extension Archives - The Automatic Earth

The European Parliament’s approval of the Copyright Directive today is the end of the internet as we know it. This new regulation creates substantial new controls on what we can share online which threaten freedom of expression, undermine creativity, and cement the dominance of technology giants. The Copyright Directive will create two internets. The first, a heavily censored version for European users, including filters to prevent you from uploading content. The second, a free internet where creativity is encouraged, for everyone else. The directive represents everything that’s wrong with the EU’s policymaking process. It was written at a substantial distance from Europeans, heavily influenced by lobbyists and national compromises.

There is a serious lack of accountability. The opposition to the directive was substantial, but it didn’t seem to matter. Over 200 intellectual property academics have warned that the directive serves “narrow sectional interests”. Even substantial parts of the European music industry have raised concerns about the scheme. The Change.org petition opposing the directive has reached over 5.1 million signatories, the most in the website’s history. Last weekend – while some Brits were marching to stay in the EU – thousands of Europeans took to the street in Save the Internet marches.

More overreach.

“Safety campaigners described the move as one of the biggest leaps forward in 50 years and said it could save 25,000 lives by 2037..”

Oh yeah? How many lives could be saved by designing your infrastructure to make cars unnecessary?

• All New UK Cars To Have Speed Limiters By 2022 Under EU Plans (G.)

All new cars sold in the UK and Europe are to be fitted with devices to automatically stop drivers from exceeding the speed limit under sweeping changes to vehicle safety rules provisionally agreed by the EU. Although Britain may no longer be part of the EU when the rules come into effect, the UK regulator, the Vehicle Certification Agency, has said it will mirror safety standards for vehicles in the UK. The speed limiter is one of a range of safety features to be made mandatory from 2022, along with automated emergency braking, electronic data recorders and improved visibility built into lorries for drivers to see vulnerable cyclists and pedestrians around the vehicle.

Safety campaigners described the move as one of the biggest leaps forward in 50 years and said it could save 25,000 lives by 2037. The package of measures needs to be ratified by the European parliament, which is likely by September. The speed limiter device, called intelligent speed assistance, or ISA, uses GPS data and sign recognition cameras to detect speed limits where the car is travelling, and then will sound a warning and automatically slow down the vehicle if it is exceeding the limit. However, drivers will be able to override the device simply by pushing hard on the accelerator, reassuring some motoring groups that have argued that in certain situations – such as when trying to swiftly overtake a vehicle in front – speeding up could be safer.

A long extension appears to be the only way forward.

• Brexit Extension Could Be Until 31 March 2020 (G.)

The EU has pencilled in April Fools’ Day 2020 as a leading option for Britain’s first day outside the bloc, should the UK government ask Brussels for a lengthy extension of article 50 in three weeks’ time, it can be revealed. The date was to be offered at the leaders’ summit last week if Theresa May had followed through on her promise to request a short extension in the event of passing her Brexit deal, and a longer one should it be rejected again by the House of Commons. Such was the disapproval of her cabinet, the prime minister only sought a short delay until 30 June in her formal letter. She was subsequently given an unconditional extension until 12 April, or a longer one to 22 May in the unlikely event of the withdrawal agreement being ratified this week.

Without having received a request from Downing Street for a prolonged extension, the EU’s leaders instead left open the offer of a lengthy delay should there be a new political process or event before 12 April, such as a general election or second referendum, but they did not stipulate its potential length. A one-year extension, ending on 31 March 2020, was, however, written into internal EU papers before the summit as an offer that could be made to May should she formally seek a longer extension, sources said. It will likely remain an option if May comes back to Brussels having failed to ratify her deal. Such a UK departure date would ensure the British government would not have any opportunity to meddle in the EU’s long-term plans, including its budget, sources suggested.

The same deal they fought so hard against.

• Brexiters Demand May Exit Date To Back Deal (G.)

Theresa May is under intense pressure to set out a timetable for her departure from Downing Street to seal the support of Brexit hardliners for her twice-rejected deal. The prime minister will address Conservative MPs at a meeting of the 1922 Committee of backbenchers on Wednesday as the House of Commons prepares to vote on alternatives to her Brexit deal. There are renewed signs that leavers are reluctantly preparing to back her in a third meaningful vote rather than risk seeing Brexit slip away altogether. MPs will hold a series of “indicative votes” on alternative Brexit options on Wednesday after three ministers resigned to back a motion to seize control of the parliamentary timetable from the government.

Leavers fear this could lead to what May has a called a “slow Brexit” – a lengthy delay to the article 50 process, leading to a closer future relationship with the EU. Options for MPs to consider may include revocation of article 50, a second referendum, leaving with no deal and backing a Norway-style deal that would include single market membership and a customs arrangement. Boris Johnson appeared to pave the way for a climbdown over May’s deal on Tuesday night. Asked at a Telegraph event whether he would vote for it, the leading Brexiter said: “I am not there yet.” He described it as a “terrible deal, something which I bitterly opposed for a long time”. However, he said he needed “to see that the second phase of the negotiations will be different from the first” and highlighted the “appreciable risk” that not voting for the deal could lead to no Brexit.

