Pablo Picasso Cafe Royan [The Coffee] 1940
How much of this has any use to society?
It happens every three years: The Bank for International Settlements released its Triennial Central Bank Survey about the global foreign exchange (FX) and over-the-counter (OTC) derivatives markets, as it occurred in April. The numbers are ginormous, and get more ginormous with every survey, with trading volume measured in trillions of dollars per day. This is a huge data trove, and I will focus here on global FX trading. To start with, there are the amounts. Currencies are traded in pairs, such as the US dollar against the euro. In April 2019, trading in FX markets reached $6.59 trillion per day, up 30% from the prior survey period, April 2016. Trades with the USD on one side of the trade averaged $5.82 trillion per day in April 2019. This was up 31% from the daily average in April 2016 and was over five times the daily average in April 2001:
The sudden appearance of the euro in 2001 as the second largest currency out of nowhere indicates that at that time, it had just replaced five currencies, including the biggie, the Deutsche Mark. The chart above shows the top 16 most traded currencies. Four have a significant share – USD, EUR, Japanese yen (JPY), and British Pound (GBP). The remaining 12 of the top 16 currencies are the limp spaghetti at the bottom of the chart, including the Chinese renminbi (CNY). In terms of the share that a currency is on one side of a trade, the US dollar remains total King, at 88.3%.
Ohm get real: “..Williams has the unique task of overseeing regulation of Wall Street and execution of monetary policy.”
Wild swings this week in U.S. money markets have raised fresh concerns about whether the New York Federal Reserve under John Williams has lost its deft touch with markets. The New York Fed had to intervene in cash markets this week when the repo rate, a key measure of liquidity in the global banking system, sky-rocketed, forcing the Fed to make an emergency injection of more than $125 billion on Tuesday and Wednesday. A key interest rate the Fed aims to influence also broke above the central bank’s target range on Tuesday for the first time since the financial crisis. “What has happened in the repo market is far from a minor problem,” said Ward McCarthy, chief financial economist for Jefferies. “That’s a financial crisis waiting to happen if they don’t get that under control.”
As the head of the New York Fed, Williams has the unique task of overseeing regulation of Wall Street and execution of monetary policy. [..] Fed Chair Jerome Powell defended the central bank’s response to the liquidity crunch on Wednesday, saying officials saw the cash shortage coming and “took appropriate actions” to address the issue. “We don’t see this as having any implications for the broader economy,” Powell told reporters after the Fed announced at the close of a two-day policy meeting that it would reduce its benchmark overnight lending rate to a range of 1.75% to 2.00%. “We took appropriate actions to address those pressures and those measures were successful. If we experience another episode in money markets we have the tools to address those pressures.”
Is this one of those things that will continue into 2050?
Federal prosecutors and regulators are expanding their already aggressive investigations of allegedly fraudulent precious metals trades at J.P. Morgan Chase to other U.S. markets and financial firms, CNBC has learned. The broader inquiry into market manipulation of all kinds comes amid a spike in criminal prosecutions and civil actions in the past year involving so-called “spoofing” in the precious metals markets. Prosecutors have broadened their investigation in part due to information received from traders questioned for spoofing-related charges. Information from those traders has led to criminal charges against other individuals, according to people familiar with the probes who spoke with CNBC on the condition of anonymity due to the nature of the ongoing investigations.
The widening inquiry is being led by the Justice Department and the U.S. Commodity Futures Trading Commission as they continue their pursuit of individuals and firms for manipulating U.S. markets. The scope of the investigations has grown to the point where the criminal fraud division of the Justice Department expects to add personnel to the existing team to assist with the investigations and prosecutions of cases.Spoofing is the practice of a trader placing a buy or sell order for a commodity or stock with the intent to cancel the order before it can be executed. The goal of the tactic is to affect the price of the futures contract or share to benefit a preexisting trading position.
At least JPMorgan isn’t doing anything new…
This month in London marks the 100th anniversary of the first “London Gold Fixing”, the infamous daily meeting of a secretive cartel of bullion banks which has met since 1919 to set benchmark gold prices used throughout the international gold market, a meeting which continues to this day through its thinly disguised successor, the LBMA Gold Price auction. London gold price benchmarks are critically important to the global gold market because they are used as a valuation source for everything from ISDA gold interest rate swap contracts to gold-backed Exchange Traded Funds (ETFs), and everything from OTC gold contracts to transaction reference prices used by physical bullion dealers when purchasing gold bars and gold coins from refineries and suppliers.
Since 2015, the London Gold Fixing has been known as the LBMA Gold Price following a rush by the London Bullion Market Association (LBMA) bullion banks to patch over the then scandalized ‘Fixing’ in a smoke and mirrors and circle the wagons relaunch and renaming exercise. The collusive Gold Fixing first formally came into existence on 12 September 1919 when the Bank of England tapped its favorite bankers N.M. Rothschild & Sons to be the daily Fixing’s permanent chairman. Rothschild and the Bank of England had been joined at the hip since the early 1800s and would continue to be so in the Gold Fixing throughout the next century.
