Feb 232017
 
 February 23, 2017  Posted by at 9:53 am Finance Tagged with: , , , , , , , , , ,  5 Responses »
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Jack Delano Colored drivers entrance, U.S. 1, NY Avenue, Washington, DC 1940

 


The Absolute Dominance Of The US Economy, In One Chart (MW)
Trump Scorns the IMF’s Globalism, and Now He Gets to Vote on It
The Problem with Gold-Backed Currencies (CHS)
What’s So Great About Europe? (BBG)
Italy Warned by EU Over High Public Debt With Spillover Risk (BBG)
‘Spain Is Ruined For 50 Years’ (Exp.)
Why Greece’s Crisis Has Broken All Previous Records (K.)
Millions In UK Are Just One Unpaid Bill Away From The Abyss (G.)
Oz Reserve Bank Interest Rate Moves Limited By High Debt, House Prices (AbcAu)
Exxon Wiped A Whopping 19.3% Of Its Oil Reserves Off Its Books In 2016 (Q.)
Turkish Provocations Test Greek Resolve (K.)
Greece Okays Asylum Requests Of 10,000 Refugees (K.)

 

 

Not sure that’s what I get from the graph.

The Absolute Dominance Of The US Economy, In One Chart (MW)

Despite the bleak picture painted by President Donald Trump of the U.S. as a country in disarray, America’s status as an economic superpower is still very much intact, even as China steadily closes the gap. The U.S. economy, as measured by GDP, is by far the largest in the world at $18.04 trillion. China, the closest thing the U.S. has for a competitor, is No. 2 with a GDP of $11 trillion, while Japan is a distant third with $4.38 trillion. As the chart by HowMuch.net illustrates, the U.S. accounts for about a quarter of the global economy, nearly 10 percentage points more than China’s 14.84%. Put another way, the U.S. economy is roughly equivalent to the combined GDPs of the eight next-biggest countries after China — Japan, Germany, the U.K., France, India, Italy, Brazil and Canada.

However, the narrative shifts when countries are grouped by geography, with Asia clearly in the lead. The region, denoted in yellow in the chart, contributed 33.84% to the global GDP. “Asia’s economic center of gravity is in the east, with China, Japan and South Korea together generating almost as much GDP as the U.S.,” said Raul Amoros at HowMuch.net. North America follows Asia at 27.95%, and Europe trails at 21.37%. The three blocs combined represent about 83% of the world’s economic activity. The chart also highlights the chasm between wealthy and poor countries. South America’s four largest economies — Brazil, Argentina, Venezuela and Colombia — only add up to 4% of the global GDP, while Africa’s three biggest — South Africa, Egypt and Nigeria — account for around 1.5%.

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I picked the last bit of the article.

Trump Scorns the IMF’s Globalism, and Now He Gets to Vote on It

The IMF has already survived one major mission-change. It’s known today as the lender of last resort to countries facing balance-of-payments crises. But in its first three decades, the Fund managed the world’s currency order. That was the role assigned at Bretton Woods in 1944, when the IMF and World Bank were set up. Forty-five nations attended the summit, but two men dominated it: John Maynard Keynes and America’s Harry Dexter White. From the back of her car in Uganda, Lagarde calls them the “founding fathers.” Their goal was to avoid a repeat of the 1930s, when competitive devaluations and tariff wars led to the collapse of world trade. Keynes wanted the IMF to act as a central bank of central banks, denominating their accounts in a new global currency. It would let members devalue or borrow with relative ease. Both creditors and debtors would pay interest on their holdings, discouraging large trade surpluses as well as deficits.

White’s plan was more creditor-friendly, reflecting the U.S. position as world lender. There would be no new currency: IMF members would tie their money to the dollar. They couldn’t devalue without consulting the Fund, and were only supposed to borrow short-term to close balance-of-payments gaps. “The British wanted an automatic source of credit, the Americans a financial policeman,” wrote Keynes’s biographer Robert Skidelsky. The English economist was one of the 20th century’s sharpest thinkers, but it was the U.S. Treasury official who got his way. The system turned out to have a flaw: It depended on the supply of U.S. dollars backed by gold. That link came under pressure as America, financing social programs at home and war in Vietnam, slipped into persistent deficit. In 1971, President Richard Nixon took the dollar off the gold standard, ending phase one at the IMF.

Today there’s a patchwork of floating rates, pegs and currency unions like the euro. It’s not working to everyone’s satisfaction – notably Trump’s. His team has called out several countries, from China to Germany, for gaming the system. Money courses around that system on a scale that would have been unimaginable at Bretton Woods. Massive trade imbalances built up. The dollar remains central. The risks were laid bare in 2008, when a collapsed U.S. housing bubble led to world recession. Since then, some financial leaders – among them the governor of the People’s Bank of China, Zhou Xiaochuan, and his U.K. counterpart Mark Carney – have gently hinted that something more like Keynes’s plan might be in order, to reduce the world’s dollar dependency.

Lagarde doesn’t see that happening on her watch. “It didn’t happen in 1944, when the world had destroyed itself,” she said. “I’m not a dreamer.” She argues instead that what the IMF is doing today will remain useful tomorrow. Countries will always be getting in a financial mess. Someone has to clean it up. Ukraine needed money in 2015: without the IMF, “where would the $17.5 billion come from? Whose pocket would it be?”

Read more …

The curse of the reserve currency. And if you look a bit deeper, any gold-backed currency.

The Problem with Gold-Backed Currencies (CHS)

There is something intuitively appealing about the idea of a gold-backed currency –money backed by the tangible value of gold, i.e. “the gold standard.” Instead of intrinsically worthless paper money (fiat currency), gold-backed money would have real, enduring value–it would be “hard currency”, i.e. sound money, because it would be convertible to gold itself. Many proponents of sound money identify President Nixon’s ending of the U.S. dollar’s gold standard in 1971 as the cause of the nation’s financial decline. If our currency was still convertible to gold, the thinking goes, the system would never have allowed the vast pile of debt to accumulate. The problem with this line of thinking is that it is disconnected from the real-world mechanisms of capital flows and the way money is created in our financial system.

This article explains why Nixon took the USD off the gold standard: since the U.S. was running trade deficits, all of America’s gold would have been transferred to the exporting nations. America’s gold reserves would have disappeared, leaving nothing to back the dollar. The U.S. Empire Would Have Collapsed Decades Ago If It Didn’t Abandon The Gold Standard. The problem to sound-money proponents is trade deficits: if the U.S. only had trade surpluses, then the gold would not drain away. But Triffin’s Paradox explains why this doesn’t work for a reserve currency: a reserve currency has two distinct sets of users: domestic users and global users. Each has different needs, so there is a built-in conflict between the two sets of users.

Global users of the USD need enormous quantities of dollars to use as reserves, to pay debts denominated in USD and to facilitate international trade. The only way the issuing nation can provide enough currency to meet this global demand is to run large, permanent trade deficits–in effect, “exporting” dollars in exchange for goods and services. This is the paradox: to maintain the “exorbitant privilege” of a reserve currency, a nation must “export” its currency in size; a nation that runs trade surpluses cannot supply the world with enough of its currency to act as a reserve currency.

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That is one damning set of numbers.

What’s So Great About Europe? (BBG)

A woman said that maybe the problem with the European Union – or at least the common currency, the euro – was that it was too advantageous to Germany. “Because we have a common currency, we get an edge in exports,” she said. “I profit from this. Thanks!” “Do you think this is harming our neighbor countries?” Armbruster asked. “Yes, definitely,” she responded. “Germany was always a problem in Europe,” interjected Andre Wilkens, a Berlin-based policy wonk who was one of the evening’s featured speakers but mostly sat and listened. “The EU was formed to solve that problem.” Others got up to say that Europe needed more solidarity, with Germans leading the way. It needed more of a sense of community. More attention needed to be paid to the millions of jobless young people in Greece, Italy, Portugal and Spain.

Then things shifted to straight-out Euroenthusiasm. “To be totally honest, I think Europe is super,” said a woman sitting in the front row. Added a man a few rows back: “There are problems that we Germans alone can’t solve.” By working together with the rest of Europe, he went on, Germany had a better shot at fighting climate change and preventing war. It isn’t exactly news that a bunch of people gathered in a theater in downtown Stuttgart support the idea of Europe and even, for the most part, the reality of the European Union. The home of Daimler, Porsche and Robert Bosch is one of the continent’s great economic success stories – and its residents’ political views aren’t necessarily shared by other Germans. On the whole, Germans see the EU in a more positive light than the citizens of most other European countries (I’ve included the 10 most populous EU member countries in the chart below), but they’re still pretty negative about it.

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All Italy can do is pretend. And Brussels likes it that way.

Italy Warned by EU Over High Public Debt With Spillover Risk (BBG)

The European Commission warned that Italy faces excessive economic imbalances as the country’s shaky center-left government struggles to control public debt, boost sluggish growth and mend ailing banks. Troubles including soured bank loans risk spilling into other euro-area countries, the commission said on Wednesday. Italy’s public debt is projected to rise to 133.3% of gross domestic product this year from an estimated 132.8% in 2016. “High government debt and protracted weak productivity dynamics imply risks with cross-border relevance looking forward, in a context of high non-performing loans and unemployment,” the European Union’s executive arm in Brussels said in a set of annual policy recommendations to EU governments. Italy is struggling to maintain government stability amid infighting in the ruling Democratic Party, where some members are pushing for early elections.

The country also faces sluggish GDP growth of 0.9% this year and lingering issues at domestic banks, which are weighed down by €360 billion of bad loans that have eroded profitability, undermined investor confidence and curtailed new lending. “The stock of non-performing loans has only started to stabilize and still weighs on banks’ profits and lending policies, while capitalization needs may emerge in a context of difficult access to equity markets,” the commission said. In May it plans to recommend whether Italy should be subject to a stricter oversight regime – one with fines as a last resort – for failing to keep public debt on a trajectory toward the EU limit of 60% of GDP. The assessment will take into account final economic data for 2016 and Italian government pledges to adopt by the end of April budget-austerity measures worth 0.2% of GDP.

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“We have a third world production model of speculators and waiters, with a labour market where the majority of jobs created are temporary and with remunerations of €600, the largest wage decline in living memory..”

‘Spain Is Ruined For 50 Years’ (Exp.)

A leading Spanish economist has hit out at the ECB saying “crazy” loans will ruin the lives of the population for the next 50 years.And it is only a matter of time before the Government is forced to default as a debt bubble and low wages effectively forge the worst declines in “living memory”. Leading economist Roberto Centeno, who was an advisor to US president Donald Trump’s election team on hispanic issues, says the country has borrowed €603 billion that it cannot conceivably pay back. And he says Spanish politicians including Minister of Economy Luis de Guindos are “insulting their intelligence” after doing back door deals with the ECB. In a blog post Mr Centeno says there needs to be audits so the country can understand the magnitude of its debt mountain.

He said Spain was “moving steadily towards the suspension of payments which is the result of out of control public waste, financed with the largest debt bubble in our history, supported by the ECB with its crazy policy of zero interest rate expansion and without any supervision.” The expert added the doomed situation will “lead to the ruin of several generations of Spaniards over the next 50 years”. And that current Prime Minister Rajoy has employed 2500 special advisors in his central government as opposed to other leaders. He said: ”Our economic future requires drastic decisions to cut public waste, such as eliminating thousands of useless public companies, thousands of useless advisers, [Prime Minister Mariano] Rajoy has 2,500 in Moncloa, compared to Obama’s 600, Merkel’s 400 or the 250 working for Theresa May.

“There’s disastrous management of Health and Education, the cost of which has skyrocketed 60 per cent since they were transferred to the Autonomous Communities while the quality plummeted.” Mr Centento also said the Government and the European Union’s estimations of GDP are completely wrong and has presented them with figures he claims are accurate. He said the country is currently suffering from a “third world production model”. He added: “We have a third world production model of speculators and waiters, with a labour market where the majority of jobs created are temporary and with remunerations of €600, the largest wage decline in living memory, “And all this was completed with a broken pension system and an insolvent financial system.”

Forecasting an unprecedented shock to the European financial model, Mr Centento is calling for an immediate audit despite a recent revelation that the ECB is failing in its supervisory role over Europe’s banks. He also claimed the Spanish government and European Union leaders have been manipulating figures since 2008. Mr Centento said: “We will require the European Commission and Eurostat to audit and audit the Spanish accounting system for serious accounting discrepancies that may jeopardise stability. “The gigantic debt bubble accumulated by irresponsible governments, and that never ceases to grow, will be the ruin of several generations of Spaniards. “The Bank of Spain’s debt to the Eurosystem is the largest in Europe. “The day that the ECB minimally closes the tap of this type of financing or markets increase their risk aversion, the situation will be unsustainable.”

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A feature not a bug.

Why Greece’s Crisis Has Broken All Previous Records (K.)

How unique is the Greek crisis? Two charts tell the tragic tale. The first – from the International Monetary Fund’s recent Article IV report on Greece – compares four major economic crises that took place in the developed world in the last 100 years: the Great Depression in the United States, the Asian financial crisis of the late 1990s, the eurozone recession and Greece’s long collapse. Greece’s performance is by far the worse. The East Asian countries caught in the hurricane of 1997-8 returned to pre-crisis real GDP within three years. The eurozone needed six years, and today its real GDP is only 2% higher than the pre-crisis high point. The output of the US economy had shrunk by a quarter three years after the Wall Street Crash of 1929, but by 1936 it had recovered to pre-crisis levels. The Greek economy contracted by 26% in real terms between 2007 and 2013, and at the end of 2016 – nine years after the start of its own Great Depression – it remained stuck at the bottom.

The second chart, from the analysis service Macropolis, compares the performance of eight countries that have sought assistance from the IMF since 1997 seven years after the start of their programs. The Fund’s best student was Turkey, which doubled its GDP in real terms between 2000 and 2007. Russia was a close second, largely thanks to growth fueled by climbing oil and gas prices. South Korea comes next, with growth well above 50% from its baseline year, while Indonesia, Brazil and Thailand are hovering around 25%. The only countries which remained below their pre-crisis GDP levels seven years after seeking the Fund’s assistance are Argentina (in the aftermath of the 1998-2002 crisis) and Greece. At its low point, three years into its crisis, Argentina’s dollar-denominated GDP – largely because of the devaluation of the peso after the abolition of convertibility – had fallen by two-thirds compared to pre-crisis highs. At the seven-year mark, Argentina, unlike Greece, was experiencing a robust recovery.

Focusing on the comparison with the Great Depression in the United States, US unemployment peaked in May 1933 at 26%, to be cut by more than half by the end of 1936. In Greece it reached 28% in July 2013, and has since fallen to 23%. The Dow Jones Industrial index lost 85% of its value between August 1929 and May 1932, but it rose fourfold in the three-and-a-half years to the end of 1936 (another 23 years would pass, however, before it got back to pre-crisis levels).

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No, it’s not just the EU, or the euro.

“..an economic climate that is normalising low-income families having to live hand to mouth..”

Millions In UK Are Just One Unpaid Bill Away From The Abyss (G.)

As the cocktail of long-term austerity, rising living costs and a slumping post-Brexit economy hits, what’s really frightening is the crisis that is brewing but is barely being noticed. Look at this week’s finding that one in four families now have less than £95 in savings. That’s staggering, not simply because it gives an insight into how large swaths of families in Britain are clinging on financially in a climate of low wages, cut benefits and high rents, but also because it offers us a warning of how little it will take to push them over the edge. There are now 19 million people in this country living below the minimum income standard (an income required for what the wider public view as “socially acceptable” living standards), according to figures released by the Joseph Rowntree Foundation (JRF) this month.

Around 8 million of them could be classed as Theresa May’s “just about managing” families: those who can, say, afford to put food on the table and clothe their children but are plagued by financial insecurity. The other 11 million live far below the minimum income standard and are, the JRF warns, “at high risk of falling into severe poverty”. We are entering a period not simply of growing hardship in this country but of what I would call precarious poverty: the sort that isn’t characterised by the traditional image of lifelong, deep-seated deprivation, but which can hit in a matter of days: a broken washing machine, a late child tax credit payment, an injury that leads to time off work. In an economic climate that is normalising low-income families having to live hand to mouth, increasingly, for a whole economic class, one small unexpected cost can trigger a spiral into debt.

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And now they’re stuck. This is where it gets risky.

Oz Reserve Bank Interest Rate Moves Limited By High Debt, House Prices (AbcAu)

Fears of inflating housing bubbles in Sydney and Melbourne are stopping the Reserve Bank from cutting interest rates to boost the economy, the central bank governor conceded today. The stark admission by Reserve Bank governor Phillip Lowe about the RBA’s dilemma comes as soaring house prices in the eastern states have Australians carrying “more debt than they ever have before”. Dr Lowe delivered the reality check at the Australia Canada Economic Leadership Forum, where he said low interest rates made it attractive for borrowers in both countries to invest in real estate, making further rate cuts an undesirable option. “We are trying to balance multiple objectives at the moment,” he said in response to questions after the speech.

“We’d like the economy to grow a bit more quickly and we’d like the unemployment rate to come down a bit more quickly than is currently forecast. “But if we were to try and achieve that through monetary policy it would encourage people to borrow more money and it probably would put more upward pressure on housing prices and, at the moment, I don’t think either of those two things are really in the national interest.” For the moment, it looks like the Reserve Bank feels content — or locked in — to leaving official interest rates on hold at a record low 1.5%. However, Dr Lowe expressed optimism that this level of rates was low enough to spark business investment and stronger economic growth, and therefore there would be no need to lower rates further.

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That’s a lot of (not) oil.

Exxon Wiped A Whopping 19.3% Of Its Oil Reserves Off Its Books In 2016 (Q.)

ExxonMobil has taken a big hit to one of the pillars underlying its decades of braggadocio: its oil reserves. In an announcement today, Exxon said it had written down its proven oil reserves by a massive 19.3%, a stinging reduction to what is a primary measure of any oil company’s value. As of the end of 2016, Exxon had 20 billion barrels in proven reserves, compared with 24.8 billion a year earlier. This includes the erasure of all 3.5 billion barrels of Exxon’s proven oil sands reserves at Canada’s Kearl field. Last year’s low oil prices made it uneconomical to drill at Kearl, which had been at the core of Exxon’s growth strategy. In addition, for the second straight year, Exxon failed to replace all the reserves it pumped—in 2016, it replaced just 65% of its produced reserves. In 2015, it replaced just 67%.

Prior to these years, Exxon had replaced at least 100% of its production every year since 1993. As bad as that was, it was expected: Exxon had signaled that it would write down reserves in 2016, and analysts had expected the company not to replace what it pumped. What wasn’t anticipated was the impact on Exxon’s vaunted longer-term performance. Almost every year, when Exxon announces its earnings, dividend payouts, reserve replacement results—and nearly any other important annual result—it throws in its 10-year record in the respective category to demonstrate its steady, reliable hand on the tiller. This time, bringing up the 10-year record backfired: The replacement failures of the last two years and the 2016 writedown punched a hole in Exxon’s vaunted 10-year reserves replacement average—it plunged to 82% in 2016, from 115% a year earlier.

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Simmering conflict.

Turkish Provocations Test Greek Resolve (K.)

The recent spike in Turkish provocations in the Aegean and incendiary comments emanating from Ankara are aimed at testing Greece’s resolve, according to Greek analysts. In what was seen as its latest transgression, Turkey dispatched its Cesme research vessel to conduct surveys on Wednesday in international waters between the islands of Thasos, Samothrace and Limnos, but within the area of responsibility of the Hellenic Search and Rescue Coordination Center. The night before, Turkish coast guard vessels conducted patrols in the region around the Imia islets. At the same time, the Cyprus talks are being undermined over what Greeks believe is a minor detail – the decision by the Cyprus Parliament for schools to commemorate a 1950 referendum calling for union with Greece.

Greeks say it is an attempt to shift attention from the fundamental issues of the peace talks, namely post-settlement security and guarantees. In response, Athens has pursued the principle of proportionality by countering the presence of Turkish military and coast guard vessels with an equivalent number of Greek ones, while embarking on a diplomatic campaign at international organizations and in major capitals. Analysts also attribute the spike in tension to the Supreme Court’s refusal to extradite the Turkish servicemen that Ankara says were involved in the July coup attempt. But they also note that it serves as a convenient pretext for Turkey to up the nationalistic rhetoric ahead of the April 16 referendum called by President Recep Tayyip Erdogan in a bid to expand his powers.

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Think maybe rich Europe has slipped Tsipras a few bucks?

Greece Okays Asylum Requests Of 10,000 Refugees (K.)

At least 10,000 refugees, including around 2,000 minors, are expected to remain in Greece over the coming three years as their asylum applications have been approved. The approved asylum claims account for about a sixth of more than 60,000 migrants who are currently stranded in Greece following the decision last year by a series of Balkan states to close their borders amid a massive influx of refugees from Syria and other war-torn states. The arrival of migrants in Greece has slowed significantly following an agreement between the European Union and Turkey in March last year to crack down on human smuggling across the Aegean.

However, boatloads of migrants continue to arrive on Greek shores from neighboring Turkey. On Wednesday, another 145 migrants arrived on the eastern Aegean island of Chios alone. Authorities attribute the sudden spike in arrivals to the unseasonably good weather. According to the Greek Asylum Service, a total of 1,912 migrants lodged asylum applications in January of this year. Last year, when hundreds of thousands of migrants flooded through Greece toward other parts of Europe, a total of 51,091 people applied for asylum in Greece, compared to 13,195 in 2015, 9,432 in 2014 and 4,814 in 2013.

Read more …

Feb 132017
 
 February 13, 2017  Posted by at 10:49 am Finance Tagged with: , , , , , , , , ,  10 Responses »
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New York City Under 26 Inches Of Snow, 1947

 


Why Does Economic Growth Keep Slowing Down? (StLouisFed)
The Market Will Be Repricing Dramatically Downward – Stockman (CNBC)
Jim Rogers: “A Lot Of People Will Disappear” (ZH)
US Trade Deficit Last Year Was Widest Since 2012 (WSJ)
Trump Reviews Top White House Staff After Tumultuous Start (Pol.)
Mike Flynn’s Position as National Security Adviser Grows Tenuous (WSJ)
Refugee-Embracing Trudeau Set to Bite His Tongue on Trump Visit (BBG)
Romania Protests Enter Day 13, Call For Government Of ‘Thieves’ To Resign (G.)
Germany Repatriates Gold Faster Than Planned As Faith In Euro Plunges (RT)
Brussels’ Hypocrisy Over The Closing Of Borders (Nikos Devletoglou)
Greece: The Low-Noise Collapse Of An Entire Country (FE)

 

 

Even though the St. Louis Fed people can’t seem to read their own numbers properly, or at least interpret them, here it is. As the Automatic Earth has said for many years: the peak of our wealth was sometime in the 1970’s or even late 1960’s.

Everything after that was borrowed or printed. Here’s the proof. Sent this to Nicole earlier saying ‘We’ve been vindicated by the Fed itself.’ “Real GDP growth fell and leveled off in the mid-1970s, then started falling again in the mid-2000s”

Why Does Economic Growth Keep Slowing Down? (StLouisFed)

The U.S. economy expanded by 1.6% in 2016, as measured by real GDP. Real GDP has averaged 2.1% growth per year since the end of the last recession, which is significantly smaller than the average over the postwar period (about 3% per year). These lower growth rates could in part be explained by a slowdown in productivity growth and a decline in factor utilization. However, demographic factors and attitudes toward the labor market may also have played significant roles. The figure below shows a measure of long-run trends in economic activity. It displays the average annual growth rate over the preceding 40 quarters (10 years) for the period 1955 through 2016. (Hence, the first observation in the graph is the first quarter of 1965, and the last is the fourth quarter of 2016.)

Long-run growth rates were high until the mid-1970s. Then, they quickly declined and leveled off at around 3% per year for the following three decades. In the second half of the 2000s, around the last recession, growth contracted again sharply and has been declining ever since. The 10-year average growth rate as of the fourth quarter of 2016 was only 1.3% per year. Total output grows because the economy is more productive and capital is accumulated, but also because the population increases over time. The next figure compares long-run growth rates of real GDP and real GDP per capita. Both series display similar behavior. Although population growth has been slowing, the effect is not big enough to change the qualitative results described above. The third figure adds long-run growth rates of real GDP divided by the labor force. Dividing by the labor force instead of the total population accounts for the effects of changing demographics and labor market attachment.

From the 1970s until the 2000s, long-run growth rates of real GDP divided by the labor force remained well below those of real GDP per capita. There are two main factors that explain this: 1) Lower fertility and longer lifespans steadily increased the potential labor force relative to the total population. 2) Labor force participation increased significantly from the 1960s until 2000, largely driven by increased female labor force participation. When accounting for both of these factors, economic activity from 1975 to 1985 looks more depressed than in the two decades that followed. This seems consistent with the negative effects that the 1970s oil shocks and efforts to reduce inflation in the early 1980s had on the economy.

The trend in labor force participation reversed in 2000, as participation rates have been steadily decreasing since then. This explains why real GDP divided by labor force growth rates are now higher than real GDP per capita growth rates. Having accounted for the long-term effects of changes in demographics and labor market attitudes, we can now look at the effects of productivity growth and factor utilization. The final figure compares long-run growth rates in real GDP divided by the labor force with long-run growth rates in total factor productivity and long-run averages of capacity utilization (i.e., the actual use of installed capital relative to potential use). Note that data for capacity utilization are only available since 1967.

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“The market is apparently pricing in a huge Trump stimulus. But if you just look at the real world out there, the only thing that’s going to happen is a fiscal bloodbath and a White House train wreck like never before in U.S. history.”

The Market Will Be Repricing Dramatically Downward – Stockman (CNBC)

Stocks are booming under President Donald Trump, but long-time critic David Stockman warns traders are living in a “fantasy land” that can’t last —and Trump’s policies will derail the market for years to come. The former Reagan administration OMB director appeared on CNBC’s “Futures Now”last week to emphasize that Trump has become seemingly distracted by issues other than his proposed economic agenda. That should be a particular point of worry for investors, who Stockman argued have been far more optimistic about Trump’s presidency than might be warranted by the facts. In other words, while all three major market indexes continued to hit record highs last week, the former Reagan aide sees the current market rally as moot and not reflective of the current political climate.

“What’s going on today is complete insanity,” said Stockman. “The market is apparently pricing in a huge Trump stimulus. But if you just look at the real world out there, the only thing that’s going to happen is a fiscal bloodbath and a White House train wreck like never before in U.S. history.” Since the election, the S&P 500 Index has rallied more than 8%, the Nasdaq about 6% and the Dow Jones Industrial Average a whopping 10%. Last week, all three benchmarks rallied to new record highs. Yet if anything, according to Stockman’s predictions, those gains may be lost. Most of Trump’s actions “[have] nothing to do with the economic agenda” he’s proposed, Stockman told CNBC. That, along with a debt ceiling debate that will take place on March 15 in Congress, and a market rally that has gone on for a while, leads Stockman to think that a big downturn is on the way.

“There’s going to be no tax action this year,” said Stockman, echoing the concerns of Goldman Sachs and a few other Wall Street economists who say Trump’s plans for the economy are facing mounting political risks. Last week, the president vowed that tax reform could happen this year, and promised an announcement within the next few weeks. “If there’s any next year it will be deficit neutral, which means it’s not going to add the $15 to earnings like these people expect,” Stockman said, speaking of the rosy expectations of some analysts who think tax reform could boost corporate earnings in the medium-term. “My argument is there is not going to be any economic rebound, there is not going to be any profit surge,” Stockman added. “Therefore the market will be repricing dramatically downward once it’s clear that that’s the case.”

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Rogers adds a new dimension of doom: “..a lot of institutions, people, companies even countries, certainly governments and maybe even countries are going to disappear.”

Jim Rogers: “A Lot Of People Will Disappear” (ZH)

On the Greater Depression… …get prepared because we’re going to have the worst economic problems we’ve had in your lifetime or my lifetime and when that happens a lot of people are going to disappear. In 2008 Bear Stearns disappeared, Bear Stearns had been around over 90 years. Lehman Brothers disappeared. Lehman Brothers had been around over 150 years. A long, long time, a long glorious history they’ve been through wars, depression, civil war they’ve been through everything and yet they disappear. So the next time around it’s going to be worse than anything we’ve seen and a lot of institutions, people, companies even countries, certainly governments and maybe even countries are going to disappear.

I hope you get very worried. When you start having bear markets as you I’m sure well know one bad thing happens and another bad thing happens and these things snowball just like in bull markets good news comes out then more good news comes out the next thing you know you’re five or six or seven years into a bull market. Well bear markets do the same thing and so we have a lot of bad news on the horizon. I haven’t even gotten to war. I haven’t even gotten to trade war or anything like that but you know things do go wrong.

