Jul 172020
 


Fred Stein Evening, Paris 1934

 

Welcome To The End Game (F.)
Immune Response To Coronavirus Could Be a Matter of Life And Death (SCMP)
My Patient Caught COVID19 Twice. So Long To Herd Immunity Hopes? (Vox)
My Hydroxychloroquine Deep Dive (GB)
A Mask Cuts Your COVID-19 Risk By 65% (WEF)
Georgia Hospital Worker Sounds Alarm (NPR)
Unemployment Increase Set To End As Jobless Claims Climb (NYP)
Key US Lawmakers Back Unions’ Call For New Airline Bailout (R.)
AG Barr: US Companies Kowtow To China (JTN)
So Much Money, So Little Time To Find Deal At EU Summit (AP)
Russia Rejects UK’s Claims Of Hacking & Election Meddling (RT)

 

 

Let’s go break some records, shall we?

 

 

 

 

 

 

 

 

 

 

Second wave watch: Israel, Japan, Australia, Hong Kong

Taleb

 

 

 

 

“It won’t be hard to see it coming because if the Nasdaq goes vertical it will be hard to miss.”

Welcome To The End Game (F.)

If this chart doesn’t make you think the crash is coming soon, then probably nothing will: The Nasdaq is on its final run and is going vertical, a classic end of bubble move. This is trader heaven and turns into speculator hell for those who think that markets do grow to the skies. It could go up a long way in price but it won’t go for long in time. It could last to Christmas, it could fold tomorrow, but my feeling is that unless this bubble is cut down by the Fed, the final move will be large and quick. You can refer to the dotcom crash for the general shape of what looks possible next.

The attempts by the government to pump up the economy with new money is resulting in it going straight into equities and straight into the tip of the equity spear, the giant high beta story stocks. This is a malfunction of the QE mechanism that supports asset prices and slowly trickles the benefits of this support down the pyramid of wealth. Now the game is up because the new money is going straight into this bubble of financial assets that are spiralling up out of control. If we now get a Nasdaq bull vertical that is the end of the chapter of the process, it will be followed by a devastating crash as everyone dashes to the exit in a blaze of wealth destruction.


The Federal Reserve needs to get a lid on this fast and it appears to be trying to by tapering its balance sheet, but the bubble is still fizzing and if it does not stop soon it will do what bubbles generally do, erupt then collapse. The final eruption before collapse looks to be underway and we should only hope it doesn’t happen. If it does enter the terminal bubble phase and then collapse, it will be the second blow to the U.S. and world economy, which repeats the 1930 narrative of the one-two punch of twin crises. In the Great Depression it was “stock market crash” followed by “banking crisis.” Here it will be “lockdown” followed by “stock market crash.”

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Immune response differs greatly from one person to the next.

Immune Response To Coronavirus Could Be a Matter of Life And Death (SCMP)

Differences in the way people’s immune systems respond to being infected with the coronavirus could be a matter of life or death, according to a new study. When the human body comes under attack from a virus, the immune system produces T cells to tackle it. These mostly come in two forms: “helpers”, which organise the defence response, and “killers”, which are told how and where to fight. The killers destroy virus cells with toxic chemicals, but to do the job effectively requires precise coordination with the helper cells. In many patients who became seriously ill with Covid-19, this teamwork was missing, according to researchers from the Hospital of the University of Pennsylvania in the United States led by associate professor of medicine Dr Nuala Meyer.

According to their study, published in Science magazine on Wednesday, there are “three ‘immunotypes’ associated with poor clinical trajectories versus improving health”. The team found that in some patients there was a disproportionately large number of helper cells while the generation of killer cells was suppressed. This meant that while there was a lot of “horn blowing” about the threat posed by the virus, there were too few fighters to tackle it effectively. The second immunotype encompassed those people whose immune systems produced a much higher number of killer cells, meaning they were better armed to destroy the invaders, but not enough helper cells to coordinate the fight. As a result, they suffered significantly from Covid-19 but managed to survive it, the study said.

At the other end of the spectrum were those who failed to produce enough T cells of either kind, meaning they lacked the firepower to destroy the invasive cells and were therefore the most at risk of dying. The US study looked at 125 patients, making it the largest of its kind yet conducted. Although the scientists were unable to fully explain the different immune system responses, they suspected it might be linked to the patients’ general health at the time of infection. While most of the Covid-19 patients in the study had received more or less the same treatments, the researchers said doctors might need to consider a more tailored approach. “The findings promote the idea of tailoring clinical treatments or future immune-based clinical trials for patients whose immunotype suggests a greater potential benefit,” they said.

However, a doctor at a hospital treating Covid-19 patients in Beijing, who asked not to be named, said such a system was already in place. He said that while the reasons for different immune responses remained unclear, frontline doctors had been observing huge differences in the way people reacted to treatment methods since the early days of the coronavirus outbreak in China. A treatment that might work wonders for one person, could kill another, he said. “Too many helper T cells can lead to a storm [of inflammation],” he said. “Some drugs can suppress this signal before they raise havoc.”

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We know nothing. When will we acknowledge that?

My Patient Caught COVID19 Twice. So Long To Herd Immunity Hopes? (Vox)

“Wait. I can catch Covid twice?” my 50-year-old patient asked in disbelief. It was the beginning of July, and he had just tested positive for SARS-CoV-2, the virus that causes Covid-19, for a second time — three months after a previous infection. While there’s still much we don’t understand about immunity to this new illness, a small but growing number of cases like his suggest the answer is yes. Covid-19 may also be much worse the second time around. During his first infection, my patient experienced a mild cough and sore throat. His second infection, in contrast, was marked by a high fever, shortness of breath, and hypoxia, resulting in multiple trips to the hospital.

Recent reports and conversations with physician colleagues suggest my patient is not alone. Two patients in New Jersey, for instance, appear to have contracted Covid-19 a second time almost two months after fully recovering from their first infection. Daniel Griffin, a physician and researcher at Columbia University in New York, recently described a case of presumed reinfection on the This Week in Virology podcast. It is possible, but unlikely, that my patient had a single infection that lasted three months. Some Covid-19 patients (now dubbed “long haulers”) do appear to suffer persistent infections and symptoms. My patient, however, cleared his infection — he had two negative PCR tests after his first infection — and felt healthy for nearly six weeks.

I believe it is far more likely that my patient fully recovered from his first infection, then caught Covid-19 a second time after being exposed to a young adult family member with the virus. He was unable to get an antibody test after his first infection, so we do not know whether his immune system mounted an effective antibody response or not. Regardless, the limited research so far on recovered Covid-19 patients shows that not all patients develop antibodies after infection. Some patients, and particularly those who never develop symptoms, mount an antibody response immediately after infection only to have it wane quickly afterward — an issue of increasing scientific concern. What’s more, repeat infections in a short period are a feature of many viruses, including other coronaviruses.

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A Twitter thread that looks into a whole slew of reports on HCQ.

My Hydroxychloroquine Deep Dive (GB)

Gotta start with this chart many of you have seen by now In early June after months of following articles, treatment protocols, declarations, etc. I was curious about how the countries lined up. For the most part, it’s accurate
Image It’s not perfect as HCQ was also used in Belgium and Spain and later in Italy, but the idea is that Western Europe as a whole never embraced the ‘treat early and often’ strategy. Mostly they tried it with sick patients, didn’t work..moved on They mainly followed the WHO position. I wanted to address the chart first, because its not a work of great science. It was meant to provoke thought and discussion. Along the way, some saw it as proof. It’s not, but it does make you say “hmm..” In this thread, I’m going to try and go much deeper into the data.

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Sometimes I think maybe it’s just too simple, that people want it to be more complicated for them to believe it.

By the way, pieces like this should always mention the risk cuts when two people in an interaction both wear a mask.

And all the things you see about wearing masks outdoors? BS. Unless you’re in prolonged close interaction.

A Mask Cuts Your COVID-19 Risk By 65% (WEF)

Social distancing and wearing a mask prevent you from spreading COVID-19, but they also protect you from getting it, two experts explain in a new video discussion of coronavirus transmission. A range of new research on face coverings shows that the risk of infection to the wearer decreases by 65%, says Dean Blumberg, chief of pediatric infectious diseases at the University of California, Davis Children’s Hospital. “On the issue of masks, I’d like to restart—because we’ve learned a lot,” Blumberg says. “We’ve learned more due to research and additional scientific evidence. What we know now is that masks work and are very important.” Blumberg and William Ristenpart, a professor of chemical engineering, appeared on a recent livestream devoted to explaining how the coronavirus spreads and how to prevent transmission.


