To Send 3,000 Refugees Back To Greece (KTG)

 

 

Virtual money economy.

Silicon Valley May Get Hit By China’s ‘Virtual Reality’ Economy (CNBC)

“Japan 25 years ago and China now were both debt [and] currency fueled flood of cash into U.S. assets inflating both valuations and fears,” Josh Wolfe, co-founder and managing partner of Lux Capital, a $700 million venture capital firm, told CNBC via email this week. Like other skeptical investors, Wolfe believes there are “really two Chinas: A high growth tech and biotech driven economy conflated with a levered old asset state owned influenced burden of very bad decision making and governance.” China’s high debt, slowing growth and appetite for U.S. assets—the country already owns trillions in U.S. Treasuries and dollars—raises the stakes for tech companies if the country’s fortunes should suddenly reverse.

Of the nearly $60 billion that the National Venture Capital Association says was invested in U.S. startups last year, about a quarter of those flows came from one destination: China. Along with art and high end real estate, tech ventures have been the primary recipient of China’s largesse. Meanwhile, 2016 has already exceeded last year’s record flow of Chinese capital, according to recent figures from The Rhodium Group. Wolfe told CNBC that Chinese investors “are fleeing a virtual reality economy in China and funding virtual reality startups in the U.S. They seem to be choosing illiquidity and uncertainty, denominated in dollars over liquidity and certainty of devaluation denominated in yuan.”

China’s slowing economy has reverberated across the globe, sending commodities reeling and giving investors fright. That pain is far from over: The IMF warned on Friday that China’s real GDP could sink below 6% in 2020. If Chinese interest rates rise or liquidity tightens, the flood of money threatens to do “what all excesses do: reverse or stop,” said Lux Capital’s Wolfe. “As the China bubble pops, it has been commodities and commodity exporting countries in the first wave, then banks and non-performing loans, then it will be the assets they financed or were secured by.”

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Yuan+Junk=Yunk.

High-Risk ‘Shadow’ Credit in China Put at $2.9 Trillion by IMF (BBG)

IMF staff said that 19 trillion yuan ($2.9 trillion) of Chinese “shadow” credit products are high-risk compared with corporate loans and highlighted the danger that defaults could lead to liquidity shocks. The investment products are structured by the likes of trust and securities companies and based on equities or on debt – typically loans – that isn’t traded, staff members John Caparusso and Kai Yan said in a report released Friday. The commentary highlighted the potential for risks bigger to the nation’s financial stability than from companies’ loan defaults. While loan losses can be realized gradually, defaults on the shadow products could trigger risk aversion that’s harder to manage, the report said.

The “high-risk” products offer yields of 11% to 14%, compared with 6% on loans and 3% to 4% on bonds, the commentary said. The lowest-quality of these products are based on “nonstandard credit assets,” typically loans, it said. In a separate document in a bundle released by the IMF, the Chinese banking regulator was cited as saying that banks’ exposures to “nonstandard credit assets” were a key concern, with moves already made to require higher provisioning against such exposures than for regular loans.

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“Foreign buying of US assets very often reaches record highs prior to major financial accidents.”

Insanity, Oddities and Dark Clouds in Credit-Land (AM)

Bond markets are certainly displaying a lot of enthusiasm at the moment – and it doesn’t matter which bonds one looks at, as the famous “hunt for yield” continues to obliterate interest returns across the board like a steamroller. Corporate and government debt have been soaring for years, but investor appetite for such debt has evidently grown even more. A huge mountain of interest-free risk has accumulated in investor portfolios and on bank balance sheets. Globally, more than $13 trillion in sovereign bonds trade at negative yields to maturity. In spite of soaring defaults, junk bond yields have collapsed again as well. In short, insanity rules in the bond markets. A recent article in the FT informs us of “a wave of foreign demand for US corporate debt”:

“Record-low interest rates are no barrier for US companies finding buyers for their debt thanks to a relentless global quest for fixed returns that shows little sign of easing. The pace of US corporate debt sales – which has not been fast enough to quench investor demand – is expected to continue unabated driven by foreign buyers in a world where roughly $13tn of sovereign and corporate debt trades in negative territory. “It is a low return world,” says Ed Campbell, a portfolio manager with asset manager QMA. “You don’t have a lot of asset classes that are attractive and there is a flight to quality where the US is outperforming.” More than $2.3tn of dollar-denominated debt has been issued by companies and banks since the year began, including three of the ten largest corporate bond sales on record, Dealogic data show.”

This not only shows that “investors” (we use the term loosely) are insane, it also happens to be a contrary indicator. Foreign buying of US assets very often reaches record highs prior to major financial accidents. Is this really a “flight to quality?” Corporate defaults are currently at the highest level since 2009, with US defaults clearly leading the pack:

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And what should(s)he do for everyone else who’s in trouble? Can’t very well help only students.

The Next President Should Forgive All Student Loans (TIME)

If Hillary Clinton is to win this November, she needs to motivate the electorate to come out to vote for something more than a justified aversion to Donald Trump. Particularly for younger voters and voters with families, she has to capture their imaginations with a bold, simple, and common sense proposal to address one of the most critical financial and social problems currently facing a generation: the student loan crisis. And she needs to do so in a way that can do the most immediate good for the nation at large. First, all outstanding student loan debt should be forgiven. Second, a new loan program should be created that is tied to incentives for college graduates to choose careers in public service and which indexes repayment to income.

Current outstanding student loans amount to 1.3 trillion dollars, roughly 10% of all household debt. Student loan debt is larger than either car loans or credit card debt. Forty-two million Americans hold student loan debt. Student debt has been a drag on younger generations’ incomes and has contributed to the stagnation in middle class earnings. The average debt at graduation has skyrocketed from $10,000 in 1993 to more than $35,000 in 2016. Furthermore, the federal government has set interest rates on student loans at twice the current market rate of other types of loans. Going to college should not be a profit center for Wall Street and the federal government.

By forgiving student loan debt—which is largely held by the government—a tremendous economic stimulus would be generated, whose beneficiaries are people, not banks. The cost is comparable to the stimulus program created in the wake of the financial crisis of 2008, and, in this case, Main Street and not Wall Street will benefit. Quickly, more than two generations of Americans would be able to invest in homes and develop and support families. And the Americans who benefit are those who have obtained education and skills, but whose careers have been hobbled by an inordinate amount of debt.

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Private debt sinks societies. For no good reason. Make forgiving student debt part of a modern jubilee?!

The Big Idea about Private Debt (Steve Keen)

This is a talk I gave to the Northern Ireland Big Ideas Event organised by NICVA: the “Northern Ireland Council for Voluntary Action” (https://www.nicva.org/event/big-ideas-…). Unfortunately I ran out of time to finish my presentation on why a “Modern Debt Jubilee” is needed to escape from the current economic state of credit stagnation, but I covered why it is this–and not “secular stagnation” that explains the prevalence of low rates of economic growth globally.

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True but not strong.

How to Break the Power of Money (Korten)

Our current political chaos has a simple explanation. The economic system is driving environmental collapse, economic desperation, political corruption, and financial instability. And it isn’t working for the vast majority of people. It serves mainly the interests of a financial oligarchy that in the United States dominates the establishment wings of both the Republican and Democratic parties. So voters are rebelling against those wings of both parties—and for good reason. As a society we confront a simple truth. An economic system based on the false idea that money is wealth—and the false promise that maximizing financial returns to the holders of financial assets will maximize the well-being of all—inevitably does exactly what it is designed to do:

1. Those who have financial assets and benefit from Wall Street’s financial games get steadily richer and more powerful. 2. The winners use the power of their financial assets to buy political favor and to hold government hostage by threatening to move jobs and tax revenue to friendlier states and countries. 3. The winners then use this political power to extract public subsidies, avoid taxes, and externalize environmental, labor, health, and safety costs to further increase their financial returns and buy more political power. This results in a vicious cycle of an ever greater concentration of wealth and power in the hands of those who demonstrate the least regard for the health and well-being of others and the living Earth, on which all depend.

Fewer and fewer people have more and more power and society pays the price. A different result requires a different system, and the leadership for change is coming, as it must, from those for whom the current system does not work.