On Trump and the possibility of trade wars…and real wars Mr. Trump has also said he’s going to have trade war with China, Mexico, Japan, Korea a few other people that he has named. He swore that on his first day in office he would impose 45% tariffs against China. He’s been there three weeks, two or three weeks and he hasn’t done it yet but he still got it in his head I’m sure or maybe he’s just another politician like all the rest of them. He says one thing and he doesn’t mean it at all but he does have at least three people in high levels in his group who are very, very keen to have trade wars with China and other people.

If he does that Eric, it’s all over. I mean history is very clear that trade wars always lead to problems, often to disaster, sometimes even to real war, a shooting war. So I don’t know, I’m not sure Mr. Trump knows. He said so many things and many of the things are contradictory. Now if he’s not going to have trade wars with various people then chances are for a while happy days are here… [The dollar is] going to go too high, may turn into a bubble, at which point I hope I’m smart enough to sell it because at some point the market forces are going to cause the dollar to come back down because people are going to realize, oh my gosh, this is causing a lot of turmoil, economic problems in the world and it’s damaging the American economy. At that point the smart guys will get out. I hope I’m one of them.

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Sputtering engines all around.

US Trade Deficit Last Year Was Widest Since 2012 (WSJ)

The U.S. logged a $502.25 billion trade deficit in 2016, the largest in four years and a gap President Donald Trump is setting out to narrow to bolster the U.S. economy. The new president faces obstacles in the coming months and years, including the potential for a stronger dollar, larger federal budget deficits and low national saving rates compared with much of the rest of the world, all of which could force trade deficits to widen. As in past years, the 2016 gap reported Tuesday by the Commerce Department reflected a large deficit for U.S. trade in goods with other countries, offset in part by a trade surplus for services. The gap in terms of goods only was $347 billion with China last year, $69 billion with Japan, $65 billion with Germany and $63 billion with Mexico.

For December, the total trade gap decreased 3.2% from November to a seasonally adjusted $44.26 billion. Exports rose 2.7%, including increased sales of civilian airplanes and aircraft engines. Imports were up 1.5% in December, including a rise in car imports. [..] The interplay between trade, growth and employment is complex and difficult to manage. The U.S. has run trade deficits for decades, during periods of expansion and low unemployment as well as during recessions and high unemployment. The gap widened starting in the late 1990s with China’s emergence as a world trading power and recent research shows a surge of imports from China put downward pressure on U.S. wages and manufacturing employment.

Economists generally say trade has overall if uneven benefits, including lower prices for consumers.In 2016, the total deficit rose modestly from the prior year to its highest dollar level since 2012. But it shrank slightly to 2.7% as a share of U.S. economic output after hovering at 2.8% of GDP in 2013 through 2015. The gap fundamentally reflects the fact that Americans consume more than they produce relative to the rest of the world. To shrink the gap, they would either have to produce more or consume less. If Americans consumed less, the deficit could contract along with the broader economy, as happened during the 2001 and 2007-2009 recessions, leaving workers no better off. To produce more, U.S. firms could export more or take market share from imports. Tariffs could help that happen, but other countries might retaliate.

Read more …

This was always going to happen. It’s been clear from the start that not all these people would last very long. It’s Trump-style: throw out some stuff and see what sticks. And this is where the anti-Trump stance of the media bites: WaPo or CNN or NYT or in this case Politico have lost any and all signs of objectiveness. Which colors their reporting on this too, or so one must assume. We could have done with some credible sources.

Trump Reviews Top White House Staff After Tumultuous Start (Pol.)

President Donald Trump, frustrated over his administration’s rocky start, is complaining to friends and allies about some of his most senior aides — leading to questions about whether he is mulling an early staff shakeup. Trump has told several people that he is particularly displeased with national security adviser Michael Flynn over reports that he had top-secret discussions with Russian officials about and lied about it. The president, who spent part of the weekend dealing with the Flynn controversy, has been alarmed by reports from top aides that they don’t trust Flynn. “He thinks he’s a problem,” said one person familiar with the president’s thinking. “I would be worried if I was General Flynn.”

Yet Trump’s concern goes beyond his embattled national security adviser, according to conversations with more than a dozen people who have spoken to Trump or his top aides. He has mused aloud about press secretary Sean Spicer, asking specific questions to confidants about how they think he’s doing behind the podium. During conversations with Spicer, the president has occasionally expressed unhappiness with how his press secretary is talking about some matters — sometimes pointing out even small things he’s doing that he doesn’t like. Others who’ve talked with the president have begun to wonder about the future of Chief of Staff Reince Priebus. Several Trump campaign aides have begun to draft lists of possible Priebus replacements, with senior White House aides Kellyanne Conway and Rick Dearborn and lobbyist David Urban among those mentioned.

Gary Cohn, a Trump economic adviser who is close with senior adviser Jared Kushner, has has also been the subject of chatter. For now, Priebus remains in control as chief of staff. He was heavily involved in adviser Stephen Miller’s preparation for appearances on Sunday morning talk shows, which drew praise from the president. If there is a single issue where the president feels his aides have let him down, it was the controversial executive order on immigration. The president has complained to at least one person about “how his people didn’t give him good advice” on rolling out the travel ban and that he should have waited to sign it instead of “rushing it like they wanted me to.” Trump has also wondered why he didn’t have a legal team in place to defend it from challenges.

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A very strange position to be in for a career intelligence man.

Mike Flynn’s Position as National Security Adviser Grows Tenuous (WSJ)

The White House is reviewing whether to retain National Security Adviser Mike Flynn amid a furor over his contacts with Russian officials before President Donald Trump took office, an administration official said Sunday. Mr. Flynn has apologized to White House colleagues over the episode, which has created a rift with Vice President Mike Pence and diverted attention from the administration’s message to his own dealings, the official said. “He’s apologized to everyone,” the official said of Mr. Flynn. Mr. Trump’s views toward the matter aren’t clear. In recent days, he has privately told people the controversy surrounding Mr. Flynn is unwelcome, after he told reporters on Friday he would “look into” the disclosures.

But Mr. Trump also has said he has confidence in Mr. Flynn and wants to “keep moving forward,” a person familiar with his thinking said. Close Trump adviser Steve Bannon had dinner with Mr. Flynn over the weekend, according to another senior administration official, and Mr. Bannon’s view is to keep him in the position but “be ready” to let him go, the first administration official said. Mr. Trump’s son-in-law and senior adviser, Jared Kushner, as of Sunday evening hadn’t yet weighed in, the official said. Mr. Flynn initially said that in a conversation Dec. 29 with the Russian ambassador, Sergey Kislyak, he didn’t discuss sanctions imposed that day by the outgoing Obama administration, which were levied in retaliation for alleged Russian interference in the 2016 presidential election.

Mr. Flynn now concedes that he did, administration officials said, after transcripts of his phone calls show as much. He also admits he spoke with the ambassador more than once on Dec. 29, despite weeks of the Trump team’s insisting it was just one phone call, officials said. Mr. Pence, in television interviews, vouched for Mr. Flynn, based on a private conversation, and he was angered he repeated information publicly that turned out to be untrue, administration officials said. Messrs. Pence and Flynn spoke twice on Friday, one official said. If Mr. Flynn had promised any easing of sanctions once Mr. Trump took office, he may have violated a law that prohibits private citizens from engaging in foreign policy, legal experts have said.

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Who does the headlines at Bloomberg?

Refugee-Embracing Trudeau Set to Bite His Tongue on Trump Visit (BBG)

More than two decades ago, with Donald Trump already atop a real-estate empire, a young Justin Trudeau set out to explore the world. He toured Europe and Africa with friends, hiding their beer from customs agents before boarding the Trans-Siberian railway to China. On the train, he sketched, read “War and Peace” and gazed at the remnants of the Soviet Union. It was a defining trip, he’d later write, that left him praising both diversity and compromise. Both values will be tested Monday. The now-45-year-old Canadian prime minister – hailed by Joe Biden as one of the last champions of liberalism – heads to Washington for his first meeting with the new U.S. president, 70, whose bellicose statements and immigration restrictions reveal a deep gulf between the two leaders. But U.S. liberals hoping for Trudeau to emerge as Trump’s foil shouldn’t hold their breath.

He’s already bit his tongue and focused almost exclusively on an economic relationship that accounts for three-quarters of Canada’s exports. The White House visit will test just how far Trudeau can go to woo the president and preserve trade without selling out his core values. “We both got elected on commitments to strengthen the middle class, and support those working hard to join it,” Trudeau said last week. “And that’s exactly what we’re going to be focused on.” He has little choice. Nearly two-thirds of all Canadian trade is with the U.S., the highest ratio of Group of 20 nations and quadruple all but Mexico. Almost all of Canada’s oil goes to the U.S. and most of the country’s manufacturing is geared toward meeting U.S. demand. Americans hold C$2.3 trillion ($1.8 trillion) in Canadian assets, almost exactly the same amount held by Canadians in the U.S. A Deutsche Bank report this month that looked at the potential impact of Trump policies on all the U.S.’s major partners found Canada would be among the hardest hit, forcing the country to cede about $70 billion in trade to the U.S. [..]

The threats to Canada from Trump’s agenda go beyond trade. Trump has shown an interest in overhauling the U.S. tax system in a way that would impose financial disincentives against imports. The border-adjusted tax plan would focus levies on domestic income and imports while exempting exports and offshore income. It has met opposition from retailers and oil refiners but is supported by major exporters. It’s unclear whether the president fully favors that approach. All this, however, is unlikely to be detailed Monday. Instead, Trudeau will seek to lay out a joint economic narrative with Trump. The prime minister’s conciliatory spirit traces back to that Trans-Siberian railway trip. On New Year’s Eve 1994, Trudeau drank vodka with the conductor, captivated by stories but abhorred by “his casual racism to our fellow passengers,” he wrote in his autobiography.

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Corruption interrupted.

Romania Protests Enter Day 13, Call For Government Of ‘Thieves’ To Resign (G.)

Tens of thousands of Romanians have braved the cold and returned to the streets in protest, calling on the government to resign as they accused it of attempting to water down anti-corruption laws. “Thieves! Resign!” chanted protesters gathered in front of the seat of government in Bucharest on Sunday night, as they used the lights from their mobile phones to project the blue, yellow and red colours of the Romanian flag. Up to 50,000 protesters took part in the Bucharest march, according to Romanian media reports. The authorities did not give any estimate of their own. Some 20,000 more took to the streets in other major cities, calling on the government to stand down. “We want to give the government a red card,” one of the protesters, 33-year-old businessman Adrian Tofan, said.

Sunday’s demonstrations, the 13th consecutive day of protests against the government, took place despite the administration backing down over a planned controversial decree which would have made abuse of power a crime punishable by jail only if the sums involved exceeded 200,000 lei ($47,500). The demonstrations, the largest since the ousting and summary execution of communist dictator Nicolae Ceausescu in 1989, have continued despite the resignation on Thursday of justice minister Florin Iordache. “The justice minister’s resignation isn’t enough after what they tried to do,” said Tofan. Another demonstrator also said he had completely lost faith in the government. “We want this government to stand down. We don’t trust it, they want us to go backwards,” said Bogdan Moldovan, a doctor.

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Highly speculative, but….“..some economists in Germany say the repatriated gold may be needed to back a new deutschmark should the eurozone collapse..”

Germany Repatriates Gold Faster Than Planned As Faith In Euro Plunges (RT)

Berlin is bringing home its gold reserves stored in New York, London and Paris faster than scheduled, Germany’s central bank said Thursday. The move is linked to surging euroskepticism, as new governments in France and Italy may ditch the single currency. The German Bundesbank has already moved 583 tons of gold out of New York and Paris, planning to have a half of its gold back in Germany by the end of 2017, which is ahead of the 2020 plan. The rest will be split between the Federal Reserve Bank of New York and the Bank of England. “We have a lot of discussions about Trump, regarding implications on monetary policy, macroeconomics, etc., but we trust the central bank of the US,” Bundesbank board member Carl-Ludwig Thiele told a news conference. “Trump has not triggered a discussion about the storage facility in New York,” he said.

As French presidential candidate Marine Le Pen and Italy’s 5-Star Movement are openly calling to pull out of the euro, some economists in Germany say the repatriated gold may be needed to back a new deutschmark should the eurozone collapse. During the Cold War, 98% of Germany’s bullion was stored abroad, and so far the biggest repatriation was in 2000 when the Bundesbank repatriated 931 tons from the Bank of England. When the relocation is complete, Germany will still have 1,236 tons in New York, 432 tons in London and the rest in Frankfurt. The current repatriation involves moving 300 tons from New York and 374 tons from Paris. The Bundesbank said it is not worried about keeping gold in England despite Brexit, as London remains a key gold trading market and a safe place. Germany has the second-largest gold reserves in the world after the US with 3,381 tons.

Read more …

Amen.

Brussels’ Hypocrisy Over The Closing Of Borders (Nikos Devletoglou)

Sir, It seems remarkable that today’s leaders of the EU, encouraged by the overreaction of the global mass media, reserve for themselves the appearance of virtue and goodness and generally resent the refreshing American principle summed up by president Donald Trump as America First. Americans have shed blood, along with vast material expense, defending human rights in Europe — regardless of ethnicity, geography, culture or religion, demonstrably having guaranteed the continent’s survival in freedom and subsequent prosperity, including that of Germany, after the second world war.

The EU’s hypocrisy offends. Indeed, it remains a mystery how Brussels feels justified in its heavy criticism of America’s increasing vigilance over its own borders when the EU itself continues to turn a blind eye to the formidable barbed-wire militarised fortifications erected all along the northern frontiers of Greece by its neighbours, pitilessly blocking the passage of hundreds of thousands refugees desperately fleeing the war in Syria. These refugees still dearly hope to reach Germany first and eventually other parts of Europe, but are instead inhumanely trapped in Greece practically under the authority of the EU — which, further, even condones the closing of borders in Austria and Hungary. These are provocative double standards. The scant remaining resources in Greece are already stretched to their limits.

Previously prosperous islands in the Aegean Sea – Chios, Samos and Lesbos were until recently celebrated high-profile tourist destinations worldwide – are currently overrun by multitudes of refugees, understandably aggressively inclined by now, at the expense of social cohesion elsewhere in Greece as well. Still worse, the country remains undeservedly caught in a deepening economic and financial crisis, a result of blind austerity policies inspired by Germany that the EU rigorously enforces to this day, manifestly ruling out growth and prosperity in Greece any time soon. Both the IMF and the European authorities still fail to appreciate that reducing Greek debt by one-third in the present circumstances would consistently reflect the social, economic and financial damage they themselves have caused by arbitrarily depressing the Greek economy since 2010.

Nicos E Devletoglou, Emeritus Professor of Economics, University of Athens, Greece

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Bitter, bitter tragedy. “The human and social cost of this austerity policy is not included in the Excel tables of the Eurogroup. But it is paid cash by the population.”

Greece: The Low-Noise Collapse Of An Entire Country (FE)

European officials may argue that their bailout is working, they welcome the recovery of Greece and the budget surpluses, but the situation is quite different: passively we are witnessing the low-noise collapse of a whole country. While forecasts foresee a rebound of the Greek economy in 2016, with growth of at least 2.6%, these risks once again prove to be false. If a slight start was recorded at the beginning of the year, it continued to slacken. In the last few months, the engine seems to have stalled. According to Markit figures published on February 1st, manufacturing activity recorded its largest decline in 15 months. “The decline is related to both the decline in production and new orders. While rising import prices have accelerated to their highest level in 70 months, companies nevertheless lower their selling prices,” explains the economic and financial institute, pointing to the fall in consumption and the lack of outlets.

In seven years Greece’s GDP decreased by a third. Unemployment affects 25% of the population and 40% of young people between 15 and 25 years. One third of companies have disappeared in five years. Successive cuts imposed everywhere in the name of austerity now bite in all regions. There are no more trains, no more buses in whole parts of the country. No more schools, sometimes. Many secondary schools had to close in the most remote corners because of lack of funding. Per capita spending on health has declined by a third since 2009, according to the OECD. More than 25,000 doctors were dismissed. Hospitals lack personnel, medicines, everything. The human and social cost of this austerity policy is not included in the Excel tables of the Eurogroup.

But it is paid cash by the population. One fifth of the population lives without heating or telephone. 15% of the population has now fallen into extreme poverty compared to 2% in 2009. The Bank of Greece, which cannot be suspected of complacency, has drawn up a report on the health of the Greek population, published in June 2016. The figures it gives are overwhelming: 13% of the population are excluded medical care; 11.5% cannot buy prescription drugs; People with chronic health problems are up to 24.2%. Suicides, depression, mental illness show exponential increases. Worse: while the birth rate has fallen by 22% since the beginning of the crisis, the infant mortality rate almost doubled in a few years to reach 3.75% in 2014.

After seven years of crisis, austerity and European plans, the country is exhausted, financially, economically and physically. “The situation is getting worse. What we need most now is food. This shows that the problems relate to the essential and not the quality of life. It’s about subsistence,” says Ekavi Valleras, head of the NGO Desmos. And it is to this country that Europe asks moreover to assume alone or almost the reception of the refugees coming to Europe.

Read more …

Feb 112017
 
 February 11, 2017  Posted by at 4:28 pm Finance Tagged with: , , , , , , , , ,  No Responses »
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Henri Cartier Bresson Salamanca 1963

 

Earlier this week I was talking in Athens to a guy from Holland, who incidentally with a group of friends runs a great project on Lesbos taking care of some 1000 refugees in one of the camps there. But that’s another topic for another day. I was wondering in our conversation how it is possible that, as we both painfully acknowledged, people in Holland and Germany don’t know what has really happened in the Greek debt crisis. Or, rather, don’t know how it started.

That certainly is a big ugly stain on their media. And it threatens to lead to things even uglier than what we’ve seen so far. People there in Northern Europe really think the Greeks are taking them for a ride, that the hard-working and saving Dutch and Germans pay through the teeth for Greek extravaganza. It’s all one big lie, but one that suits the local politicians just fine.

By accident(?!), I saw two different references to what really happened, both yesterday in the UK press. So let’s reiterate this one more time, and hope that perhaps this time someone in Berlin or Amsterdam picks it up and does something with it. There must be a few actual journalists left?! Or just ‘ordinary’ people curious enough, and with some intact active neurons, to go check if their politicians are not perhaps lying to them as much as their peers are all over the planet.

What I’m talking about in this instance is the first Greek bailout in 2010. While there are still discussions about the question whether the Greek deficit was artificially inflated by the country’s own statisticians, in order to force the bailout down the throats of the then government led by George Papandreou, there are far fewer doubts that the EU set up Greece for a major league fall just because it could, and because Dutch, French, German politicians could use that fall for their own benefit.

The reason to do all this would have been -should we say ostensibly or allegedly?-, to get Greece in a situation where the Germans and the French could abuse the emergency they themselves thus created, to transfer the Greece-related bad debts of their banks to the EU public at large, and subsequently to the Greek public, instead of forcing the banks to write these debts down. That is still the core of the Greek problem to this day. It’s also the core problem with the IMF’s involvement: the fund’s statutes prescribe it should have insisted on writedowns long ago, from the very first moment it got involved.

The bailout, as Yanis Varoufakis repeats below, was not -and never- meant to help Greece. Instead, it was meant to do the exact opposite, to enable Europe’s richer countries -and their banks- to escape the only just punishment for reckless lending practices, by unloading their debt onto the Greek people.

Varoufakis Accuses Creditors Of Going After Greece’s ‘Little People’

Former Greek finance minister Yanis Varoufakis [..] said that the country has been put on a fiscal path which makes everyday life “unsustainable” in Greece. “The German finance minister agrees that no Greek government, however reformist it might be, can sustain the current debt obligations of Greece,” he said. Earlier in the day, Wolfgang Schäuble told German broadcaster ARD that Greece must reform or quit the euro. “A country in desperate need of reform has been made unreformable by unsustainable macroeconomic policies,” Mr Varoufakis said.

He said that “instead of attacking the worst cases of corruption, for six years now the creditors have been after the little people, the small pharmacists, the very poor pensioners instead of going for the oligarchies”. Greece in 2010 was given a huge loan that Mr Varoufakis said was not designed to save the bankrupt country but to “cynically transfer huge banking losses from the books of the Franco German banks onto the shoulders of the weakest taxpayers in Europe”.

The Financial Times, in a rare moment of lucidity, and with an unintentionally hilarious headline, puts its fingers on that same issue, as well as a few additional sore spots, and with admirable vengeance and clarity:

Conflict Over Athens’ Surplus Needles The IMF

This week the enduring problem of Greece took a new and disturbing turn. It was revealed that the executive board of the IMF is split on the question of what fiscal surplus Greece should be required to hit — which in itself will affect whether it needs official debt relief to reach sustainable growth.

[..] the fact that the fund admitted a division between its member countries is significant. European nations are over-represented on the board relative to their size in the global economy. Wielding that power to dissuade the fund from demanding debt relief from eurozone governments is a clear conflict of interest and poses a threat to the fund’s credibility and independence.

[..] The fund, which over the years has come to take a more realistic view of Greece’s debt sustainability, has dug its heels in and said it will not continue to participate without further reductions in the burden. This leaves eurozone countries, particularly Germany, in a quandary. Berlin insists it will not continue with the rescue without the involvement of the IMF but it fiercely opposes the debt writedown that the fund is demanding.

The point at issue is the fiscal surplus Greece is required to hit. The IMF says that reaching and maintaining a primary surplus of 1.5% of gross domestic product is sufficient; the eurozone wants an improbable 3.5%. [..] The European directors on the board, who want the IMF to agree to the higher fiscal surplus number, are undoubtedly conflicted by having an eye on the effect on their own governments having to write down debt.

Forthcoming elections in the eurozone, including Germany and France, mean that the political as well as economic cost of being seen to give in to Greece is considerable.

Greece’s own government has also been shaken by the conflict, and through its intransigence, the eurozone may force yet another change of administration, with the Syriza government being replaced by the centre-right opposition. At the margin, that may result in Greece being offered a slightly better deal than under the current administration. But short-term political manoeuvring is a terrible way to try to set Greece on a path to long-term debt sustainability and economic stability.

Right from the beginning of the Greek crisis in 2010, the political need to shield first their banks and investors, and then their taxpayers, has warped the response of eurozone governments. They have consistently signed up to hugely over-optimistic growth and surplus targets rather than accepting the need for more external finance and, if required, debt writedowns.

The rest of the IMF’s membership should be prepared to overrule the recalcitrant Europeans. The complaints of a self-interested cabal cannot be allowed to get in the way of Greece’s best interests. Eurozone governments have behaved poorly on this issue. They deserve to be defeated.

First of all, to put Greece and ‘sustainable growth’ together in one sentence is as preposterous as it is to do the same with Greece and ‘surplus’. But more importantly, the FT is right in just about every word here. Europe de facto decides what the IMF does. So despite all the recent conflicts between the Troika members (though they reportedly just announced they agreed on what to dictate to Greece over the weekend), it’s really all EU (i.e. Germany, France) all the time. Greece never stood a chance, and neither did justice.

The point about upcoming elections in Holland, France and Germany gets more important by the day. Since former EU parliament chief Martin Schulz left that post to head the ‘socialist’ SPD in Germany’s elections, he’s seen his poll numbers soar so much that Merkel and Schaeuble are getting seriously nervous about their chances of re-election. Like in all countries these days, certainly also in Europe, their knee-jerk reaction is to pull further to the right. Which is the opposite of setting the record straight with regards to.

As for Dijsselbloem, Schaeuble’s counterpart as finance minister for Holland, his Labor Party (PVDA) -yes, that twit claims to be a leftie- is down so much in the polls that you have to wonder where he gets the guts -let alone the authority- to even open his mouth. PVDA has 38 seats in the Dutch parliament right now and are predicted to lose 27 of them and have just 11 left after the March 15 vote, taking them from 2nd largest party to 7th largest. And out of power.

And he still heads the eurogroup, including in the negotiations with Greece and the IMF?! It’s a strange world. Dijsselbloem proudly proclaimed this week that without the IMF being involved in the next bailout, Holland wouldn’t ‘give’ Greece another penny anymore. Think Dijsselbloem and Schaeuble don’t know what happened in 2010? Of course they do. They know better than anyone.

It’s simply better for their careers -or so they think- to further impoverish the entire Greek nation and the poorest of its citizens than it is to come clean, to tell their people the whole story has been based on dirty tricks from the start. And since their media refuse to tell the truth, too, the story will last until at least after their respective elections. Thing is, Dijsselbloem will be out of a political job by March 16, so what’s he doing, setting himself up for a juicy job at one of the banks whose debts were transferred to Greek pensioners in 2010? No conscience?

 

Perhaps Greece’s best hope is, of all people, Donald Trump. Yeah, a long shot if ever you saw one. But Trump can overrule the IMF board simply because the US is the biggest party involved in the fund. He can tell that divided board to get its act together and stop harassing a valuable NATO member. At least he has the business sense to understand that a country with 23% unemployment -and that’s just the official number- and 50-60% youth unemployment cannot recover no matter what happens, and that sustainable growth, any kind of growth, is an impossibility once you take people’s spending power away.

Meanwhile, elite and incumbent Europe seems to think that publicly agitating against Trump is the way to go (they may come to regret that stance, and a stance it all it is). Trump’s apparent choice for EU ambassador, economist Ted Malloch, was accused by European Parliament hotshots Weber and Verhofstadt -in a letter, no less- of “outrageous malevolence” towards “the values that define this European Union”, for saying the Union needs ‘a little taming’. For some reason, they don’t seem to like that kind of thing. “Outrageous malevolence”, we’re talking Nobel literature material here.

Malloch also said EU president Juncker was a “very adequate mayor, I think, of some city in Luxembourg.” And that he “should go back and do that again.” And Malloch said on Greek TV this week that Greece should have left the eurozone four years ago. “Why is Greece again on the brink? It seems like a deja vu. Will it ever end? I think this time I would have to say that the odds are higher that Greece itself will break out of the euro.”

Why would he say that? How about because of the numbers in this by now infamous graph, straight out of the IMF itself, which shows EU countries have conspired to plunge one of their fellow “Union” member states into a situation far worse than the US was in during the Great Depression? Would that do it?

 

 

And we haven’t even touched on the role that Goldman Sachs plays in the entire kerfuffle, with its fake loans and derivatives, yet another sordid tale in this Cruella De Vil web of power plays spun by incompetent petty men. And Americans think they got it bad… Guess that Goldman role makes it less likely for Trump to interfere in Greece’s favor. Which would seem a bad idea, for everyone involved, not least of all because of rising tensions with Turkey over islands and islets and rocks (I kid you not) in the Aegean Sea.

It would be much better and safer for Trump, and for all of Europe, to make sure Greece is a strong nation, not a depressed and demoralized penal colony for homeless and refugees. That is asking for even more trouble. But nary a soul seems to be tuned in to that, it’s all narrow windows, short term concerns and upcoming elections. No vision.

Or perhaps Merkel will do something unexpected. Word has it that Greek finance minister Tsakalotos is meeting with Angela this weekend, a move that would seem to bypass Schaeuble, who once again said yesterday that Greece can only get a debt writedown if it leaves the eurozone. And that’s something Merkel is not exactly keen on. If only because it means unpredictability, volatility, not a great thing if your popularity as leader is already on shaky ground.

But to summarize, the Greek people didn’t do this. Of course plenty of Greek citizens borrowed more money than they should have in the first decade of the millenium, stories about credit cards in people’s mailboxes with a ‘free’ €5000 credit on them are well known in Athens. But they were by no means the ones who profited most. And the country has a long history of corruption and tax evasion. Which is what the French and German banks ‘cleverly’ played into as their politicians acted like they had no idea. Still, none of that comes even close to a reason or an excuse for completely eviscerating a fellow member of both the EU and NATO.

And it makes little sense. Do these people really want to risk peace in the eastern Mediterranean, or inside Greece itself (which will inevitably explode if this continues), just in order to keep Commerzbank or BNP Paribas out of the trouble they rightfully deserve to be in?

No, it’s not Tim Malloch’s ‘statements that reveal’ “outrageous malevolence” towards “the values that define this European Union”. It’s the actions of the European Union itself that do.