In their comments and answers to questions from viewers, Blumberg and Ristenpart repeatedly made the point that research continues to support the fundamental methods to prevent spreading COVID-19: Wear masks, maintain social distance, and keep social interactions outdoors whenever possible. There are two primary methods of coronavirus transmission, Blumberg and Ristenpart explain. The first is via droplets a carrier expels, which are about one-third the size of a human hair but still large enough that we can see them. Masks create an effective barrier against droplets. “Everyone should wear a mask,” Blumberg says. “People who say, ‘I don’t believe masks work,’ are ignoring scientific evidence. It’s not a belief system. It’s like saying, ‘I don’t believe in gravity.’


“People who don’t wear a mask increase the risk of transmission to everyone, not just the people they come into contact with. It’s all the people those people will have contact with. You’re being an irresponsible member of the community if you’re not wearing a mask. It’s like double-dipping in the guacamole. You’re not being nice to others.” The second major coronavirus transmission method is via the aerosol particles we expel when we talk. Those are about 1/100th the size of a human hair and are more difficult to defend against. Social distancing and staying outdoors, where there is more air flow, are helpful, Blumberg and Ristenpart say. “Studies in laboratory conditions now show the virus stays alive in aerosol form with a half-life on the scale of hours. It persists in the air,” Ristenpart says. “That’s why you want to be outdoors for any social situations if possible. The good air flow will disperse the virus. If you are indoors, think about opening the windows. You want as much fresh air as possible.”

Read more …

More stories about refrigerated trucks outside morgues.

Georgia Hospital Worker Sounds Alarm (NPR)

The emergency room overflowed with patients. Then, the next wave arrived. This time on stretchers. “They were lined up along the walls in the ER,” a health care worker inside a Navicent Health-owned hospital in middle Georgia told GPB News. “We never have had an influx like that. Since the Fourth of July, it has just exploded.” Staff members did what they always do. They tended to patients as best they could. For the sickest patients, staff searched for available beds in nearby hospitals. In previous weeks, the health care worker said, COVID-19 patients typically got transported to medical centers about 70 miles north to Atlanta or 160 miles east to Savannah. This week, there was no room. Desperate, the health care worker said, administrators began checking available hospitals in Kentucky, Tennessee, Alabama, North Carolina, South Carolina and Florida.

The distance stretched more than 850 miles north to south, from Louisville, Ky., down to Orlando, Fla. “When you have to start shipping patients out of state, it’s bad,” the worker said. “When the hospitals are full, that’s when it becomes really dangerous for everybody.” The Navicent employee approached GPB News late Wednesday, saying hospital systems are not providing an accurate reflection of what staffers are seeing inside the walls of medical centers overrun with patients. The employee spoke on condition of anonymity for fear of getting fired, and NPR is not identifying the Navicent hospital where the employee works to maintain that person’s anonymity. “People will never understand if we do not tell the truth about how bad it really is,” the employee said. “That’s what makes us so angry.”

Tired of being stuck at home, Georgians headed to beaches and bars, to hair salons and restaurants. Many flaunted not wearing masks as if the virus were gone. For some, it was their own personal way of telling the government to shove its restrictive policies. Public health officials warned of opening too fast, too soon – that you can’t wish a virus away. Georgia has seen coronavirus cases skyrocket as residents have gone about business as usual in recent weeks. Cases have topped 127,000, and more than 3,000 lives have been taken. Just three weeks ago, the overall cases stood at 69,000.

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End of July.

Unemployment Increase Set To End As Jobless Claims Climb (NYP)

A boost in unemployment pay is about to run out for people who lost their jobs due to the coronavirus pandemic — as jobless claims pass 51 million. The $600-per-week federal supplement in unemployment insurance is a flashpoint ahead of talks next week on a new coronavirus relief bill. Republicans including Senate Majority Leader Mitch McConnell oppose extending the boost — though there are hints of a potential compromise. The supplement for weekly unemployment was intended to ensure that most people kept the same income if they were temporarily out of work, but it officially runs out at the end of July. If it’s taken away, people would only get weekly benefits from state governments, which range from less than $250 a week in Arizona and Louisiana to over $1,200 with dependents in Massachusetts.


Many people have returned to work as states allow businesses to reopen, but another 1.3 million Americans applied for first-time unemployment benefits last week. From the start, Senate Republicans objected to the boost resulting in some jobless people earning more than 100 percent of their prior pay due to varying state rates, saying it created an incentive not to work. McConnell (R-Ky.) said this month that extending the boost won’t be in a new bill. “We’re hearing it all over the country that it’s made it harder actually to get people back to work,” he said. White House economic adviser Larry Kudlow is pushing for a “back to work” bonus to replace the unemployment bump. But signaling room for compromise, Treasury Secretary Steven Mnuchin, the top Trump administration negotiator on past packages, said last week a priority was changing the provision to ensure “no more” than 100 percent of pre-pandemic pay was awarded.

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It’s obvious the industry will not return, or at least for a very long time. So why bail it out?

Key US Lawmakers Back Unions’ Call For New Airline Bailout (R.)

Key U.S. House Democrats are backing a push by airline unions for a new round of government bailouts to keep workers employed in the face of tens of thousands of possible layoffs this fall, according to a letter encouraging other colleagues to sign on. In March, Congress approved $32 billion for the aviation industry to keep workers on payroll through Sept. 30, but as air travel demand remains depressed in the pandemic, airlines have warned of furloughs in October, prompting union calls for a six-month extension of aid. Airlines for America (A4A), a trade group representing major U.S. airlines, said Thursday it is not actively seeking new government assistance but would accept new bailout funds as long as no new strings were attached.


Under the first package, airlines agreed to limits on share buybacks and executive compensation, and issued warrants on a portion of the funds that the government can exchange for shares. If Congress enacts labor’s proposal, “we would support our workforce’s decision to pursue a simple and clean extension of the grants as long as no additional or extraneous conditions are required,” an A4A spokeswoman said. Airlines also agreed not to force any job cuts before October, giving them time to assess the pace of a recovery. Now over 60,000 airline workers at American Airlines and United Airlines alone are facing furlough warnings. Delta is hoping to avoid furloughs after about 17,000 employees volunteered for buyouts, though Chief Executive Ed Bastian said in a memo on Friday that the airline is still overstaffed in some areas based on its network and demand projections.

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To be continued.

AG Barr: US Companies Kowtow To China (JTN)

Attorney General William Barr on Thursday condemned U.S. businesses for compromising American principles while chasing profits from China. Barr during a speech at the Gerald R. Ford Presidential Museum in Michigan warned about the Asian super power’s ambitions and the tactics it uses to achieve its aims. “The People’s Republic of China is now engaged in an economic blitzkrieg — an aggressive, orchestrated, whole-of-government (indeed, whole-of-society) campaign to seize the commanding heights of the global economy and to surpass the United States as the world’s preeminent technological superpower,” Barr said.

“It is clear that the PRC seeks not merely to join the ranks of other advanced industrial economies, but to replace them altogether,” he said. “If you are an American business leader, appeasing the PRC may bring short-term rewards. But in the end, the PRC’s goal is to replace you.” The attorney general said that while doing business with China has failed to soften the country’s authoritarian regime, it has had negative results as some American businesses seek to appease China in order to retain the ability to do business there. “As this administration’s China Strategy recognizes, ‘the [Chinese Communist Party’s] campaign to compel ideological conformity does not stop at China’s borders.’

Rather, the CCP seeks to extend its influence around the world, including on American soil,” he said. “All too often, for the sake of short-term profits, American companies have succumbed to that influence—even at the expense of freedom and openness in the United States.” Barr pointed to Hollywood for taking actions to appease the Chinese regime. He also called out technology companies, saying that organizations “such as Google, Microsoft, Yahoo, and Apple have shown themselves all too willing to collaborate with the CCP.” “The American people are more attuned than ever to the threat that the Chinese Communist Party poses not only to our way of life, but to our very lives and livelihoods,” he said. “And they will increasingly call out corporate appeasement.”

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And in the midst of it all, they insist on keeping the twice-yearly idiotic move between Brussels and Strasbourg going. You don’t want to know what that costs.