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“The agreements make global corporations immune to laws and regulations that can be said to adversely impact their profits.”

TTIP: The Suicide of Nations (PCR)

The TransAtlantic and TransPacific “partnerships” are the economic and financial counterpart to Washington’s military and foreign policy push for world hegemony. TTIP and TPP are neither partnerships nor trade agreements. They are instruments of financial imperialism that, if they come into effect, subordinate the sovereignty of countries to the profits of global corporations. The reason the “partnerships” are negotiated in secrecy without public discussions and the participation of the national legislatures is that the so-called agreements cannot stand the light of day. The reason is simple. The agreements make global corporations immune to laws and regulations that can be said to adversely impact their profits.

It makes no difference whether the laws protect the environment, the safety of food and workers or are part of the social fabric. If the laws impose costs that reduce profits, corporations can sue the governments in “corporate tribunals” in which the corporations themselves serve as judge and jury. This is no joke. Public Citizen reports that the agreements would greatly expand the privileges given to foreign corporations by the North American Free Trade Agreement under which $350 million has been paid out by governments to corporations because of costs of complying with toxic waste and logging rules, with $13 billion in claims pending.

Economist Michael Hudson cites a British study that public provision of health care, such as the UK’s National Health Service, is a TTIP target on the grounds that not only health care regulations but also public provision of health care harms the commercial interests of corporations. TTIP and TPP are tools for disenfranchising electorates and overturning democratic outcomes and for looting taxpayers via damage suits against governments for the costs of complying with health, safety, environmental, and social laws and regulations. The agreements place corporations above the laws of countries. The agreements have the potential of producing a worldwide sweatshop with starvation wages devoid of environmental and safety legislation.

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Curious ideas when coming from the Wall Street Journal.

How Global Elites Forsake Their Countrymen (Noonan)

On Wall Street, where they used to make statesmen, they now barely make citizens. CEOs are consumed with short-term thinking, stock prices, quarterly profits. They don’t really believe that they have to be involved with “America” now; they see their job as thinking globally and meeting shareholder expectations. In Silicon Valley the idea of “the national interest” is not much discussed. They adhere to higher, more abstract, more global values. They’re not about America, they’re about … well, I suppose they’d say the future. In Hollywood the wealthy protect their own children from cultural decay, from the sick images they create for all the screens, but they don’t mind if poor, unparented children from broken-up families get those messages and, in the way of things, act on them down the road.

From what I’ve seen of those in power throughout business and politics now, the people of your country are not your countrymen, they’re aliens whose bizarre emotions you must attempt occasionally to anticipate and manage. In Manhattan, my little island off the continent, I see the children of the global business elite marry each other and settle in London or New York or Mumbai. They send their children to the same schools and are alert to all class markers. And those elites, of Mumbai and Manhattan, do not often identify with, or see a connection to or an obligation toward, the rough, struggling people who live at the bottom in their countries. In fact, they fear them, and often devise ways, when home, of not having their wealth and worldly success fully noticed.

Affluence detaches, power adds distance to experience. I don’t have it fully right in my mind but something big is happening here with this division between the leaders and the led. It is very much a feature of our age. But it is odd that our elites have abandoned or are abandoning the idea that they belong to a country, that they have ties that bring responsibilities, that they should feel loyalty to their people or, at the very least, a grounded respect.

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“Did they think they can separate me from my kids without a fight? I fight corrupt US empire clowns all day, every day. Not even tired.”

Megaupload’s Dotcom To Seek A Review Of US Court’s Forfeiture Ruling (R.)

German tech entrepreneur and alleged internet pirate Kim Dotcom will seek a review of a Federal Court decision which rejected his bid to keep hold of millions of dollars in assets held in Hong Kong and New Zealand, his lawyer said. A three-judge panel of the 4th Circuit U.S. Court of Appeals ruled two to one on Friday that Dotcom could not recover his assets because by remaining outside the U.S., he was a fugitive, which disentitled him from using the resources to fight his case. Dotcom’s lawyer Ira P. Rothken said his client would seek a review of the decision in front of the full bench and, if necessary, petition the Supreme Court.

“This opinion has the effect of eviscerating Kim Dotcom’s treaty rights by saying if you lawfully oppose extradition in New Zealand, the U.S. will still call you a fugitive and take all of your assets,” Rothken said in an email to Reuters received on Sunday. Dotcom has been fighting extradition from New Zealand over charges of copyright infringement, racketeering and money laundering in the United States related to the Megaupload file-sharing site he founded in 2005. A New Zealand court ruled in December he could be extradited, but an appeal hearing has been set for later this month. Dotcom responded to the Federal Court ruling on Twitter. “Did they think they can separate me from my kids without a fight? I fight corrupt US empire clowns all day, every day. Not even tired.”

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The writedowns total down the road keeps growing rapidly.

A Year After The Crisis Was Declared Over, Greece Is Still Spiralling Down (G.)

In a side street in the heart of Athens, two siblings are hard at work. For the past year they have run their hairdressing business – an enterprise that was once located on a busy boulevard – out of a two-bedroom flat. The move was purely financial: last summer, as it became clear that Greeks would be hit by yet more austerity to foot the bill for saving their country from economic collapse, they realised their business would go bust if it continued operating legally. “We did our sums and understood that staying put made no sense at all,” says one sibling. “If we didn’t [offer] receipts, if we avoided taxes and social security contributions, we could just about make ends meet.”

They are far from being alone. A year after debt-stricken Greece received its third financial rescue in the form of international funding worth €86bn, such survival techniques have become commonplace. For a middle class eviscerated by relentless rounds of cuts and tax rises – the price of the country’s ongoing struggle to avert bankruptcy – the draconian conditions attached to the latest bailout are invariably invoked in their defence. Measures ranging from the overhaul of the pension system to indirect duties – slapped on beer, fuel and almost everything in between – and a controversial increase in VAT are similarly cited by Greeks now reneging on loan repayments, property taxes and energy bills.

Against a backdrop of monumental debt – €320bn, or 180% of GDP, the accumulation of decades of profligacy – fatalism is fast replacing pessimism on the streets. “Our country is doomed,” sighs Savvas Tzironis, summing up the mood. “Everything goes from bad to worse.” Close to half a million Greeks are believed to have migrated since the crisis begun, thanks to the searing effect of persistent unemployment (at just under 24%, the highest in Europe) and an economy that has shed more than a third of its total output over the past six years. The nation has been assigned some €326bn in bailout loans since May 2010 – the biggest rescue programme in global financial history. Yet the fear that it is locked in an economic death spiral was given further credence last week when Eurobank analysts announced that consumption and exports had also fallen, by 6.4% and 7.2%, in the second quarter of the year.

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And why should Larry Elliott not call a spade a spade? What’s happening to Greece is not some ‘policy mistake’, all parties involved know exactly what they do.

The Greek Crisis Will Flare Up Again. And Why Should It Not? (G.)

Greece has ceased to make headlines. A year ago, the TV cameras were trained on the protesters thronging the streets of Athens because there were fears that a crisis that had been steadily becoming more acute in the first half of 2015 could result in the single currency splintering. That threat was removed by a deal that involved a humiliating climbdown by the Syriza-led government. Greece received a bailout, but with harsh conditions attached. There were three obvious problems with that 2015 deal, which secured Greece its third bailout in five years. The first was that the new dose of austerity would make it more difficult for Greece to emerge from a slump just as severe as that which gripped the US in the 1930s.

The second was that Greece’s creditors were making unrealistic assumptions for growth and deficit reduction. The third was that sooner or later the Greek crisis would flare up again. It was a case of when, not if. It has not all been bad news over the past 12 months. Fears that yields on Greek bonds would soar after the UK’s Brexit vote did not materialise. Some of the tough capital controls that were imposed in the summer of 2015 to protect the banking system have been eased. There has been talk that by next summer it will be possible for the government in Athens to raise money in the world’s financial markets by selling Greek government bonds. All that said, though, the first two predictions have come true.

