Jul 052025
 


Paul Gauguin Sheperd and sheperdess in a meadow 1888

 

Putin-Trump Meeting Necessary – Kremlin (RT)
Trump To Reinstate Sweeping Tariffs (RT)
Trump Has Quiet Meeting with Saudi Defense Minister, MbS Younger Brother (CTH)
Trump Eases Russia Sanctions – But EU Is Too Eager To Strangle Itself (Marsden)
Trump Expects Hamas Answer In 24 Hours On ‘Final’ Peace Proposal (ZH)
July 4, 2025 Finds Americans More Enslaved than Ever (Paul Craig Roberts)
The Fourth of July (James Howard Kunstler)
UK Gov’t Preparing For Civil War, Using Russian Invasion Threat As Cover (MN)
Trump’s Golden Dome Plans Fuel Fourfold Jump in Patriot Missile Buying (Sp.)
Trump Announces White House UFC Fight (RT)
Kiev Can’t Turn Tide On Battlefield – Spy Chief (RT)
Germany Looking To Secretly Buy US Arms For Ukraine – Bild (RT)
Germany Plans Six-Month Military Service – Reuters (RT)
Ethiopia Declares Completion Of Dam Debated With Egypt and Sudan (RT)

 

 

1,000 voices decry the “terrible” impact of the Big Beautiful Bill. Economist Daniel Lacalle has a very different opinion.

Tucker

As per James Woods.

Fourth

Ramallah

 

 

Hassett

 

 

 

 

“..both leaders have repeatedly stressed that such a meeting would require extensive preparations..”

Putin’s conditions are abundantly clear. They’ve grown over a decade. Paul Craig Roberts said it well this week: “What percentage of the Western population understands that the Kremlin was forced to intervene in the Russian provinces in Ukraine in order to prevent a Gaza-type destruction of Russian people?”

Trump must realize that if he wants to make a -peace- deal. I’m not sure he does.

Putin-Trump Meeting Necessary – Kremlin (RT)

A meeting between Russian President Vladimir Putin and his US counterpart Donald Trump is necessary but has to be well prepared, Kremlin spokesman Dmitry Peskov told journalists on Friday. His comments came after the two leaders held their sixth phone call the day before. According to Kremlin aide Yury Ushakov, during their nearly one-hour long conversation, Trump and Putin discussed a wide range of issues, including the Ukraine conflict, the situation in the Middle East, and Russia-US cooperation. Asked to comment on plans to hold an in-person summit of the two presidents, Peskov stated that both sides acknowledge that such a meeting is “necessary” and that there is readiness on both sides to make it happen.

Peskov recalled, however, that both leaders have repeatedly stressed that such a meeting would require extensive preparations. The Kremlin had previously stated on multiple occasions that the timing of a Putin-Trump summit depends on Washington’s own initiative and has insisted that such a meeting would have to be “result-oriented.” Trump described Thursday’s phone call as “pretty long,” and stated that the two leaders talked about “a lot of things, including Iran.” However, the US president expressed frustration that he “didn’t make any progress” with Putin over the Ukraine conflict and the establishment of a ceasefire.

The Kremlin has since confirmed that the US president urged Putin to cease hostilities as soon as possible, while the latter reaffirmed Moscow’s readiness to negotiate. According to Ushakov, Putin stressed that Russia intends to achieve the primary goals of its military operation, which is “the elimination of the well-known root causes that led to the current state of affairs.” Russia “will not back down from these goals,” the presidential aide said.

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There will be some very unhappy faces.

Trump To Reinstate Sweeping Tariffs (RT)

US President Donald Trump has said his administration will begin notifying trading partners of new tariffs on their exports, as he prepares to reinstate tariffs that were paused for trade talks, which are set to expire next week. Since returning to office in January, Trump has launched a tariff campaign aimed at protecting US manufacturers. The campaign culminated on April 2 with a set of measures on what he called ‘Liberation Day’, including a blanket 10% tariff on all imports and steeper rates for goods from China, Mexico, Canada, and the EU. Some of the tariffs were paused for 90 days to allow negotiations, which are now due to end on July 9. Speaking to reporters early Friday, Trump said “10 or 12” notification letters would be sent that day, with more to follow “over the next few days.”

“By the ninth they’ll be fully covered,” he said, referring to the deadline for countries to reach deals and avoid higher import tariffs. “They’ll range in value from maybe 60% or 70% tariffs to 10% and 20% tariffs.” Trump said smaller countries would be notified later, with tariffs taking effect from August 1. “It’s a lot of money for the country, but we’re giving them a bargain,” he added, without naming specific countries or sectors. Earlier this week, he ruled out extending talks. The US has so far reached agreements with the UK and Vietnam, and declared a truce with China after previous tariffs sparked a trade war that shook global markets. Treasury Secretary Scott Bessent said on Thursday that Washington was close to a high-level framework deal with the EU that could avert 50% tariffs on the bloc’s exports next week.

Trump has long accused the EU of unfair trade practices, arguing that the bloc’s regulatory framework fuels the transatlantic trade imbalance. EU trade ministers have criticized the UK-US deal – which keeps a 10% baseline tariff on British exports while easing tariffs on steel and cars – and warned of possible retaliation unless the bloc secures better terms. Bessent said around 100 countries could face a minimum 10% rate, though further deals are likely. “I think we’re going to see a lot of action over the coming days,” he told Bloomberg. The Organization for Economic Co-operation and Development (OECD) warned this week that the tariffs could disrupt global supply chains and drag growth down to 2.9% through 2026.

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He’s not sitting still much, is he? Interesting dynamics here.

Trump Has Quiet Meeting with Saudi Defense Minister, MbS Younger Brother (CTH)

It was reported last night that President Trump held a quiet meeting with Saudi Arabia Defense Minister Prince Khalid bin Salman in the White House Thursday. This meeting is reported to cover discussions around de-escalation with Iran, the conflict in Gaza and what comes next. The meeting also comes on the heels of President Trump having a phone call with Russian President Vladimir Putin and work throughout the middle-east region by President Trump Emissary Steve Witkoff and Israeli Strategic Affairs Minister Ron Dermer. (Via Fox News) “Saudi Defense Minister Prince Khalid bin Salman secretly met with President Donald Trump and other key officials in the White House on Thursday to discuss de-escalation efforts with Iran, multiple sources confirmed with Fox News. Khalid, also known as KBS, is the younger brother of Saudi Crown Prince Mohammed bin Salman.

[…] The talks were also reportedly about ending the war in Gaza and negotiating the release of the remaining hostages – whether dead or alive – and about working toward peace in the Middle East. (more) Previously it was reported by Israeli media that President Trump was working on a comprehensive solution to Gaza that would encompass peace in the middle-east by normalizing ties with Israel, isolating Iran and giving them fewer options for regional instability. Expanding the Abraham Accords provides the diplomatic vehicle for this approach.

Prime Minister Benjamin Netanyahu will visit the White House on Monday, July 7th. It is strongly rumored that Syria and Lebanon would soon join the Abraham Accords, with the possibility of Saudi Arabia joining thereafter. Saudi Crown Prince Mohammed Bin Salman (MBS) is a key figure hoping to bring a new era to the middle east absent of conflict and focused on prosperity. According to Israel Hayom, there was a 4-way call (Trump, Netanyahu, Rubio, Dermer) after the Iran strikes. President Trump and Benjamin Netanyahu agreed to “fundamental principles in general terms” including:

• “Gaza hostilities will conclude within two weeks.” • Four Arab nations (including Egypt and the UAE) will administer the Gaza Strip, replacing the murderous Hamas terrorist organization.” • “The remaining Hamas leadership will face exile to other countries (possibly Qatar and Turkey), while the hostages gain freedom.” • “Multiple nations globally will accept numerous Gaza inhabitants seeking emigration.” • “Abraham Accords expansion will bring Syria, Saudi Arabia, and additional Arab and Muslim countries to recognize Israel and establish official relationships.” • “Israel will declare its willingness for future Palestinian conflict resolution under the ‘two states’ concept, contingent upon the Palestinian Authority reforms.” • “The United States will acknowledge limited Israeli sovereignty implementation in Judea and Samaria.”

Saudi Arabia was previously on the cusp of signing up to the Abraham Accords, but retreated from the agreement when the Israeli-Hamas war erupted within Gaza. It would not be surprising to see them come back to that agreement with President Trump’s guidance and request. If we think about the status of Syria, we can clearly see how President Trump has enticed the new Syrian government led by Ahmed al-Sharaa to the peace table based on economic benefits (sanctions removed). In fact there are large billboards all over Tel Aviv thanking President Trump for his efforts in the embattled nation. It is rather remarkable. Put all that together, and yes there are significant indications well beyond the report by Israel Hayom that something rather remarkable is possible within the middle-east and specifically as they relate to Israel.

With Iran now effectively removed from their ability to antagonize the region, and with President Trump as the enforcer to stop their extremist tendencies, the path toward regional peace seems much more likely. This opens the door for a new era in mid-east politics. (VIA WSJ) – […] Ms. House compares MBS to the 17th-century Russian czar Peter the Great, and the comparison is apt. Both men are best understood as modernizing autocrats, driven to shake up traditional societies and so enable them to withstand the competition and stress of a rapidly changing geopolitical scene. Like Peter, who built St. Petersburg to serve as Russia’s bridge to the West, MBS hopes that his new city—known as Neom—will make Saudi Arabia a dominant force in technological innovation. And like Peter, who asserted political control over the Russian Orthodox church and personally shaved the beards of aristocrats resisting modernization, MBS has ruthlessly imposed his vision on both religious and tribal leaders skeptical of change.

[…] While earlier rulers took small steps to wean the economy from oil, MBS believes the time for half-measures has passed. Saudi Arabia, as MBS grasped years ago, cannot live by oil alone. But to lessen its dependence on oil, the social contract between Saudi citizens and their government has to change. New sources of revenue, like tourism, will have to supplement oil wealth. New industries, like data centers, will need to be welcomed into the kingdom, and new cities to house them will either have to grow from existing ones or, like Neom, be invented.(more) If you think about the geopolitics behind much of the global conflict you may identify the U.S, U.K and EU as the historic source of influential instability. In the big picture BRICS was created as an economic hedge against this troubling influence, an alternative alignment of partners.

With U.S. President Donald J Trump challenging and changing the objectives of the ‘western alliance’, and indeed fracturing the western trade markets and the underlying economics therein, a new picture begins to emerge. A strategic USA political and economic realignment based on peace, growth and independent stability, can unite America, Russia, Saudi Arabia and many emerging economies. However, the old financial guards within the UK, EU, Japan, Canada, Australia will likely fight this geopolitical shakeup. All of that said, the ‘old guards’ biggest weapon to fight back against a global economic and peace realignment would be their control over the western-developed intelligence networks. Is that the dynamic we have been seeing? When contrast against visible recent events, that is a very interesting question to ponder.

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“We were just fine running on Russian oil and gas until you snatched it away like a juice box from a toddler. Now you’re scolding us for not pulling new energy out of thin air? Fine. We’re going nuclear. With Russia.”

Trump Eases Russia Sanctions – But EU Is Too Eager To Strangle Itself (Marsden)

Looks like Washington is about to steal the EU’s lunch. Again. The Trump administration just lifted sanctions on a Russian-led nuclear project in Hungary, specifically one run by Moscow’s atomic energy titan, Rosatom. “The administration of President Trump has lifted this sanction. This made it possible to guarantee the safety of Hungary’s energy supply in the long term. Finally, there is a kind of presidential administration in the United States which respects the reality of the map, takes it into account,” said Hungarian Foreign Minister Peter Szijjarto. “We are not a country with a large number of oil and natural gas factories surrounded by dry land. Thus, our sustainable, cheap and safe electricity supply can only be provided by nuclear energy.”