“In a pantomime moment, Farage turned to those sat behind him to ask whether they really wanted him to return as an MEP.”

• EU Cannot Betray ‘Increasing Majority’ Who Want To Cancel Brexit – Tusk (G.)

Donald Tusk has issued a rallying call to the “increasing majority” of British people who want to cancel Brexit and stay in the European Union. In a stirring intervention, the European council president hailed those who marched on the streets of London and the millions who are petitioning the government to revoke article 50. Speaking to the European parliament, Tusk reprimanded those who voiced concerns about a potential lengthy extension to article 50 in the event of the Commons rejecting the withdrawal agreement again this week.

Tusk said: “Let me make one personal remark to the members of this parliament. Before the European council, I said that we should be open to a long extension if the UK wishes to rethink its Brexit strategy, which would of course mean the UK’s participation in the European parliament elections. And then there were voices saying that this would be harmful or inconvenient to some of you. “Let me be clear: such thinking is unacceptable. You cannot betray the 6 million people who signed the petition to revoke article 50, the 1 million people who marched for a people’s vote, or the increasing majority of people who want to remain in the European Union”

To heckling from Ukip MEPs, Tusk went on: “They may feel that they are not sufficiently represented by the UK Parliament, but they must feel that they are represented by you in this chamber. Because they are Europeans.” The former Ukip leader, Nigel Farage, responded to Tusk by describing him as “deluded” and claiming that a second referendum would deliver a larger majority for leave. Initial suggestions that 1 million people marched last weekend in favour of remaining in the EU have been questioned in recent days. In a pantomime moment, Farage turned to those sat behind him to ask whether they really wanted him to return as an MEP. He ended his speech to the parliament by appealing to the EU’s leaders to “get the British out”.

2nd Special Counsel.

• McConnell Backs Push For Investigation Of Russia Probe Missteps (R.)

The top Republican in the U.S. Senate said on Tuesday he supported a push by a Republican colleague for an inquiry into potential law enforcement missteps in a probe of possible collusion between President Donald Trump’s campaign and Russia. “I think Senator (Lindsey) Graham has raised a legitimate question,” Senate Majority Leader Mitch McConnell told reporters. “I think it’s not inappropriate for the chairman of the Judiciary Committee, with jurisdiction over the Justice Department, to investigate possible misbehaviors.”

Graham, who heads the panel, said on Monday he wanted to see a special counsel appointed to look into the origins of a Foreign Intelligence Surveillance Act warrant for former Trump adviser Carter Page. The warrant was based in part on information in a dossier on Trump compiled by Christopher Steele, a former British intelligence officer who co-founded a private intelligence firm. Graham said he would use the panel’s subpoena power if necessary, whether or not a special counsel is appointed, to look into the matter.

Barr’s on his way to becoming America’s new punchbag.

• Mueller Report Details To Be Issued In ‘Weeks, Not Months’ (R.)

U.S. Attorney General William Barr plans to issue a public version of Special Counsel Robert Mueller’s report on the investigation into Russian interference in the 2016 presidential election within “weeks, not months,” a Justice Department official said on Tuesday. Barr released his own summary of the report’s central findings on Sunday, but said he needed more time to review the report to determine how much of it could be made public. He relayed his plans to release a public version of the report in the coming weeks to Senate Judiciary Committee Chairman Lindsey Graham during a phone call this week, the official said.

The official said there is no plan to share an advanced copy of the report with the White House. Some portions of Mueller’s confidential report contain materials that arose during secret grand jury proceedings. Federal rules generally prohibit the government from releasing that information to the public. The report also contains information about ongoing criminal investigations that Mueller referred to other U.S. attorneys offices. Barr has not yet revealed a precise date for when the final public version might be ready.

Cassandra Fairbanks’s intensely sad story.

• Ecuador Ambassador Tells Assange to ‘Shut up’ and Accept Spying (GP)

It was meant to be a routine visit by a journalist to another journalist. Instead, I found myself locked in a cold, surveilled room for over an hour by Ecuadorian officials, as a furious argument raged between the country’s ambassador and Julian Assange on Monday. The room was inside the Ecuadorian Embassy in London, where 2019 Nobel Peace Prize nominee Julian Assange currently lives under the ostensible protection of political asylum. Yet the WikiLeaks publisher was barred from entering the room, where he was supposed to join me for a pre-approved meeting, because he refused to submit to a full-body search and continuous surveillance. In the fireworks that followed, Assange accused the ambassador of being an agent of the United States government.

The crackdown on visitors was felt before I even entered the embassy. It’s the third time I’ve visited in the past year, and each time the atmosphere seems progressively worse. Just like my previous visit, since new rules for visitors were enacted, I couldn’t take my phone into the meeting without giving the Ecuadorian officials a swathe of data. If you want to take it in with you, they request its brand, model, serial number, IMEI number, and telephone number. I was also advised that Ecuador could not be trusted to hold my phone while I met with Assange, so I left it behind and walked to the embassy phoneless, several minutes early to make sure I was on time.

This is not going to be easy.

• Boeing 737 MAX Software Fix: Easy To Upload, Harder To Approve (R.)