By last summer, Greece had suffered a five-year slump that was on a par with the damage caused to the US economy in the Great Depression. Yet the country’s creditors thought it was a good idea to suck even more demand out of the economy through spending cuts and tax increases. The result has been depressingly predictable. Far from there being a resumption of growth, the economy has continued to contract. Greece’s national output was 1.4% lower in the first three months of 2016 than it was a year earlier. Consumer spending was down by 1.3%. Nor, with confidence at rock bottom, is there much prospect of better times. Greece remains deep in recession.

[..] The IMF says that without debt relief, Greece’s debt could hit 250% of GDP by the middle of the century. Germany would prefer those discussions to be delayed until after its election in autumn next year. But the chances are that Greece will be back in the headlines before then.

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Oh, irony. Just a few days after I wrote about Greece’s 15 minutes of fame in Meanwhile in Greece.., both the Guardian and the NY Times happen to notice the same thing. “..ceased to make headlines..” , “..Attention dwindling..”

Aid and Attention Dwindling, Migrant Crisis Intensifies in Greece (NYT)

Seven months after the EU shut the doors to large numbers of newcomers, Greece remains Europe’s de facto holding pen for 57,000 people trapped amid the chaos. Many are living in a distressing limbo in sordid refugee camps on the mainland and on Greek islands near Turkey. A year after the world was riveted by scenes of desperate men, women and children streaming through Europe, international attention to their plight has waned now that the borders have been closed and they are largely confined to camps. Anti-immigrant sentiment has surged since last year in many countries, especially as people who entered Europe with the migrant flow are linked to crimes and, in a few cases, attacks planned or inspired by the Islamic State or other radical groups.

Neither the prosperous nations of Western and Northern Europe, where the refugees want to settle, nor Turkey, their point of departure for the Continent, are living up to their promises of help. [..] The ranks of those in limbo are most likely to grow despite a deal to resolve the crisis that took effect March 20 between the EU and Turkey. While the number of migrants entering Greece has dwindled from nearly 5,000 a day last year, hundreds have started crossing the Aegean Sea again after the July 15 coup attempt in Turkey. Few of the resources pledged by the EU to assist the asylum seekers and process their applications have actually come through, leaving the Greek authorities struggling to cope with a daunting humanitarian and logistical challenge that has fallen from view in the rest of Europe.

European Union member states have sent just 27 of the 400 asylum specialists and 24 of the 400 interpreters they had agreed to provide to process claims for refugees like Mrs. Madran. So far, 21,000 migrants have been registered for asylum; 36,000 have not. A union plan to ease Greece’s burden by relocating tens of thousands of asylum seekers to the Continent has also fizzled, with European countries taking less than 2,300 people.

The bottlenecks have overwhelmed many of the camps, especially on the Greek islands, where migrants arriving after the March 20 deal are supposed to be held until being deported to Turkey. That program has stalled because of legal challenges and because Greece must process each asylum application first. So far, 468 of the more than 10,000 people who have arrived since the deal took effect have been returned. Turkish monitors assigned to assist were fired by President Recep Tayyip Erdogan of Turkey after the coup attempt against him.

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“The cost for Greece since the beginning of the Refugee Crisis “is more than €2 billion, the EU has allocated so far €330million – not to the Greek government but to NGOs, mostly NGOs from abroad..” Makes you wonder how much of that €330million has actually been used to help refugees, and how much on NGO operating costs.

Germany To Send 3,000 Refugees Back To Greece (KTG)

I thought, EU members states were supposed to take 6,000 refugees per month from Greece – according to some forgotten EU Deal signed the European Commission and the EU member states. Reality teaches us, the deal will work the other way around. Member states will send refugees back to …Greece. Blame the Dublin III Agreement. Germany decided to send to Greece and specifically to Crete more than 3,000 refugees in first phase. Berlin considers that this number is “redundant” in its territory. According to local media ekriti.gr, the Greek government has adopted this German decision, while Migration Minister Yiannis Mouzalas chaired a revelant meeting in Herakleion recently and announced the transfer.

The refugees will start coming by plane initially in Heraklion and Chania in December. Mouzalas had said that they will come after the tourist season. Independent MEP Notis Marias also confirmed the transfer in an interview with Radio Kriti. The cost for Greece since the beginning of the Refugee Crisis “is more than two billion euro, the EU has allocated so far €330million – not to the Greek government but to NGOs, mostly NGOs from abroad,” ekriti notes. Meanwhile the influx from Turkey started to increase again, more than 650 refugees and migrants arrived last week. Athens is worried that Ankara will draw back from the EU-Turkey deal in October.

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Jul 202016
 
 July 20, 2016  Posted by at 9:09 am Finance Tagged with: , , , , , , , , ,  8 Responses »


Harris&Ewing Newsie, Washington DC 1920

To the Mattresses: Cash Levels Highest In Nearly 15 Years (CNBC)
The Financial System Is Breaking Down At An Unimaginable Pace (Black)
This ‘Market’ Discounts Nothing Except Monetary Cocaine (Stockman)
These Sicilian Mortgages Show How Hard It Is to Rescue Italian Banks (BBG)
Deal With Canada On The Brink as German Party Sues EU Over CETA (Exp.)
The Long, Sad, Corrupted Devolution Of The GOP (Intercept)
The World Is Taking Revenge Against Elites. When Will America’s Wake Up? (G.)
The Secret History of Glass-Steagall (WSJ)
We Need More Borders And More States (Mises Inst.)
June 2016 Was 14th Consecutive Month Of Record-Breaking Heat (G.)
This Year’s Record Arctic Melt Is a Problem For Everybody (Stone)

 

 

Breaking point.

To the Mattresses: Cash Levels Highest In Nearly 15 Years (CNBC)

Despite the post-Brexit market rally, fund managers have gotten even more wary of taking risks. The S&P 500 has jumped about 8.5% since the lows hit in the days after Britain’s move to leave the EU, but that hasn’t assuaged professional investors. Cash levels are now at 5.8% of portfolios, up a notch from June and at the highest levels since November 2001, according to the latest BofA Merrill Lynch Fund Manager Survey. In addition to putting money under the mattress, investors also are looking for protection, with equity hedging at its highest level in the survey’s history. Indeed, fear is running high as investors believe that global financial conditions are tightening, despite nearly $12 trillion of negative-yielding debt around the world and the U.S. central bank on hold perhaps until 2017.

In fact, fear is running so high that BofAML experts think that it’s helping fuel the recent market rally. “Record numbers of investors saying fiscal policy is too restrictive and the first underweighting of equities in four years suggest that fiscal easing could be a tactical catalyst for risk assets going forward,” Michael Hartnett, chief investment strategist, said in a statement. Positioning changed, with a rotation from euro zone, banks and insurance companies shifting to the U.S., industrials, energy, technology and materials stocks. Fund managers believe that so-called helicopter money will become a reality, with 39% now anticipating the move compared to 27% in June.

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“..the total sum of negative-yielding debt in the world has increased in the last sixteen days alone by an amount that’s larger than the entire GDP of Russia.”

The Financial System Is Breaking Down At An Unimaginable Pace (Black)

Now it’s $13 trillion. That’s the total amount of government bonds in the world that have negative yields, according to calculations published last week by Bank of America Merrill Lynch. Given that there were almost zero negative-yielding bonds just two years ago, the rise to $13 trillion is incredible. In February 2015, the total amount of negative-yielding debt in the world was ‘only’ $3.6 trillion. A year later in February 2016 it had nearly doubled to $7 trillion. Now, just five months later, it has nearly doubled again to $13 trillion, up from $11.7 trillion just over two weeks ago. Think about that: the total sum of negative-yielding debt in the world has increased in the last sixteen days alone by an amount that’s larger than the entire GDP of Russia.

Just like subprime mortgage bonds from ten years ago, these bonds are also toxic securities, since many of are issued by bankrupt governments (like Japan). Instead of paying subprime home buyers to borrow money, investors are now paying subprime governments. And just like the build-up to the 2008 subprime crisis, investors are snapping up today’s subprime bonds with frightening enthusiasm. We’ll probably see $15 trillion, then $20 trillion, worth of negative-yielding subprime government debt within the next few months. So this trend will continue to grow for now, until, just like in 2008, the bubble bursts in cataclysmic fashion. It took several years for the first subprime bubble to pop. This one may take even longer. But even still, we can already see the consequences today.