Translation: “Listen up, you overcaffeinated Brussels bureaucrats running this group project from hell. We were just fine running on Russian oil and gas until you snatched it away like a juice box from a toddler. Now you’re scolding us for not pulling new energy out of thin air? Fine. We’re going nuclear. With Russia.” Enter Paks 2, Hungary’s next-gen nuclear project, pronounced “Paksh” as in “Paksh me another reactor, Vladimir.” This Rosatom-led deal was frozen under Biden-era sanctions. Now with Trump back, Hungary’s firing it up again. Hungary’s original Paks plant already supplies half the country’s electricity. Paks 2 will boost that to 70% by the 2030s and replace 3.5 billion cubic meters of gas annually – or enough to power Brussels’ virtue-signaling and moral-outrage generators for a week. It would also slash Hungary’s carbon emissions by 17 million tons, which theoretically should earn Budapest a climate gold star from Brussels.

But a few weeks back, Hungary smelled another bad idea brewing in Brussels. This time, it was sanctions on nuclear fuel. Because when you’re already dealing with a self-imposed gas crisis, the next logical step is obviously to kneecap your nuclear options, too. “If the European Commission and Brussels banned Central European countries, including Hungary, from purchasing fuel from Russia, this would have tragic consequences not only for Hungary, but for the entire European energy market,” Szijjarto warned back in May of the nuclear fuel side-eye. Meanwhile, in Brussels, EU leaders have been busy crafting their 18th round of Russia sanctions. That’s right – 18. The sanctions now have more sequels than the Fast & Furious movie franchise. At this rate, someone should build a sanctions-themed roller coaster and amusement park. Then it could just stay closed under the pretext that it’s too expensive to power.

And while EU politicians perform their best moral-grandstanding monologues on the world stage, European companies are sneaking around backstage making nuclear deals with Russia anyway. Leading the pack is France’s Framatome, which is co-partnering with Rosatom on the very same Paks 2 project. Framatome’s role has actually expanded thanks to Germany kneecapping itself, as has become routine. The Greens in the previous coalition government blocked Siemens Energy’s involvement. Just what German industry needed – another self-inflicted wound. And Framatome isn’t just supplying the process control systems for Rosatom. The two have also signed a broader deal to produce nuclear fuel – in Germany. Don’t mess this up, Berlin! Spoiler alert: Odds are pretty good that it probably will.

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Or what? You’re going to kill the children?

Trump Expects Hamas Answer In 24 Hours On ‘Final’ Peace Proposal (ZH)

President Donald Trump announced Friday that it would likely become clear within 24 hours whether Hamas would accept what he described as a “final proposal” for a ceasefire with Israel in Gaza. He also mentioned in the fresh statement that he had discussions with Saudi Arabia about broadening the Abraham Accords, in reference to the normalization agreements between Israel and certain Gulf nations established during his first term in office. On Tuesday Trump said that Israel had agreed to the terms required for a 60-day ceasefire with Hamas, during which both sides would aim to work toward ending the lengthy war which has been raging in the wake of the Oct.7, 2023 terror attacks. A Hamas official on Thursday told the BBC that the Palestinian militant group is now “ready and serious” to reach a deal if it ended the war.

That was in reaction to President Trump having said that Israel has agreed to the “necessary conditions” to finalize the proposed 60-day ceasefire in Gaza. Trump said the US would “work with all parties to end the War” – in a post on Truth Social. However, no details have been given on this particular ceasefire plan. Israel has not confirmed it agreed to any specific conditions as of yet. “I hope… that Hamas takes this Deal, because it will not get better – IT WILL ONLY GET WORSE,” Trump wrote. But what will the consequences be if Hamas refuses – more bombing of the Gaza Strip? Some details revealed in Israeli media have been presented as follows: According to an unsourced Channel 12 report Thursday, Trump has offered a direct guarantee to Hamas that if it agrees to the so-called Witkoff framework — which includes the release of 10 living hostages in two phases and 18 bodies in three phases over the course of a 60-day ceasefire — the US will ensure efforts continue to reach a lasting end to the conflict.

Israel is also believed to be under heavy US pressure to clinch a ceasefire deal ahead of Prime Minister Benjamin Netanyahu’s trip to Washington for talks with Trump next week. The prime minister is set to visit the White House on Monday. Trump also said Friday that Gazans have “been through hell” and that “I want the people of Gaza to be safe.” But he didn’t directly answer when a reporter asked if the US is still considering taking any security responsibility over the Gaza Strip as part of the proposed truce plan. The plan that the Trump administration floated in February included the permanent relocation of Palestinians in the Gaza Strip, and turning the land into a Mediterranean resort destination. No Arab or neighboring nation has stepped forward to say they would accept more Palestinian refugees. Almost all regional states have historically absorbed at least tens or hundreds of thousands. American security contractors are currently present in the Gaza Strip, controversially as part of a US and Israeli-backed humanitarian aid distribution program.

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“Who will liberate us from Israel?”

July 4, 2025 Finds Americans More Enslaved than Ever (Paul Craig Roberts)

Today we will be treated to fireworks and speeches celebrating our liberation from the British in the latter part of the 18th century. It is a false celebration, because many of our cherished freedoms described in the Constitution have been taken away, and in place of the British we have a new master–Israel–a master whose grip tightens on us by the year. In the 21st century we have destroyed a number of countries for Israel, financed and provided the weapons and diplomatic over for Israel’s genocide of Palestine, and celebrated Israel’s indicted mass murderer leader with standing ovations in the US Congress. President Trump speaks of the mass murderer as if he is the greatest person on earth. The US might yet be forced by Israel into war with Iran.

Red states such as Florida and Texas have passed laws against US citizens speaking or acting disapprovingly of Israel. No such laws exist protecting US gentiles from politically incorrect words and protests. US universities have lost to the Israel Lobby the ability to govern themselves. The Israel Lobby was able to reach inside a Catholic university and block the tenure of Norman Finkelstein, himself a Jew, and to reach inside the University of Illinois to cancel the tenure granted to Steven Salaita.

Presidents of Ivy League universities were hauled before the US Congress and upbraided for not preventing students from protesting Israel’s genocide of the Palestinians. Some were forced to resign. A rule was imposed on the universities that students who protest Israel must be suspended or expelled. If they are foreign students, they are picked up and deported. Christian Zionists worship Israel, not Christ, and are indoctrinated with the conviction that God’s purpose for America is to serve as Israel’s protector. The British never had such control over their American colony. Far from being a free and independent people, Americans are the two-bit punk puppet of their Israeli master. Who will liberate us from Israel?

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“I can negotiate with a man who wants to make money. I can’t negotiate with a communist who wants to kill me.” — Josh Lippincott on “X”

The Fourth of July (James Howard Kunstler)

O, Norman Rockwell, where are you when we really need you? Forgive us, Emma Lazarus, our second thoughts about those huddled masses yearning to breathe free. . . the wretched refuse of your teeming shore(s). That was then and this is now. O, beautiful for spacious skies (but, why so many contrails criss-crossing overhead from the New York Island to the gulf stream waters?). O, land of tattooed grandmas, hostages of the tiny screens, the sexually confounded, the illiterate and innumerate, the lawless and the feckless, brainwashed youth marinated in Marx, the deranged, befuddled, the bought-off, the bug-eyed and bewildered, the lame, the halt, the addicts, grifters, hustlers, porn-stars, drugstore cowboys, alpha dogs, beta boys, shrieking Karens, and sundry victims of future-shock — wither, this hallowed experiment in nationhood?

Wouldn’t you like to know? In the meantime, husk that corn and flip them burgers! Turn them wieners! Mash your guacamole, pop another frostie, pass the Jack, lock-and-load, and mind those hovering drones! It is the 249th birthday of what remains of our country! Respect and thanks, ye ancestors! At least, there is Mr. Trump in command now, not Norman Bates’s mother (or whatever decrepitating thing pretended to rule from the White House those previous four years of anarchy and agony). Daddy’s in da house — finally! — and things are being put in order against all odds. Yeah, you’re gonna clean up your damn room, or else! For many, this is a yuge relief. The rest of you, with your “No Kings” fake revolution, your Antifa monkey business, your mean girl psychodramas, your trans psychosis, your childless despair, your occult Gramscian schemes of destruction — please report back to the margins, where you belong.

The struggle to get normal again is epic and harsh. And, of course, many will deny that there ever was such a state of being, of minding your business in the purest sense of the phrase, acting like responsible, self-respecting, autonomous adults. In the immortal words of Aimee Mann, better wise-up. Childhood ends; something else begins. Take yourself seriously for a change, but keep your heart light, ready for the jokes that travail always presents. After all, nothing is funnier than unhappiness.

To get back to normal, to shed the burden of absurdities we’ve been heaped with, requires an accounting. You know this. Matter of fact, the absence of such an accounting has been bugging you no end. A whole lot of pain and suffering was inflicted across this land in recent years and barely a soul has had to do any ‘splainin’. It rankles badly. When, if ever, will these vicious, seditionist goons who turned the nation inside-out and upside-down be compelled to sit at the defendant’s table in a court of law?

I have a theory. The right dawgs, you well-know, have been in position for months. They understand the conspiracy hatched ten years ago through-and-through. Mr. Patel, remember, ran Chairman Devon Nunes investigation of the nascent RussiaRussiaRussia hoax in 2017 as senior counsel for the House Permanent Select Committee on Intelligence and helped draft the “Nunes Letter,” much abused by the perfidious news media, that laid out the plot by Brennan, Clapper, Comey, Obama & Company to smother Donald Trump’s newborn presidency in its crib.

Through some alchemy of mass political psychosis, that conspiracy has rolled on for a whole decade, one malice-driven prank after another. It continues to this day, an evermore rearguard action conducted by Deep state rogues and their public mouthpiece, Norm Eisen of Lawfare, Inc. Dan Bongino, now at Mr. Patel’s right-hand, chronicled that long march of treason in several books while he conducted daily podcast discourses on the workings of it all. “Remember the names,” he always said. Danny Boombatz remembers the names.

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“Low trust, highly fractured, and highly politically factionalised which is leading us increasingly inevitably into civil conflict.”

UK Gov’t Preparing For Civil War, Using Russian Invasion Threat As Cover (MN)

A prominent academic in London has warned that the UK government is actively preparing for the break out of a civil war, but is using the “logically absurd” cover of a Russian invasion to put contingencies in place. Pointing to remarks made in the 2025 National Security Strategy paper last month, Professor David Betz of King’s College London has suggested that the British government is using the phantom threat of a foreign attack in order to harden critical national infrastructure against sabotage. “For the first time in many years, we have to actively prepare for the possibility of the UK homeland coming under direct threat,” the Whitehall paper noted, adding that “critical national infrastructure – including undersea cables, energy pipelines, transportation and logistics hubs” are a major target.

During a discussion with Professor Lewis Halsey, Professor Betz, a modern war expert recently stated “there is growing apprehension about the security of Britain, the security of its infrastructure specifically, and about the potential for active conflict at home in a very direct manner, effecting people in a very direct manner.” “But that’s not external in origin, that’s internal, and that has to do with the way our society is now configured, it is highly fractured,” Betz continued, adding “Low trust, highly fractured, and highly politically factionalised which is leading us increasingly inevitably into civil conflict.” Betz further outlined how the Russian threat is being amplified as a cover story. “The fact of the matter is there is a great distance between us and Russia… we are not militarily threatened in a direct way on the ground by any obvious external enemy, even Russia,” Betz outlined.