Boeing engineers armed with laptops and thumb drives will be able to upload a crucial software fix for the 737 MAX anti-stall system in about an hour. That’s the easy part. Before Boeing’s workhorse of the future can resume flying, the upgrade must first be approved by the U.S. Federal Aviation Administration (FAA) and then by wary regulators around the globe who have grounded it in the wake of two deadly crashes.R egulators in China, Europe and Canada have signaled they will not rubber stamp an FAA decision to allow the planes back into the air but conduct their own reviews. With the FAA under pressure for its role in certifying the newest 737, and other regulators challenging its leadership of the airline safety system, Boeing’s money-spinning jet could remain parked for months.

“We are guessing this thing’s not going to be put to bed until the July or August time frame,” said Charlie Smith, chief investment officer at Fort Smith Capital Group, which holds shares in Boeing. The world’s largest planemaker has been working on the upgrade for its MCAS stall-prevention system since October’s Lion Air crash, when pilots are believed to have lost a tug of war with software that repeatedly pushed the nose down. Acting FAA Administrator Dan Elwell told the U.S. Senate Tuesday in written testimony that the agency will agree to allow the 737 MAX to return to service “only when the FAA’s analysis of the facts and technical data indicate that it is appropriate.”

“The case is only the second of more than 11,200 Roundup lawsuits to go to trial in the United States..”

• US Jury To Determine Liability, Damages In Roundup Cancer Trial (R.)

A lawyer for a man who said his cancer was caused by Bayer AG’s glyphosate-based weed killer Roundup on Tuesday urged U.S. jurors to “send a message” to the company by holding it liable and awarding millions in damages. The case is only the second of more than 11,200 Roundup lawsuits to go to trial in the United States as litigation setbacks and a prior jury verdict against the company have sent Bayer shares plunging. “A responsible company would test its product. A responsible company would tell their customers if they knew it causes cancer,” Aimee Wagstaff, a lawyer for plaintiff Edwin Hardeman, said during closing arguments on Tuesday. She called conduct by Bayer’s Monsanto unit reckless and offensive.

Bayer, which bought Roundup maker Monsanto in a $63 billion deal last year, denies the allegations, saying decades of studies by independent scientists have shown glyphosate and Roundup to be safe for human use. In Hardeman’s case, the jury on March 19 found Roundup to have been a “substantial factor” in causing his non-Hodgkin’s lymphoma. That verdict followed a first phase of the trial that focused exclusively on science. The decision allowed the trial to proceed to a second phase in which the same jury will decide if Bayer is liable. In the second phase lawyers for Hardeman were able to present previously excluded internal documents allegedly showing the company’s efforts to influence scientists and regulators about the popular product’s safety.

These findings have become our new normal: “the insects have been lost from a quarter of the places they were found in 1980.”

• Widespread Losses Of Pollinating Insects Revealed Across Britain (G.)

A widespread loss of pollinating insects in recent decades has been revealed by the first national survey in Britain, which scientists say “highlights a fundamental deterioration” in nature. The analysis of 353 wild bee and hoverfly species found the insects have been lost from a quarter of the places they were found in 1980. A third of the species now occupy smaller ranges, with just one in 10 expanding their extent, and the average number of species found in a square kilometre fell by 11. A small group of 22 bee species known to be important in pollinating crops such as oilseed rape saw a rise in range, potentially due to farmers increasingly planting wild flowers around fields. However, the scientists found “severe” declines in other bee species from 2007, coinciding with the introduction of a widely used neonicotinoid insecticide, which has since been banned.

Researchers have become increasingly concerned about dramatic drops in populations of insects, which underpin much of nature. Some warned in February that these falls threaten a “catastrophic collapse of nature’s ecosystems”, while studies from Germany and Puerto Rico have shown plunging numbers in the last 25 to 35 years. The study, published in the journal Nature Communications, is based on more than 700,000 sightings made by volunteers across Britain from 1980 to 2013. These are used to map the range of each species of bee and hoverfly over time. The data did not allow the assessment of numbers of insects, but some researchers think populations have fallen faster than range.

Debt Rattle March 21 2019

Mar 212019

March 21, 2019 Posted by Raúl Ilargi Meijer at 9:37 am Finance Tagged with: assault weapons, Brexit, extension, Fed, kale, loneliness, markets, MMT, New Cold War, New Zealand, pesticides, Ukraine, William Blum 12 Responses »

Pablo Picasso Bathers with ball 3 1928

• Why The Fed Keeps Propping Up The Market (Colombo)

• Fed’s New Balance Sheet Plan: Get Rid of MBS (WS)

• EU Will Only Back Short Brexit Delay If May’s Deal Passes First (G.)

• Remain Would Win Second Brexit Referendum Clearly, Poll Indicates (Ind.)

• Theresa May: Don’t Blame Me For Brexit Crisis, Blame MPs (G.)

• MPs Furious After May Blames Them For Crisis (Ind.)