Feb 112017
 
 February 11, 2017  Posted by at 10:26 am Finance Tagged with: , , , , , , , , , , ,  No Responses »
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Dorothea Lange Play street for children. Sixth Street and Avenue C, NYC 1936

 


Trump ‘May’ Not Appeal Travel Ban Ruling To Supreme Court (ZH)
What’s Really Behind Trump’s Bungling Of The Immigration-Ban Order? (MW)
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Daniel Tarullo, Federal Reserve Regulatory Point Man, to Resign (WSJ)
Foreigners Dump Debt, Offering Up a Test for Rates (WSJ)
Russia’s Exile From World Markets May Soon Be Over (BBG)
EU Foreign Policy Chief Tells Trump Not To Interfere In Europe’s Politics (G.)
EU In Disintegration Mode (Martin Armstrong)
Eurozone, IMF Agree On A Common Stance On Greece (R.)
Greek Bailout Talks Set to Drag Past February Amid Standoff (BBG)
Universal Basic Income ‘Useless’, Says Finland’s Biggest Union (Ind.)
Snowden Claims Report Russia May ‘Gift’ Him To Trump Proves He’s No Spy (G.)
‘We Are Silently Dying’: Refugees In Greek Camp Slip Into Despair (MEE)

 

 

Keep ’em guessing.

Trump ‘May’ Not Appeal Travel Ban Ruling To Supreme Court (ZH)

Update: In the latest moment of confusion for the new administration, chief of staff Reince Priebus said the administration was still considering an appeal to the Supreme Court after a lower court soundly rejected its request to reinstate the order. Priebus’s statement came one hour after a White House official said it was not planning to challenge the Ninth Circuit Court of Appeals ruling upholding a temporary restraining order (TRO) blocking the ban, while Trump himself has said a new order on security could come next week. Priebus told The Washington Post that “every single court option is on the table, including an appeal of the Ninth Circuit decision on the TRO to the Supreme Court. In short, the situation remains fluid.

What a difference a day makes. Less than 24 hours after an angry Trump tweeted “SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!” in the aftermath of yesterday’s adverse Appeals Court ruling… … the President has changed his mind and has decided not to see anyone in court – if only for the time being – because according to Reuters, his administration is not currently planning to appeal the temporary hold on his travel ban to the Supreme Court, a White House official said Friday according to multiple media sources. The official noted, however, that the White House said it will forge ahead on the broader battle against a lawsuit challenging the executive order, if out of court. Which means, that as per the steps we laid out last night, the administration will now prepare a brand new immigration order.

Trump hinted as much earlier in the day when during his press conference with Abe, he said: “We’ll be doing something very rapidly having to do with additional security for our country; you’ll be seeing that sometime next week,” Trump said with Abe by his side. He offered no specifics. He then added “we are going to keep our country safe,” he said on Friday. “We are going to do whatever’s necessary to keep our country safe.” He added he would continue to fight for the travel ban in courts, and that “ultimately, I have no doubt we will win that particular case.” Trump later told reporters aboard Air Force One that he would likely wait until next week to respond with legal action. “Perhaps Monday or Tuesday,” he said.

Trump earlier Friday hinted a new order could be in the works, but he declined to detail what it would look like. And so, while his travel ban is held up in court, Trump said he is considering ordering his staff to draft a new executive order that will have an easier time clearing legal hurdles. “We also have a lot of other options, including just filing a brand new order,” he told reporters on the presidential aircraft.

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“The justices were very unlikely to second-guess a president’s national security intelligence. They don’t consider that to be their job, they don’t want to do it, and they know how dangerous that could be – for the country and, indeed, for the standing of the courts. Legal precedent strongly suggests that they’d support the president so long as he could reassure them he had a rational basis for his action. But that’s not what Trump’s lawyer did.”

What’s Really Behind Trump’s Bungling Of The Immigration-Ban Order? (MW)

What on Earth is wrong with Donald Trump? Did he actually set out to lose his immigration ban in the appeals court deliberately, so that he could whip up his base into ever more fury at the “elites”? Contrary to what you may hear, the U.S. Court of Appeals for the 9th Circuit on Thursday did not — repeat: did not — repudiate Trump’s legal right to suspend selective immigration. It just repudiated the bungling incompetence with which his administration made the case. Yes, the three justices ruled: “Courts owe substantial deference to the immigration and national security policy determinations” of the president and Congress. That is “an uncontroversial principle that is well-grounded in our jurisprudence.” Indeed, as I pointed out earlier this week, it is well established that the president has very broad discretion to suspend immigration where he deems it necessary.

But that was not what the Trump administration claimed. Instead, they argued that they were actually above the law, the Constitution or legal review. “The Government has taken the position that the President’s decisions about immigration policy, particularly when motivated by national security concerns, are unreviewable, even if those actions potentially contravene constitutional rights and protections,” the justices wrote with disbelief. They added: “There is no precedent to support this claimed unreviewability, which runs contrary to the fundamental structure of our constitutional democracy.” You couldn’t make this up. Trump is now raging at the judges. But the blame for this fiasco lies entirely with him, and no one else. All the administration had to tell the appeals court was that it had rational reasons for suspending immigration from the seven specific countries.

Even with national security details “redacted,” the president’s lawyer could have laid out a simple case. Call it Iraq War II. “Intelligence sources say .. intelligence sources warn .. We have received intelligence ..” And so on. He could have kept it vague and menacing. He could have made it up. So long as he offered something. All the courts needed was an excuse. Cue our old friend “Curveball.” The justices were very unlikely to second-guess a president’s national security intelligence. They don’t consider that to be their job, they don’t want to do it, and they know how dangerous that could be – for the country and, indeed, for the standing of the courts. Legal precedent strongly suggests that they’d support the president so long as he could reassure them he had a rational basis for his action. But that’s not what Trump’s lawyer did.

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Having Goldman do your tax policies can backfire in seconds.

White House: Cohn-Led Tax Plan Is Real and It’s Phenomenal

Former Goldman Sachs president Gary Cohn is leading the effort to craft President Donald Trump’s plan to overhaul taxes that will be released within weeks, a White House official said. Unnamed congressional leaders have been consulted on the blueprint, the official said. It’s separate from Trump’s proposed budget, the official said, requesting anonymity because the plan is still under development. During a meeting at the White House with U.S. airline executives Thursday, Trump said he had a “phenomenal” plan to revamp business taxes that would be revealed within the next two or three weeks, without offering details. White House Press Secretary Sean Spicer told reporters later that day that specifics would emerge only in the coming weeks.

Still, he said the White House is at work on an outline of the most comprehensive business and individual tax overhaul since 1986. Cohn, 56, stepped down as Goldman’s president and COO in December after agreeing to lead Trump’s National Economic Council, an influential panel that helps coordinate and develop the president’s economic program. He was long seen as the heir apparent to the bank’s CEO Lloyd Blankfein. During a news conference Friday with Japanese Prime Minister Shinzo Abe, Trump said he was working with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell on the tax measure, which would be guided by an “incentive-based policy” and released “over the next short period of time.”

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3 seats now, Yellen’s in a year. Politicians deciding where a by law independent central bank will turn.

Daniel Tarullo, Federal Reserve Regulatory Point Man, to Resign (WSJ)

The Federal Reserve’s lead architect of postcrisis financial regulations plans to resign this spring, giving President Donald Trump more freedom to remake the central bank and to accelerate a deregulatory agenda by putting his own appointees in charge of overseeing Wall Street. Daniel Tarullo, a 64-year-old Fed governor and the government’s most influential overseer of the American banking system, wrote to Mr. Trump on Friday saying he would resign “on or about” April 5. The move had been expected, and will remove from the policy-making debate one of the strongest voices for imposing safeguards on big banks and nonbanks to protect against another meltdown. Mr. Trump and many of his advisers have criticized those rules as hampering economic growth, and have suggested they will fill vacancies with officials who will handle banking policy with a lighter touch.

Stock prices for megabanks jumped on the news of Mr. Tarullo’s imminent departure, with shares in Bank of America and Citigroup rising almost 1% in the half-hour following the announcement. Mr. Tarullo’s resignation will also give the Trump administration broad discretion to put its own stamp on the central bank at a time when critics—including top Republicans in Congress—have accused the institution of lacking transparency and accountability. The departure could leave vacant three of the seven slots on the Fed’s board of governors. In addition, Janet Yellen’s term as chairwoman expires early next year. Filling those vacancies would also give the new president the chance to redirect the course of monetary policy, though it is unclear whether he would seek officials who would alter Ms. Yellen’s current course of cautious rate increases.

Mr. Tarullo’s announcement came exactly a week after Mr. Trump signed an executive order instructing regulators to review the rules implemented since the 2010 Dodd-Frank financial overhaul, and as Republican lawmakers intensify their plans to rewrite that landmark law. But partisan gridlock on Capitol Hill makes it unlikely Congress can make big changes, leaving it to the regulators Mr. Trump nominates to change the way rules are written, implemented and enforced.

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I’m going with Tim Duy’s tweet on this one: “I would say “Foreigners back away from US Treasury, proving they aren’t necessary to finance deficits.”

Foreigners Dump Debt, Offering Up a Test for Rates (WSJ)

Foreign buyers, led by China, are taking a smaller slice of the debt issued by the U.S. and other major economies, a change that may test the long-held belief that overseas money has kept interest rates low in the developed world. For much of this century, the world’s money increasingly sought the harbors of the bond markets of big, Western nations, principally the U.S. but also Germany and Britain. During that period those countries, and their citizens and companies, borrowed money at remarkably low interest rates. The receding foreign tide comes amid other momentous changes for the global economy and interest rates, including a turn in many political corners away from the free-trading ethos that has defined modern capitalism and glimmers of inflation that are encouraging major central banks to pare back their unprecedented economic stimulus measures.

Foreigners are steadily pulling back: As of November, for the first time since 2009, less than 30% of the $20 trillion market for U.S. government debt was held overseas, according to the latest official data, released in January, from the Treasury Department and Federal Reserve. In the U.K., it is now 27%, compared with a record of 36% in 2008. In Germany, it is 49%, down from a peak of 57% in 2014. The consequences from this shift are uncertain. Strong demand helps push up prices, and lower yields, of government bonds, at least in the short term. And buyers such as the Chinese state have been ravenous sources of demand.

Between 2000 and 2014, Chinese authorities built up a $4 trillion currency reserve, mainly through buying Treasurys to keep the yuan weak and help the country’s exporters. In January, its reserves fell below $3 trillion, the lowest level in almost six years. China is now trying to boost its currency, and its Treasury holdings fell by about $200 billion between May and November. “You create an environment where yields are manipulated lower by captive investors,” said Paul Donovan, chief economist at UBS Wealth Management. “There is now a shift going on here, which is most significant for the U.S.”

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Russia did so well under the sanctions, perhaps it’s better for them to keep doing what they were.

Russia’s Exile From World Markets May Soon Be Over (BBG)

As Donald Trump edges the U.S. closer to a thaw in relations with Vladimir Putin’s Russia, commodity investors are already jumping in. A plan by United Co. Rusal, the biggest Russian aluminum maker, for a London sale of shares valued at about $1.7 billion is the latest sign that Russia’s exile from world markets is over for the nation’s metal and mining giants. It’s a turnaround from years in which slumping raw-materials prices, a weak economy and sanctions imposed by then-U.S. President Barack Obama over the annexation of Crimea punished valuations and drove away foreign investors. Share sales by Russian mining companies have been rare since 2010. Until two months ago, PhosAgro’s offering in April 2013 was the last major sale by a non-state Russian mining company.

The fertilizer miner and processor is among those that have returned since December. Offerings from Novolipetsk Steel and TMK bring the total raised by mining and metals producers since then to about $575 million. Others weighing offers include En+ Group and Polyus. Magnitogorsk Iron & Steel, also known as MMK, is also considering selling a small stake to the market, people familiar said on Friday. Billionaire Mikhail Prokhorov’s Onexim may offer up to 5% of Rusal to investors soon, people said late Thursday. It’s not just plain equities. In a sign of investor appetite, steelmaker Severstal sold $250 million of convertible bonds on Thursday paying a zero coupon. “Investors see less risk in Russian companies now as the geopolitical situation has eased,” Rusal Deputy Chief Executive Officer Oleg Mukhamedshin said in an interview in Moscow last week following a company sale of eurobonds. “That affects demand for both bonds and equities.”

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Brussels trembles ahead of multiple national elections. But faking your great achievements and position of strength doesn’t actually make you look strong.

EU Foreign Policy Chief Tells Trump Not To Interfere In Europe’s Politics (G.)

The EU foreign policy chief, Federica Mogherini, has warned the Trump administration not to interfere in European politics, advising it to “deal with America first”. Speaking during a two-day visit to Washington, Mogherini did not make specific accusations but said that she sometimes heard voices in the new administration “saying the European Union is not necessarily a good idea. Inviting us to dismantle what we have managed to build and which has brought us not only peace, but also economic strength.” “It’s not for me or another European to speak about domestic political choices or decisions in the US. The same goes with Europe – no interference,” Mogherini said, speaking at the Atlantic Council thinktank. “Maybe America first means also that you have to deal with America first.”

Mogherini’s tone echoed the increasing alarm in Brussels over the new administration’s attitudes. Donald Tusk, the head of the European Council, has listed the new US administration and its “worrying declarations” as one of the leading global threats to the EU. Trump has not missed a chance to deride the EU, going out of his way to praise Brexit, and in an interview just before taking office, he depicted the continent as being dominated by Germany and on the brink of collapse. “President Trump believes that dealing bilaterally with different European countries is in US interests, that we could have a stronger relationship with the countries individually,” said Ted Malloch, the man tipped to be Donald Trump’s nominee as ambassador to the EU. He also accused Europe of “blatant anti-Americanism”.

She also took the opportunity to remind the administration, which hosted the UK prime minister, Theresa May, as the president’s first foreign guest, and promised her a favourable trade deal, that Britain did not have the right to negotiate independently until it was outside the EU, which was two years away at least. “The strength of the EU and the unity of the EU I believe is more evident today than it was a few months ago. This has to be clearly understood here,” Mogherini said. “This also means respect for the EU not simply as an institution. It is a union of 28 member states.”

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“..the Trump Administration [..] fail to grasp that talking the dollar down will just not work if the political structure of the EU is breaking up.”

EU In Disintegration Mode (Martin Armstrong)

The EU leadership is really trying to make Great Britain pay dearly for voting to exit the Community. Like the socialists in America, it’s our way or no way. The left may call the right the “deplorables” but the left are the “intolerables” who refuse to ever consider they might be wrong. The EU thinks that if they can make it so bad for Britain, nobody else will leave. They refuse to examine why there is rising discontent within Europe. They refuse to let go of this dream of a federalized Europe to eradicate national identities along with sovereign rights. [..] Britain is not willing to surrender all domestic law to that of the EU. Indeed, EU law is no longer to be applied in Britain. Here we have the EU demanding Ireland retroactively charge Apple taxes simply because their tax rate is less that the highest EU member.

That is surrendering everything sovereign to Brussels. Laws are only to be decided by the British parliament – not Brussels. Jurisprudence is a matter for the British courts not the European Court. Britain is to leave the EU internal market and the EU Customs Union and seeks a free trade agreement to be concluded between the EU and Great Britain. The EU seeks to punish Britain for rejecting its dream. The EU forgets that Trump is now in and a trade deal with Britain will no longer be at the back of the queue as was the case under Obama. Free movement of people, together with the free movement of goods, free movement of services and the free movement of capital, are the four fundamental freedoms which are regarded as the foundation of the EU. The free movement of persons justifies the right of all EU citizens to settle in the Union and to accept work. However, this has not worked as smoothly as presumed.

The cost of living is significantly different throughout the EU. Eastern Europeans, mainly from Poland, have infiltrated Britain working for less money creating competition for domestic workers while foreign companies use cheaper labor in the East to undercut domestic companies on their home-turf. As the economy turns down and deflation prevails, the threat of foreign jobs is being addressed throughout Europe. Add to this the refugee crisis and you have a powder keg throughout Europe waiting to go off. In view of the high unemployment in almost all countries, domestic citizens have ALWAYS turned against foreign workers as the easy scapegoats for the economic decline. This only merges with the high taxes reducing disposable income.

The EU leaders [..] have no clear statement to challenge what is going on. The regulatory nightmare and outright rage that is rising among the people is simply ignored by Brussels. The legal uncertainty with the British exit on the banking system is something nobody even wants to speculate about. How do bail-ins work in Europe if abandoned in Britain? So while the EU thinks by punishing Britain they will discourage others from leaving, they are seriously mistaken. The dream of the EU is dead. It should have remained just a trade union – that was it. What the Trump Administration is clueless about is the ability of the EU to hold it together, they fail to grasp that talking the dollar down will just not work if the political structure of the EU is breaking up.

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All that’s left is emptiness.

Eurozone, IMF Agree On A Common Stance On Greece (R.)

Euro zone lenders and the International Monetary Fund have reached agreed between themselves to present a common stance to Greece later on Friday in talks on reforms and the fiscal path Athens must take, euro zone officials said. Such a united stance would be a breakthrough because the two groups have differed for months on the size of the primary surplus Greece should reach in 2018 and maintain for years later as well as the issue of debt relief. Those differences have hindered efforts to unlock further funding for Greece under its latest euro zone bailout program. “There is agreement to present a united front to the Greeks,” a senior euro zone official said, adding that the outcome of Friday’s meeting with the Greeks was still unclear and it was unclear if Athens would accept the proposals. “What comes out of it, we will see,” the official said. Financial markets took heart from the news, however.

Greece’s two-year bond yield fell almost 50 basis points to 9.55%. It hit the 10% mark on Thursday as worries about the bailout drove away buyers. The chairman of euro zone finance ministers, Jeroen Dijsselbloem, said in The Hague that Friday’s meeting, in which Greek Finance Minister Euclid Tsakalotos will take part, was to discuss the size of Greece’s primary surplus. The euro zone wants Greece to reach a primary surplus – which excludes interest repayments on debt – of 3.5% of GDP and keep it there for many years. But the IMF believes that with reforms in place now Greece will reach only 1.5% next year and in the following years and has therefore been pushing for Athens to legislate new measures that would safeguard the agreed euro zone targets. Officials said the lenders would ask Greece to take €1.8 billion worth of new measures until 2018 and another €1.8 billion after 2018, focused on broadening the tax base and on pension cutbacks.

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What a surprise.

Greek Bailout Talks Set to Drag Past February Amid Standoff (BBG)

Greece probably won’t complete its bailout review by the time the euro area’s finance ministers next meet, on Feb. 20, setting the stage for potentially thorny negotiations in the midst of next month’s bitter electoral campaign in the Netherlands. “We will take stock of the further progress of the second review during the next Eurogroup,” Dutch Finance Minister Jeroen Dijsselbloem said in a statement after a meeting with his Greek counterpart, Euclid Tsakalotos, in Brussels on Friday. “There is a clear understanding that a timely finalization of the second review is in everybody’s interest,” Dijsselbloem said after the meeting, in which representatives of creditor institutions also participated.

Greece is locked in talks with the European Commission, the ECB, the European Stability Mechanism and the IMF over the conditions attached to its latest bailout. During Friday’s meeting, bailout auditors asked the government to legislate additional fiscal cuts equal to about 2% of GDP if the country fails to meet certain budget targets, a person familiar with the matter said after the talks. These contingent measures are the basis for further discussions, the person said, asking not to be named as the matter is sensitive. While progress was made in the meeting, unreasonable demands from the IMF make a resumption of staff-level talks difficult, a Greek government official said in a text message, asking not to be named in line with policy.

The Greek government has been resisting calls to preemptively legislate contingent belt-tightening for 2018 and beyond, arguing that measures already in place should suffice to meet an agreed goal for a budget surplus – before interest payments – equal to 3.5% of GDP. Among the measures the IMF is demanding is pension cuts and a lowering of the threshold at which income tax is paid. Both are red lines the government says it’s not willing to cross. “Although we expect that the Greek government will implement the required measures, the risk of early elections is increasing given the rising political cost to the government and its slim majority in the parliament,” Moody’s analyst Kathrin Muehlbronner said. “Early elections might bring a new and more reform-minded conservative government, but Greece’s economy would be hit again by prolonged uncertainty, after having just started to record positive growth.”

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This must be the dumbest thing I’ve heard in a long time. And that’s saying something these days. The UBI trial started just weeks ago, and they already know it will fail?

Universal Basic Income ‘Useless’, Says Finland’s Biggest Union (Ind.)

Finland’s basic income experiment is unworkable, uneconomical and ultimately useless. Plus, it will only encourage some people to work less. That’s not the view of a hard core Thatcherite, but of the country’s biggest trade union. The labour group says the results of the two-year pilot program will fail to sway its opposition to a welfare-policy idea that’s gaining traction among those looking for an alternative in the post-industrial age. “We think it takes social policy in the wrong direction,” said Ilkka Kaukoranta, chief economist of the Central Organisation of Finnish Trade Unions (SAK), which has nearly 1 million members. Since January, a group of unemployed Finns aged between 25 and 58 have been receiving a stipend of €560 per month. The amount isn’t means-tested and is paid regardless of whether the recipient finds a job, starts a business or returns to school.

Popular in the 1960s, the idea of a guaranteed minimum income for everyone is gaining more proponents again amid resurgent populism. French Socialist candidate Benoit Hamon has made it a policy platform in his presidential campaign. A universal — or unconditional — basic income (UBI), which would replace means-tested welfare payments, has its share of supporters on both the left and the right of the political spectrum. Advocates say it eliminates poverty traps and redistributes income while empowering the individual and reducing paperwork. In Finland, which like other Nordic nations is seen as a trendsetter when it comes to the welfare state, the idea is being explored by a center-right government headed by a former businessman and self-made millionaire.

While limited in scope (it’s conditional on the beneficiary having received some form of unemployment support in November 2016) and size (it’s based on a randomly-selected sample of 2,000 jobless people), the Finnish trial may help answer questions like: “Does it work”? “Is it worth it”? And the most fundamental of all: “Does it incite laboriousness or laziness?”

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“Speak not because it is safe, but because it is right.”

Snowden Claims Report Russia May ‘Gift’ Him To Trump Proves He’s No Spy (G.)

Whistleblower Edward Snowden has seized on a report that Russia is considering sending him back to the US as a “gift” to Donald Trump, saying that the story vindicates him of charges that he is a spy. “Finally: irrefutable evidence that I never cooperated with Russian intel,” he said on Twitter. “No country trades away spies, as the rest would fear they’re next.” Snowden was responding to a report by NBC which stated that US intelligence had collected information that Russia wanted to hand Snowden over in order to “curry favor” with Trump, who has said that the former NSA contractor is a “traitor” and a “spy” who deserves to be executed. The report – based on two sources in the intelligence community – said the intelligence had been gathered since Trump’s inauguration.

Snowden’s ACLU lawyer, Ben Wizner, told NBC News he was unaware of any plan to return his client to the US. “Team Snowden has received no such signals and has no new reason for concern,” Wizner said. Russia granted Snowden asylum in 2013 and a three-year residency in 2014. Snowden has been living in exile in Moscow, facing charges in the US including violations of the US Espionage Act for leaking documents about secret mass surveillance programs. Speaking at a GOP candidate debate in March 2016, Trump said of Snowden: “I said he was a spy and we should get him back. And if Russia respected our country, they would have sent him back immediately, but he was a spy. It didn’t take me a long time to figure that one out.” The Kremlin publicly dismissed these claims.

Snowden offered a longer explanation of his feelings of vindication when he was interviewed by Katie Couric in December 2016, when rumours of a Russian handover first started circulating. He described the suggestion as vindication that he was“independent”. He added: “The fact that I’ve always worked on behalf of the United States and the fact that Russia doesn’t own me. In fact the Russian government may see me as a sort of liability.” Snowden suggested that a reason why Russia might want to return him was his recent criticism of the Kremlin’s human rights record and his suggestions that its officials had hacked US security networks. Previously Snowden has said that Moscow had “gone very far, in ways that are completely unnecessary, costly and corrosive to individual and collective rights” in monitoring citizens online.

When Couric asked if Snowden would mind being extradited, he replied: “That would obviously be something that would be a threat to my liberty and to my life. “But what I’m saying here is you can’t have it both ways. You can’t say this guy’s a bad guy – a Russian tool or something like that – at the same time you say he’s going to be traded away.” After reiterating his sense of vindication on Friday, Snowden posted again to Twitter: “Speak not because it is safe, but because it is right.”

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Incredible.

‘We Are Silently Dying’: Refugees In Greek Camp Slip Into Despair (MEE)

Poor living conditions, a sudden spate of deaths and a “complete loss of hope” are exacerbating mental health issues and leading to suicide attempts and self-harm in the Moria refugee camp on the Greek island of Lesvos, NGOs and refugees have warned. “More and more what we are seeing is people with severe depression linked to the conditions in which they are in and to the complete loss of hope,” said Louise Roland-Gosselin, an advocacy manager for the medical NGO, Doctors Without Borders (MSF). “[Refugees] in Moria are absolutely crushed and we hear more and more about how people are self-mutilating, how they want to commit suicide and we are aware of cases of suicide and attempted suicide, not only on Lesbos but also on other islands,” she added.

[..] For many of the camp’s residents the long and backlogged process of applying for asylum and the lack of activities in the camp has heightened their despair. “It’s still quite a depressing sight,” explained Roland-Gosselin. “You still have hundreds of people who are sleeping in tents, there is little access to water, hygiene conditions are not acceptable, there’s still hundreds of people without heating and they have absolutely no activity, they have nothing to do all day. So it’s an incredibly depressing place.” Some are turning to self-harm as a result of the situation. Cutting is common in the camp according to refugees MEE spoke to. “People here die inside, so when they die inside they either hurt someone else or they hurt themselves, that’s why they do it, to get the pain out. So they cut themselves. I’ve seen it happen to my friend. He’d cut himself, we’d bandage his arm and then he’d do it again the second day,” explained al-Anny.

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Jan 282017
 
 January 28, 2017  Posted by at 10:23 am Finance Tagged with: , , , , , , , , , ,  6 Responses »
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Wassily Kandinsky Autumn Landscape with Boats 1908


US Economy Back Below “Stall Speed” (WS)
Dow Hits 20,000 As US National Debt Reaches $20 Trillion (Snyder)
US Auto Industry In Crisis Amid “Inventory Bubble” (ZH)
Trump’s Crusade on Drug Pricing Puts Both Parties on the Spot (BBG)
Trump Bars Door To Refugees, Visitors From Seven Nations (R.)
EU Lacks Leadership to Tackle Global Crises – Czech Minister (BBG)
‘It Looks as if the World Is Preparing for War’ – Gorbachev (Time)
Congresswoman Returns From Syria With ‘Proof’ Obama Funded ISIS (YNW)
UN Agency Cuts Food Aid To 1.4 Million Displaced Iraqis (AlJ)
The Media Is Now The Political Opposition (Paul Craig Roberts)
Lifting of Sanctions Could Be Costly To Russia (Paul Craig Roberts)
Want To Know How Society’s Doing? Forget GDP – Try These Alternatives (G.)
Canada May Contribute To Dutch-Led International Abortion Fund (AFP)
IMF Says Greece Debt ‘Explosive’ In Long Term (AFP)
Greece: The Game Is On Again (Coppola)

 

 

Nothing is real. And nothing to get hung about. Strawberry Fields forever.

US Economy Back Below “Stall Speed” (WS)

The consensus forecast by economists predicted that the US economy would grow at an rate of 2.2% in the fourth quarter, as measured by inflation-adjusted GDP. The forecasts ranged from 1.5% to 2.8%. The New York Fed’s “Nowcast” pegged it at 2.1%, and the Atlanta Fed’s “GDPNow” at 2.9%. And today, the Bureau of Economic Analysis reported that growth in the fourth quarter was a measly 1.9%. That was down from 3.5% in the third quarter, a spurt that had once again given rise to the now gutted hopes that the US economy would finally emerge from its stall speed. But instead it has slowed down. For the year 2016, the growth rate dropped to 1.6%. It was worse even than 2013, when GDP growth tottered along at 1.7%. And it matched the growth rate in 2011. Both 2016 and 2011 were the worst since 2009 when the US was in the middle of the Great Recession:

In fact, over the past 50 years, anytime the economy grew less than 2% in a year, it was either already in a recession for part of the year, or there’d be a recession the following year. Hence “stall speed” – a speed that is too slow to keep the economy from stalling altogether. [..] So stall speed for the year. But this time it’s different. This is the third year since the Great Recession when GDP growth dropped below 2%. The Fed’s policies of eight years of cheap credit have entailed soaring debt levels among companies, governments, and consumers – money borrowed from tomorrow that was spent today. Borrowing for productive investment is one thing. Borrowing for consumption is another: it boosts GDP but creates a debt overhang with no productive assets that generate income to service that debt in the future; that debt service for prior consumption then acts as a burden on future consumption.

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You can’t buy growth. You can just fake it for a while.

