Apr 082022
 
 April 8, 2022  Posted by at 8:55 am Finance Tagged with: , , , , , , , , , , ,  60 Responses »


Pablo Picasso Femme nue couchée (Marie-Thérèse Walter) 1932

 

Ukraine Foreign Minister Demands More “Weapons, Weapons, Weapons” From NATO (ZH)
The True Importance Of The Bucha False Flag (Saker)
Israel, Russia Clash Over Ukraine (Lauria)
Azov Fighter Video Overshadows Zelenskyy’s Address To Greek Lawmakers (R.)
Ukraine War Frenzy Proves: It’s Still John McCain’s GOP (Tracey)
US Air Force Delays Hypersonic Missile Program Over “Flight Test Anomalies” (ZH)
The Dollar Devours the Euro (Michael Hudson)
Despite Sanctions The Ruble Is Stronger Than Before The War (OffG)
Sit Back And Watch Europe Commit Suicide (Escobar)
Two-Star General Warns Hunter Biden Laptop Witness About His Safety (CTH)
BLMs LA Mansion Bought For 3.1M Sold 6 Days Later For 5.8M (DM)
Peter Thiel Blasts Buffett, Dimon, & Fink As “Finance Gerontocracy” (ZH)
The Spike Protein Is The “Amyloid” Being Deposited (Chesnut)
Nearly $300 Million To Wokify The Canadian Military (CS)
Priti Patel Part Of CIA-linked Lobby Group With Husband Of Assange Judge (DUK)

 

 

 

 

Disinformation

 

 

Wow, this sounds stupid

 

 

“The more weapons we get and the sooner they arrive in Ukraine, the more human lives will be saved.”

Uh, no.

Ukraine Foreign Minister Demands More “Weapons, Weapons, Weapons” From NATO (ZH)

“Weapons, weapons, weapons” is what Ukraine’s government is still demanding of NATO countries, even after the Biden-approved $800 million package last month. Foreign Minister Dmytro Kuleba issued the plea after meeting with NATO Secretary-General Jens Stoltenberg in Brussels, stating on Twitter that the “three most important things” for Ukrainians are “weapons, weapons, weapons.” “Met with Secretary General Jens Stoltenberg at NATO HQ in Brussels. I came here today to discuss three most important things: weapons, weapons, and weapons,” Kuleba wrote. “Ukraine’s urgent needs, the sustainability of supplies, and long-term solutions which will help Ukraine to prevail,” he added.

Already the Pentagon has agreed to send more Javelin anti-armor systems, also as Stinger anti-aircraft missiles are being supplied, which Moscow sees as a huge provocation, with the war entering its sixth week. During a press conference in Brussels, Kuleba said his agenda in meeting with NATO leaders remains “simple”… “We know how to fight. We know how to win. But without sustainable and sufficient supplies requested by Ukraine, these wins will be accompanied by enormous sacrifices,” Kuleba said. “The more weapons we get and the sooner they arrive in Ukraine, the more human lives will be saved.”

Previously, CNN had documented that Kiev is increasingly pushing Washington for more advanced battlefield weapons, especially to take out Russia’s superior tanks and aircraft: The Defense Department plans to accelerate production of Stinger anti-aircraft missiles and Javelin anti-tank missiles so it can refill its own depleted stocks as it continues to send the vital systems to Ukrainian forces fighting the Russian invasion, according to defense officials. Ukraine wants 500 Javelin anti-tank missiles and 500 Stinger anti-aircraft missiles delivered from the US daily, according to a recent military assistance wish list. CNN viewed the document that details the items Ukraine believes it needs from the US.

Read more …

“Russia needs to flush the EU down her “mental toilet” and only deal with sovereign countries which have retained enough agency to defend their own interests.”

The True Importance Of The Bucha False Flag (Saker)

[..] the leaders of the Empire of Hate and Lies have fully opened the “Hate and Lies” valve and it appears that they are seriously “losing it”. Remember how in the Skripal and MH-17 cases EU countries joined in the sanctions out of “solidarity”? I personally would call that cowardice and submissiveness, but “solidarity” works too. Well, the Eurolemmings have solidarized themselves into their own grave and now there is no undoing what they did to themselves. From the Russian point of view, it is rather straightforward: Russia tried to encourage EU countries to use their own judgment and act in their own interests.

It is now quite clear that as long as they get to brown-nose Uncle Shmuel the Eurolemmings are quite content with their fate. Russia needs to flush the EU down her “mental toilet” and only deal with sovereign countries which have retained enough agency to defend their own interests. In the EU that means Hungary and, to a much lesser degree, Serbia (not the people, of course, but the government which remains subservient to the Eurolemmings). The Bucha massacre itself will go down Zone A’s collective memory hole, that’s where all the previous false flags of the Empire of Hate and Lies have gone. Once a demonization operation has served its use, it can be forgotten.

So what are the purposes of the Bucha false flag: • Change the narrative from the (non-existing) Ukronazi “victories” to “stop the Russian atrocities” • Obfuscate the DELUGE of evidence (witnesses and forensic) showing that it was the Ukronazis who engaged in mass atrocities in Mariupol. Remember – Ukrainian victims are sacred, Russian victims are simply irrelevant. In fact, a Russian CAN NOT be a victim unless he is anti-Putin, then it’s okay. • To condition (I mean that in the psychological sense) the TV watching serfs of the Empire of Lies and Hate to hate anything Russian with a searing, explosive, hated. • Declare that Putin is now the “New Hitler” (though Putin has been Hitler pretty much since 2000, it’s just that now he is even MORE Hitler than before) and Russia some kind of broken, poor, and otherwise horrible Mordor.

• Use this pretext to try to eject Russia and Russians from as many locations and organizations on the planet as possible. That means all of Zone A for sure, but also plenty of locations and organizations in Zone B where the comprador ruling set the tone and don’t give a damn about their own people and country. • Try to scare Putin with the same fate as Gaddafi, Milosevic, and Hussein who were all demonized and later murdered. • If you think about it, I think that it is fair to say that these are all clear signs that the Empire of Hate and Lies has now declared total war on Russia, just short of overtly actually attacking Russian forces or Russia, of course. In fact, Russia and the Empire of Hate and Lies have been at war since at least 2013..

Read more …

“Serious politicians, especially at such a high level as Minister Lapid, have no right to talk idly..”

Israel, Russia Clash Over Ukraine (Lauria)

From the start of Russia’s invasion of Ukraine Israel has refused to join the West’s economic war against Moscow, maintaining a neutral stance that as positioned it as a possible broker to end the conflict. But all that appears to have changed with remarks by Israel’s foreign minister in a Twitter post on Sunday, the day the massacre at Bucha was revealed and before any investigation could be conducted. Foreign Minister Yair Lapid wrote: “It is impossible to remain indifferent in the face of the horrific images from the city of Bucha near Kyiv, from after the Russian army left. Intentionally harming a civilian population is a war crime and I strongly condemn it.” Israel’s ambassador to Ukraine also implied that Russia had committed a war crime. “Deeply shocked by the photos from #Bucha. Killing of civilians is a war crime and cannot be justified,” Ambassador Michael Brodsky tweeted on Sunday.

Earlier, on March 13, during a visit to Romania, Lapid had tweeted: “… like Romania, Israel condemns the Russian invasion of Ukraine. It’s without justification, and we call on Russia to stop its firing and attacks, and to resolve this conflict around the negotiating table.” The Israeli foreign ministry tried to distance itself from the ambassador’s remarks. Haaretz reported: “Asked if the Foreign Ministry’s official position was that Russia had committed war crimes in Ukraine, a spokesman replied: ‘No. It’s a tweet by the ambassador regarding the photos. He didn’t blame Russia.’” Prime Minister Naftali Bennett, who flew to Moscow on March 5 to meet with President Vladimir Putin (and was condemned for it), has made no comment about the Bucha incident.

Israel is trying to maintain a balancing act between Moscow and Washington, which cannot be pleased with Israel not joining the economic war. Russia and Israel have long maintained good relations, with Moscow even allowing Israel to conduct bombing raids on Syria. But years of goodwill have now been put on the line with Foreign Minister Lapid’s remarks. And now Russia has struck back. Sergey Ivanov, head of the department of diplomacy and consular service at the Foreign Ministry’s Diplomatic Academy, wrote a scathing critique of Israel on Wednesday, posted on the ministry’s Telegram page. It holds nothing back, openly condemning Israel for a variety of sins, including its treatment of the Palestinians.

Ivanov wrote that many Western journalists and political analysts have opportunistically become overnight “Ukraine experts” just as Western politicians, such as Lapid, are making rash statements to boost their popularity. “Serious politicians, especially at such a high level as Minister Lapid, have no right to talk idly,” Ivanov warned. “They should be aware of the possible consequences of what they say, including with regard to relations with Russia.”

Read more …

Bring your nazi to work. Just how stupid are these people?

“Ukraine’s Zelensky faces criticism in Greece after bringing a Neo Nazi member of the Azov battalion alongside him during his address to the Greek Parliament.”

Azov Fighter Video Overshadows Zelenskyy’s Address To Greek Lawmakers (R.)

Ukrainian President Volodomyr Zelenskyy’s address to the Greek parliament on Thursday caused an outrage from opposition parties after a man who identified himself as an ethnic Greek member of Ukraine’s ultranationalist Azov battalion appeared on a video. Zelenskyy spoke about the destruction of the Russian-besieged Ukrainian port of Mariupol – home to thousands of ethnic Greeks – and appealed to Athens for help. During his speech he showed a video with a message by a man who identified himself as a member of the Azov battalion, a far-right militia now part of Ukraine’s National Guard. “I address you, as a Greek by origin. I am Mikhail, my grandfather fought against the Nazis… I participate in the defence of Ukraine through the Azov Battalion,” he said.

Zelenskyy, who was invited to address the Greek parliament by conservative Prime Minister Kyriakos Mitsotakis, received a standing ovation from lawmakers present in the room. But the video caused a backlash on social media and an angry reaction from leftist parties. Shortly after the speech, the head of the leftist SYRIZA party Alexis Tsipras said the incident was a provocation. “Solidarity with the Ukrainian people is a given. But the Nazis can not have a say in parliament,” he tweeted. A Greek government spokesman responded that the message of a member of the Azov Battalion was “mistaken and inappropriate.”

Western countries say Moscow’s invasion, the biggest assault on a European country since World War Two, was entirely unprovoked. Russia says it is carrying out a “special operation” to disarm and “denazify” its neighbors. Ukraine’s embassy in Athens said the Azov regiment, set up as a far right group in 2014, has been reformed and integrated into the National Guard of Ukraine. “For many years Russia tried to ‘plant’ into Greek minds the myth that “Azov” Regiment is a paramilitary independent unit operating in Mariupol,” it said.

Read more …

Given the average age, no wonder that things move very slowly.

Ukraine War Frenzy Proves: It’s Still John McCain’s GOP (Tracey)

“The senator from Kentucky is now working for Vladimir Putin,” fumed John McCain back in March 2017. His target: Rand Paul, who had committed the unforgivable offense of momentarily delaying the latest round of NATO expansion. Montenegro, a tiny country in southeastern Europe that most Americans have never heard of, was about to join the sprawling military alliance — and McCain was determined to see the final ratification ritual proceed with as little debate as possible. So he hurled the time-honored “working for Putin” accusation, and sure enough, Paul quickly withdrew his minor procedural objection. The glorious ascension of Montenegro to NATO membership status was thereby assured.

Since that episode, a lot has transpired regarding the public perception of McCain. He delighted liberals by feuding regularly with Donald Trump — even going so far as to denounce Trump for engaging in “disgraceful” and “pathetic” flattery of Putin. “No prior president has ever abased himself more abjectly before a tyrant,” McCain raged. He undermined Congressional Republicans’ legislative agenda during the brief window in Trump’s presidency when the party had unified control of government — famously delivering a dramatic thumbs-down gesture to derail GOP hopes of repealing Obamacare, as a chagrined Mitch McConnell watched powerlessly on.

McCain had returned to his most natural state. After annoying Democrats by running against Barack Obama in the 2008 election, and being surly about his defeat for some time afterwards, he had once again resumed playing the “maverick” role he so relished — reviled by “his own side,” and loved by the “other side.” His death in 2018 brought forth the most effusive display of state-sanctioned grief that any US political figure had received since Ronald Reagan died in 2004, with all the universal media adulation that entails. Trump’s exclusion from the funeral proceedings, at McCain’s posthumous direction, was just the icing on the cake. But nowadays, if you bring up McCain in certain GOP circles, it will often be claimed that his influence has mercifully dissipated. The Republican Party experienced a bonafide ideological upheaval under Trump, they’ll say, and the McCain worldview — defined mainly by his unwavering commitment to a hyper-interventionist US foreign policy — has since fallen starkly out of favor.

Read more …

“Western countries have yet to field a hypersonic weapon while the old world order crumbles as a multipolar world emerges..”

US Air Force Delays Hypersonic Missile Program Over “Flight Test Anomalies” (ZH)

While Russia launched hypersonic air-to-ground missiles during the invasion of Ukraine and China flew a hypersonic weapon around the world late last year, the US continues to fall behind the hypersonic curve as a new round of delays were announced by the US Air Force (USAF), according to Bloomberg. The AGM-183 Air-Launched Rapid Response Weapon (ARRW) was expected to be declared “early operational capability” by Sept. 30. However, according to a USAF statement, those timelines have been pushed back to the next fiscal year. ARRW, expected to be the Pentagon’s first hypersonic weapon, suffered three consecutive failed tests last year. ARRW’s latest hurdle was two upcoming ground-based booster motor tests by June 30.

But, it appears “due to recent flight test anomalies,” the missile test would be shifted out to as late as December with additional tests planned next fiscal year, according to the USAF statement. “The ARRW production decision remains event-driven and will occur after operational utility is demonstrated through successful system end-to-end flight tests,” the service continued. Lockheed-Martin’s ability to manufacture and deliver the new weapon appears to be a 2023 story. Western countries have yet to field a hypersonic weapon while the old world order crumbles as a multipolar world emerges, pushing Russia and China closer together. Perhaps that’s why President Biden is set to unveil a new trilateral security hypersonic pact with the UK and Australia to advance the development of hypersonic weapons.

On Wednesday, Republican Rep. Mike Rogers of Alabama sounded the alarm at the House Armed Services Committee hearing that China has “more troops, ships, and hypersonic missiles than the United States.” Republican Rep. Michael Turner of Ohio said the US needs to increase its hypersonic development.

Read more …

“..why not simply throw in the financial towel and adopt the U.S. dollar, like Ecuador, Somalia and the Turks and Caicos Islands?”

The Dollar Devours the Euro (Michael Hudson)

European trade and investment prior to the War to Impose Sanctions had promised a rising mutual prosperity between Germany, France and other NATO countries vis-à-vis Russia and China. Russia was providing abundant energy at a competitive price, and this energy was to make a quantum leap with Nord Stream 2. Europe was to earn the foreign exchange to pay for this rising import trade by a combination of exporting more industrial manufactures to Russia and capital investment in developing the Russian economy, e.g. by German auto companies and financial investment. This bilateral trade and investment is now stopped – and will remain stopped for many, many years, given NATO’s confiscation of Russia’s foreign reserves kept in euros and British sterling, and the European Russophobia being fanned by U.S. propaganda media.

In its place, NATO countries will purchase U.S. LNG – but they will need to spend billions of dollars building sufficient port capacity, which may take until perhaps 2024. (Good luck until then.) The energy shortage will sharply raise the world price of gas and oil. NATO countries also will step up their purchases of arms from the U.S. military-industrial complex. The near-panic buying will also raise the price for arms. And food prices also will rise as a result of the desperate grain shortfalls resulting from a cessation of imports from Russia and Ukraine on the one hand, and the shortage of ammonia fertilizer made from gas. All three of these trade dynamics will strengthen the dollar vis-à-vis the euro. The question is, how will Europe balance its international payments with the United States?

What does it have to export that the U.S. economy will accept as its own protectionist interests gain influence, now that global free trade is dying quickly? The answer is, not much. So what will Europe do? I could make a modest proposal. Now that Europe has pretty much ceased to be a politically independent state, it is beginning to look more like Panama and Liberia – “flag of convenience” offshore banking centers that are not real “states” because they don’t issue their own currency, but use the U.S. dollar. Since the eurozone has been created with monetary handcuffs limiting its ability to create money to spend into the economy beyond the limit of 3 percent of GDP, why not simply throw in the financial towel and adopt the U.S. dollar, like Ecuador, Somalia and the Turks and Caicos Islands? That would give foreign investors security against currency depreciation in their rising trade with Europe and its export financing.

Read more …

“The price of oil is going up and the ruble is worth just as much as it was before the war.”

Despite Sanctions The Ruble Is Stronger Than Before The War (OffG)

It’s official, as of right now the Russian ruble is worth more US dollars than before the invasion of Ukraine. On the 22nd of February this year, one US dollar would exchange for just over 79 rubles. As of the time of writing, it is now 78. The same is true of the British pound (around 108 rubles before, 102 now), and the Euro (88 rubles before, 84 now). Across the board, the ruble is stronger than before the war. So, how has this happened? Aren’t NATO, the EU and the rest of the “international community” meant to be crippling the Russian economy with biting sanctions? The media are claiming that the strength of the ruble “may be illusory” or that Russia has exploited a “loophole” in the sanctions and used “financial alchemy” to “rescue the ruble”.

Reminder: In 2014, when the west sanctioned Russia over the Crimean referendum, the ruble lost almost half its value. It recovered slightly in 2016, and has since stabilized, but has never come close to its pre-Crimean worth. So, presumably the earlier sanctions didn’t have a “loophole” in them, and/or the Russians either weren’t aware of this “financial alchemy” back then, or simply decided not to use it. Of course there is one key difference between 2014 and 2022 – the oil market. As we have written before, in 2014/15 the US and Saudi Arabia flooded the market with cheap oil and crashed the price. Russia (and Iran, and Venezuela) all suffered huge economic damage from this move.

But far from repeating this tactic, Saudi Arabia has increased their prices. The Western press claims that the US asked Saudi Arabia to increase oil production and they refused. They claim Saudi Arabia “sided with Russia”, and that they should be “punished”. Meanwhile, Turkey has just suspended the trial of the Saudi citizens alleged to have murdered journalist Jamal Khashoggi, a move that should please the Saudi government no end. The West seems as bad at “punishing” their misbehaved allies as they are at tanking the value of the Russia’s currency. To sum up – The price of oil is going up and the ruble is worth just as much as it was before the war.

Read more …

“..next winter energy bills packing a mean punch; products disappearing from supermarkets; holiday bookings almost frozen; Le Petit Roi Macron in France – maybe up to a nasty electoral surprise – announcing “food stamps like in WWII are possible”.

Sit Back And Watch Europe Commit Suicide (Escobar)

The stunning spectacle of the EU committing slow motion hara-kiri is something for the ages. Like a cheap Kurosawa remake the movie is actually about the Empire of Lies-detonated demolition of the EU, complete with subsequent rerouting of some key Russian commodities exports to the US at the expense of the Europeans. It helps to have a 5th columnist actress strategically placed, in this case astonishingly incompetent European Commission head Ursula von der Lugen, with a brand new vociferous announcement of an extra sanctions package: Russian ships banned from EU ports; road transportation companies from Russia and Belarus prohibited from entering the EU; no more coal imports (over 4.4 billion euros a year).

That translates in practice into the Empire of Lies shaking down its wealthiest – Western – clients/puppets. Russia of course is too powerful militarily. The Empire badly needs some of its key exports – especially minerals. Mission Accomplished in this case amounts to nudging the EU into imposing more and more sanctions and willfully collapsing their national economies, allowing the US to scoop everything up. Cue to the coming catastrophic economic consequences felt by Europeans in their daily life (but not by the wealthiest 5%): inflation devouring salaries and savings; next winter energy bills packing a mean punch; products disappearing from supermarkets; holiday bookings almost frozen; Le Petit Roi Macron in France – maybe up to a nasty electoral surprise – announcing “food stamps like in WWII are possible”.

We have Germany facing the returning ghost of Weimar hyperinflation; BlackRock President Rob Kapito saying, in Texas, “for the first time, this generation is going to go into a store and not be able to get what they want”; farmers in Africa not able to afford fertilizer at all this year, reducing agricultural production by an amount capable of feeding 100 million people. Zoltan Poszar, former NY Fed and US Treasury guru, current Credit Suisse grand vizir, has been on a streak, stressing how commodity reserves – and here Russia is unrivaled – will be an essential feature of what he calls Bretton Woods III (yet, in fact, what’s being designed by Russia, China, Iran and the Eurasia Economic Union is a post-Bretton Woods). Poszar remarks that wars, historically, are won by those who have more food and energy supplies, in the past to power horses and soldiers, today to feed soldiers and fuel tanks and fighter jets. China, incidentally, has amassed large stocks of virtually everything.

Read more …

“..so that people can see the scale of depravity and Biden family corruption within the evidence..”

Two-Star General Warns Hunter Biden Laptop Witness About His Safety (CTH)

Emerald Robinson has a great interview with Jack Maxey from Switzerland. Maxey was the first person to receive a full hard drive copy of the Hunter Biden laptop from Rudy Guliani. After media, Senate and U.S. government officials refused to take action, Maxey went to Switzerland in order to complete a full forensic audit of the laptop content in a neutral jurisdiction. Previously, Maxey outlined his intent to share the full contents of the original files, and all of the retrieved deleted files, with the public so that people can see the scale of depravity and Biden family corruption within the evidence. In this interview with Emerald Robinson, Maxey states the full and searchable email archive will likely be completed early next week.


Additionally, in this interview Maxey goes into greater detail about the larger issues surrounding impediments to the release of information, including how the laptop contained access certificates to enter the Defense Department database. Maxey tried to get the DoD to address the issue without success, until he found a direct conduit to a two-star general who took the certificate codes, deactivated the access and thanked him for his diligence. Unfortunately, that same general then told Maxey he needed to focus on securing the safety of himself and his family, as the full weight of the U.S. interests, including the intelligence apparatus and defense apparatus, will likely target him. In my opinion, it is Maxey’s forensic review of the data and statements about making it all public, that triggered/pressured the collective western media to begin admitting the laptop issues were real and start covering the details.

Read more …

What an insane story.

BLMs LA Mansion Bought For 3.1M Sold 6 Days Later For 5.8M (DM)

A Los Angeles mansion frequented by Marilyn Monroe and Humphrey Bogart was bought by a real estate developer working for BLM founder Patrisse Cullors and her partner for $3.1 million, and then purchased by BLM’s foundation just six days later for $5.8 million in cash, it has emerged. The rapid price inflation ‘raises serious questions,’ ethics experts said. The purchase of the 6,500 square-foot, six-bedroom property in Studio City was first revealed on Monday by New York Magazine, amid growing questions about BLM’s finances. The organization in February 2021 said it had taken in more than $90 million in 2020 and still had $60 million on hand, but it remains unclear how that money is being managed or even where it is.

Cullors, the co-founder of the organization, resigned in May 2021 as director of the Black Lives Matter Global Network Foundation (BLMGNF), amid scrutiny of her property empire. She has written best-selling books, and has a contract with Warner Brothers to produce content. On Wednesday, Cullors, 38, angrily hit back at the questions over cash purchase of the Studio City mansion, describing the criticism as ‘racist and sexist’. She insisted that the expansive property was bought as a ‘safe space’ for black creatives, activists and thought leaders, and its purchase was never disclosed because it needed renovating. Cullors called the New York Magazine investigation ‘a despicable abuse of a platform that’s intended to provide truthful information to the public’, and said that the author had ‘a proven and very public bias against me and other Black leaders’. She did not address the discrepancy in the home’s cost.