“Which isn’t to say there aren’t things which Russia could do to attack the UK should they wish to, but one of those is not occupying the village green with Russian soldiers, that simply, frankly, is a rather bizarre assertion,” he contended. “What they’re concerned about is domestic conflict, and they perfectly understand this, but that’s completely politically toxic for them to say so publicly, hence the convenience of saying ‘we need to develop… a citizen’s militia for the protection of critical infrastructure’,” Betz further noted.

“To say that we’re doing this against the potential of Russian attack, which is frankly a logically absurd proposition, but it is convenient as a pretext,” he emphasised. Betz also recently posited that many European countries are on the verge of civil war and may already be past the point of no return. He says his research shows there is a statistically significant chance of a civil war breaking out within five years in a major European country, with a distinct possibility that the conflict could spill over to neighbouring Nations.

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“.. the average unit cost for these interceptors is around $3.871 million.”

Trump’s Golden Dome Plans Fuel Fourfold Jump in Patriot Missile Buying (Sp.)

The US Army plans to dramatically boost its procurement of Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) interceptors target by four times, from 3,376 to 13,773 missiles, as US President Donald Trump pushes forward ambitious Golden Dome for America initiative amid suspension of military aid to Ukraine. The MSE missile, a critical component of Trump’s defense concept, is a “hit-to-kill” interceptor missile designed to destroy incoming ballistic missiles, cruise missiles, and aircraft through direct impact. According to the US Army’s budget report, the average unit cost for these interceptors is around $3.871 million.

“The Army Requirements Oversight Council Memorandum (AROCM) approved a PAC-3 MSE AAO/APO increase from 3,376 to 13,773 on 16 April 2025,” a Sputnik correspondent’s analysis of the Pentagon’s FY 2026 budget report revealed. This significant leap in the Army’s acquisition objective for these critical interceptors appears to be a direct consequence of the strategic emphasis placed on missile defense by the Golden Dome initiative, indicating a concerted effort to rapidly build up the necessary arsenal. According to the US Army’s budget report, its Fiscal Year 2026 request for PAC-3 MSE missiles totals over $1.31 billion. This amount comprises $945.9 million in discretionary funds and an additional $366 million in mandatory (reconciliation) funds, which specifically procure 96 extra MSE missiles for FY 2026.

The $945.9 million in discretionary funding for FY 2026 includes $549.57 million earmarked for 130 base procurement MSE Missiles. An additional $396.335 million, supporting the procurement of 103 missiles, comes from Overseas Operations Cost (OOC) funding specifically for Operation Atlantic Resolve (OAR), a US government initiative providing military assistance to Ukraine. On Monday, US media reported that the Pentagon paused deliveries of certain air defense missiles and precision munitions to Ukraine over concerns that the US’s own stock was running critically low. White House spokeswoman Anna Kelly confirmed the halt in supplies to NBC News, stating that the decision prioritized US interests.

Trump formally unveiled his ambitious “Golden Dome” missile defense concept on May 20, envisioning an “impenetrable shield” over the US against advanced missile threats. This expansive program is set for a major legislative boost, with Trump’s One Big Beautiful Bill Act, which allocates $25 billion for integrated air and missile defense, expected to be signed into law this week.

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Strangely, but fitting.

Trump Announces White House UFC Fight (RT)

US President Donald Trump has announced plans to host a UFC title fight at the White House as part of next year’s America250 celebrations. He added that up to 25,000 people could attend. Speaking at a rally in Iowa on Thursday, Trump outlined a number of activities planned for the celebration of America’s 250th anniversary, saying it will be “a birthday party the likes of which you have never seen before.” The celebrations will include both professional and amateur events at national parks, battlefields, and historic sites, as well as a sports tournament called the Patriot Games featuring high school athletes from all 50 states.

Trump surprised the audience by saying: “We’re going to have a UFC fight – think of this – on the grounds of the White House.” He added that there is “a lot of land there” and that the event would be “a championship fight, full fight, like 20,000 to 25,000 people,” with UFC CEO Dana White organizing the event. Details about the exact location on the White House grounds and the timeline for the UFC event have yet to be disclosed. The announcement has already drawn attention for its unconventional nature and has sparked debate among critics and supporters. Many Trump fans have praised the idea on social media, calling it bold and uniquely American.

One user on X called it “one for the history books.” Another said the fight will make the US Semiquincentennial “legendary.” Several users have said the proposed fight is “nothing new,” noting that former US President Theodore Roosevelt set up a dojo in the White House to practice martial arts and even held a jiu-jitsu demonstration in the East Room. Others responded with ridicule. “This is straight out of Idiocracy,” one critic wrote, referring to the 2006 dystopian comedy film that depicts a future America overwhelmed by anti-intellectualism and spectacle. Another user suggested that the White House might next host “midget wrestling in the East Room.”

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“..the principle that “wherever the foot of the Russian soldier steps is ours..”

Kiev Can’t Turn Tide On Battlefield – Spy Chief (RT)

Kiev lacks the ability to push Russian forces back, Kirill Budanov, head of Ukraine’s military intelligence agency HUR, has acknowledged, asserting that only negotiations can meaningfully alter the course of the conflict. Russian President Vladimir Putin recently remarked that military logic often requires occupying territories while not formally claiming them. He added that historically Russia operated on the principle that “wherever the foot of the Russian soldier steps is ours,” in the sense of defending national interests. Asked to respond to Putin’s comments in an interview this week, Budanov said the Russian president was militarily accurate.

“Wherever they reach will be under their control. Do you think there is anyone who does not realize that? I hope everyone does,” Budanov said, while still urging Ukrainians to comply with conscription and fulfill their duty by fighting Russia. He said he did not anticipate major changes on the battlefield, where Russian forces continue to make incremental advances. Significant developments, he added, would likely not occur “at least until peace talks are concluded.” Since the 2014 Western-backed uprising in Kiev, five Ukrainian regions have voted to secede and join Russia, four of them after the escalation in 2022. Moscow has cited Kiev’s use of military force in Donbass and its sabotage of a negotiated roadmap for reintegrating the Donbass regions as key triggers for the ongoing hostilities.

Vladimir Zelensky rejected a proposed peace deal in 2022 that would have curtailed Ukraine’s NATO aspirations. Instead, he opted to pursue a military solution backed by Western arms donors. Zelensky has maintained that only the full restoration of all territories claimed by Kiev would be acceptable to his government. Direct talks between Russia and Ukraine resumed earlier this year in Istanbul under pressure from the US. The administration of President Donald Trump has indicated that Kiev will need to agree to some form of territorial compromise to reach a resolution. Zelensky has conceded that Ukraine cannot achieve a military victory and is urging the West to intensify sanctions on Moscow in hopes of forcing it to yield diplomatically.

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Secretely? Why?

Germany Looking To Secretly Buy US Arms For Ukraine – Bild (RT)

Germany wants to agree a “secret deal” with the US to buy two Patriot air defense systems in order to hand them over to Ukraine, Bild has reported, citing government sources.vSeveral US media outlets claimed earlier this week that Washington had paused deliveries of various critical munitions to Kiev, including Patriot and Hellfire missiles, GMLRS rockets, and thousands of 155mm artillery shells. The White House later confirmed that supplies of some weapons have been halted, saying the “decision was made to put America’s interests first.”vThe freeze in deliveries is “causing alarm” in Berlin, Bild reported on Thursday. According to the newspaper, the government of Chancellor Friedrich Merz fears that the policy shift could also result in Washington rejecting a request to sell Germany two Patriot systems and interceptors.

According to Bild’s sources, Berlin quietly approached US Defense Secretary Pete Hegseth on the matter two weeks ago after being asked to do so by Ukraine, which previously failed to acquire the systems on its own. The German authorities are now waiting for a response from Hegseth, they added.vBild described the lack of air defenses as an “urgent problem” for Ukraine, and that it currently has only four Patriot systems left in service and insufficient missiles for them. If Kiev runs out of interceptors, Russian airstrikes are likely to become even more “dangerous,” it added.vOn Friday, German government spokesman Stefan Kornelius acknowledged that “intensive discussions” are taking place between Berlin and Washington regarding the possibility of providing air defense systems and munitions for them to Ukraine.

However, he noted that there are “different ways” to address Kiev’s needs in the area. Politico reported on Wednesday that the Kiev authorities were “blindsided” by the halt in American military aid supplies, and have asked Washington “to let Europe purchase US weapons for Ukraine.” Several European countries are reviewing potential purchases on behalf of Ukraine, according to the outlet.vKremlin spokesman Dmitry Peskov suggested that the US paused deliveries of key munitions to Ukraine because they “simply cannot produce missiles in the necessary quantities,” noting that many supplies were likely redirected to Israel amid its conflict with Iran last month.

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Desperately blaming Russia for their very own collapse. The British do it, Germany does it…

Germany Plans Six-Month Military Service – Reuters (RT)

Germany is planning to introduce a voluntary six-month military service in order to double the number of reservists, Reuters has reported, citing informed sources. Since the escalation of the Ukraine conflict in February 2022, Berlin has been trying to boost its armed forces, citing a “threat” posed by Russia. Moscow has repeatedly dismissed as “nonsense” claims it intends to attack NATO countries, saying that the Western politicians are deliberately scaring their populations to justify increased military spending. Earlier this year, German Chancellor Friedrich Merz vowed to make the Bundeswehr the “strongest army” on the continent, with Defense Minister Boris Pistorius eyeing a “drastic increase” to Germany’s military budget of up to €90 billion ($102 billion) by 2028.

The German government expects that attracting volunteers would allow the country to increase the number of reservists from around 100,000 to 200,000, Reuters reported in an article on Friday. Berlin could consider returning to conscription, abolished in Germany since 2011, if the scheme fails to deliver, according to the sources. During six-month service, volunteers would learn “simple tasks” such as guard duty while being offered the chance to eventually obtain tank or truck driver’s licenses, it added. Berlin hopes that some of the volunteers would go on to have a career in the military, the sources said.

According to Reuters, Pistorius wants to have the legislation passed by the end of August so that the first volunteers to start their training in May next year. The defense minister said in June that the Bundeswehr would be required to increase the number of its active duty troops from around 180,000 to 260,000 to meet its NATO targets. The statement was made ahead of the recent NATO summit, during which the bloc’s members agreed to boost their defense spending to 5% GDP by 2035. Russian officials have condemned the militarization drive in Germany and other Western European nations, urging them to support US-led peace initiatives for the Ukraine conflict, instead of gearing up for war with Moscow.

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Wars have started over much less.

Ethiopia Declares Completion Of Dam Debated With Egypt and Sudan (RT)

Ethiopia has announced the completion of the Grand Ethiopian Renaissance Dam (GERD), a multibillion-dollar hydropower project on the Blue Nile that has been the focus of a decade-long dispute with Egypt and Sudan. The dam will be formally inaugurated in September, the Office of the Prime Minister said in a statement. Under construction since 2011, the GERD is designed to generate up to 5.15 gigawatts of electricity, making it the largest hydroelectric power plant in Africa. While Ethiopia presents the project as a transformative energy source for the region, Egypt and Sudan have repeatedly raised concerns over its impact on downstream water flows.

In a message shared on X, the Ethiopian government described the GERD as “a symbol of regional cooperation and mutual benefit,” insisting that the project “is not a threat, but a shared opportunity.” Officials in Addis Ababa argue that the dam’s power generation will benefit not just Ethiopia but neighboring states as well. The dam is built on the Blue Nile – the Nile’s main tributary. The Nile provides about 97% of Egypt’s freshwater supply, according to various sources. Both Cairo and Khartoum fear that upstream water retention could severely affect agriculture and water security in their countries.