Dow Hits 20,000 As US National Debt Reaches $20 Trillion (Snyder)

The Dow Jones Industrial Average provides us with some pretty strong evidence that our “stock market boom” has been fueled by debt.  On Wednesday, the Dow crossed the 20,000 mark for the first time ever, and this comes at a time when the U.S. national debt is right on the verge of hitting 20 trillion dollars

 

Is this just a coincidence?  As you will see, there has been a very close correlation between the national debt and the Dow Jones Industrial Average for a very long time.

 

For example, when Ronald Reagan took office in 1991, the U.S. national debt had just hit 994 billion dollars and the Dow was sitting at 951.  And as you can see from this chart by Matterhorn.gold via David Stockman, roughly that same ratio has held true throughout subsequent presidential administrations…

During the Clinton years the Dow raced out ahead of the national debt, but an “adjustment” during the Bush years brought things back into line. The cold hard truth is that we have been living way above our means for decades.  Our “prosperity” has been fueled by the greatest debt binge in the history of the world, and we are greatly fooling ourselves if we think otherwise.We would never have gotten to 20,000 on the Dow if Barack Obama and Congress had not gotten us into an extra 9.3 trillion dollars of debt over the past eight years. Unfortunately, most people do not understand this, and the mainstream media is treating “Dow 20,000″ as if it is some sort of great historical achievement

“The average began tracking the most powerful corporate stocks in 1896, and has served as a broad measure of the market’s health through 22 presidents, 22 recessions, a Great Depression, at least two crashes and innumerable rallies, corrections, bull and bear markets. The blue chip reading finally cracked the 20,000 benchmark for the first time early Wednesday. During the current bull market, the second longest in history, the Dow has more than tripled since March 2009.”

Since Donald Trump’s surprise election victory, the Dow has now climbed by approximately 2150 points. And it took just 64 calendar days for the Dow to go from 19,000 to 20,000.  That is an astounding pace, and financial markets around the rest of the planet are doing very well right now too. In fact, global stocks rose to a 19 month high on Wednesday. So where do we go from here? Well, if Donald Trump wants to see Dow 30,000 during his presidency, then history tells us that he needs to take us to 30 trillion dollars in debt.

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“The last thing the auto industry needs is more capacity.”

US Auto Industry In Crisis Amid “Inventory Bubble” (ZH)

Despite record U.S. auto sales last year, the number of vehicles on car-dealer lots remains near record highs, and, as J.D.Power analyst Thomas King warned this week, 2016 ended with an inventory “bubble” that will require less production or more incentives to clear. With near record high inventories of 3.9 million vehicles… U.S. auto inventory finished 2016 at about 66 days supply, up from 60 days a year earlier. Inventory would last 2.23 months at the November sales pace, according to the latest available data from the Census Bureau. The stock-to-sales ratio in 2016 is extremely elevated compared to historical norms…

More problematically, King warns, about one-third of inventory were older model-year vehicles, rather than more typical level of less than a quarter. Of course this massive stockpile hits just as President Trump pressures the auto-industry to onshore more jobs and more production… But as the industry automates, factories don’t create jobs like they used to, said Marina Whitman, a professor of business administration and public policy at the University of Michigan. “The American auto industry last year produced more cars than it ever had before, but they did it with somewhere between one-third and one-half the number of workers that they had decades ago,” said Whitman, who was an adviser to President Richard Nixon and GM’s chief economist from 1978 to 1992. “The last thing the auto industry needs is more capacity,” she said.

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Hilarious to see how much money all these people get from the industry. And insane.

Trump’s Crusade on Drug Pricing Puts Both Parties on the Spot (BBG)

Donald Trump has a chance to rally his core supporters as well as left-wing Democrats, wrapping himself in the populist flag to take on the politically powerful drug industry. He is vowing to keep a campaign pledge to push legislation allowing Medicare to negotiate prescription drug prices, a practice currently prohibited by law. Proponents say this would reduce drug prices and Medicare costs for the federal government. Medicare pays for about 29% of prescription drugs in the U.S. and would have considerable leverage. Trump would be taking on the leaders of his own party, starting with House Speaker Paul Ryan. Most Republicans have long argued that giving Medicare such power is tantamount to government price-setting, which ideologically they oppose and which they say would stifle innovation and research in the drug industry.

Many of them receive huge campaign contributions from the industry’s sizable political war chest. There are arguments over the merits and effects, but the politics are clear cut. In a Kaiser Foundation poll last autumn, the public, by 82% to 17%, favored allowing the federal government to negotiate lower drug prices. Huge majorities say costly drug prices – in recent years they have risen about four times the rate of inflation – are a major concern. These costs are felt by some of Trump’s strongest supporters, non-college educated whites. And liberals, led by politicians like Bernie Sanders, champion a robust government role to keep drug prices down.

[..] There was an instructive vote in the Senate this month on a closely related issue, allowing the importation of cheaper drugs from Canada. It failed 52 to 46. But it garnered the support of 10 Republicans, including deficit hawks like Rand Paul of Kentucky and Utah’s Mike Lee. However, 13 Democrats, most of them beneficiaries of industry political contributions, voted against the measure. Subsequently, they have gotten a lot of flak from liberal groups, which especially have targeted Cory Booker of New Jersey. He received $49,830 from the industry in the last election. If Trump goes all out on this issue, it will be near impossible for most of these Democrats to side with the industry over a Republican president whom they accuse of representing the interests of the rich. And, knowledgeable Congress watchers say, a number of Republicans, in the face of White House pressure and public opinion, would cave, too.

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This is a bump the entire west must go through.

Trump Bars Door To Refugees, Visitors From Seven Nations (R.)

President Donald Trump on Friday put a four-month hold on allowing refugees into the United States and temporarily barred travelers from Syria and six other Muslim-majority countries, saying the moves would help protect Americans from terrorist attacks. In the most sweeping use of his presidential powers since taking office a week ago, Trump paused the entry of travelers from Syria and the six other nations for at least 90 days, saying his administration needed time to develop more stringent screening processes for refugees, immigrants and visitors. “I’m establishing new vetting measures to keep radical Islamic terrorists out of the United States of America. Don’t want them here,” Trump said earlier on Friday at the Pentagon. “We only want to admit those into our country who will support our country and love deeply our people,” he said.

The order seeks to prioritize refugees fleeing religious persecution, a move Trump separately said was aimed at helping Christians in Syria. That led some legal experts to question whether the order was constitutional. One group said it would announce a court challenge on Monday. The Council on American-Islamic Relations said the order targets Muslims because of their faith, contravening the U.S. Constitutional right to freedom of religion. “President Trump has cloaked what is a discriminatory ban against nationals of Muslim countries under the banner of national security,” said Greg Chen of the American Immigration Lawyers Association. The bans, though temporary, took effect immediately, causing havoc and confusion for would-be travelers with passports from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.

Trump has long pledged to take this kind of action, making it a prominent feature of his campaign for the Nov. 8 election, but people who work with Muslim immigrants and refugees were scrambling on Friday night to determine the scope of the order. [..] Trump’s order also suspends the Syrian refugee program until further notice, and will eventually give priority to minority religious groups fleeing persecution. Trump said in an interview with the Christian Broadcasting Network that the exception would help Syrian Christians fleeing the civil war there. Legal experts were divided on whether this order would be constitutional. “If they are thinking about an exception for Christians, in almost any other legal context discriminating in favor of one religion and against another religion could violate the constitution,” said Stephen Legomsky, a former chief counsel at U.S. Citizenship and Immigration Services in the Obama administration.

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But apparently he thinks this can change. Shame he doesn’t say how.

EU Lacks Leadership to Tackle Global Crises – Czech Minister (BBG)

The EU is unable to work with global superpowers in addressing conflicts and crises because it lacks leadership, Czech Finance Minister Andrej Babis said. “Europe is very slow, very bureaucratic,” Babis said. “The problem is who will sit together at the table” with leaders of the U.S., U.K., Russia “to solve the problem in the Middle East, North Africa, the migration. Europe is always waiting for elections” in countries including Germany and France, he said. The Czech billionaire, whose party leads polls ahead of the fall general elections, has been critical of the bloc his country joined in 2004 and the way it tackled a series of issues, including the migration crisis. He rejected a call from his fellow Czech interior minister to lead separate talks with the U.K. on Brexit, saying the EU needs to stay united in the negotiations. Babis said he was surprised by the announced “hard Brexit,” and urged Britain to activate Article 50 of the EU’s Lisbon Treaty quickly to speed up the negotiations.

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He’s been here before.

‘It Looks as if the World Is Preparing for War’ (Gorbachev)

The world today is overwhelmed with problems. Policymakers seem to be confused and at a loss. But no problem is more urgent today than the militarization of politics and the new arms race. Stopping and reversing this ruinous race must be our top priority. The current situation is too dangerous. More troops, tanks and armored personnel carriers are being brought to Europe. NATO and Russian forces and weapons that used to be deployed at a distance are now placed closer to each other, as if to shoot point-blank. While state budgets are struggling to fund people’s essential social needs, military spending is growing. Money is easily found for sophisticated weapons whose destructive power is comparable to that of the weapons of mass destruction; for submarines whose single salvo is capable of devastating half a continent; for missile defense systems that undermine strategic stability.

Politicians and military leaders sound increasingly belligerent and defense doctrines more dangerous. Commentators and TV personalities are joining the bellicose chorus. It all looks as if the world is preparing for war. In the second half of the 1980s, together with the U.S., we launched a process of reducing nuclear weapons and lowering the nuclear threat. By now, as Russia and the U.S. reported to the Non-proliferation Treaty Review Conference, 80% of the nuclear weapons accumulated during the years of the Cold War have been decommissioned and destroyed. No one’s security has been diminished, and the danger of nuclear war starting as a result of technical failure or accident has been reduced. This was made possible, above all, by the awareness of the leaders of major nuclear powers that nuclear war is unacceptable.

I urge the members of the U.N. Security Council — the body that bears primary responsibility for international peace and security — to take the first step. Specifically, I propose that a Security Council meeting at the level of heads of state adopt a resolution stating that nuclear war is unacceptable and must never be fought. I think the initiative to adopt such a resolution should come from Donald Trump and Vladimir Putin — the Presidents of two nations that hold over 90% of the world’s nuclear arsenals and therefore bear a special responsibility.

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Tulsi Gabbard is a Democrat. Can we now please finally have a serious conversation about what the US has done to the Middle East/Northern Africa region? How are we ever going to atone for this if we don’t? Or would we rather continue in denial?

Congresswoman Returns From Syria With ‘Proof’ Obama Funded ISIS (YNW)

Congresswoman Tulsi Gabbard told CNN that she has proof the Obama administration was funding ISIS and Al-Qaeda.Hawaii Rep. Gabbard went to Syria on a secret fact-finding mission to wade through the lies and propaganda and find out what is really happening on the ground. Immediately on her return CNN booked her for an “exclusive” interview – and Gabbard told them exactly what they didn’t want to hear: she has proof the Obama administration was funding ISIS and Al-Qaeda. Explaining to Jake Tapper that she met people from all walks of life in Aleppo and Damascus, Gabbard said that Syrians “expressed happiness and joy at seeing an American walking their streets.” But they also wanted to know “why is it that the United States, its allies and other countries, are providing support, are providing arms, to terrorist groups like Al-Nusra, Al-Qaeda, ISIS, who are on the ground there, raping, kidnapping, torturing, and killing the Syrian people?

“They asked me why is the United States supporting these terrorist groups who are destroying Syria – when it was Al-Qaeda who attacked the United States on 9/11, not Syria. “I didn’t have an answer for that.“ That was more than Jake Tapper, who was hostile from the beginning of the interview, could handle. His face screwed up, he lashed out, saying, “Obviously the United States government denies providing any sort of help to the terrorist groups you are talking about, they say they provide help for the rebel groups.“ If that was supposed to Tapper’s knockout blow, Gabbard saw it coming a mile away. Without missing a beat, she calmly deconstructed his ideological, and savagely wrong, talking points.

“The reality is, Jake – and I’m glad you bought up that point – every place that I went, every person I spoke to, I asked this question to them. And without hesitation, they said ‘there are no moderate rebels, who are these moderate rebels that people keep speaking of?’ “Regardless of the name of these groups, the strongest fighting force on the ground in Syria is Al-Nusra or Al-Qaeda and ISIS. That is a fact. There are a number of different other groups, all of them are fighting alongside, with or under the command of the strongest group on the ground that is trying to overthrow Assad.”

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We have so much to answer for.

UN Agency Cuts Food Aid To 1.4 Million Displaced Iraqis (AlJ)

The World Food Programme (WFP) has slashed food rations distributed to 1.4 million displaced Iraqis by 50% because of delays in payments from donor states. The sharp cutbacks come at a time when a growing number of Iraqis flee the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) group. At least 160,000 people have been displaced since October when the Iraqi military, backed by Kurdish forces and Shia militias. launched a military campaign to recapture Mosul from the armed group. WFP spokeswoman Inger Marie Vennize said the UN agency was talking to the United States – its biggest donor, Germany, Japan and others to secure funds to restore full rations.

“We have had to reduce [the rations] as of this month,” she was quoted by the Reuters news agency as saying. “The 50% cuts in monthly rations affect over 1.4 million people across Iraq,” she added. The effect is already being felt in camps east of Mosul, ISIL’s last major bastion in northern Iraq. “They are giving an entire family the food supply of one person … we want to go back home,” said Omar Shukri Mahmoud at the Hassan Sham camp. Safa Shaker, who fled with her extended family, said: “We are a big family and this ration is not going to be enough. “We escaped from [ISIL] in order to have a chance to live and now they have cut the aid. How are we supposed to live?” she added.

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I wouldn’t shoot from the hip as much as PCR does, but in essence he’s right. Old media, CNN, WaPo, NYT, have wasted so much of their credibility. And they’re not taking any step back from that. it’s till all just echo-chambering.

The Media Is Now The Political Opposition (Paul Craig Roberts)

Stephen Bannon is correct that the US media—indeed, the entire Western print and TV media—is nothing but a propaganda machine for the ruling elite. The presstitutes are devoid of integrity, moral conscience, and respect for truth. Who else but the despicable Western media justified the enormous war crimes committed against millions of peoples by the Clinton, Bush, and Obama regimes in nine countries—Afghanistan, Iraq, Libya, Pakistan, Yemen, Syria, Somalia, Palestine, and the Russian areas of Ukraine? Who else but the despicable Western media justified the domestic police states that have been erected in the Western world in the name of the “war on terror”? Along with the war criminals that comprised the Clinton, Bush, and Obama regimes, the Western media should be tried for their complicity in the massive crimes against humanity.

The Western media’s effort to sustain the high level of tension between the West and Russia is a danger to all mankind, a direct threat to life on earth. Gorbachev’s warnings are correct. Yet presstitutes declare that if Trump lifts the sanctions it proves that Trump is a Russian agent. It is paradoxical that the Democrats and the liberal-progressive-left are mobilizing the anti-war movement to oppose Trump’s anti-war policy! By refusing to acknowledge and to apologize for its lies, euphemistically called “fake news,” the Western media has failed humanity in a number of other ways. For example, by consciously telling lies, the media has legitimized the suborning of perjury and false testimony used to convict innocent defendants in America’s “justice” system, which has about the same relation to justice as genocide has to mercy.

If the media can lie about world events, police and prosecutors can lie about crimes. By taking the role of the political opposition to Trump, the media has discredited itself as an honest critic on topics where Trump needs criticism, such as the environment and his tolerance of oppressive methods used by police. The presstitutes have ended all chance of improving Trump’s performance with reports and criticism. Trump needs moderating on the environment, on the police, and on the war on terror. Trump needs to understand that “the Muslim threat” is a hoax created by the neoconservatives and the military/security complex with the complicity of the presstitutes to serve the hegemony agenda and the budget and power of the CIA, Pentagon, and military industries.

If the US stops bombing and slaughtering Muslims and training and equiping forces to overthrow non-compliant Muslim governments such as Syria, Iraq, and Libya, “the Muslim threat” will disappear. Maybe Trump will add to his agenda breaking into hundreds of pieces the six mega-media companies that own 90% of the US media and selling the pieces to seperate independent owners who have no connection to the ruling elites. Then America would again have a media that can constrain the government with truth rather than use lies to act for or against the government.

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Russia knows.

Lifting of Sanctions Could Be Costly To Russia (Paul Craig Roberts)

Tweets on social media say Trump is about to lift the sanctions placed on Russia by the Obama regime. Being a showman, Trump would want to make this announcement himself, not have it made for him by someone outside his administration. Nevertheless, the social media tweets are a good guess. Reports are that Trump and Putin will speak tomorrow. The conversation cannot avoid the issue of sanctions. Trump during his first week has moved rapidly with his agenda. He is unlikely to delay lifting the sanctions. Moreover, there is no cost to Trump of lifting them. The sanctions have no support in the US and Western business communities. The only constituency for the sanctions were the neoconservatives who are not included in the Trump administration.

Victoria Nuland, Susan Rice, Samantha Power are gone along with much of the State Department. So there is nothing in Trump’s way. President Putin is correct that the sanctions helped Russia by pushing Russia to be more economically independent and by pushing Russia toward developing economic relationships with Asia. Lifting the sanctions could actually hurt Russia by integrating Russia into the West. The Russian government should take note that the only sovereign country in the West is the United States. All the rest are US vassals. Could Russia escape the same fate? Anyone integrated into the West is subject to Washington’s pressure. The problem with the sanctions is that they are an insult to Russia. The sanctions are based on lies that the Obama regime told.

The real purpose of the sanctions was not economic. The purpose was to embarrass Russia as an outlaw state and to isolate the outlaw. Trump cannot normalize relations with Russia if he lets this insult stand. Therefore, the social media tweets are likely to be correct that Trump is about to lift the sanctions. This will be good for US-Russian relations, but perhaps not so good for the Russian economy and Russian sovereignty. The Western capitalists would love to get Russia deep in debt and to buy up Russia’s industries and raw materials. The sanctions were a partial protection against foreign influence over the Russian economy, and so the removal of the sanctions is like removing a shield as well as removing an insult.

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I like measuring well-being through grain prices, but at the same time I don’t think basic needs should be subject to the same ‘market forces’ as cellphones etc. As growth and globalism vanish, we should all produce out own basics.

Want To Know How Society’s Doing? Forget GDP – Try These Alternatives (G.)

Here are the week’s leading indicators. The Dow Jones industrial average topped 20,000 points for the first time. British GDP grew 0.6% in the final quarter of 2016. The FTSE 100 and Germany’s DAX 30 persisted close to record highs, while US GDP softened slightly. Bored yet? I am. As a former financial journalist, I’m well acquainted with the merry-go-round of indicators that blip in and out of our lives like digital dopamine, telling us how well we’re doing. As a human being, I’m increasingly alarmed that these are just irrelevant numbers that have little or no bearing on how well we are really doing. [..] I’d rather suggest a series of other metrics that give a clearer indication of where humanity is at. Perhaps these are the key performance indicators we should hardwire into our reporting calendar:

Inequality ratios One of the lessons of the 20th century was that inequality breeds revolt and revolutions never end well. One of the lessons of the 21st century is that people seem to be determined not to learn the lessons of the 20th century. The Gini coefficient is a crude measure of how unequal societies are becoming. Some economists have been toying with another measure, the Palma ratio, which is better at discerning how much richer the richest cohort are getting, compared with the poorest. Both tell us much about our direction of travel.

Grain prices If we must focus on financial instruments, edible commodities are surely more interesting than stock and bond prices. You can’t eat a three-month Treasury bill, after all. In 2007/08, a wave of riots swept the developing world as the cost of basic foodstuffs soared. Governments fell. A dotted line joined that manifestation of unrest with the Arab spring four years later. Food matters. We routinely write that as many as a billion people on the planet are hungry, malnourished. That’s far more than the number with Dow Jones tracker funds.

Carbon dioxide, parts per million, in the atmosphere The most scary dataset of all. It goes up every year. And so do global temperatures. If this carries on for another couple of decades, people won’t be inspecting their portfolios – they’ll be foraging in the woods. Has anyone read The Road?

Antidepressant prescriptions A veritable bellwether for so much – from the wretched state we’re in psychologically to the inadequacies of our healthcare systems. Prescriptions have doubled in England in the past decade. An interest to declare: I take them, and believe they work for me. But I also firmly believe they are prescribed far too readily, by overstretched GPs who have only six minutes to speak to patients and little recourse to anything other than pills. Personally, I’d be willing to shave a couple of points off GDP in return for a more comprehensive programme to address this 21st-century epidemic.

Homelessness Not just in the UK, where it’s risen for six years in a row, but in California, Paris, Moscow. Surely, one of the first questions a newly arrived alien might ask upon landing in Britain would be “why do so many of you earthlings live outside?”, and not “how are my BT shares doing?”

Dependency ratio Admittedly, this is not a thrilling one to monitor as it doesn’t move much. But it is moving – and in the wrong direction for lots of developed countries. The dependency ratio is the number of working-age people compared with the number of children and those over retirement age. According to the Resolution foundation, there are currently seven dependants for every 10 working-age Britons, but this will increase to eight in the 2020s and nine by 2050.

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It’s not an abortion fund, it’s much wider than that: “sexual reproductive rights, including abortion”.

Canada May Contribute To Dutch-Led International Abortion Fund (AFP)

Canada is considering contributing to a Dutch-led international fund to support abortion services in developing countries, set up in response to Donald Trump’s order to halt financing of NGOs that support the practice. A spokesman for Canada’s international development minister, Marie-Claude Bibeau, told AFP the minister had spoken with her Dutch counterpart about the fund, and was considering donating an unspecified sum to it or a similar measure that would support “sexual reproductive rights, including abortion” abroad. “Sexual health and reproductive rights will be at the heart of Canada’s new international assistance policy,” spokesman Louis Belanger said in an email.

“We will continue to explore opportunities to work together to advance women’s empowerment by expanding access to sexual and reproductive health services including abortion,” he said. Canada is set to unveil its new foreign aid strategy in the coming weeks. A decision on the fund would either be included or follow soon after that announcement. Trump on Monday signed a decree barring US government funding for foreign NGOs that support abortion. The restrictions prohibit them from also providing abortion information, counseling or referrals, or engaging in advocacy to promote abortion. Lilianne Ploumen, the Dutch minister for foreign trade and development cooperation, said when she announced the new fund that the Netherlands must do everything in its power to offset the US ban so that “women can remain in control of their own bodies”.

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Broken record.

IMF Says Greece Debt ‘Explosive’ In Long Term (AFP)

Greece’s government debt remains “highly unsustainable,” and will be “explosive” in the longer run, requiring a more credible debt relief plan from Europe, the International Monetary Fund said in a report obtained by AFP. Addressing the debt burden of the beleaguered nation will require “significant debt relief” from European institutions, including dramatically extending the grace periods and maturities of the loans, the IMF said in it’s annual report on the Greek economy, which includes a debt sustainability analysis. The IMF board is due to discuss the report February 6. Even with full implementation of the economic reforms the country has agreed to, “Greece’s debt is highly unsustainable” and “will become explosive in the long run,” as the government will have to replace highly-subsidized official financing with market financing at much higher rates, the IMF said.

The pessimistic report, though in keeping with the fund’s repeated statements on the topic, makes it more unlikely the IMF stays on the sidelines of any new European loan deal for Greece. Months of bickering have delayed progress of Greece’s 86-billion-euro ($92.4 billion) bailout program agreed in 2015 and officials increasingly are worried that elections this year in the Netherlands, France and Germany could further poison any progress. The IMF report says that in order to “provide more credibility to the debt strategy for Greece, further specificity will be needed regarding the type and scope of debt relief to be expected” from Europe. This must include “ambitious extensions of grace and maturity periods, a full deferral of interest on European loans, as well as a locking in of the interest rate on a significant amount of European loans … to put debt on a sustained downward path.”

The IMF calls for extending the grace period until 2040, during which time no debt payments would be required, and extending the maturity of the loans to 30 years in some cases to 2070, dramatically longer than what Europe agreed to in 2012. At the heart of the dispute over the new loan program is a demand by the eurozone that Greece deliver a primary balance, or surplus on public spending before debt repayments, of 3.5% of GDP, far in excess of the 1.5% the IMF says is feasible. The target is very high – and most countries do not even come close – but Germany and other eurozone hardliners are insistent that Greece reach it for several years after its current program concludes in 2018. Eurogroup head Jeroen Dijsselbloem insisted on Thursday that the IMF remained committed to the Greek bailout program, despite repeated calls by the IMF for more realistic targets and more debt relief.

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1) The IMF is to a large extent playing a double role, and is comfortable in that role.

2) Yes, ‘pensions-to-GDP’ is very high in Greece, but that is only because other benefits simply don’t exist. Pensions can only be cut further if an unemployment benefits program is initiated. Everyone involved knows this, it’s just that some (IMF) prefer to act as if they don’t. Because such a program would cost money.

3) The demise of Greece as a nation is as much the shame of the IMF as that of Germany and the EU. The consequences of the demise will be too.

Greece: The Game Is On Again (Coppola)

In 2015, Yanis Varoufakis tried to renegotiate the terms of the Greek bailout. He expected his peers in the Eurogroup to treat him as an equal. But they were expecting a repentant supplicant. Greece had sinned, it was receiving just punishment for its sins, and who did Varoufakis think he was, coming along and telling them that the treatment Greece was receiving was unjust and counterproductive? This misunderstanding made a bad situation far worse. It led eventually to Greece’s near-expulsion from the Euro and the breaking of Alexis Tsipras. And, of course, to Varoufakis’s resignation. Now it is the IMF’s turn to misread the psychological framing. This is not a four-handed poker game, it is a duel to the death. And it is not really about Greece. The surface conflict is between Greece and its creditors, but the underlying power struggle is between the German-led creditor bloc and the European Commission.

The eventual outcome will determine the shape of the Eurozone, and indeed the whole EU, in the future. Neither the Greek government nor the European Commission want the IMF involved. The only reason the IMF is still involved is that the creditors want it to be. And the reason the creditors want the IMF involved is that they do not trust the Commission to deliver the harsh penance they have prescribed for Greece. The IMF has been cast in the role of creditors’ second. Unfortunately, this is not how the IMF sees itself. It is still trying to act as a neutral broker, crafting a deal acceptable to both sides. It has repeatedly called for substantial debt relief, and has also demanded deep reforms to the Greek economy. But because it is no longer perceived as neutral, its call for debt relief is ignored while its reform initiative is inevitably seen as a disguised demand for more austerity.

[..] Greece’s pension expenditure as a proportion of GDP is the highest in the EU, even though payments are only about 70% of the EU average. That’s the problem with quoting fixed payments like pensions (and debt service) in relation to GDP: as GDP falls, the cost rises. The Greek economy is now about 27% smaller than it was in 2008, and still shrinking. The IMF’s case is that pension cost as a proportion of GDP is now unsustainable, and further, that the creditors are not going to agree to debt relief while pension cost remains so high. It is probably right on both counts. But once again, what really matters is the psychological framing.

[..] the IMF’s position is untenable. Since it can no longer credibly claim to be neutral, it must explicitly back one side or the other. If it backs neither, it will de facto be seen as supporting the creditors – and that is not consistent with its international mandate, since it effectively means giving up its quest for substantial debt relief (since the creditors have no desire to agree to this). But coming out in support of Greece probably means abandoning its long-standing commitment to ensuring fiscal sustainability through pension and tax reforms. It appears an impossible choice. If the IMF can concede neither of these, then it must do what it should have done long ago. Walk.

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Jan 252017
 
 January 25, 2017  Posted by at 11:16 am Finance Tagged with: , , , , , , , , , ,  13 Responses »
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Jack Delano Family of Dennis Decosta, Portuguese Farm Security Administration client 1940


US Demoted To ‘Flawed Democracy’ (CNBC)
David Stockman: Prepare for Fiscal Bloodbath, Not Fiscal Stimulus (DR)
Donald Trump Claims ‘Environmentalism Is Out Of Control’ (Ind.)
Trump Administration Seeks To Muzzle US Agency Employees (R.)
Trump Poised To Build Wall, Ban Many Middle East Immigrants (WSJ)
Trump Pins Keystone, Dakota Pipeline Fate on Renegotiation (BBG)
Pricier Oil Means China’s Foreign Reserves Will Shrink Even Faster (BBG)
A $90 Billion Wave of Debt Shows Cracks in US Real Estate Boom (BBG)
A New Deal to Save Europe (Varoufakis)
The European New Deal (Varoufakis)
Karl Rove’s Prophecy (Unz)
Bumblebee Added to US Endangered Species List (VoA)
Half Of Families In Greece Live On Pensions (Kath.)
Cold Weather Reignites Fears For Refugees Poorly Sheltered In Greece (G.)