So Much Money, So Little Time To Find Deal At EU Summit (AP)

As European Union leaders start pouring in early for a two-day summit starting Friday, all realize that rarely so much has been on the line. The 27-nation bloc is battered by the coronavirus pandemic, much of its economy in need of a massive aid injection and its countries riven by disputes ranging from the respect for basic democratic principles to the need for tough controls on spending. “The crisis brought about by this pandemic, with all of its economic and social consequences, is the most severe we have had to face since the Second World War,” European Council President and summit host Charles Michel said Thursday.

To make sure their nations bounce back, the 27 leaders will be assessing an overall budget and recovery package spread over seven years estimated at around 1.75 trillion to 1.85 trillion euros. “Does 1.75 trillion euros ($2 trillion) seem like a lot of money to you? Believe me, it does to the European heads of state or government too,” Michel said. It has certainly been enough to end a rut of five remote videoconference summits that yielded little to bring sides closer together and forced everyone to come in person to the urn-shaped Europa summit center for at least two days of summiteering. On the eve of Friday’s opening, French President Emmanuel Macron will already be huddling with Italian Prime Minister Giuseppe Conte to find the best way to help nations most affected by the crisis.

Chancellor Angela Merkel of Germany, which holds the rotating EU presidency and is seen as holding the key to a successful outcome, already had video conference talks with Michel. “An agreement is not guaranteed — to the contrary,” said an EU official involved in the talks. He spoke on condition of anonymity because the talks were ongoing. “There are still important differences.” The members were already fighting bitterly over the seven-year, 1-trillion-euro EU budget when COVID-19 was still a local story in Wuhan, China, late last year.

Then the virus hit the EU head on and estimations are now that the economy of the 19 countries that use the euro currency will contract by 8.7% this year. It sent the EU into a panic as it was at a loss on how to coordinate policies of its member states early on. Now, the EU’s executive is proposing a 750-billion-euro recovery fund, partly based on common borrowing, to be spent as loans and grants to the most needy countries. The group of the four so-called frugal countries, led by the Netherlands, is questioning the need for grants and also wants strict governance criteria, including the possibility of veto, on how the money will be spent. There are also questions on which nations should be the main beneficiaries.

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Why even bother denying anymore?

Russia Rejects UK’s Claims Of Hacking & Election Meddling (RT)

Contradictions in the words of the UK’s top diplomat were pointed out by the Russian Foreign Ministry’s spokeswoman, Maria Zakharova. Raab’s statement “was so ambiguous and inconsistent that it was practically impossible to understand,” she said. With London confirming that it has no proof against Russia, but still threatening retaliatory measures, “there’s a feeling that we have a new loop of the ‘highly likely’ tactics.” “Highly likely” was the phrase used by then-UK Prime Minister Theresa May to blame Russia for the chemical poisoning of double agent Sergei Skripal in Salisbury back in 2018. Two years later, London hasn’t provided any convincing evidence to back the claim.

Raab’s “almost certain” will apparently become the new go-to formula for the UK authorities, but the tactics of blaming Russia for internal problems in Britain will remain the same, Zakharova said. The Russian Embassy in London called it a purely propagandist step, noting that it never received any notes of protest from the British parties regarding the hacking claims. As for Raab’s threats of retaliation, an embassy spokesman said that “any unfriendly steps towards Russia won’t be left without a proper and adequate response.” The hacking claims were an attempt to “tarnish the reputation of the Russian vaccine” against the coronavirus, CEO of Russian Direct Investment Fund (RDIF) Kirill Dmitriev said.

Those behind the slur are “scared of [the vaccine’s] success because the Russian vaccine could potentially be the first on the market and it potentially could be the most effective,” he explained. It’s no coincidence that those accusations were made just after the announcement that the state regulators will be approving the Russian vaccine in August, Dmitriev added. Besides, stealing data from the UK would have made no sense for Moscow, as a Russian firm, R-Pharm, will be producing the British vaccine made by Oxford-based AstraZeneca. “No secrets are needed. Everything is already given to R-Pharm,” Dmitriev said.

Read more …

 

 

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Who on earth made this? And how? 2020 The Movie.

 

 

 

 

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Jun 192016
 
 June 19, 2016  Posted by at 9:00 am Finance Tagged with: , , , , , , ,  Comments Off on Debt Rattle June 19 2016


Harris&Ewing Car interior. Washington & Old Dominion R.R. 1930

Tracing The Global Market Thread That Could Be Unraveled By Brexit (R.)
Britain’s Rival EU Campaigns Restart (R.)
Hogs to Slaughter (HFarmer)
The Dumbest Monetary Experimental End Game In History (Bohm-Bawerk)
A Palace For Fannie (Mae) – Why The Imperial City Must Be Sacked (Stockman)
Over $50 Million Hacked Dashes Hopes in the World of Virtual Currency (NYT)
Assange Starts 5th Year Cooped In London Embassy (AFP)
Rome Set To Elect First Female Mayor (AFP)
Brazil’s Temer Goverment on Fire, 4th Minister Could Resign (TeleSur)
EU Trying To Bury Report On Turkey Migrant Returns (EUO)

Decentralization.

Tracing The Global Market Thread That Could Be Unraveled By Brexit (R.)

If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed. The invisible thread that links assets as diverse as gold, bank stocks, the Japanese yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks “adverse spill-overs to the global economy”. With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets. So why will the will of one country’s people in one referendum have such a profound impact on global markets?

The answer is partly how interconnected global markets are, and partly timing – the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support. Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the U.S. Federal Reserve reversing its slow-starting tightening cycle, and ECB and Bank of Japan rates going deeper into negative territory. Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks. Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JPMorgan.

This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years. They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly “safe haven” assets. But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further. They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking.

This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession. If “core” bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone “periphery” countries like Greece, Italy and Spain. Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated. Euro zone banks are down 30% this year, Japanese banks 35%, UK banks 20%, and U.S. banks 10%.

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Various polls contradict each other so much it’s hilarious.

Britain’s Rival EU Campaigns Restart (R.)

The campaign to decide Britain’s membership of the European Union restarted on Sunday after a three-day hiatus following the killing of lawmaker Jo Cox, with Prime Minister David Cameron warning that Britons faced an “existential choice” on Thursday. Campaigning activities ahead of the June 23 EU referendum resumed as two opinion polls showed the ‘Remain’ camp recovering some momentum, although the overall picture remains one of an evenly split electorate. With five days left until Britons cast their ballots, the rival campaigns returned with a raft of interviews and articles in Sunday’s newspapers, covering the familiar immigration versus economy debate that has defined the campaign so far.

Cameron, who leads the campaign to stay in the EU, urged voters to consider the economic impact that leaving the 28-member bloc would have. “We face an existential choice on Thursday,” he wrote in the Sunday Telegraph. “So ask yourself: have I really heard anything – anything at all – to convince me that leaving would be the best thing for the economic security of my family?” Michael Gove, a senior spokesman for the rival ‘Leave’ campaign, played down the role of the referendum in the future of the economy, and said that leaving would actually improve Britain’s economic position. “I can’t foretell the future but I don’t believe that the act of leaving the European Union would make our economic position worse, I think it would make it better,” he said in an interview with the same newspaper.

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“.. generations of fatherless children at every level raising up children who have no connection to anything that isn’t coming from a glowing screen..”

Hogs to Slaughter (HFarmer)

America is a third world country, it’s just not ready to accept that reality yet. Politically it is thoroughly corrupted, economically it is too deeply indebted to ever extricate itself, morally it is without direction, rudderless in dangerous seas and heading for the rocks.

The divides between the wealthy and the impoverished too wide to ever cross, the races and generations set against one another deliberately, provoked hourly by the very people who should be doing everything possible to unite them, armed to the teeth, seething with rage, neutered or enraged by pharmaceuticals, depending upon the age and gender, divided by sex, generations of fatherless children at every level raising up children who have no connection to anything that isn’t coming from a glowing screen- and all the while deliberately it seems, provoking hostility with every nation, every race, every people and persuasion in order to stir up a seething cauldron of slights and revenge for the coming reckoning.

[..] Last night I had a dream. One of the last things I did before I called it quits just after dark was to feed the hogs. I stood on the tailgate of the truck and emptied bags of watermelon rinds and soft mangoes, wilted heads of lettuce, bunches of carrots, apples, sweet yellow hothouse peppers imported from Holland, strawberries by the gallon, string beans, potatoes, cabbages and onions. The sows stood up on the fence rails and lifted their snouts to me to pet, their way of thanking me for the meal although they’d waited all day long for it.