A few months ago I told you about the remarkable $3.4 trillion funding gap in the US pension system. Remember, we’re not talking about Social Security– that has its own $40+ trillion shortfall. I’m talking about private companies’ retirement pensions, or public service worker pensions at the city and state level. (By the way, this is NOT strictly a US phenomenon. Europe suffers its own $2 trillion pension shortfall.) There’s zero mathematical probability that these pensions will be able to meet their obligations. They’re already underfunded. And the problem is getting worse, thanks in part to this plague of low and negative interest rates.

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“Regardless of whether the November winner is Hillary or the Donald, there is one thing certain. There will be no functioning government come 2017.”

This ‘Market’ Discounts Nothing Except Monetary Cocaine (Stockman)

[..]..whether the central banks buy public debt from the inventories of the 23 prime dealers and other market speculators or directly from the US treasury makes no technical difference whatsoever. The end state of “something for nothing” finance is the same in both cases. In fact, “helicopter money” is just a desperate scam emanating from the world’s tiny fraternity of central bankers who have walked the financial system to the brink, and are now trying to con the casino into believing they have one more magic rabbit to pull out of the hat. They don’t. That’s because it takes two branches of the state to tango in the game of helicopter money.

The unelected monetary central planners can run the digital printing presses at whim, and continuously “surprise” and gratify the casino gamblers with another unexpected batch of the monetary drugs. That has been exactly the pattern of multiple rounds of QE and the unending invention of excuses to prolong ZIRP into its 90th month. The resulting rises in the stock averages, of course, were the result of fresh liquidity injections and the associated monetary high, not the discounting of new information about economics and profits. By contrast, helicopter money requires the peoples’ elected representatives to play.

That is, the Congress and White House must generate large incremental expansions of the fiscal deficit—so that the central bankers can buy it directly from the US treasury’s shelf, and then credit the government’s Fed accounts with credits conjured from thin air. To be sure, the cynics would say – no problem! When have politicians ever turned down an opportunity to borrow and spend themselves silly, and to than be applauded, not chastised, for the effort? But that assumes we still have a functioning government and that today’s politicians have been 100% cured of their atavistic fears of the public debt. Alas, what is going to cause helicopter money to be a giant dud – at least in the US – is that neither of these conditions are extant.

Regardless of whether the November winner is Hillary or the Donald, there is one thing certain. There will be no functioning government come 2017.

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Rewriting the law to save your banks?

These Sicilian Mortgages Show How Hard It Is to Rescue Italian Banks (BBG)

Down the cobbled streets of Palermo, past baroque churches and gothic palaces, a lesson is lurking for Italy’s government as it hatches a plan to save the country’s banks. Sicily’s biggest city is the focal point of a 2007 securitization of non-performing loans, or NPLs, that shows just how long it can take to resolve soured loans in the country. The deal, known as Island Refinancing, should also act as a warning for investors of the dangers of buying similar securities as Italian banks gear up to sell more of them. The Island bonds are backed by two portfolios of NPLs originated by a Sicilian bank that’s now a subsidiary of UniCredit SpA. Just under half of the loans originated in the 1990s and they include residential mortgages as well as loans financing hotels and industrial buildings.

Unlike other asset-backed securities where interest and principal are paid through cash flows from mortgage or auto credit borrowers, investors in NPL securitizations depend on getting money back from soured loans – typically through the courts. And that’s where the problem lies. A court may auction the loan collateral and use the proceeds to pay the bonds, but that is a slow process. Italy is almost as well known these days for its sluggish and cumbersome insolvency procedures as it is for the Leaning Tower of Pisa or the AC Milan soccer club. Italian bankruptcy proceedings last an average of 7.8 years, compared to an average of just over two years for the rest of Europe.

Efforts are currently being made to speed up the process, with Prime Minister Matteo Renzi saying recent reforms to insolvency laws will shorten recovery times on NPL collateral to as little as six months. Still, the thus-far glacial pace of cash collections from NPLs has resulted in multiple credit ratings downgrades for the Island Refinancing deal, which will expire in 2025.

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The time for trade deals is over.

Deal With Canada On The Brink as German Party Sues EU Over CETA (Exp.)

Centre-left Die Linke has launched legal action to block the controversial Comprehensive Economic and Trade Agreement (CETA) pact, saying it is unconstitutional under German law. The party’s attempt to torpedo the hated deal is just the latest in a series of devastating trade blows for the EU, which is unravelling following the Brexit vote. And it reveals once more the cavernous differences opening up between different member states which have effectively rendered the European project unworkable. Earlier this month Canada’s despairing Trade Minister Chrystia Freeland asked: “If the EU cannot do a deal with Canada, I think it is legitimate to say who the heck can it do a deal with?”

But now there is a very real prospect that CETA will be torpedoed before it has even left port in a development which will throw the future of a much bigger deal with America into serious doubt. Negotiations over the Transatlantic Trade and Investment Partnership (TTIP) have ground to a halt, with impatient American officials warning Brussels to stop dragging their heels. The US chief negotiator said the proposed deal was nowhere near as enticing to Washington now that Britain has left the bloc, comparing a Europe without the UK to an America without California. Britain will not be affected by either calamity after voting to leave the EU, and is now free to begin informal talks on sealing its own trade deals with Canada, the US and the rest of the world.

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Lincoln, too, was a Republican.

The Long, Sad, Corrupted Devolution Of The GOP (Intercept)

In August 1956, the Republican Party gathered in San Francisco to re-nominate President Dwight D. Eisenhower as its candidate in the upcoming presidential election. The party that year adopted a platform that emphasized that the GOP was “proud of and shall continue our far-reaching and sound advances in matters of basic human needs.” This included boasting that Eisenhower had overseen a hike in the federal minimum wage that raised incomes for 2 million Americans while expanding Social Security to 10 million more people and increasing benefits for 6.5 million others.

Today’s Republican Party has made weakening labor unions a priority, but the 1956 platform noted that under Eisenhower, “workers have gained and unions have grown in strength and responsibility, and have increased their membership by 2 millions.” It also touted an increase in federal funding for hospital construction and expanded federal aid for health care for the poor and public housing. The platform also pointed out that Eisenhower had asked for “the largest increase in research funds ever sought in one year” to tackle ailments like cancer and heart disease. Rather than opposing self-governance for Washington, D.C., 1956’s Republicans encouraged it, saying they “favor self-government national suffrage and representation in the Congress of the United States” for those living there.

The platform also asked Congress to submit a constitutional amendment establishing “equal rights for men and women.” The platform boasted proudly of the African-Americans who had been appointed to positions in Eisenhower’s administration, and of ending racial discrimination in federal employment. At no point did the document call for any restrictions on immigration; rather, by contrast, it asked Congress to consider an extension of the 1953 Refugee Act, which brought tens of thousands of war-weary European refugees to American shores. Dwight D. Eisenhower was the face of the Republican Party in the 1950s. He had served as the supreme commander of the Allied forces as they retook Europe from fascist militaries in the decade before.

Experiencing two global wars shaped Eisenhower’s worldview, turning him into an advocate of peace. Eisenhower cut the military budget by 27% following the Korean War, and used his bully pulpit to highlight the trade-offs of military spending. “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed,” he said in a 1953 speech. In his farewell address on January 17, 1961, he highlighted the rise of what he called a “military-industrial complex” — a war industry that he cautioned could exert “undue influence” on the government.

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When indeed?

The World Is Taking Revenge Against Elites. When Will America’s Wake Up? (G.)

A snapshot of America in the middle of June 2016. It is several days before the first great shock of the summer, the Brexit vote, and here in America, all is serene. The threat posed by Senator Bernie Sanders has been suppressed. The Republicans have chosen a preposterous windbag to lead them; the consensus is that he will be a pushover. For all the doubts and dissent of the last year, the leadership faction of the country’s professional class seem to have once again come out on top, and they are ready to accept the gratitude of the nation. And so President Barack Obama did an interview with Business Week in which he was congratulated for his stewardship of the economy and asked “what industries” he might choose to join upon his retirement from the White House.