In September, the Egyptian government filed a complaint with the UN Security Council, accusing Ethiopia of violating international law and threatening regional stability with its alleged unilateral actions regarding the GERD project. The move came after Prime Minister Abiy Ahmed announced the fifth phase of filling the dam. Amid ongoing disagreement over water rights, Ethiopia has pushed forward with a regional water governance framework. In October, Prime Minister Abiy confirmed the implementation of the Cooperative Framework Agreement (CFA), a treaty designed to establish a permanent Nile River Basin Commission (NRBC) among upstream nations. The treaty has been signed by upstream countries including Uganda, Rwanda, Kenya, Tanzania, Ethiopia, and Burundi, with South Sudan joining in 2012.

While the treaty moved closer to activation after South Sudan’s parliament ratified it in July, Egypt and Sudan have rejected the accord. Both governments called it an “incomplete” document that is not “representative of the Nile Basin as a whole.” Egypt has warned that even a modest reduction of just 2% in its Nile water supply could lead to the loss of around 200,000 acres of farmland, posing a serious threat to national food security. Sudan has voiced similar fears, citing the river’s vital role in its agriculture sector.

Read more …

 

 

 

 

Jefferson

Covid

Flynn+

Parking
https://twitter.com/HowThingsWork_/status/1940901653550715254

 

 

Support the Automatic Earth in wartime with Paypal, Bitcoin and Patreon.

 

 

 

 

 

 

Sep 022018
 
 September 2, 2018  Posted by at 9:16 am Finance Tagged with: , , , , , , , , , ,  7 Responses »


Salvador Dali Portrait of Picasso 1947

 

Is The US Economic Boom Beginning To Fizzle Out? (Coppola)
Former Eurogroup Head Dijsselbloem Says Demands On Greeks Were Too Heavy (R.)
The IMF Abetted The European Union’s Subversion Of Greek Democracy (Mody)
Ethiopia Debt Woes Curtail China Funding (R.)
May Vows No Compromise With EU On Brexit Plan (BBC)
Pentagon Cancels Aid To Pakistan Over Record On Militants (R.)
Monsanto-Bayer: Eliminating The Name Will Not Erase The Criminal History (CD)
What’s Happening To Our Weather? The Answers Are Hiding In Arctic Air (G.)

 

 

Bit short today. I think because all the focus is one two funerals I don’t care much about. In one, a bishop grabs boobs, in the other the one person not invited gets all the attention.

Is that a surprise?

Is The US Economic Boom Beginning To Fizzle Out? (Coppola)

President Trump is not going to be too happy with the New York Fed’s latest nowcast for Q3 2018. The staff projection, based upon the latest data, shows annualized quarter-on-quarter GDP growth slowing to 2% per annum. At the end of 2017 it was 4%, and even at the end of Q2 it was 3%.

The Atlanta Fed’s nowcast, which calculates GDP growth in the same way as the U.S. Bureau of Economic Analysis, also shows GDP growth slowing in Q3, though from a higher level. The Atlanta Fed’s growth estimate for Q3 is 4.1%. President Trump will no doubt be happy with this, but not so happy with the fact that at the beginning of August the estimate was 5%.

So what has gone wrong? Why are the nowcasts suggesting that U.S. economic growth is beginning to slow? The indicators that go into the NY Fed’s nowcasts have been gradually turning red for some time now. There appears to be something of a downturn going on in the housing market; both new starts and sales have fallen. Exports have fallen and imports have risen, apparently because of worsening terms of trade, most likely due to the strong dollar. Most recently, manufacturers have drawn down inventories, and there is a fall in orders and shipments for durable goods. There are no dramatic drops, but it all adds up to a gradual economic slowdown.

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How long have you realized this, Jeroen, and what have you done to repair it?

Former Eurogroup Head Dijsselbloem Says Demands On Greeks Were Too Heavy (R.)

Euro zone countries have asked for too much from the Greek people in return for international bailout loans, former Eurogroup chief Jeroen Dijsselbloem said in an interview on Dutch television on Saturday. “On reforms, we have asked a lot from the Greek people, too much,” Dijsselbloem told current affairs program Nieuwsuur. “Reforms are hard enough to accomplish in a society with a well-functioning government, but this was obviously not the case in Greece.” Greece emerged from the biggest bailout in economic history on Aug. 20, after receiving 288 billion euros in financial aid since 2010, with the European Union as its biggest lender.

During the crisis, the Greek economy shrank by a quarter, pushing a third of the population into poverty and driving thousands to move abroad. “Greece is obviously not a success story,” Dijsselbloem said. “Their crisis has been so deep, that you can’t call it a success.” Dijsselbloem chaired the Eurogroup of euro zone finance ministers from 2013 until the beginning of 2018, and led dozens of lengthy emergency meetings during which bailouts for Greece, Cyprus and the Spanish banking sector were grudgingly pieced together.

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Sister act.

The IMF Abetted The European Union’s Subversion Of Greek Democracy (Mody)

European authorities never allowed a conversation around the core imperative of reducing Greece’s debt burden. Syriza formed a government on January 25, 2015. On January 31, Erkki Liikanen, governor of Finland’s central bank and, in that capacity, a member of the ECB’s Governing Council, threatened that the ECB would stop funding Greek banks if the Greek government did not agree to the terms of the creditors. And on February 4, the ECB decided Greece’s fate. In an aggressive move that took everyone by surprise, the ECB cut off funding to Greek banks, preemptively immobilizing the Greek government before it could begin negotiations with its creditors.

The ECB withdrew an earlier arrangement under which Greek banks used their government bonds as collateral (security) to obtain funds for running their day-to-day operations. Although Greek government bonds had a junk rating and normally only higher-rated bonds qualified as collateral, the ECB had waived that requirement to help the banks stay afloat. With its February 4 decision, the ECB revoked that waiver. Greek banks could now borrow only from the Greek central bank under an Emergency Liquidity Arrangement (ELA); ELA funds carried a higher interest rate and, moreover, could be turned off at any time, thus choking the Greek financial system.

Stock prices of Greek banks fell sharply, and two days later, the rating agency S&P pushed the government bonds’ rating further into junk territory. With continuing deposit flight from Greek banks and the threat of a financial meltdown, the Syriza government rapidly lost all leverage before it could use its economic argument in a political negotiation.

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More Belt and Road.

Ethiopia Debt Woes Curtail China Funding (R.)

Ethiopia has been lauded by experts from China’s ruling Communist Party as a “model country” in Beijing’s $126 billion Belt and Road initiative to build rail, road and sea links tying China to Eurasia and Africa. But as the Horn of Africa nation of 100 million people faces debt distress, there are signs that China, a major creditor, is slowing financing to Ethiopia as doubts grow over the profitability of some infrastructure projects there. “The intensifying repayment risks from the Ethiopian government’s debt reaching 59 percent of GDP is worrying investors,” China’s mission to the African Union in Addis Ababa said on its website in July.

It said that Chinese investment in the country was cooling and that the China Export and Credit Insurance Corp was reducing the scale of its investment there. Against a backdrop of rising worry over African indebtedness to China, Prime Minister Abiy Ahmed will visit Beijing for the Forum on China-Africa Cooperation (FOCAC), which starts on Monday. He is due to meet Chinese Prime Minister Li Keqiang and is expected to court investment from Chinese firms into Ethiopia’s agro-industrial and pharmaceutical businesses, China’s Xinhua news agency said. Ethiopia has been a top destination for Chinese loans in Africa, despite its lack of natural resources, with state policy banks extending it more than $12.1 billion since 2000, according to the China Africa Research Initiative (CARI) at the Johns Hopkins School of Advanced International Studies in Washington (SAIS).

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Not your call, Theresa.

May Vows No Compromise With EU On Brexit Plan (BBC)

Theresa May has insisted she will not be forced into watering down her Brexit plan during negotiations with the EU. Writing in the Sunday Telegraph, the prime minister says she will “not be pushed” into compromises on her Chequers agreement that are not in the “national interest”. But Mrs May also warns she will not “give in” to those calling for a second referendum on the withdrawal agreement. She says it would be a “gross betrayal of our democracy and… trust”. The People’s Vote, a cross-party group including some MPs, is calling for a public vote on the final Brexit deal. The UK is on course to leave the EU on 29 March and the government had previously ruled out another referendum.

The prime minister writes that the coming months are “critical in shaping the future of our country”, but that she is “clear” about her mission in fulfilling “the democratic decision of the British people”. She adds that following the Chequers agreement in July – which led to the resignation of two cabinet ministers – “real progress” has been made in Brexit negotiations. While there is more negotiating to be done, Mrs May writes: “We want to leave with a good deal and we are confident we can reach one.” The government has been preparing for a no-deal scenario, even though this would create “real challenges for both the UK and the EU” in some sectors, she says. But the PM adds: “We would get through it and go on to thrive.”

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Just as they’ve voted in Imran Khan, who once suggested he might order the shooting down of U.S. drones if they entered Pakistani airspace, [and] has opposed the United States’ open-ended presence in Afghanistan.

Pentagon Cancels Aid To Pakistan Over Record On Militants (R.)

The U.S. military said it has made a final decision to cancel $300 million in aid to Pakistan that had been suspended over Islamabad’s perceived failure to take decisive action against militants, in a new blow to deteriorating ties. The so-called Coalition Support Funds were part of a broader suspension in aid to Pakistan announced by President Donald Trump at the start of the year, when he accused Pakistan of rewarding past assistance with “nothing but lies & deceit.” The Trump administration says Islamabad is granting safe haven to insurgents who are waging a 17-year-old war in neighboring Afghanistan, a charge Pakistan denies. But U.S. officials had held out the possibility that Pakistan could win back that support if it changed its behavior.

U.S. Defense Secretary Jim Mattis, in particular, had an opportunity to authorize $300 million in CSF funds through this summer – if he saw concrete Pakistani actions to go after insurgents. Mattis chose not to, a U.S. official told Reuters. “Due to a lack of Pakistani decisive actions in support of the South Asia Strategy the remaining $300 (million) was reprogrammed,” Pentagon spokesman Lieutenant Colonel Kone Faulkner said. Faulkner said the Pentagon aimed to spend the $300 million on “other urgent priorities” if approved by Congress. He said another $500 million in CSF was stripped by Congress from Pakistan earlier this year, to bring the total withheld to $800 million. The disclosure came ahead of an expected visit by U.S. Secretary of State Mike Pompeo and the top U.S. military officer, General Joseph Dunford, to Islamabad. Mattis told reporters on Tuesday that combating militants would be a “primary part of the discussion.”

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8,000 lawsuits. And Bayer is not a US company, big difference.

Monsanto-Bayer: Eliminating The Name Will Not Erase The Criminal History (CD)

Cancelling out Monsanto’s name and keeping only that of Bayer, does not mean forgetting the wrongdoings of a company which, according to the verdict of the Monsanto Tribunal of The Hague, is stained with crimes of ecocide. With Bayer’s official takeover of Monsanto, the giant multinational also inherits its liabilities. On the eve of the start of the integration process, Monsanto has been held liable for causing cancer through the use of its glyphosate-based weedkiller Roundup and ordered to pay $289 million of damages to the plaintiff Dewayne Lee Johnson in the first landmark case, settled in California in mid August 2018. The jury also found that Monsanto “acted with malice or oppression.”

According to Reuters, the number of lawsuits brought against Bayer’s newly acquired Monsanto is approximately 8000 in the US alone. UN experts Ms Hilal Elver, Special Rapporteur on the right to food and Mr. Dainius Puras, Special Rapporteur on the right to physical and mental health, defined the ruling “a significant recognition of the human rights of victims, and the responsibilities of chemical companies.” Revelations in reports published last year, most notably the “Monsanto Papers” and the “Poison Papers“, have shed light on strategies of big agrochemical groups to expand their empires: from lobbying, interference in government agencies’ proceedings, attacks in collusion with institutions on independent science, to mega mergers and acquisitions.