 

 

“..Washington can’t point fingers at President Donald Trump for the nation’s downgrade. “The U.S. has been teetering on the brink of becoming a flawed democracy for several years..”

US Demoted To ‘Flawed Democracy’ (CNBC)

The U.S. has been demoted from a full democracy to a flawed democracy for the first time, according to the Economist Intelligence Unit (EIU). Every year, the firm’s Democracy Index provides a snapshot of global democracy by scoring countries on five categories: electoral process and pluralism; civil liberties; the functioning of government; political participation; and political culture. Nations are then classified under four types of governments: full democracy, flawed democracy, hybrid regime and authoritarian regime.America’s score fell to 7.98 last year from 8.05 in 2015, below the 8.00 threshold for a full democracy, the EIU announced in a report on Wednesday. That put the world’s largest economy on the same footing as Italy, a country known for its fractious politics.

A flawed democracy is a country with free elections but weighed down by weak governance, an underdeveloped political culture and low levels of political participation, according to the EIU. Other flawed democracies in 2016 included Japan, France, Singapore, South Korea and India, the report said. However, Washington can’t point fingers at President Donald Trump for the nation’s downgrade. “The U.S. has been teetering on the brink of becoming a flawed democracy for several years, and even if there had been no presidential election in 2016, its score would have slipped below 8.00,” the report explained. Instead, dwindling trust in government, elected representatives and political parties is to blame.

“Trust in political institutions is an essential component of well-functioning democracies. Yet surveys by Pew, Gallup and other polling agencies have confirmed that public confidence in government has slumped to historic lows in the U.S. This has had a corrosive effect on the quality of democracy,” the report found. As other developed countries experience a similar trust deficit, contemporary democracy is undergoing a crisis, the EIU said. The increasing role played by non-elected technocrats, increased voter abstention and curbs on civil liberties are among the main symptoms of this global malaise, the EIU said, noting that almost half of the 167 countries covered by its index registered a decline in overall scores between 2006 and 2016.

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“The Congressional Budget Office (CBO) baseline says there will be no recession through 2026. That is 206 months. The longest one we have ever had is about 100 months, under a much better circumstance.”

David Stockman: Prepare for Fiscal Bloodbath, Not Fiscal Stimulus (DR)

“I have lots of hope and zero faith.” “Somehow the idea that Donald Trump is the second coming of Ronald Reagan has gotten in the mix. Wall Street has priced it in. It is just completely wrong.” David Stockman served within the Ronald Reagan administration as the director of the Office of Management and Budget from 1981-1985 and is a two term Congressman. Stockman is also the recent bestselling author of Trumped! His book hits at the heart of exactly what the incoming administration must do in order to correct the dangerous direction toward financial turmoil. Cavuto then pressed on fiscal stimulus and the Reagan approach, where Stockman replied, “We are not going to get big tax cuts. We are in a diametrically different position. In 1980 the public debt was $930 billion, that was 30% of GDP.

There was huge running room and an open balance sheet for the accidental Keynesian stimulus. This resulted from the tax cuts and the defense increase, along with a massive deficit.” “Ronald Reagan actually increased the public debt by $1.8 trillion, or two times more than had been generated by the first 39 presidents.” “Today we have used that all up. We are at $20 trillion of debt.” “The base case forecast is so optimistic, such a rosy scenario, that they are going to need reflow of extra economic growth to get back to where they started. The Congressional Budget Office (CBO) baseline says there will be no recession through 2026. That is 206 months. The longest one we have ever had is about 100 months, under a much better circumstance.”

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Yeah, we need more cars…

Donald Trump Claims ‘Environmentalism Is Out Of Control’ (Ind.)

President Donald Trump has claimed that “environmentalism is out of control”. Mr Trump spent the morning meeting with auto executives as part of a push to bring jobs back to the US. Mr Trump told his guests at the White House that he was looking to ease regulations to help car companies and other businesses wishing to operate in the US. Among the attendees at the breakfast meeting were Ford chief executive Mark Fields, Fiat Chrysler chairman Sergio Marchionne and General Motors chief executive Mary Barra. Mr Trump called on car firms to increase production in the United States and boost American employment, adding that he hoped to see new auto plants built in the country. “We have a very big push on to have auto plants and other plants,” Mr Trump said.

Mr Trump has repeatedly criticised companies for building cars in Mexico and elsewhere and has threatened to impose 35 per cent tariffs on imported vehicles. The President often singled out Ford’s Mexico investments for criticism during his election campaign. The gathering was the first time the CEOs of the big three car makers have met jointly with a US president since a July 2011 session with former president Barack Obama to highlight a deal to raise fuel efficiency standards to 54.5 miles per gallon by 2025. White House spokesman Sean Spicer said on the eve of the meeting that Mr Trump was looking forward to meeting the CEOs and “hearing their ideas about how we can work together to bring more jobs back to this industry”.

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This will only lead to more publicity.

Trump Administration Seeks To Muzzle US Agency Employees (R.)

U.S. President Donald Trump’s administration has moved since he took office last week to curb the flow of information from several government agencies involved in environmental issues, in actions that may have been designed to discourage dissenting views. Employees at the Environmental Protection Agency, the Interior Department, the Department of Agriculture and the Department of Health and Human Services (HHS) have seen directives from the newly minted leadership seeking to limit how they communicate to the public, according to multiple sources. The moves have reinforced concerns that Trump, a climate change doubter, could seek to sideline scientific research showing that carbon dioxide emissions from burning fossil fuels contributes to global warming, as well as the career staffers at the agencies that conduct much of this research.

All of the agencies affected by the actions have some input on issues related to the environment and have been involved in various efforts related to climate change, including effects on natural resources and human health. On Tuesday, a source at the EPA said that staff had been told by members of the Trump administration not to speak to reporters or publish any press releases or blog posts on social media. EPA staff have also been asked not to publicize any talks, conferences, or webinars that had been planned for the next 60 days, the staffer said, asking not to be named. Asked if the EPA had been gagged, White House press secretary Sean Spicer said on Tuesday: “I don’t know … we’re looking into it. … I don’t think it’s a surprise we’re going to review the policies, but I don’t have any info at this time.”

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No surprise here. That may come when these things become real.

Trump Poised To Build Wall, Ban Many Middle East Immigrants (WSJ)

President Donald Trump was set to announce plans to expedite construction of his promised wall along the Mexican border, and was preparing orders banning entry to the U.S. of people from countries deemed risky and suspending the U.S. refugee program, people familiar with the planning said. Trump planned to travel Wednesday to the Department of Homeland Security, where he said he would be announcing his border security plans. Trump has given few details about his promise for a border wall, a project that is estimated to cost at least $10 billion and possibly much more.

Congressional Republicans have been mulling appropriating funds in spending legislation that must pass by April to keep the government funded, but Trump may be able to divert funds from other projects to begin work sooner. The other executive actions on immigration were possible for later in the week. That includes a ban on entry, which was expected to include Iraq, Iran, Syria, Yemen, Somalia, Sudan and Libya, one person familiar with the planning said. During his presidential campaign, Trump initially said he would ban entry by Muslims but later modified his proposal to call for suspending visas to people from any place “where adequate screening cannot occur.”

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“White House spokesman Sean Spicer cast that possible renegotiation of the Dakota Access project as a way to address concerns by stakeholders, including the Standing Rock Sioux Tribe..”

Trump Pins Keystone, Dakota Pipeline Fate on Renegotiation (BBG)

President Donald Trump took steps to advance construction of the Keystone XL and Dakota Access oil pipelines, while demanding a renegotiation to get a better deal for the U.S. government. Trump stopped short of green lighting construction on either pipeline but put a deadline on the government’s review of TransCanada’s proposed Keystone XL to transport Alberta oil sands crude to U.S. refineries. Trump also announced policies to encourage the use of American-made products in U.S. pipeline projects and to curtail federal environmental reviews for major infrastructure projects. “If we’re going to build pipelines in the United States, the pipes should be made in the United States,” Trump said.

The moves, taken on Trump’s fourth full day in office, are a major departure from the Obama administration, which rejected the Keystone proposal in 2015 and has kept Dakota Access blocked since September. Environmentalists, concerned about climate change and damage to water and land, now face an executive branch that’s less sympathetic to their efforts. For the oil industry, it heralds more freedom to expand infrastructure and ease transportation bottlenecks. White House spokesman Sean Spicer cast that possible renegotiation of the Dakota Access project as a way to address concerns by stakeholders, including the Standing Rock Sioux Tribe, which is concerned about Native-American cultural sites and the safety of its water supply.

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As I said a while ago: throw in a major devaluation and see what you get then.

Pricier Oil Means China’s Foreign Reserves Will Shrink Even Faster (BBG)

Much focus is on how China’s capital outflows will impact the world’s biggest pile of foreign-exchange reserves, but another issue in need of attention here is the rally in crude, argues Goldman Sachs. In a country where oil prices play “a disproportionate role” in the balance of payments – and China’s crude output is forecast to fall as much as 7% this year – the commodity’s bullish outlook poses a serious threat to reserves that have already shrunk more than 20% in the past two years. “The outlook for the balance of payments has deteriorated from a year ago, because oil prices are now on an upward trajectory, which could push the current-account surplus to around $200 billion this year, down from $331 billion as recently as 2015,” Goldman analysts Robin Brooks and Michael Cahill wrote in a Jan. 23 note.

That 40% slump is part of the picture for reserves, which contracted to $3.01 trillion at the end of 2016 from a record $3.99 trillion in mid-2014. A stronger dollar will also drive outflows. Goldman estimates the greenback will strengthen 15% by the end of 2019 against its major developed-market peers, so China is likely to keep weakening its currency fixing to maintain stability. The analysts reckon this could trigger a renewed pick-up in capital flight, which abated to $532 billion in 2016 from $736 billion in 2015. China even registered net inflows via its capital and financial accounts in December for the first time for 1 1/2 years.

Still, Goldman sees capital outflows slowing this year to $500 billion, and it expects reserve losses to accelerate to $394 billion from $369 billion in 2016 because the deterioration in the current account, led by surging oil prices, is “so sizable.”

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Like this: “Extremely low interest rates over the last four or five years have forgiven a lot of sins.”

A $90 Billion Wave of Debt Shows Cracks in US Real Estate Boom (BBG)

A $90 billion wave of maturing commercial mortgages, leftover debt from the 2007 lending boom, is laying bare the weak links in the U.S. real estate market. It’s getting harder for landlords who rely on borrowed cash to find new loans to pay off the old ones, leading to forecasts for higher delinquencies. Lenders have gotten choosier about which buildings they’ll fund, concerned about overheated prices for properties from hotels to shopping malls, and record values for office buildings in cities such as New York. Rising interest rates and regulatory constraints for banks also are increasing the odds that borrowers will come up short when it’s time to refinance. “There are a lot more problem loans out there than people think,” said Ray Potter, founder of R3 Funding, which arranges financing for landlords and investors. “We’re not going to see a huge crash, but there will be more losses than people are expecting.”

The winners and losers of a lopsided real estate recovery will be cemented as the last vestiges of pre-crisis debt clear the system. While Manhattan skyscraper values have surged 50% above the 2008 peak, prices for suburban office buildings still languish 4.8% below, according to an index from Moody’s Investors Service and Real Capital Analytics Inc. Borrowers holding commercial real estate outside of major metropolitan areas are now feeling the pinch as they attempt to secure fresh financing, Potter said. The delinquency rate for commercial mortgages that have been packaged into bonds is forecast to climb by as much as 2.4 percentage points to 5.75% in 2017, reversing several years of declines, as property owners struggle with maturing loans, according to Fitch Ratings. That sets the stage for bondholder losses.

Banks sold a record $250 billion of commercial mortgage-backed securities to institutional investors in 2007, and lax lending standards enabled landlords across the U.S. to saddle buildings with large piles of debt. When credit markets froze the following year, Wall Street analysts warned of a cataclysm, with $700 billion of commercial mortgages set to mature over the next decade. “At the depths of the panic, it was just that: panic,” said Manus Clancy, a managing director at Trepp, a firm that tracks commercial-mortgage debt. “That made people’s future expectations extremely bearish. Extremely low interest rates over the last four or five years have forgiven a lot of sins.”

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Yanis ignores the role the decline of growth plays. That is a shame.

A New Deal to Save Europe (Varoufakis)

“I don’t care about what it will cost. We took our country back!” This is the proud message heard throughout England since the Brexit referendum last June. And it is a demand that is resonating across the continent. Until recently, any proposal to “save” Europe was regarded sympathetically, albeit with skepticism about its feasibility. Today, the skepticism is about whether Europe is worth saving. The European idea is being driven into retreat by the combined force of a denial, an insurgency, and a fallacy. The EU establishment’s denial that the Union’s economic architecture was never designed to sustain the banking crisis of 2008 has resulted in deflationary forces that delegitimize the European project. The predictable reaction to deflation has been the insurgency of anti-European parties across the continent.

And, most worrying of all, the establishment has responded with the fallacy that “federation-lite” can stem the nationalist tide. It can’t. In the wake of the euro crisis, Europeans shudder at the thought of giving the EU more power over their lives and communities. A eurozone political union, with a small federal budget and some mutualization of gains, losses, and debt, would have been useful in 1999, when the common currency was born. But now, under the weight of massive banking losses and legacy debts caused by the euro’s faulty architecture, federation-lite (as proposed by French presidential hopeful Emmanuel Macron) is too little too late. It would become the permanent Austerity Union that German Finance Minister Wolfgang Schäuble has sought for years. There could be no better gift to today’s “Nationalist International.”

Simply put, progressives need to ask a straightforward question: Why is the European idea dying? The answers are clear: involuntary unemployment and involuntary intra-EU migration. Involuntary unemployment is the price of inadequate investment across Europe, owing to austerity, and of the oligopolistic forces that have concentrated jobs in Europe’s surplus economies during the resulting deflationary era. Involuntary migration is the price of economic necessity in Europe’s periphery. The vast majority of Greeks, Bulgarians, and Spaniards do not move to Britain or Germany for the climate; they move because they must. Life for Britons and Germans will improve not by building electrified border fences and withdrawing into the bosom of the nation-state, but by creating decent conditions in every European country.

And that is precisely what is needed to revive the idea of a democratic, open Europe. No European nation can prosper sustainably if other Europeans are in the grip of depression. That is why Europe needs a New Deal well before it begins to think of federation. In February, the DiEM25 movement will unveil such a European New Deal, which it will launch the next month, on the anniversary of the Treaty of Rome. That New Deal will be based on a simple guiding principle: All Europeans should enjoy in their home country the right to a job paying a living wage, decent housing, high-quality health care and education, and a clean environment.

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The practical measures in Yanis’ ’manifesto’.

The European New Deal (Varoufakis)

The European New Deal should include five precise goals and the means to achieve them under existing EU treaties, without any centralization of power in Brussels or further loss of sovereignty:

· Large-scale green investment will be funded by a partnership between Europe’s public investment banks (the European Investment Bank, KfW, and others) and central banks (on the basis of directing quantitative easing to investment project bonds) to channel up to 5% of European total income into investments in green energy and sustainable technologies.

· An employment guarantee scheme to provide living-wage jobs in the public and non-profit sectors for every European in their home country, available on demand for all who want them. On condition that the scheme does not replace civil-service jobs, carry tenure, or replace existing benefits, it would establish an alternative to choosing between misery and emigration.

· An anti-poverty fund that provides for basic needs across Europe, which would also serve as the foundation of an eventual benefits union.

· A universal basic dividend to socialize a greater share of growing returns to capital.

· Immediate anti-eviction protection, in the form of a right-to-rent rule that permits homeowners facing foreclosure to remain in their homes at a fair rent set by local community boards. In the longer term, Europe must fund and guarantee decent housing for every European in their home country, restoring the model of social housing that has been dismantled across the continent. Both the employment scheme and the anti-poverty program should be based on a modern version of an old practice: public banking for public purpose, funded by a pragmatic but radical currency reform within the eurozone and the EU, as well as in non-EU European countries. Specifically, all seigniorage profits of central banks would be used for these purposes.

In addition, an electronic public clearing mechanism for deposits and payments (outside the banking system) would be established in each country. Tax accounts would serve to accept deposits, receive payments, and facilitate transfers through web banking, payment apps, and publicly issued debit cards. The working balances could then be lent to the fund supporting the employment and anti-poverty programs, and would be insured by a European deposit insurance scheme and deficits covered by central bank bonds, serviced at low rates by national governments. Only such a European New Deal can stem the EU’s disintegration.

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“We’re an empire now, and when we act, we create our own reality.”

Karl Rove’s Prophecy (Unz)

In a famous exchange between a high official at the court of George W. Bush and journalist Ron Suskind, the official – later acknowledged to have been Karl Rove – takes the journalist to task for working in “the reality-based community.” He defined that as believing “that solutions emerge from your judicious study of discernible reality.” Rove then asserted that this was no longer the way in which the world worked: “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality – judiciously, as you will – we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.” (Ron Suskind, NYTimes Magazine, Oct. 17, 2004).

This declaration became popular as an illustration of the hubris of the Bush-Cheney government. But we could also see it as fulfilled prophecy. Fulfilled in a manner that no journalist at that time would have deemed possible. Yes, the neoconservatives brought disrepute upon themselves because of the disaster in Iraq. Sure, opposition to the reality Rove had helped create in that devastated country became a first rung on the ladder that could lead to the presidency, as it did for Barack Obama. But the neocons stayed put in the State Department and other positions closely linked to the Obama White House, where they became allies with the liberal hawks in continuing ‘spreading democracy’ by overthrowing regimes. America’s mainstream news and opinion purveyors, without demurring, accommodated the architects of reality production overseen by Dick Cheney.

[..] publications that used to be rightly known as quality newspapers have turned into unreadable rags. The newspaper that was my employer for a couple of decades used to be edited on the premise that its correspondents rather than authorities were always correct in what they were saying. Today greater loyalty to the reality created in Washington and Langley cannot be imagined. For much of northern Europe the official story that originates in the United States is amplified by the BBC and other once reliable purveyors of news and opinion like the Guardian, the Financial Times and the (always less reliable) Economist.

[..] How could Rove’s predictions so totally materialize? There’s a simple answer: ‘they’ got away with momentous lies at an early stage. The more authorities lie successfully the more they are likely to lie again in a big way to serve the purposes of earlier lies. The ‘they’ stands for those individuals and groups in the power system who operate beyond legal limits as a hydra-headed entity, whose coordination depends on the project, campaign, mission, or operation at hand. Those with much power got away with excessive extralegal use of it since the beginning of this century because systems of holding the powerful to account have crumbled on both sides of the Atlantic. Hence, potential opposition to what the reality architects were doing dwindled to almost nothing. At the same time, people whose job or personal inclination leads them to ferret out truth were made to feel guilty for pursuing it.

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Your children’s children are going to love you for this.

Bumblebee Added to US Endangered Species List (VoA)

A small insect is getting a lot of attention in the United States. The rusty patched bumblebee is the first of its species to be declared endangered in the lower 48 states – meaning every state except Alaska and Hawaii. The rusty patched bumblebee is named for a rust-colored line on its back. The U.S Fish and Wildlife Service announced this month it was adding the bee to its endangered species list. The insects are “on the brink of extinction,” according to the service. It said the bees were once found in 28 states. But there now are only small populations remaining in 13 states. The government agency will make a plan to help the dying bees recover. The agency said that such a plan might help other insects, like butterflies.

U.S. officials think land owners can take small steps to help the rusty patched bumble bee. They say land owners can be friendlier towards bees by using native plants in their gardens. The insects directly fertilize many kinds of fruit and vegetable crops. And they fertilize grain crops used to feed cattle and milk cows. It costs billions of dollars to duplicate the job the bees do for free. Land owners are also being urged to cut back on their use of pesticide products. The officials also suggest that gardeners leave their plants alone at the end of the summer instead of cutting them. That way, the bees will have a place to live over the winter. The Fish and Wildlife Service says the rusty patched bumblebee was added to the endangered species list partly because of habitat loss. Other reasons were disease, pesticides and climate change.

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It gets worse by the day.

Half Of Families In Greece Live On Pensions (Kath.)

Greek society is evolving into a sum of households surviving on pensions while its most dynamic section, young people aged between 18 and 35, are abandoning it or considering abandoning it to seek a better life abroad, a survey by the Small Enterprises Institute of the Hellenic Confederation of Professionals, Craftsmen and Merchants (IME GSEVEE) has concluded. The report published on Tuesday suggests that the long-term financial crisis, whose main victims are the middle class, is not only leading to a further decline in incomes and the broadening of inequalities, but also openly threatening social cohesion. The so-called therapy, with its constantly increasing direct and indirect taxes, may lead to primary budget surpluses but this is not returned to taxpayers in the form of public services, as at the same time public spending on health and education is also being reduced.

The survey, conducted between November 14 and 26, used a sample of 1,000 households across Greece. It found that more than three-quarters of households (75.3%) had endured significant declines in their income in 2016. Crucially, 37.1% of households said that they live on less than €10,000 per year, while 49.2% said that their main source of income is pensions. This was actually higher in December 2014 (at 52%), and the small decline is attributed to the cuts in pensions. Salaries are the main source of revenues for 37.9% of households, up from 37.3% in the 2015 survey, while 9% said that they mainly rely on incomes from businesses.

Almost one in every three households has an unemployed member, which amounts to 1.1 million households, while the long-term unemployed amount to 73.3% of all jobless. Financial problems are not limited to the unemployed though, as 22.4% of households also include an employee who earns less than the minimum monthly salary of €586 gross. No wonder 9.7% of respondents said at least one member of their family has left the country.

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The entire aid industry must be overhauled, from EU to NGOs and ‘charities’, or this will continue. Brussels likes the agony because it thinks it’s a deterrent, the NGOs are profit seekers. The model is completely broken.

Cold Weather Reignites Fears For Refugees Poorly Sheltered In Greece (G.)

A new bout of cold weather across southern Europe has reignited fears for thousands of refugees and migrants sheltered in deplorable conditions in Greece. Forecasts of freezing temperatures have also been met with trepidation by international agencies, aid groups and local mayors on islands. “Thousands of people are poised to suffer needlessly in conditions that are becoming increasingly desperate,” said Eva Cossé at Human Rights Watch. “Europe’s failed policies have contributed to immense suffering for people warehoused on the Greek islands.” Greece was the focus of public outcry this month after shocking footage emerged of refugees on Lesbos living in flimsy, snow-swamped tents as an arctic blast sent temperatures plummeting to -14C.

The outcry prompted the government to dispatch a naval ship to temporarily house up to 500 people detained at the island’s vastly overcrowded Moria reception centre. Others were moved into heated containers, hotel rooms and apartments. But the measures have proved inadequate and with more severe weather on the way officials, volunteers and human rights defenders fear the worst. Sub-zero temperatures are expected by Thursday. Since the closure of the Balkan route into Europe, more than 62,000 men women and children have been trapped in Greece, according to government figures. Every day a steady trickle continues to arrive on rickety boats from Turkey, placing increasing pressure on Lesbos and other eastern Aegean islands close to the Asia Minor coast. “It is not much talked about, but this month alone 900 people have reached Greece,” said Gianmaria Pinto, country director of the Norwegian Refugee Council.

“Right now I am on Chios and in one camp there are people living on the beach, in small tents, exposed to the wind and rain. They should be moved to better and more humane conditions and the structures and opportunity for that are only on the mainland.” Under a controversial deal agreed by the EU and Turkey to curb an influx that surpassed a million people in 2015, Greek authorities last year accepted the introduction of a policy of containment in order to process asylum seekers at accelerated rates. By restricting refugees to islands it was hoped “secondary movement” into Europe could be reduced and those undeserving of asylum easily repatriated to Turkey. Instead, the policy has backfired with thousands of refugees being forced to endure dire conditions in overcrowded camps while their asylum requests are processed slowly. Many have been in the facilities since March when the EU-Turkey accord was signed.

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Jan 242017
 
 January 24, 2017  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , ,  8 Responses »
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Jack Delano Cars being precooled at the ice plant, San Bernardino, CA 1943


UK Supreme Court Rules Parliament Must Have Vote On Triggering Article 50 (G.)
Global Markets Turn Back On Euro As Economic Woes Reinforce Dollar (Tel.)
Trump Withdraws From TPP Amid Flurry Of Orders (G.)
Beppe Grillo Agrees With ‘Moderate’ Trump, Blasts EU ‘Total Failure’ (Exp.)
Trump is the start of Global Regime Change (Artemis)
Protest In The Era Of Trump (Krieger)
The White House Can’t Easily Repair Its Relationship With The Media (Atl.)
Congressman Introduces Bill To Withdraw The US From The United Nations (MU)
He Is Risen… But For How Long? (Jim Kunstler)
Fed Debate Over $4.5 Trillion Balance Sheet Looms In 2017 (BBG)
Greek Island Mayors Ask PM To Transfer Refugees To Mainland (Kath.)
Thousands Of Refugee Children Sleeping Rough In Sub-Zero Serbia (G.)

 

 

A country well on its way to irrelevance.

UK Supreme Court Rules Parliament Must Have Vote On Triggering Article 50 (G.)

Parliament’s approval is needed before the government can trigger article 50 and formally initiate the UK’s departure from the European Union, the supreme court has ruled. The government’s executive powers, inherited through the royal prerogative, are not sufficient to uproot citizens’ rights gained through parliamentary legislation such as the 1972 European Communities Act, the justices have declared. The justices ruled against the government by a majority of eight to three. The eagerly awaited decision by the largest panel of judges ever assembled in Britain’s highest court routes the protracted Brexit process through parliament, handing over to MPs and peers the authority to sanction the UK’s withdrawal. A summary of the decision, which has far-reaching constitutional implications, was delivered by the president of the supreme court, Lord Neuberger of Abbotsbury.

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So much for the overvalued dollar.

Global Markets Turn Back On Euro As Economic Woes Reinforce Dollar (Tel.)

Banks are using the euro less and less in international transactions, with financiers preferring to use dollars – indicating the euro’s declining importance in the global economy. Economists believe sustained political risk in the eurozone, fears that the currency area could fall apart, and the continuing hangover from the sovereign debt crisis have all contributed to the currency’s relative decline. Figures from the Bank of International Settlements show that the euro is being used less in international banking, while the US dollar continues to grow in importance. At the end of September, the BIS figures show, outstanding cross-border business in US dollars amounted to $13.9 trillion (£11.1 trillion), a rise of almost $60bn over previous three months.

By contrast, outstanding cross-border claims in euros fell by almost $160bn to a total of $8.1 trillion. Overall claims globally amount to $28.2 trillion, meaning the US dollar accounts for almost 50pc of the total. The euro is next with 29pc, while the yen is in third place – its $1.7 trillion of claims is 6pc of the total. Sterling is fourth at $1.3 trillion, or a 5pc share. By contrast, in 2012, the euro was a bigger player, with around $11 trillion of cross-border claims, but has faded sharply since then. Around half of the decline in recent years is due to the euro’s fall in value relative to the dollar, making the euro transactions appear smaller when they are compared in a common currency. But the other half is made up in large part by the eurozone’s own problems.

The most fundamental is the fear that the currency area will be stuck in permanent low growth, making investments risky. With the rise of anti-EU politicians such as Marine Le Pen in France there is also the worry that, in extreme circumstances, the euro could break up. “Partly as a result of the sovereign debt crisis, we know from investors outside Europe that they have a lot of question marks about the viability of the eurozone,” said David Owen, chief European economist at Jefferies. He was joined by Alastair Winter at Daniel Stewart, who said: “It may not be politically correct but there is a case that the euro may not survive much beyond this year. The dollar is popular because it offers a standard for value, a bit like the old gold standard. All of the other major currencies present problems.”

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Why not so the same with TISA etc. at the same time?

Trump Withdraws From TPP Amid Flurry Of Orders (G.)

Donald Trump has begun his effort to dismantle Barack Obama’s legacy, formally scrapping a flagship trade deal with 11 countries in the Pacific rim. The new president also signed executive orders to ban funding for international groups that provide abortions, and placing a hiring freeze on non-military federal workers. Trump’s decision not to join the Trans-Pacific Partnership (TPP) came as little surprise. During his election campaign he railed against international trade deals, blaming them for job losses and focusing anger in the industrial heartland. Obama had argued that this deal would provide an effective counterweight to China in the region. “Everyone knows what that means, right?” Trump said at Monday’s signing ceremony in the White House. “We’ve been talking about this for a long time. It’s a great thing for the American worker.”