• New Zealand Bans All Assault Weapons Immediately (AP)

• Stagnant Capitalism (Varoufakis)

• Exposing the Myth of MMT (Rickards)

• Australia Construction Slowdown A Major Threat To The Economy (ABC.au)

• As Russia Collusion Fades, Ukrainian Plot To Help Clinton Emerges (Solomon)

• Sucking Liberals into a New Cold War (William Blum)

• Loneliness Estimated To Shorten A Person’s Life By 15 Years (SciAm)

• Kale Is Now One Of The Most Pesticide-Contaminated Vegetables (CNBC)

Yeah, no, more Fed crap and comments about markets and I’ve had enough. A market should be recognized as an action, a process, not as a thing or an object. And the action is price discovery. If that is not taking place you don’t have a market. Anything the Fed props up is not a market. One necessary aspect of price discovery is honesty, people must believe they’re not being tricked. With the way people talk about this now, the language they use risks losing all meaning. Enough already, and that goes for Jesse Colombo too. Who also posted this one on Twitter, which is a lot more relevant than his article. But that’s just me.

• Why The Fed Keeps Propping Up The Market (Colombo)

The bull market of the past decade since the Great Recession has been an unusual one: despite all of the economic damage that occurred during the global financial crisis and rising risks (including global debt rising by $75 trillion), it has been the longest bull market in history. The explanation for this paradox is simple: it’s not an organic bull market because the Fed and other central banks keep stepping in to prop up the market every time it stumbles. Though the Fed has two official mandates (maintaining stable consumer prices and maximizing employment), it has taken on the unofficial third mandate of supporting and boosting the stock market since the Great Recession.

The chart below, which was inspired by market strategist Sven Henrich, shows how the Fed or other central banks have stepped in with more monetary stimulus (quantitative easing, promises to keep interest rates low, etc.) every time the S&P 500 has stumbled over the past decade:

An economy that is growing at 2%, inflation near zero, and Central banks globally required to continue dumping trillions of dollars into the financial system just to keep it afloat is not an economy we should be aspiring to. But despite commentary the financial system has been ‘put back together again,’ then why are Central Banks acting?

Get rid of them or they’ll blow up America.

• Fed’s New Balance Sheet Plan: Get Rid of MBS (WS)

The Fed has a new plan for what to do with its balance sheet and today announced several major components of it:

• Begin tapering the “runoff” of Treasury securities in May. • End the runoff of Treasury securities on September 30. • Continue shedding mortgage-backed securities (MBS) at the current maximum of $20 billion a month, essentially until their gone. • After September, reinvest MBS principal payments into Treasury securities. • Chair Jerome Powell said during the press conference that the balance sheet will by then be “a bit above $3.5 trillion.” • The balance sheet will remain at this level even as the economy grows, thus slowly shrinking in relationship to GDP. • The Fed may sell MBS outright to speed up the process of getting rid of them. • No decision has been made on the delicate issue of the maturity composition of the balance sheet – which would require buying short-term bills for the first time in years to replace longer-term notes and bonds.

The stated balance-sheet doctrine now is that the Fed wants to have sufficient reserves (money that banks deposit at the Fed) to conduct monetary policy efficiently. The interest it pays the banks on those reserves is one of its major tools to manage short-term interest rates.

It’s not even the main trump card the EU has.

• EU Will Only Back Short Brexit Delay If May’s Deal Passes First (G.)

Donald Tusk has put a no-deal Brexit back on the table by saying EU leaders will only agree to a short delay if MPs back Theresa May’s deal next week, on a day of high drama in Brussels and London. After belatedly receiving the prime minister’s formal letter requesting a three-month extension of article 50, and taking a late afternoon phone call with her, the European council president admitted that success appeared “frail, even illusory” on the eve of Thursday’s summit. The German foreign minister, Heiko Maas, tweeted: “The letter from Theresa May has not solved any problem yet. If the European council [summit of leaders] is to decide on an extension of the deadline for Britain, we would like to know what is the concrete purpose.”

But Tusk said the EU would seek until the very last moment to avoid the UK crashing out without a deal and show “patience and goodwill” despite the “Brexit fatigue” in the capitals. The EU27’s heads of state or government would be likely to agree in principle at the summit on Thursday to an extension up to 23 May or 30 June, and sign it off without needing to meet next week should May be able to find a majority in the Commons at the third time of asking, he said. The European commission is insisting that an extension beyond the date of the European elections on 23 May would require British MEPs to be elected, although others believe there is little risk as long as the UK has left by 1 July when the parliament formally convenes.

“In the light of the consultations that I have conducted over the past days I believe that a short extension will be possible but to be conditional on a positive vote on the withdrawal agreement in the House of Commons,” Tusk said. “A question remains open as to the duration of such an extension. Prime Minister May’s proposal of the 30 June, which has its merits, creates a series of questions of a legal and political nature. Leaders will discuss this tomorrow.”

The frustration and “tension”, as one senior EU diplomat described it, was made clear by the French foreign minister, Jean-Yves Le Drian, who told the French parliament on Wednesday afternoon that Paris was willing to block an extension. He said there were only two ways to leave the EU: ratify the withdrawal agreement or a no-deal exit. If parliament did not ratify the withdrawal agreement “the central scenario is a no-deal exit”, he said, adding: “We’re ready.” He stated that if May could not present “sufficient guarantees of the credibility of her strategy” that would lead to the extension being refused and a no-deal exit.

But it would be undemocratic?!