The president replied as follows: “… what I will say is that – just to bring things full circle about innovation – the conversations I have with Silicon Valley and with venture capital pull together my interests in science and organization in a way I find really satisfying.” In relating this anecdote, I am not aiming to infuriate because the man we elected in 2008 to get tough with high finance and shut the revolving door was now talking about taking his own walk through that door and getting a job in finance. No. My object here is to describe the confident, complacent mood of the country’s ruling class in the middle of last month. So let us continue. On the morning after British voters chose to leave the EU, Obama was in California addressing an audience at Stanford University, a school often celebrated these days as the pre-eminent educational institution of Silicon Valley.

The occasion of the president’s remarks was the annual Global Entrepreneurship Summit, and the substance of his speech was the purest globaloney, flavored with a whiff of vintage dotcom ebullience. Obama marveled at the smart young creative people who start tech businesses. He deplored bigotry as an impediment that sometimes keeps these smart creative people from succeeding. He demanded that more power be given to the smart young creatives who are transforming the world. Keywords included “innovation”, “interconnection”, and of course “Zuckerberg”, the Facebook CEO, who has appeared with Obama on so many occasions and whose company is often used as shorthand by Democrats to signify everything that is wonderful about our era.

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“The law was seen as protecting the specialized securities firms from having to compete with large national banks..”

The Secret History of Glass-Steagall (WSJ)

The Republican party platform calls for a revival of the Glass-Steagall Act, a depression-era banking law repealed in 1999. Glass-Steagall was the brainchild of Sen. Carter Glass (D-VA), best known as the principal architect of the Federal Reserve system. It erected a firewall between deposit-taking/loan-making banks and securities activities such as underwriting and trading. Its original goal was to prevent three things: purchasing of risky securities with government-insured deposits, extending bad loans to shaky companies owned by a bank, and pushing underwritten securities onto naïve bank customers. The provision became law when the Banking Act of 1933 was passed within days of President Franklin Roosevelt taking office in March 1933 in an effort to restore public confidence in the banking system.

The same act created the Federal Deposit Insurance Corp., which insures bank deposits, as well as the Federal Open Market Committee, the monetary policy making board of the Federal Reserve. The act also banned banks from paying interest on checking accounts and granted the Fed authority to put ceilings on interest rates offered for other deposits. Far from resisting Glass-Steagall, Wall Street securities firms embraced and became its most vocal supporters. The law was seen as protecting the specialized securities firms from having to compete with large national banks funded by cheap retail and commercial deposits.

The law was strengthened by a 1956 law that put bank holding companies under the purview of the Federal Reserve and made it clear they could not control both a commercial bank and an investment bank. As the years passed, however, the wall separating securities firms and banks developed cracks—primarily because of pressure from banks wanting to expand into securities dealing. Banks won regulatory approval for their affiliates to underwrite government securities, mortgage-backed securities and commercial paper. They were allowed to provide brokerage services to customers and market insurance. Banks began providing advice and assistance on mergers, acquisitions and financial planning. All this occurred without the law being changed.

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The perks of decentralization.

We Need More Borders And More States (Mises Inst.)

In the context of trade and immigration, borders are often discussed as a means of excluding foreign workers and foreign goods. In one way of thinking, borders provide an opportunity for states to exclude private actors such as workers, merchants, and entrepreneurs. On the other hand, borders can also serve a far more endearing function, and this is found in the fact that borders represent the limits of a state’s power. That is, while borders may exclude goods and people, a state’s borders also often exclude other states. For example, East Germany’s border with West Germany represented the limits of the East German police state, beyond which the power of the Stasi to kidnap, torture, and imprison peaceful people was far more limited than it was within its native jurisdiction.

The West German border acted to contain the East German state. Similarly, the borders of Saudi Arabia delineate a limit to the Saudi regime’s ability to behead people for sorcery or for making critical remarks about the blood-soaked dictators known as the House of Saud. Even within a single nation-state, borders can illustrate the benefits of decentralization, as in the case of the Colorado-Nebraska border. On one side of the border (i.e., Nebraska) state police will arrest you and imprison you for possessing marijuana. They may kill you if you resist. On the other side of the border, the state’s constitution prohibits police from prosecuting marijuana users. The Colorado border contains Nebraska’s war on drugs.

Certainly, there are ways for regimes to extend their power even beyond their borders. This can be done by cozying up with the regimes of neighboring countries (or intimidating them), or through the organs of international quasi-state organizations. Or, as in the case of the US and EU, imposing broader policies upon a number of supposedly sovereign states. Nevertheless, thanks to the competitive nature of states, many states will often find it difficult to project their power into neighboring states, and thus borders represent a very-real impediment to a state’s power. This can then open the door to greater freedom, and even save lives as certain states impoverish or make war on their own citizens.

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When this streak is over everyone will think we’re safe.

June 2016 Was 14th Consecutive Month Of Record-Breaking Heat (G.)

As the string of record-breaking global temperatures continues unabated, June 2016 marks the 14th consecutive month of record-breaking heat. According to two US agencies – Nasa and Noaa – June 2016 was 0.9C hotter than the average for the 20th century, and the hottest June in the record which goes back to 1880. It broke the previous record, set in 2015, by 0.02C. The 14-month streak of record-breaking temperatures was the longest in the 137-year record. And it has been 40 years since the world saw a June that was below the 20th century average.

The string of record-breaking monthly temperatures began in April 2015, and was pushed along by a powerful El Niño, where a splurge of warm water spreads across the Pacific Ocean. But the effects of El Niño have receded, and the effects of global warming are clear, said Nasa’s Gavin Schmidt. “While the El Niño event in the tropical Pacific this winter gave a boost to global temperatures from October onwards, it is the underlying trend which is producing these record numbers,” he said.

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“..a Texas-sized chunk of sea ice has disappeared from our planet’s north pole between the early 1980s and today.”

This Year’s Record Arctic Melt Is a Problem For Everybody (Stone)

If your life has felt like a hot mess this year, you’re not alone. Same goes for the Arctic, which month after month has seen its ice cover contract to new lows. By late September, Arctic sea ice may reach its lowest extent since satellite record-keeping began. And that’s got scientists in a tizzy, because if there’s one thing geologic history has taught us, it’s that sudden drops in Arctic ice cover are often the tip of the proverbial iceberg for a whole slew of planetary feedbacks. It’s difficult to keep up with all the climate-related records our world has been smashing, so here’s a quick recap of what’s been happening up north.

At the close of 2015 (currently the hottest year in recorded history, but not for long), the Arctic was already sweating iceberg-shaped bullets, thanks to freakishly warm weather brought on by a combination of a monster El Niño and the underlying global warming trend. Then 2016 burst on the scene, with temperatures at the North Pole rising some fifty degrees Fahrenheit above normal. The Arctic stayed exceptionally hot through January and February. By the time March rolled around, the atmosphere was loaded with heat, and Arctic sea ice was already starting to look thin. NASA confirmed that it was indeed the smallest wintertime Arctic sea ice extent on the record books, peaking at some 5.6 million square miles (14.5 million square km).

Then, the Arctic started to melt. And it kept going, and going, and going, smashing record after record, month after month. As of this writing, we’ve just come off the fifth record-low sea ice month this year. Every month except March has marked an all-time monthly low, with June sea ice maxing out a full 100,000 square miles (260,000 square kilometers) below the previous record low, set in 2010. June sea ice was also 525,000 square miles (1.36 million square km) below the 1981-2010 average. Put another way, a Texas-sized chunk of sea ice has disappeared from our planet’s north pole between the early 1980s and today.