For the first time part of these documents were shown to a jury, which were able, among other things to also see that, “at least starting 20 years ago, Monsanto has known that their product can cause cancer, and has gone out of its way to ignore it and/or fight any science that suggests a link”, as declared to Democracy Now by Brent Wisner, the lead trial counsel for Dewayne Lee Johnson in his lawsuit against Monsanto. Added to this, in the same week, California’s Supreme Court rejected a challenge by Monsanto to the state’s decision to include glyphosate in its Proposition 65 list of carcinogens.

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How clean is the air?

What’s Happening To Our Weather? The Answers Are Hiding In Arctic Air (G.)

I am standing on the ocean. Ahead of me, the world is split into two perfect halves: blue sky above, white sea ice below. The view is clean and simple, but a continuous waltz of swirling and shunting is hidden inside those two colours: the inner workings of the Arctic engine. This place is special for many reasons, and to appreciate one of the most unusual all I need to do is to live; to breathe. The air is -2C, but the air coming from my lungs is invisible. The familiar wisps of cold breath that I associate with crisp winter air in Britain are absent. They cannot form here. And that anomaly is connected in a fundamental way to our presence here, on a scientific expedition to study this environment. For two months, the Swedish icebreaker Oden is home to 74 of us, living and working at the top of the world to tap into the stories that the blue and the white have to tell.

The Arctic has held on to its mystique for centuries. Many western explorers have pitted their wits, strength, and endurance against this environment, while traditional Arctic communities have learned to work with the complexities of the ice rather than against them. Those of us who live well south of the Arctic circle hear a lot about how the white in the north is changing, but less about how it is. It’s hard to construct a secondhand mental image of what it’s like here. There are no landmarks and you cannot step in the footprints of the past. This is an ocean with an icy shell that cracks and shifts as it’s pushed by the wind, breaking apart into separate floes or piling up to form ridges.

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Jan 062015
 
 January 6, 2015  Posted by at 11:27 am Finance Tagged with: , , , , , , , ,  3 Responses »


DPC Unloading bananas, New Orleans 1903

Oil Below $49 As Sector Faces Its ‘Hunger Games’ (CNBC)
Brent Falls Below $52 As Oil Hits New Five And A Half Year Lows (Reuters)
Oil Drama Drives Shares Lower In Asia And Europe (Reuters)
Some Traders Are Betting On $20 Oil (MarketWatch)
Caterpillar Is Latest Victim Of Sliding Oil Price (MarketWatch)
Saudi Slashes Monthly Oil Prices To Europe; Trims US., Ups Asia (Reuters)
Saudi Arabia Raises Price of Main Oil Grade for Asian Buyers (Bloomberg)
Oil Below $55 May Force Norway to Cut Rates Again (Bloomberg)
Oilfield Writedowns Loom as Market Collapse Guts Drilling Values (Bloomberg)
Greece vs Europe: Who Will Blink First? (AEP)
The Black Hole Theory Of The Eurozone (Coppola)
As Goes Greece, So Goes the Euro (Bloomberg ed.)
A New Year, A New Europe? Don’t Count On It (CNBC)
Goldman Says JPMorgan Should Break Itself Into Pieces (Bloomberg)
China Fast-Tracks $1 Trillion in Projects to Spur Growth (Bloomberg)
Venezuelan Leader Maduro Seeks Economic Help On Tour (BBC)
The Demise of UK’s Lucky Years Pits Winners Against Losers (Bloomberg)
The Economics (and Nostalgia) of Dead US Shopping Malls (NY Times)
Forecast 2015 – Life in the Breakdown Lane (Jim Kunstler)
2015: Grounds for Optimism (Dmitry Orlov)
The People Pushed Out Of Ethiopia’s Fertile Farmland (BBC)
Does CNN Really Have A Video Ready For The Apocalypse? (BBC)

“.. a dystopian post-apocalyptic future where the main protagonists battle each other to survive.”

Oil Below $49 As Sector Faces Its ‘Hunger Games’ (CNBC)

Oil’s dramatic fall in price will have serious effects on revenues and spending in the sector, according to some industry analysts, with one investment firm predicting a sector-wide “recession” that will last for several years. Both U.S. crude and Brent futures fell to fresh 5-1/2-year lows on Tuesday, with the former slipping below $49. Weak global demand and booming U.S. oil production are seen as the key reasons behind the price plunge, as well as OPEC’s reluctance to cut its output. This sector slump will lead to a fight to the death for oil firms, according to analysts at Bernstein Research. The research firm likened the current environment to the Hollywood movie “The Hunger Games”, which portrays a dystopian post-apocalyptic future where the main protagonists battle each other to survive.

“Our research convinces us an oil services recession is largely unavoidable at even $80 a barrel…The Hunger Games have begun,” Nicholas Green, a senior analyst at the company, said in a note on Tuesday morning. Bernstein’s Green believes that offshore activity will also face a “structural recession.” He predicts that there will be only half of the new work available in 2015, compared to last year, and forecasts no material recovery before 2017. Other possible casualties of the sector’s struggle for survival are the high-risk and reward exploration and oil production companies (E&P), ratings agency Moody’s said Tuesday. If oil prices average $75 a barrel in 2015, then North American E&P companies would likely reduce their capital spending by around 20% from last year, according to Moody’s.

It could even be cut by 40% it oil starts at below $60 a barrel, it added. Oilfield services companies, or OFS, are companies that provide services to the E&P industry, and could face an earnings crunch of 12% to 17% if oil averages $75 a barrel in 2014, according to Moody’s. An average price below $60 a barrel in 2015 could drive earnings down by 25 to 30%, it added. Meanwhile, midstream operators – which are involved in the transportation of oil – would come under significant earnings pressure if this spending is cut, according to the ratings agency.

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“When the Saudis are cutting prices, the markets are not going to go higher.”

Brent Falls Below $52 As Oil Hits New Five And A Half Year Lows (Reuters)

Oil prices sank to fresh 5-1/2-year lows on Tuesday, extending losses after a 5% plunge in the previous session as worries over a global supply glut intensified. Brent crude fell by 3% to below $52 a barrel as cuts to monthly oil selling prices for European buyers by top OPEC producer Saudi Arabia heightened worries about oversupply. “Saudi Arabia is showing no signs of pulling back,” said Bjarne Schieldrop, chief commodity analyst with SEB in Oslo. “Stocks are continuing to build, and there is an increase in contango.” While Saudi Arabia increased its selling price to Asia, some analysts said the cuts to Europe reflect the kingdom’s deepening defense of market share. This added to bearish data over the weekend showing that Russia’s 2014 oil output hit a post-Soviet-era high and exports from Iraq, OPEC’s second-largest producer, reached their highest since 1980.

On Tuesday, the UAE’s Abu Dhabi National Oil Company set the December retroactive selling price for its benchmark Murban crude at $60.65 a barrel, its lowest level since May 2009. “It’s hard to pinpoint a specific downward pressure,” Schieldrop said. Brent crude fell as low as $51.23 a barrel on Tuesday, its lowest level since May 2009. It was trading at $51.31 at 0942 GMT (0442 ET), down $1.80. U.S. crude was at $48.54, down $1.50, after falling to $48.47, its lowest since April 2009. Jitters over political uncertainty in Greece added to an already faltering eurozone economy, raising questions about energy demand in Europe and compounding the bearish sentiment. A slew of factors was keeping up the downward pressure on prices, analysts said, pointing to concerns about the Greek economy, high oil output from Russia, Iraq and the United States, and a stronger dollar. “The weak euro should be one of the reasons,” said Tamas Varga of PVM, adding: “When the Saudis are cutting prices, the markets are not going to go higher.”

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As I said yesterday, this oil thing is the real deal.

Oil Drama Drives Shares Lower In Asia And Europe (Reuters)

European shares sank for a third day on Tuesday as a slide in oil prices showed no sign of easing off, supporting traditional safe-haven assets such as top-rated government bonds, the Japanese yen and the Swiss franc. Asian shares had slumped overnight after another day of drama on oil markets that drove U.S. crude to less than $50 a barrel for the first time since the first half of 2009 and handed Wall Street its worst losses in three months. The resulting bid for safety drove the average of yields on German, U.S. and Japanese 10-year debt to less than 1% for the first time. Also hit by a poor reading from a purchasing managers’ survey in Italy, all of Europe’s major exchanges were in negative territory an hour into morning trade.

“Global risk sentiment has been hurt by sliding stocks and oil prices. That is leading to a perception that there is a lack of demand and that has implications for global growth,” said Jeremy Stretch, head of currency strategy at CIBC World Markets. The FTSEuroFirst 300 index of leading shares, along with France’s CAC40 and Germany’s DAXI, were all down 0.8%. Britain’s oil and gas heavy FTSE index lost 1.3%. Japan’s Nikkei dropped 3%, its largest fall in almost 10 months while South Korean shares fell 1.7% to a 1-1/2-year low. Even high-flying mainland Chinese shares pulled back after hitting 5-1/2-year highs earlier in the session.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4%. The slide in oil prices has shown little sign of abating in the new year, plunging as much as 6% on Monday as investors continue to reprice for broadly lower global demand and the impact of heavy U.S. shale drilling. Brent crude fell by another 1.5% to less than $53 after data showed Russian oil output at post-Soviet era highs and Iraqi oil exports near 35-year peaks. “Falls in oil prices are going beyond many people’s expectations. This will put pressure on the earnings of U.S. energy firms,” said Hirokazu Kabeya, senior strategist at Daiwa Securities in Tokyo.

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“.. the pickup in interest in far out-of-the money calls is noteworthy for what it says about market psychology.”

Some Traders Are Betting On $20 Oil (MarketWatch)

Here’s how bearish some traders are getting on oil these days. Even before Nymex WTI crude futures on Monday dipped below $50 a barrel in the latest stage of the crude rout, Stephen Schork, editor of the widely followed Schork Report, took note of trading in well out-of-the-money put options (puts give you the right, but not the obligation, to sell the underlying futures contract at a specific strike price). Unsurprisingly, open interest (the number of open contracts) in $50 strike-price puts on the February WTI futures contract had risen to 22,537 as of Friday’s close from 193 contracts at the beginning of December. Open interest on $45 puts rose from 8 to 36,113, while open interest in $40 puts rose from 1 to 9,864.

Here’s where it gets interesting: Open interest on $30 puts on the March futures contract rose to 2,127 from 34, while $30 puts on the June contract rose from 35 to 51,252. In addition, there has even been some light trading in June $20 puts, with open interest at 176 as of Friday’s close. “In other words, bets on sub-$30 crude oil in June are now 1.7 times greater than physical inventory at the Nymex terminal complex in Cushing,” Schork said in a note, referring to the Oklahoma delivery point for WTI oil. Of course, a trader can make money on a put even if the price of the underlying contract doesn’t fall below the strike price. The value of the option can rise as the price of the commodity declines. But the pickup in interest in far out-of-the money calls is noteworthy for what it says about market psychology.

Is it a sign that market sentiment has moved to an extreme, setting the stage for a rebound? The economics of the oil market are effectively “broken” and that’s left “psychology” to drive price action, Schork said. Even though the market is oversold according to technical measures, that’s been the case for the past three months, he said. “We could get a rebound to $70, but we could see $30 before we see $70, so why do you risk $20 to win $20,” he said. “So no picking the bottom here.”

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All suppliers hurt. A lot.