The property was purchased on October 21, 2020 by Dyane Pascall, a real estate developer who worked for the firm run by Cullors and her partner, Janaya and Patrisse Consulting. Pascall is president of Conscious Capital Investment Enterprises, according to LinkedIn, which describes it as ‘Real Estate Investment company in South LA that provides affordable housing in low income communities in the face of rapid gentrification.’

Read more …

“today all the gold in the world is worth $12 trillion, while global equities are worth $115 trillion. In 1980, the ratio was one-to-one..”

Peter Thiel Blasts Buffett, Dimon, & Fink As “Finance Gerontocracy” (ZH)

At Bitcoin 2022, Thiel started his speech with a video from him in the past, talking about the future of digital infrastructure. His predictions regarding cell phone usage, which may have sounded odd at the time, were quite accurate. He also mentioned the dollar hegemony and even the potential for digitalization of the dollar, all of which we are seeing today. The speech that followed was, in the words of Bitcoin Mag, “quite incredible” – he started by pulling out a wad of $100 bills, and presenting them to the crowd. He said, “It’s a mysterious thing, what is money?” He followed by offering the money to a random person in the crowd, a gesture to which many people responded. “It’s kind of crazy that this still works,” Thiel said. While he is a billionaire, he had a point.

He went on about how PayPal began, bitcoin’s placement in terms of velocity and more — and then he began talking about enemies of Bitcoin. “If bitcoin is going to replace gold, the question is, why is it so undervalued?” he said. “Bitcoin is always the most honest market in the world, the most efficient market and it was the canary in the coal mine.” Thiel went on to point out that “today all the gold in the world is worth $12 trillion, while global equities are worth $115 trillion. In 1980, the ratio was one-to-one, with all the gold in the world and global equities having the same value of $2.5 trillion.” And so, while in the 1970s, equities were a bad investment, the great moderation that started in 1980 after Volcker killed galloping inflation, made equities the best investment of the past 40 years.

However, now that inflation is as high as it was in the late 1970s, equities are the enemy and bitcoin is the right investment, according to Thiel. Concluding his musing on valuation, Thiel says that the competitor for bitcoin is not ethereum which is a payment system, nor gold, but equities and asks why shouldn’t there be parity between the $115 trillion value of global equities and the ~$830BN value of bitcoin. “I am still hopeful that bitcoin goes up by a factor of 100x” he said. The Paypal founder then also makes a mockery of all those who say that bitcoin is not an inflation hedge with just one chart – the chart showing how anyone who had a sense of the inflationary tsunami that is coming, made a killing in early 2020 when the could have bought bitcoin at a far lower price.

Saying that it’s hard to know where Bitcoin goes from here, the billionaire said that Bitcoin is the most honest and most efficient market: “Bitcoin is the canary in the coalmine, it was telling us that inflation is coming; it is telling us that central banks are bankrupt; it is telling us that we are at the end of the fiat money regime.” [..] His conclusion: the Financial Gerontocracy has declared war on Bitcoin as a revolutionary youth movement for good reason. It is this time the revolutionary youth should understand their enemies and return fire.

Thiel

Read more …

It’s everywhere.

The Spike Protein Is The “Amyloid” Being Deposited (Chesnut)

The spike protein is the “amyloid” being deposited and inducing amyloidoses: a major finding missed severe covid may be due to the added deposition of complement with the spike. The paper “The histologic and molecular correlates of COVID-19 vaccine-induced changes in the skin” made a case for the immune response to the Spike Protein causing self-limited hypersensitivity reactions to the vaccine. However, if you study the paper carefully, you notice that the authors have missed a far more important finding.

The biopsy specimens of normal skin post vaccine and of skin affected by the post-vaccine eruption showed rare deep microvessels positive for spike glycoprotein with no complement deposition contrasting with greater vascular deposition of spike protein and complement in skin biopsies from patients experiencing severe coronavirus disease 2019 (COVID-19). The histology exactly recapitulated perniosis including COVID-19–associated perniosis, which provides evidence that the Spike Protein alone induces COVID-19 pathology. More importantly, the fact that IN NORMAL SKIN, the Spike Protein was found to be deposited in DEEP VESSELS, MICROVESSELS, BLOOD VESSELS AND DEEP ENDOTHELIAL CELLS. Why would one assume that this deposition is only occurring in NORMAL SKIN TISSUE? I believe it is most certainly occurring in NORMAL TISSUE. PERIOD.

Read more …

Think they’ll give their lives for him?

Nearly $300 Million To Wokify The Canadian Military (CS)

Nestled deep within the Liberal government’s new 2022 budget is a whopping $100.5 million in taxpayer funding for “gender identity” culture change and training in the Canadian Armed Forces. The sum is part of Prime Minister Justin Trudeau’s new $58 billion spending bonanza and nested in their $8 billion defence spending boost over the next five years. “Budget 2022 proposes to provide $100.5 million over six years, starting in 2021-22, with $1.7 million in remaining amortization, and $16.8 million ongoing,” the budget report reads. These funds will be put towards “undertaking engagement and consultations on culture change” as it relates to gender identity or sexual orientation discrimination. The Liberal budget also mentions “coaching services.”


Under Trudeau’s watch, Canada’s military has been hit with sex scandals and harassment controversies. Instead of addressing the root causes of the problem and removing bad apples, the Liberals have used the issue as an opportunity to make the military more woke. Another gender-related spending in the defence budget included $144.3 million over five years and an additional $31.6 million ongoing to expand health services and physical fitness programs to “be more responsive to women and gender-diverse military personnel.” “This builds on funding from Budget 2021 of $236.2 million over five years, starting in 2021-22, and $33.5 million ongoing for the Department of National Defence and Veterans Affairs Canada to support efforts to eliminate sexual misconduct and gender-based violence in the military and support survivors,” the budget claims.

Read more …

One big vicious circle.

Priti Patel Part Of CIA-linked Lobby Group With Husband Of Assange Judge (DUK)

Priti Patel sat on the Henry Jackson Society’s (HJS) advisory council from around 2013-16, although the exact dates are unclear as neither the HJS nor Patel responded to Declassified’s requests for clarification. She has also received funds from the HJS, and was paid £2,500 by the group to visit Washington in March 2013 to attend a “security” programme in the US Congress. Patel, who became an MP in 2010 and was appointed Home Secretary in 2019, also hosted an HJS event in parliament soon after she returned from Washington. After the UK Supreme Court said this month it was refusing to hear Assange’s appeal of a High Court decision against him, the WikiLeaks founder’s fate now lies in Patel’s hands. He faces life in prison in the US.

The HJS, which was founded in 2005 and does not disclose its funders, has links to the CIA, the intelligence agency behind the prosecution of Assange and which reportedly developed plans to assassinate him. One of the HJS’s international patrons is James Woolsey, CIA director from 1993-95, who was in this role throughout the period Patel was advising the group. Woolsey’s affiliation to the HJS goes back to at least 2006, soon after it was founded. In 2014, the group hosted General David Petraeus, CIA director from 2011-12, at a UK parliament meeting from which all media were barred. Three years later, in 2017, the HJS organised another event at parliament with General Michael Hayden, CIA director from 2006-9, to “discuss the current state of the American Intelligence Community and its relationships with foreign partners.”

Hayden described “the relationship within the Five Eyes community as strong as ever, despite potential concerns over recent intelligence leaks between members.” Five Eyes is an intelligence alliance comprising Australia, Canada, New Zealand, the UK, and the US. During a visit to the UK in July 2020, then US Secretary of State Mike Pompeo spoke at a roundtable hosted by the HJS with what the Washington Post referred to as a group of “hawkish” members of the Conservative Party. As director of the CIA in 2017, Pompeo had launched a blistering attack on WikiLeaks calling the media organisation a “hostile intelligence service” that makes “common cause with dictators”. Pompeo did not provide evidence but added a threat: “To give them the space to crush us with misappropriated secrets is a perversion of what our great Constitution stands for. It ends now.”

Read more …

 

 

 

 

 

Biden family

 

 

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

 

 

 

Jun 082021
 


Pablo Picasso Le repos 1932
This painting has a story. It’s very funny. Click the pic.

 

Nearly 80% Of Surveyed Americans Won’t Change Their Mind & Get Vaccine (RT)
Unvaccinated Houston Methodist Nurses Plan Walkout (HC)
Why Subject Our Children To The Risk Of Death From Vaccination? (CW)
Child Vaccination: Who’s Selfish Now? (Curzon)
Time To Make Them PAY (Denninger)
Embattled Thailand Kicks Off Mass Vaccination Drive Against Covid-19 (RT)
Reset Yourself ! (Kunstler)
Trump Calls Bitcoin Scam, Denounces It For Competing Against The Dollar (RT)
Dumping The Dollar: Russia Ready To Shift Currency Liquidity To The Euro (RT)
The Coming Biden/Putin Train-Wreck Summit (Ron Paul)
Daniel Ellsberg: The 90-Year-old Whistleblower Tempting Prosecution (BBC)

 

 

 

 

Freud & Jung would have retweeted this clip.

 

 

 

 

Forget about vaccine-induced herd immunity.

Nearly 80% Of Surveyed Americans Won’t Change Their Mind & Get Vaccine (RT)

A new poll has found that Americans refusing a Covid-19 vaccination are highly unlikely to change their minds as inoculation rates have also significantly dropped. More than three in four adults (78%) who have thus far refused to get a Covid-19 vaccination say they are unlikely to change their minds in the future, according to a new Gallup poll. Of that group, 51% say they are “highly unlikely” to change their minds. Approximately 20% of people who are hesitant to receive a vaccine say they are open to changing their stance, with only 2% saying they are “highly likely” to eventually be convinced to get inoculated. The poll – conducted among over 3,500 adults with a margin of error of 3% – could spell bad news for President Joe Biden’s ambitious goal of vaccinating 70% of US adults by July 4.

Recent reports have shown that vaccine rates are plummeting in recent weeks, threatening the president’s plan. While approximately 3.4 million shots were being given out a day in mid-April, that number has now fallen to below one million a day, according to a report from the Washington Post. To hit the president’s goal, it says, approximately 4.2 million adults would need to be getting vaccinated a week, but only 2.4 million were given a jab last week. The drop has been chalked up by health officials to a lack of supply, rather than demand as vaccination sites have popped up around the country, but are seeing less and less people come through.

Some states have tried incentivizing vaccine hesitant residents by offering lottery winnings worth millions of dollars. The rates of vaccination vary significantly from state to state, with a handful set to hit Biden’s goal, including New York, a state in which over 60% of adults have received at least one dose of a vaccine. Some right-leaning states, however, have lower vaccination rates and are unlikely to hit the 70% threshold in the next month, the Washington Post report goes on. Twelve states, including Oklahoma, Montana, and West Virginia, have seen their daily vaccinations fall to just 15 jabs per 10,000 residents. One Utah woman told the outlet that “in certain circles, it’s almost shameful to get the vaccine.”

Read more …

The entire state is free.

Unvaccinated Houston Methodist Nurses Plan Walkout (HC)

Dozens of cheering supporters gathered outside the Houston Methodist Baytown campus Monday evening as several medical workers who refused to get a COVID-19 vaccine ended their last shifts working for the hospital system. The act of protest was aimed at what workers said was the hospital’s decision to suspend employees for two weeks without pay and then fire them for failing to immunize themselves. Jennifer Bridges, a nurse who effectively lost her job at the Baytown facility for deciding not to be inoculated, said the goal was to stage a walkout but that did not go as planned. Participating employees who refused the vaccine’s first dose were told not to gather or linger on the hospital grounds after ending their shift, she said. “The hospital wouldn’t let us do it,” Bridges said.

She got out of work early, emptied her locker and gathered with others on a grassy medium near the ambulance entrance to the hospital. Bridges fished a paper out of a backpack — a suspension report — that she had been asked to sign. She refused, she continued. About 117 employees in May filed a class action lawsuit against the health system for requiring its workers to be vaccinated against COVID-19. Bridges said the plaintiffs in the suit are a mix of those who want more trial data to emerge on the long-term effects of the vaccine before taking it, and those who simply don’t want any shots. “We’re not against the vaccine, we just want to be more comfortable with this one and have thorough research out before we take it,” Bridges in April said.

“When patients get care, they have the right to refuse treatment, but we’re not allowed that same exemption.” The suit alleged that the three major coronavirus vaccines are only authorized for emergency use by the U.S. Food and Drug Administration, meaning employers cannot require them as a condition of employment. At least 50 more employees have expressed interest in joining the plaintiffs since the lawsuit went public, she said.

Houston Methodist

Read more …

“SARS-CoV-2 is going to become an endemic virus. It will always be with us. The sooner most of us are exposed to it, ideally in childhood, the sooner it will cease to be a major problem.”

Why Subject Our Children To The Risk Of Death From Vaccination? (CW)

All non-corrupted scientific commentators have known from the very start that this pandemic only ends one way: SARS-CoV-2 is going to become an endemic virus. It will always be with us. The sooner most of us are exposed to it, ideally in childhood, the sooner it will cease to be a major problem. High-risk individuals can choose to take a vaccine. Ivermectin and vitamin D can be used to prevent infection and treat confirmed cases. As we have seen, the argument that children must take vaccines so that we can achieve herd immunity is utterly false. Only those completely ignorant of virology and immunology would even attempt to make it. That brings us back to the original argument for vaccinating children against Covid: to protect them from the severe disease.

If this is the only reason to vaccinate children, there is only one calculation that parents should make: Is the risk from Covid greater than the risk from the vaccine? The present Covid vaccines being administered in the West are based on experimental technologies that are being used under emergency use authorisations (EUAs). Full safety studies will not be completed until 2023. The Covid vaccines were all created in the last year and we have no medium-term or long-term data on them. We don’t know if they will have an effect on children’s reproductive organs and fertility. We don’t know if they will produce auto-immune diseases. And we don’t know if they will lead to ADE (antibody-dependent enhancement) upon re-exposure to the virus (causing more severe illness).

We do know that the vaccines produce a range of cardiovascular and neurological events including strokes, myocarditis, pericarditis and paralysis in a significant number of people. In the small US state of Connecticut at least 18 children and young adults have come down with myocarditis, an extremely serious and sometimes fatal condition involving inflammation of the heart muscle (and they’ve only just started vaccinating children there). The Israel Ministry of Health has reported that the incidence of myocarditis for vaccine recipients is between 1 in 3,000 and 1 in 6,000 in young men. In Canada (population 38 million) only 11 children have died from Covid since the start of the pandemic. In the UK (pop 68 million) 32 children have died. It is nearly certain that all of them had one or more severe comorbidities. The fact is, most children brush off Covid without even knowing they’ve had it. For all intents and purposes, Covid poses zero risk to healthy children.

Read more …

“..a lot of ethical dilemmas as to whether you should vaccinate children to protect adults.”

Child Vaccination: Who’s Selfish Now? (Curzon)

A number of school leaders have swung into action following the approval of the vaccination of children against Covid (a disease which almost all children aren’t at risk from) using the Pfizer vaccine (trials of which only included 1,134 children). It wasn’t very long ago that the establishment line was: if you don’t get a Covid vaccine, you are selfish. Even the Queen (disappointingly) joined in with this line [..]. But now, adult advisers to the Government suggest that children should be vaccinated not to protect children but to protect…themselves. Professor Anthony Harnden, the Deputy Chairman of the Government’s Joint Committee on Vaccination and Immunisation, says:


‘I think the vast majority of benefit won’t be to children, it will be an indirect benefit to adults in terms of preventing transmission and protecting adults who haven’t been immunised, for whatever reason haven’t responded to the vaccine and therefore that presents quite a lot of ethical dilemmas as to whether you should vaccinate children to protect adults.’ He notes that children themselves are ‘in the main’ not at risk from Covid. Over half of the adult population has been fully vaccinated (with seventy-five per cent having received at least one dose of a vaccine) and Covid deaths, while still exaggerated, have flattened. There is no reason to vaccinate most children and, given the potential side effects, many not to do so. If the Government bottles it on the vaccination of children, it is they who are being selfish.

FLCCC

Read more …

Good question (we asked this before): where are the life insurance companies?

If they don’t change their policies, that’s a big sign.

Time To Make Them PAY (Denninger)

[..] of those from 5-17 the number of persons who were admitted to the hospital and died, from March 1 2020 through March 31st, 2021 was……. wait for it…… NINE. Yes, a literal NINE nationwide. Another nine under 5 died. That’s right — 18 children in total from 0-17 year olds died of Covid-19 all the way back to March of 2020. If that’s not enough further review in a recent study the CDC did itself found that about a third of those were misclassified and had no plausible connection to Covid-19 actually killing the person in question. That’s a statistical zero risk of death if you are in that age bracket (17 and under) and get Covid. There are roughly 75 million persons under the age of 18 in the United States; this means their risk of death from Covid-19 since March of 2020 is roughly 1 in 4 million.

To put context on this you’re roughly one thousand times (there is a lot of variation with age and sex) more likely to die of something else in that age bracket provided you make it out your first year. Why your first year? Because roughly 5,500 per million infants die in their first year from all causes combined which is a stunning 20,000 times the rate that Covid-19 kills them. In addition for those under 50 the percentage of hospital admissions ending in death was 2.4%. There is no material risk of dying of Covid if you are under 50 and this is with zero early drug intervention which we know works so can we cut the crap folks? This isn’t my data it’s the government’s official data. The AARP confirms this; 95% of those who died were 50+ but 64.6% of the Covid-19 alleged cases have been in people under 50.

Yet now the CDC is attempting to scare kids and adolescents into taking jabs through flat-out lies. Why hasn’t the CDC been banned from Twitter and Facebook for “medical misinformation”? They are the publishers of this data and yet they are knowingly lying about their own data! Now are there an awful lot of seniors who are fat and/or diabetic? You bet. But there are also many who are not and Covid doesn’t kill them often, if at all. There is no reason for anyone to put up with any more of this bull****. After almost a year and a half of being gaslighted, lied to up and down the line by every so-called “expert” under the sun, having treatments suppressed to the point that discussing them gets you thrown off social media sites and doctors sanctioned or threatened with loss of their licenses and professional associations please explain to me why the people of this nation haven’t gotten tired of their loved ones being deliberately sacrificed — that would be called murder, by the way — and shoved all of this bull**** up the government’s ass?

Nor is there any reason for anyone to get a jab for anyone else’s benefit; these are not fully-tested and documented products, no matter what someone tries to tell you and again, the FDA’s own documents in the form of the actual EUAs say so. Any claim otherwise is ALSO a lie; these shots are lightly tested and there is plenty of evidence that more than one of the original safety claims made for them are now known false. [..] where are the life insurance companies? If there’s one group of people who have their crap dialed in when it comes to who’s going to die and how often it’s those folks. Oh not you specifically of course, but statistically, you bet. These companies do not lose money and they don’t make stupid bets either. Every one of their bets collects a small amount of money and when they’re wrong very large amounts go out their door. If they are not changing rates and forcing jabs to get coverage or surcharging you if you don’t get the jab then this much is absolutely certain: Covid-19 is non-event from a life insurance perspective — in other words, whether they think you’ll die of it.

Read more …

Drown them in ivermectin instead.

Embattled Thailand Kicks Off Mass Vaccination Drive Against Covid-19 (RT)

Bangkok has started its mass vaccination campaign against Covid-19, with the government aiming to inoculate six million people in June alone, as a third wave surges and now accounts for 80% of all cases since the pandemic began. “The government will ensure that everyone is vaccinated,” Prime Minister Prayuth Chan-ocha said on Monday after a visit to a Bangkok inoculation center as the national vaccination program kicked off. Amid a third wave of the virus, which has seen case levels far exceed those of the first and second waves, the state is aiming to administer six million doses of AstraZeneca’s Covid-19 vaccine, which is being made locally, and China’s Sinovac shot in June. The government hopes to vaccinate 70% of the country’s 66 million people before the end of the year.


To date, only 2.8 million people have received one shot in an initial rollout targeting the most vulnerable, including frontline health and transport workers. The government has been heavily criticized by opposition parties for over-reliance on the AstraZeneca vaccine, which is being made by royal-owned Siam Bioscience. Concerns emerged that the company’s production capacity may have been overestimated after the Philippines said its order had been reduced and delayed. Bangkok has been forced to search elsewhere for more supply, sourcing 200,000 AstraZeneca vaccines from South Korea, and hopes to complete a 20-million-shot deal with Pfizer in the coming weeks. To date, Thailand has registered 179,886 infections and 1,269 fatalities from the virus, 80% of which has been recorded during the third wave. 2,419 new infections and 33 deaths were recorded on Monday.

Read more …

“..plenty of pretty young things on hand, only some of whom know a reverse repo from an Appenzeller Sennenhund..”

Reset Yourself ! (Kunstler)

If Quentin Tarantino made a James Bond movie, the villain would be a maniac named Klaus Schwab, played with a light touch by Christoph Waltz, leading a SMERSH-like org bent on turning the world into a utopia of robots, and, of course, absolutely everything would go wrong, leading to a joyously comical bloodbath in the climax. Are we living in that movie, one wonders? In real life — is there even such a thing anymore? — Klaus Schwab is the octogenarian head of the World Economic Forum (WEF), the NGO that hosts the annual cavalcade of global villains at Davos, Switzerland, held every January in perfect designer snow, with the raclette melting temptingly on the hearth, endless flutes of Bollinger R.D. Extra Brut making the rounds, and plenty of pretty young things on hand, only some of whom know a reverse repo from an Appenzeller Sennenhund. Must be fun as all git-out.

The Davos meeting is ostensibly called to improve the state of the world (ha!), and thereby inspires countless paranoid fever dreams in the minds of many who would prefer to be spared utopian social experiments, especially from plans drawn by billionaire bankers who view the present surfeit of mankind on this planet (some 7.6 billion) as cluttering up the joint — all these unnecessary hoi polloi filling the oceans with their yukky plastic, making navigation difficult for the Davos yachting crowd… or something like that. Klaus Schwab has been shockingly literal about his wished-for utopia, summing up his vision as, “You will own nothing, and you will be happy about it.” Hmmm, no property… and then what? Logically, no corpus of contract law to regulate it? Farewell pesky US constitution. (Let’s face it, it’s been falling apart lately, anyhow.) How’s that going to make folks happy? Can I at least keep my Waterpik and my flyrod?

And what about your property Klaus? And the property of your nonagenarian buddy George Soros, including all the cash money he’s been sprinkling around the USA to fund the election of utterly incompetent Attorneys General and District Attorneys, so as to sow chaos in America’s streets? What about your pal Bill Gates’s property… those hundreds of thousands of acres he’s buying up across the American grain belt? And the half that goes to Melinda under California divorce law. Will the poor girl have to make those dreary trips to the Safeway on her own? Will there even be supermarkets? Or just distribution depots like the old soviet glory days, with long lines for schmoozing?

Read more …

“I want the dollar to be the currency of the world. That’s what I’ve always said.”

Trump Calls Bitcoin Scam, Denounces It For Competing Against The Dollar (RT)

Former President Donald Trump called bitcoin a probable “scam” on Fox Business, Monday, complaining that it’s competing against the US dollar, which he wants to be the “currency of the world.” During an interview on Fox Business, host Stuart Varney asked Trump for his thoughts on the popular cryptocurrency and whether he would invest in it. “Bitcoin, it just seems like a scam,” Trump declared, adding, “I don’t like it because it’s another currency competing against the dollar.” “I want the dollar to be the currency of the world. That’s what I’ve always said.” Trump has repeatedly shot down cryptocurrencies in recent years, accusing them of facilitating “unlawful behavior, including drug trade and other illegal activity.”