Read more …

Jun 292016
 
 June 29, 2016  Posted by at 8:06 am Finance Tagged with: , , , , , , , ,  1 Response »


Walker Evans Shoeshine stand, Southeastern US 1936

16 Reasons To Celebrate Brexit’s Win (Bandow)
Brexit, a Step in the Right Direction (OTM)
Brexit Pulls Central Bankers In Conflicting Directions (WSJ)
When Central Planning Fails (ZH)
Cameron Wins Brexit Breathing Space At Gloomy EU Summit (AFP)
Draghi Wishes for a World Order Populists Will Love to Hate (BBG)
Exposure Of Asian Economies To UK Banks Will Cause Sharp Slowdown (SCMP)
Japan Inc.’s Yen Nightmare Looms at Large Exporters (BBG)
Robot Lawyer Overturns 160,000 Parking Tickets In London And New York (G.)
Oil Is Still Heading to $10 a Barrel (A. Gary Shilling)
A Zombie Is A Terrible Thing To Behold (Jim Kunstler)
Elites, ‘You’re Fired!’ (Dmitry Orlov)
The World Is Rejecting Globalization (Bernie Sanders)
Dutch PM Rutte Wants ‘Binding’ Assurances Over EU’s Ukraine Deal (R.)

A tas less Brexit than the past few days. Since most of the ‘journalism’ is so ‘end of the world’ one-sided, let’s start with some different views.

‘Doug Bandow is a former Special Assistant to President Ronald Reagan and author of Foreign Follies: America’s New Global Empire. He is a Senior Fellow at the Cato Institute.’

16 Reasons To Celebrate Brexit’s Win (Bandow)

1. Average folks took on the commanding heights of politics, business, journalism and academia and triumphed. Obviously, the “little guy” isn’t always right, but the fact he can win demonstrates that a system whose pathways remain open to those the Bible refer to as “the least of these.” The wealthiest, best-organized and most publicized factions don’t always win.

2. Told to choose between economic bounty and self-governance, a majority of Britons chose the latter. It’s a false choice in this case, but people recognized that the sum of human existence is not material. The problem is not just the decisions previously taken away from those elected to govern the UK; it’s also the decisions that would have been taken away in the future had “Remain” won.

3. Those governed decided that they should make fundamental decisions about who would rule over them. The Eurocrats, a gaggle of politicians, bureaucrats, journalists, academics, lobbyists and businessmen were determined to achieve their ends no matter what the European people thought. A constitution rejected? Use a treaty. A treaty rejected? Vote again. A busted monetary union? Force a political union. And never, ever consult the public. No longer, said the British.

13. Schadenfreude is a terrible thing, but almost all of us glory in the misfortune of at least some others. The recriminations among the Remain camp in Britain are terrible to behold. Labour Party tribunes blame their leader Jeremy Corbyn, whose Euroskeptic past created suspicions inflamed by his criticisms of the EU while nominally praising it. His supporters blame the Scottish nationalists for not turning out their voters. Former Liberal-Democrat Party leader and deputy Prime Minister Nick Clegg trashed Cameron and Chancellor of the Exchequer George Osborne for seeking political advantage by holding the referendum. The Scots are mad at the English. Irish “republicans” in Northern Ireland also are denouncing the English, while their longtime unionist rivals are trashing the republicans. The young are blaming the old for ruining their futures. Apparently, America isn’t the only home for myopic bickering.

14. Sometimes the advocate of a lost cause triumphs. Nigel Farage has been campaigning against the EU forever, it seems. Yet every advance appeared to trigger a retreat. His United Kingdom Independence Party picked up support, but then had to shed some of those whose views really were beyond the pale. UKIP was able to break into the European Parliament, which it hated, but won only one seat at Westminster, despite receiving 3.9 million votes, or 12.6% of the total, in last year’s election. One reason was that Cameron and the Tories stole his issue, promising a referendum on the EU—in which they then opposed separation. Election night he admitted that it looked like the UK would choose to remain. Except the British people ended up taking his advice.

Read more …

From Charles’ “correspondent” Ron. Brexit as a natural phenomenon. “I believe we have entered a critical but wonderful age, the age of reemergence of decentralization and decentralized governance; may we preserve this opportunity for the gift that it is to life, liberty and property.”

Brexit, a Step in the Right Direction (OTM)

“Mankind’s fundamental quest is to survive and prosper by solving scarcity. BREXIT is simply a modern example of an old pattern of behavior that seeks to resolve scarcity, (the shrinking pie of economic opportunity and ownership), through reconfiguration of relationships to reallocate resources to enable more equitable equilibrium in supply and demand. As a prelude to BREXIT, housing in Britain, in particular, had become out of reach for those that have labored under the assumption that hard work, education, and a good job would lead to an ability to own a home, which many young Britons now find economically out of their reach; many Britons blame the government’s monetary policy of 0% interest rates for inflation and unaffordable housing.

In another sign of frustration, a few years ago a graffiti sign expressed a sentiment of the youth in Britain, one of them posted at Bell Lane near Liverpool St. Station, it read: ‘Sorry, the lifestyle you ordered is out of stock.’ The Bank of England has continued policies that have contributed to the exasperation expressed through the referendum, this along with the burdens of having an open country and economy that increased labor supply which in turn increased demand for housing and available credit to driving the asset bubble. This type of scarcity, being seen in Britain, is very common throughout history and is generally driven by the confluence of interests that connects and drives centralized, unified policies between bankers, merchants (in today’s world global corporations) and governments.

Turning back the clock a bit, I would like to include a couple of quotes by an amazingly brilliant and eloquent commentator in economics, Fredic Bastiat in his writings from 1850: 1) “I do not dispute their right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law – by force – and to compel us to pay for them with our taxes.” 2) “Self-preservation and self-development are common aspirations among all people. And if everyone enjoyed the unrestricted use of his faculties and the free disposition of the fruits of his labor, social progress would be ceaseless, uninterrupted, and unfailing. But there is also another tendency that is common among people. When they can, they wish to live and prosper at the expense of others.”

Read more …

Currency wars with an twist.

Brexit Pulls Central Bankers In Conflicting Directions (WSJ)

ECB President Mario Draghi urged central banks to better coordinate policies to confront the problem of ultralow inflation in an era of slow global growth, underscoring the conundrum he and his associates face in the wake of Britain’s vote to leave the European Union. The guardians of the global monetary system face conflicting pressures as they seek to support their economies amid new turbulence. They also run the risk that their efforts will work at odds with each other and destabilize the financial system. Central banks should examine whether their policies are “properly aligned,” Mr. Draghi said at an ECB conference in Portugal. He further warned that currency devaluations aimed at boosting national competitiveness are a “lose-lose” for the global economy.

“In a globalized world, the global policy mix matters—and will likely matter more as our economies become more integrated,” Mr. Draghi said. “The speed with which monetary policy can achieve domestic goals inevitably becomes more dependent on others.” His warning resonated as central banks try to respond to the looming Brexit. Last week’s vote sent currencies spinning, pushing up the dollar and Japanese yen and driving down the euro and the British pound. It also sent investors away from stocks and risky bond investments. Markets settled on Tuesday after two days of sharp selling of risky assets. The Bank of England faces the risk of recession paired with the threat of inflation. If it lowers interest rates to boost growth, it could put additional downward pressure on its currency which stirs inflation. If it stands still, economic growth could suffer.

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Diminishing returns on the biggest debt drive in history will diminish with a vengeance.

When Central Planning Fails (ZH)

Things have not been going according to plan for Kuroda-san and his policy-making ‘Peter-Pan’s in Japan. Since The Bank of Japan unleashed NIRP on its ‘saving’ community – which, according to the textbooks would force money to reach for riskier investments, pumping stocks up, or flush cash into inflationary consumption – stock prices have collapsed and bond prices have exploded… In fact, in six months, bonds are outperforming stocks by a central-bank-credibility-crushing 70%!!! Rate cuts…not working.

And it’s not just The BoJ that is struggling – since The Fed hiked rates, The S&P is down 3.5% and Treasuries are up 16%!!

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Behind the rhetoric, the EU is powerless to demand on the timeline. Moreover, guys like Juncker and Tusk are starting to fear for their cushy jobs.