When I finished I broke down the cardboard boxes and rolled up the empty plastic bags and then filled their troughs with fifty gallons of fresh, cool water. The Moon wasn’t quite full and Mars just beneath it, glowing like a jewel, and in the distance the large thunderheads were tipped pink from the last rays of the distant Sun, barn swallows streaking across the top of the orchard feasting on the mosquitoes that came to life in the cooling air.

I thought about these hogs, always hungry, always anticipating the next feeding and how easy they have become to manage since I discovered that simple secret. They will sit patiently waiting for me to bring them food rather than try and escape and find something to eat on their own. They are spoiled by their good fortune, fattening themselves on the food I bring them until they produce the things we require of them- piglets to sell and sausage and bacon to eat. I cannot imagine that the people who have managed to gain control of the levers of power in this world have not only learned from these kinds of lessons, but perfected the intricacies of human manipulation; psychological, pharmaceutical, social and spiritual.

I dreamed that the reasons that government checks and benefits were doled out monthly was no different than the reason I feed the pigs only once a day in large quantities. They grow dependent upon it, it is just large enough to make them feel for the moment like they have something substantial and to be excited about it and so remain close to the source of that disbursement, but it is not enough for them to ever be able to put away for the future so they might have the chance to escape that perpetual bondage, and by the end of their waiting there is only the hunger for the next allotment. No one would choose to live that way voluntarily and so they are led there, like the farmer with his bucket of slops, tapping the edge with a stick as he walks back to the enclosure, every head tilted in his direction, every eye glued to the pail.

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“The US mortgaged their future to foreigners willing to fund this consumption spree. ”

The Dumbest Monetary Experimental End Game In History (Bohm-Bawerk)

Whenever we try to explain the reasons behind the crisis, such as the build-up in non-productive and counterproductive debt (see here, here and here for more details) people ask us why did this happened now, and not earlier? It is a fair question that we have thought about and believe have one simple answer. Bottom line, the world economy is running on a system with no natural correcting mechanisms. As we are never tired of pointing out, the Soviet Union only had one recession, the one in 1989. The system was stable, until it was not. A system that does not correct internal imbalances grows just like a parasitic cancer, eventually killing its host. If unsustainable capital allocations are allowed to continue unchecked, the pool of real savings will at some point be depleted.

At that point recession hits because the structure of production is too capital intensive relative to the level of real saving available. A quick look at US saving and investment rates since the 1950s confirms what we all know to be true; saving and investments are not keeping up with GDP growth. That the trend broke after Nixon took the dollar of gold in 1971 is not a coincidence. Real funding for economic activity were slowly substituted from proper saving towards “forced” saving through fiat money expansion. The inevitable result from such a policy has been the massive increase in debt and drop in the US balance versus the rest of the world. No matter what political leaning the country had, debt kept on rising and its mirror image, the current account balance, kept on falling.

The US mortgaged their future to foreigners willing to fund this consumption spree. No one seemed to care that the US did not build up a productive capital base that could service all this debt in the future. The US, issuer of the world reserve currency, was good as gold. At least that was what the world assumed, and surprisingly enough still do.

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Real estate prices WILL be reset, globally. But the resistance againt the reset is fierce; it will rob too many of their powers and comfort zones.

A Palace For Fannie (Mae) – Why The Imperial City Must Be Sacked (Stockman)

To hear the establishment media tell it, you would think that Attila the Hun was fixing to sack the Imperial City. Would that Donald Trump were that bold or dangerous. Then again, he is a showman of no mean talents. So if there is a maquette of Fannie Mae’s planned new $770 million headquarters somewhere around Washington DC, he could start the sacking right there. Hopefully, he would not hesitate to shatter it with a fusillade of tweets – or even take a jackhammer to it while wearing a Trump hard hat. Fannie Mae is surely a monument to crony capitalist corruption, and living proof that massive state intervention in credit markets is a recipe for disaster. But rather than shut it down after it helped bring the nation’s financial system to the edge of ruin, the beltway pols have come up with an altogether different idea.

To wit, they plan to move Fannie from her already luxurious NW Washington headquarters to this hideous new glass palace to be built in the heart of Washington DC. Could there be a bigger insult to the 15 million families who lost their homes to foreclosure owing to the crash of the giant housing bubble that Fannie Mae and the crony capitalist crooks who ran it helped perpetuate? And that’s to say nothing of the $180 billion of taxpayer money that was pumped into Fannie Mae and the other GSE’s after the house of cards came tumbling down in August 2008. In fact, while the politicians on Capitol Hill have dawdled for eight years without any statutory changes or mandates for even minor reforms, Fannie Mae’s management and its phalanx of K-Street lobbies showed exactly who rules in the Imperial City.

It is the larcenous rule of these syndicates of beltway racketeers, in fact, that has put Donald Trump’s name on the Presidential ballot. So let it be granted that his manners and policy knowledge appear to be on the meager side. Yet it is malodorous tales like that of Fannie Mae’s swank new palace which demonstrate why a disrupter on horseback is exactly what the Imperial City deserves.

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The weakest link is a feature.

Over $50 Million Hacked Dashes Hopes in the World of Virtual Currency (NYT)

A hacker on Friday siphoned more than $50 million of digital money away from an experimental virtual currency project that had been billed as the most successful crowdfunding venture ever — taking with him not just a third of the venture’s money but also the hopes and dreams of thousands of participants who wanted to prove the safety and security of digital currency. The attack most likely puts an end to the project, known as the Decentralized Autonomous Organization, which had raised $160 million in the form of Ether, an alternative to the digital currency Bitcoin. While the computer scientists involved in the project are aiming to tweak the code that underpins Ether in a way that will recover the money, the theft is nevertheless prompting a bigger debate about the viability and principles of virtual currencies like Bitcoin and Ether.

“This is one of the nightmare scenarios everyone was worried about: Someone exploited a weakness in the code of the D.A.O. to empty out a large sum,” Emin Gün Sirer, a computer science professor at Cornell who co-wrote a paper pointing out problems with the project, said on Friday. Central banks and financial firms have been exploring how to use the technology underlying virtual currencies — known as blockchain — to improve their own internal systems. The technology is considered to have advantages in terms of transparency and security. Just last week, Janet L. Yellen, the Federal Reserve chairwoman, told central bankers at a trade industry conference that they should accelerate their efforts to explore blockchain.

But the incident on Friday provided another reminder of how the code can be just as vulnerable to human greed and mistakes as paper bills. The D.A.O. was meant to be a standard-bearer for online currency ventures. It was funded by investors from around the world using Ether, which has become popular over the last year. But just before the project stopped raising money in late May, computer scientists pointed out several vulnerabilities in its underlying code — effectively warning that what happened to the experimental consortium would be possible or even likely. “The D.A.O. is being attacked,” Griff Green, a community organizer with the company that wrote the project’s software, Slock.it, wrote on a chat channel for the project Friday morning. “This is not a drill.”

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Julian deserves much more support from all of us.

Assange Starts 5th Year Cooped In London Embassy (AFP)

WikiLeaks founder Julian Assange starts his fifth year camped out in the Ecuadoran embassy in London on Sunday, an occasion his supporters intend to mark with events celebrating whistleblowers. Supporters said they were planning to stage songs, speeches and readings in several European cities. Assange, 44, is wanted for questioning over a 2010 rape allegation in Sweden but has been inside Ecuador’s UK mission for four full years in a bid to avoid extradition. The anti-secrecy campaigner, who denies the allegation, walked into the embassy of his own free will on June 18, 2012, with Britain on the brink of sending him to Stockholm, and has not left since. His lawyers say he is angry that Swedish prosecutors are still maintaining the European arrest warrant against him.

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This would make my day. “Opposition to Italy’s endemic cronyism and sleaze..”

Rome Set To Elect First Female Mayor (AFP)

Voters in the Italian capital went to the polls Sunday with all signs indicating that they will elect Virginia Raggi as the first female mayor of the Eternal City. Raggi, a 37-year-old lawyer and local councillor, has leapt from anonymity to become one of the best-known faces in Italian politics in the space of only a few months on the campaign trail. The telegenic brunette, whose victory would be a blow for Prime Minister Matteo Renzi, is the rising star of the populist Five Star movement (M5S), the anti-establishment party founded by comedian Beppe Grillo. More than nine million voters are eligible to take part in Sunday’s second round election in 126 communes, including Rome, Milan, Naples, Turin and Bologna.