The TPP was never ratified by the Republican-controlled Congress, but several Asian leaders had invested substantial political capital in it. Their countries represent roughly 13.5% of the global economy, according to the World Bank. Trump’s election opponent, the Democrat Hillary Clinton, had also spoken out against the TPP. The move also intensified speculation over the future of the 17-year-old North American Free Trade Agreement (Nafta). There were reports that Trump would sign an executive order on Monday to begin renegotiating terms with Canada and Mexico. He did move to reinstate a ban on providing federal money to international non-government organizations that perform abortions or provide information about them. The policy also prohibits taxpayer funding for groups that lobby to legalize abortion or promote it as a family planning method.

Republican administrations have tended to institute such a ban while Democrats have reversed it, most recently President Obama in 2009. Trump signed it one day after the anniversary of the supreme court’s 1973 Roe v Wade decision that legalized abortion in the US. Activists fear that the precedent is now under threat. The administration was criticized after footage appeared to show only one woman in the room as this executive order, along with the other two, were signed. Only four of Trump’s cabinet picks are women.

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Beppe knows the importance for Italy of ‘protectionism’. It’s the only way to keep Italian (small) business alive.

Beppe Grillo Agrees With ‘Moderate’ Trump, Blasts EU ‘Total Failure’ (Exp.)

Italy’s populist Five Star Movement leader Beppe Grillo has welcomed Donald Trump’s extraordinary rise to power and dismissed the European Union (EU) as a total failure. Mr Grillo described the controversial new US President as a “moderate whose image has been distorted”. He declared he was “very optimistic” about the Trump presidency which he said would reignite the US economy and stop it from playing world police enforcer. In an interview with French magazine Journal du Dimanche, the former stand-up comic expressed his fundamental agreement with Mr Trump’s populist presidential platform. He said: “I read one of his books in which he says some really sensible things on the need, for example, to bring economic activity back to the United States.

“He said what he had to say about Chinese protectionism as well.” Mr Grillo said Mr Trump would use fiscal policy to entice large companies to keep their business in the US instead of taking it south of the border to Mexico and that he would also “relaunch small and medium enterprises”. He said: “Mr Trump will also recall the US Army stationed at the four corners of the world and I agree with all this.” The Italian nationalist accused the media of twisting the “moderate message” of Mr Trump who then “simply adapted to what was being said about him”. He said: “We consequently have a deformed perception of him.” Looking closer to home, M Grillo described the EU as “a total failure” that needed to be re-imagined.

He said: “It is an enormous apparatus, with two parliaments, in Brussels and Strasbourg, to please the French. “Europe was born with Jean Monnet but then was progressively transformed. “I liked the word ‘community’ but then it was called union for the currency, which was to be common and not unique.” He continued: “I am in favour of a different Europe, where each state can adopt its fiscal and monetary system. “I want the Eurobond, a 20% devalued euro for southern European countries, protecting our products against those arriving from abroad, and a revision of the 3% deficit budgetary rule. “I no longer feel the spirit of Europe.”

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From a much longer article on volatility trading.

Trump is the start of Global Regime Change (Artemis)

Trump is the first “populist” US president since Andrew Jackson in 1829 and takes office with a mandate to reverse the course of globalization. Denial is not a strategy and it’s time to face the reality that is coming… the good, the bad, and the ugly. First off, stop underestimating this man – you don’t become leader of the free world through stupidity and luck. The rants and twitter storms are part of a strategy of media control and distraction. Trump knows that if you can’t win, then you change the rules of the game – this is what he has already done with American politics – and what he is about to do to the entire Post-Bretton Woods World Order. If you really want to know a person, watch what they do, and not what they say… or what they tweet. Trump’s business career was largely comprised of three core strategies 1) Leverage 2) Restructure 3) Brand… in that order.

Throughout the late 1970s and 1980s Trump rode a generational decline in interest rates and debt binge to purchase a range of high profile real estate projects including the Grand Hyatt (1978). Trump Tower (1983), the Plaza Hotel (1988) and the Taj Mahal (1988). In the 1990s he went through a total of 6 bankruptcies due to over-leveraged hotel and casino businesses in Atlantic City and New York. In the 2000s he pivoted to move away from debt-driven property investments to building a global brand through the “Apprentice” TV show. Trump will run the country as he ran his businesses…. He will lever, and lever, and lever, and lever… and lever… and then restructure his way to success, or whatever success is defined as by the broadest measure of popularity at any given time. Trumponomics, if it delivers, will be a supply side free for all: massive tax cuts, deficit spending to create jobs, financial and energy deregulation, business creation, and trade protectionism all driving inflation.

More importantly, Trump sees bankruptcy as a tool and not an obligation and will have no problem pushing the US to the limits of debt expansion. “I do play with bankruptcy laws, they’re very good to me!” he once said. Trump may be willing to bring the US to the brink of default if it produces middle class jobs and popularity, and what he understands is that nobody can stop him, not Europe, not China. In a Trump mindset, the US national debt and deficits, or prior commitments (e.g. NATO), are not to be taken seriously as long as we hold all the cards… namely the biggest military in the world, energy independence, world reserve currency, and the world’s largest buyer of consumer goods. He is dangerously right, these geo-political solvency tools are far more powerful than the bankruptcy laws he used to protect his casino assets… the US is just another, bigger, badder, more bankrupt casino with air craft carriers.

The media doesn’t seem to understand that Trump’s overtures to Russia and Taiwan are not diplomatic gaffes but rather forms of economic leverage. He is reminding Europe that NATO is nothing without the US, and reminding China that creditor nations lose trade wars. As a negotiating tactic, it may work … or may drive the world to a hot war… or both. Like it or not – the old rules are gone. Diplomacy has been replaced by Twitter, and the unexpected is now to be expected. Trump’s world is a zero-sum game – and this means a shock doctrine of US centric re-positioning in trade in a dramatic change from the post-World War II order. The US has the largest military, the best geography, best technology innovation, the largest economy, best demographics in the developed world, and shale-driven energy independence to boot.

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A discussion that makes a lot of sense. What is being protested? If this is unclear, isn’t that perhaps counterproductive? Can you effectively protest some of Trump’s measures after having demonized him in a wide and general fashion for a long time? Shouldn’t there be millions in the streets right NOW to protest the medieval Golden Gag Rule? Where are they?

Protest In The Era Of Trump (Krieger)

The best way to control the opposition is to lead it.

[..] I’d say the most common sign seems to have been some derivative of “Women’s Rights = Human Rights.” I unquestionably agree with this statement, which begs the question, who doesn’t? Well many of the barbaric, feudalist monarchies in the Middle East for starters. Saudi Arabia being a prime example, a place where women are not permitted to drive. Fortunately for them, their money is still green and the Clinton Foundation took plenty of it (between $10 million and $25 million to be exact). Democrats protested that by rigging the primary for her. I didn’t personally attend any of the protests, so I asked my followers on Twitter who did attend to reach out to me and tell me about what they saw. I received lengthy responses from three people. One was a Gary Johnson voter, one a Hillary voter and one didn’t vote at all.

They all pretty much confirmed what you could deduct from the signs. It was a message of “women power,” seemingly focused on women’s rights, specifically abortion and contraception. This brings me to another observation, which will serve as a segue to the final thrust of this article. It appears the emotional driver of the protest was two fold — a serious concern that certain women’s rights will be rolled back, and a form of catharsis for people still reeling from the election loss. This is interesting, because the focal point appears to be not just driven by identify politics, but on preserving already existing rights. Ok, fine, but what about all the ills currently at play? The destruction of the middle class, the surveillance state, the fact that Wall Street owns every single administration no matter who wins. What about the wars and the rapidly metastasizing military-industrial-intelligence complex.

These are things that are currently happening, and have been getting worse under both Republican and Democratic administrations. Does it make sense for all this energy to be focused on a potential threat, as opposed to all of the many ongoing unethical, destructive aspects of American life in 2017? Which brings us to the most important point of this entire article. I don’t want to be too judgmental here. While much of the messaging from the Women’s March seems to have been pretty unserious and divorced from the reality of the many serious issues plaguing the nation, I want to see a silver lining here. I think there’s little doubt that Trump’s election resulted in a certain percentage of the population finally waking up to how much trouble this country is in.

The problem is that many of these people see Trump as the problem to be eliminated, as opposed to the symptom of a sick, destructive society that he actually is. This is where the entire “resistance” can be easily co-opted by the DNC and the rapidly emerging neocon/neoliberal alliance rooted in identity politics, which poses no actual threat to the people actually in power. In this sense, all of this potentially productive energy could tragically be redirected into simply bringing back the same Democratic types that were forcefully rejected during the 2016 election.

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The Trump White House couldn’t care less. “The Media” means the Old Media, and they get that.

The White House Can’t Easily Repair Its Relationship With The Media (Atl.)

After harshly condemning the media over the weekend for its coverage of President Donald Trump’s inauguration, White House Press Secretary Sean Spicer struck a less combative tone during a press conference on Monday. But he nevertheless continued to argue that the media is trying to undermine the president, and stood by a debunked statement that the inauguration drew the “largest audience” of all time. “I believe we have to be honest with the American people,” Spicer said at the briefing, responding to a reporter’s question about his commitment to truth-telling. He added: “I’m going to come out here and tell you the facts as I know them, and if we make a mistake I’ll do our best to correct it.”

Later, however, he lamented that there is a “constant theme to undercut the enormous support” he said Trump has. “There’s an overall frustration when you turn on the television over and over again and get told that there’s this narrative.” The press secretary’s pledge to tell the truth may indicate that the administration hopes to improve its relationship with the media, or at least the appearance of it, following criticism and mockery of Spicer’s hostile interaction with reporters over the weekend. At the same time, his insistence that the media treats Trump with a double standard, and his complaints that the media has created an anti-Trump narrative, highlights how difficult it will be to repair the relationship between the administration and the media.

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Shake the cage.

Congressman Introduces Bill To Withdraw The US From The United Nations (MU)

A new bill has been introduced which would allow the United States to withdraw from the United Nations, and is now beginning to turns heads.

Representative Mike Rogers from Alabama introduced H.R. 193 American Sovereignty Act of 2017 in early January but is just now getting media exposure. The full bill can be seen here on congress.gov. The bill requires: (1) the President to terminate U.S. membership in the United Nations (U.N.), including any organ, specialized agency, commission, or other formally affiliated body; and (2) closure of the U.S. Mission to the United Nations.

The bill prohibits: (1) the authorization of funds for the U.S. assessed or voluntary contribution to the U.N., (2) the authorization of funds for any U.S. contribution to any U.N. military or peacekeeping operation, (3) the expenditure of funds to support the participation of U.S. Armed Forces as part of any U.N. military or peacekeeping operation, (4) U.S. Armed Forces from serving under U.N. command, and (5) diplomatic immunity for U.N. officers or employees.

Clearly, many people would be in favor of such a move and many would oppose it. Many who would support the move believe that the United Nations Agenda 30 is a blueprint for a unipolar world order with a destructive agenda, as Zerohedge reported last year. Regardless of one’s beliefs or opinions on the UN being a front for  a new world order, this bill is a direct and bold move against the elite’s plans. For any nation to reclaim true sovereignty from the United Nations is setting a powerful example for the rest of the world. It sends a message that a country does not need a global governing body, but instead can run itself without global oversight.

Essentially, if the U.S. reclaimed sovereignty from the United Nations, it would be the equivalent of what Britain did by reclaiming it’s sovereignty from the European Union…times 10. Perhaps the biggest revelations to come from such news would be the eventual exposure of the level of theft, deception and criminal activity done by the registered corporation known as The United Nations (yes it is a registered corporation).

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“..the ruins of industry stand like tombstones on the landscape.”

He Is Risen… But For How Long? (Jim Kunstler)

Returning to the first forty-eight hours of the new regime, first the ceremony itself: there was, to my mind, the disturbing sight of Donald Trump, deep in the Capitol in the grim runway leading out onto the inaugural dais. He lumbered along, so conspicuously alone between the praetorian ranks front and back, overcoat open, that long red slash of necktie dangling ominously, with a mad gleam in his eyes like an old bull being led out to a sacrificial altar. His speech to the multitudes was not exactly what had once passed for presidential oratory. It was not an “address.” It was blunt, direct, unadorned, and simple, a warning to the assembled luminaries meant to prepare them for disempowerment. Surely it was received by many as a threat.

Indeed an awful lot of official behavior has to change if this country expects to carry on as a civilized polity, and Trump’s plain statement was at face value consistent with that idea. But the disassembly of such a vast matrix of rackets is unlikely to be managed without generating a lot of dangerous friction. Such a tall order would require, at least, some finesse. Virtually all the powers of the Deep State are arrayed against him, and he can’t resist taunting them, a dangerous game. Despite the show of an orderly transition, a state of war exists between them. Anyway, given Trump’s cabinet appointments, his “swamp draining” campaign looks like one set of rackets is due to be replaced by a new and perhaps worse set.

Trump was correct that the ruins of industry stand like tombstones on the landscape. The reality may be that an industrial economy is a one-shot deal. When it’s gone, it’s over. Even assuming the money exists to rebuild the factories of the 20th century, how would things be produced in them? By robotics or by brawny men paid $15-an-hour? If it’s robotics, who will the customers be? If it’s low-wage workers, how are they going to pay for the cars and washing machines? If the brawny men are paid $40 an hour, how would we sell our cars and washing machines in foreign markets that pay their workers the equivalent of $1.50 an hour. How can American industry stay afloat with no export market? If we don’t let foreign products into the US, how will Americans buy cars that are far more costly to make here than the products we’ve been getting? There’s no indication that Trump and his people have thought through any of this.

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Eric Rosengren, stop it, you’re killing me: “If you think the economy is growing more rapidly then you want..”

Fed Debate Over $4.5 Trillion Balance Sheet Looms In 2017 (BBG)

It’s time to talk about the balance sheet. Eight years after the Federal Reserve launched the first of three controversial bond-buying campaigns to help save the U.S. economy, its holdings are stuck at $4.5 trillion, and the question of when to let them shrink is beginning to simmer. Several policy makers have pushed publicly to get the debate started. How the discussion plays out could have big implications for the pace of future interest-rate hikes and for the dollar. “They should start framing this for the market,” said Michael Gapen, chief U.S. economist at Barclays Plc. Investors need to hear what the “balance of policy” will be between the balance sheet and the central bank’s main tool, the federal funds rate, he said.

The sheer weight of the balance sheet helps hold down long-term U.S. borrowing costs, which is why the Fed bought bonds in the first place. If officials allow holdings to mature without continuing their current practice of reinvesting the principal, they could push yields higher by reducing demand in the bond market. The topic has shot to renewed prominence as the outlook for the U.S. economy has brightened. The Fed has raised rates twice in the last 13 months and penciled in three quarter-point moves this year. Moreover, newly-inaugurated President Donald Trump has put expansionary fiscal policy on the horizon. If fiscal stimulus begins to overheat the economy, the Fed might tighten policy more sharply. St. Louis Fed President James Bullard said he’d prefer to use the balance sheet to do some of that lifting, echoing remarks by his Boston colleague Eric Rosengren.

“If you think the economy is growing more rapidly then you want, you can either continue to raise short-term rates, or you can also do balance sheet in conjunction with that,” Rosengren said in a Jan. 9 interview. At the very least, he said, the Fed should be talking about the issue soon. San Francisco Fed President John Williams, Atlanta’s Dennis Lockhart, Philadelphia’s Patrick Harker and Dallas chief Robert Kaplan have all agreed. None of them has expressed urgency, and the topic may not be on the agenda when the Federal Open Market Committee convenes again on Jan. 31. But each knows it can take the FOMC several meetings to make big decisions, and they are likely eyeing where rates will be a year from now. Rosengren is thought by Fed watchers to favor four hikes this year. “I don’t think it’s something they’ll do in 2017,” said Mark Zandi at Moody’s. “My guess is they view this as a 2018 project.”

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It’s not in Tsipras’ hands. The EU demands the refugees stay on the islands so they cannot move further north. The EU also makes sure conditions on the islands are miserable with the idea that this keeps others from coming to Europe. And thirdly, they claim moving refugees to the mainland would violate the treaty with Turkey.

Greek Island Mayors Ask PM To Transfer Refugees To Mainland (Kath.)

The mayors of Lesvos, Chios, Samos, Kos and Leros on Monday jointly presented their demands for measures to ease severe overcrowding at migrant reception centers on their islands during a meeting in Athens with Prime Minister Alexis Tsipras. According to government sources, the meeting was held in a cordial climate and both sides agreed it remained imperative that an agreement between Ankara and the EU to curb human smuggling across the Aegean must not be allowed to collapse. However, though the sources described the mayors’ demands as “logical,” it remained unclear what action, if any, the government plans to respond with. In the meeting with Tsipras, which was also attended by senior officials of the Central Union of Municipalities and Communities of Greece (KEDKE), the mayors emphasized that the situation on the islands was very tense and required immediate action.

They called for the transfer of hundreds of migrants to facilities on the Greek mainland, the improvement of the asylum process so that migrants can leave islands without delay, and measures to boost local economies which have been hit hard by the refugee crisis on top of the country’s financial crisis. Separately, in comments to the News247.gr website, Migration Minister Yiannis Mouzalas remarked that the mass transfer of migrants to the Greek mainland would lead the EU-Turkey deal “to collapse.” He added that while in 2015 refugees accounted for 70 to 80% of arrivals, now 70% of arrivals are economic migrants. According to a report by the Athens-Macedonian News Agency, the interior and defense ministers of several Balkan and Central European countries are planning to meet in Vienna on February 8 to discuss ways of bolstering their borders against illegal immigration.

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Europe’s shameful disgrace deepens and widens.

Thousands Of Refugee Children Sleeping Rough In Sub-Zero Serbia (G.)

Hundreds of new refugees and migrants, many of them children, are arriving in Serbia every day despite the prospect of sleeping rough in sub-zero temperatures and reports of violent treatment, Save the Children has said, as it calls on the EU to do more to help. The EU-Turkey deal, which was supposed to stem the flow of refugees arriving in Europe by boat, has meant many refugees are being forced to take a deadlier land route to cross the Balkans, with children as young as eight experiencing harsh weather conditions, dog bites and violent treatment by police and smugglers. Although Serbia is not part of the European Union, it borders Hungary, Bulgaria and Romania, and has become a transit point for those hoping to reach western Europe. About 6,000 people are stuck in Serbia not able to cross the border into Hungary, which is the direction of travel most would like to take.

Serbia does have asylum centres but when space becomes available, many migrants and refugees are too anxious to go to them, fearing that they will be detained indefinitely or deported illegally. Many of them are turning to smugglers for help instead, charities claim. In the past two months, Save the Children estimates that 1,600 cases of illegal push-backs from Hungary and Croatia have been alleged by refugees and migrants, who have been forced – often violently – back into Serbia, despite already having crossed its border. The UN’s refugee agency (UNHCR) confirmed in its weekly briefing that it was continuing to receive hundreds of reports of foreign nationals being expelled from EU countries in the Balkans and sent back to Serbia.

An average of 30 cases a day of “unlawful and clandestine push-backs” highlights a disregard for the human right to an individual assessment of the need for international protection, according to Save the Children. Belgrade “risks becoming a dumping zone, a new Calais where people are stranded and stuck” the humanitarian group Médecins Sans Frontières has warned.

[..] Save the Children estimates that there are up to 100 refugees and migrants arriving in Serbia every day and is supporting the government to refurbish safe spaces and support services prioritising lone children. About 46% of refugee and migrant arrivals in Serbia are children and 20% are unaccompanied. The UNHCR said at least five refugees had died of cold since the start of the year. “Saving lives must be a priority and we urge state authorities across Europe to do more to assist and protect refugees and migrants,” a UNHCR spokeswoman, Cecile Pouilly, told a press briefing in Geneva on Friday. This week, the Serbian authorities made additional temporary space available to get people off the snowy streets and into shelters. The charities have warned, however, that it still far from enough to meet the needs of people who are sleeping rough.

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Jan 232017
 
 January 23, 2017  Posted by at 10:08 am Finance Tagged with: , , , , , , , , ,  7 Responses »
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DPC Looking south on Fifth Avenue at East 56th Street, NYC 1905


We’ve Been in Decline for 40 Years – Trump is a Chance to Rethink – Eno (G.)
The Coming Unhappiness With Trump – Egon von Greyerz (KWN)
Trump’s Infrastructure, Defense Plans Will Lead To Ruin – Ron Paul (CNBC)
China’s Central Bank ‘Playing Dangerous Game’ To Prop Up Yuan (SCMP)
EU Is Dead But Doesn’t Know This Yet – Marine Le Pen (DS)
We Need An Alternative To Trump’s Nationalism. It’s Not The Status Quo (YV)
George Soros and the Women’s March on Washington (Nomani)
These are the Countries with the Biggest Debt Slaves (WS)
“Billion-Year” Gambian President Was Installed By The CIA (SCF)
Greek Supreme Court To Decide On Fate Of Eight Turkish Servicemen (Kath.)
UK Government ‘Sneaks Out’ Its Own Alarming Report On Climate Change (Ind.)
The Last Time Oceans Got This Warm Sea Levels Were 20 to 30 Feet Higher (LAT)

 

 

Only fitting that the best description of how I feel about this can be found in an interview about music.

We’ve Been in Decline for 40 Years – Trump is a Chance to Rethink – Eno (G.)

He has called himself an optimist. In the past. I ask him if he still is, post-2016. Yes, he says, there is a positive way to look at it. “Most people I know felt that 2016 was the beginning of a long decline with Brexit, then Trump and all these nationalist movements in Europe. It looked like things were going to get worse and worse. I said: ‘Well, what about thinking about it in a different way?’ Actually, it’s the end of a long decline. We’ve been in decline for about 40 years since Thatcher and Reagan and the Ayn Rand infection spread through the political class, and perhaps we’ve bottomed out. My feeling about Brexit was not anger at anybody else, it was anger at myself for not realising what was going on. I thought that all those Ukip people and those National Fronty people were in a little bubble.

Then I thought: ‘Fuck, it was us, we were in the bubble, we didn’t notice it.’ There was a revolution brewing and we didn’t spot it because we didn’t make it. We expected we were going to be the revolution.” He draws me a little diagram to explain how society has changed – productivity and real wages rising in tandem till 1975, then productivity continuing to rise while real wages fell. “It is easily summarised in that Joseph Stiglitz graph.” The trouble now, he says, is the extremes of wealth and poverty. “You have 62 people worth the amount the bottom three and a half billion people are worth. Sixty-two people! You could put them all in one bloody bus … then crash it!” He grins. “Don’t say that bit.” (Since we meet, Oxfam publish a report suggesting that only eight men own as much wealth as the poorest 3.6 billion people in the world – half the world’s population.)

[..] He is still thinking about the political fallout of the past year. “Actually, in retrospect, I’ve started to think I’m pleased about Trump and I’m pleased about Brexit because it gives us a kick up the arse and we needed it because we weren’t going to change anything. Just imagine if Hillary Clinton had won and we’d been business as usual, the whole structure she’d inherited, the whole Clinton family myth. I don’t know that’s a future I would particularly want. It just seems that was grinding slowly to a halt, whereas now, with Trump, there’s a chance of a proper crash, and a chance to really rethink.”

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Not his fault. As I wrote in November 8’s America is the Poisoned Chalice.

The Coming Unhappiness With Trump – Egon von Greyerz (KWN)

“The new US Administration has taken over with the conviction that they will “make America great again.” I really hope they will succeed because a strong US would be good for the world. Sadly, the odds of achieving that admirable objective are totally stacked against them. At the end of the next 4 years there is a risk that this Administration will be more hated than any government since Carter and probably even more hated than Carter. The coming unhappiness with Trump and his team will not arise because of the actions they take. They will clearly do everything in their might to make America great again. But the probabilities are totally against them to achieve this goal. They are taking over power at a time when debt has grown exponentially since the 1970s. They are also assuming power of a country that has not achieved a proper budget surplus for well over half a century. Even worse, the US has not had a positive trade balance since the early 1970s.

So here we have a country that has been living above its means for decades and has no real chance of changing this vicious cycle. The Federal debt is at $20 trillion and has been growing at the rate of 9% per year for the last 40 odd years. The forecast for the next four years is that the growth of the debt will accelerate. Total US debt is over $70 trillion or over 3.5x GDP. But that is just a fraction of the US liabilities. Unfunded liabilities are over $200 trillion. And you can add to that to the real gross derivative positions of US banks, which most likely more than $500 trillion. The success of a president in the US is closely linked to the performance of the stock market. Therefore, the best chance for a president to be loved by the American people and re-elected is for stocks to go up. P/Es on the S&P index are now at 70% above their historical mean – hardly a position from which it is likely to surge. Corporate borrowings have also surged since the Great Financial Crisis started.

In 2006 US corporate debt was just over $2 trillion. Today it is more than 3x higher at $7 trillion! At the same time, cash as a%age of corporate debt is declining and is now down to 27%. Within this massive increase in debt, there are major defaults looming in many areas like car loans, student loans and the fracking sector where potential write offs could be in the trillions of dollars. Another disaster which is guaranteed to happen in the US and the rest of the world is the coming pension crisis. Most people in the West have zero or a minimal pension. And even for the ones who have proper pension plans, they are greatly underfunded. It is estimated that US state and local government pensions are underfunded to the extent of a mind-blowing $6 trillion. And this is after a long period of surging stocks and bonds. Imagine what will happen to these pensions when stocks and bonds collapse, which is very likely to happen in the next few years.

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Look here, CNBC, introducing Ron Paul as a “well-known Trump critic” is insane. Fake labeling.

Trump’s Infrastructure, Defense Plans Will Lead To Ruin – Ron Paul (CNBC)

For all the fanfare that greeted President Donald Trump at his inauguration on Friday, the next four years of his presidency could very well be marred by a weakening economy as a result of “injurious” policies. That’s according to past Texas Congressman and former presidential candidate Ron Paul, who joined CNBC’s “Futures Now” last week to echo his past sentiments about the new president. Most notably, the well-known Trump critic believes that the President’s proposed plans could overspend the economy into trouble and drive the Federal Reserve to interfere. “With his massive increase in infrastructure and the military, I think there’s going to be a lot more spending,” said Paul. “The debt is going to be much bigger [and] I think that will put more pressure” on the Federal Reserve, he said, with the central bank already planning to tighten interest rates.

“You have good times, and then you have bad times to compensate for the artificially good times,” he added. “So we’ll have a downturn and that will be a real challenge for the new administration.” Although most of Wall Street appears bullish about the short-term economic outlook under Trump’s fiscal policy plans, some economists have been less than sanguine. Paul’s critique echoed that of David Stockman, a former Reagan-era budget director who also warned CNBC last week that Trump’s plans would ultimately lead to financial calamity. Paul had refused to endorse Trump from early on in the election cycle, claiming that the now President would divide the Republican Party. Much of Paul’s criticism of Trump lies with the latter’s proposed border taxes, which Paul believes is actually more of a “tariff” that would block free trade. “I think that right now, I’d fear most the retaliation [from other countries] and the burden it’s going to place on the consumer,” said Paul.

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“Floatation does not mean a large devaluation,” he said. “Actually, a one-off devaluation [of the yuan] doesn’t need to be big

No, I don’t think so. A devaluation must be big, because you can’t risk having to repeat it. And floatation will mean a large loss of value no matter what. When you float, you can’t manipulate anymore.

China’s Central Bank ‘Playing Dangerous Game’ To Prop Up Yuan (SCMP)

China’s central bank is playing a dangerous game using the country’s foreign reserves to defend the yuan because it could leave the nation defenceless in an increasingly volatile world, a state researcher has warned. Zhang Ming, senior fellow at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, said the People’s Bank of China (PBOC) should take a hands-off approach to the currency and focus on safeguarding foreign exchange reserves. “Forex reserves are valuable assets that [China] can use at critical times. It’s a pity that they are being sold heavily in the market,” Zhang said. “It should be the last resort.” Zhang said the PBOC was betting on “the weakening of the US dollar and a domestic economic rebound”.

The country’s forex reserves have shrunk by almost a $1 trillion since June 2014 as the central bank has sought to prevent a large fall in the yuan against the U.S. dollar. Zhang call’s for Beijing to reverse tack and abandon its heavy intervention in the foreign exchange market is gaining traction among researchers. Zhang Bin, another researcher at the Chinese Academy of Social Sciences, agreed that Beijing should free up controls on the yuan’s exchange rate by reducing government intervention in the market. “Floatation does not mean a large devaluation,” he said. “Actually, a one-off devaluation [of the yuan] doesn’t need to be big, and [the currency] may rebound as well. By doing this it will help the domestic economy,” he said.

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She’s dead on, I’ve been saying this for years, and she’s getting it handed to her on a silver platter the same way Trump was.