Caterpillar Is Latest Victim Of Sliding Oil Price (MarketWatch)

Caterpillar shares tumbled Monday as the company became the latest victim of the sliding price of oil. Caterpillar’s stock umbled almost 6% after J.P. Morgan downgraded it to underweight from neutral on concerns about the company’s direct exposure to oil and gas, and indirect exposure to mining, U.S. construction and emerging markets. The maker of diggers and dozers’ direct exposure to the sector is equal to about $6.5 billion, or 12% of revenue, while its indirect exposure may be as much as 15% of revenues, analysts wrote in a note. That means almost 30% of its total revenue is facing pressure in 2015 and 2016.

Caterpillar supplies turbines to offshore rigs, as well as reciprocating engines and transmissions for on-site drilling. It also provides construction equipment that is used in infrastructure development, along with aftermarket and other services. “Its indirect exposure may be greater than anticipated,” said the note. “Our analysis suggests that since 2010 U.S. construction equipment demand has been strongly correlated with the expansion of fracking and, as a result, we would expect to see a slowdown in equipment demand in 2015.” The North American construction market accounts for about 17% of Caterpillar’s revenue, and about 5% of its total revenue may be tied to oil and gas states.

Caterpillar also has exposure to Canadian Oil Sands, which is likely to experience a significant slowdown in demand. Emerging markets and the Middle East are other key markets that are expected to be hurt by the falling oil price. “Finally, the stronger dollar may also weigh on [Caterpillar’s] competitiveness against its international competitors and, given that senior executive compensation is based partly on market share, we would expect pricing to come under increasing pressure as we go forward,” said the note. Shares of the Dow Jones Industrial Average component have fallen 5.6% in the last three months, while the Dow has gained 2.9%.

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This is how Reuters reports the Saudi move, scroll down to see how Bloomberg does it.

Saudi Slashes Monthly Oil Prices To Europe; Trims US., Ups Asia (Reuters)

Saudi Arabia made deep cuts to its monthly oil prices for European buyers on Monday, a move some analysts said reflects the kingdom’s deepening defense of market share, although it also hiked prices in Asia from record lows. State oil firm Saudi Aramco cut the official selling price (OSP) for its Arab Light crude to Northwest Europe, a region that buys only a small proportion of Saudi Arabia’s crude, by $1.50 a barrel for February, putting it at a discount of $4.65 a barrel to the Brent Weighted Average (BWAVE), the lowest since 2009. However, Aramco also raised its February price for its Arab Light grade for customers for Asia – the largest of its major markets, accounting for more than half of its exported crude – by 60 cents a barrel versus January to a discount of $1.40 a barrel to the Oman/Dubai average.

The $2 discount to Asia in January was the largest in records going back more than a decade, but traders had been expecting Aramco to hike prices by at least 20 to 30 cents due to the narrowing spread in the Dubai market. The Arab Light OSP to the United States, the fifth consecutive monthly cut, was set at a premium of 30 cents a barrel to the Argus Sour Crude Index (ASCI) for February, down 60 cents from the previous month. The Kingdom’s move to cut its OSPs has been perceived by many traders as a signal of its decision to abandon efforts to shore up falling crude oil prices and, instead, focus on maintaining its share of key markets.

“The moves are reinforcing that the Saudis just don’t intend to do anything to rebalance (price) levels,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. Benchmark Brent oil prices held on to earlier deep losses following the publication of the Saudi OSPs on Monday, trading at around $53.50 a barrel, down $3 on the day. Some analysts, however, have said they see the changes in monthly differentials as a simple reflection of deteriorating market conditions, not an indicator of policy. One trader said that the cuts to Europe may be a result of trying to price out West African barrels from Europe.

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Bloomberg intentionally cherrypicks ithe headline, but does state in the article: “It decreased 11 prices globally and increased six ..” Journalism? You tell me.

Saudi Arabia Raises Price of Main Oil Grade for Asian Buyers (Bloomberg)

Saudi Arabia raised the cost of its oil sales to Asia in February, prompting speculation the world’s biggest exporter is retreating from using record price discounts to defend market share. Saudi Arabian Oil will sell its Arab Light grade for $1.40 a barrel less than a regional average next month, the company said yesterday in a statement. That’s a narrowing from January, when the discount was $2, the biggest in at least 14 years. It decreased 11 prices globally and increased six. Brent oil fell 5.9% yesterday.

Oil prices collapsed 32% since OPEC decided to maintain its output target on Nov. 27, amid signs Saudi Arabia and other members are determined to let North American shale drillers and other producers share the burden of reducing an oversupply. When Aramco lowered prices for November it prompted speculation the nation was seeking to preserve market share. “They’re putting the brakes on a little bit,” Leo Drollas, a London-based independent consultant and former chief economist at the Centre for Global Energy Studies, said by phone. “It’s a little message that maybe prices are going down too far too quickly, and this is a little signal that they’re looking at things.”

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Not doing so well.

Oil Below $55 May Force Norway to Cut Rates Again (Bloomberg)

As oil drops below $55 a barrel, speculation is growing that the central bank of western Europe’s biggest crude producer will need to cut rates again. A 54% slump in Brent crude since a June high has pummeled the offshore industry in Norway, where oil and gas make up 22% of gross domestic product. Over the same period the krone has lost about 20% against the dollar and 8% against the euro. The OBX benchmark stock index is down about 12%. The central bank delivered a surprise rate cut last month it said was triggered by plunging crude prices. Since then the oil price development has proven even worse than the central bank anticipated. In an interview yesterday, Governor Oeystein Olsen said $55 oil is “clearly lower” than expected in December.

At Norway’s biggest bank, DNB, economists say Olsen will need to reduce rates again in June from 1.25%. “The weaker krone buys Norges Bank some time before they make another cut,” Kjersti Haugland, an analyst at DNB, said by phone. After lowering rates for the first time in almost three years on Dec. 11, Olsen said he sees a “50-50 chance” of more easing this year. Nordea Bank, Scandinavia’s biggest bank, says that means another two reductions, bringing the benchmark deposit rate to 0.75%. The central bank, which also oversees Norway’s $850 billion sovereign wealth fund, plans to provide more detail on how oil prices will shape its policy in March, Olsen said. Brent crude will need to trade above $70 a barrel before pressure on monetary policy abates, Olsen said in a Dec. 12 interview. Since then, the price of oil has dropped 14% to its lowest level in more than five years.

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Slaughterhouse.

Oilfield Writedowns Loom as Market Collapse Guts Drilling Values (Bloomberg)

Tumbling crude prices will trigger a flood of oilfield writedowns starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration. With crude prices down more than 50% from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, said a team of Citigroup analysts led by Alastair Syme. Companies on the hook for risky, high-cost projects that don’t make sense in a $50-a-barrel market include international titans such as Royal Dutch Shell and small wildcatters like Sanchez Energy. The impending writedowns represent the latest blow to an industry rocked by a combination of faltering demand growth and booming supplies from North American shale fields.

The downturn threatens to wipe out more than $1.6 trillion in earnings for producing companies and nations this year. Oil explorers already are canceling drilling plans and laying off crews to conserve cash needed to cover dividend checks to investors and pay back debts. “The mid-cap and small-cap operators are going to be hardest hit because this is all driven by their cost to produce,” said Gianna Bern, founder of Brookshire Advisory, who also teaches international finance at the University of Notre Dame. An index of 43 U.S. oil and gas companies lost about one-fourth of its value since crude began its descent from last year’s intraday high of $107.73 a barrel on June 20. The price dipped below $50 on Jan. 5, the lowest since April 2009.

The decline represents a $4.4 billion drop in daily revenue for oil producers, which equates to $1.6 trillion on an annualized basis, Citigroup researchers led by Edward Morse said in a Jan. 4 note to clients. The oil-market rout is exposing projects dating as far back as 2009 that were either poorly executed or bad ideas to begin with, Syme’s team said in a note to clients. Shell, Europe’s largest energy producer, may have as much as 5% of its capital tied up in money-losing projects. For U.K.-based BG Group, the figure could be as high as 8%, according to the Citi analysts. The biggest swath of asset writedowns probably will happen among U.S. explorers such as Sanchez, Matador and Clayton Williams that don’t have the same financial discipline as bigger producers such as Marathon Oil, Bern said.

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Very true, Ambrose: “Mr Draghi can hardly agree to buy Greek bonds three days before the likely election of a party that has vowed to repudiate that same debt.”

Greece vs Europe: Who Will Blink First? (AEP)

There is a whiff of 1914 to the latest Balkan showdown. Everybody thinks everybody else is bluffing, all of them betting that a calamitous chain reaction will be averted. In Germany, Der Spiegel reports that Angela Merkel thinks Greece can be ejected safely from the euro, if the rebel Syriza party wins the elections on January 25 and carries out its pledge to tear up Greece’s hated “memorandum” with the EU-IMF “Troika”. The German Chancellor’s team are blanketing the airwaves in what looks like a campaign to drive the threat home. “We are past the days when we still have to rescue Greece,” said Michael Fuchs, the parliamentary leader of Mrs Merkel’s Christian Democrats. “The situation has completely changed. It is entirely different from three years ago when we didn’t have the backstop defences in place. Greece is no longer ‘systemically relevant’ for the euro.” He added wickedly that the single currency might actually be stronger without the Balkan troublemaker.

It was revealed last week that Germany offered Greece a “friendly” return to the drachma in 2011. Months later, Mrs Merkel was prepared to eject Greece from EMU altogether. Tim Geithner, the former US Treasury Secretary, said the Europeans seemed determined to teach Greece a lesson: “They lied to us, and we’re going to crush them,” was the gist of it. Mrs Merkel retreated only after it became clear that Spain and Italy would be engulfed by contagion if Greece was thrown out. This time, Berlin seems almost eager to finish the job. Yet Syriza’s ice-cool leader, Alexis Tsipras, is equally convinced that the EU elites will back down, knowing that they have invested too much political capital in Greece’s salvation to walk away. After all, the sums involved now are tiny compared to the €245 billion in loans already dispersed since the crisis erupted in May 2010. Surely, after having claimed so confidently that the crisis was essentially over, Mrs Merkel can hardly admit that her strategy has failed?

Syriza itself is a neo-Marxist mélange, an ideological work in progress. Mr Tsipras no longer has a picture of Che Guevara in his office and has quickly mastered the Brussels vernacular – so much so that EU leaders and City economists presume, rightly or wrongly, that his rhetoric is just for domestic consumption. Yet the ultra-Left Aristeri Platforma still holds the biggest bloc of votes on Syriza’s central committee, and has stated that the movement must “be ready to implement its progressive programme outside the eurozone” if the EU refuses to yield. Mr Tsipras clearly wants Greece to remain in the euro. But he continues to insist on terms that negate that. He says: “We will cancel austerity. Under a Syriza government Greece will exit the bailout. This is not negotiable.” Twisting his knife into the German psyche, he wants the same level of debt relief – 50% – that Germany secured in 1953, which Greece signed up to despite the death of some 300,000 of its citizens under Nazi occupation.

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“.. if markets have already priced in QE, why would actually doing QE make any difference?”

The Black Hole Theory Of The Eurozone (Coppola)

Jean Pisani-Ferry tells the ECB to get a grip:

On the face of it, the ECB has many reasons to launch QE. For two years, inflation has consistently failed to reach the 2% target. In November, the annual price growth was just 0.3%, while the recent collapse in oil prices will generate further downward pressure in the coming months. Even more important, inflation expectations have started to de-anchor: forecasters and investors expect the undershooting of the target to persist over the medium term. Low inflation is already a serious obstacle to economic recovery and rebalancing within the eurozone. Outright deflation would be an even more dangerous threat.