[..] For the next 85 years from its inception in September 1919, the Gold Fixing occurred daily at Rothschild’s headquarters in New Court, St. Swithins Lane, across the road from the Bank of England, with five men from five bullion banks religiously meeting at 10:30 am each morning. After the collapse of the London Gold Pool in 1968, the Gold Fixing moved to a twice per day pricing with an extra 3:00 pm meeting added by the fixers to ‘watch over’ the US morning hours gold market.
Beijinng needs dollars, guys.
Chinese conglomerates that had gone on a debt-fueled buying binge over the past decade but have come under heavy pressure from the government to sell their overseas holdings in order to reduce their astronomical debts – well, they’re doing it. In the US, Chinese conglomerates have dumped $26 billion in assets so far in 2019, up from $8 billion in the full year of 2018. Globally, Chinese companies have agreed to sell about $40 billion in overseas assets so far this year. This now exceeds the already heavy pace of selling for the full year of 2018, which totaled $32 billion, according to data from Dealogic cited by the Financial Times. But the buying hasn’t totally stopped: So far this year, Chinese companies have acquired $35 billion in assets globally.
This made Chinese companies a net seller of overseas assets for the first time in the data going back to 2009. In 2015, Chinese conglomerates sold only $10 billion of overseas assets but acquired $100 billion of assets, for a net increase of $90 billion. In 2016, the peak of China’s debt-fueled, haphazard, glory-driven acquisition binge, these conglomerates acquired over $200 billion in assets overseas, as observers scratched their heads, while sellers laughed all the way to the bank.
Johnson says he wants to keep plans secret, EU says that’s because he has no plans. They haven’t seen any.
Boris Johnson has 12 days to set out his Brexit plans to the EU, according to Finland’s prime minister. Antti Rinne said he and French President Emmanuel Macron agreed the UK needed to produce the proposals in writing by the end of September, adding if not, “then it’s over”. Finland currently holds the EU’s rotating presidency. A Downing Street source said: “We will continue negotiating and put forward proposals at the appropriate time.” Mr Johnson has said a deal is possible at a crucial summit of EU leaders on 17 October, but he has insisted Brexit will happen by the 31 October deadline, even if a deal is not agreed.
The UK government said talks with the EU have been making progress since Mr Johnson came into No 10 in July. It said it had put forward “a number of proposals” as alternatives to the Irish border backstop – the policy aimed at preventing the return of a hard border on the island of Ireland and a key sticking point in former PM Theresa May’s Brexit deal. But Mr Johnson has repeatedly refused to reveal details of the proposals in interviews, saying he did not want to negotiate in public. The EU has continued to criticise the UK for not putting any plans in writing.
From CBS: “Sixteen states have sued family members by name, alleging they steered Purdue while draining more than $4 billion from the company since 2007.”
OxyContin maker Purdue Pharma LP on Wednesday asked a U.S. bankruptcy judge to halt for roughly nine months more than 2,600 lawsuits alleging the company and its controlling Sackler family helped fuel the U.S. opioid crisis, according to court documents. In addition to seeking a pause in widespread litigation against it, Purdue also asked U.S. Bankruptcy Judge Robert Drain to shield the wealthy Sacklers from related opioid lawsuits they face. Purdue filed for Chapter 11 bankruptcy protection on Sunday after reaching an outline of a deal it estimated to be valued at more than $10 billion with states and local governments that brought the bulk of the cases. They allege the company deceptively marketed opioids by overstating benefits and downplaying risks.
Purdue has been accused of contributing to a public health crisis that has been marked by nearly 400,000 overdose deaths between 1999 and 2017, according to the latest U.S. data. Purdue and the Sacklers have denied they are liable for the opioid epidemic. Purdue said in Wednesday’s court filing that an injunction halting litigation would preserve money that would otherwise be drained through prolonged legal battles. Purdue is spending more than $5 million a week in legal and professional fees, and other related expenses, the company said in court papers. [..] In Wednesday’s court filing, Purdue said allowing litigation against the Sacklers to continue would threaten billions of dollars they have pledged toward settling lawsuits and increase expenses for the company as it is drawn into the cases.
The New York Times Magazine just published a 14,000 words piece about the Boeing 737 MAX accidents. It is headlined: “What Really Brought Down the Boeing 737 Max?” But the piece does not really say what brought the Boeing 737 MAX down. It does not explain the basic engineering errors Boeing made. It does not explain its lack of safety analysis. It does not mention the irresponsible delegation of certification authority from the Federal Aviation Administration to Boeing. There is no mention of the corporate greed that is the root cause of those failures. Instead the piece is full of slandering accusations against the foreign pilots of the two 737 MAX planes that crashed. It bashes the airlines and the safety authorities of Indonesia and Ethiopia.