But all eyes are on Five Star which has emerged as the best-supported opposition to the centre left, Democratic Party (PD)-led coalition of Prime Minister Renzi, and the stakes are extremely high for a movement that was only founded in 2009. With the ebullient Renzi’s star waning slightly, success in Rome could provide a platform for a tilt at national power in general elections due in 2018. The PD also faces defeat in Italy’s financial capital Milan and a tough challenge in Turin. “We are witnessing a historic moment,” Raggi said after the June 5 first round of voting, from which she emerged with 35% of the vote, well ahead of her run-off rival, Roberto Giachetti (24%). It was a remarkable achievement for a party with a very limited organisational apparatus and also for a woman who only entered politics five years ago.

That was a move, she recently told AFP, triggered by the birth of her son Matteo and her determination that he should not grow up in a city beset by the intertwined problems of failing public services and endemic corruption. Opposition to Italy’s endemic cronyism and sleaze is the foundation of M5S’s appeal to voters and the Roman electorate have had their fill of those in recent years. Dozens of local businessmen, officials and politicians are currently on trial for their involvement in a criminal network that ripped off the city to the tune of tens – if not hundreds – of millions. From stealing the funds allocated to get ethnic Roma children to school out of isolated camps, to paving the city’s streets with wafer-thin surfaces, scams abounded for years, according to prosecutors, in what is known as the Mafia Capitale scandal.

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Let’s try and guess how many will be left when the Olympics start.

Brazil’s Temer Goverment on Fire, 4th Minister Could Resign (TeleSur)

Brazil’s current Minister of Education is the latest public official in the Michel Temer administration to be implicated in the country’s political corruption scandal. Brazil’s coup imposed Education Minister Mendonca Filho is being investigated for allegedly receiving an illegal bribe of $29,000 for the purpose of financing his 2014 re-election campaign, Brazil’s General Prosecutor Rodrigo Janot announced Friday, making him the latest official in Temer’s administration who could be forced to stand down. During a Supreme Court hearing Friday, General Prosecutor Janot argued that “evidence of possible bribes for his [Mendonca Filho’s] political campaign” would result in the court having jurisdiction to investigate potential criminal practices.

The allegations stem from records and documents obtained by Brazilian authorities belonging to the former financial director of UTC, Walmir Pinheiro, who last year agreed to a plea bargain testimony. The owner of UTC, Ricardo Pessoa, was also arrested last November after previously admitting to acts of corruption. [..] If convicted the Minister of Education would probably be pressured to resign from his current post, making him the fourth public official to resign or quit since the Temer administration came to power earlier this year.

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The level of “un-democracy” in the EU rises to alarming levels.

EU Trying To Bury Report On Turkey Migrant Returns (EUO)

The European Commission and some member states want to bury a report by an EU agency that is likely to say Turkey is unfit for asylum seekers, EUobserver understands. People sitting on the management board of the Malta-based European Asylum Support Office (EASO), including EU commission staff from the home affairs department, DG Home, are unhappy with EASO’s efforts to determine if Turkey is a safe third country. The management board also includes representatives from all 28 EU member states. “The subject is a sensitive one indeed and so obviously there can be some members of the management which have concerns,” Jean-Pierre Schembri, EASO’s spokesperson told this website on Wednesday (15 June).

The EU’s big migrant swap deal with Ankara largely hinges on designating Turkey as safe enough to send back rejected and unwanted asylum seekers from Greece to Turkey. Signed off in mid-March, the deal aims to stop people from leaving Turkey to seek international protection in the EU. The Greek islands now has on average dozens of new arrivals per day, down from the thousands at the height of the crisis last year. And the EU wants to keep it that way. But the EASO probe could knock a big legal hole in the plan, adding to the chorus of human rights defenders who say it is illegal. EASO management board members are also unhappy because the agency appears to have diverted from its original mandate. The team was supposed to compile a so-called country of origin report for Turkey but then it also started looking into the safe third country issue following a mission to Turkey some two weeks ago.

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Apr 122016
 
 April 12, 2016  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , ,  5 Responses »


Gottscho-Schleisner Fulton Market pier, view to Manhattan over East River, NY 1934

US Bank Stocks Are Having A Terrible 2016 (WSJ)
BofA Warns “Europe Looks Frightening” (ZH)
The Party’s Over (BBG)
Olivier Blanchard Eyes Ugly ‘End Game’ For Japan On Debt Spiral (AEP)
Smash The Mafia Elite, Treat Offshore Wealth As Terrorist Finance (Mason)
Aussie Hazards From Mortgages to Mines Lift Bond Risk (BBG)
Australia’s Housing Bubble And The Road To Private Serfdom (Soos)
Scientists Unveil New ‘Tree of Life’ (NY Times)
How Kim Kardashian Gets Elected President (Jim Kunstler)
Greece, Troika Adjourn Bailout Review Till After IMF Spring Meet (R.)
Ten Billion Risks in Greece’s Summer of Discontent (BBG)
‘Europe Has To Change Course’: Greece and Portugal Unite To Lambast EU (Tel.)
Tsipras Aiming For Debt Relief But Slams IMF (Kath.)
Greece Hopes To Move Refugees From Piraeus, But Tension At Elliniko (Kath.)
95,000 Unaccompanied Children Applied For Asylum In Europe In 2015 (EUO)
Italy Rescues 1,850 Migrants In Strait Of Sicily (AFP)

Luckily they’re TBTF. They don’t have to worry. We do.

US Bank Stocks Are Having A Terrible 2016 (WSJ)

Bank stocks are having a terrible 2016, as central-bank policies, which for years lifted asset prices, are hurting the financial sector. The impact of economic stimulus efforts on lenders will get a fresh airing this week, as big U.S. banks begin reporting their earnings for the first quarter. Trading revenue is expected to have taken a hit, but the more enduring problem will be visible in the lenders’ net interest margins, the basic measure of bank profitability that gets flattened by low interest rates. The broader U.S. stock market has shaken off a steep slump at the beginning of the year and is back in positive territory. But banks and other financial companies are lagging far behind. The divergence highlights the dilemma facing central banks. Easy-money policies have fueled a rally in risky assets.

They are also squeezing profits at financial companies, inflicting pain on a sector that is fundamental to the health of the economy. Earnings for S&P 500 financial companies during the quarter ended March are expected to be down 8.5% from the same period last year, according to FactSet. Analysts have cut their projections for almost three-quarters of the companies in the financial sector, including J.P. Morgan Chase and Bank of America, both of which are scheduled to release earnings this week. “At the end of the day, it’s just a more difficult earnings environment for financials,” said Jeremy Zirin at UBS Wealth Management Americas. Bank shares face an array of challenges. Low and in some cases negative interest rates globally have eroded banks earnings, while a steep decline in commodity prices at the start of the year raised concerns over lenders exposure to soured loans in the energy and mining sectors.

In Europe, the picture has been complicated further by concerns over nonperforming loans broadly, particularly in economically stressed Southern Europe. Financial companies are the worst performers in the S&P 500, down 7.6% in 2016 as the broader index has risen 0.2%. The KBW Nasdaq Bank Index of large U.S. commercial lenders has fallen 15% this year. Some big banks have done even worse. Morgan Stanley has fallen 25% this year, giving up roughly three years of stock-price gains in the process. Bank of America is in a similar position, with its shares down 23%. Citigroup shares have dropped 22%.

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Very scary graph.

BofA Warns “Europe Looks Frightening” (ZH)

"Europe looks concerning" warns BofAML's Stephen Suttmeier, pointing out, rather ominously that the broad European index – STOXX 600 – is trading like it did in 2001 & 2008.

 

 

The STOXX Europe 600 (SXXP) is trending below declining and bearishly positioned 26 and 40-week moving averages. ECB quantitative easing has not reversed this bearish trend. The 2016 set-up is similar to early 2001 and early 2008 with 350 important resistance and 300 important support. Both 2001 and 2008 saw rebounds into bearishly positioned and falling 26/40-week MAs that formed important lower tops in May.

We think this pattern could repeat or at least rhyme moving into May 2016. The breaks below 300 in September 2011 and June 2008 led to much deeper weakness and a similar break in 2016 could see the SXXP trend down toward 200.

Source: BofAML

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“Some of the more exotic activities from major corporations of late make much more sense when considered against a landscape of deteriorating returns.”