“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he said on Twitter in July 2019. “We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!” Trump’s presidential administration also attempted to crack down on cryptocurrency through regulations last year as one its final acts ahead of President Joe Biden’s inauguration.

Read more …

“Since we are a market economy, we cannot just order: stop using dollars..”

Dumping The Dollar: Russia Ready To Shift Currency Liquidity To The Euro (RT)

Russian authorities are planning to shift the nation’s currency liquidity from the US dollar to the euro, the country’s Finance Ministry announced on Monday. “Our number one goal is to turn Russia into a euro-oriented country, thus to replace the dollar with the euro,” said Dmitry Timofeev, head of the department of external restrictive measures control at the Russian Finance Ministry. The official noted that Russia has every reason for the move, adding that the government is preparing a wide range of incentives for businesses to transition to the European single currency. “Since we are a market economy, we cannot just order: stop using dollars,” Timofeev said, though he added that some state-owned corporations might be forced to shift.


“We need to develop the necessary tools in a single package to move the entire economy further away from the dollar, which, in fact, will allow us to avoid sanctions and make the world more democratic,” he added. The announcement comes days after Russian Finance Minister Anton Siluanov said that the National Wealth Fund would reduce its share of dollars to zero within the next month. Meanwhile, Russian Deputy Prime Minister Alexander Novak warned that Russia may soon be tempted to move away from dollar-denominated crude contracts if the US administration continues to pile up targeted economic sanctions.

Read more …

“Biden is well-prepared to answer for this when he soon visits Europe since, of course, he was deeply involved in this scandal the first time around.”

The Coming Biden/Putin Train-Wreck Summit (Ron Paul)

I have my doubts whether the Putin-Biden summit in Geneva will take place later this month, but even if somehow it is pulled off, recent Biden Administration blunders mean the chance anything of substance will be achieved is virtually nil. The Biden Administration was supposed to signal a return of the “adults” to the room. No more bully Trump telling NATO it’s useless, ripping up international climate treaties, and threatening to remove troops from the Middle East and beyond. US foreign policy would again flourish under the steady, practiced hands of the experts. Then Biden blurted out in a television interview that President Putin was a killer with no soul. Then US Secretary of State Antony Blinken discovered the hard way that his Chinese counterparts were in no mood to be lectured on an “international rules-based order” that is routinely flouted by Washington.

It’s going to be a rough ten days for President Biden. Just as news breaks that under the Obama/Biden Administration the US was routinely and illegally spying on its European allies, he is preparing to meet those same allies, first at the G7 summit in England on June 11-13 and then at the June 14th NATO meeting in Brussels. Make no mistake, Joe Biden is up to his eyeballs in this scandal. Ed Snowden Tweeted late last month when news broke that the US teamed up with the Danes to spy on the rest of Europe, that “Biden is well-prepared to answer for this when he soon visits Europe since, of course, he was deeply involved in this scandal the first time around.”

Though Germany’s Merkel and France’s Macron have been loyal US lapdogs, the revelation of how Washington treats its allies has put them in the rare position of having to criticize Washington. “Outrageous” and “unacceptable” are how they responded to the news. Russia has been routinely accused (without evidence) of malign conduct and interference in internal US affairs, but it turns out that the country actually doing the spying and meddling was the US all along – and against its own allies! Surely this irony is not lost on Putin.

Ron Paul Walensky

Read more …

“That would immediately raise the question of the US initiating nuclear war against China to prevail in that situation..”

Daniel Ellsberg: The 90-Year-old Whistleblower Tempting Prosecution (BBC)

While the Pentagon Papers left a lasting legacy, they weren’t the only documents Mr Ellsberg got his hands on. At the same time, Mr Ellsberg copied another classified study that showed how seriously American military chiefs took the threat of nuclear war during the Taiwan crisis of 1958. For 50 years, the study went virtually unnoticed until 2017, when Mr Ellsberg published the full document online, which was highlighted by the New York Times newspaper last month. In theory, Mr Ellsberg’s disclosure could put him at risk of prosecution on the same charges he faced for leaking the Pentagon Papers. Now aged 90, Mr Ellsberg says he is not intimidated by the possibility of prison. In an interview with the BBC, he explained why.

[..] For decades, Mr Ellsberg has been a tireless critic of government overreach and military interventions. His opposition crystallised during the 1960s, when he advised the White House on nuclear strategy and assessed the Vietnam War for the Department of Defense. What Mr Ellsberg learned during that period weighed heavily on his conscience. If only the public knew, he thought, political pressure to end the war might prove irresistible. The release of the Pentagon Papers was a product of that rationale, which underpins Mr Ellsberg’s latest disclosure, albeit in a different context. “I want to do my part in avoiding nuclear war,” Mr Ellsberg said from his home in California. In his assessment, a nuclear war over Taiwan is a serious threat. To understand why, consider the unsettled question of Taiwan’s relationship to China.

China has asserted sovereignty over Taiwan since the end of the Chinese civil war in 1949. Since then, China has regarded Taiwan as a rebel province that must be reunited with the mainland – by force if necessary. As Taiwan’s most-important ally, the US would be expected to take action if China did attack the island. “War games appear to show that the Chinese would win a conventional war over Taiwan and against the US,” Mr Ellsberg said. “That would immediately raise the question of the US initiating nuclear war against China to prevail in that situation, just as US decision-makers committed themselves to doing if it was necessary in 1958.” In the end, it was not necessary in 1958. But what material released by Mr Ellsberg shows, in sobering detail, is why American military leaders believed it might have been.

Read more …

 

We try to run the Automatic Earth on donations. Since ad revenue has collapsed, you are now not just a reader, but an integral part of the process that builds this site. Thank you for your support.

 

 

Georgestradamus

 

 

 

 

Support the Automatic Earth in virustime. Click at the top of the sidebars to donate with Paypal and Patreon.

 

Jul 262020
 


Elaine de Kooning Fairfield Porter #1 1954

 

 

It won’t come as a surprise to anyone that the first half of 2020 has brought, among many other things, renewed calls for the demise of the US dollar. It’s been pretty much a non-stop call for over a decade now, and longer. But this time, like all previous ones, I’m thinking: I don’t see it. I guess my first question is always: please explain why the dollar would collapse before the euro does.

For one thing, the dollar would have to collapse/default against one or more “entities”. The dollar is not like one of those highrises that collapse upon themselves. It will have to default or collapse against something(s) else. Since it is the world reserve currency, that means there would have to be a replacement reserve currency. Yes, that could also be for example gold or SDR’s, or even a basket of currencies, and something like that may happen eventually, but it doesn’t appear in the cards in the short run.

There are really only two candidates for the role, and neither looks at all fit to play it. The euro may have some ambitions in that direction, but it has far too many problems still. The yuan/renminbi certainly has such ambitions, but the Communist party refuses to let it get on stage to show what it’s got. As I recently wrote:

 

The main sticking point for Beijing is a conundrum it cannot solve. The CCP wants to have BOTH a global currency AND total control over that currency. It will have to choose between the two, and cannot make up its mind. So it pretends it doesn’t have to choose. Sure, there has been some advancement for the yuan, but I bet most of that is on the back of the Belt and Road (BRI), and that will turn out to be one of the main victims of the coronavirus. The BRI is China’s very clever way of exporting its overproduction, but potential buyers have other things on their mind today.


Meanwhile, even with that, the yuan is used in only 1.8% of cross-currency payments. [..] The sudden, and rushed, take-over of Hong Kong with the new security law will not help China’s plans to be accepted internationally. [..] The world’s large investors will not put their money into something that Xi Jinping can declare devalued by 50% on a rainy morning when he sees fit. He will have to cede that kind of control.

The euro has made some gains vs the USD recently, going from 1.07 to 1.16 or so, but that means very little once you look at the broader picture. Moreover, the reason the financial press provides for -much of- those gains, which is that the EU supposedly showed “unity” in its recent Recovery Fund talks, is bollocks.

If it showed one thing, it was a lack of unity. That’s why these were the longest talks they ever had. And if this had not been Angela Merkel’s last hurrah, they might not have agreed at all. They paid off the Frugal Four to the tune of hundreds of millions, and that’s how they got a deal. Horse traders.

A simple screenshot from Bloomberg of the USD vs EUR over the last five years makes clear why the recent changes are no big deal. (All BBG screenshots are from July 24 just before 10 AM EDT and all cover a 5 year period.)

 

 

A reserve currency has two roles: being the currency that most international trade is conducted in, and -closely related- being the currency that countries hold most as foreign exchange (FX) reserves. After WWII, the US dollar became the most important currency for trade more or less by default, a position that it greatly strengthened with the petrodollar.

A 2015 SWIFT paper provides details about the US dollar’s share of international trade:

The US dollar prevails as the dominant international trade currency, with a 51.9% share of the value of international currency usage in 2014. The euro is second, with a 30.5% share of the total value. The British pound is third, with a 5.4% share of the total value, followed by Asian currencies such as the Japanese yen and the Chinese yuan.

That’s from five years ago, but things won’t have changed much. The system is complex and inert, it has a very strong resistance against large and sudden changes. (Do note that the euro’s share of international trade is substantially skewed because it includes payments between countries that use the euro as their currency, plus those EU countries that don’t -yet-). Single market, international trade.

And then there’s the dollar’s FX role.

In September 2019, Eswar Prasad at Brookings reported that the dollar’s share of global FX reserves remains around 65%.

The drop from 66 percent in 2015 to 62 percent in 2018, is probably a statistical artifact related to changes in the reporting of reserves. Compared with 2007, however, the dollar’s share of global FX reserves has declined by 2 percentage points while the euro’s share is down 6 percentage points. Over this period, the Japanese yen’s share has risen by 2 percentage points, while other less prominent reserve currencies have increased their total share by 4 percentage points. The renminbi, which was not an official reserve currency in 2007, now accounts for 2 percent of global FX reserves. [..] .. the euro has stumbled, the renminbi has stalled, and dollar supremacy remains unchallenged.

[..] In July 2019, China’s total official reserve assets amounted to just over $3.2 trillion, of which $3.1 trillion (97 percent of the total) was held in the form of FX reserves. Gold holdings amounted to about $89 billion [..] Coming amid rising trade tensions with the U.S., the 5 percent increase in China’s gold stock and the 24 percent increase in the value of its official gold holdings during 2019 have been interpreted as a sign of China’s attempting to diversify its reserve holdings away from U.S. dollars.

If this interpretation was indeed correct, China has a long way to go. Gold now accounts for 3 percent of China’s gross international reserves. From a global financial market perspective, and especially relative to its overall international reserves, the $18 billion increase in the value of China’s gold reserves during 2019 is trivial; it barely registers as a shift in the composition of China’s overall reserves.

Assuming that China still holds 58 percent of its FX reserves in dollar-denominated assets, the value of those assets in July 2019 was $1.8 trillion. So, the value of its gold reserves, $94 billion, is a mere one twentieth of that of China’s dollar-denominated reserves.

With the euro and yuan out of the way as potential reserve currency candidates, we can take a look at gold. Senior commenter Dr.D at the Automatic Earth recently wrote: “As advertised, the US$ is defaulting. What? Where? US$ has been cut in half compared to Silver in 3 months. US$ has been cut in half compared to BTC in 3 months. US$ has been cut in half compared to Gold in 4 years.

Like many people talking about a USD demise, perhaps that’s too much of a dollar-centric view and conclusion. Surely gold and silver can rise vs the USD without announcing an imminent collapse of the latter. And since precious metals tend to go up in times of uncertainty, and COVID has brought shovels full of just that, you would expect them to rise.

Therefore you would have to also look at how they do vs for example the euro, before concluding anything. Note: I didn’t include Bitcoin because it’s too new and volatile. Makes me think of the Lindy Effect, often cited by Nassim Taleb, the idea that the older something is, the longer it’s likely to be around in the future.

Here are a few more Bloomberg screenshots. And yes, gold has done well vs the USD in, say, the past two years, no doubt.

 

 

But gold has pretty much followed the exact same pattern vs the euro:

 

 

Silver has done even better, more recently, vs the USD, though compared to where it was in 2016 it’s not that big a step (barely more than 10%):

 

 

And the pattern of silver vs the euro is so similar it’s almost eery.

 

 

I don’t see anything there that would make me think the dollar is collapsing, no more than the euro is. What I see is gold and silver rising. People move into precious metals, perceived as safe havens; they always do when the world is in turmoil. And don’t forget there are trillions in additional recent central bank money sloshing around that have to move somewhere.

As for the changes of the USD vs the euro: we’ve already seen that they are not exceptional. Losing a few percent vs the euro will not collapse the dollar.

Also, there’s something missing in the discussion as far as I’ve seen: the option that it’s the US itself that wants a lower dollar at this point in time, and actively works to get it lower. A strong dollar works for a strong economy, but not for one weakened by a pandemic and an acrimonious political climate.

But the US has borrowed so much money!, you say. Yes, but so have Europe, and Japan, and China, everyone has who could.

 

A little more about gold, since some are clamoring for a return to the gold standard. Which is not likely, because too many parties would resist, either for ideological or practical reasons. But say you would consider it, then you would as one of the first things you do, look at gold reserves. Here are the top ten gold holding countries per March 2020, as assembled by TradingEconomics.com:

 

 

Note: Britain is not there, because “Between 1999 and 2002 the Treasury sold 401 tonnes of gold – out of its 715-tonne holding – at an average price of $275 an ounce, generating about $3.5bn during the period.” (BBC). Gold is at $1,900 today. Nuff said.

The US gold reserves are so large it would appear to give them an unfair advantage if a gold standard were considered. Same as they have in the current set-up. Then again, if you insert population numbers into the equation, Germany, Italy, Switzerland, even the Netherlands, have more in relative terms. Question is: where does that leave all the others?

Long story short: I don’t see a US dollar default or collapse in the near future. But by all means enlighten me.

 

 

 

 

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

Thank you.

 

 

It’s very bad luck to draw the line
On the night before the world ends
We can draw the line some other time

X – Some other time

 

 

Support the Automatic Earth in virustime.

 

Feb 262019
 


Salvador Dali The Feeling of Becoming 1931

 

Bubble-Era Home Mortgages Are A Disaster Waiting To Happen (Jurow)
18 Reasons Why Australian Property Prices Will Fall Further (AFR)
Imports by China, Emerging Asia Plunge Most Since 2008 (WS)
Debt Roars Back in China, Deleveraging Is Dead (BBG)
With 10-to-1 Leverage, Shadow Banks Fuel China’s Huge Stock Boom (BBG)
Paul Volcker Is Worried About the ‘Culture of the Financial System’ (Fortune)
Rising Level Of Corporate Debt A Risk To Global Economy – OECD
Germany & Netherlands The Only Real Euro Winners (RT)
Jeremy Corbyn: We’ll Back A Second Referendum To Stop Tory No-Deal Brexit (G.)
UK and US Agree Post-Brexit Derivatives Trading Deal (G.)
Judge Threatens To ‘Shut Down’ Cancer Patient’s Lawyer in Monsanto Case (G.)
Concrete Is Tipping Us Into Climate Catastrophe. It’s Payback Time (Vidal)

 

 

“..almost one-third of these delinquent owners had not paid the mortgage for at least five years..”

Bubble-Era Home Mortgages Are A Disaster Waiting To Happen (Jurow)

Remember all those sub-prime mortgages that blew up in 2007 and popped the housing bubble? The widely-held consensus is that millions of them were foreclosed as housing markets cratered. [..] The truth is these mortgages are still dangerous and could soon undermine the housing recovery. Collectively, loans from the bubble period that were not guaranteed by Fannie Mae or Freddie Mac were called non-agency securitized mortgages. Researcher Black Box Logic had an enormous database of non-agency loans until it was sold to Moody’s three years ago. At the peak of the buying madness — November 2007 — its database showed 10.6 million loans outstanding with a total balance of $2.43 trillion.

In 2016, Fitch Ratings first published a spreadsheet showing what percentage of these loans had been delinquent for more than three-, four-, or five years. Here is an updated table showing the 10-worst states and how the number of deadbeat borrowers has soared.

In 2012, just 2% of all these delinquent borrowers had not paid for more than five years. Two years later that number had skyrocketed to 21%. Why? Mortgage servicers around the country had discontinued foreclosing on millions of delinquent properties. Homeowners got wind of this and realized they could probably stop making payments without any consequences whatsoever. So they did. Take a good look at the figures for 2016. Nationwide, almost one-third of these delinquent owners had not paid the mortgage for at least five years.

In the worst four states, more than half of them were long-term deadbeats. Notice also that four of the other states were those you would not expect to have this rampant delinquency — North Dakota, Massachusetts, Vermont, and Maryland. Another way to gauge the extent of the problem is to look at the major metros with the highest delinquency rate. Here is a table of the 10 metros with the worst delinquency rate in early 2016, taken from Black Box Logic’s database.

Within the last two years, important graphs and tables showing the extent of the delinquency mess have disappeared from reports issued regularly by Fannie Mae, mutual fund provider TCW, and data provider Black Knight Financial Services. According to a TCW spokesperson, the graph is no longer published in the firm’s Mortgage Market Monitor because there did not seem to be much demand for it. Really? This graph had appeared in their report for years and showed the extremely high percentage of modified non-agency loans where the borrower had re-defaulted. Meanwhile, the omitted Fannie Mae table also showed the rising percentage of modified Fannie Mae loans that had re-defaulted. Its last published table showed re-default rates of almost 40%. Do you think these important omissions are just coincidence?

Read more …

25% in 2019 alone?!

18 Reasons Why Australian Property Prices Will Fall Further (AFR)

The housing market has taken a turn for the worse moving deeper into the decline of a debt-financed asset bubble, possibly driving house prices to fall by as much as 25 per cent in 2019 on nominal terms, according to housing bear and analyst LF Economics. The group made up of Lindsay David and Philip Soos, who have authored books on boom and bust in housing markets, lists 18 factors that are putting extreme pressure on the Sydney and Melbourne markets. Their baseline prediction is a 15 per cent to 20 per cent fall in prices just in 2019 although 25 per cent is possible.

One of the main factors driving the pressure is $120 billion worth of interest-only loans that are transitioning to principal and interest loans between now and 2021. “Banks and regulators have already softened their stance on these borrowers, allowing some greater time to sell or extending the interest-only period ,” LF Economics said in a new report “Let The Bloodbath Begin”. “Nevertheless, with debt repayments rising anywhere between 20 [per cent] to 50 per cent upon conversion, many recent borrowers will be placed under considerable financial stress.”

Read more …

Question: how are the shadow banks linked to international trade?

Imports by China, Emerging Asia Plunge Most Since 2008 (WS)

Imports by China and other emerging Asian economies in December plunged to the lowest level in two years, in the steepest one-month plunge since 2008, after having already plunged in November, according to the Merchandise World Trade Monitor, released on Monday by CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs. For November and December combined, imports by China and other Emerging Asian Economies plunged 13%, the steepest two-month plunge since November and December 2008 (-18%). In point terms, it was the largest plunge in the data going back to 2000. “Emerging Asia” includes China, Hong Kong, India, South Korea, Indonesia, Malaysia, Taiwan, Thailand, the Philippines, Pakistan, and Singapore. But China is by far the largest economy in the group, and by far the largest importer in the group.

The fact that imports into Emerging Asia are plunging is a sign of suddenly and sharply weakening demand in China. This type of abrupt demand-downturn was clearly visible in the double-digit plunge in new-vehicle sales in China over the last four months of 2018, plunging demand in many other sectors in China, and record defaults by Chinese companies. When it comes to China, “plunge is no longer an exaggeration. So the US trade actions against China – the variously implemented, threatened, or delayed tariffs – was largely geared toward hitting exports by China to the US. But it was imports that plunged! Exports from Emerging Asia too dropped in November and December, but not nearly as brutally as imports, down by 6.7% over the two months combined. And these drops were not all that unusual in the export index:

Read more …

Xi has lost control. There are reports about him being replaced, but that would be way into the future, if it happens.

Debt Roars Back in China, Deleveraging Is Dead (BBG)

For almost two years, the question has lingered over China’s market-roiling crackdown on financial leverage: How much pain can the country’s policy makers stomach? Evidence is mounting that their limit has been reached. From bank loans to trust-product issuance to margin-trading accounts at stock brokerages, leverage in China is rising nearly everywhere you look. While seasonal effects explain some of the gains, analysts say the trend has staying power as authorities shift their focus from containing the nation’s $34 trillion debt pile to shoring up the weakest economic expansion since 2009.

The government’s evolving stance was underscored by President Xi Jinping’s call for stable growth late last week, while on Monday the banking regulator said the deleveraging push had reached its target. “Deleveraging is dead,” said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis in Hong Kong. Investors reacted positively to the official remarks, with the more than 30 brokerages listed in Shanghai and Shenzhen up by the 10 percent daily limit on Monday, according to data compiled by Bloomberg. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by assets, rose 6.3 percent.

[..] China’s overall leverage ratio stood at 243.7 percent at the end of 2018, with corporate debt reaching 154 percent, household borrowings at 53 percent and government leverage at 37 percent, according to Zhang Xiaojing, deputy head of the Institute of Economics at the Chinese Academy of Social Sciences. Before that, the nation’s leverage ratio climbed at an average 12 percentage points each year between 2008 and 2016. China’s total debt will rise relative to GDPthis year, after a flat 2017 and a decline in 2018, Wang Tao, head of China economic research at UBS in Hong Kong, predicted in a report this month. While Wang cautioned that “re-leveraging” may increase concerns about China’s commitment to ensuring financial stability, investors have so far cheered the prospect of easier credit conditions.

Read more …

The shadows reign supreme in China.

“..a rally that added more than $1 trillion to stock values since the start of 2019.”

With 10-to-1 Leverage, Shadow Banks Fuel China’s Huge Stock Boom (BBG)

Eager to pile into the world’s most-volatile major stock market with 10-to-1 leverage? China’s shadow bankers are happy to help – and that has the nation’s policy makers worried. Just hours after China’s CSI 300 Index notched a 6 percent surge on Monday, its biggest gain in more than three years, the country’s securities regulator warned of a rise in unregulated margin debt and asked brokerages to increase monitoring for abnormal trades. The China Securities Regulatory Commission’s statement followed a pickup in advertising by margin-finance platforms, which operate with little to no supervision and offer far more leverage than the country’s regulated securities firms.

While margin debt in China is much lower today than when it helped precipitate a market collapse in 2015, investors are taking on leverage quickly as they chase a rally that added more than $1 trillion to stock values since the start of 2019. The risk is that a sudden reversal would force leveraged traders to sell, exacerbating volatility in a market that posted bigger swings than any of its peers over the past 30 days. That prospect may unnerve Chinese policy makers, who have a history of trying to protect the nation’s 147 million individual investors from outsized losses. “If the market continues to go up, the situation will get worse and so will the risks,” said Yang Hai, an analyst at Kaiyuan Securities Co. in Shanghai. “Under the current regulatory scope, investors have to shoulder risks themselves.”

Read more …

Finally someone talks to Volcker and he doesn’t say anything.