• Remain Would Win Second Brexit Referendum Clearly, Poll Indicates (Ind.)

Nearly two-thirds of people would vote to remain in the EU rather than for Theresa May’s deal if a referendum offering those options were called, a snap poll by YouGov has found. Sixty-one per cent of the population would vote to remain while 39 per cent would opt for the existing deal, However, if people were asked in a public vote whether they would prefer to remain in the EU or leave with no deal in place, Remain would still win, though by the smaller margin of 57-43 per cent. It shows a 22-point lead for Remain over Ms May’s deal, or a 14-point lead for Remain over no deal at all.

The poll, carried out on behalf of the Put it to the People campaign, comes as second referendum expectations have risen. [..] A march in support of a Final Say second referendum takes place on in central London on Saturday and is expected to attract hundreds of thousands of protesters. Meanwhile a “Leave means Leave” protest, also known as the “Brexit betrayal march”, is underway with Brexit supporters walking for two weeks from Sunderland to London demanding the UK leaves the EU on 29 March.

Carefully crafted utter panic.

• Theresa May: Don’t Blame Me For Brexit Crisis, Blame MPs (G.)

Theresa May is facing a furious backlash from her own backbenchers and calls for her resignation after she blamed squabbling MPs for delaying Brexit. In a defiant statement on Wednesday night she told the British public: “I am on your side,” and now hopes to force her deal through parliament next week at the third time of asking. Less than an hour earlier, she had been warned in a private meeting with Conservative MPs that her bid to delay leaving could end up losing her even more votes from her own party.

“She is going into an ever narrower cul-de-sac,” said one former minister. Speaking in Downing Street in a televised address, May said the three-month Brexit delay she had earlier in the day formally requested from EU27 leaders was “a matter of great personal regret for me” – and she would not countenance a longer extension of article 50. With just nine days to go before Britain is due to leave the EU, she laid the blame for the crisis squarely at the door of parliament.

“Of this I am absolutely sure: you the public have had enough.”

What she missed is that it’s her they’re tired of.

• MPs Furious After May Blames Them For Crisis (Ind.)

MPs have called Theresa May “irresponsible”, “disgraceful” and “toxic” after she blamed them for for the UK’s impending failure to leave the EU on 29 March. Labour’s Wes Streeting accused the prime minister of putting MPs’ lives in danger with an “incendiary” address. Ms May used a Downing Street speech to criticise the very people she needs to get her Brexit deal through the Commons at the third time of asking, telling voters that she was “sure” that “you, the public, have had enough” of political games. She said: “You’re tired of the infighting, you’re tired of the political games and the arcane procedural rows, tired of MPs talking about nothing else but Brexit when you have real concerns about our children’s schools, our National Health Service, knife crime. “You want this stage of the Brexit process to be over and done with. I agree. I am on your side.”

It can be done. Just not in the US, too many guns there already.

• New Zealand Bans All Assault Weapons Immediately (AP)

Prime Minister Jacinda Ardern says New Zealand is immediately banning sales of military style semi-automatic rifles and high-capacity magazines like the weapons used in last Friday’s attacks on two Christchurch mosques. Ardern announced the ban Thursday and said it would be followed by legislation to be introduced next month. She said the man arrested in the attacks had purchased his weapons legally and enhanced their capacity by using 30-round magazines “done easily through a simple online purchase.” [..] The New Zealand government is asking all owners of assault weapons or now-banned attachments to report them to the government in the next two days before turning them in.

I think manipulation by central banks is a much bigger problem than stagnation.

• Stagnant Capitalism (Varoufakis)

When the Great Depression followed the 1929 stock-market crash, almost everyone acknowledged that capitalism was unstable, unreliable, and prone to stagnation. In the decades that followed, however, that perception changed. Capitalism’s postwar revival, and especially the post-Cold War rush to financialized globalization, resurrected faith in markets’ self-regulating abilities. Today, a long decade after the 2008 global financial crisis, this touching faith once again lies in tatters as capitalism’s natural tendency toward stagnation reasserts itself. The rise of the racist right, the fragmentation of the political center, and mounting geopolitical tensions are mere symptoms of capitalism’s miasma.

A balanced capitalist economy requires a magic number, in the form of the prevailing real (inflation-adjusted) interest rate. It is magic because it must kill two very different birds, flying in two very different skies, with a single stone. First, it must balance employers’ demand for waged labor with the available labor supply. Second, it must equalize savings and investment. If the prevailing real interest rate fails to balance the labor market, we end up with unemployment, precariousness, wasted human potential, and poverty. If it fails to bring investment up to the level of savings, deflation sets in and feeds back into even lower investment.

It takes a heroic disposition to assume that this magic number exists or that, even if it does, our collective endeavors will result in an actual real interest rate close to it. How do free marketeers convince themselves that there exists a single real interest rate (say, 2%) that would inspire investors to funnel all existing savings into productive investments and spur employers to hire everyone who wishes to work at the prevailing wage?

I’ve kept my distance from the discussion, but this is nice.