EU Is Dead But Doesn’t Know This Yet – Marine Le Pen (DS)

Far-right National Front leader Marine Le Pen said on Sunday that France has to leave the European Union as she claimed that staying in the bloc is no longer a viable option for the country. Speaking in an interview with France’s BGNES, Le Pen said the EU is dead but it does not know this yet, stating that the bloc has failed economically, socially as well as security-wise. She said the recent economic growth, unemployment and poverty indicators prove the EU’s failure, adding that the bloc is also incapable of protecting its own borders against what she called as “Islamic terrorism”. With voters across Europe moving to the right, most polls currently show a Fillon-Le Pen runoff is the most likely scenario in May. National Front leader Le Pen told a meeting of rightwing populist parties in Germany on Saturday that Europe was about to “wake up” following the victory of Donald Trump in the US election and the British vote to leave the EU.

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I get what Varoufakis thinks and says, but I also think renewed nationalism is backed into the cake by now. Where I differ from most is I don’t see that as a disaster, not necessarily. It’s the EU that is a disaster.

We Need An Alternative To Trump’s Nationalism. It’s Not The Status Quo (YV)

Thatcher’s and Reagan’s neoliberalism had sought to persuade that privatisation of everything would produce a fair and efficient society unimpeded by vested interests or bureaucratic fiat. That narrative, of course, hid from public view what was really happening: a tremendous buildup of super-state bureaucracies, unaccountable supra-state institutions (World Trade Organisation, Nafta, the European Central Bank), behemoth corporations, and a global financial sector heading for the rocks. After the events of 2008 something remarkable happened. For the first time in modern times the establishment no longer cared to persuade the masses that its way was socially optimal.

Overwhelmed by the collapsing financial pyramids, the inexorable buildup of unsustainable debt, a eurozone in an advanced state of disintegration and a China increasingly relying on an impossible credit boom, the establishment’s functionaries set aside the aspiration to persuade or to represent. Instead, they concentrated on clamping down. In the UK, more than a million benefit applicants faced punitive sanctions. In the Eurozone, the troika ruthlessly sought to reduce the pensions of the poorest of the poor. In the United States, both parties promised drastic cuts to social security spending. During our deflationary times none of these policies helped stabilise capitalism at a national or at a global level. So, why were they pursued?

Their purpose was to impose acquiescence to a clueless establishment that had lost its ambition to maintain its legitimacy. When the UK government forced benefit claimants to declare in writing that “my only limits are the ones I set myself”, or when the troika forced the Greek or Irish governments to write letters “requesting” predatory loans from the European Central Bank that benefited Frankfurt-based bankers at the expense of their people, the idea was to maintain power via calculated humiliation. Similarly, in America the establishment habitually blamed the victims of predatory lending and the failed health system.

It was against this insurgency of a cornered establishment that had given up on persuasion that Donald Trump and his European allies rose up with their own populist insurgency. They proved that it is possible to go against the establishment and win. Alas, theirs will be a pyrrhic victory which will, eventually, harm those whom they inspired. The answer to neoliberalism’s Waterloo cannot be the retreat to a barricaded nation-state and the pitting of “our” people against “others” fenced off by tall walls and electrified fences.

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Russia threw out Soros, Hungary wants to, so does FYROM. Who’s next?

George Soros and the Women’s March on Washington (Nomani)

In the pre-dawn darkness of today’s presidential inauguration day, I faced a choice, as a lifelong liberal feminist who voted for Donald Trump for president: lace up my pink Nike sneakers to step forward and take the DC Metro into the nation’s capital for the inauguration of America’s new president, or wait and go tomorrow to the after-party, dubbed the “Women’s March on Washington”? The Guardian has touted the “Women’s March on Washington” as a “spontaneous” action for women’s rights. Another liberal media outlet, Vox, talks about the “huge, spontaneous groundswell” behind the march. On its website, organizers of the march are promoting their work as “a grassroots effort” with “independent” organizers. Even my local yoga studio, Beloved Yoga, is renting a bus and offering seats for $35.

The march’s manifesto says magnificently, “The Rise of the Woman = The Rise of the Nation.” It’s an idea that I, a liberal feminist, would embrace. But I know — and most of America knows — that the organizers of the march haven’t put into their manifesto: the march really isn’t a “women’s march.” It’s a march for women who are anti-Trump. As someone who voted for Trump, I don’t feel welcome, nor do many other women who reject the liberal identity-politics that is the core underpinnings of the march, so far, making white women feel unwelcome, nixing women who oppose abortion and hijacking the agenda. To understand the march better, I stayed up through the nights this week, studying the funding, politics and talking points of the some 403 groups that are “partners” of the march. Is this a non-partisan “Women’s March”?

Roy Speckhardt, executive director of the American Humanist Association, a march “partner,” told me his organization was “nonpartisan” but has “many concerns about the incoming Trump administration that include what we see as a misogynist approach to women.” Nick Fish, national program director of the American Atheists, another march partner, told me, “This is not a ‘partisan’ event.” Dennis Wiley, pastor of Covenant Baptist United Church of Christ, another march “partner,” returned my call and said, “This is not a partisan march.” Really? UniteWomen.org, another partner, features videos with the hashtags #ImWithHer, #DemsInPhily and #ThanksObama. Following the money, I pored through documents of billionaire George Soros and his Open Society philanthropy, because I wondered:

What is the link between one of Hillary Clinton’s largest donors and the “Women’s March”? I found out: plenty. By my draft research, which I’m opening up for crowd-sourcing on GoogleDocs, Soros has funded, or has close relationships with, at least 56 of the march’s “partners,” including “key partners” Planned Parenthood, which opposes Trump’s anti-abortion policy, and the National Resource Defense Council, which opposes Trump’s environmental policies. The other Soros ties with “Women’s March” organizations include the partisan MoveOn.org (which was fiercely pro-Clinton), the National Action Network [..]. Other Soros grantees who are “partners” in the march are the American Civil Liberties Union, Center for Constitutional Rights, Amnesty International and Human Rights Watch.

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Well, they call their debts assets…

These are the Countries with the Biggest Debt Slaves (WS)

Americans have been on a borrowing binge. To buy their favorite cars and trucks, they’ve loaded up on $1.14 trillion in auto loans. Young and not so young Americans are mortgaging their future with student loans that now amount to $1.28 trillion. Credit card and other debts are at $1.12 trillion. And mortgage debt stands at $8.82 trillion. So, total household debt was $12.35 trillion, according to the New York Fed’s Household Debt and Credit Report for the third quarter 2016. That’s a massive amount of debt. Many consumers are struggling with it. Student loans are seeing enormous default rates, and repayment rates are far worse than previously disclosed. And “debt slaves” has become a term in the financial vernacular. But it isn’t nearly enough debt…

Neither for the New York Fed whose President William Dudley, in a speech a few days ago, practically exhorted households to borrow more against the equity in their homes so that they blow this cash and drive up retail sales: “Whatever the timing, a return to a reasonable pattern of home equity extraction would be a positive development for retailers, and would provide a boost to aggregate growth,” he mused, with nostalgic thoughts of 2008. Nor for the global rankings of debt slaves, where US households squeaked into the ignominious 10th place, barely ahead of Portugal! I mean, come on! Portugal!! There are many ways to measure household indebtedness and debt burdens. Comparing total household debt to the overall size of the economy as measured by GDP is one of the measures. And per this household-debt-to-GDP measure, the Americans are 10th place with 78.8% and look practically prudent compared to the peak just before the Financial Crisis.

[..] And here’s some inevitable food for a terrifying thought: The countries with highly indebted households, so the top of the list, are mostly countries were central-bank policy rates are very low or even negative, and where mortgage rates are super low. What happens to those housing markets, the households, the banks, and the overall economies when interest rates rise even a little and that whole equation of perennially ballooning debt falls apart? We already know what happens.

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You might be tempted to name this an unbelievable story, but then you realize this is what the US is good at. Reads like a spy novel, a film script.

“Billion-Year” Gambian President Was Installed By The CIA (SCF)

Gambian President and dictator Yahya Jammeh, facing a combined military force composed of Senegalese army troops, the Nigerian air force, and troops from Mali, Ghana, and Togo, has agreed to relinquish the presidency of Gambia. On December 1, 2016, Jammeh was defeated for re-election in a surprise upset by his little-known rival Adama Barrow. Jammeh received only 45% of the vote. During the election campaign Jammeh vowed in an interview with the BBC to «rule for one billion years». After initially conceding defeat to Barrow, Jammeh reneged on his promise to step down and announced he would remain as president. The Economic Community of West African Countries (ECOWAS) decided that Jammeh had to go, a stance ironically supported by the United States, which had assisted Jammeh in overthrowing Gambia’s democratically-elected president, Sir Dauda K. Jawara, in 1994.

After Jammeh refused ECOWAS’s, the African Union’s, and the United Nations Security Council’s demands to leave office and permit Barrow to assume the presidency, ECOWAS mobilized its military forces. On January 19, 2017, Barrow was sworn in as president in the Gambian embassy in Dakar, the Senegalese capital. Hours later, Senegalese troops began to enter Gambia and Nigerian air force jets buzzed the Gambian capital of Banjul. The presidents of Mauritania and Guinea flew to Banjul to urge Jammeh to leave office peacefully. Jammeh’s fate was sealed when Major General Ousman Badjie, the commander of the Gambian armed forces, recognized Barrow as Gambia’s commander-in-chief.

The demand from the United States for Jammeh to relinquish power was a display of absolute hypocrisy since Washington had not only installed Jammeh into power but two successive U.S. presidents warmly welcomed the military ruler to the White House. Jammeh, who owns a $3.5 million mansion in Potomac, Maryland, was warmly greeted by President Barack Obama at the 2014 and 2015 U.S.-Africa Leaders’ Summits in Washington. President George W. Bush greeted Jammeh at the U.S.-Africa Business Summit in Washington in 2003. With the protection of the State Department’s Diplomatic Security Service, Jammeh’s Moroccan-born wife, Zineb Jammeh, ran up huge totals at the Washington area’s fashionable shopping malls. She also settled on Sam’s Club, a wholesale discount store, to buy massive amounts of household goods. Jammeh is a textbook case of CIA-sponsored kleptocracy on a grand scale.

Under Jammeh, Gambia continued to be a strategic ally of the United States. The kleptocratic Gambian leader permitted the U.S. National Aeronautics and Space Administration (NASA) to maintain an emergency landing site for NASA’s space shuttle in the country and Gambia participated with the U.S. Central Intelligence Agency in the post-9/11 rendition program. Before being installed as Gambia’s dictator, Jammeh had received training from the Pentagon. Merely a lieutenant in the Gambian National Army. In 1993, Jammeh attended the notorious «School of the Americas» in Fort Benning, Georgia. The school has trained some of Latin America’s most notorious military dictators and death squad commanders. While in Fort Benning, Jammeh was made an honorary citizen of the state of Georgia. The following year, and before he launched his coup, Jammeh attended the Military Police Officers Basic Course (MPOBC) at Fort McClellan, Alabama.

[..] It was during the administration of President Bill Clinton that the green light was given for Jammeh to be installed in a CIA-led coup in Gambia. On July 24, 1994, President Jawara was at his palace in Banjul entertaining the commanding officer of the visiting U.S. Navy tank landing ship, the USS La Moure County. Also present was U.S. ambassador to Gambia, Andrew Winter, a career foreign service officer who represented a new breed of U.S. ambassador – one that routinely and publicly involved himself in the domestic political affairs of the nation to which they were posted. While Jawara and the ship’s commander exchanged diplomatic niceties, junior army officers, led by Jammeh, staged a coup against the democratically elected government.

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Only one decision makes any sense.

Greek Supreme Court To Decide On Fate Of Eight Turkish Servicemen (Kath.)

The Greek Supreme Court on Monday is to rule whether eight Turkish servicemen who fled to Greece after July’s failed coup should be extradited. Three separate panels of Greek judges have already ruled that the Turkish officers’ lives may be put at risk if they were to be returned to Turkey, where Prime Minister Recep Tayyip Erdogan has launched a tough crackdown on dissent since the summer’s coup attempt. Diplomatic circles that fear a rejection of Turkey’s request could put a further strain on ties between Athens and Ankara, particularly at a time when Cyprus reunification talks also hang in the balance, have been keeping a close eye on proceedings. The issue has also drawn attention from intellectuals and the media in Greece and other parts of Europe, who see it as a test of the bloc’s fundamental principles and values. All eight servicemen have denied involvement in the coup attempt and say they fear for their lives if they are returned to Turkey.

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What a surprise.

UK Government ‘Sneaks Out’ Its Own Alarming Report On Climate Change (Ind.)

The Government has been accused of trying to bury a major report about the potential dangers of global warming to Britain – including the doubling of the deaths during heatwaves, a “significant risk” to supplies of food and the prospect of infrastructure damage from flooding. The UK Climate Change Risk Assessment Report, which by law has to be produced every five years, was published with little fanfare on the Department for Environment, Food and Rural Affairs’ (Defra) website on 18 January. But, despite its undoubted importance, Environment Secretary Andrea Leadsom made no speech and did not issue her own statement, and even the Defra Twitter account was silent. No mainstream media organisation covered the report.

One leading climate expert accused the Government of “trying to sneak it out” without people noticing, saying he was “astonished” at the way its publication was handled. In the report, the Government admitted there were a number of “urgent priorities” that needed to be addressed. It said it largely agreed with experts’ warnings about the effects of climate change on the UK. These included two “high-risk” issues: the damage expected to be caused by flooding and coastal erosion; and the effect of rising temperatures on people’s health. The report concluded that the number of heat-related deaths in the UK “could more than double by the 2050s from a current baseline of around 2,000 per year”. It said “urgent action” should be taken to address overheating in homes, public buildings and cities generally, and called for further research into the effect on workers’ productivity.

The Government also recognised that climate change “will present significant risks to the availability and supply of food in the UK”, the report said, partly because of extreme weather in some of the world’s main food-growing regions. The report also said the public water supply could be affected by shortages and that the natural environment could be degraded. Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change and the Environment in London, said he was “astonished” at the way such a report had been slipped out. “Defra did very little to publicise it – they didn’t even tweet about it,” he said. “It’s almost as if they were trying to sneak it out without people realising. I have no idea what they were thinking.”
.

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You better start swimming or you’ll sink like a stone.
For the times they are a-changing.

The Last Time Oceans Got This Warm Sea Levels Were 20 to 30 Feet Higher (LAT)

Ocean temperatures today are about the same as they were more than 100,000 years ago – at a time when sea levels were 20 to 30 feet higher. The findings, published in the journal Science, highlight the key role that human activity has played in global warming and underscore concerns about the future impact of rising sea levels. Over millions and billions of years, the Earth has gone through periods of cooling (when water freezes out of the oceans, causing glaciers to grow and sea levels to fall) and warming (when the ice melts and sea levels rise). Scientists often look for clues hidden in layers of ancient rock and ice to determine what conditions were like in that long-gone climate.

The last interglacial period, which took place some 129,000 to 116,000 years ago, is a particularly intriguing chapter in Earth’s relatively recent history because of what it could tell us about today’s climate, said lead author Jeremy Hoffman, a paleoclimatologist at the Science Museum of Virginia. “The last interglacial is extremely interesting because it’s the last time period in recent Earth history when global temperatures were a little bit higher and global sea level was about 6 to 9 meters higher – but carbon dioxide in the atmosphere was roughly at what it was during the pre-industrial era,” said Hoffman, who conducted the work as a doctoral student at Oregon State University. “So it’s a really interesting scientific question: What is it about the last interglacial that’s so unique, that gave rise to higher sea levels?”

The problem is, researchers often assume climate change happened synchronously across the globe — that is, if it grew warm in one part, it also heated up in the others, and if it cooled in one area, it was cooling everywhere else at the same time. It’s already clear from climate patterns today that this simply isn’t the case, Hoffman said. Even if Earth overall is warming at a given point in time, for example, some spots might be getting cooler while others heat up. “What we know about how climate and temperature change on this planet is, it’s not all at the same time or at the same rate,” he said. “You can see these even today in human-caused climate change, how that’s playing out on a global scale.”

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Jan 222017
 
 January 22, 2017  Posted by at 11:11 am Finance Tagged with: , , , , , , , , , ,  7 Responses »
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Dorothea Lange Resettlement project, Bosque Farms, New Mexico 1935


The Inauguration, and the Counter-Inauguration (Atlantic)
White House Spokesman Slams Media In Bizarre First Briefing (ZH)
The Demons Have Been Unchained (HB)
How the NYT Plays with History (Robert Parry)
Any Country Leaving Euro Zone Must Settle Bill First: ECB’s Draghi (R.)
Trump Team in Talks with UK on Post-Brexit Trade Deal (BBG)
Utopian Ideas On Climate Change Will Get Us Precisely Nowhere (G.)

 

 

The Automatic Earth ‘celebrates’ its 9th birthday today! Thank you Nicole first of all, and thank all of you, so much, for reading, for commenting, being involved, for your kind donations. A true honor and pleasure.

(Someone had to point it out to me, of course I forgot.)

 

 

I’ve tried hard to understand what the women were/are protesting, and what I find is I’m still confused, since it seems they protest anything and everything. Or, as the Atlantic puts it: “the Women’s March was a protest that celebrated protest.” Looks to me like a surefire recipe for handing it to Trump on a platter.

Trump seems to be part of what’s being protested, but what exactly? His “grab the pussy” nonsense? But that was years ago and he was talking about willing women. Stupid and ugly, but it doesn’t make him a threat to all women. His abortion stance? Some of his supporters are pro-lifers for sure, but so far nothing indicates he’ll lead some big turnaround on the issue.

What I think everybody needs to recognize is that there are, and especially will be, very obvious and clearly definable topics linked to this administration that should be vigurously protested and investigated. But this protest doesn’t do any such thing.

Neither does the Democratic party, who can’t locate their own asses anymore. And most of all neither do the media, which for example covered nothing yesterday but a piece of absurd briefing theater about the number of people attending the inauguration. Once again handing the floor to Trump. It’s embarrassing.

Pointing out silly things Trump says that you know everyone in your respective echo chambers will agree with you on is easy, and Trump will keep feeding you. What it is not, though, is journalism. Or politics, for that matter. Or meaningful protest.

The role of Trump, I think, in America, must be that of a wake-up call. But nobody’s waking up.

The Inauguration, and the Counter-Inauguration (Atlantic)

In the middle of the National Mall, on the same spot that had, the day before, hosted the revelers who had come out for the inauguration of Donald Trump, a crowd of people protesting the new presidency spontaneously formed themselves into a circle. They grasped hands. They invited others in. “Join our circle!” one woman shouted, merrily, to a small group of passersby. They obliged. The expanse—a small spot of emptiness in a space otherwise teeming with people—got steadily larger, until it spanned nearly 100 feet across. If you happened to be flying directly above the Mall during the early afternoon of January 21, as the Women’s March on Washington was in full swing, you would have seen a throng of people—about half a million of them, according to the most recent estimates—punctuated, in the middle, by an ad-hoc little bullseye.

“What is this circle about?” a woman asked one of the circle-standers. “Nobody knows!” the circle-stander replied, cheerfully. The space stayed empty for a moment, as people clasped hands and looked around at each other with grins and “what-now?” expressions. And then: A woman ran through the circle, dancing, waving a sign that read “FREE MELANIA.” The crowd nodded approvingly. Another woman did the same with her sign. A group of three teenage boys danced with their “BAD HOMBRE” placards. The crowd whooped. Soon, several people were using the space as a stage. A woman dressed as a plush vulva shimmied around the circle’s perimeter. The circle-standers laughed and clapped and cheered. They held their phones in their air, taking pictures and videos. They cheered some more.

The Women’s March on Washington began in a similarly ad-hoc manner. The protest sprang to life as an errant idea posted to Facebook, right after Trump won the presidency. The notion weathered controversy to evolve into something that, on Saturday, was funereal in purpose but decidedly celebratory in tone. The march, in pretty much every way including the most literal, opposed the inaugural ceremony that had taken place the day before. On the one hand, it protested President Trump. Its participants wore not designer clothes, but jeans and sneakers and—the unofficial uniform of the event—pink knit caps with ears meant to evoke, and synonymize, cats. It had, in place of somber ritual, a festival-like atmosphere. It featured, instead of pomp and circumstance, people spontaneously breaking into dance on a spontaneously formed dance floor.

And yet in many ways, the march was also extremely similar to the inauguration whose infrastructure it had co-opted, symbolically and otherwise, for its own purposes. The Women’s March on Washington shared a setting—the Capitol, the Mall, the erstwhile inaugural parade route—with the ceremonies of January 20. And, following an election in which the victor lost the popular vote, the protest seems to have bested the inauguration itself in terms of (physical) public turnout. During a time of extreme partisanship and division—a time in which the One America the now-former president once spoke of can seem an ever-more-distant possibility—the Women’s March played out as a kind of alternate-reality inauguration: not necessarily of Hillary Clinton, but of the ideas and ideals her candidacy represented. The Women’s March was an installation ceremony of a sort—not of a new president, but of the political resistance to him.

“I DO NOT ACCEPT THIS FILTHY ROTTEN SYSTEM,” read one sign, carried by Lauren Grace, 35, of Philadelphia. She got the quote from Dorothy Day. And she intended it, Grace explained to me, to protest “a system that sort of left me out.” “We’re told that voting is a sacred right in this country,” Grace said. “But even though Hillary won the popular vote, she still lost. I feel pretty conflicted about a country where that could happen.”

The Women’s March was, to be sure, also a protest march in an extremely traditional vein: It featured leaders—celebrities, activists, celebrity activists—who gave speeches and offered performances on a stage with the Capitol in its background; its participants held signs, and chanted (“This-is-what-a-feminist-looks-like!,” “No-person-is-illegal!”), and commiserated. It was also traditional in that its participants were marching not for one specific thing, but for many related aspirations. Women’s reproductive rights. LGBTQ rights. Immigration rights. Feminism in general (“FEMALES ARE STRONG AS HELL,” one sign went, riffing off a famous feminist’s Netflix show). The environment (“CLIMATE CHANGE IS REAL,” “MAKE THE PLANET GREAT AGAIN”). Science (“Y’ALL NEED SCIENCE”). Facts (“MAKE AMERICA FACT-CHECK AGAIN”). Some signs argued for socialism. Some argued against plutocracy. Some argued for Kindness. Some pled for Peace. Some simply argued that America is Already Great.

This was a big-tent protest, in other words—a messy, joyful coalescence of many different movements. The Women’s March deftly employed, in its rhetoric, the biggest of the big-tent tautologies: The point of this protest wasn’t so much the specific things being protested as it was the very bigness of the crowds who were doing the protesting. This was another way the protest alternate-realitied the presidential inauguration: Just as the official ceremony is meant to celebrate not only the person occupying the presidency, but the presidency itself, the Women’s March was a protest that celebrated protest.

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Tyler Durden gets the essence: ..what he is seeing is that he once again is controlling the media narrative, which is focusing on a very immaterial and arbitrary issue, instead of spending time on investigative work and reporting on far more serious issues relating to Trump’s new administration.

White House Spokesman Slams Media In Bizarre First Briefing (ZH)

In a bizarre first briefing, White House press secretary Sean Spicer on Saturday unloaded a blistering attack on the media and accused it of false reporting about the otherwise irrelevant question of why Trump’s inauguration crowd was visibly smaller than that of Obama’s. Spicer used up virtually all the time in his first official appearance in the Press Briefing Room to denounce news organizations’ focus on the inaugural crowd size, saying “these attempts to lessen the enthusiasm of the inauguration are shameful and wrong.” We wouldn’t necessarily use those words: silly should suffice since if Trump really wanted to “defend” why fewer people attended his inauguration, he can simply say many more of his supporters are employed and had to be at work on Friday, than during either Obama’s 2009 or 2013 inauguration events.

However, the press secretary decided that hyperbole is the better part of valor and said “This was the largest audience to ever witness an inauguration, period, both in person and around the world” Spicer made the allegation despite photographs of the event clearly showed that the Mall was not full in the sections Spicer described, with dwindling-to-nonexistent crowds near the Smithsonian Institution Building and west toward the Washington Monument. There was also sparse attendance along the parade route from the Capitol to the White House. He alleged that some photos of the inauguration were “intentionally framed in a way” that minimized the crowd, without providing examples or evidence.

No official agency provides estimates of the size of gatherings on the Mall. But photos taken from the same vantage point at about the same time of day show that the crowds were far smaller than for President Barack Obama’s first inauguration, which Washington city officials estimated at 1.8 million people.Ultimately, the whole press briefing episode had a surreal undertone, one in which Trump, via his speaker, appears to continue to troll the press, now in the White House. As a seemingly perturbed NYU journalism professor Jay Rosen summarized it “Wow. Sean Spicer walked to the podium. Unloaded on the media for bias. Accused reporters of dishonesty. Walked off without taking questions.” The reaction among the rest of the press was similar.

Spicer took no questions from reporters and he did not say specifically how many people the White House believes attended the inauguration. He said three large sections of the Mall that each held at least 200,000 people were “full when the president took the oath of office.” Earlier on Saturday, in remarks at CIA headquarters in Langley, Trump said that from his vantage point at the podium, “it looked like a million, million and a half people. They showed a field where there were practically nobody standing there, and they said Donald Trump did not draw well.” Trump also said parts of the National Mall “all the way back to the Washington Monument” were “packed.”

Quoted by Bloomberg, former White House spokesman Ari Fleischer said on Twitter after Spicer’s remarks that “This is called a statement you’re told to make by the president. And you know the president is watching.” He is indeed, and what he is seeing is that he once again is controlling the media narrative, which is focusing on a very immaterial and arbitrary issue, instead of spending time on investigative work and reporting on far more serious issues relating to Trump’s new administration.

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The German press is just like the American one, clinging to consensus, hanging on to what is already lost: “Not only Democrats are hoping for an impeachment proceeding.”

The Demons Have Been Unchained (HB)

That was no presidential speech; that was a veritable declaration of war. Threatening in tone. Cold and calculating in logic. Change minus the hope. Donald Trump used the traditional Inauguration Day address to settle a score with the U.S. political establishment going back decades. With four ex-presidents sitting a few feet behind him, the 45th president delivered a populist manifesto. Until his victory, the nation’s political elite used days like these, he told America, to celebrate amongst themselves. Their triumph was not your triumph. Their well-being was not your well-being. But this time, power would transfer not just from one party to the other, but from Washington back to the people. In the people’s name, he will put America “first.” In their name, he will “take back” America’s factories.

In their name, he will “exterminate” Islamic terrorism, end inner-city drug gang “bloodbaths” and get NATO partners like Germany to pay more for Europe’s security. In domestic policy, the Trump agenda sounds like a blueprint for civil war; in foreign policy, it sounds like the dawn of a new ice age. Not that he’s cold-bloodedly planning either one, but he knows where his fiery rhetoric will lead him. The new president loves a good fight, not consensus. He doesn’t want to hug, but to smother, to overwhelm. Yesterday was his day, but the days that follow may belong to his opponents. There are three main opponents that could bring him down politically.

Opponent No. 1: The other America. Across the country, an anti-Trump movement is growing. While only 10,000 people came to an open-air concert in Washington celebrating his victory on the night before the inauguration, 20,000 people took to the streets in New York to protest his elevation. Their signs shouted: Not My President. The security and surveillance costs around Trump Tower on Fifth Avenue, at the corner of 56th Street, is costing taxpayers about a half million dollars – each day.

Opponent No. 2: The Media. Among publishers, producers, filmmakers and journalists, Trump has hardly any friends. CNN, The Washington Post, The New York Times and Hollywood couldn’t warm to the volcanic personality of the new president. Even an unbroken Twitter assault has no chance against such a monolithic wall of media rejection. He hates them, and they hate him right back. He pushes forward his agenda, and they push back unabashedly with theirs. Trump enters The White House with the lowest approval rating ever of an elected president.

Opponent No. 3: The Political Party System. Washington is having an allergic reaction to Trump. Democrats and even Republicans are cooperating on Capitol Hill to investigate the Trump team’s contacts to Russia in a special committee. House Speaker Paul Ryan doesn’t see himself as a Trump follower but as a Trump successor. He is the wolf in sheep’s clothing, biding his time, waiting for an opening. Put another way: Not only Democrats are hoping for an impeachment proceeding. America is now on the brink of a new period of polarization. The demons in this fraternal battle have been unchained. The greatness that Trump seeks will not be borne under these conditions. An icy wind is blowing across the land.

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Good overview by veteran Parry of late 20th century false news campaigns, Nixon vs Johnson, Reagan vs Carter and more.