Paul Volcker Is Worried About the ‘Culture of the Financial System’ (Fortune)

Former Federal Reserve chairman Paul Volcker has some serious fears about the banking industry. And he believes supporting regulators to combat those fears is imperative. Speaking to analyst Mike Mayo in a CFA Enterprising Investor interview published on Monday, Volcker said that he’s “concerned” about the current “culture of the financial system, banking in particular.” He told Mayo that banks have been dominated by “how much profit the firm (and you) make.” And he believes that the focus on profitability could ultimately affect corporate oversight. “What’s the role of directors in keeping culture under control?” he asked. “Can the directors of a big bank really do an effective job of overseeing an institution? Or do they see their job as protecting the CEO who they appointed?

Or maybe the CEO appointed them, so there is a certain amount of built in mutual interest in ducking emphasis on internal controls.” Volcker, who served as Fed chairman during the Carter and Reagan administrations, has been one of the more vocal supporters of controlling and regulating banks. He’s the namesake for the Volcker Rule, which aims at limiting banking activity and bank interaction with hedge funds and private equity funds. It also puts the onus on banks to protect customers. In his interview with Mayo, Volcker talked about the importance of banks protecting their customers. He said that a right and good banking culture is one where “the customer comes first.” The issue, however, is that banks sometimes fail in doing that, Volcker said.

Read more …

No kidding.

Rising Level Of Corporate Debt A Risk To Global Economy – OECD

The global economy faces escalating risks from rising levels of corporate debt, with companies around the world needing to repay or refinance as much as $4tn (£3.1tn) over the next three years, according to the OECD. Sounding the alarm over the scale of the debt mountain built up over the past decade since the last financial crisis, the Paris-based Organisation for Economic Co-operation and Development found that global company borrowing has ballooned to reach $13tn by the end of last year – more than double the level before the 2008 crash. Nearly the equivalent of the entire US Federal Reserve balance sheet – roughly $4tn – will need to be repaid or refinanced over the coming years, the report said. However, the task is complicated by cooling economic growth from trade tensions and a slower rate of expansion in China ..

Financial market investors have grown increasingly concerned that high debt levels in the US could turn a looming slowdown for the world’s largest economy into a full-blown recession. High debt levels in several other nations as the Federal Reserve raises interest rates has also rattled financial markets in recent months. According to research from the Economist Intelligence Unit, a potential meltdown in the US bond market is the second biggest risk to the world economy after the US-China trade standoff, amid a combination of global economic headwinds “more wide-ranging and complex than at any point since the great recession”. The IMF has previously warned of gathering “storm clouds” for the world economy, including from trade tensions and heightened levels of debt – particularly in China.

Read more …

.. since 1999, Germans on average cumulatively richer by $26,120. Italians poorer by $84,000.

Germany & Netherlands The Only Real Euro Winners (RT)

The eurozone’s single currency, the euro, has been a serious drag on the economic growth of almost every member of the bloc, according to a study by German think tank, the Centre for European Politics (CEP).
Germany and the Netherlands, however, have benefited enormously from the euro over the 20 years since its launch, the study showed. The currency triggered credit and investment booms by extending the benefits of Germany’s low interest-rate environment across the bloc’s periphery. However, those debts became hard to sustain after the 2008 financial crisis, with Greece, Ireland, Spain, Portugal and Cyprus forced to seek financial aid as growth slowed and financing became scarce.

According to CEP, over the entire period since 1999, Germans were on average estimated to be cumulatively richer by €23,000 ($26,120) than they would otherwise have been, while the Dutch were €21,000 ($23,850) wealthier. To compare, Italians and French were each €74,000 ($84,000) and €56,000 ($63,600) poorer, respectively. The survey did not include one of Europe’s fastest-growing economies, Ireland, due to a lack of appropriate data. [..] In the first few years after its introduction, Greece gained hugely from the euro but since 2011 has suffered enormous losses,” the authors wrote, explaining that over the whole period, Greeks were each €190 ($216) richer than they would have been.

The study concluded that since the loser countries could no longer restore their competitiveness by devaluing their currencies, they had to double down on structural reforms. Spain was highlighted as a country that was on track to erase the growth deficit it had built up since the euro’s introduction. “Since 2011, euro accession has resulted in a reduction in prosperity. Losses reached their peak in 2014. Since then, they have been falling steadily,” said the report, adding: “The reforms that have been carried out, are paying off.”

Read more …

Corbyn should have been much more concerned about his credibility. This late in the game, does it even matter anymore?

Jeremy Corbyn: We’ll Back A Second Referendum To Stop Tory No-Deal Brexit (G.)

Jeremy Corbyn has finally thrown his party’s weight behind a second EU referendum, backing moves for a fresh poll with remain on the ballot paper if Labour should fail to get its own version of a Brexit deal passed this week. The decision to give the party’s backing to a second referendum follows a concerted push by the shadow Brexit secretary, Sir Keir Starmer, and deputy leader, Tom Watson, who fear any further delay could have led to more defections to the breakaway Independent Group (TIG), whose members all back a second referendum. Although the move has delighted MPs who are backing the People’s Vote campaign, Corbyn is likely to face determined opposition from dozens of MPs in leave seats if the party whips to back a second referendum, including a significant number of frontbenchers.

The former shadow minister Lucy Powell said she believed at least 25 MPs would vote against any whip to back a second referendum, meaning that it would face an uphill struggle to pass the Commons without significant Conservative support. A private briefing sent to Labour MPs on Monday night and seen by the Guardian makes it clear that Labour’s policy would be to include remain as an option in any future referendum. “We’ve always said that any referendum would need to have a credible leave option and remain,” the briefing said. “Obviously at this stage that is yet to be decided and would have to be agreed by parliament.”

The briefing also makes it clear that the party would not support no deal being included on the ballot paper. “There’s no majority for a no-deal outcome and Labour would not countenance supporting no deal as an option,” the briefing says. “What we are calling for is a referendum to confirm a Brexit deal, not to proceed to no deal.”

https://twitter.com/i/status/1100294356706168832

Read more …

No matter how big the political mess,

UK and US Agree Post-Brexit Derivatives Trading Deal (G.)

The US has lent its backing to Britain to protect the City from losing trillions of pounds of complex financial derivatives business after Brexit, warding off a potential banking industry land grab by the EU. In a joint announcement heralded as a sign of the special relationship between the UK and the US, the two countries said they would take every step to ensure the continued trading of derivatives across the Atlantic under every Brexit eventuality. Derivatives are financial contracts widely used by companies to manage risks, ranging from hedging against changes in central bank interest rates to fluctuations in commodity prices. Brexit threatens to unpick trading in the UK, even with the US, as City banks currently operate under EU rules while Britain is a member of the bloc.

Under the steps announced by the Bank of England, the Financial Conduct Authority and the US Commodity Futures Trading Commission, firms working in the US and the UK will continue to meet the requirements required to operate in both countries, even if Britain leaves the EU without a deal. London and New York sit at the centre of the world’s multitrillion-pound derivatives market, with the US and the UK controlling 80% of the $594tn (£454tn) a year business – worth more than five times world GDP. About a third of the £230tn of derivatives contracts traded in the UK every year come from US companies, more than any other jurisdiction. The development comes as Brussels prepares rules that would force clearing houses – financial institutions key to the trading of derivatives – outside the EU to come under the supervision of its regulators.

Read more …

This is getting awfully close to class justice. Monsanto has hundreds of the top lawyers, and what do the plaintiffs have?

Judge Threatens To ‘Shut Down’ Cancer Patient’s Lawyer in Monsanto Case (G.)

Monsanto is facing its first federal trial over allegations that its Roundup weedkiller causes cancer, but a US judge has blocked attorneys from discussing the corporation’s alleged manipulation of science. In an extraordinary move in a packed San Francisco courtroom on Monday, US judge Vince Chhabria threatened to sanction and “shut down” a cancer patient’s attorney for violating his ban on talking about Monsanto’s influence on government regulators and cancer research. “You’ve completely disregarded the limitations that were set upon you,” the visibly angry judge said to attorney Aimee Wagstaff, threatening to prevent her from continuing. “If you cross the line one more time … your opening statement will be over … If I see a single inappropriate thing on those slides, I’m shutting you down.”

The unusual conflict in the federal courtroom has fueled concerns among Monsanto’s critics that the trial may be unfairly stacked against the plaintiff, Edwin Hardeman, a 70-year-old Santa Rosa man who alleges that his exposure to Roundup over several decades caused his cancer. Building on longstanding allegations, Hardeman’s lawyers and other critics have argued that Monsanto has for years suppressed negative studies and worked to promote and “ghostwrite” favorable studies about its herbicide to influence the public and regulators.

In a blow to the plaintiffs, Chhabria this year approved Monsanto’s request to prohibit Hardeman’s attorneys from raising allegations about the corporation’s conduct, saying issues about its influence on science and government were a “significant … distraction”. That means jurors must narrowly consider the studies surrounding Roundup’s cancer risks, and if they rule that Monsanto caused Hardeman’s illness, then in a second phase the jury would learn about the company’s conduct when assessing liability and punitive damages.

[..] Wagstaff told the Guardian last week before trial began that the limitations on evidence in the first phase meant the “jury will only hear half of the story”. “The jury will hear about the science, but they won’t get to hear about how Monsanto influenced it,” she said. “The jury won’t have a complete understanding of the science. If we win without the jury knowing the complete science, that’s a real problem for Monsanto.” Chhabria repeatedly interrupted Wagstaff’s opening statement Monday morning, reminding jurors that her comments did not constitute evidence and should be taken with a “grain of salt”. He also asked her to speed up when she was introducing Hardeman and his wife and discussing how they first met in 1975.

Wagstaff spoke in detail about the research on cancer and glyphosate, about some of Monsanto’s involvement in studies, and about the company’s communications with the Environmental Protection Agency. [..] The restrictions on testimony about Monsanto’s conduct and alleged manipulation of science is likely to be a major detriment to Hardeman and future plaintiffs, said Jean M Eggen, professor emerita at Widener University Delaware Law School. “It was a brilliant move on the part of the defendant Bayer to try to keep [out] all of that information,” she said. “And it may pay off for them.”

Read more …

We paved paradise. Which is a much wider and bigger issue than just a climate one.

Concrete Is Tipping Us Into Climate Catastrophe. It’s Payback Time (Vidal)

Because of the heat needed to decompose rock and the natural chemical processes involved in making cement, every tonne made releases one tonne of C02, the main greenhouse warming gas. Including the new Crossrail line through London, the building of Britain’s four largest current construction projects will, if completed, together emit more than 10m tonnes of CO2 – roughly the same amount as a city the size of Birmingham, or what 19 million Malawians emit in a year. Nearly 6% of all UK greenhouse gas emissions, and up to 8% of the world’s, are now sourced from cement production. If it were a country, the cement industry would be the third largest in the world, its emissions behind only China and the US.

So great is its carbon footprint that unless it is transformed and made to adopt cleaner practices, the industry could, on its own, jeopardise the whole 2015 Paris agreement which aims to hold worldwide temperatures to a 2C increase. To bring it into line, the UN says its annual emissions need to fall about 16% in the next 10 years, and by far more in the future. While some of the biggest cement companies have reduced the carbon intensity of their products by investing in more fuel-efficient kilns, most improvements gained have been overshadowed by the massive increase in global cement and concrete production. Population increases, the urban explosion in Asia and Africa, the need to build dams, roads and houses, as well as increases in personal wealth have stoked demand.

Read more …

Jan 072019
 


Berthe Morisot Julie and her boat 1884

 

China Has a Dangerous Dollar Debt Addiction (Balding)
China Drops Hints Of Trade Pain Ahead (BV)
US and China To Resume Trade Talks With Both Eager For Compromise (G.)
May To Hold Parliamentary Brexit Vote On January 15 (R.)
Theresa May Pleads For EU To Give Ground And Rescue Brexit Deal (G.)
Germany and Ireland Step Up Efforts To Find Brexit Border ‘Fix’ (G.)
Average UK Unsecured Household Debt Hits Record £15,400 (G.)
UK Car Sales Record Biggest Fall Since Financial Crisis (R.)
France’s Macron Reeling As Tough Stance Against ‘Yellow Vests’ Backfires (R.)
The Euro: A Mindless Idea – Ashoka Mody (Spiked)

 

 

$1.2 trillion will have to be rolled over this year. There are $90 billion of offshore renminbi deposits in Hong Kong available to buy dollars. Good luck.

China Has a Dangerous Dollar Debt Addiction (Balding)

China’s foreign debt has been rising rapidly, and that’s becoming an increasingly big problem — for the country and, potentially, the world. Officially, China lists its outstanding external debt at $1.9 trillion. For a $13 trillion economy, that’s not a major amount. But focusing on the headline number significantly understates the underlying risks. Short-term debt accounted for 62% of the total as of September, according to official data, meaning that $1.2 trillion will have to be rolled over this year. Just as worrying is the speed of increase: Total external debt has increased 14% in the past year and 35% since the beginning of 2017. External debt is no longer a trivial slice of China’s foreign-exchange reserves, which stood at just over $3 trillion at the end of November, little changed from two years earlier. Short-term foreign debt increased to 39% of reserves in September, from 26% in March 2016.

The true picture may be more precarious. China’s external debt was estimated at between $3 trillion and $3.5 trillion by Daiwa Capital Markets in an August report. In other words, total foreign liabilities could be understated by as much as $1.5 trillion after accounting for borrowing in financial centers such as Hong Kong, New York and the Caribbean islands that isn’t included in the official tally. Circumstances aren’t moving in China’s favor. The nation’s companies rushed to borrow in dollars when there was a 3% to 5% spread between Chinese and U.S. interest rates and the yuan was expected to strengthen. Borrowing offshore was cheaper and offered the additional bonus of likely currency gains. Now, the spread in official short-term yields has shrunk to near zero and the yuan has been depreciating for most of the past year. Refinancing debt in dollars has become harder, and more risky.

Beijing’s policies have exacerbated the buildup of foreign debt. To promote Xi Jinping’s Belt and Road Initiative, the president’s landmark foreign policy endeavor, China has been borrowing dollars on international markets and lending around the world for everything from Kenyan railways to Pakistani business parks. With this year and 2020 being the peak years for repayments, China faces dollar funding pressure. To repay their dollar debts, Chinese firms will either have to draw from the central bank’s foreign-exchange reserves (a prospect Beijing is unlikely to allow) or buy dollars on international markets. This creates a new set of problems. There are only 617 billion yuan ($90 billion) of offshore renminbi deposits in Hong Kong available to buy dollars. If China was to push firms to bring debt back onshore, this would necessitate significant outflows that would push down the yuan’s value against the dollar.

Read more …

More trickle down fails.

China Drops Hints Of Trade Pain Ahead (BV)

While a cut in the reserve requirement ratio, China’s fifth in a year, was not surprising, the 100-basis point shift that started off 2019 was larger than anticipated. Of course, demand for cash tends to spike around this time of year, due to both the Chinese New Year holiday and tax deadlines, but the economy is cooling uncomfortably fast. Official figures may show growth slowed to 6.3% in the fourth quarter, Standard Chartered reckons. Friday’s announcement adds to other easing measures: People’s Bank of China officials last month announced a new policy tool to encourage lenders to disburse their cash more widely. The “targeted medium-term lending facility” will make cheaper funding available to banks that the PBOC judges to be doing their part by lending more to small companies.

It’s certainly not full-blown monetary stimulus yet; the central bank has not fired its heavier artillery, such as a benchmark rate cut. The market has also been kept waiting for reductions to cost of borrowing from the PBOC’s more important channel, its regular medium-term lending facility. But the overall direction of travel is clear, and both recent moves point to structural issues that worry pessimists: the extra liquidity pumped into the system does not seem to be translating into more loans for smaller companies, which may signal deeper problems with capital allocation, not to mention the private sector’s nervousness about politics in 2019.

All of this is bad news for Beijing’s trade negotiators, when they hold talks with U.S. counterparts face-to-face this week. As the pain mounts, they may be pushed to yield more in order to gain relief. They could, for example, agree to formally drop the controversial “Made in China 2025” plan, or to announce concrete measures to beef up enforcement of intellectual property rights. Trump said on Sunday that weakness in China’s economy will push officials to negotiate. He may be right.

Read more …

Tariffs rose Jan 1. It’s getting urgent.

US and China To Resume Trade Talks With Both Eager For Compromise (G.)

US officials arrived in China for the first face-to-face negotiations since a 90-day truce was declared in a trade war between Washington and Beijing, in the hope of ending a bruising confrontation between the world’s two largest economies. Hopes that the sixth round of negotiations between the two sides could yield a breakthrough helped Asian shares rise on Monday, combined with optimism about the state of the global economy on the back of strong US jobs figures on Friday. In Tokyo, the Nikkei soared more than 3% and there were also strong positive moves in Shanghai, Hong Kong and Sydney. US and Chinese trade representatives were set to hold talks on Monday and Tuesday.

After failing to reach an agreement in December when Donald Trump and Xi Jinping met, both sides agreed to suspend tariff increases while holding discussions on technology transfers, as well as intellectual property theft and cybersecurity. If no agreement is reached, US tariffs on $200bn of Chinese goods will increase in March to 25% from the current 10%. Trump said on Sunday that China was under pressure to do a deal amid signs of a slowdown in its economy. “I think China wants to get it resolved. Their economy’s not doing well. I think that gives them a great incentive to negotiate,” he said. “China’s slowdown is occurring across the board, affecting almost every industry and region,” said Scott Kennedy, a trade expert focused on China at the Center for Strategic and International Studies. “Resolving the trade war or at least finding some common ground with Washington will be needed to fully restore confidence,” he said.

Read more …

Whatever the outcome, chaos guaranteed. You can jot down next Tuesday night in your agenda for that.

May To Hold Parliamentary Brexit Vote On January 15 (R.)

Prime Minister Theresa May will hold a delayed parliamentary vote on her Brexit deal on Tuesday, January 15, the BBC reported on Monday, citing government sources. May was forced to pull the vote on her deal in December after she said it would be defeated by a large majority. The government had previously said the vote would be held in the week of January 14. May said on Sunday that Britain would be in uncharted territory if her Brexit deal is rejected by parliament, despite little sign that she has won over sceptical lawmakers.

Read more …

In case you were still wondering who will be blamed.

Theresa May Pleads For EU To Give Ground And Rescue Brexit Deal (G.)

Theresa May is preparing to make another desperate plea to EU leaders to offer a concession on the Irish backstop as she attempts to win over Brexiters who have vowed to vote down the government’s deal. The prime minister on Sunday promised to hold the meaningful vote in parliament in the week beginning 14 January despite growing opposition from Conservative backbenchers and the Democratic Unionist party, whose votes are required to push the deal through parliament. As MPs prepare to return to Westminster with the crucial Commons vote looming on the withdrawal agreement, Downing Street insisted that new compromises could still be won from Europe that would ensure the safe passage of May’s plan.

The hope of new developments came as opposition to the prime minister’s deal hardened. The hurdles facing May include: • Brexiters say the government faces a disaster if it fails to ditch the current deal, with DUP deputy leader Nigel Dodds describing the Irish backstop as “toxic”. • EU sources say talks to be held in Dublin on Tuesday between Leo Varadkar and Germany’s foreign minister, Heiko Maas, will not seek to reopen negotiations over the 585-page withdrawal agreement. • Senior MPs including Yvette Cooper and Nicky Morgan are launching a parliamentary campaign to rewrite government legislation to block a no-deal Brexit. • Chris Patten, the former Conservative Party chairman, called for a second referendum on the UK’s decision to leave the EU. • More than 200 MPs have signed a letter calling for Theresa May to rule out a no-deal Brexit. Tory ex-minister Dame Caroline Spelman, who organised the letter with Labour’s Jack Dromey, said the group had been invited to see the prime minister on Tuesday.

In an interview on Sunday, May said the vote, which was due to be held last month and postponed, would go ahead next week, as she sought further clarification from the EU to address MPs’ concerns. She also said she would look at giving parliament a greater say in how the UK’s future relationship would be negotiated, but refused to say exactly what that might be. Asked if there had been any changes she could offer to backbenchers who were expected to vote down her deal, she told BBC1’s Andrew Marr Show: “What we will be setting out over the next few days are assurances in three areas: first are measures specific to Northern Ireland; the second is a greater role for parliament as we take these negotiations forward into the next stage for our future relationship; and third – and we are still working on this – is further assurances from the European Union to address the issues that have been raised.”

Whitehall sources insisted that a compromise could still be found with the EU and that further planned announcements will be made this week that would win over MPs opposed to the deal. “We will be working flat out. There will be further contacts with the EU leaders. The issue of the backstop is not yet over,” the source said.

Read more …

“The EU cannot now give another concession ahead of the vote because if the deal isn’t ratified, it means any new concessions will simply be banked again to no benefit at all. It would be pointless.”

Germany and Ireland Step Up Efforts To Find Brexit Border ‘Fix’ (G.)

Germany’s foreign affairs minister is to fly to Dublin on Tuesday for Brexit talks as relations with Ireland intensify in an attempt to find a “fix” that will help Theresa May get the EU withdrawal agreement ratified. Heiko Maas will address an annual gathering of Ireland’s global diplomatic corps and take part in an unofficial fourth round of talks between Ireland and German leaders since Thursday. He will make the address in English, with a large German media contingent accredited, a reflection of how significant his speech is deemed back in Berlin. Last week the taoiseach, Leo Varadkar, had a lengthy telephone call with Angela Merkel. He then flew to Munich to address a meeting of her coalition partners, the CSU, and on Friday met the Germany chancellor’s successor as CDU leader, Annegret Kramp-Karrenbauer, for discussions on Brexit and the future of Europe.

The emerging Irish-German nexus on the Irish border backstop “fix” is being seen as significant in Irish political circles, where people also point to the fact that Varadkar speaks German and has a good working relationship with Merkel. They point out it was Merkel, not the taoiseach, who requested the phone call with Varadkar last Thursday. The talks lasted 40 minutes and were, according to Varadkar, “an opportunity to kind of brainstorm a bit as to what we could do to assist prime minister Theresa May in securing ratification of the withdrawal agreement”. But informed EU sources say Brexiters should not raise their hopes of a reopening of negotiations. The “fix” will be further details in the political declaration on the future relationship and not the 585-page withdrawal agreement. “That is locked,” said one EU source.

There is deep frustration that the British cannot see how far the EU went to break the impasse on the Irish border talks, yielding to May’s demands for a UK-wide customs arrangement. One EU source said: “The EU was totally opposed to this in 2017 and again in March and June in 2018. It then emerged out of the tunnel in the autumn as the solution, but the Brexiters did not see it for what it was – a major concession. [..] “They are now looking for more concessions, but they just can’t be given. The Brits banked this major concession and just did nothing with it. People can’t understand why it wasn’t sold as a victory for May. “The EU cannot now give another concession ahead of the vote because if the deal isn’t ratified, it means any new concessions will simply be banked again to no benefit at all. It would be pointless.”

Read more …

That’s about $20,000. Not including mortgages and student loans.

Average UK Unsecured Household Debt Hits Record £15,400 (G.)

Britain’s household debt mountain has reached a new peak, with UK homes now owing an average of £15,385 to credit card firms, banks and other lenders, according to the TUC. The trade union body said household debt rose sharply in 2018 as years of austerity and wage stagnation forced households to increase their borrowing. The TUC said in its annual report on the nation’s finances that the amounts owed by British households rose to a combined £428bn in the third quarter of 2018. Each household owed £886 more than it did 12 months previously, it said. The figures do not include outstanding mortgage debts but do include student loans.