Cameron Wins Brexit Breathing Space At Gloomy EU Summit (AFP)

EU leaders gave Britain breathing space Tuesday by accepting it needed time to absorb a shock Brexit vote before triggering a divorce but insisted the crunch move could not wait months. A humiliated Prime Minister David Cameron came face-to-face with European colleagues for the first time since last week’s vote at a Brussels summit which leaders said was “sad” but pragmatic. Trillions of dollars have been wiped off world markets since Thursday’s vote to leave the EU, while the United Kingdom’s future has been thrown into doubt after Scotland said it would push for a new independence referendum. Further shockwaves juddered through British politics as Jeremy Corbyn, leader of the main opposition Labour party, vowed to fight on despite losing a crushing no-confidence vote among his party’s lawmakers.

Thousands of people took to the streets of London, which voted overwhelmingly to stay in the EU, to protest against the referendum result, waving EU flags and placards saying: “Stop Brexit”. After hours of talks in Brussels, EU President Donald Tusk said that he understood that time was needed “for the dust to settle” in Britain before the next steps can be taken. But reflecting wider concerns of a domino effect of other states wanting to leave, EC president Jean-Claude Juncker said Britain did not have “months to meditate”. He set a clear timetable for triggering Article 50, the EU treaty clause that begins the two-year withdrawal process, after Cameron’s successor takes office in early September. Juncker said that if the new prime minister was a pro-remain figure, Article 50 should be activated “in two weeks after his appointment” – but if it was a supporter of the leave campaign, “it should be done the day after his appointment,” he added.

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Note how the term ‘populist’ is regurgitated by media like Bloomberg, and then applied to anyone ‘we’ are supposed to eye with suspicion. Beppe Grillo, Nigel Farage, Hugo Chavez, Podemos, there’s a long list by now, and all they have in common is resistance to ‘The Model’. Problem of course is, when used this way, a term loses its meaning. But for now, everyone takes for granted that anyone who’s a Euroskeptic is also per definition a populist.

Draghi Wishes for a World Order Populists Will Love to Hate (BBG)

Mario Draghi has just pushed the boundaries of central banking further into the realm of globalization, at a time when globalization is on the run. Following the work of Reserve Bank of India Raghuram Rajan and others, the ECB president on Tuesday became the most senior global central banker so far to call for more explicit policy cooperation between jurisdictions. Draghi’s aim is to mitigate the damaging cross-border side-effects brought on by the combination of monetary activism and tighter global financial links. “We have to think not just about whether our domestic monetary policies are appropriate, but whether they are properly aligned across jurisdictions,” Draghi said at the ECB’s annual policy forum in Sintra, Portugal. “In a globalized world, the global policy mix matters.”

While Draghi made no explicit reference in the speech to the U.K.’s June 23 decision to quit the EU, a powerful rejection by voters of globalization, he told European leaders just hours later that he leans toward the more pessimistic forecasts of the impact of Britain’s vote on growth in the rest of the region, according to a document obtained by Bloomberg News. [..] Policy coordination is a laudable thought as long as it’s not taken too far, said Omair Sharif at Societe Generale in New York. “What he’s getting at is simply the idea that we don’t have a great understanding of all the financial linkages and capital flows,” Sharif said. “That certainly does call for better understanding among central banks, not necessarily coordinated policies.”

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It was all borrowed growth anyway. And you can’t borrow growth.

Exposure Of Asian Economies To UK Banks Will Cause Sharp Slowdown (SCMP)

Asian economies may slow down sharply and currencies may be pushed broadly lower as the Brexit contagion hits Asia, with Hong Kong likely to fall into a recession and the Chinese yuan to decline further, according to analysts. Britain’s dramatic decision to break from the European Union has roiled financial markets and sent shockwaves across the globe. Asian economies could soon feel deeper pains through several channels, including the financial sector, trade, investor confidence, and investor psychology, according to analysts from Nomura on Tuesday. “It’s not a temporary contagion. There are going to be several waves [on Asia],” said Rob Subbaraman at Nomura in a conference call.

Subbaraman said his team had slashed GDP growth forecasts for all major economies in the region and put Asia’s aggregate growth at 5.6% in 2016, down from a previous projection of 5.9%. In the region, Hong Kong may be hit the most, with its 2016 GDP likely to shrink by 0.2%, compared with a previous estimate of 0.8% growth. In 2015, Hong Kong’s economy grew by 2.4%. Singapore’s projected growth rate for 2016 was also cut sharply to 1.1%, versus an estimate of 1.8% previously. “Hong Kong and Singapore are both financial hubs and very exposed to UK banks,” said Subbaraman. “They also have managed exchange rates, which give central banks less leeway in rate policy. There is also a risk that the HIBOR (Hong Kong Interbank Offered Rate) rates could start rising.”

In particular, the reasons that they forecast an “outright recession” for the Hong Kong economy are mainly related to a stronger Hong Kong dollar, which is rising with the US dollar amid global risk aversion. Hong Kong’s reliance on exports also leaves it exposed to Brexit risks, as the city’s merchant exports to the UK and the rest of the EU accounted for 14% of GDP in 2015, the highest in Asia, Nomura analysts said.

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More currency wars with more twist.

Japan Inc.’s Yen Nightmare Looms at Large Exporters (BBG)

For a sense of how much the surging yen will hurt Japanese earnings, look at the gap between where companies expected the currency to trade and where it actually is. On average, large manufacturers calculated their earnings forecasts assuming the yen would be about 114 per dollar, based on data from the Bank of Japan. With the yen’s latest rally, the gap with that forecast is the widest since the global financial crisis in 2008.

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Cities won’t be happy with this. Parking tickets are a large source of income.

Robot Lawyer Overturns 160,000 Parking Tickets In London And New York (G.)

An artificial-intelligence lawyer chatbot has successfully contested 160,000 parking tickets across London and New York for free, showing that chatbots can actually be useful. Dubbed as “the world’s first robot lawyer” by its 19-year-old creator, London-born second-year Stanford University student Joshua Browder, DoNotPay helps users contest parking tickets in an easy to use chat-like interface. The program first works out whether an appeal is possible through a series of simple questions, such as were there clearly visible parking signs, and then guides users through the appeals process.

The results speak for themselves. In the 21 months since the free service was launched in London and now New York, DoNotPay has taken on 250,000 cases and won 160,000, giving it a success rate of 64% appealing over $4m of parking tickets. “I think the people getting parking tickets are the most vulnerable in society. These people aren’t looking to break the law. I think they’re being exploited as a revenue source by the local government,” Browder told Venture Beat. The bot was created by the self-taught coder after receiving 30 parking tickets at the age of 18 in and around London. The process for appealing the fines is relatively formulaic and perfectly suits AI, which is able to quickly drill down and give the appropriate advice without charging lawyers fees.

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Shilling’s not had his strongest year so far, but duly noted.

Oil Is Still Heading to $10 a Barrel (A. Gary Shilling)

Back in February 2015, the price of West Texas Intermediate stood at about $52 per barrel, half of its 2014 peak. I argued then that a renewed decline was coming that could drive it below $20, a scenario regarded by oil bulls as unthinkable. But prices did fall further, dropping all the way to a low of $26 in February. Since then, crude rallied to spend several weeks flirting with $50 per barrel, a level not seen since last year. But it won’t last; I’m sticking to my call for prices to decline anew to $10 to $20 per barrel. Recent gains have little to do with the fundamentals that led to the collapse in the first place.

Wildfires in the oil-sands region in Canada, output cuts in Nigeria and Venezuela due to political unrest, and hopes that American hfracking would run out of steam are the primary causes of the recent spurt. But the world continues to be awash in crude, and American frackers have replaced the OPEC as the world’s swing producers. The once-feared oil cartel is, to my mind, pretty much finished as an effective price enforcer. Even OPEC’s leader, Saudi Arabia, is acknowledging the new reality by quashing recent attempts to freeze output, borrowing from banks and preparing to sell a stake in its Aramco oil company as it tries to find new sources of non-oil revenue.

The Saudis and their Persian Gulf allies continue to play a desperate game of chicken with other major oil producers. Cartels exist to keep prices above equilibrium, which encourages cheating as cartel members exceed their allotted output and other producers take advantage of inflated prices. So the role of the cartel leader, in this case Saudi Arabia, is to cut its own output, neutralizing the cheaters to keep prices up. But the Saudis suffered market-share losses from their previous production cuts. OPEC has effectively abandoned restraints, with total output soaring to as high as 33 million barrels per day at the end of last year:

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“..a zombie holding a bag of dog-shit is like unto the end of the world..”