• Exposing the Myth of MMT (Rickards)

When critics hear that a Green New Deal could potentially cost something like $97 trillion, or proposals for Medicare for all, free tuition, free child care or guaranteed basic income, they say, “That all sounds nice, but we just can’t afford it.” That’s their main argument — that no matter how desirable these programs might be in theory, we just can’t afford them. Most criticism of MMT falls along those lines. Even the Keynesians like those I mentioned earlier, who generally favor large amounts of government spending to stimulate the economy, have come out against MMT. Besides that claim that we can’t afford it, even the Keynesians say MMT would be highly inflationary. If you printed that much money and start handing it out to people, demand would outstrip the output capacity of the economy and you’d get high inflation.

But the MMT advocates have an answer to these objections. They’re not the least bit intimidated by critics who say we can’t afford it. They say, “Yes, we can, and Modern Monetary Theory proves it. Just print the money and monetize the debt. Japanese debt is 2.5 times the United States’ debt, and China’s is higher than ours.” They haven’t collapsed, so we can take on far more debt than we have today. Furthermore, QE did not create much inflation. In fact, the Fed would like to see more inflation than it has. It still can’t produce a sustained 2% inflation rate after all these years. You might think the argument is ridiculous. After all, do we really want to become Japan? But in important ways, the MMT crowd has the upper hand in the debate.

After 27 years, Australia is finally hitting a recession.

• Australia Construction Slowdown A Major Threat To The Economy (ABC.au)

The property market upheaval brings billionaire investor Warren Buffett’s oft-quoted piece of wisdom to mind: “Only when the tide goes out do you discover who’s been swimming naked.” We are witnessing more naked developers as half-finished projects dot the landscape of our major cities. As the year progresses, many more operators who’ve pushed the boundaries will join them. “Areas of oversupply will see a bit more chaos in the next six to twelve months,” Scott Gray-Spencer, local head of capital markets at the global real estate firm CBRE, told ABC’s The Business. Mr Gray-Spencer sees areas more than 10 kilometres from the city centres of Sydney and Melbourne, and parts of Queensland, as the most vulnerable.

Property investors, who were major targets of the crackdown, accounted for almost 50 per cent of mortgages two to three years ago. They have largely left the market and political uncertainty may keep them on the sidelines for longer as they await the outcome of the looming federal election. Should Labor win, it’s likely investors will wait to see how its plans to curb the negative gearing and capital gains tax concessions pan out. Even though Labor’s proposed negative gearing changes will not affect new housing, investors may still be worried about price growth because the next buyer is unable to negatively gear. So it could be some time before developers see an important group of buyers return in force. If the banks don’t stop them, the less generous tax laws might.

A half-finished apartment block in Cronulla sits idle while it waits for a buyer. (ABC News: John Gunn)

At first sight it looked like a parody.

• As Russia Collusion Fades, Ukrainian Plot To Help Clinton Emerges (Solomon)

After nearly three years and millions of tax dollars, the Trump-Russia collusion probe is about to be resolved. Emerging in its place is newly unearthed evidence suggesting another foreign effort to influence the 2016 election — this time, in favor of the Democrats. Ukraine’s top prosecutor divulged in an interview aired Wednesday on Hill.TV that he has opened an investigation into whether his country’s law enforcement apparatus intentionally leaked financial records during the 2016 U.S. presidential campaign about then-Trump campaign chairman Paul Manafort in an effort to sway the election in favor of Hillary Clinton.

The leak of the so-called “black ledger” files to U.S. media prompted Manafort’s resignation from the Trump campaign and gave rise to one of the key allegations in the Russia collusion probe that has dogged Trump for the last two and a half years. Ukraine Prosecutor General Yurii Lutsenko’s probe was prompted by a Ukrainian parliamentarian’s release of a tape recording purporting to quote a top law enforcement official as saying his agency leaked the Manafort financial records to help Clinton’s campaign. The parliamentarian also secured a court ruling that the leak amounted to “an illegal intrusion into the American election campaign,” Lutsenko told me.

Lutsenko said the tape recording is a serious enough allegation to warrant opening a probe, and one of his concerns is that the Ukrainian law enforcement agency involved had frequent contact with the Obama administration’s U.S. embassy in Kiev at the time. “Today we will launch a criminal investigation about this and we will give legal assessment of this information,” Lutsenko told me.

A memorial service was held on Sunday in Washington for William Blum, a former State Department official whose disillusionment with the Vietnam War turned him into a fierce critic of U.S. foreign policy. Blum educated a generation of Americans about the rapacious aims of the U.S. abroad, debunking the myth of Washington’s good intentions for the peoples of the world. Blum died on December 9, 2018.

• Sucking Liberals into a New Cold War (William Blum)

Cold War Number One: 70 years of daily national stupidity. Cold War Number Two: Still in its youth, but just as stupid. “He said he absolutely did not meddle in our election. He did not do what they are saying he did.” – President Trump re Russian President Vladimir Putin after their meeting in Vietnam. [Washington Post, Nov.e 12, 2017] Putin later added that he knew “absolutely nothing” about Russian contacts with Trump campaign officials. “They can do what they want, looking for some sensation. But there are no sensations.” Numerous U.S. intelligence agencies have said otherwise. Former Director of National Intelligence, James Clapper, responded to Trump’s remarks by declaring: “The president was given clear and indisputable evidence that Russia interfered in the election.”