The level of unsecured debt as a share of household income is now 30.4%, the highest level it has ever been at. It is well above the £286bn peak in 2008 before the financial crisis, the TUC said. That figure also included student loans, but tuition fees then were £3,000 a year compared with up to £9,250 now. [..] The TUC general secretary, Frances O’Grady, said: “Household debt is at crisis level. Years of austerity and wage stagnation has pushed millions of families deep into the red. The government is skating on thin ice by relying on household debt to drive growth. A strong economy needs people spending wages, not credit cards and loans.”

Read more …

They’re going to stay home?!

UK Car Sales Record Biggest Fall Since Financial Crisis (R.)

British new car sales in 2018 fell at their fastest rate since the global financial crisis a decade ago, hit by a slump in demand for diesel, stricter emissions rules and waning consumer confidence due to Brexit, according to an industry body. Demand dropped by nearly 7% last year to 2.37 million vehicles, the largest fall since registrations nosedived 11.3% in 2008, preliminary data from the Society of Motor Manufacturers and Traders (SMMT) showed. A nearly 30% drop in demand for diesel was the most significant factor in the decline. Diesel has been pummelled since the Volkswagen emissions cheating scandal of 2015, prompting a crackdown and higher levies.

But the industry also warned that Britain’s departure from the European Union due at the end of March risks the future of a sector which employs over 850,000 people and has been one of Britain’s few manufacturing success stories since the 1980s. “It’s still hard to see any upside to Brexit,” said SMMT Chief Executive Mike Hawes. “Everyone recognises that Brexit is an existential threat to the UK automotive industry and we hope a practical solution will prevail,” he said, calling for lawmakers to back Prime Minister Theresa May’s deal to guarantee a transition period. [..] After record highs in 2015 and 2016, demand fell in 2017 and some analysts see car demand as a leading indicator which could be a harbinger for future economic performance. Britain’s economy slowed to a crawl at the end of 2018, the housing market is stalling and lending to consumers growing at its slowest pace in nearly four years, according to data released on Friday.

Read more …

Macron is not just a fool himself, he’s surrounded by them as well. His spokesman after fleeing his office out of a back door as protesters invaded the courtyard and smashed up several cars said: “It wasn’t me who was attacked.” “It was the Republic.”.

Because the government is the Republic. The population is not.

France’s Macron Reeling As Tough Stance Against ‘Yellow Vests’ Backfires (R.)

Emmanuel Macron intended to start the new year on the offensive against the ‘yellow vest’ protesters. Instead, the French president is reeling from more violent street demonstrations. What began as a grassroots rebellion against diesel taxes and the high cost of living has morphed into something more perilous for Macron – an assault on his presidency and French institutions. The anti-government protesters on Saturday used a forklift truck to force their way into a government ministry compound, torched cars near the Champs Elysees and in one violent skirmish on a bridge over the Seine punched and kicked riot police officers to the ground.

The French authorities’ struggle to maintain order during the weekend protests raises questions not just over policing tactics but also over how Macron responds, as he prepares to bring in stricter rules for unemployment benefits and cut thousands of public sector jobs. On Sunday evening, Macron wrote on Twitter: “Once again, the Republic was attacked with extreme violence – its guardians, its representatives, its symbols.” His administration had hardened its stance against the yellow vests after the protest movement appeared to have lost momentum over the Christmas holidays.

The government would not relent in its pursuit of reforms to reshape the economy, government spokesman Benjamin Griveaux said on Friday, branding the remaining protesters agitators seeking to overthrow the government. Twenty-four hours later, he was fleeing his office out of a back door as protesters invaded the courtyard and smashed up several cars. “It wasn’t me who was attacked,” he later said. “It was the Republic.”

Read more …

“There is a Euro, which is a single currency in an incomplete monetary union, with a set of fiscal rules that are evidently economically illiterate..”

The Euro: A Mindless Idea – Ashoka Mody (Spiked)

[..] most serious of all is the notion of common economic development as a basis for Europe. It was briefly true after the Treaty of Rome in 1957, which opened up the borders, but the momentum ran out within two decades. You open borders, but once they’re open, there’s not a lot more you can do. Even the gains from the so-called Single Market are very limited beyond a certain point. Every economist understands that. On the Euro, there was never any question that it was a bad idea. Nicholas Kaldor, an economist at Cambridge University, wrote in March 1971 that a single currency was a terrible idea, both as economics and as politics. And Kaldor has been proven right time and again.

But the entire European establishment just ignores every subsequent warning from well-regarded economists, and produces defensive counternarratives. For example, I often hear that Europe needs fixed exchange rates in order to have a Single Market. Why? Germany is trading a lot with Poland, Hungary and the Czech Republic, which are in the Single Market, but have different currencies. These fluctuate, but the trade continues apace. You don’t need a single currency for a Single Market.

spiked: When did your critique of the European project emerge? Was it during your involvement in the Irish bailout? Mody: When I finished at the IMF I planned to write a book on the Euro crisis. And I began writing it as an IMF economist would – what happened before the crash, the bubble, the bubble bursting, the panic, the fact it wasn’t well managed, and so on. But I soon realised that something wasn’t right here. And so I spent two years tracing the history of the Euro, and asking the question: what brought the Euro into existence in its current form? You see, it is not just that there is a Euro. There is a Euro, which is a single currency in an incomplete monetary union, with a set of fiscal rules that are evidently economically illiterate – and nobody questions the fact that they are economically illiterate, that they lack a necessary fiscal backstop and the necessary fiscal union. So why does it exist?

Read more …

Dec 182018
 


Titian The rape of Europe 1560-62

 

It took me a while to decide which word(s) best define the past year and the next one, but I think this is pretty much it. 2018 was chaotic more than anything else, and that chaos will give rise to mayhem in 2019.

What I think is striking is that this is true across the board, in all walks of life so to speak. In finance, in politics, in energy markets, in ecological matters, and perhaps most of all in the ways all these topics are being covered by what once were trusted media.

I’m going to have to come back to all these topics separately, so it’s promising to be a very busy holiday season, but it’s also good to try and put them together in one place, if only to show how interconnected everything is. And how futile it is to look at the economy without seeing its connection to energy flows and ecosystems. And vice versa.

 

In finance and economics, we’ve seen an avalanche of falling numbers recently, in stock prices, bond prices, housing, across the globe, and obviously that evokes a lot of comments in the financial press. But that press, and bankers investors on their own, still talk about markets.

However, as I wrote in April 2018, if there is no price discovery, and there isn’t, there ARE NO markets, and it would be good and beneficial if many more people absorb that simple reality. Many more so-called traders and investors would be a start, but by no means enough. Lots more people who have nothing to do with the ‘markets’ should understand why there is no such thing anymore.

As long as you limit it to stock and bond markets, it may appear fine that people don’t understand. But as soon as you acknowledge there are no housing markets either for the exact same reasons, the story changes considerably. Because then it becomes clear that all -former- markets, bar none, have been eviscerated by central bank policies that sought to prop up banks, often highly successfully so, which they knew could only happen at the expense of communities and societies.

We’ve ended up with scores of mom and pop ‘investors’ who own hugely overpriced stocks and homes, while their pensions funds hold zillions ‘worth’ of bonds and also increasingly stocks. The link between pensions and AAA-rate assets was pulverized in the process. That looks set to continue, and worsen, in 2019. But that may be just the look of things. Because there really are no markets, there is no price discovery.

What is still there is a lot of talk about whether the Fed -and other central banks- will raise rates further or not, or will stop or continue their asset buying schemes. Central banks are the only game in town, there are no markets, nobody knows what anything is really worth because the Fed etc. took the discovery process beyond their reach.

And now all those financial ‘subjects’ are sitting on all this stuff that only appears to have value, and that value hinges exclusively on what Draghi, Kuroda, Yellen and now Jay Powell have decided things are worth. And yes, it does make matters appear okay, but because they can’t do QE forever, all of those values will need to be re-assessed by actual markets once Powell et al. are either thrown out or decide for themselves to leave the arena.

It won’t be pretty, it will be devastating. It’s impossible to say if it will come to a head in 2019, because the Fed can lower rates a bit again after its recent rate hikes and prop up the zombie for longer. Then again Draghi can’t do that anymore since he’s already in negative rate territory, and while the euro could fall to parity with the USD as a consequence, there’s a limit to that too.

Anyway, more on that later.

 

Energy and ecology seem to become more intertwined as we go along, though that may well be a trompe oeil, trick of the eye. Still, if you see and read what people have to say about things like the big COP24 event in Katowice last week, it’s obvious that the 2nd law of Thermodynamics is a hard one to internalize. Because that law seems to say that the use of energy, period, produces waste, while all these mostly well-meaning folk are merely focusing on shifting between energy sources.

There is surprisingly little attention for not using energy in the first place, which the 2nd Law appears to stipulate is the only way to stop the rot. And it’s entirely feasible to build homes that use 70-80% less power to heat and cool, or to design a transport system in a city that saves that much energy.

But the ‘leaders’, politicians and business people, prefer to address solar panels and wind turbines that allow for the amount of energy used to fall only moderately, which when combined with the economic growth that nobody questions, will lead to the use of ever more energy.

And I get that, you need to shrink your present economies, and the models they’re based on, in order to save the planet. I’m not so much talking about climate change, since the earth is a system so complex we should really be very cautious about deriving any conclusions about it from simplified models, but the species extinction reported in 2018 is another, and more immediately convincing, story.

Still, conferences like COP24, or its predecessor COP21 which I wrote about 3 years ago in CON21, are not just entirely useless, they move everything backward that all the worried boys and girls are so worried about.

The movers and shakers of the world all owe their positions to the economies, and therefore the levels of energy use, that the worried people now want to move away from. And then they turn to the same movers and shakers to make that happen. Sorry, no can do. All you’ll get is lip service from people looking for money and power, who are not interested in being proved wrong if they are.

Today’s climate discussion is a road to nowhere where down the line there’ll be nobody left to talk to and no birds singing. You yourself probably won’t be there either. There is not one politician who will volunteer to give up their power if that could save the world their children will have to live in. They’ll come up with a story where their position is save and so is that world, and they’re more than likely to believe it.

 

As for the media, the tale gets darker fast. It didn’t start in 2018, but it did become a lot more outspoken. As I’ve said before, there are three targets for the former trusted sources of impartial news, even as those sources rapidly become more partial as we move forward. And that of course has to do with their new business model I wrote about a lot: writing negative stories about Donald Trump became an obvious source of revenue well before he was president.

Once he was elected, the media doubled down. They wrote against Trump at first thinking he would be beaten in the GOP primaries, then some more when he faced Hillary, then because they didn’t like him in the White House, and finally because he turned out to be the business proposition that quite literally kept them alive. What was it, over 100,000 new subscribers for the NYT a MONTH at a certain point?! Would CNN and Rachel Maddow even exist anymore without the Donald?

But that also means that the MSM cannot report anything positive about the man, with the exception of a bombing campaign in a faraway sandbox, and that is pretty crazy. No matter where you stand politically, not even Trump can do everything wrong, but CNN, MSNBC, WaPo,NYT et al can’t say it out loud, because their new readers and viewers want negative stories.

I’m not at all a Trump fan, I find it insane that America can’t find a single person among its 320 million inhabitants who could better represent it, but I also saw well over two years ago that the reporting on Trump was so biased someone had to restore at least some balance. And if that was to be me, so be it.

It’s like the entire US -and UK- press has become the National Enquirer, where the questions of truth or accuracy have become, and/or always was, a complete afterthought, irrelevant to whatever is actually published. And the readers and viewers caught inside the echo chamber will never know any better than that that is what the world really looks like.

It’s the ‘old’ media’s response to the threat of social media, a fight they cannot possibly win in the end, but not one they will relinquish easily; it will be the end of them. So there’s Trump, and then there’s Russia and Julian Assange. And there’s a live shooting practice going on in which all three are fair game.

According to two reports published just yesterday in the NY Times and the BBC, African Americans and French Yellow Vests were targeted by Russian bots, trolls, give them a name. What these once trusted media no longer understand, or don’t care about, is that they are effectively saying that African Americans and Yellow Vests are all so stupid and so unconvinced and unconvincing in their political convictions that a bunch of poorly defined Russians made them throw their votes away from Hillary Clinton and towards Trump.

Like African Americans have no opinions and therefore in the end no functioning brains. Like their f*king robots, some inferior lifeform. Is there anything you can say that is more racist than that? I come up empty. And I understand Kanye.

And that the ‘Russians’ caused tens of thousands of Frenchmen and -women to put on a yellow vest and protest Macron’s dismantling of -very- long-standing labor rights and taxation ‘reforms’ that benefit the rich French elite. You cannot insult two such vast yet diverse groups of people, who seem to have little if anything in common, African Americans and Yellow Vests, you cannot insult them more or worse than such reports do.

And they simply don’t see it. In their view, and which they -rightly by now- trust their public will eat up like hot cakes, their 24/7 anti-Trump and anti-Russia campaigns have been so convincing that they can basically say anything at all by now. If Trump or the Russians deny, that’s just what they would do if they were guilty. Assange can’t deny anything at all, they’ve totally silenced him. They being the US deep state in liaison with the MSM.

 

That’s how we’re about to enter 2019, how we’re about to move from chaos to mayhem. It is scary not just because of what we see happening today, but even more because we’ve never seen anything remotely like it. Sure, US media, any country’s media, have always supported government strategic lies in times of warfare or other tensions.

But an overall campaign against a sitting president, comprised of dozens of articles a day consisting of mere allegations and rumors, let alone the same against a state nuclear power arguably mightier than the US itself, and a journalist who’s the only one in his profession who’s actually done what journalists should do, not the well-paid follow the party line thing going on at the MSM, all this is unprecedented.

And given what we’ve seen in 2018 in the realm of banned social media accounts, in a wider sense of the word, we can only wonder how much worse the censorship can get in the mayhem year of 2019.

Can the Automatic Earth, and for instance our friends at Zero Hedge, only continue to exist next year if we agree to increasingly become the poodles of the ruling political classes, intelligence services, and their press masters and lackeys?

It’s starting to look that way. So in closing, I want to call on you to support us by donating a Christmas gift, and preferably a recurring one all through the 2019 mayhem year, so we know we can continue to present you with an alternative to the ‘appropriate’ information you’re ‘supposed’ to be receiving.

It’s later than you think.

 

 

Aug 132018
 
 August 13, 2018  Posted by at 8:43 am Finance Tagged with: , , , , , , , , , , , ,  9 Responses »


Vincent van Gogh The yellow house (The Street), Arles 1888

 

Turkey Central Bank To Take ‘All Necessary Measures’ For Stability (AFP)
Turkey Pledges Action To Calm Markets (BBC)
Euro Drops To One-Year Low On Lira Crisis Contagion Fears (G.)
Beware the Dog Days of August (Pettifor)
Trump Gives Mueller Three Weeks For Sitdown (ZH)
Trump ‘Will Deny Under Oath’ Asking Comey For Flynn Leniency (AT)
Why Trump Cancelled the Iran Deal (Zuesse)
China Slashes Support For Solar Industry (R.)
Greek Bailout Drama ‘In Last Throes’ But The Hardship Is Not Over Yet (G.)
Those Who Think That They Will Break Julian Assange Are Mistaken (P.)

 

 

“Whatever it takes” is still popular. But there are limits. They’re cutting off FX trade and injecting liquidity. But what if they’re called on this? It’s only Monday… As I write this the lira has lost another 6.6% so far for the day.

Turkey Central Bank To Take ‘All Necessary Measures’ For Stability (AFP)

Turkey’s central bank on Monday announced it was ready to take “all necessary measures” to ensure financial stability after the collapse of the lira, promising to provide banks with liquidity. “The central bank will closely monitor the market depth and price formations, and take all necessary measures to maintain financial stability, if deemed necessary,” the bank said in a statement, vowing to provide “all the liquidity the banks need”. The statement came after the Turkish lira hit record lows against the dollar amid a widening diplomatic spat with the United States. The detention of US pastor Andrew Brunson since October 2016 on terrorism charges has sparked the most severe crisis in ties between the two NATO allies in years.

The central bank announced the series of measures on Monday, a day after Erdogan’s son-in-law Berat Albayrak, who is treasury and finance minister, announced an action plan was in the pipeline. “In the framework of intraday and overnight standing facilities, the Central Bank will provide all the liquidity the banks need,” the bank said. The bank also revised reserve requirement ratios for banks, in a move also aimed at staving off any liquidity issues. It said with the latest revision, approximately 10 billion lira, $6 billion, and $3 billion equivalent of gold liquidity will be provided to the financial system. The nominally independent central bank has defied pressure to hike interest rates which economists said would curb the fall of the lira.

Read more …

“I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars… You should know that to keep this nation standing is… also the manufacturers’ duty..”

Turkey Pledges Action To Calm Markets (BBC)

Turkey has pledged it will take action to calm markets after the lira plunged to a new record low in Asian trading. The details would be unveiled shortly, the country’s finance minister told Turkish newspaper Hurriyet. “From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market,” Berat Albayrak said. The lira lost 20% of its value versus the dollar on Friday. It had already fallen more than 40% in the past year. The latest blow came on Friday, when US President Donald Trump said he had approved the doubling of tariffs on Turkish steel and aluminium. Concerns about contagion prompted investors to sell riskier assets on Monday including emerging market currencies and stocks in Asia.

Mr Albayrak said the country would “act in a speedy manner” and its plan included help for the banks and small and medium-sized businesses most affected by the dramatic volatility in the lira. His assurance came after Turkey’s president blamed the lira’s plunge on a plot against the country. “What is the reason for all this storm in a tea cup? There is no economic reason… This is called carrying out an operation against Turkey,” he said. Recep Tayyip Erdogan once again urged Turks to sell dollars and buy liras to help boost the currency. “I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars… You should know that to keep this nation standing is… also the manufacturers’ duty,” he said.

Read more …

It’s starting to spread. And hurt.

Euro Drops To One-Year Low On Lira Crisis Contagion Fears (G.)

The Turkish lira fell almost 9% in early trading on Monday and the euro hit a one-year low as investors feared that the country’s financial crisis could spread to European markets. Despite defiant words by the Turkish president Erdogan over the weekend pledging as yet unspecified action to reverse the slide, the currency slipped alarmingly against the US dollar on Monday. In early trading it reached an all-time low of 7.24 before bouncing back after the country’s banking regulator announced late on Sunday night that it would limit the ability of Turkish banks to swap the battered lira for foreign currency. Asian stock markets were also down on Monday. The Nikkei in Japan lost 1.7%, Hong Kong was off 1.8%, Shanghai -1.7%, Sydney -0.5% and the Taiwanese bourse fell 3%.

The FTSE100 was expected to open down 0.4% later on Monday morning while Germany’s Dax 30 was set for a 0.65% fall. The euro dropped 0.3% to a one-year low against the US dollar on Monday as the falling lira fuelled demand for safe havens, including the greenback, Swiss franc and yen. The Vix volatility index measuring turbulence in financial markets – also known as the fear index – jumped 16% on Monday. There was also concern that other emerging market currencies – already under pressure from the rising US dollar – could be dragged into the lira’s downward spiral. The South African rand hit a low level not seen since mid-2016, the Russian rouble slumped again and the Indian rupee slid to an all-time trough. The lira has tumbled more than 40% this year on worries about Erdogan’s increasing control over the economy and deteriorating relations with the United States ..

Read more …

The Fed is to blame for Turkey.

Beware the Dog Days of August (Pettifor)

Today’s financial turbulence can be traced back to Fed decisions in June 2017 to begin the “normalisation” of its balance sheet, gradually shedding its bond holdings in monthly stages. This monthly “runoff” of $10bn of maturing assets on to capital markets causes bond prices to fall, and yields to rise. On some estimates the Fed’s bond portfolio is expected to shrink by $315bn in 2018 and $437bn in 2019. This process of “normalisation” is no simple and stable matter. In the words of market analyst Kristina Hooper, it’s like “defusing a bomb”. To add to the strains caused by the “runoff” of assets, in June 2018, the Fed raised rates for the seventh time in three years and Libor followed suit.

These rising rates of interest have led to the strengthening of the dollar and capital flight from emerging markets. But above all, interest rate rises pose a threat to the heavily indebted global economy. In 2000, the stock of global private and public debt amounted to $142 trillion – 260% of global GDP or income. Today, 10 years after, the credit bubble at the heart of the GFC has nearly doubled to $247 trillion, or 318% of global GDP. Much of that debt is a result of the Federal Reserve’s largesse. Thanks to capital mobility, quantitative easing enabled companies, like many based in Turkey, to borrow in dollars on the international capital markets at low rates of interest.

Now, as Turkey’s currency and those of other emerging markets fall, the cost of servicing debt denominated in dollars rises dramatically, threatening default. But while it is necessary to point to the Fed’s actions to understand tremors in world markets, and to warn of the threat of another financial crisis, the fact is that central bankers should never have alone been held responsible for the restoration of macroeconomic stability.

[..] After the 1929 financial crisis, Keynes in 1931 and Roosevelt in 1933 got a grip, and as Erich Rauchway explains in his book The Money Makers, jointly began the process of ending the gold standard, and radically restructuring the global financial system to restore not just macroeconomic stability but, after 1945, a “golden age” in economics. Today, we are once again threatened by global financial turmoil. This may be the time to ditch economic orthodoxy, and revive the radical and revolutionary monetary theory and policies of John Maynard Keynes. Or do we have to endure another global crisis before economists come to their senses?

Read more …

“..we’re not going to be the ones to interfere with the election..”

Trump Gives Mueller Three Weeks For Sitdown (ZH)

President Trump is giving special counsel Robert Mueller until September 1st for a sit-down interview under limited conditions, as an interview beyond that window “could interfere with the midterm elections,” reports the Wall Street Journal, citing Trump attorney Rudy Giuliani. Trump’s attorneys sent Mueller’s team a proposal indicating that the president would be willing to take questions on collusion with Russia in the 2016 elections, but not obstruction of justice alleged to have occurred after he took office – as Giuliani has previously said it could become a perjury trap. “We certainly won’t do [an interview] after Sept. 1, because we’re not going to be the ones to interfere with the election,” Mr. Giuliani told the Journal.

“Let him [Mr. Mueller] get all the bad publicity and the attacks for that.” “I think we made the offer we can live with,” said Giuliani. “Based on a prior meeting with Mr. Mueller, Mr. Giuliani said he had believed prosecutors wanted to wrap up the inquiry by September. “Now they’re not really rushing us,” he said. Mr. Mueller has made some moves that suggest the inquiry itself could stretch beyond the midterm elections and certainly past the September timeline Mr. Giuliani laid out.” -WSJ Last week the special counsel subpoenaed Roger Credico, comedian and radio host that former Trump adviser Roger Stone claims was a back channel to Wikileaks. Credico has denied this – instead calling himself a “confirming source” due to his contacts with WikiLeaks attorneys. He is set to testify in front of Mueller’s grand jury on September 7.

Read more …

Can we get Comey under oath too?

Trump ‘Will Deny Under Oath’ Asking Comey For Flynn Leniency (AT)

If he has to testify under oath, US President Donald Trump will deny he ever asked former FBI director James Comey to treat former national security adviser Michael Flynn leniently, his lawyer said on Sunday. “There was no conversation about Michael Flynn,” Rudy Giuliani said on CNN’s State of the Union program regarding the February 14, 2017, meeting in the Oval Office. The private chat figures prominently in Special Counsel Robert Mueller’s probe into possible obstruction of justice in the Russia election interference case.

Comey testified in Congress last year that Trump tried to persuade him to go easy on Flynn the day after the president sacked his national security adviser for lying about his contact with the Russian ambassador. “I hope you can see your way to letting Flynn go. He’s a good guy. I hope you can let this go,” Comey quoted Trump as saying. Trump sacked Comey in May 2017, later admitting on TV that the FBI’s Russia investigation was on his mind when he made the decision.