So far, so good. Deflation risk is a legitimate reason for a central bank to loosen monetary policy. The ECB has already pushed funding rates close to zero and deposit rates into negative territory, as well as throwing money at banks and buying ABS and MBS in an attempt to get banks to lend. All this appears to have done is slow the rate at which M3 lending is falling (in a credit-money economy, I regard M3 lending as the best indicator of future NGDP growth). It’s hard to argue that the ECB has done anything like enough to counter deflationary pressures and restore growth. But I’m really not sure about this. He seems to think that the ECB must do QE because it has already been priced in by markets:

Should the ECB disappoint expectations, bond and foreign-exchange markets would confront an abrupt and damaging unwinding of positions: long-term interest rates would rise, stock markets would sink, and the exchange rate would appreciate.

A failure to deliver what markets expect is a central bank failure, is it? Really? More importantly, if markets have already priced in QE, why would actually doing QE make any difference? The price effects are already there, and yet M3 lending is falling, unemployment remains stubbornly high, manufacturing PMI is on the floor and so are inflation expectations. I can accept Pisani-Ferry’s argument that the ECB must now do QE because otherwise things will get much worse, but I can’t see how it is going to reverse the current deflationary trend unless it is far larger than the programme the market has already priced in. “Shock and awe” is needed. Where is the political will for this?

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“Any country exiting the euro would throw the common currency’s continued existence into doubt.”

As Goes Greece, So Goes the Euro (Bloomberg ed.)

German Chancellor Angela Merkel is said to view Greece’s exiting the euro as a manageable risk that would pose no existential crisis for the common currency. That opinion, if she indeed holds it, is misguided at best and dangerous at worst. It’s true that Greece poses a less naked financial risk to the rest of the euro region than it did in 2009, when revelations about the true size of its deficit triggered the ongoing crisis. Today, only about a fifth of Greek government debts are owed to the private sector, thanks to the country’s bailout by the European Union, the European Central Bank and the International Monetary Fund. And borrowing by Greek private companies accounts for less than 1% of loans made by Europe’s biggest banks, according to JPMorgan.

So it’s true that, if Greek elections later this month produce a new government prepared to default on its debts rather than continue with austerity, the financial repercussions will be limited. That says little, however, about the chaos that could accompany the country’s departure from the euro. Contagion is never predictable. Once inclusion in the euro is shown to be ephemeral – despite the EU treaty’s insistence that membership is “irrevocable” – then other of the currency’s weaker members will be vulnerable to speculation about their staying power. Investors may be driven to short the bonds of Italy, Portugal or Spain – no matter how strong the economic or political arguments against their leaving the currency union – driving their borrowing costs to levels they can’t afford.

To be sure, Der Spiegel’s report about Merkel’s intentions might not accurately reflect Germany’s attitude to a Greek exit. Joachim Poss, a German coalition lawmaker, said today that the consequences would be “incalculable.” And German government spokesman Steffen Seibert noted the region’s policy is “to stabilize and strengthen the euro area, the euro area with all of its members, including Greece.” Nevertheless, the mere discussion of a potential fracture in the euro zone should be a warning to European leaders that their path to ever-closer union is anything but assured. The euro has slumped to its weakest value against the dollar since 2006. Although there are other factors involved, it is a reminder that investors aren’t keen on putting their money into a currency with an uncertain future. Make no mistake: No matter how much some politicians might claim that they’ve contained a potential Greek crisis, they have not. Any country exiting the euro would throw the common currency’s continued existence into doubt.

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“.. even if Draghi does unveil what the market is anticipating, the question is, will further easing measures be the solution to Europe’s economic malaise?

A New Year, A New Europe? Don’t Count On It (CNBC)

A new year is upon us and that means investors will take a fresh look at European stocks. Unfortunately, Europe’s gloomy picture hasn’t changed. Not enough growth. Inflation is too low. And unemployment is still too high in parts of Europe. Enter stage right: Mario Draghi. Arguably the most powerful European official, investors are betting on the European Central Bank President to unveil a full-blown program of quantitative easing to stimulate the region’s stagnant economy. “Will the ECB join in the fun? If yes – then that should bring stability to the Eurozone and help investors feel better – if not then watch out as global markets [to] adjust,” said Kenneth Polcari, Director at O’Neil Securities. The decision on full blown QE could come at the next governing council meeting on January 22th.

If the ECB does not join the party, then markets could be set for a steep decline. Already financial markets have been moving on the expectation that Draghi will deliver the goods. But if this is a classic –overpromise and underdeliver – something Draghi is quite good at, then traders say expect markets to react negatively. But even if Draghi does unveil what the market is anticipating, the question is, will further easing measures be the solution to Europe’s economic malaise? Sure, it worked in the U.S. but does that mean it will work in Europe? Some traders say no. An economic recovery takes more than just quantitative easing. Each individual economy needs to work on structural reform – policies to help revive their own respective countries. And while each country says it’s working on a plan – some analysts say more work can be done.

Less reliance on ECB and more action from individual country leaders is needed, they say. Despite what is most likely going to be a slow and drawn-out path to recovery, there are some investors who are bullish on Europe. In fact, Morgan Stanley writes that it is positive on European equities for 2015. Analysts there expect a pick-up in economic momentum, and 10% earnings per share (EPS) growth. One of the factors that should help earnings this year is a weaker euro. The single currency is currently trading at a multi-year low against the US dollar. “A key component in our 10% EPS forecast is the likely currency tailwinds that European companies will enjoy next year. Our foreign exchang strategists expect EUR/USD to reach 1.12 by the end of 2015,” writes Graham Secker, Morgan Stanley’s Chief European Equity Strategist.

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All big banks should be broken up.

Goldman Says JPMorgan Should Break Itself Into Pieces (Bloomberg)

JPMorgan Chase’s parts are probably worth more to investors than the whole after regulators proposed tougher rules penalizing firms for size and complexity, according to Goldman Sachs. JPMorgan could unlock value by splitting its four main businesses or dividing into consumer and institutional companies, Goldman Sachs analysts led by Richard Ramsden wrote today in a research note. Units of New York-based JPMorgan trade at a discount of 20% or more to stand-alone peers, they wrote. “Our analysis suggests that a breakup into two or four parts could unlock value in most scenarios, although the range of outcomes we assessed is wide, at 5% to 25% potential upside,” the analysts wrote. The move would reverse much of Chief Executive Officer Jamie Dimon’s work since taking over JPMorgan in 2006.

Under Dimon, 58, the firm grew to become the largest U.S. lender by assets and the world’s biggest investment bank after acquiring ailing firms during the 2008 financial crisis. Dimon has said the firm’s size creates opportunities to cross-sell products and better serve clients. “Each of our four major businesses operates at good economies of scale and gets significant additional advantages from the other businesses,” Dimon wrote in a letter to shareholders last year. “This is one of the key reasons we have maintained good financial performance.” The logic of a breakup would rely on the consumer business, commercial bank, investment bank and asset management unit being valued closer to so-called pure-play financial companies, the Goldman Sachs analysts wrote.

The parts probably could operate with lower capital levels as stand-alone firms, resulting in higher returns on equity, they wrote. The maneuver would risk some of the $6 billion profit JPMorgan says it makes tied to synergies between businesses, though a split into halves would preserve much of those benefits, the analysts wrote. The Federal Reserve laid out a plan last month that may require JPMorgan to add more than $20 billion to its capital by 2019. The rules could get even stricter, prompting banks to consider new business models, the Goldman Sachs analysts wrote. “JPMorgan – and other money centers – would strongly consider strategic alternatives, providing shareholders with a breakup ‘put option’ if capital requirements get tougher,” they wrote.

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It’s going to need the shadow banking system to make this work, the very same it’s trying to curb.

China Fast-Tracks $1 Trillion in Projects to Spur Growth (Bloomberg)

China is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year as policy makers seek to shore up growth that’s in danger of slipping below 7%. Premier Li Keqiang’s government approved the projects as part of a broader 400-venture, 10 trillion yuan plan to run from late 2014 through 2016, said people familiar with the matter who asked not to be identified as the decision wasn’t public. The National Development and Reform Commission, which will oversee the projects, didn’t respond to a faxed request for comment. The move illustrates concern among officials that China’s planned shift to a domestic-consumption driven economy has yet to produce enough growth momentum.

The yuan rose, halting a two-day decline, and Australia’s dollar – a proxy for China – climbed after the news. “It’s part of China’s efforts to stabilize growth, and the news will help to boost market confidence,” said Julia Wang, a Hong Kong-based economist with HSBC. “Infrastructure investment will continue to be a major driver for China’s economic growth.” The approvals contrast with past moves to boost growth via infrastructure in which the government gave the green-light to projects individually. They are part of efforts to respond to weak output, according to the people. The projects will be funded by the central and local governments, state-owned firms, loans and the private sector, said the people.

The investment will be in seven industries including oil and gas pipelines, health, clean energy, transportation and mining, according to the people. They said the NDRC is also studying projects in other industries in case the government needs to provide more support for growth. The NDRC’s spokesman, Li Pumin, said last month China would encourage investment in those areas. The Economic Observer newspaper reported Dec. 26 on its website that an official from the NDRC’s Zhejiang provincial bureau said the government had approved more than 420 infrastructure projects needing investment of more than 10 trillion yuan.

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China will step in.

Venezuelan Leader Maduro Seeks Economic Help On Tour (BBC)

Venezuelan President Nicolas Maduro is beginning an international tour to try to stem the impact of falling oil prices and a deepening recession. Mr Maduro goes first to China – a major source of loans for Venezuela – for talks with the Chinese President, Xi Jinping. He will then travel to various Opec member countries to press for cuts in oil output that would boost prices. Venezuelan oil prices have dropped by half since June. The country gets most of its foreign currency from oil exports and is estimated to have the largest oil reserves in the world. Before he left Venezuela Mr Maduro announced a number of new mechanisms aimed at addressing the country’s economic crisis.

He said he would create a strategic reserve, appoint a new board to run the organisation that manages currency exchange controls, and create new agencies to manage the distribution of commodities. President Maduro has said his country is suffering the consequences of an economic war launched by US President Barack Obama “to destroy” the oil producers’ cartel, OPEC. He has also accused the US of flooding the markets with oil as part of an economic war against Russia. The Venezuelan opposition blames the country’s economic crisis and shortages of many staples, such as corn oil and milk, on the socialist policies of Mr Maduro and his late predecessor, Hugo Chavez.

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“Across the U.K., real weekly earnings – adjusted for inflation – dropped by 10.3% on average between 2008 and 2014 ..”

The Demise of UK’s Lucky Years Pits Winners Against Losers (Bloomberg)

Out shopping one winter weekday morning in the southern English town of Eastleigh, 58-year-old Steve Fryer has reason to smile. Hired at 16 by J Sainsbury Plc, he stayed with the retailer for four decades, ascending from the shop floor to management. With a pension that generates more than his final salary at retirement two years ago, he’s paid off his mortgage, owns a second home in a nearby coastal resort and is helping the last of three daughters on to the property ladder. Asked if he could secure the same prosperity starting out today, Fryer shakes his head. “I got through by hard work, but I was also working in the lucky years,” he says. “I don’t see a light at the end of the tunnel for the younger ones.” It’s an indictment heard across the U.K. four months from a general election that threatens to redraw the British political landscape.

As Prime Minister David Cameron campaigns for a second term on the U.K.’s economic recovery, his chances of re-election are undermined by a sense that things aren’t getting better for many voters after more than 4 1/2 years of austerity under the Conservative-led coalition. Take John Harcourt. At 21, he’s hunting for work in Eastleigh to lift him off welfare benefits before he goes to university later this year. He’s chosen to study motor-vehicle engineering, in part to avoid what he says is a lackluster labor market and to secure the skills he thinks he’ll need if he’s to find long-term employment. “It’s very difficult as there’s just not much turnover in jobs,” he says. “I’m happy to do anything. I’d do administration, retail, flip burgers.” You don’t have to walk far in Eastleigh, a town of about 125,000, to run into the two faces of the modern-day British economy.