As we’ll see below, there isn’t too much of the “clear and indisputable” stuff. And this of course is the same James Clapper who made an admittedly false statement to Congress in March 2013, when he responded, “No, sir” and “not wittingly” to a question about whether the National Security Agency was collecting “any type of data at all” on millions of Americans. Lies don’t usually come in any size larger than that. Virtually every member of Congress who has publicly stated a position on the issue has criticized Russia for interfering in the 2016 American presidential election. And it would be very difficult to find a member of the mainstream media who has questioned this thesis. What is the poor consumer of news to make of these gross contradictions?

Time to rephrase ‘social media’. Man evolved living in groups, it’s simple.

• Loneliness Estimated To Shorten A Person’s Life By 15 Years (SciAm)

Thanks to remarkable new technologies and the widespread use of social media, we are more “connected” than ever before. Yet as a nation, we are also more lonely. In fact, a recent study found that a staggering 47 percent of Americans often feel alone, left out and lacking meaningful connection with others. This is true for all ages, from teenagers to older adults. The number of people who perceive themselves to be alone, isolated or distant from others has reached epidemic levels both in the United States and in other parts of the world. Indeed, almost two decades ago, the book Bowling Alone pointed to the increasing isolation of Americans and our consequent loss of “social capital.” In Japan, for example, an estimated half million (known as hikikomori) shut themselves away for months on end.

In the United Kingdom, four in 10 citizens report feelings of chronic, profound loneliness, prompting the creation of a new cabinet-level position (the Minister for Loneliness) to combat the problem. While this “epidemic” of loneliness is increasingly recognized as a social issue, what’s less well recognized is the role loneliness plays as a critical determinant of health. Loneliness can be deadly: this according to former Surgeon General Vivek Murthy, among others, who has stressed the significant health threat. Loneliness has been estimated to shorten a person’s life by 15 years, equivalent in impact to being obese or smoking 15 cigarettes per day. A recent study revealed a surprising association between loneliness and cancer mortality risk, pointing to the role loneliness plays in cancer’s course, including responsiveness to treatments.

Wasn’t kale supposed to not need any?

• Kale Is Now One Of The Most Pesticide-Contaminated Vegetables (CNBC)

Often touted for being highly nutritious, kale has joined the list of 11 other fruits and vegetables known to be “dirty,” according to an analysis by the Environmental Working Group. The watchdog group publishes its “Dirty Dozen” list annually, in which it ranks the 12 produce items that contain the highest amount of pesticide residues. The group analyzes data from the Department of Agriculture’s regular produce testing to determine the list. Ranked alongside kale on the list are strawberries, spinach, nectarines, apples, grapes, peaches, cherries, pears, tomatoes, celery and potatoes.

The last time kale was included in the USDA’s produce tests was 2009 and it ranked eighth on the Dirty Dozen list. “We were surprised kale had so many pesticides on it, but the test results were unequivocal,” said EWG Toxicologist Alexis Temkin in a release. More than 92 percent of kale had residue from at least two pesticides after washing and peeling the appropriate vegetables, according to the report. Some had up to 18. Almost 60 percent of the kale samples showed residual Dacthal, a pesticide that is known as a possible human carcinogen. The group releases its “Clean Fifteen” list as well, highlighting the 15 produce items with the least amount of pesticide residue detected. It includes avocados, sweet corn, pineapples, frozen sweet peas, onions, papayas, eggplants, asparagus, kiwis, cabbages, cauliflower, cantaloupes, broccoli, mushrooms and honeydew melons.

Debt Rattle February 19 2015

Feb 192015

February 19, 2015 Posted by Raúl Ilargi Meijer at 1:20 pm Finance Tagged with: extension, Greece, IMF, Marxist, Steve Keen, terrorists, Ukraine, US, Varoufakis 2 Responses »

Russell Lee “Yreka, California, seat of a county rich in mineral deposits” 1942

• The US Will Have To Bail Out Greece (MarketWatch)

• Greece – It’s a Revolution, Stupid! (Mathew D. Rose)

• Germany Rejects Greece’s Application To Extend Its Loan Agreement (CNBC)

• Europe and Greece Are at War Over Nothing (Bloomberg ed.)

• How I Became An Erratic Marxist (Yanis Varoufakis)

• For Greece And Many Others, Economic Reform Kills Economic Health (Steve Keen)

• February 24 To Be The First Crunch Day For Greek State Coffers (Kathimerini)

• Greek Debt Payment Plan Offers Huge Haircut (Kathimerini)

• Greek Philosophy: Conflict Of Ideas Driving The Crisis (CNBC)

• Greece Runs Up The Austerity White Flag In Brussels (Guardian)

• Besieged Ukraine Town Debaltseve Falls (Reuters)

• ‘Guantanamo of the East’: Ukraine Locks Up Refugees at EU’s Behest (Spiegel)

• Ukraine Finance Minister’s American ‘Values’ (Robert Parry)

• Are the World’s Biggest Banks Moving Money for Terrorists? (Bloomberg)

“The IMF looks to have abdicated all responsibility for fixing the mess.”