Read more …

Nice analysis by Eric Zuesse. h/t ZH

Why Trump Cancelled the Iran Deal (Zuesse)

[..] whereas Fox News, Forbes, National Review, The Weekly Standard, American Spectator, Wall Street Journal, Investors Business Daily, Breitbart News, InfoWars, Reuters, and AP, are propagandists for the Republican Party; NPR, CNN, NBC, CBS, ABC, Mother Jones, The Atlantic, The New Republic, New Yorker, New York Magazine, New York Times, Washington Post, USA Today, Huffington Post, The Daily Beast, and Salon, are propagandists for the Democratic Party; but, they all draw their chief sponsors from the same small list of donors who are America’s billionaires, since these few people control the top advertisers, investors, and charities, and thus control nearly all of the nation’s propaganda. The same people who control the Government control the public; but, America isn’t a one-Party dictatorship. America is, instead, a multi-Party dictatorship. And this is how it functions.

Trump cancelled the Iran deal because a different group of billionaires are now in control of the White House, and of the rest of the US Government. Trump’s group demonize especially Iran; Obama’s group demonize especially Russia. That’s it, short. That’s America’s aristocratic tug-of-war; but both sides of it are for invasion, and for war. Thus, we’re in the condition of ‘permanent war for permanent peace’ — to satisfy the military contractors and the billionaires who control them. Any US President who would resist that, would invite assassination; but, perhaps in Trump’s case, impeachment, or other removal-from-office, would be likelier. In any case, the sponsors need to be satisfied — or else — and Trump knows this.

Trump is doing what he thinks he has to be doing, for his own safety. He’s just a figurehead for a different faction of the US aristocracy, than Obama was. He’s doing what he thinks he needs to be doing, for his survival. Political leadership is an extremely dangerous business. Trump is playing a slightly different game of it than Obama did, because he represents a different faction than Obama did. These two factions of the US aristocracy are also now battling each other for political control over Europe.

Read more …

Too much debt.

China Slashes Support For Solar Industry (R.)

China’s solar stress could burn more dealmakers. The industry faces a glut of raw materials and panels after the Chinese government slashed support for the heavily indebted sector. The first victim of the switch is industry giant GCL-Poly Energy, which scrapped plans to flog assets to state-backed Shanghai Electric. It won’t be the last. The loss of official support has cast a shadow over the business. After Beijing in June limited the number of new projects and cut tariffs it pays to solar generators, analysts lowered their forecasts for new installations of solar capacity this year by as much as a third. That signals dark days ahead, as new projects drive growth for both power plant operators and manufacturers.

The industry’s dependence on hefty leverage – a legacy of hasty expansion and delayed subsidy payouts – makes its position more precarious. Some solar companies, such as Panda Green Energy, were already struggling with net borrowing of more than 10 times EBITDA. The squeeze is especially hard on manufacturers of solar materials and equipment, which must splash cash on research to stay competitive. Meanwhile, overcapacity has depressed prices: Chinese solar modules now trade at a 15% discount to the global average, according to Macquarie. Distress should spur consolidation. The Solactive China Solar Index has fallen nearly 20% since the policy shift. As valuations sink, less indebted players like LONGi Green Energy Technology can go bargain-hunting.

Read more …

Stop trying to make it look like a recovery. It is not possible under present conditions.

Greek Bailout Drama ‘In Last Throes’ But The Hardship Is Not Over Yet (G.)

In an economy that has contracted by 26%, a fifth of the working population – two-fifths of young people – have been left unemployed, while about 500,000 people have fled, mostly to EU member states in Europe’s wealthier north. And the hardship isn’t over. The leftist-led government has signed up to a staggering array of ambitious targets. Post–bailout Greece has committed to produce primary surpluses of 3.5 % of GDP until 2022, a feat achieved by only a handful of countries since the 1970s, and 2.2 % until 2060. For Kevin Featherstone, who heads the Hellenic Observatory at the London School of Economics, such obligations amount to perpetual purgatory.

“No other government in Europe would choose to follow this path,” he said. “Greece has been saved in the sense of avoiding the armageddon of euro exit but how it has been saved is so disadvantageous that one can’t talk of a rescue or exit from crisis.” Although Tsipras is at pains to play down outside supervision, Greece will still be subject to a regime of enhanced surveillance initially. Further pension cuts are in store. In May he had unveiled a 106-page post-bailout growth plan. But no amount of preparation can conceal the country’s acute vulnerability to turbulence beyond its borders. Only days before the programme’s end, global market jitters saw yields on Greek bonds soared.

It is accepted that Greece has enough resources to meet funding needs for the next two years, but the IMF is far from persuaded that Athens will be able to sustain market access “over the longer run without further debt relief”. If so, the fund is likely to clamour ever more loudly that the landmark deal, reached in June, easing Greek debt repayments (extending maturities on some loans and improving interest rates on others) just does not go far enough. The crisis has lasted so long that many Greeks can no longer recall their country being “normal” or their pockets full. The middle class has been hardest hit with taxes as high as 70% of income earned. Controversial property levies have added to the toll. “In reality this exit will be a formality because in truth it isn’t going to change a thing,” said Stratos Paradias, who leads the Hellenic Property Federation.

Read more …

Great interview with Ecuador’s former consul to the UK, who became a close friend of Assange.

Those Who Think That They Will Break Julian Assange Are Mistaken (P.)

[..] conditions in the Latin American country’s embassy in Knightsbridge are now very different to those that Assange experienced during the six years beginning 19 June 2012, when he arrived seeking political asylum. Ecuador’s government at the time, and its president Rafael Correa, openly accepted his request, believing Assange’s life to be in danger and admiring his fight to defend freedom of information and expression. At that time the Consul of Ecuador in the UK was Fidel Narváez, who was tasked with accompanying Assange from the day he first set foot in the embassy. Narváez had contacted Julian and Wikileaks in April 2011 to request that the organisation publish all the cables relating to Ecuador.

At that moment an amicable relationship was born, one which has continued to grow throughout the years. Fidel is no longer Consul. He was relieved of his duties for issuing a letter of safe-conduct for Edward Snowden without consulting his government. It was, he states, a completely personal decision, and one for which he feels absolutely no regret. “If I found myself in the same situation now, I would do the same thing again. It was the correct decision, the just decision. I knew who Snowden was, what he had done, why he was being pursued, and I knew how important it was to protect him. I do not regret it. I am proud of what I did.”

Read more …

Jun 232018
 


Henri Matisse The goldfish 1912

 

Greece Swaps Bailout Hell For Eternal Purgatory (R.)
Euro Is Here To Stay: German Finance Minister (R.)
Can You Think of Any Other Ways to Spend $716 Billion? (Taibbi)
Ike Was Right! (Bill Bonner)
Irish House Prices Sky-High Due To Finance Not Scarcity (Pettifor)
Trump Threatens 20% Tariff On European Union Cars (R.)
Social Security Benefits Buy 34% Less Than In 2000 (CNBC)
In 2010 Britons Stopped Getting Any Older. The Implications Are Huge (G.)
Airbus Raises Range Of Fears In Brutal Brexit Assessment (G.)
Trump’s Family Separation Scandal Reveals Every Species of Hypocrite (Taibbi)
Don’t Cry for Me, Rachel Maddow (Kunstler)
Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded (AFP)
Children In Custody At Border To Be Reunited With Families By End Of Day (CBS)
US Judge Says May Rule Next Week On Reuniting Migrant Children (R.)
Survivors Report 220 Migrants Drown Off Libya In Recent Days (R.)
Starving Seabirds On Remote Island Full Of Plastic (BBC)

 

 

A terrible deal.

Greece Swaps Bailout Hell For Eternal Purgatory (R.)

Greece is swapping bailout hell for eternal purgatory. Eight years after it first sought outside financial assistance Athens can at last support itself, helped by extra euro zone funds and debt relief. But it will have to maintain a tight budget for decades, while doubts over its debt sustainability will linger. The latest deal suits both European creditors and Greek Prime Minister Alexis Tsipras. With the country’s third bailout coming to an end in August, both sides wanted a clean exit, without a backstop facility. Euro zone countries recoiled at the idea of granting Greece more credit, while Tsipras wants to claim that the country is finally free of austerity. Both Ireland and Portugal ended their bailouts in this way.

But Greece still owes a hefty 180% of GDP, because official lenders refused to write off the debt. True, the euro zone has extended repayments over many decades. Still, the International Monetary Fund’s reluctance to describe the debt as sustainable made a smooth exit less certain. Hence the latest dollop of debt relief. Lenders have given Greece the last €15 billion of the bailout to build a cash buffer. They also extended their loans by 10 years, meaning Greece should not face large repayments until the 2030s. Creditors will also lower interest rates and transfer the profit on Greek bonds bought by the ECB as long as the country sticks to reform targets. The deal should make it possible for Greece to survive without further financial help for at least a decade.

But the country’s junk credit rating and the absence of a backstop means government bonds won’t be eligible as collateral for ECB loans. This will force banks to find other, more expensive sources of funding. The other question is whether Greek debt can be sustained without a default or further writedowns. If the government delivers on its promise to maintain a budget surplus before interest payments of over 3.5% of GDP – three times the euro zone average – until 2022, and 2.2% thereafter, the debt load will slowly fall. Yet Greece’s unemployment rate of 20% is more than twice as high as in the rest of the single currency area. And euro zone officials will still visit every quarter. The country has escaped its bailout hell, but is hardly free.

Read more …

Again, this is like a team owner stating publicly that he supports the coach 100%.

Euro Is Here To Stay: German Finance Minister (R.)

The euro is irreversible, German Finance Minister Olaf Scholz said in a newspaper interview to be published on Saturday when asked if the single currency will still be there in 10 years. “Yes, the euro is irreversible,” Scholz told the Rheinische Post. “It secures our common future in Europe.” He added that an initial blueprint to strengthen the euro zone agreed between Chancellor Angela Merkel and French President Emmanuel Macron during talks at the Meseberg retreat outside Berlin this week would shield the euro from crises. “With the Meseberg agreements we are further building the house of Europe,” he said. “It contains a sealed roof that withstands future storms and rainy days. We have a new momentum in Europe and this is thanks to President Macron.”

Read more …

Don’t question the military.

Can You Think of Any Other Ways to Spend $716 Billion? (Taibbi)

While the world continues to be transfixed over the gruesome images coming from the border, business went on as usual in Washington. Earlier this week, the Senate quietly passed the $716 billion “John S. McCain National Defense Authorization Act for Fiscal Year 2019.” The bill, which passed 85-10 in a massive show of bipartisan support, represents a considerable boost in defense spending across the board – roughly $82 billion just for next year. The annual increase by itself is bigger than the annual defense budget of Russia ($61 billion) and the two-year jump of over $165 billion eclipses the entire defense budget of China ($150 billion).

The bill is a major win for Trump, who has made no secret about his desire to push through giant increases in military spending. The legislation even sends the U.S. down the road to meeting the Trump administration’s lunatic goal of developing smaller, more “flexible” (read: usable) nuclear weapons, as it includes $65 million for the development of a new, lower-yield, submarine-launched nuke. But the problem with the defense bill, at least in terms of attracting coverage, is that it’s also a big win for almost every other major political constituency in Washington. Spending on defense lobbying has actually been dropping slightly in recent years, but that may only be because the opposition to defense spending has become so anemic that lobbyists don’t really need to bother anymore.

Read more …

“..the damage done by Germany’s hyperinflation of the early ’20s led to far more than just wiped-out mortgages and billion-dollar cigars.”

Ike Was Right! (Bill Bonner)

Our working hypothesis is that General Eisenhower was right. There were two big temptations to the American Republic of the 1950s; subsequent generations gave in to both of them. They spent their children’s and grandchildren’s money. Now, the country has a government debt of $21 trillion. That’s up from $288 billion when Ike left the White House. And they allowed the “unwarranted influence” of the “military/industrial complex” to grow into a monster. No president, no matter how good his intentions, can stop it. A corollary to our major hypothesis is that the rise of the Deep State (the military/industrial/social welfare/security/prison/medical care/education/bureaucrat/crony complex) was funded by the Fed’s fake-money system.

Now, investors, businesses, households, and the feds themselves have all been “faked out” by a fraudulent money system. None of them can survive a cutback in credit. For nearly 30 years, central banks have backstopped markets and flooded the world with liquidity. But last week, the Fed turned the screws a little further. It now targets a 2% Fed Funds Rate and claims to be on the path of “normalization.” And the ECB made it official, too; it hasn’t quite begun tightening, but it’s got its toolbox open. And command of the ECB work crew is set to change hands next year anyway, passing on to a German engineer.

The German psyche has been scarred by its awful experience in the last century. Even though today’s Germans didn’t live through it themselves, the entire country seems to have a race memory of it. Still preparing for hard times, the household savings rate in Germany is at least three times higher than in the sans souci U.S. Germany’s apocalypse, too, can be described in Eisenhower’s terms – too much debt (arising from World War I)… and too much influence in the hands of the military/industrial complex. Debt led to hyperinflation. But the damage done by Germany’s hyperinflation of the early ’20s led to far more than just wiped-out mortgages and billion-dollar cigars.

Read more …

Ireland and all the others.

Irish House Prices Sky-High Due To Finance Not Scarcity (Pettifor)

Economists regard the theory of supply and demand as nothing less than a “law” and as one of the fundamental principles governing “the economy”. Almost every economic event or phenomenon is considered the product of the interaction of the laws of supply and demand, argues The Concise Encyclopedia of Economics. The “law” is currently being invoked by those who believe the solution to the Irish housing crisis is to simply build more houses. It is an analysis echoed regularly by grateful developers and estate agents. But the “law” of supply and demand is a micro-economic concept and applicable only to the “economy” of individuals, households and firms.

The “economy” of a globalised country such as Ireland is, in stark contrast, a macro-economic concept, the result of analysing the aggregate activities of more than four million people operating within global markets for housing and other assets. As evidence of the flawed nature of this fundamental micro-economic theory, we only have to look at Ireland’s housing market in 2006 – the year in which the market boomed before imploding catastrophically. Irish home construction peaked in that year. In a country of just four million people, more than 90,000 homes were built. (By contrast the housing stock increased by just 8,800 between 2011 and 2016). And yet, despite this extraordinary increase in supply, and contrary to economic theory, prices in 2006 continued rising – by a whopping 11%.

Read more …

Just settle it amicably.

Trump Threatens 20% Tariff On European Union Cars (R.)

President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20% tariff on all U.S. imports of European Union-assembled cars. Trump posted his threat on Twitter the day European Union reprisals took effect against U.S. tariffs on European steel and aluminum. The EU targeted $3.2 billion in American goods exported to the 28-member bloc. “If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump wrote.

A month ago, the administration launched a probe into whether auto imports pose a national security threat. The United States currently imposes a 2.5% tariff on imported passenger cars from the European Union and a 25% tariff on imported pickup trucks. The EU imposes a 10% tariff on imported U.S. cars. German automakers Volkswagen, Daimler and BMW build vehicles at plants in the United States. Industry data shows German automakers build more vehicles in southern U.S. states that voted for Trump than they ship to the United States from Germany.

Read more …

Think medical bills.

Social Security Benefits Buy 34% Less Than In 2000 (CNBC)

If you feel like your Social Security check doesn’t stretch as far as it once did, there’s a likely explanation for it. Since 2000, the buying power of monthly benefits has fallen by more than a third, according to an annual report released Thursday by the Senior Citizens League, an advocacy group based in Alexandria, Virginia. In other words, the cost of goods and services common among retirees have collectively risen faster than the cost-of-living adjustment, or COLA, that Social Security recipients get every year. “People who recently retired might have seen only a [small] decrease in buying power,” said Mary Johnson, a policy analyst for the league. “But those retired for a long time are feeling the cumulative effect of this.”

About 47 million older Americans receive Social Security. Overall, the benefits comprise about a third of income among those age 65 or older, according to the Social Security Administration. The league’s annual report examines the costs that typically comprise household budgets of older Americans and compares their price change with annual COLAs. Based on those comparisons, the research found a 4% loss in Social Security buying power from January 2017 to January 2018 and a 34% decrease since 2000.

Read more …

Wonder if this is true only in Britain.

In 2010 Britons Stopped Getting Any Older. The Implications Are Huge (G.)

The most profound change to human life over the previous 100 years came to a halt in 2010. In the decades before it, life expectancy in Britain kept rising, with men, in particular, born in the 1920s and 1930s enjoying far longer and healthier lives than ever expected. This increase in lifespan has affected everything – from housing to health to pensions. It’s why we need to find ever greater sums for the NHS. It’s why the state pension age has had to go up. Arguably, it’s a big reason why house prices are so high – because people are living in them for longer. But the great leap forward in longevity has come to a shuddering halt.

An extraordinary analysis by the Office for National Statistics this week reveals that the trend line in longevity stopped in 2010, and has flatlined since. Why? Pick anything from austerity and cuts in NHS spending, to influenza outbreaks, obesity, diabetes, and even the rise of “multimorbidity” – where someone might have diabetes, heart disease and high blood pressure all at the same time. But the ONS did not try to answer the “why” question. It wanted to check if the statistics really do prove that longevity rises have come to a halt. And the depressing conclusion from its research is that, indeed they have. It found that the “breakpoint” in the trend towards better longevity began with males in the second quarter of 2009, with females following soon after.

Read more …

“The fear of “chaos at the borders” in 2020..”

Airbus Raises Range Of Fears In Brutal Brexit Assessment (G.)

Airbus hated Brexit from the off but, until now, it had confined itself to soft expressions of worry in public and harder lobbying behind the scenes. Its dramatic warning that it could stop investing in the UK is a radical departure from that position and carried a sting. The aircraft manufacturer did not merely say a no-deal outcome to Brexit talks “directly threatens Airbus’s future in the UK”. It also said an “orderly” Brexit, complete with a trade agreement and a transition period, would also be risky. In effect, the group will freeze investment in the UK until it can judge how a new set-up would work and how many extra costs its UK factories and research centres would bear.

John Longworth, the co-chair of Leave Means Leave campaign, accused Airbus of running a scare story and reheating Project Fear. Tariffs on aeronautical products are zero, he argued, and so “nothing will change” if the UK leaves the customs union. Yet he overlooked the detail of the Brexit assessment by Airbus, which barely mentioned tariffs. Instead, the worries were about the movement of employees between the UK and the EU, logjams in the supply chain and aircraft regulations. The most critical issue on that list is probably UK membership of the European Aviation Safety Agency (EASA), which certifies aircraft parts and runs safety checks.

In theory, the Civil Aviation Authority could do the job in the UK, as it once did, but Airbus doubts the body could assemble the expertise in time to provide a smooth transition. Norway is a non-EU member of EASA and so the UK, if it is prepared to accept the European court of justice as the legal authority behind EASA’s rulings, could also stay within. But a deal has not yet been struck, which is one of many reasons why Airbus is shouting that time is running short. Its supply chain frustrations will be shared by other large manufacturers with cross-border operations that run on a just-in-time basis to keep costs low. The fear of “chaos at the borders” in 2020, as Tom Williams, the Airbus executive in charge of the commercial aircraft division, put it, is real.

Read more …

“America’s manufacturing sector may be failing, but we still produce plenty of hypocrites.”

Trump’s Family Separation Scandal Reveals Every Species of Hypocrite (Taibbi)

John McCain, in Arizona receiving treatment for brain cancer, tweeted about Donald Trump’s barbarous immigration policy this week. “The administration’s current family separation policy is an affront to the decency of the American people, and contrary to principles and values upon which our nation was founded,” the senator wrote. Those comments bring to mind a commercial John McCain made eight years ago. At the time, he was facing a tough primary challenge from Tea Party Republican J.D. Hayworth. In the ad, McCain is seen walking along Arizona’s southern border with Pinal County Sheriff Paul Babeu, in the shadow of an enormous fence.

McCain starts tsk-tsking about the wave of crime pouring into his state. “Drug and human smuggling, home invasions, murder?” McCain asks. “We’re outmanned,” the sheriff says. “Of all the illegals in America, more than half come through Arizona.” McCain asks if they have “the right plan.” The sheriff says, “You bring troops, state, county and local law enforcement together.” “And complete the danged fence!” says McCain. [..] Trump’s policies on the border were and are monstrous. But those photos of children in captivity, which rightfully have been nearly as damaging to America’s reputation as the Abu Ghraib debacle, didn’t appear out of nowhere.

Those scenes are the latest in a long series of developments, under which politicians like McCain and Cruz and Dick Cheney, along with officials like Hayden, have gradually normalized the idea of human rights abuses as solutions to political problems. Now they’re all hiding behind someone else’s scandal. America’s manufacturing sector may be failing, but we still produce plenty of hypocrites.

Read more …

Democratic leadership has been AWOL for a long time.

Don’t Cry for Me, Rachel Maddow (Kunstler)

Actual political leadership among “the Resistance” is AWOL this week. Nancy Pelosi and Chuck Schumer failed to offer up any alternative legislative plan for sorting out these children differently. One can infer in the political chatter emanating from the Offendedness Cartel that immigration law is ipso-facto cruel and inhuman and that the “solution” is an open border. In theory, this might play to the Democratic Party’s effort to win future elections by enlisting an ever-growing voter base of Mexican and Central American newcomers. But it assumes that somehow these newcomers get to become citizens, with the right to vote in US elections — normally an arduous process requiring an application and patience — but that, too, is apparently up for debate, especially in California, where lawmakers are eager to enfranchise anyone with a pulse who is actually there, citizen or not.

Krugman of The Times really hit the ball out of the park today with his diatribe comparing US Immigration enforcement to the Nazis treatment of the Jews. As a person of the Hebrew persuasion myself, I rather resent the reckless hijacking of this bit of history for the purpose of aggrandizing the sentimentally fake moral righteousness of the Resistance. It actually diminishes the enormity of the Nazi campaign against European Jews. I daresay that commentary like Krugman’s will only serve to amplify a growing resentment of Jewish intellectuals in this country — including myself, increasingly the target of anti-Jewish calumnies and objurgations. You’d think that Mr. Trump had offered to blow up Ellis Island the way the Resistance is clamoring to pull down statues of Thomas Jefferson.

Read more …

That’s two in a row for using pictures out of context. Very damaging.

Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded (AFP)

Two photos that went viral on social media depict scenes that are not directly related to the family separations taking place on the US-Mexico border since early May. The most prominent, of Honduran two-year-old Yanela Varela crying inconsolably, has become a global symbol of the separations – helping to attract more than $18 million in donations for a Texas non-profit called RAICES. The photograph was taken on June 12 in McAllen, Texas by John Moore, a Pulitzer Prize-winning photographer for Getty Images. An online article about the picture, published by Time Magazine, initially reported the girl was taken from her mother, but was subsequently corrected to make clear that: “The girl was not carried away screaming by US Border Patrol agents; her mother picked her up and the two were taken away together.”

Time Magazine nonetheless used the image of the sobbing child on its cover, next to an image of President Trump looming over her, with the caption “Welcome to America”. The head of Honduras’ Migrant Protection Office Lisa Medrano confirmed to AFP that the little girl, just two years old, “was not separated” from her family. The child’s father also said as much. Denis Varela told the Washington Post that his wife Sandra Sanchez, 32, had not been separated from their daughter, and that both were being detained together in an immigration center in McAllen. Under fire for its cover – which was widely decried as misleading including by the White House – the magazine said it was standing by its decision. “The June 12 photograph of the 2-year-old Honduran girl became the most visible symbol of the ongoing immigration debate in America for a reason,” Time’s editor-in-chief Edward Felsenthal said.