How the NYT Plays with History (Robert Parry)

Whenever The New York Times or some other mainstream news outlet holds itself out as a paragon of professional journalism – by wagging a finger at some pro-Trump “fake news” or some Internet “conspiracy theory” – I cringe at the self-delusion and hypocrisy. No one hates fake news and fact-free conspiracy theories more than I do, but the sad truth is that the mainstream press has opened the door to such fantasies by losing the confidence of the American people and becoming little more than the mouthpiece for the Establishment, which spins its own self-serving narratives and tells its own lies. Rather than acting as a watchdog against these deceptions, the Times and its mainstream fellow-travelers have transformed themselves into little more than the Establishment’s apologists and propagandists.

If Iraq is the “enemy,” we are told wild tales about how Iraq’s non-existent WMD is a danger to us all. If Syria is in Washington’s crosshairs, we are given a one-sided account of what’s happening there, black hats for the “regime” and white hats for the “rebels”? If the State Department is backing a coup in Ukraine to oust an elected leader, we are regaled with tales of his corruption and how overthrowing a democratically chosen leader is somehow “democracy promotion.” Currently, we are getting uncritical stenography on every conceivable charge that the U.S. government lodges against Russia. Yet, while this crisis in American journalism has grown more severe in recent years, the pattern is not entirely new. It is reflected in how the mainstream media has missed many of the most significant news stories of modern history and has, more often than not, been an obstacle to getting at the truth.

Then, if the evidence finally becomes so overwhelming that continued denials are no longer tenable, the mainstream media tries to reclaim its tattered credibility by seizing on some new tidbit of evidence and declaring that all that went before were just rumors but now we can take the long whispered story seriously — because the Times says so.

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How long before Brussels starts begging countries to stay, offering deals and discounts?

Any Country Leaving Euro Zone Must Settle Bill First: ECB’s Draghi (R.)

Any country leaving the euro zone would need to settle its claims or debts with the bloc’s payments system before severing ties, ECB President Mario Draghi said. The comment – a rare reference by Draghi to the possibility of the currency zone losing members – came in a letter to two Italian lawmakers in the European Parliament released on Friday. It coincides with a groundswell of anti-euro sentiment in Italy and other euro zone states, fueled in part by last June’s unprecedented decision by Britain to leave the European Union. “If a country were to leave the Eurosystem, its national central bank’s claims on or liabilities to the ECB would need to be settled in full,” Draghi said in the letter.

Based on data to end-November from the Target 2 payment system, that would leave Italy with a €358.6 billion ($383.1 billion) bill. The system records flows of payments between euro zone countries. The threat of defaults on cross-border debts has often been credited as one element keeping the euro zone together throughout the financial crisis. As these payments are not generally settled, weaker economies including Italy, Spain and Greece have accumulated huge liabilities towards Target 2 while Germany stands out as the biggest creditor with net claims of €754.1 billion. Target 2 imbalances have worsened in recent months, with Harvard economist Carmen Reinhart warning of capital flight from Italy.

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Am I wrong in thinking the UK will have a very hard time signing any deal as long as it’s part of the EU? What are the odds of that even being legal in the first place?

Trump Team in Talks with UK on Post-Brexit Trade Deal (BBG)

The Trump administration this week will begin laying groundwork for a trade deal between the U.S. and the U.K. that would take effect after Britain leaves the European Union, a White House aide said. Prime Minister Theresa May last week declared Britain is “open for business” as she announced plans to pursue a clean break with the EU, paving the way for the U.K. to eventually strike new trade accords with the continent and other countries. May is to visit Washington this week. Trump officials believe their discussions with her government encouraged May to be more aggressive in exiting the union. She can use any American support to argue the U.K. will prosper outside the bloc although she risks inflaming tensions with EU leaders if they suspect her government is actively negotiating trade deals while still an EU member.

Two of President Donald Trump’s senior advisers, Steve Bannon and son-in-law Jared Kushner, met with U.K. Foreign Secretary Boris Johnson in New York on Jan. 8. The three are preparing for the future pact, the aide said, requesting anonymity because the discussions aren’t public. Bannon, Trump’s National Security Adviser Michael Flynn, and other administration officials have also met with British defense and intelligence leaders, the aide said. President Barack Obama warned in April that if the U.K. pursued Brexit, the country would go to the “back of the queue” for U.S. trade deals. U.K. voters chose to leave the EU anyway in a June referendum, and Trump now appears to be scrapping Obama’s position on the matter. Trump’s team is also considering a deal to reduce barriers between U.S. and British banks, the Sunday Telegraph reported, citing officials from both sides.

Trump has tapped Woody Johnson, the billionaire owner of the New York Jets NFL team, to serve as U.S. ambassador to the U.K., a person familiar with the matter said on Jan. 19. May and Mexican President Enrique Pena Nieto will make visits to the U.S. this month to meet with Trump, White House officials said. May will meet with Trump on Jan. 27, White House Deputy Press Secretary Sarah Huckabee said on Saturday. Pena Nieto will meet with Trump on Jan. 31, said White House Press Secretary Sean Spicer.

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The author starts out promising, then gets lost in the woods.

Utopian Ideas On Climate Change Will Get Us Precisely Nowhere (G.)

Urging people to stop consuming stuff in order to slow the rate of climate change is a gambit that is doomed to fail. It would be helpful if shoppers put off buying a suit or installing a new kitchen, but it’s not going to happen. Demonising those who fly to Barcelona for a long weekend is another tactic that will have almost no impact. It’s not for nothing that economists base many of their assumptions on populations having unlimited wants. Most people strain to acquire stuff that the rich have long taken for granted. Telling them to switch off this desire has never worked and is unlikely to do so now, even when the future of the planet is at stake. In this vein, the accession of Donald Trump to the presidential throne should not be read as a spectacular one-off reaction by a narrow, if electorally important group who missed out on GDP growth.

Consumption is how most people measure progress, and that will still be the case next year and in 10 years’ time, when Trump is long gone. Take a look at the figures for flights in and out of the UK, home of some the world’s busiest airports. City Airport, which is embarking on a £344m expansion, saw 4.3 million passengers in 2015. Heathrow, which has the government’s blessing for its own multibillion-pound development, welcomed 75 million passengers in the same year, Gatwick broke 40 million, and Stansted hit double-digit growth with 22.5 million passengers. Last year, Manchester airport boasted annual growth of 11% after it attracted 23.7 million passengers. And these figures don’t include the huge amount of imported and exported goods that flow through Britain’s airports.

If it’s true that trade is in the UK’s DNA – and the figures support this – any government, of whatever colour, will think twice before standing in the way of airport expansion. That doesn’t mean governments should not think about air travel when searching for ways to tackle climate change. Aircraft makers should be forced to make their planes more efficient, and airport owners must clean up the pollution they create. But this is an exercise in minimising the impact of flying, given that its expansion is inevitable. The same analysis should have applied to the country’s steel plants –and to its other polluting industries. Without a reduction in steel consumption, we must live with its continued production.

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Jan 202017
 
 January 20, 2017  Posted by at 10:02 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Unknown Masterpiece 2016-7


Trump’s Tweets Are Little Different From FDR’s Fireside Chats (MW)
Fortress Washington Braces For Anti-Trump Protests, New Yorkers March (R.)
Executive Actions Ready To Go As Trump Prepares To Take Office (R.)
Mnuchin Says Long-Term Strength of US Dollar Is Important (BBG)
German Opposition Leader Calls For Security Union With Russia, End Of NATO (DW)
The ‘Ever Closer European Union’ Principle Is “Buried And Gone” (MT)
Chinese Growth Slips To 6.7% In 2016, The Slowest For 26 Years (AFP)
China GDP Beats Expectations But Debt Risks Loom (R.)
There’s an Unexplained $9 Billion Gap in India’s Cash Supply (BBG)
Amazon Is Going To Kill More American Jobs Than China Did (MW)
Stiglitz Tells Davos Elite US Should “Get Rid Of Currency” (Black)
US Government Caught Massively Fabricating Student Loan Default Data (ZH)
EU Migration Commissioner Urges NGOs To Manage Funds With Transparency (KTG)

 

 

Nice angle. Circumventing the press is nothing new.

Trump’s Tweets Are Little Different From FDR’s Fireside Chats (MW)

Donald Trump, arguably, has already changed the office of the presidency forever, with his prolific tweets, some of which, at least in the lead-up to his Friday inauguration, have endorsed specific companies, lashed out at impersonations and in some case even laid the groundwork for complex policies. Cabinet appointees have found themselves walking back his remarks with some regularity this week. Some observers embrace the transparency of the unfiltered Trump experienced on Twitter. The public wasn’t ruffled one bit when a newly elected Trump’s staff blew off the protocol for press pool reports and end-of-day signoffs. Trump’s delivery mechanism may be relatively new, but the motivation isn’t.

Circumventing the press, and even the carefully crafted press release, is a presidential tack that can be traced as far back as Franklin Delano Roosevelt’s “fireside chats,” which leveraged the radio medium to deliver Roosevelt directly into American living rooms, said Andrew Card, in an MSNBC interview. Card, White House chief of staff to the second President Bush, also served in the administrations of Ronald Reagan and George H.W. Bush. FDR delivered his first radio address on March 12, 1933, in the middle of the crisis of confidence over the U.S. banking system. The intent? Reassure the public as if the president had stopped by personally. It was only after the broadcast’s relative success that they eventually earned the “fireside chat” familiarity. Trump’s tweets are the president-elect’s way to get closer to Americans, too, said Card. And that’s not without risk. Trump’s words represent “empathy” but don’t always reflect “judgment,” said Card.

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Are they all protesting the same thing? Where were they 8 years ago?

Fortress Washington Braces For Anti-Trump Protests (R.)

Washington turned into a virtual fortress on Thursday ahead of Donald Trump’s presidential inauguration, while thousands of people took to the streets of New York and Washington to express their displeasure with his coming administration. Some 900,000 people, both Trump backers and opponents, are expected to flood Washington for Friday’s inauguration ceremony, according to organizers’ estimates. Events include the swearing-in ceremony on the steps of the U.S. Capitol and a parade to the White House along streets thronged with spectators. The number of planned protests and rallies this year is far above what has been typical at recent presidential inaugurations, with some 30 permits granted in Washington for anti-Trump rallies and sympathy protests planned in cities from Boston to Los Angeles, and outside the U.S. in cities including London and Sydney.

The night before the inauguration, thousands of people turned out in New York for a rally at the Trump International Hotel and Tower, and then marched a few blocks from the Trump Tower where the businessman lives. The rally featured a lineup of politicians, activists and celebrities including Mayor Bill de Blasio and actor Alec Baldwin, who trotted out the Trump parody he performs on “Saturday Night Live.” “Donald Trump may control Washington, but we control our destiny as Americans,” de Blasio said. “We don’t fear the future. We think the future is bright, if the people’s voices are heard.” In Washington, a group made up of hundreds of protesters clashed with police clad in riot gear who used pepper spray against some of the crowd on Thursday night, according to footage on social media. The confrontation occurred outside the National Press Club building, where inside a so-called “DeploraBall” event was being held in support of Trump, the footage showed.


JFK inaugural parade 1961

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Nice detail: “Trump plans on Saturday to visit the headquarters of the CIA in Langley, Virginia…”

Executive Actions Ready To Go As Trump Prepares To Take Office (R.)

Donald Trump is preparing to sign executive actions on his first day in the White House on Friday to take the opening steps to crack down on immigration, build a wall on the U.S.-Mexican border and roll back outgoing President Barack Obama’s policies. Trump, a Republican elected on Nov. 8 to succeed Democrat Obama, arrived in Washington on a military plane with his family a day before he will be sworn in during a ceremony at the U.S. Capitol. Aides said Trump would not wait to wield one of the most powerful tools of his office, the presidential pen, to sign several executive actions that can be implemented without the input of Congress.

“He is committed to not just Day 1, but Day 2, Day 3 of enacting an agenda of real change, and I think that you’re going to see that in the days and weeks to come,” Trump spokesman Sean Spicer said on Thursday, telling reporters to expect activity on Friday, during the weekend and early next week. Trump plans on Saturday to visit the headquarters of the CIA in Langley, Virginia. He has harshly criticized the agency and its outgoing chief, first questioning the CIA’s conclusion that Russia was involved in cyber hacking during the U.S. election campaign, before later accepting the verdict.

Trump also likened U.S. intelligence agencies to Nazi Germany. Trump’s advisers vetted more than 200 potential executive orders for him to consider signing on healthcare, climate policy, immigration, energy and numerous other issues, but it was not clear how many orders he would initially approve, according to a member of the Trump transition team who was not authorized to talk to the press. Signing off on orders puts Trump, who has presided over a sprawling business empire but has never before held public office, in a familiar place similar to the CEO role that made him famous, and will give him some early victories before he has to turn to the lumbering process of getting Congress to pass bills.

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The contradictions people seek don’t appear to exist.

Mnuchin Says Long-Term Strength of US Dollar Is Important (BBG)

Treasury Secretary nominee Steven Mnuchin told lawmakers the long-term strength of the U.S. dollar is important and said President-elect Donald Trump’s comments that the currency was too high weren’t meant as a longer-run policy. The dollar’s “long-term strength – over long periods of time – is important,” Mnuchin said in response to questions at his confirmation hearing Thursday before the Senate Finance Committee in Washington. “The U.S. currency has been the most attractive currency to be in for very, very long periods of time. I think that it’s important and I think you see that now more than ever.” At the same time, he said the greenback is currently “very, very strong, and what you see is people from all over the world wanting to invest in the U.S. currency.”

The Bloomberg Dollar Spot Index extended its gains on Thursday. The currency has appreciated more than 5% since Trump won the Nov. 8 election on expectations he will boost economic growth through tax cuts and spending increases. Trump expressed concern about the dollar’s recent appreciation in an interview with the Wall Street Journal this month, saying the currency was “too strong.” That prompted speculation that his administration might reverse longstanding tradition in the U.S. to support a strong-dollar policy. “When the president-elect made a comment on the U.S. currency, it wasn’t meant to be a long-term comment,” Mnuchin said. “It was meant to be that perhaps in the short term the strength in the currency, as a result of free markets and people wanting to invest here, may have had some negative impacts on our ability in trade.”

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You can’t keep Germany vested against Russia for too long for opaque reasons. History says so.

German Opposition Leader Calls For Security Union With Russia, End Of NATO (DW)

The parliamentary leader of Germany’s largest opposition party has urged the dissolution of the NATO alliance. Her remarks come after US president-elect Donald Trump described it as “obsolete.” German opposition leader Sahra Wagenknecht on Tuesday added her voice to calls to dissolve NATO in the wake of US President-elect Donald Trump’s controversial remarks concerning the military alliance “NATO must be dissolved and replaced by a collective security system including Russia,” Wagenknecht told Germany’s “Funke” media group. Wagenknecht, who leads the opposition Left Party in parliament, added that comments made by the future US president “mercilessly reveal the mistakes and failures of the [German] federal government.”

In an interview published by German tabloid “Bild,” Trump described NATO as an “obsolete” organization. “I said a long time ago that NATO had problems. Number one it was obsolete, because it was designed many, many years ago,” he said. “We’re supposed to protect countries. But a lot of these countries aren’t paying what they’re supposed to be paying, which I think is very unfair to the United States,” Trump added. Germany’s Left Party has previously called for warmer ties with Russia and scrapping the security alliance, measures which appear to be policy concerns for the incoming US administration. The Left Party is Germany’s largest opposition group in parliament, and holds seats in several state legislatures.

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Rutte is smart enough to feel the ghost of the times contradicting everything he ran on in the past, but he wants to use it to remain in power. Pragmatism?! It all plays into the hands of Wilders. 2 months to Dutch elections.

The ‘Ever Closer European Union’ Principle Is “Buried And Gone” (MT)

Dutch Prime Minister Mark Rutte and former European Parliament President Martin Schulz clashed over the strategy to relaunch the Union, illustrating the deep division at Europe’s helm in front of the global audience of the World Economic Forum 19 January. Hundreds of business leaders and political figures attending the Davos forum witnessed how fundamentally disunited Europeans are when they are confronted with challenges and the solutions needed to overcome them. Schulz, who stepped down as president of the European Parliament this week, praised the achievements of the past and the need to push forward EU integration. But Rutte told the Socialists and Democrats (S&D group) MEP to “leave out those romantic ideas”, adding that “that is the fastest way to dismantle Europe”.

Europe needs a “pragmatic approach and to stop lofty speeches”, Rutte said. He called for tangible results on migration, security or the internal market in the effort to create jobs. He even went as far to say that the ‘ever closer union’ principle is “buried and gone”. The ‘ever closer union’ goal is seen as the driving force behind the EU project. It was enshrined in the founding Treaty of Rome that celebrates its 60th anniversary this year. While the Dutchman said that the experiences of Helmut Kohl and François Mitterrand could not be “a model for the future”, Schulz punched back responding he was not a “romantic” but a “German”. He got an applause when he recalled how the emotional ties after World War II brought peace and prosperity to the continent.

The fight between the two started right from the get-go as Rutte insisted more efforts from France and Italy to reform their economies are needed to save Europe. He warned that if countries failed to meet their promises, it would be harder for Northern leaders like him to convince their citizens about the need to tighten their belts. “At the end, this will have a devastating impact on EU integration”, he warned. But Schulz told the Dutch leader to be “very prudent” about dictating to other countries what they should do, as this could further divide the European bloc. He said that it is the European Commission and Council, and not “several member states”, who are responsible for fiscal and macroeconomic recommendations made to national governments.

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Fake news.

Chinese Growth Slips To 6.7% In 2016, The Slowest For 26 Years (AFP)

China’s economy has grown at its slowest rate in more than a quarter-century as Beijing braces itself for an uncertain outlook that could see a trade stand-off with Donald Trump. After a tumultuous start to 2016, the country’s leaders used huge monetary stimulus to steer the world’s number two economy to hit their annual target and also record the first quarterly pick-up in two years. The Asian superpower is a crucial driver of global growth but Beijing is trying to reduce its heavy reliance on exports and state-backed investment and instead focus on domestic consumer spending to drive expansion. However, the transition has proved bumpy, with the crucial manufacturing sector struggling in the face of sagging global demand for its products and excess industrial capacity left over from an infrastructure boom.

This led to the economy growing 6.7% last year, in line with forecasts but down from 6.9% in 2015, and the worst reading since 1990. The government targeted 6.5-7.0%. The October-December increase of 6.8% also marked the first quarterly improvement since the final three months of 2014. The national statistics bureau called the figure a “good start” for the government’s goal of achieving 6.5% annual growth through to 2020. “China’s economy was within a proper range with improved quality and efficiency. However, we should also be aware that the domestic and external conditions are still complicated and severe,” the bureau said in a statement. It added that the coal and steel industries had cut overcapacity, but structural reform should be the “mainline” this year, urging policymakers to focus on “fending off risks” to stability.

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Beats expectations with a 26-year low. Wow.

China GDP Beats Expectations But Debt Risks Loom (R.)

China’s economy grew a faster-than-expected 6.8% in the fourth quarter, boosted by higher government spending and record bank lending, giving it a tailwind heading into what is expected to be a turbulent year. But Beijing’s decision to prioritize its official growth target could exact a high price, as policymakers grapple with financial risks created by an explosive growth in debt. China’s debt to GDP ratio rose to 277% at the end of 2016 from 254% the previous year, with an increasing share of new credit being used to pay debt servicing costs, UBS analysts said in a note. The fourth quarter was the first time in two years that the world’s second-largest economy has shown an uptick in economic growth, but this year it faces further pressure to cool its housing market, the impact of government efforts at structural reforms, and a potentially testy relationship with a new U.S. administration.

“We do not expect this (Q4 GDP) rebound to extend far into 2017, when a slowdown in the property market and steps to address supply shortages in the commodity sector ought to drag again on demand and output,” said Tom Rafferty, regional China manager for the Economist Intelligence Unit. The economy expanded 6.7% in 2016, the National Bureau of Statistics said on Friday, near the middle of the government’s 6.5-7% growth target but still the slowest pace in 26 years. Economists polled by Reuters had expected 6.7% growth for both the fourth quarter and the full year. Housing helped prop up growth again in the fourth quarter, with property investment rising a surprisingly strong 11.1% in December from 5.7% in November, even as house prices showed signs of cooling in some major cities.

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The mayhem is far from over.

There’s an Unexplained $9 Billion Gap in India’s Cash Supply (BBG)

India’s unprecedented ban on high-denomination currency bills has led to a mismatch in cash supply that has flummoxed some economists and data crunchers. Indians withdrew about 600 billion rupees ($9 billion) more than the 9.1 trillion rupees of currency in circulation as of Jan. 13, according to a report submitted by the Reserve Bank of India to a parliamentary panel on Wednesday. A copy of the document was seen by Bloomberg News. “This is usually not the case,” said Sujan Hajra, chief economist at Anand Rathi Securities in Mumbai, who was a director at the RBI from 1993-2006. He added that cash with public should be lower than currency in circulation “but then you don’t have demonetization usually.”

Clarity will emerge only once the central bank reconciles and publishes final figures, he said. The central bank has refused to share the amount of invalidated bills that have been deposited and said on Jan. 5 that it is still counting the notes to eliminate errors. In a shock move late on Nov. 8, Prime Minister Narendra Modi canceled 15.4 trillion rupees of the 17.7 trillion rupees in circulation and pledged to swap the worthless notes with fresh bills. Between Nov. 9 to Jan. 13, the RBI printed about 5.53 trillion rupees of new notes and put in circulation 25,197 million bank notes aggregating 6.78 trillion rupees, taking total currency in circulation to about 9.1 trillion rupees, according to the RBI’s document on Wednesday. As on Jan. 13 the public had withdrawn close to 9.7 trillion rupees from bank counters and cash-dispensing machines, the document said.

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Apples and oranges, but still. Amazon sucks money out of communities. Support your local dealer!

Amazon Is Going To Kill More American Jobs Than China Did (MW)

Amazon.com has been crowing about its plans to create 100,000 American jobs in the next year, but as with other recent job-creation announcements, that figure is meaningless without context. What Amazon won’t tell us is that every job created at Amazon destroys one or two or three others. What Jeff Bezos doesn’t want you to know is that Amazon is going to destroy more American jobs than China ever did. Amazon has revolutionized the way Americans consume. Those who want to shop for everything from books to diapers increasingly go online instead of to the malls. And for about half of those online purchases, the transaction goes through Amazon.

For the consumer, Amazon has brought lower prices and unimaginable convenience. I can buy almost any consumer product I want just by clicking on my phone or computer — or even easier, by just saying: “Alexa: buy me one” — and it will be shipped to my door within days or even hours for free. I can buy books for my Kindle, or music for my phone instantly. I can watch movies or TV shows on demand. But for retail workers, Amazon is a grave threat. Just ask the 10,100 workers who are losing their jobs at Macy’s. Or the 4,000 at The Limited. Or the thousands of workers at Sears and Kmart, which just announced 150 stores will be closing. Or the 125,000 retail workers who’ve been laid off over the past two years.

Amazon and other online sellers have decimated some sectors of the retail industry in the past few years. For instance, employment at department stores has plunged by 250,000 (or 14%) since 2012. Employment at clothing and electronics stores is down sharply from the earlier peaks as more sales move online. “Consumers’ affinity for digital shopping felt like it hit a tipping point in Holiday 2014 and has rapidly accelerated this year,” Ken Perkins, the president of Retail Metrics, wrote in a research note in December. And when he says “digital shopping,” he really means Amazon, which has increased its share of online purchases from about 10% five years ago to nearly 40% in the 2016 holiday season. It’s only going to go higher, as Amazon aggressively targets other sectors such as groceries and even restaurants with delivery services for restaurant-prepared meals.

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Important points by Simon Black.

Stiglitz Tells Davos Elite US Should “Get Rid Of Currency” (Black)

half a world away at the World Economic Forum in Davos, Switzerland, Nobel Laureate economist Joseph Stiglitz made remarks earlier this week that the US should “get rid of currency.” He means paper currency, as in the US should not only get rid of $100 bills… but ALL paper currency– 50s, 20s, 10s, 5s, and even 1s. You guessed it. Stiglitz suggests that regular people don’t need paper money, and that it’s only useful for drug dealers, terrorists, tax evaders, and money launders. This thinking is so 20th century, and it’s simply wrong. ISIS is a great example. The US military has literally blown up more than a billion dollars worth of ISIS’s stockpiles of physical cash during airstrikes. But this hasn’t affected their terrorist activities one bit. That’s because the most notorious terrorist group on the planet famously uses both the world’s oldest currency (gold) and the world’s newest currency (Bitcoin).

Professor Stiglitz has likely never been anywhere near a terrorist, so he likely doesn’t have a clue how they conduct financial transactions. Stiglitz also relies on the old claim that cash facilitates illicit activity. Again, this thinking only highlights a Dark Ages mentality. In the today’s world, drug dealers and prostitutes accept credit cards. No matter what you’re selling on a street corner, whether it’s hot dogs or marijuana, there are plenty of solutions (like Stripe, Square, or PayPal) to easily allow anyone to accept credit card payments. But these intellectuals seem stuck in a Pablo Escobar fantasy that drug dealers have entire rooms filled with cash. What Stiglitz, and perhaps many law enforcement agencies, fail to realize is that one of the biggest tools in masking illegal activity is actually Amazon.com. Specifically, Amazon gift cards.

[..] These guys just don’t get it. Cash isn’t about tax evasion or illegal activity. It’s about having a choice. Any rational person who actually looks at the numbers in the banking system has to be concerned. In many parts of the world, banks are pitifully capitalized and EXTREMELY illiquid. This is especially the case in Europe right now where entire nations’ banking systems are teetering on insolvency. In the United States, liquidity is also quite low, and banks play all sorts of accounting games to hide their true financial condition. Plus, never forget that the moment you deposit funds at a bank, it’s no longer YOUR money. It’s the bank’s money. As a depositor, you’re nothing more than an unsecured creditor of the bank, and they have the power to freeze you out of your life’s savings without even giving you a courtesy call. Physical cash provides consumers another option. If you don’t want to keep 100% of your savings tied up in a system that’s rigged against you and has a long history of screwing its customers, you can instead choose to hold physical cash.

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Wonder what the new administration will make of this.

US Government Caught Massively Fabricating Student Loan Default Data (ZH)

Ever since 2012 we have warned that one of the biggest threats arising from the US student loan bubble – which is no longer disputed by anyone except perhaps members of the outgoing administration – is not that it is soaring at an unprecedented pace, that’s obvious for anyone with the latest loan total number over $1.4 trillion, rising at a pace of nearly $100 billion per year, but that the government – either on purpose or due to honest miscalculation – was not correctly accounting for the true extent of delinquencies and defaults. Today, we finally got confirmation that, as speculated, the US government was indeed fabricating student loan default data, making it appear far lower than it was in reality. An the WSJ reported overnight “many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed.”

The admission came last Friday, when the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers. This also means that the number of loan defaults in various cohorts is far greater than previously revealed. A spokeswoman for the Education Department said that the problem resulted from a “technical programming error.” And so, the infamous “glitch” strikes again. How bad was the data fabrication? When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country. In other words, virtually every single number was made to appear better than it actually was. And people mock China for its own “fake data.”

According to an analysis of the revised data, at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years. This is a stunning number and suggests that the student loan crisis is far greater than anyone had anticipated previously. It also means that the US taxpayer will be on the hook for hundreds of billions in government-funded loans once attention finally turns to who is expected to foot the bill for years of flawed lending practices.

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Translation: the EU has no idea, none at all, where its hundreds of millions in taxpayer funds have gone. It’s how the aid industry is set up. And the refugees still suffer for no reason other than profit, politics and greed.

EU Migration Commissioner Urges NGOs To Manage Funds With Transparency (KTG)

EU Migration Commissioner Dimitris Avramopoulos urged non-governmental organizations involved in the care of refugees and migrants to manage funds with more transparency. “NGOs must manage available funds with transparency,” Avramopoulos said on Wednesday and called on international organizations operating in the country “to step up their efforts to provide immediate assistance to those in need in the islands.” Avramopoulos was visiting the hot spot of Moria and the refugee camp of Kara on Lesvos together with Migration Minister Yannis Mouzalas and EU’s official responsible for NGOs funding, Philippe de Broers.

On his part, Mouzalas said “We covered 70% of the needs in the camps with less money than the money received by NGOs and institutional organizations.” Mouzalas added that the European Commission needed to take tight control of the funds given to NGOs for refugees and migrants. “We have asked the European Commission and the DG Echo (i.e. DG EU Humanitarian Aid and Civil Protection)” for tighter control “and we have stated that we can not we control to this money” he said. Criticism against the NGOs and international organizations comes after a bad weather front left thousands of refugees and migrants exposed to extreme weather conditions with heavy snow fall and polar cold.

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