It only mildly criticizes Boeing for designing the MCAS system that brought the planes down. The author of the piece, William Langewiesche, was a professional pilot before he turned to journalism. But there is so much slander in the text that it might as well have been written by Boeing’s public relations department. The piece is also riddled with technical mistakes. We will pick on the most obvious ones below. The following is thus a bit technical and maybe too boring for our regular readers. Langewiesche describes the 737 MAX trim system and its failure mode:
“That’s a runaway trim. Such failures are easily countered by the pilot — first by using the control column to give opposing elevator, then by flipping a couple of switches to shut off the electrics before reverting to a perfectly capable parallel system of manual trim. But it seemed that for some reason, the Lion Air crew might not have resorted to the simple solution.” Wrong: The manual trim system does not work at all when the stabilizer is widely out of trim (i.e. after MCAS intervened) and/or if the plane is flying faster than usual. That is why the European regulator EASA sees it as a major concern and wants it fixed.
They blame the government.
A Japanese court on Thursday cleared three energy firm bosses of professional negligence in the only criminal trial stemming from the 2011 Fukushima nuclear meltdown. The three men were senior officials at the TEPCO firm operating the Fukushima Daiichi plant and had faced up to five years in prison if convicted. “All defendants are not guilty,” the presiding judge said, ruling that the executives could not have predicted the scale of the tsunami that overwhelmed the plant and triggered the accident. The decision is likely to be appealed, extending the legal wrangling over responsibility for the worst nuclear accident since Chernobyl, more than eight years after the disaster. Outside the courtroom, dozens of people staged a rally, including some who had travelled from the Fukushima region to hear the verdict.
“It is absolutely an unjust ruling. We absolutely cannot accept this,” one woman said angrily, addressing the crowd. “We will appeal this and continue our fight,” shouted a man nearby. The three former executives were accused of professional negligence resulting in death and injury for failing to act on information about the risks from a major tsunami, but they argued the data available to them at the time was unreliable. Judge Kenichi Nagafuchi said the verdict turned on the “predictability” of the massive tsunami that swamped the nuclear plant in March 2011 after a 9.0-magnitude undersea earthquake. He pointed out there had been no proposal from the government’s nuclear watchdog “that TEPCO should suspend operations until (safety) measures are taken.”
Any and all of such proposals that doesn’t focus on using much less energy, but instead on ‘transition’, is not worth reading.
Greenhouse gas emissions could be halved in the next decade if a small number of current technologies and behavioural trends are ramped up and adopted more widely, researchers have found, saying strong civil society movements are needed to drive such change. Solar and wind power, now cheaper than fossil fuels in many regions, must be scaled up rapidly to replace coal-fired generation, and this alone could halve emissions from electricity generation by 2030, according to the Exponential Roadmap report from an international group of experts. If the rapid uptake of electric vehicles in some parts of the world could be sustained, the vehicles could make up 90% of the market by 2030, vastly reducing emissions from transport, it said.
Avoiding deforestation and improving land management could reduce emissions by the equivalent of about 9bn tonnes of carbon dioxide a year by 2030, according to the report, but contradictory subsidies, poor planning and vested interests could stop this from happening. Key to any transition will be the growing social movements that are pressing for urgent action on climate breakdown. By driving behavioural change, such as moving away from the overconsumption of meat and putting pressure on governments and companies, civil movements have the power to drive the transformation needed in the next decade, say the report’s authors.
Christiana Figueres, a former top climate official at the UN, said: “I see all evidence that social and economic tipping points are aligning. We can now say the next decade has the potential to see the fastest economic transition in history.” The experts identified 36 developments that would produce the emission cuts needed, from renewable energy to changes in food production, the design of cities, and international transport, such as shipping. All of them are judged possible to achieve by 2030.
A wild guess: because the Guardian, which published this piece, has published so many things that are not true?
We live in a time of political fury and hardening cultural divides. But if there is one thing on which virtually everyone is agreed, it is that the news and information we receive is biased. Every second of every day, someone is complaining about bias, in everything from the latest movie reviews to sports commentary to the BBC’s coverage of Brexit. These complaints and controversies take up a growing share of public discussion. Much of the outrage that floods social media, occasionally leaking into opinion columns and broadcast interviews, is not simply a reaction to events themselves, but to the way in which they are reported and framed. The “mainstream media” is the principle focal point for this anger. Journalists and broadcasters who purport to be neutral are a constant object of scrutiny and derision, whenever they appear to let their personal views slip.
The work of journalists involves an increasing amount of unscripted, real-time discussion, which provides an occasionally troubling window into their thinking. But this is not simply an anti-journalist sentiment. A similar fury can just as easily descend on a civil servant or independent expert whenever their veneer of neutrality seems to crack, apparently revealing prejudices underneath. Sometimes a report or claim is dismissed as biased or inaccurate for the simple reason that it is unwelcome: to a Brexiter, every bad economic forecast is just another case of the so-called project fear. A sense that the game is rigged now fuels public debate.
An orphaned baby reticulated giraffe embraces wildlife keeper. Photo: Amy Vitale