A Zombie Is A Terrible Thing To Behold (Jim Kunstler)

The politics of Great Britain are now falling apart landslide-style. Since just about everybody in or near power can be blamed for the national predicament, there’s nobody to turn to, at least not yet. The Labour party just acted out The Caine Mutiny, starring Jeremy Corbyn as Captain Queeg. The Tory Cameron gave three months notice without any plausible replacement in view. Now Cameron’s people are hinting in the media that they can just drag their feet on Brexit, that is, not do anything to enable it from actually happening for a while. Of course, that’s what the monkeyshines of banking and finance have done: postponed the inevitable reckoning with the realities of our time: growing resource scarcity, population overshoot, climate change, ecological holocaust, and the diminishing returns of technology.

Britain illustrates the problem nicely: how to produce “wealth” without producing wealth. It’s called “the City,” their name for the little district of London that is their Wall Street. In the absence of producing real things, the City became the driver of the UK’s economy, a ghastly parasitical organism that functioned as the central transfer station for the world’s swindles and frauds, churning the West’s dwindling residual capital into a slurry of fees, commissions, arbitrages, rigged casino bets, and rip-offs. In the process, it enabled the ECB to run the con-job that the EU became, with the fatal distortions of credit that have put its members into a ditch and sent the private European banks off a cliff, Thelma and Louise style.

The next stage of this protean global melodrama is what happens when currencies and interest rates become completely unglued from their assigned roles as patsies in financial racketeering. Sooner or later we’ll know what’s going on in the vast shadowy gloaming of “derivatives,” especially the “innovative” arrangements that affect to be “insurance” against losses in currency and interest rate “positions” — bets made on the movements of these things. When currencies rise or fall quickly, these so-called “swaps” are “triggered,” and then some hapless institution is left holding a big bag of dog-shit. A zombie is a terrible thing to behold, but a zombie holding a bag of dog-shit is like unto the end of the world.

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Dmitry uses the same definition of fascism I did the other day. More people should, because it tells you who the real fascists are.

Elites, ‘You’re Fired!’ (Dmitry Orlov)

• Patriotism is one’s love of one’s native land and people. It is a natural, organic result of growing up in a certain place among a certain people, who have also grown up there, and who pass along a cultural and linguistic legacy that they all love and cherish. This does not imply that those not of one’s family, neighborhood or region are in any way inferior, but they are not one’s own, and one loves them less.

• Nationalism is a synthetic product generated using public education and is centered around certain hollow symbols: a flag, an anthem, some yellowed pieces of paper, a few creation myths and so on. It is supported by certain rituals (parades, speeches, handing out of medals) that comprise a civic cult. The purpose of nationalism is to support the nation-state. Where nationalism serves the needs of one’s native land and people, nationalism and patriotism become aligned; when it destroys them, nationalism becomes the enemy and patriots form partisan movements, rise up and destroy the nation-state.

• Fascism is the perfect melding of the nation-state and corporations, in the course of which the distinction between public and private interests becomes erased and corporations come to dictate public policy. An almost perfect expression of fascism is the recent transatlantic and transpacific trade agreements negotiated in secret by the Obama administration, which at the moment, to everyone’s great relief, seem to be dead in the water.

It should be obvious that fascism has to be defeated, and if we were to pick just one perfectly good reason to fire the transatlantic elites then it is to thwart this corporate power grab. But it does not stop there, because nationalism and patriotism are also in play. Patriotism is a natural, core human value without which all you have is a rootless population shifting about opportunistically. Nationalism is a relatively recent innovation (nation-states are a 17th century invention) and as such a dangerous one, but in the case of some of the older and more successful nation-states it does provide significant benefits: a cherished cultural tradition anchored to a national language and literature, the ability to keep the peace and to repel outside aggression. And then there is the EU, with its flag depicting a constellation of stars that are obviously orbiting something—something that could only be a black hole, since it is invisible.

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Bit by bit, Brexit gets defined in its real perspective. Bernie Sanders needs numbers too much to make his case, but the case is obvious.

The World Is Rejecting Globalization (Bernie Sanders)

Surprise, surprise. Workers in Britain, many of whom have seen a decline in their standard of living while the very rich in their country have become much richer, have turned their backs on the EU and a globalized economy that is failing them and their children. And it’s not just the British who are suffering. That increasingly globalized economy, established and maintained by the world’s economic elite, is failing people everywhere. Incredibly, the wealthiest 62 people on this planet own as much wealth as the bottom half of the world’s population — around 3.6 billion people. The top 1% now owns more wealth than the whole of the bottom 99%. The very, very rich enjoy unimaginable luxury while billions of people endure abject poverty, unemployment, and inadequate health care, education, housing and drinking water.

Could this rejection of the current form of the global economy happen in the United States? You bet it could. During my campaign for the Democratic presidential nomination, I’ve visited 46 states. What I saw and heard on too many occasions were painful realities that the political and media establishment fail even to recognize. In the last 15 years, nearly 60,000 factories in this country have closed, and more than 4.8 million well-paid manufacturing jobs have disappeared. Much of this is related to disastrous trade agreements that encourage corporations to move to low-wage countries. Despite major increases in productivity, the median male worker in America today is making $726 dollars less than he did in 1973, while the median female worker is making $1,154 less than she did in 2007, after adjusting for inflation.

Nearly 47 million Americans live in poverty. An estimated 28 million have no health insurance, while many others are underinsured. Millions of people are struggling with outrageous levels of student debt. For perhaps the first time in modern history, our younger generation will probably have a lower standard of living than their parents. Frighteningly, millions of poorly educated Americans will have a shorter life span than the previous generation as they succumb to despair, drugs and alcohol. Meanwhile, in our country the top one-tenth of 1% now owns almost as much wealth as the bottom 90%. 58% of all new income is going to the top 1%. Wall Street and billionaires, through their “super PACs,” are able to buy elections.

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This makes it look like Rutte plays hardball, or almost. In reality, he’s looking for ways to disregard the outcome of the Dutch referendum. Already, while the applicable law says that the outcome should be implemented by the government as soon as possible, Rutte just keeps pushing it forward. After July 1, when Holland is no longer chair of the EU, pressure will rise on both sides. But if Rutte tries to sign the Ukraine deal despite the referendum, ‘binding assurances’ or not, he should be voted out of office ASAP. The Dutch people said NO, and Rutte can‘t turn that into a YES.

Dutch PM Rutte Wants ‘Binding’ Assurances Over EU’s Ukraine Deal (R.)

Dutch Prime Minister Mark Rutte asked European Union leaders on Tuesday for “legally binding” assurances to address his country’s concerns over a trade and association deal with Ukraine and said The Hague would block it otherwise. The Netherlands is the only EU state not to have ratified the bloc’s agreement on closer political, security and trade ties with Kiev following a referendum in April in which the Dutch voted overwhelmingly to reject it. The agreement with Kiev, reached after Russia annexed Crimea from Ukraine in March 2014 and then backed rebels fighting government troops in the east of the country, is being provisionally implemented now, but its future hinges on the Netherlands.

“What we need is a legally binding solution, which will address the many worries and elements of the discussion in the Netherlands leading up to the referendum,” Rutte said after an EU leaders’ summit in Brussels to discuss the aftermath of Britain’s vote last week to leave the bloc. The debate around the referendum in the Netherlands, which showed dissatisfaction with Rutte’s government and policy-making in Brussels, zeroed in on whether the agreement with Kiev would herald EU membership for Ukraine and its 45 million people. “The exact form – I don’t know yet,” Rutte said. “It could be that we have to change the text, it could be that we can find a solution which will not involve changing the text of the association agreement. I don’t know yet.

“If I am not able to achieve that … we will not sign,” he said. “We will try to find a solution, it will be difficult, the chances are small that we will get there but I think we should try.” The whole deal could be derailed should The Hague refuse to ratify it, but a senior EU official said he hoped this could be solved by the end of the year.

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