Read more …

A mixed bag.

Children In Custody At Border To Be Reunited With Families By End Of Day (CBS)

Most of the immigrant children who’d been separated from their families and are still being held by U.S. Customs and Border Protection are expected to be reunited by the end of the day, a source with the Department of Homeland Security told CBS News. This does not reflect the greater number of children who are in the custody of the Department of Health and Human Services. That number was reported this week to be greater than 2,340. There will be a small number of children with Customs and Border Protection who will not be immediately reunited with their families. Reasons for delay may include if relationships can’t be confirmed or if authorities think there’s a risk to the child.

At the border, the government is trying to clear up who gets prosecuted and who does not. Confusion, however, hasn’t stopped border crossings, CBS News’ Mireya Villarreal reports. Shane McMahon’s client from El Salvador was charged with crossing into the U.S. illegally. He was separated from his 16-year-old son, and on Friday, those charges were suddenly dropped. “I think what’s happening is that everybody’s trying to figure out how the order applies to us and what to do with it,” McMahon said. The Trump administration says that nearly 500 children have been reunited with family. More than 1,800 remain separated from parents, who are desperate for answers.

Read more …

A case from February that could solve today’s issues.

US Judge Says May Rule Next Week On Reuniting Migrant Children (R.)

A federal judge said on Friday he could rule as soon as the middle of next week on a request to order the U.S. government to reunite thousands of immigrant children who were separated from their parents after illegally crossing the Mexico-U.S. border. While U.S. President Donald Trump bowed to political pressure on Wednesday and issued an executive order ending the separations, the administration has been silent on plans to reunite parents split from their children. More than 2,300 migrant children have been separated since the Trump administration began a “zero tolerance” policy toward illegal border crossings in early May.

At a court hearing on Friday, a lawyer for the American Civil Liberties Union pressed U.S. District Court Judge Dana Sabraw in San Diego to issue an injunction as soon as Friday evening to force the government to begin reuniting families. “Parents can’t find their children, they are not even speaking to their children. It’s a humanitarian crisis,” said Lee Gelernt, a lawyer for the ACLU, at Friday’s hearing. He asked the judge to order the government to reunite all children in 30 days, and in five days for children under the age of five. Gelernt also asked for an order barring separations.

[..] The judge peppered a government lawyer with questions about procedures for handling children separated from their parents and tracking by government agencies, and in general the government lawyer focused on arguments about legal procedure. The government has said in court papers that separation of children is a consequence of the lawful detention of the parent. The ACLU filed the case in February alleging the government violated the right to due process of two unidentified women, from Brazil and the Democratic Republic of Congo, when their children were removed from them.

Read more …

Europe outdoes Trump.

Survivors Report 220 Migrants Drown Off Libya In Recent Days (R.)

Survivors have reported that about 220 migrants drowned off the coast of Libya in the last few days while trying to reach Europe, putting the death toll this year on that route to more than 1,000, the United Nations said on Thursday. The U.N. refugee agency (UNHCR) said that as the summer season starts, the number of refugees and migrants attempting to cross the Mediterranean was expected to increase and it called for increased rescue operations. The Libyan coast guard has brought more than 8,000 people to disembarkation points along the coast this year, it said. Only five people survived the capsizing of a boat carrying 100 people on Tuesday, while the same day a rubber craft with 130 passengers sank, leading to 70 people drowning, UNHCR said.

On Wednesday a boat of refugees and migrants who were rescued reported that more than 50 people traveling with them had perished at sea, it said. “UNHCR is dismayed at the ever-growing numbers of refugees and migrants losing their lives at sea and is calling for urgent international action to strengthen rescue at sea efforts by all relevant and capable actors, including NGOs and commercial vessels, throughout the Mediterranean,” the agency said. Earlier, Libya’s coastguard picked up 443 African migrants on Thursday from three inflatable boats in trouble near its western coast, a spokesman said.

Read more …

Where’s the outrage? Why is there still no overall ban on one-use plastics? Why do I still see people walking around with plastic coffee cups?

Starving Seabirds On Remote Island Full Of Plastic (BBC)

New footage of the devastating impact of plastic pollution on wildlife has been captured by a BBC team. Seabirds are starving to death on the remote Lord Howe Island, a crew filming for the BBC One documentary Drowning in Plastic has revealed. Their stomachs were so full of plastic there was no room for food. The documentary is part of a BBC initiative called Plastics Watch, tracking the impact of plastic on the environment. The marine biologists the team filmed are working on the island to save the birds. They captured hundreds of chicks – as they left their nests – to physically flush plastic from their stomachs and “give them a chance to survive”.

The birds nest in burrows on Lord Howe Island, which is more than 600 kilometres off the east coast of Australia. While chicks wait in the burrow, the parents head out to sea and dive for small fish and squid to feed their offspring. “These birds are generalist predators,” explained marine biologist Jennifer Lavers who works with the shearwater colony. “They’ll eat just about anything they’re given. That’s what’s allowed them to thrive – a lack of pickiness. “But when you put plastic in the ocean, it means they have no ability to detect plastic form non-plastic, so they eat it.”

Parent birds unwittingly feeding plastic to their chicks means that the birds emerge from their burrows with stomachs filled with plastic, and with insufficient nutrition to enable them set out to sea and forage for themselves. But when the birds first head out of the burrow, the research team have been stepping in to help. “If the amount of plastic is not so significant, we use a process called levage, where we flush or wash the stomach – without harming the bird,” explained Dr Lavers. The BBC crew filmed the team working with individual chicks – using tubes to flush their stomachs with seawater and make them regurgitate the plastic.

Read more …

Jun 072018
 


Ivan Aivazovsky Stormy Night at Sea 1850

 

Is Draghi Risking Everything To Teach Rome A Lesson? (ZH)
The Next Economic Crisis Begins in the European Union (Bruno)
David Stockman: Stocks Will Plunge 50% In This ‘Daredevil Market’ (CNBC)
Euro Recovers On Rising Bets ECB May Unwind Stimulus (R.)
Indonesia Joins India In Begging Fed To Stop Shrinking Its Balance Sheet (ZH)
Fed Clambers Back To Positive Real Rates, Now Debate Is When To Stop (R.)
Social Security To Tap Into Trust Fund For First Time In 36 Years (MW)
Opioids Are Responsible For 20% Of US Millennial Deaths (ZH)
The ‘Doomsday Brexit Plan’ Document Should Frighten Us All (TP)
Nearly 4 Million UK Adults Forced To Use Food Banks (Ind.)
How We Created The Anthropocene (BBC)

 

 

“..watch as the EUR and bond yields tumble, and the dollar resumes its relentless push higher.”

Is Draghi Risking Everything To Teach Rome A Lesson? (ZH)

[..] as Bloomberg’s Lisa Abramowicz said in a podcast today, it was the ECB “basically just giving the finger to Italy.” Confirming as much, Anne Mathias, Global Rates and FX strategist for Vanguard, responded that “part of the vocal nature of the ‘talking about the talking about’ [the end of QE] probably has something to do with Italy, especially as they’ve been paring their purchases of Italian debt. What the ECB is trying to say is hey, “this is our party, and you’re welcome to it, but if you’re going to leave it’s not going to be easy for you.” The ECB is trying to show Italy a future without the ECB as backstop.”

A spot-on follow up question from Pimm Fox asked if this is “a situation in which the ECB is cutting off its nose to spite its face, because you can stick to rules for the sake of sticking to rules, but when you have a potential crisis, why wait for it to be a real crisis such as Italy, which the new government has pledged to spend a lot of money, to lower taxes, while they still have a huge government deficit. Why would the ECB do this.” The brief answer is that yes, it is, because sending the Euro and yields higher on ECB debt monetization concerns, only tends to destabilize the market, and sends a message to investors that the happy days are ending, in the process slamming confidence in asset returns, a process which usually translates into a sharp economic slowdown and eventually recession, or even depression if the adverse stimulus is large enough.

As for the punchline, it came from Abramowicz, who doubled down on Pimm Fox’ question and asked if the “European economy can withstand the shock” of the ECB’s QE reversal, which would send trillions in debt from negative to positive yields. While the answer is clearly no, what is curious is that the ECB is actually tempting fate with the current “tightening” scare, which may send the Euro and bond yields far higher over the next few days, perhaps even to a point where Italy finds itself in dire need of a bailout… from the ECB. Then again, don’t be surprised if during next Thursday’s ECB press conference, Mario Draghi says that after discussing the end of QE, no decision has been made or will be made for a long time. At that moment, watch as the EUR and bond yields tumble, and the dollar resumes its relentless push higher.

Read more …

Downsize Germany or else.

The Next Economic Crisis Begins in the European Union (Bruno)

Mercantilism is a practice of conducting economic affairs that Europe practiced especially during the period between the 16th and 17th centuries. It’s the progenitor of colonialism and favors the idea that a state’s—or nation’s—power increases in direct proportion to its ability to export. The more a nation exports, producing a trade surplus, the stronger it becomes. The current “imperfection” of the euro stems from this concept. Germany has become a mercantilist power within a union of nation states (the EU) that had agreed to pursue common as well as national interests. The result has not only been an imbalance of trade; rather, it’s been a complete political and economic disparity.

Some EU countries, of which Germany represents the best example, have also used their surplus to lower their inflation rate below the eurozone-accepted two-percent standard. Indeed, Germany’s trade surplus formula was predicated on a minimal increase in salaries—and reduced government spending on infrastructure and other public services. The result has been the accumulation of significant competitive advantages. Ironically, whenever the euro drops in value, Germany gains with respect to the PIGS. The products that make up the core of its surplus become even more competitive within and beyond the EU.

That explains President Donald Trump’s ever more vociferous suggestions to ban the import of German cars in the United States. It’s no accident that Trump launched a literal trade war, focusing on Germany and China, just days before the start of the G7 Summit in Canada. Germany’s accumulated gains from the low inflation and the more competitive conditions allow it to literally “colonize” (financially speaking) the so-called less virtuous or “deficit” nations. Germany can buy up their best businesses and services. In the meantime, Germany has also acquired a political dominance to match its surplus within the EU itself.

It can control the rules of the EU economy and influence their evolution. That’s why there are few options for the PIGS. And that’s why society and political discourse have deteriorated. The rise of the so-called populist—I prefer the term “protest”—parties, Left or Right, in countries like Italy is a trend destined to expand throughout the EU and cause irreparable fissures. If the EU does not change (and by change, I mean a downsizing of Germany’s stature), the fissures will be irreparable, and one or more states will leave, breaking the union.

Read more …

“It’s all risk and very little reward in the path ahead..”

David Stockman: Stocks Will Plunge 50% In This ‘Daredevil Market’ (CNBC)

David Stockman is intensifying his bear case. President Ronald Reagan’s Office of Management and Budget director blames a bull market that’s getting longer in the tooth — paired with headwinds ranging from President Donald Trump’s leadership to fiscal policy decisions to questionable earnings. “I call this a daredevil market. It’s all risk and very little reward in the path ahead,” Stockman said Tuesday on CNBC’s “Futures Now.” “This market is just way, way over-priced for reality.” His thoughts came as the Nasdaq was reaching all-time highs again, while S&P 500 rose slightly but the Dow failed to extend its win streak to three days in a row.

“The S&P 500 could easily drop to 1,600 because earnings could drop to $75 a share the next time we have a recession,” Stockman warned. “We’re about eight or nine years into this expansion. Everything is crazily priced. I mean the S&P 500 at 24 times at the end, tippy top of a business cycle.” One of his biggest gripes with the bulls is the notion that President Donald Trump’s tax cuts are providing a fundamental lift to stocks. “These tax cuts are going to add to the deficit in the 10th year of an expansion. It’s just irresponsible crazy,” he said. “It’s all going to stock buybacks and M&A deals anyway. That doesn’t cause the economy to grow. It’s just a short-term boost to the stock market that doesn’t last.”

Read more …

All it takes is some hollow words.

Euro Recovers On Rising Bets ECB May Unwind Stimulus (R.)

The euro stayed near two-week highs against many of its rivals on Thursday, on rising bets the ECB may soon announce it will start winding down its massive bond purchase program. Jens Weidmann, the head of Germany’s central bank, said expectations the ECB would taper its bond-buying program by the end of this year were plausible while his Dutch counterpart, Klaas Knot, said there was no reason to continue a quantitative easing program. The trio of comments drove the euro to a two-week high of $1.1800 sharp. The common currency last traded at $1.1781, extending its gains so far this week to 1.15%.

“In the near term, we are likely to see event-driven trading on the euro. We should expect the euro to jump 100 pips (one cent) quite easily on comments from key officials,” said Kyosuke Suzuki, director of forex at Societe Generale. The ECB has been debating whether to end the unprecedented 2.55 trillion euro ($2.99 trillion) bond purchase program this year as the threat of deflation has passed. Still many market players were surprised by the flurry of comments as they had thought uncertainty caused by a political crisis in Italy could make policymakers cautious about indicating an end to stimulus at its policy meeting on June 14.

Indeed, the yield spread of Italian debt to German Bunds widened on Wednesday as Italian bonds are seen as the biggest beneficiary of the ECB’s buying. “This euro buying is essentially short-term trade. People don’t know when Italian debt problems will be solved but they do know when the ECB might announce an exit from stimulus,” said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities.

Read more …

But then Europe and Japan signal they’ll do the same.

Indonesia Joins India In Begging Fed To Stop Shrinking Its Balance Sheet (ZH)

On the same day that the governor of Malaysia’s central bank quit, and just days after Urjit Patel, governor of the Reserve Bank of India, took the unprecedented step of writing an oped to the Federal Reserve, begging the US central bank to step tightening monetary conditions, and shrinking its balance sheet, thereby creating a global dollar shortage which has slammed emerging markets (and forced India into an unexpected rate hike overnight), Indonesia’s new central bank chief joined his Indian counterpart in calling on the Federal Reserve to be “more mindful” of the global repercussions of policy tightening amid the ongoing rout in emerging markets.

As Bloomberg reports, in his first interview with international media since he took office two weeks ago, Bank Indonesia Governor Perry Warjiyo echoed what Patel said just days earlier, namely that the pace of the Fed’s balance sheet reduction was a key issue for central bankers across emerging markets. As a reminder, the RBI Governor made exactly the same comments earlier this week, arguing that slowing the pace of stimulus withdrawal at a time when the US Treasury is doubling down on debt issuance, would support global growth, as the alternative would be an emerging markets crisis that would spill over into developed markets.

Read more …

Get the hell out. Take their powers away.

Fed Clambers Back To Positive Real Rates, Now Debate Is When To Stop (R.)

The Federal Reserve will likely raise its target interest rate to above the rate of inflation for the first time in a decade next week, igniting a new debate: when to stop. The Fed has been gradually hiking rates since late 2015 with little sign of tighter conditions hampering economic recovery. The expected June increase will raise the stakes as the Fed seeks to sustain the second-longest U.S. expansion on record while continuing to edge rates higher. With inflation still tame, policymakers are aiming for a “neutral” rate that neither slows nor speeds economic growth. But estimates of neutral are imprecise, and as interest rates top inflation and enter positive “real” territory, analysts feel the Fed is at higher risk of going too far and actually crimping the recovery.

The Fed is “gradually entering a new world when rates are at 2 percent,” nearing zero on a real basis and approaching where they are no longer felt to be stimulating economic activity, said Thomas Costerg, senior U.S. economist at Pictet Wealth Management. The last time rates moved into positive real territory on a sustained basis was the spring of 2005 when the Fed began tightening rapidly after a period of arguably too-lax monetary policy, ending just months before the start of the 2007-2009 financial crisis. The debate over the current cycle’s end point “came earlier than I expected,” Costerg said, with the Fed facing imminent calls on where the neutral rate of interest lies.

Read more …

Opaque topic, but this is obviously not good.

Social Security To Tap Into Trust Fund For First Time In 36 Years (MW)

Medicare’s finances were downgraded in a new report from the program’s trustees Tuesday, while the projection for Social Security’s stayed the same as last year. Medicare’s hospital insurance fund will be depleted in 2026, said the trustees who oversee the benefit program in an annual report. That is three years earlier than projected last year. This year, like last year, Social Security’s trustees said the program’s two trust funds would be depleted in 2034. For the first time since 1982, Social Security has to dip into the trust fund to pay for the program this year. It should be stressed that the reports don’t indicate that benefits disappear in those years.

After 2034, Social Security’s trustees said tax income would be sufficient to pay about three-quarters of retirees’ benefits. Congress could at any time choose to pay for the benefits through the general fund. Medicare beneficiaries also wouldn’t face an immediate cut after the trust fund is depleted in 2026. The trustees said the share of benefits that can be paid from revenues will decline to 78% in 2039. That share rises again to 85% in 2092. The hospital fund is financed mainly through payroll taxes. Social Security trustees said that reserves for the fund that pays disability benefits would be exhausted in 2032. Combined with the fund that pays benefits to retirees, all Social Security reserves would be exhausted by 2034, they said.

Read more …

Better start acting.

Opioids Are Responsible For 20% Of US Millennial Deaths (ZH)

The opioid crisis has become a significant public health emergency for many Americans, especially for millennials, so much so that one out of every five deaths among young adults is related to opioids, suggested a new report. The study is called “The Burden of Opioid-Related Mortality in the United States,” published Friday in JAMA. Researchers from St. Michael’s Hospital in Toronto, Ontario, found that all opiate deaths — which accounts for natural opiates, semi-synthetic/ humanmade opioids, and fully synthetic/ humanmade opioids — have increased a mindboggling 292% from 2001 through 2016, with one in every 65 deaths related to opioids by 2016. Men represented 70% of all opioid-related deaths by 2016, and the number was astronomically higher for millennials (24 and 35 years of age).

According to the study, one out of every five deaths among millennials in the United States is related to opioids. In contrast, opioid-related deaths for the same cohort accounted for 4% of all deaths in 2001. Moreover, it gets worse; the second most impacted group was 15 to 24-year-olds, which suggests, the opioid epidemic is now ripping through Generation Z (born after 1995). In 2016, nearly 12.4% of all deaths in this age group were attributed to opioids. “Despite the amount of attention that has been placed on this public health issue, we are increasingly seeing the devastating impact that early loss of life from opioids is having across the United States,” said Dr. Tara Gomes, a scientist in the Li Ka Shing Knowledge Institute of St. Michael’s.

“In the absence of a multidisciplinary approach to this issue that combines access to treatment, harm reduction and education, this crisis will impact the U.S. for generations,” she added. Over the 15-year period, more than 335,000 opioid-related deaths were recorded in the United States that met the study’s criteria. Researchers said this number is an increase of 345% from 9,489 in 2001 (33.3 deaths per million population) to 42, 245 in 2016 (130.7 deaths per million population).

Read more …

“At what stage of their hapless fiddling, constant arguing and pitiful attempts to administer the kiss of life to the corpse that Brexit has turned out to be, does a politician officially earn the title of – stupid idiot?”

The ‘Doomsday Brexit Plan’ Document Should Frighten Us All (TP)

This is the first paragraph of The Times article (paywall) regarding Britain’s now famous Doomsday Brexit plan. “Britain would be hit with shortages of medicine, fuel and food within a fortnight if the UK tries to leave the European Union without a deal, according to a Doomsday Brexit scenario drawn up by senior civil servants for David Davis.” The Times confirms that the port of Dover will collapse “on day one” if Britain crashes out of the EU, leading to critical shortages of supplies. This was the middle of three scenarios put forward by senior advisors. A type of best guestimate if you like. You simply do not want to know the outcome of the worst of those three scenarios. Indeed, we have been spared from such details.

The article states that the RAF would have to be deployed to ferry supplies around Britain. And yes, we’re still on the middle scenario here. “You would have to medevac medicine into Britain, and at the end of week two we would be running out of petrol as well,” a contributing source said. The report continues to describe matters such as cross-channel disruption for heavy goods vehicles, which would also be catastrophic. Massive carparks will be required. A senior official said in the ‘Doomsday’ Brexit plan: “We are entirely dependent on Europe reciprocating our posture that we will do nothing to impede the flow of goods into the UK. If for whatever reason, Europe decides to slow that supply down, then we’re screwed.”

Let’s not worry about the fact that French borders are often left in chaos due to the all too familiar strikes that appear almost monthly during holiday season for one reason or another. Home secretary Sajid Javid makes an unconvincing comment stating he’s ‘confident’ a deal will be done. That’s hardly the type of assurance we need is it? UK officials emphasised that the June EU summit due on the 28th was heading for a “car crash” because “no progress has been made since March” to devise plans for a long-term deal. If your confidence in Brexit is starting to wane, don’t worry, half the nation are not just anxious but downright fearful – mainly because, neither in or out has given any concreate evidence of likely outcomes. This is probably because Brexit hasn’t been done before – and was designed that way. Deliberately.

At what stage of their hapless fiddling, constant arguing and pitiful attempts to administer the kiss of life to the corpse that Brexit has turned out to be, does a politician officially earn the title of – stupid idiot? “Just bloody get on with it” shout the Brexiteers, except both they and the UK government still can’t decide what ‘it’ is.

Read more …

I’ve asked it before: where will Britain be 10 years from now?

Nearly 4 Million UK Adults Forced To Use Food Banks (Ind.)

Nearly 4 million adults in the UK have been forced to use food banks due to ”shocking” levels of deprivation, figures have revealed for the first time. An exclusive poll commissioned by The Independent reveals one in 14 Britons has had to use a food bank, with similar numbers also forced to skip meals and borrow money as austerity measures leave them “penniless with nowhere to turn”. The findings come as a major report by the Joseph Rowntree Foundation (JRF) shows more than 1.5 million people were destitute in the UK last year alone, a figure higher than the populations of Liverpool and Birmingham combined. This includes 365,000 children, with experts warning that social security policy changes under the Tory government were leading to “destitution by design”.

Destitution is defined as people lacking two “essential needs”, such as food or housing. The polling on food poverty, from a representative sample of 1,050 UK adults carried out for The Independent by D-CYFOR, suggests that 7 per cent of the adult population – or 3.7 million people – have used a food bank to receive a meal. A million people have decreased the portion size of their child’s meal due to financial constraints, the survey says. The results come after it emerged in April that the number of emergency meals handed out at food banks had risen at a higher rate than ever, soaring by 13 per cent in a year, with more than 1.3 million three-day emergency food supplies given to people in crisis in the 12 months to March.

Read more …

I haven’t read the book -and it’s not out yet- but this seems, let’s say, naive. If you figure that a constant increase in energy use is the culprit, how can you say renewable nergy is the solution, and not call for using less energy?

How We Created The Anthropocene (BBC)

Factories and farming remove as much nitrogen from the atmosphere as all of Earth’s natural processes, and the climate is changing fast because of carbon dioxide emissions from fossil fuel use. Beyond these grim statistics, the critical question is: will today’s interconnected mega-civilisation that allows 7.5 billion people to lead physically healthier and longer lives than at any time in our history continue from strength to strength? Or will we keep using more and more resources until human civilisation collapses? To answer this, we re-interpret human history using the tools of modern science, to provide a clearer view of the future.

Tracing the ever-greater environmental impacts of different human societies since our march out of Africa, we found that there are just five broad types that have spread worldwide. Our original hunter-gatherer societies were followed by the agricultural revolution and new types of society beginning some 10,500 years ago. The next shift resulted from the formation of the first global economy, after Europeans arrived in the Americas in 1492, which was followed in the late 1700s by the new societies following the Industrial Revolution. The final type is today’s high-production consumer capitalist mode of living that emerged after WWII.