The Party’s Over (BBG)

It’s when a party’s been going on too long that it’s most at risk of getting out of hand. The more interesting guests fade away, leaving the field dominated by a sketchier crowd. Behavior considered beyond the pale earlier in the evening is excused to inject more vigor into flagging spirits.Financial markets, which former Federal Reserve Chairman William McChesney Martin once likened to a drunken debauch, exhibit similar dynamics. Seven years into the current global economic recovery, the punch bowl is almost drained. The remaining revelers are starting to raid the cupboards for stronger stuff. For evidence that the balloons are bursting and the dance-floor lights are coming up, take a look at the return on equity of the S&P 500 Index.

The measure dropped below 12% on March 21 – the first time it’s crossed the line in that direction since June 2008. The occasions prior to that were May 2001 and April 1991, and all three instances coincided closely with U.S. recessions. You see a similar pattern in the FTSE 100 Index. Just 11 trading days during the 2009 nadir of global markets saw returns on equity slip below the current level of 5.5%. In Asia, the Hang Seng Index, Shanghai Composite and CSI 300 have all touched their lowest levels since 2009 this year, and remain just a sliver above their rock-bottom points.Among major equity indexes, only the Nikkei, which is not far below its highest levels since 2008, and Europe’s Stoxx 50, which has been bumping along at low levels since 2011, break the pattern.

Some of the more exotic activities from major corporations of late make much more sense when considered against a landscape of deteriorating returns. Take inversions, where U.S. companies carry out reverse takeovers of foreign businesses in order to benefit from low corporate tax rates overseas.Such deals, which activist investor Carl Icahn estimates have exceeded half a trillion dollars in recent years, don’t come cheap. Pfizer, the global pharmaceutical giant that dropped its $160 billion attempt to hop into bed with Allergan after the U.S. Treasury promised to claw back the lost revenue, will pay a $400 million break fee to its spurned partner, people familiar with the matter said last week. There’s also an estimated $120 million to $150 million Pfizer will have to shell out for the work its own bankers and lawyers have done.

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“The BoJ is soaking up the entire budget deficit under Governor Haruhiko Kuroda as he pursues QE a l’outrance.”

Olivier Blanchard Eyes Ugly ‘End Game’ For Japan On Debt Spiral (AEP)

Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned. Olivier Blanchard, former chief economist at the IMF, said zero interest rates have disguised the underlying danger posed by Japan’s public debt, likely to reach 250pc of GDP this year and spiralling upwards on an unsustainable trajectory. “To our surprise, Japanese retirees have been willing to hold government debt at zero rates, but the marginal investor will soon not be a Japanese retiree,” he said. Prof Blanchard said the Japanese treasury will have to tap foreign funds to plug the gap and this will prove far more costly, threatening to bring the long-feared funding crisis to a head.

“If and when US hedge funds become the marginal Japanese debt, they are going to ask for a substantial spread,” he told the Telegraph, speaking at the Ambrosetti forum of world policy-makers on Lake Como. Analysts say this would transform the country’s debt dynamics and kill the illusion of solvency, possibly in a sudden, non-linear fashion. Prof Blanchard, now at the Peterson Institute in Washington, said the Bank of Japan will come under mounting political pressure to fund the budget directly, at which point the country risks lurching from deflation to an inflationary denouement. “One day the BoJ may well get a call from the finance ministry saying please think about us – it is a life or death question – and keep rates at zero for a bit longer,” he said.

“The risk of fiscal dominance, leading eventually to high inflation, is definitely present. I would not be surprised if this were to happen sometime in the next five to ten years.” Arguably, this is already starting to happen. The BoJ is soaking up the entire budget deficit under Governor Haruhiko Kuroda as he pursues quantitative easing a l’outrance. The central bank owned 34.5pc of the Japanese government bond market as of February, and this is expected to reach 50pc by 2017.

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But the mob owns the house..

Smash The Mafia Elite, Treat Offshore Wealth As Terrorist Finance (Mason)

Amid the cobbled passageways and tumbling tenements of the Italian city of Perugia, it’s possible to daydream you are in the middle ages. You are surrounded by medieval art and architecture. And then you think: hold on, what happened to the Renaissance? Sure, there are some imposing private palaces from the period 1300-1500, and sure Raphael left half a fresco in a tiny chapel. But it’s not Florence. The money was clearly here at some point but, some time after 1300, the artistic, cultural and scientific riches moved somewhere else. By 1500, the city was “smaller, poorer and politically narrower” than 200 years before, writes historian Sarah Rubin Blanshei. Why? Because the rich did not pay their taxes.

The Perugian elite became a closed stratum of mafiosi, earning their money from mercenary work abroad, jealously guarding their family inheritance, stifling social mobility. Sound familiar? As David Cameron’s fiasco over the Panama Papers collides with George Osborne’s over the budget, the danger is that we frame these merely as political scandals. In fact, the Panama Papers point to a deeper sickness. Globalised capitalism has become an organised and legalised form of corruption, in which the work of the manager, the inventor and the entrepreneur come second to that of people whose wealth “works for them” – preferably in a jurisdiction nobody can see. If you listen to Cameron’s defenders, their logic follows three contours: he did nothing illegal, nothing unparliamentary and nothing wrong.

I do not doubt his decision to invest in an offshore fund was legal. That he failed to register his shares in Blairmore on becoming an MP, and lobbied for the protection of offshore trusts while being an undeclared beneficiary of one, does merit investigation by Parliament. But it’s the insistence by the apopleptic right that he should not be criticised over tax avoidance – that “everybody does it” – that we should register as a kind of collective Marie Antoinette moment for the UK’s social elite.

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MO: “..the acquisition of defaulted debt at a discount..”

Aussie Hazards From Mortgages to Mines Lift Bond Risk (BBG)

Those Australians struggling with mortgage payments and the possibility of damage from the global commodity price slump are helping to inflate bond risk for Macquarie Group’s banking unit. The cost of insuring Macquarie Bank notes against non-payment climbed to as much as 172 basis points last month, the highest since June 2013, after the lender flagged a rise in overdue home loans. The Sydney-based bank’s credit-default swaps have increased 39 basis points in 2016, the second most in the benchmark Markit iTraxx Australia index, and were at 155 basis points April 8. While Macquarie Group is predicted to post a record full-year profit, there’s increasing speculation about how well Australia’s lenders will cope with a mining downturn that’s already causing some resource-related firms to default on loans.

Large gyrations in global markets in the first quarter helped drive out credit spreads for banks, and there’s concern that home-loan books will be hurt by a stuttering Australian housing market. “Macquarie’s CDS was caught up in the February selloff with the big four banks and whilst the latter have regained ground in March, Macquarie remains at wides,” said Simon Fletcherat National Australia Bank. “This is likely to be in part due to some market nerves” after Macquarie revealed an increase in overdue loans in one of its recent regulatory filings, he said. While Macquarie’s total impaired mortgages fell in the final three months of 2015 compared with the previous quarter, the lender on Feb. 19 flagged an increase in overdue loans over the same timeframe. The bank’s 90-days-plus overdue residential mortgages almost doubled to A$476 million ($360 million) in the quarter ended Dec. 31. The main “driver” of the increase was due to the acquisition of defaulted debt at a discount, the lender said in a statement on its website last month.

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Do let it sink in: “With total household sector liabilities at $2.2 trillion dollars as of 2015, Q4, Australians are so indebted that the majority of principal will never be repaid.”

Australia’s Housing Bubble And The Road To Private Serfdom (Soos)

Over the last 20 years, housing has developed a reputation as a risk-free and high-gain asset. Property remains a coveted asset and can now be purchased with a small deposit; the rest borrowed from banks. It certainly is an attractive investment: since 1996, housing prices, adjusted for inflation and quality, have soared by 141% through to 2015.

Many global housing markets corrected after the GFC, but Australia’s continued to boom, especially in Sydney and Melbourne. This resilience is attributable to the vested interests: the FIRE (finance, insurance and real estate) sector, numerous Federal and state government interventions, and leveraged home owners and investors, who believe housing price inflation benefits them.Almost every residential owner wants the gravy train to continue running to escape the drudgery of wage labour and achieve the coveted status of property baron.

Australia has one of the world’s most expensive housing markets, but unlike an Olympic gold medal, the nation should feel shame rather than pride in achieving this dubious feat. Residential property is so highly leveraged that even a small fall in its value would have adverse consequences, placing heavily-geared owners in the position of negative equity. Falling prices and credit defaults can reverberate throughout the economy, leading to a recession or worse. After all, a real estate slump drove other wealthy economies into a major downturn during the GFC, not the other way around.