Those at the end of their work life with a pension and property are coping with the tepid recovery from the 2008-2009 recession, while those starting out struggle to be hired, then face low wage growth once they have a job. Across the U.K., real weekly earnings – adjusted for inflation – dropped by 10.3% on average between 2008 and 2014, according to the Office for National Statistics. The opposition Labour Party says that equates to the biggest drop in real incomes since the time of Queen Victoria and the advent of industrialization more than a century ago. [..] Four years since Cameron declared “we’re all in this together,” the economic divide is not simply geographical but increasingly defines the country. While the government boasts of the fastest economic growth of any major developed nation, an Ipsos MORI poll in November found that eight in 10 Britons say they’ve felt little, if any, impact on their standard of living. [..]

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I’ve always thought that if a community’s center evolves around shopping, it has negative value.

The Economics (and Nostalgia) of Dead US Shopping Malls (NY Times)

Inside the gleaming mall here on the Sunday before Christmas, just one thing was missing: shoppers. The upbeat music of “Jingle Bell Rock” bounced off the tiles, and the smell of teriyaki chicken drifted from the food court, but only a handful of stores were open at the sprawling enclosed shopping center. A few visitors walked down the long hallways and peered through locked metal gates into vacant spaces once home to retailers like H&M, Wet Seal and Kay Jewelers. “It’s depressing,” Jill Kalata, 46, said as she tried on a few of the last sneakers for sale at the Athlete’s Foot, scheduled to close in a few weeks. “This place used to be packed. And Christmas, the lines were out the door. Now I’m surprised anything is still open.” The Owings Mills Mall is poised to join a growing number of what real estate professionals, architects, urban planners and Internet enthusiasts term “dead malls.”

Since 2010, more than two dozen enclosed shopping malls have been closed, and an additional 60 are on the brink, according to Green Street Advisors, which tracks the mall industry. Almost one-fifth of the nation’s enclosed malls have vacancy rates considered troubling by real estate experts — 10% or greater. Over 3% of malls are considered to be dying — with 40% vacancies or higher. That is up from less than 1% in 2006. Premature obituaries for the shopping mall have been appearing since the late 1990s, but the reality today is more nuanced, reflecting broader trends remaking the American economy. With income inequality continuing to widen, high-end malls are thriving, even as stolid retail chains like Sears, Kmart and J. C. Penney falter, taking the middle- and working-class malls they anchored with them.

“It is very much a haves and have-nots situation,” said D. J. Busch, a senior analyst at Green Street. Affluent Americans “will keep going to Short Hills Mall in New Jersey or other properties aimed at the top 5 or 10% of consumers. But there’s been very little income growth in the belly of the economy.” At Owings Mills, J. C. Penney and Macy’s are hanging on, but other midtier emporiums like Sears, Lord & Taylor, and the regional department store chain Boscov’s have all come and gone as anchors. Having opened in 1986 with a renovation in 1998, Owings Mills is young for a dying mall. And while its locale may have contributed to its demise, other forces played a crucial role, too, like changing shopping habits and demographics, experts say. “I have no doubt some malls will survive, but major segments of our society have gotten sick of them,” said Mark Hinshaw, a Seattle architect, urban planner and author.

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“Stock buybacks boost share prices, of course, but they don’t represent any real increased value in a given company. They’re just snakes eating their own tails.”

Forecast 2015 – Life in the Breakdown Lane (Jim Kunstler)

As 2014 closed out, that kit-bag of frauds, swindles, Ponzis, grifts, bait-and-switches, and three-card-monte scams is looking at least as wobbly as it did in 2007 when Wall Street was busy manufacturing booby-trapped MBSs and CDOs. Except we know the true aggregate risk at stake has only grown larger and more hazardous due to all the strenuous efforts by authorities since the panic of 2008 to evade any natural process for clearing mal-investment and debt gone bad. A lot of that stank was simply shoveled into the Federal Reserve’s basement, where it sits to this day, composting steamily. As to be expected (and averred to in my previous books and blogs) financial repression, market intervention, and statistical distortion will produce ever more financial perversity.

That is the hazard in decoupling truth from reality. Imposed dishonesty will always express itself in unexpected ways. Who expected the price of oil to fall by nearly half in a few months? These days, perversity expresses itself in a morbidly obese dollar gorging on junk while bulimic currencies elsewhere projectile-vomit their value away as the economies attached to them die of malnutrition. Perhaps this comes as a surprise to central bankers standing at their control panels like recording engineers at the soundboard, tweaking all the dials and slides expecting to achieve a perfect repressive inflation rate of 2%+ so they can melt away the onerous debt of sovereign balance sheets and Too Big To Fail banks — incidentally squeezing the citizenry of purchasing power in small annual increments that add up, after a while, to worthless money.

They did manage to extend the inflation of stock market indexes another year, which the public is supposed to interpret as “prosperity.” Half a trillion dollars in stock buybacks of S&P companies were executed in 2014, much of it done with money, i.e. “leverage,” borrowed at zero interest. Stock buybacks boost share prices, of course, but they don’t represent any real increased value in a given company. They’re just snakes eating their own tails.

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“3. The United States is still quite powerful and can cause massive damage on its way down.”

2015: Grounds for Optimism (Dmitry Orlov)

To my mind, the really interesting development of 2014 is that the world as a whole (with a few minor exceptions) has become quite lucid on the topic of what the United States, as a global empire, is and stands for. It is now very commonly and completely understood that: 1. The United States is an evil empire, attempting not so much to rule the world as to disrupt it to its short-term advantage, 2. The United States is failing, as an empire and as a country, and no amount of fraud, mayhem, torture and murder is going to save it, 3. The United States is still quite powerful and can cause massive damage on its way down. This damage must be contained, while plans are drawn up for an international arrangement that will arise upon its demise.

Looking back on 2013 and before, such sentiments were already being expressed, but on the fringes and quietly. The difference is that in 2014 they became commonplace knowledge, and their expressions thundered from presidential podiums. What’s more, there just isn’t that much of a counterargument being voiced. I don’t hear a single voice out there arguing that the US is a benevolent force that is on the up-and-up, would never hurt a fly and is the permanent center of the universe. Yes, some people can still think that, but it’s hard to see value in such “thought.” There are still a few holdouts: the UK, Canada and Australia especially. But even there the true picture is being distorted because of their Murdockified national media.

Judging from what I hear from the people there, they are almost uniformly nauseated by the subservient pro-US antics of their national leaders. As for the EU, the image of political uniformity presented by Brussels is largely a fiction. In the core countries of Western Europe, business leaders are almost uniformly in favor of close cooperation with Russia and against sanctions. Along the fringe, entire countries appear to be on the verge of switching sides. Hungary—never a friend of Russia—now seems more pro-Russian than ever. Bulgaria, which has had a love/hate attitude toward Russia for centuries now, seems to be edging back closer to love. Even the Poles are scratching their heads and wondering if close cooperation with the US is in their national interest.

Another major shift I have observed is that a significant percentage of the thinking people in the US no longer trusts their national media. There is a certain pattern to the kinds of messages that can go viral and spread wildly via tweets and social media. Fringe messages must, by definition, stay on the fringe. And yet last year something snapped: a few times I ran a story in an attempt to plug a gaping hole in the US mass media’s coverage of events in the Ukraine, and the response was overwhelming, with hundreds of thousands of new readers showing up. What’s more, a lot of them have kept coming back for more. I take this to mean that what I have to say, while by no means mainstream, is no longer on the fringe, and that bloggers have an increasingly important role in helping plug the giant holes in national media coverage.

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We’ll keep going till there’s nothing left.

The People Pushed Out Of Ethiopia’s Fertile Farmland (BBC)

The construction of a huge dam in Ethiopia and the introduction of large-scale agricultural businesses has been controversial – finding out what local people think can be hard, but with the help of a bottle of rum nothing is impossible. After waiting several weeks for letters of permission from various Ethiopian ministries, I begin my road trip into the country’s southern lowlands. I want to investigate the government’s controversial plan to take over vast swathes of ancestral land, home to around 100,000 indigenous pastoralists, and turn it into a major centre for commercial agriculture, where foreign agribusinesses and government plantations would raise cash crops such as sugar and palm oil. After driving 800km (497 miles) over two days through Ethiopia’s lush highlands I begin my descent into the lower Omo valley.

Here, where palaeontologists have discovered some of the oldest human remains on earth, some ancient ways of life cling on. Some tourists can be found here seeking a glimpse of an Africa that lives in their imagination. But the government’s plan to “modernise” this so-called “backward” area has made it inaccessible for journalists. As my jeep bounces down into the valley, I watch as people decorated in white body paint and clad in elaborate jewellery made from feathers and cow horn herd their cows down the dusty track. I arrive late in the afternoon at a village I won’t name, hoping to speak to some Mursi people – a group of around 7,000 famous for wearing huge ornamental clay lip plates. The Mursi way of life is in jeopardy. They are being resettled to make way for a major sugar plantation on their ancestral land – so ending their tradition of cattle herding.

Meanwhile, a massive new dam upstream will reduce the Omo River, ending its seasonal flood – and the food crops they grow on its banks. It is without doubt one of the most sensitive stories in Ethiopia and one the government is keen to suppress. Human rights groups have repeatedly criticised schemes like this, alleging that locals are being abused and coerced into compliance. I’d spoken to local senior officials in the provincial capital of Jinka, before travelling into the remote savannah. The suspicion is palpable as the chief of the south Omo zone lectures me. Local people and the area’s reputation have been greatly harmed by the negative reports by foreigners, he says. Eventually a frank exchange takes place and I secure verbal permission to report on the changes taking place in the valley.

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How crazy would you like it?

Does CNN Really Have A Video Ready For The Apocalypse? (BBC)

If the end of the world arrives, chances are you aren’t going to be watching CNN. But just in case you are, the cable news network has a video ready for the Big Sign-off. That’s according to blogger Michael Ballaban who posted the purported footage online. The clip isn’t much, really – just low-res footage of a US Army band playing a mournful rendition of Nearer My God to Thee, which takes a little over a minute. Then fade, presumably, to the rapture, apocalypse, giant comet impact or whatever coup de grace fate has in store for our little blue marble. Writing on the Jalopnik blog, Ballaban says he first heard about the video from a college professor who worked at CNN. He was then able to confirm its existence when he was an intern at the network in 2009. The video, he reports, is available on CNN’s MIRA archiving system under the name “TURNER DOOMSDAY VIDEO” – the lingering legacy, it seems, of now-departed CNN founder Ted Turner.

Of course, it’s existence shouldn’t be a total shock. Mr Turner has said that the same tune that serenaded the doomed passengers of the sinking Titanic would usher the world’s population into the great hereafter. Still, Ballaban writes, he was a bit sceptical. “It sounded mostly like a mythic joke, the kind of thing that Ted Turner, the all-around ‘eccentric billionaire’ archetype, would mention offhand. Bison ranches, the America’s Cup, four girlfriends at once, the last word on the last day on earth – why not?” he writes. Just in case there is any confusion, the video clip is marked, in bright red letters, with an HFR – “hold for release” – warning: “HFR till end of the world confirmed.” “CNN, once ever so thorough in its fact-checking, knew that the last employee alive couldn’t be trusted to make a call as consequential as one from the Book of Revelation,” Ballaban writes. “The end of the world must be confirmed.”

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