A careful analysis shows that each successive mode of living is reliant on greater energy use, greater information and knowledge availability, and an increase in the human population, which together increase our collective agency. These insights help us think about avoiding the coming crash as our massive global economy doubles in size every 25 years, and on to the possibilities of a new and more sustainable sixth mode of living to replace consumer capitalism. Seen in this way, renewable energy for all takes on an importance beyond stopping climate breakdown; likewise free education and the internet for all has a significance beyond access to social media – as they empower women, which helps stabilise the population.

Read more …

Jun 052018
 


John French Sloan East Entrance, City Hall, Philadelphia 1901

 

Carbon Bubble To Destroy Trillions Of Dollars Of Global Wealth (Ind.)
The Effects Of Trump’s Steel Tariffs On Red State Energy (F.)
US Firms To Pour $2.5 Trillion Into Buybacks, Dividends, M&A This Year (CNBC)
India Central Banker Sees Sudden “Evaporation” Of Dollar Funding (ZH)
China’s Debt Crackdown To Hurt Emerging Markets, Oil, Metals – Fitch (R.)
Italy’s Long, Hot Summer (Carmen Reinhart)
Why The Euro Was Created (ZH)
Toronto’s House Price Bubble Not Fun Anymore (WS)
Why Australia’s Great Banking Boom Has Ended (SMH)
Apple Jams Facebook’s Web-Tracking Tools (BBC)
A West Coast State of Mind (Jim Kunstler)
Edward Snowden: ‘The People Are Still Powerless, But Now They’re Aware’ (G.)
Who Should Feed The World: Real People Or Faceless Multinationals? (Vidal)

 

 

Don’t think it will happen without an overall economic collapse.

Carbon Bubble To Destroy Trillions Of Dollars Of Global Wealth (Ind.)

Trillions of dollars of fossil fuel wealth will be wiped out at some point over the next 17 years even if governments fail to impose binding carbon emissions limits on industry to curb global warming, according to a major new study. Environmentalists and policymakers have long warned of the threat of a “carbon bubble” and “stranded assets” for listed energy companies, based on the possibility they will never be able to realise the value of their vast stores of oil, gas and coal if politicians actually deliver on their decarbonisation promises.

But today a group of scientists and analysts from Cambridge, Nijmegen, Macao and the Open University take that warning a step further by arguing that these assets are destined to be stranded regardless of official policies to discourage the use of fossil fuels because clean energy technologies are now developing so rapidly that those polluting assets will be worthless in any case. “Our analysis suggests that, contrary to investor expectations, the stranding of fossil fuels assets may happen even without new climate policies. This suggests a carbon bubble is forming and it is likely to burst,” said Professor Jorge Viñuales from Cambridge University. If policymakers did deliver on the decarbonisation programmes, the loss for investors would be even more rapid.

The research is at odds with work from the International Energy Agency, which projects steady price rises for fossil fuels until 2040. And Donald Trump’s decision last year to pull the United States out of the Paris Agreement on climate change has also done nothing to persuade most investors to take the stranded assets warning seriously. But the researchers’ new “simulation-based, energy-economy-carbon-cycle climate” model suggests investing in fossil fuel firms today is likely to prove a disastrous bet, suggesting that between $1 trillion and $4 trillion could be wiped off the value of global fossil fuel assets by 2035.

Read more …

Steel and concrete prices better not rise.

The Effects Of Trump’s Steel Tariffs On Red State Energy (F.)

Electricity production is heavily dependent on materials like steel, concrete, copper and aluminum, for both producing electricity and moving it around to where it’s needed (see figure). Solar and Wind energy take more steel than any other energy source. Natural gas and nuclear take the least. Solar needs 1,600 tons of steel per MW, wind energy needs over 400 tons of steel, while gas and nuclear need only 4 and 40 tons, respectively. Wind and solar also require ten times more transmission, also heavily steel-intensive, since they are usually sited far away from where the energy is used.

The average high-voltage transmission tower includes about 30 tons of steel and transmission wire contains about a ton of steel per mile. Going from our biggest solar array, located in the Mohave Desert, to Los Angeles is almost 300 miles, requiring on the order of 10,000 tons of steel depending on specific design. While we tend to think of renewables as associated with Blue States, they are actually growing faster in Red States. Four of the five states with the most installed wind energy are Texas (20,321 MW), Iowa (6,917 MW), Oklahoma (6,645 MW) and Kansas (4,451 MW). The only Blue State in the top five is California (5,662 MW).

Read more …

Prop up your stock some more.

US Firms To Pour $2.5 Trillion Into Buybacks, Dividends, M&A This Year (CNBC)

Money is pouring into the U.S. economy and in turn helping provide support for the otherwise struggling stock market. If current conditions persist, corporations are likely this year to inject more than $2.5 trillion into what UBS strategists term “flow” — the combination of share buybacks, dividends, and mergers and acquisitions activity. The development comes as companies find themselves awash in cash, thanks primarily to years of stashing away profits plus the benefits of a $1.5 trillion tax break this year that slashed corporate rates and encouraged firms to bring back money idling overseas. Companies have nearly $2.5 trillion in cash parked domestically, according to the Federal Reserve, and as much as $3.5 trillion overseas, various estimates have shown.

When all is said and done for 2018, UBS expects dividend issuance to top $500 billion, buybacks to range from $700 billion to $800 billion, and M&A to constitute about $1.3 trillion. If the numbers pan out, they would equate to about 10% of the S&P 500’s market cap and 12.5% of GDP. “Assuming improving growth and stable rates, we expect the positive positioning/flow backdrop to support US equities, which is important as the daily corporate flow slows from mid-June to mid-July,” UBS strategist Keith Parker said in a note. Parker pointed out that the firm has overweight positions in both tech and health care as the two sectors are leading the buyback boom.

Buybacks specifically have been on a torrid pace and are helping provide a floor to a market that for much of 2018 had looked tired and volatile after a 20% S&P 500 gain the year before. Repurchases are up 83% year to date, far ahead of the 9% gain in dividends, while M&A activity involving U.S. companies has surged 130%, according to UBS. [..] UBS estimates that the combination of buybacks, dividends and demand flows account for some 40% in performance this year. The S&P 500 has nudged 2.6% higher and the Dow industrials are just ahead of breakeven.

Read more …

The Fed retreats and the Treasury issues new debt.

India Central Banker Sees Sudden “Evaporation” Of Dollar Funding (ZH)

In an op-ed published overnight in the FT, a central banker writes that when it comes to the turmoil gripping the world’s Emerging Markets, whether it is the acute, idiosyncratic version observed in Argentina and Turkey, which according to JPM may be doomed, or the more gradual selloffs observed in places like Indonesia, Malaysia, Brazil, Mexico and India, don’t blame the Fed’s rate hike cycle. Instead blame the “double whammy” of the Fed’s shrinking balance sheet coupled with the dollar draining surge in debt issuance by the US Treasury.

That’s the message from the current Reserve Bank of India, Urjit Patel, who writes that “unlike previous turbulence, this episode cannot be attributed to the US Federal Reserve’s moves on interest rates, which have been rising steadily since December 2016 in a calibrated manner.” But does that mean that the Fed is not to blame for what increasingly looks like another budding EM crisis? Not at all: according to Patel, the dollar funding shortage “upheaval” stems from what he sees as the confluence of two significant events of which the Fed’s balance sheet reduction is one, while the second is the dramatic increase in US Treasury issuance to pay for Trump’s tax cuts; what is notable is that both events are drastically soaking up dollar liquidity.

As a result, Patel blames a lack a coordination between the Fed and Treasury on the adverse flow through across global funding markets as a result of this decline in dollar liquidity, and writes that “given the rapid rise in the size of the US deficit, the Fed must respond by slowing plans to shrink its balance sheet. If it does not, Treasuries will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable.” Putting these two parallel processes – which threaten to materially impair dollar funding markets – in context, on one hand there is QT, or the gradual decline in the Fed’s balance sheet which is set to peak at a rate of $50BN/month by October, while at the same time US net Treasury issuance is set to jump to $1.2 trillion in 2018 and 2019 to cover the forecasted budget deficit of $804BN and $981BN in 2018 and 2019, respectively.

And in a curious coincidence, the withdrawal of dollar funding by the Fed in monthly terms, as it reduces its reinvestment of income received, is proceeding at roughly the same pace as that of net issuance of debt by the US government. Furthermore, both processes are open ended which means that over the next few years, the government’s net issuance will stabilize, albeit at a high level, whereas the Fed’s balance-sheet reduction will keep rising. Both are terrible news for Emerging Markets, which are in desperate need of reversing the ongoing dollar outflows; however as long as Trump continues to make America great, and funds said stimulus with excess debt issuance, emerging market turmoil is virtually guaranteed.

Read more …

China retreats, too.

China’s Debt Crackdown To Hurt Emerging Markets, Oil, Metals – Fitch (R.)

China’s debt crackdown is a key risk to the country’s economic growth and will have significant knock-on effects for the global economy, particularly emerging markets with high commodity dependence or close Chinese trade links, Fitch Ratings said. Beijing’s campaign to put a lid on debt could also lead to a sharp slowdown in business investment, Fitch said late on Sunday, forecasting that growth in the world’s second-biggest economy would slow to around 4.5% over the medium term. Fitch said the implications of this scenario for the global economy would be significant but not dramatic, unlike a full-scale hard landing.

One of the most significant effects would be on commodity prices, with Fitch expecting oil and metal prices to fall 5 to 10% from its baseline scenario, reflecting China’s large role as a commodity consumer. In April, a Reuters poll of 72 institutions showed economists expected China’s economic growth to slow to 6.5% this year and 6.3% next year as Beijing extends its crackdown on riskier lending practices. GDP in 2017 expanded 6.9% in real terms and 11.2% in nominal terms. Beijing’s financial crackdown, now in its third year, has slowly pushed up borrowing costs and is choking off alternative, murkier funding sources for companies such as shadow banking.

The ratio of Chinese corporate debt to GDP is already very high by international standards – at 168% in 2017 – and is expected to start rising again as nominal GDP growth declines towards 8% from the unusually high rate of more than 11% in 2017, Fitch said. If the government aims to stabilize its corporate debt ratio by 2022, Fitch said China’s nominal economic growth rate could fall by 1 percentage point a year over the medium term while business investment growth would drop 5percentage points per year.

Read more …

Restructuring Target2. That should be fun.

Italy’s Long, Hot Summer (Carmen Reinhart)

The political upheaval and social unrest fueling the current crisis in Italy should surprise no one. On the contrary, the only uncertainty was when exactly matters would come to a head. Now they have. Italy’s per capita GDP in 2018 is about 8% below its level in 2007, the year before the global financial crisis triggered the Great Recession. And the International Monetary Fund’s projections for 2023 suggest that Italy will still not have fully recovered from the cumulative output losses of the past decade. Among the 11 advanced economies that were hit by severe financial crises in 2007-2009, only Greece has suffered a deeper and more protracted economic depression.

Greece and Italy were the two economies carrying the highest debt burdens at the outset of the crisis (109% and 102% of GDP, respectively), leaving them poorly positioned to cope with major adverse shocks. Since the crisis erupted a decade ago, economic stagnation and costly banking weaknesses have propelled debt burdens higher still, despite a decade of exceptionally low interest rates. Greece has already faced more than one “credit event” and, while Italy has also had a couple of close calls, the spring of 2018 is turning out to be its most tumultuous episode yet. The summer will probably be worse, bringing Italy closer to a sovereign debt crisis. On the surface, general government debt appears to have stabilized since 2013, at around 130% of GDP. However, as I have stressed here and elsewhere, this “stability” is misleading.

General government debt is not the whole story for Italy, even setting aside the private debt loads and the recent renewed upturn in nonperforming bank loans (a daunting legacy of the financial crisis). When evaluating Italy’s sovereign risk, the central bank’s debts (Target2 balances) must be added to those of the general government. As the most recent available data (through March) show, these balances increase the ratio of public-sector debt to GDP by 26%. With many investors pulling out of Italian assets, capital flight in the more recent data is bound to show up as an even bigger Target2 hole. This debt, unlike pre-1999, pre-euro Italian debt, cannot be inflated away. In this regard, it is much like emerging markets’ dollar-denominated debts: it is either repaid or restructured.

Read more …

What the euro has meant for Greece and Italy: lower wages, higher unemployment and higher current account deficit.

Why The Euro Was Created (ZH)

[..] we thought it would be a good idea to remind readers why the euro exists in the first place. The briefest possible answer: to make sure the Deutsche Mark does not. As presented in the chart below – which shows the performance for each of the EU12 countries against the German DEM in every decade from the 1950s to the start of the Euro in 1999 – apart from a small revaluation of core countries in the 1990s, every country devalued to Germany in every decade between the 1950s and the start of the Euro. Said otherwise, the Deutsche Mark appreciated in value against all of its European peers for 5 consecutive decades, a condition which if left unchanged, would have led to an economic and trade crisis.

And as a bonus chart, here is same data (with the US and UK added) from the end of the Bretton Woods system in 1971 to the start of the Euro (Lira -82% devaluation to German DM) and during the 1990s (-24% devaluation) – the decade immediately leading up to the Euro start. As can be seen Italy is amongs the weakest performers relative to the German DM over these periods and showed the momentum that existed in the period leading up to the start of the Euro.

And while the fixed exchange of the Euro for European nations allowed the German export industry to go into overdrive, the lack of the possibility for an external, i.e. currency, devaluation, meant that Italy has been forced to do it all by engaging in internal devaluation, i.e., lower wages, higher unemployment and boosting its current account deficit, which however is made virtually impossible given Italy’s deteriorating demographics. This is what DB’s Jim Reid said of Italy’s potential future: Looking forward, Italy will not find it easy to grow out of its problems as its facing one of the worst set of demographics of the G20 countries. Its population size has peaked (according to the UN) and is expected to decline out to 2050. Its working age population (15-64 year olds as a proxy) is set to fall -24% over the same period and is again one of the worst placed in the G20.

Read more …

“Home sales plunged 22% in May compared to a year ago..”

Toronto’s House Price Bubble Not Fun Anymore (WS)

Housing in the Greater Toronto Area is, let’s say, retrenching. Canada’s largest housing market has seen an enormous two-decade surge in prices that culminated in utter craziness in April 2017, when the Home Price Index had skyrocketed 32% from a year earlier. But now the hangover has set in and the bubble isn’t fun anymore. Home sales plunged 22% in May compared to a year ago, to 7,834 homes, according to the Toronto Real Estate Board (TREB). It affected all types of homes, even the once red-hot condos: • Detached houses -28.5% • Semi-detached houses -29.4% • Townhouses -13.4% • Condos -15.5%.

It was particularly unpleasant at the higher end: Sales of homes costing C$1.5 million or more plummeted by 46% year-over-year to 508 homes in May 2018, according to TREB data. Compared to the April 2017 peak of 1,362 sales in that price range, sales in May collapsed by 63%. But it’s not just at the high end. At the low end too. In May, sales of homes below C$500,000 – about 68% of them were condos – fell by 36% year-over-year to 5,253 homes. The TREB publishes two types of prices – the average price and its proprietary MLS Home Price Index based on a “composite benchmark home.” Both fell in May compared to a year ago.

The average price in May for the Greater Toronto Area (GTA) fell 6.6% year-over-year to C$805,320, and is now down 12.3%, or an ear-ringing C$113,000, from the crazy peak in April 2017. There are no perfect measures of home prices in a market. Each has its own drawbacks. Average home prices can be impacted by the mix and by a few large outliers – but over the longer term, it gives a good impression of the direction. The chart below shows thepercentage change in average home prices in the GTA compared to a year earlier:

Read more …

Because the boom was a bubble.

Why Australia’s Great Banking Boom Has Ended (SMH)

It doesn’t feel all that long ago that Australian banks were the envy of the world. In March 2009, when stress-testing of US financial institutions drove the final spasm of the previous year’s credit crisis, you could have bought all the shares in Citigroup, Royal Bank of Scotland Group and Barclays with their $US8.4 trillion ($11 trillion) of gross assets for less than you’d pay for the equity of Westpac, with $US347 billion of assets. Commonwealth Bank of Australia’s share price peaked six years later just a sliver south of three times the value of its net assets, an extraordinary level in a business where price-book ratios have struggled to break above one times over the past decade.

With the current Royal Commission inquiring into practices in the country’s financial services industry and a slew of court cases, those high-flyers have come to earth with a bump. CBA on Monday agreed to pay $700 million to settle a money laundering case in which it admitted that a software update allowed about 54,000 reportable transactions to go unreported over a period of almost three years. On Friday, ANZ and local units of Deutsche Bank and Citigroup announced they were facing possible criminal cartel charges over their handling of a $2.5 billion placement of ANZ shares in 2015. Having executives hauled up before government inquiries and paying out hundreds of millions in court settlements isn’t great for headlines, but it would be a mistake to see the declines in Australia’s banking sector as purely a result of this.

When your annual net income is in the region of $10 billion, as CBA’s is, a $700 million charge is more than just a rounding error. But the 1.2 per cent jump in the company’s stock after the settlement was announced Monday is an indication that the cost is worth less to shareholders than the benefit of putting the issue firmly in the past. The greater risk to Australia’s banks lurks not in the papers of regulators and inquisitors, but on the streets of the country’s sprawling suburbs. As we’ve argued before, the most ominous indicator to watch is also a favourite one of the Reserve Bank of Australia. Rents, as measured by the Australian Bureau of Statistics, have been increasing at less than 1 per cent for nine consecutive quarters , the worst performance for the measure since the housing crash of the early 1990s.

Read more …

The spirit of Steve Jobs?!

Apple Jams Facebook’s Web-Tracking Tools (BBC)

Apple will attempt to frustrate tools used by Facebook to automatically track web users, within the next version of its iOS and Mac operating systems. “We’re shutting that down,” declared Apple’s software chief Craig Federighi, at the firm’s developers conference. He added that the web browser Safari would ask owners’ permission before allowing the social network to monitor their activity. The move is likely to add to tensions between the two companies. Apple’s chief executive Tim Cook had previously described Facebook’s practices as being an “invasion of privacy” – an opinion Facebook’s founder Mark Zuckerberg subsequently denounced as being “glib”.

At the WWDC conference – held in San Jose, California – Mr Federighi said that Facebook keeps watch over people in ways they might not be aware of. “We’ve all seen these – these like buttons, and share buttons and these comment fields. “Well it turns out these can be used to track you, whether you click on them or not.” He then pointed to an onscreen alert that asked: “Do you want to allow Facebook.com to use cookies and available data while browsing?” “You can decide to keep your information private.”

One cyber-security expert applauded the move. “Apple is making changes to the core of how the browser works – surprisingly strong changes that should enable greater privacy,” said Kevin Beaumont. “Quite often the changes companies make around privacy are small, incremental, they don’t shake the market up much. “Here Apple is allowing users to see when tracking is enabled on a website – actually being able to visually see that with a prompt is breaking new ground.”

Read more …

Building on the Ring of Fire.

A West Coast State of Mind (Jim Kunstler)

It’s only been in the last thirty years that Seattle hoisted up its tombstone cluster of several dozen office and condo towers. That’s what cities do these days to demonstrate their self-regard, and Seattle is perhaps America’s boomingest city, what with Microsoft’s and Amazon’s headquarters there — avatars of the digital economy. A megathrust earthquake there today would produce a scene that even the computer graphics artistes of Hollywood could not match for picturesque chaos. What were the city planners thinking when they signed off on those building plans?

I survived the journey through the Seattle tunnel, dogged by neurotic fantasies, and headed south to California’s Bay Area, another seismic doomer zone. For sure I am not the only casual observer who gets the doomish vibe out there on the Left Coast. Even if you are oblivious to the geology of the place, there’s plenty to suggest a sense of impossibility for business-as-usual continuing much longer. I got that end-of-an-era feeling in California traffic, specifically driving toward San Francisco on the I-80 freeway out in the suburban asteroid belt of Contra Costa County, past the sinister oil refineries of Mococo and the dormitory sprawl of Walnut Creek, Orinda, and Lafayette.

Things go on until they can’t, economist Herb Stein observed, back in the quaint old 20th century, as the USA revved up toward the final blowoff we’ve now entered. The shale oil “miracle” (so-called) has given even thoughtful adults the false impression that the California template for modern living will continue indefinitely. I’d give it less than five years now.

Read more …

Snowden deserves as much support as Assange does.

Edward Snowden: ‘The People Are Still Powerless, But Now They’re Aware’ (G.)

Edward Snowden has no regrets five years on from leaking the biggest cache of top-secret documents in history. He is wanted by the US. He is in exile in Russia. But he is satisfied with the way his revelations of mass surveillance have rocked governments, intelligence agencies and major internet companies. In a phone interview to mark the anniversary of the day the Guardian broke the story, he recalled the day his world – and that of many others around the globe – changed for good. He went to sleep in his Hong Kong hotel room and when he woke, the news that the National Security Agency had been vacuuming up the phone data of millions of Americans had been live for several hours.

Snowden knew at that moment his old life was over. “It was scary but it was liberating,” he said. “There was a sense of finality. There was no going back.” What has happened in the five years since? He is one of the most famous fugitives in the world, the subject of an Oscar-winning documentary, a Hollywood movie, and at least a dozen books. The US and UK governments, on the basis of his revelations, have faced court challenges to surveillance laws. New legislation has been passed in both countries. The internet companies, responding to a public backlash over privacy, have made encryption commonplace.

Snowden, weighing up the changes, said some privacy campaigners had expressed disappointment with how things have developed, but he did not share it. “People say nothing has changed: that there is still mass surveillance. That is not how you measure change. Look back before 2013 and look at what has happened since. Everything changed.” The most important change, he said, was public awareness. “The government and corporate sector preyed on our ignorance. But now we know. People are aware now. People are still powerless to stop it but we are trying. The revelations made the fight more even.”

Read more …

Bayer-Monsanto: “It will effectively control nearly 60% of the world’s supply of proprietary seeds, 70% of the chemicals and pesticides used to grow food, and most of the world’s GM crop genetic traits..”

Who Should Feed The World: Real People Or Faceless Multinationals? (Vidal)

Unless there is a major hiccup in the next few days, an incredibly powerful company will shortly be given a licence to dominate world farming. Following a nod from Donald Trump, powerful lobbying in Europe and a lot of political arm-twisting on several continents, the path has been cleared for Monsanto, the world’s largest seed company, to be taken over by Bayer, the second-largest pesticide group, for an estimated $66bn (£50bn). The merger has been called both a “marriage made in hell” and “an important development for food security”.

Through its many subsidiary companies and research arms, Bayer-Monsanto will have an indirect impact on every consumer and a direct one on most farmers in Britain, the EU and the US. It will effectively control nearly 60% of the world’s supply of proprietary seeds, 70% of the chemicals and pesticides used to grow food, and most of the world’s GM crop genetic traits, as well as much of the data about what farmers grow where, and the yields they get. It will be able to influence what and how most of the world’s food is grown, affecting the price and the method it is grown by. But the takeover is just the last of a trio of huge seed and pesticide company mergers.

Backed by governments, and enabled by world trade rules and intellectual property laws, Bayer-Monsanto, Dow-DuPont and ChemChina-Syngenta have been allowed to control much of the world’s supply of seeds. You might think that these mergers would alert the government, but because political parties in Britain are so inward-looking, and because most farmers in rich countries already buy their seeds from the multinationals, opposition has barely been heard.

Read more …