The largest and most important purchase the average person will make is not even financed with their own money. Relative to GDP, the Australian household sector vies with Switzerland for accumulating the largest debt burden globally. As of 2015, Q4, this amounts to 124%, which is much higher than what many other nations peaked at before the bursting of their housing bubbles.

This massive indebtedness is ignored by both political parties, who endlessly claim we need to transition the Federal Government budget back to surplus as this represents “fiscal responsibility”. The reason is because nobody wants the value of their properties to sink and, instead, is supposed to repeat the hysteria about the “budget emergency”, “runaway public debt”, “record deficit” and so on. Public debt peaked in 1932 at 173% of GDP, when the economy was far less productive. Today, it is low compared to historical and global trends. With total household sector liabilities at $2.2 trillion dollars as of 2015, Q4, Australians are so indebted that the majority of principal will never be repaid. With nominal rent growth now turning negative and wage growth at record lows, it will become increasingly difficult to finance repayments, especially for first home buyers.

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“The “great Tree of Life,” he said, “fills with its dead and broken branches the crust of the earth, and covers the surface with its ever branching and beautiful ramifications.”

Scientists Unveil New ‘Tree of Life’ (NY Times)

A team of scientists unveiled a new tree of life on Monday, a diagram outlining the evolution of all living things. The researchers found that bacteria make up most of life’s branches. And they found that much of that diversity has been waiting in plain sight to be discovered, dwelling in river mud and meadow soils. “It is a momentous discovery – an entire continent of life-forms,” said Eugene V. Koonin of the National Center for Biotechnology Information, who was not involved in the study. The study was published in the journal Nature Microbiology. In his 1859 book “On the Origin of Species,” Charles Darwin envisioned evolution like a branching tree. The “great Tree of Life,” he said, “fills with its dead and broken branches the crust of the earth, and covers the surface with its ever branching and beautiful ramifications.”

Ever since, biologists have sought to draw the tree of life. The invention of DNA sequencing revolutionized that project, because scientists could find the relationship among species encoded in their genes. In the 1970s, Carl Woese of the University of Illinois and his colleagues published the first “universal tree of life” based on this approach. They presented the tree as three great trunks. Our own trunk, known as eukaryotes, includes animals, plants, fungi and protozoans. A second trunk included many familiar bacteria like Escherichia coli. The third trunk that Woese and his colleagues identified included little-known microbes that live in extreme places like hot springs and oxygen-free wetlands. Woese and his colleagues called this third trunk Archaea.

[..] The scientists needed a supercomputer to evaluate a vast number of possible trees. Eventually, they found one best supported by the evidence. It’s a humbling thing to behold. All the eukaryotes, from humans to flowers to amoebae, fit on a slender twig. The new study supported previous findings that eukaryotes and archaea are closely related. But overshadowing those lineages is a sprawling menagerie of bacteria. Remarkably, the scientists didn’t have to go to extreme places to find many of their new lineages. “Meadow soil is one of the most microbially complex environments on the planet,” Dr. Hug said.

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How crazy it can get is anybody’s guess.

How Kim Kardashian Gets Elected President (Jim Kunstler)

[..] It must be obvious that the next occupant of the White House will preside over the implosion of all these arrangements since, in the immortal words of economist Herb Stein, if something can’t go on forever, it will stop. So the only individuals left seeking the position are 1) An inarticulate reality TV buffoon; 2) a war-happy evangelical maniac; 3) a narcissistic monster of entitlement whose “turn” it is to hold the country’s highest office; and 4) a valiant but quixotic self-proclaimed socialist altacocker who might have walked off the set of Welcome Back Kotter, 40th Reunion Special. These are the ones left standing halfway to the conventions. Nobody else in his, her, it, xe, or they right mind wants to be handed this schwag-bag of doom.

On Saturday, the unstoppable Democratic shoo-in Hillary lost her 7th straight contest to the only theoretically electable Vermont Don Quixote, Bernie Sanders. This was a week after it was reported in The Huff-Po that her campaign crew literally bought-and-paid for the entire 50-state smorgasbord of super-delegates who will supposedly compensate for Hillary’s inability to otherwise win votes the old-fashioned way, by ballots cast. Wonder why that didn’t make nary a ripple in the media afterward? Because this is the land where anything goes and nothing matters, and that’s really all you need to know about how things work in the USA these days.

The Republican mandarins are apparently delirious over loose cannon Donald Trump’s flagging poll numbers in the remaining primary states. Should Trump fall on his face, do you think they’ll just hand Ted Cruz the Ronald Reagan Crown-and-Scepter set. (They’d rather lock Ted in the back of a Chevy cargo van with five Mexican narcos and a chain saw.) The GOP establishment insiders are already lighting cigars in preparation for the biggest smoke-filled room in US political history, Cleveland, July 20. But what poor shmo will they have to drag to the podium to get this odious thing done? Who wants to be the guy in the Oval Office when Janet Yellen comes in some muggy DC morning and says, “Uh, sir (ma’am)… that sucker you heard was gonna go down…? Well, uh, it just did.”

As for the Dems: they are about to anoint the most unpopular candidate of our lifetimes. The BLM mobs have promised to deliver mayhem to the streets of the party conventions and don’t think they will spare Hillary in Philary, no matter how many chitlins she scarfed down last month in Carolina. The action in Philly will unleash and reveal all the deadly power of President Obama’s NSA goon squads when the militarized police put down the riots, and Hillary will be tagged guilty by association. And that is how Kim Kardashian gets elected president.

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The Troika always only intended to hang Greece out to dry.

Greece, Troika Adjourn Bailout Review Till After IMF Spring Meet (R.)

Greece and its international lenders adjourned talks on a crucial bailout review early on Tuesday and will resume them immediately after this week’s IMF spring meeting, the Greek finance minister said. Lenders, who had been in Athens for just over a week, will return next Monday after the IMF spring meeting in Washington with a view to concluding an agreement by April 22, when eurozone finance ministers are scheduled to meet, Finance Minister Euclid Tsakalotos told reporters. “The Greek government and the four institutions agreed there was progress,” Tsakalotos said, referring to European institutions and the IMF.

Greece’s review of progress, under a bailout deal reached in July, has dragged on for months mainly because of differences among the lenders over its projected fiscal shortfall by 2018 – initially seen at 3% by the EU and 4.5% by the IMF – and resistance from Athens on unpopular measures. The differences among the lenders themselves remained. With Athens, divergences hinged on the depth of pension reform and regulating non-performing loans, particularly those involving primary home mortgages, sources close to the talks have said. “It would have been good to conclude on a deal today … we have made many concessions until now,” a Greek government official participating in the Athens-based talks said. A source close to the talks said ‘most issues’ remained open. A positive review will unlock up to €5 billion in aid. Athens needs the money to repay €3.5 billion to the IMF and the ECB in July, as well as unpaid domestic bills.

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June 23: UK referendum.

Ten Billion Risks in Greece’s Summer of Discontent (BBG)

Europe is gearing up for a summer of discontent. There’s the U.K. referendum on EU membership, a simmering refugee crisis and an increasingly desperate ECB. Taken together, this list gives reason enough to be fearful about the health of the European project in the coming months. But there is also Greece, which is caught in a spat between Germany and the IMF over debt relief as it seeks yet more bailout money. Greece – whose economic crisis already threatened to destroy the irrevocable nature of euro membership – still seems to be dragging its feet over state asset sales and pension reform. It is hemorrhaging cash from its banking system. Athens has to find more than €5 billion to meet its debts in June – and another €5 billion in July.

That’s €10 billion Greece doesn’t have; not, perhaps, a princely sum for a larger, healthier European state but that’s 20% of Greece’s annual tax income. Now, there’s an argument that with so much else going on in the European theatre, Brussels will be keen to fudge a solution just to get Greece off the agenda. IMF may not be so willing to oblige, however. If May comes and goes without a deal – be it because of German intransigence on debt relief, IMF stubbornness on budget targets, or Greek brinksmanship — Greece and its creditors may run out of time to avoid default. As Greece’s debt repayment deadlines approach, EU officials may be busy fighting fires kindled by Britain’s June 23 referendum on EU membership. The outcome of that vote is far from certain.

Bloomberg’s composite tracker of opinion polls puts votes to remain in the EU at 39 points, those wanting to leave at 38, with “don’t knows” holding the balance of power at 23. With Prime Minister David Cameron embroiled in a domestic row about his personal taxes in the wake of the so-called Panama Papers, government popularity is likely to take a hit. That can only help the anti-EU campaign; it won’t take many undecided voters to swing the outcome. The European Commission’s regular survey of attitudes to the EU, known as the eurobarometer, has already taken a turn for the worse, with the most recent poll showing rising discontent: The proportion of Europeans for whom the EU conjures up a negative image has risen to 23% (+4); before this, it had declined continuously in the four previous surveys.

Renewed concern about the European project is just starting to surface in the bond market. Investors are now charging Portugal 3.3 percentage points more for 10-year money than they demand from Germany, a spread that’s well above its six-month average of 2.2 points. Italy’s risk premium rose to 1.3 points last week, up from December’s low of 0.9 points, while Spain is at 1.4 points, up from 1.2 points a month ago. That’s not enough to ring alarm bells; but it’s odd at a time when the ECB is increasing its sovereign bond purchases.

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But Europe won’t. So what’s next?

‘Europe Has To Change Course’: Greece and Portugal Unite To Lambast EU (Tel.)

Europe must move away from “self-defeating” austerity and embrace “progressive” reform, the prime ministers of Greece and Portugal have declared. Europe is at “a critical crossroads” and needs to decide whether to embrace “closer political, fiscal and social integration” or pursue fragmentation and “narrow national interest”, Greek prime minister Alexis Tsipras and his Portuguese counterpart António Costa said in a joint statement. Both Portugal and Greece have received bail-outs from the European Union following the crash of 2008. Portugal exited its €78bn bail-out programme in May 2014, while Greece is struggling to close a crucial review of its third bail-out in five years.

“We, as prime ministers of two countries with a similar policy experience in the context of their respective adjustment programmes, share the conviction that austerity-only policies are wrong and insufficient to overcome the existing challenges,” said Mr Tsipras and Mr Costa. They added: “Europe has to change course. Instead of merely adjusting to self-defeating competitiveness and austerity measures, our two countries take the decision to closely co-operate at all levels, bilateral and European, to put forward a progressive programme of democratic Eurozone Governance, economic revival, employment creation, centered on quality jobs, and socially just and environmentally responsible growth in Europe and in our countries.”

The prime ministers also criticised the response of some EU member states to the migrant crisis, with Mr Tsipras saying that the use of teargas and plastic bullets by Macedonian police during clashes with refugees at the Idomeni makeshift camp was a disgrace to European civilisation. The Portuguese prime minister is in Athens on an official visit. Speaking after his meeting with Mr Costa, the Greek prime minister slammed the role of the IMF in Greece’s bail-out talks. “In Greece wrong policies were applied and it is a paradox that those who recognized that there were wrong policies, admitting their mistake, insist on applying the mistake,” said Mr Tsipras.

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Does Tsipras still have meaning?

Tsipras Aiming For Debt Relief But Slams IMF (Kath.)

As negotiations between Greece and its quartet of lenders dragged on into Monday night, Prime Minister Alexis Tsipras again took aim at the International Monetary Fund for its “mistaken policies,” saying it was “time to get serious as the livelihoods of millions of people were at stake.” His remarks follow similar comments made by government officials last week to the effect that the IMF’s demands for more reforms were an obstacle to a deal. Tsipras said the Fund’s policies were damaging not only Greece but Europe as well. The stakes, he said, are too high for the third bailout program not to succeed, otherwise not just Greece but Europe will suffer as well – at a time when it is faced with three parallel crises – financial, security and refugees.

“And right before a crucial referendum [in Britain], I think what is most important is stability and recovery and the prospects of its [Europe’s] people.” But IMF chief Christine Lagarde was adamant on Monday that Greece must implement more reforms, even though she admitted that the Fund had made mistakes in its handling of the Greek crisis. “Greece cannot just continuously tag along and expect that things will be sorted out. The Greek leaders will need to take more ownership of re-establishing their country,” she said. The government is racing against time to complete the first review of its third bailout package by Easter so as to push for debt relief discussions at the IMF’s Spring Meeting in Washington this weekend.

According to the Greek government, last July’s bailout deal clearly stipulates that debt relief would be on the table for discussion once the first review was concluded. “[The deal] is absolutely clear: It says that after the successful conclusion of the first review, the discussion on the debt will begin without terms and preconditions,” Tsipras said during a joint press conference with his Portuguese counterpart Antonio Costa, who is on an official visit to Athens.

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Our friend Kostas and his Social Kitchen crew serve a lot of meals at Ellliniko, among other sites. The situation is fluent and volatile, but they keep trying every day.

Greece Hopes To Move Refugees From Piraeus, But Tension At Elliniko (Kath.)

Authorities are hoping to convince hundreds of refugees and migrants to leave the unofficial camps at Idomeni and Piraeus in the coming days, as tension builds up at other facilities. The government aims to transport around 1,500 people from the camp at the Piraeus passenger terminal by the end of the week and said that four buses full of migrants had left Idomeni in northern Greece on Monday. The refugees from Piraeus will be taken to Skaramagas, west of Athens, where the army has created another temporary facility to house the migrants who have found themselves trapped in Greece. Officials are hoping the fact that some refugees have already moved to the camp and found conditions to be good will help them persuade others to leave the overcrowded site at Piraeus, where more than 4,100 people are currently camped.

However, concerns mounted on Monday over the situation at a reception center for refugees and migrants at the site of the capital’s old airport in Elliniko, southern Athens, where thousands of desperate people are living in cramped and tense conditions. In a letter to the Interior, Immigration and Defense ministries, the head of the real estate company designated to oversee the management of the Elliniko plot described the situation at the site as “out of control and harboring serious risks.” In the letter, Soultana Spyropoulou noted that a three-month agreement to host migrants at the site expired at the end of March and had envisaged 700 people, not the approximately 6,000 currently residing there. Police officers who have been assigned to guard the site report daily brawls between groups of migrants as well as thefts and even cases of rape.

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Some 10% of whom are already lost. European values.

95,000 Unaccompanied Children Applied For Asylum In Europe In 2015 (EUO)

At least 95,000 unaccompanied children applied for asylum in Europe last year, four times the numbers for 2014. The huge increase was discovered by the Bureau of Investigative Journalism during an investigation into the level of migration among unaccompanied children, defined as those under 18 years old, in Europe and the stark inconsistencies in the way they are treated. From approaching 29 different governments for statistics, the investigators found that at least 95,070 applied for asylum in Europe in 2015, up from 23,572 in 2014. The figure is much higher than previous estimates, and provides the clearest picture yet of the actual scale of migration among unaccompanied minors during last year’s refugee crisis. Only 17 of the 29 countries provided data. Spain refused to cooperate, while France said publication of official data would be later this year.

Eurostat will also complete its own figures later this year. The children are treated very differently by national authorities, with some using controversial methods such as wrist bone X-rays to determine age. The numbers raise serious questions, not only for the ability of countries to cope with the influx, but also around the children’s welfare and their uncertain future. The UK-based Bureau of Investigative Journalism has been investigating the issues faced by unaccompanied minors for two years. The focus had been on the UK but was expanded to continental Europe late last year. It approached 27 EU member states for numbers, plus Norway and Switzerland. Almost all of the larger countries were among the 17 that provided details. Of those 17, Sweden registered the most asylum applications by lone children in 2015 – 35,369. This was followed by 14,439 in Germany, 9,331 in Austria and 8,804 in Hungary.

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The Big Shift.

Italy Rescues 1,850 Migrants In Strait Of Sicily (AFP)

The Italian coastguard Monday rescued 1,850 migrants in eight operations in the Strait of Sicily, as a wave of boats departing from the Libyan coast intensifies. Two small boats carrying a total of 740 people were intercepted by the coastguard ship Diciotti, while Italian Navy vessel Cigala Fulgosi came to the aid of two inflatable dinghies with 255 people on board, a coastguard statement said. A merchant ship was diverted to help another 117 people, while an EU naval force vessel picked up 738 migrants trying to cross on two barges and a small boat.

According to UN refugee agency data at the end of March, some 17,500 people have arrived in Italy since the start of the year. Two weeks ago nearly 1,600 migrants were rescued in the same area, adding to fears that calmer seas at the onset of spring are encouraging greater numbers of migrants to attempt the perilous crossing after a winter lull. There are also concerns that European efforts to shut down the migrant sea crossing from Turkey to Greece will encourage more people to attempt the more dangerous Mediterranean passage from Libya to Italy.

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