• The US Will Have To Bail Out Greece (MarketWatch)

Fighting has flared up again in the Ukraine. The Egyptians are sending soldiers into Libya as another North African state collapses into chaos. The militants of Islamic State are spreading their influence across the region. You’d think Barack Obama might have bigger foreign policy issues to worry about than a small state of 10 million people on the eastern edges of the Mediterranean. But Greece may be about to turn from a European into an American problem. As the game of brinkmanship between the radical Syriza government elected last month and the European Union gets played out, it has become increasingly clear that both sides may have a strong interest in the talks failing. The IMF looks to have abdicated all responsibility for fixing the mess.

The worrying point is this: Both sides have an increasing interest in a catastrophic failure. But the U.S., with the U.K. perhaps in a subsidiary role, has an equally strong interest in a stable Greece. If a crunch comes, America will have no choice but to bail Greece out. How? It may well need to extend emergency loans, prop up its banks, and if necessary help it establish a new currency as well. On Monday, talks between Greece and the finance ministers of the eurozone ended chaotically. The Syriza government, led by the charismatic young Prime Minister Alexis Tsipras, is committed to ending the austerity regime imposed on Athens by the EU and the IMF and is refusing to borrow any more money under the terms of the bailout agreement.

The rest of the EU, led by Germany, is standing firm. It may be willing to make some minor concessions, such as rebranding the loans or extending their duration. But it does not look willing to compromise on the core issue — that Greece has to stick to the austerity plan, and keep tight controls on public spending. There may still be a deal to be struck. Greece after all only accounts for a small percentage of the total eurozone economy. Its debts amount to just 315 billion euros, hardly a massive sum in the context of an economic bloc with a total gross domestic product of €9.5 trillion. But the worrying point is this: Both sides have an increasing interest in a catastrophic failure.

“The German government has never wanted democratic reform in Greece..”

• Greece – It’s a Revolution, Stupid! (Mathew D. Rose)

I fear most people have become so fixated on the Greek debt and the fate of the Euro, that they have completely ignored the political dimensions of the current conflict in Europe, shich are no less dramatic. The ongoing dispute between the German and Greek governments is nothing less than a democratic revolution against German hegemony and the attempt of the Germans and their paladins in the EU to dictate Greek domestic policy. It is a struggle by the Greeks to re-establish national sovereignty. What is more, this is the first time in the history of the EU that a political party with true leftist credentials has led a member nation. For reactionary Germany, with its neoliberal agenda, that is intolerable. This conflict is profound, if not existential, and thus could well be intractable.

The Greek people have made a decision to liberate themselves from a repressive regime of austerity and its incumbent humanitarian disaster. The Germans on the other hand refer to the developments of the past five years in Greece as a success. Yes, it has been a success in the sense that the Germans and French were able to rescue their banks and leave the Greek people to foot the bill. It was even more successful in that Greece was stripped of its political and economic autonomy – with the assistance of the quislings Antonis Samaras and Evangelos Venizelos. The German government has never wanted democratic reform in Greece, leaving the perpetrators of the Greek financial crisis, the political and financial elites, unscathed.

Success has meant Greece being reduced to a vassal state, raising the market above all other values, where multinational corporations, including German companies, could take over profitable state assets cheaply and German tourists could enjoy cut-rate holidays or buy holiday homes at bargain prices. What occurred in Greece with the bailout is an occupation, not with troops and panzers, but by financial means. Following the recent elections in Greece, Germany and its EU compradors are making it clear who is in charge. The Germans are currently not offering any compromise, but iterate the same blunt demand: Greece has to accept what is being dictated; in other words, capitulate or be annihilated. This time it will not be the Wehrmacht und Luftwaffe that are to force the Greek nation into submission, but a weapon just as lethal: national bankruptcy.

“The letter does not meet the criteria agreed by the Eurogroup on Monday..”

• Germany Rejects Greece’s Application To Extend Its Loan Agreement (CNBC)

Germany has rejected Greece’s application to extend its loan agreement and renegotiate the terms of its bailout, raising the very real threat of Athens running out of money in the coming weeks. The Berlin government Thursday said Greece’s application for a six-month extension of its loan and a renegotiation of some its terms was “no substantial solution.” “In truth it goes in the direction of a bridge financing, without fulfilling the demands of the program. The letter does not meet the criteria agreed by the Eurogroup on Monday,” German finance ministry spokesman Martin Jaeger said in a statement.

Earlier Thursday Athens had formally placed a request to prolong its “master financial assistance facility agreement.” In the proposal the left-leaning Syriza Party had offered a series of concessions to the previous hardline stance that it would unilaterally scrap the austerity measures imposed as part of the country’s €240 billion bailout. However, the Greek proposal Thursday had pledged to work with the EU and the IMF in reworking the terms of the bailout and to not make any unilateral decisions when it came to the terms of the austerity package.

The Eurogroup of finance ministers from the 19 countries that use the single currency is due to meet on Friday to discuss the Greek plan. There has to be unanimous agreement among the group for any policy decision to go ahea.d The current program – which included the EU and IMF as creditors – was due to expire in little more than a week. Without further funds, Greece would soon run out of money rasing the prospect of a default on its bonds and a possible exit from the euro zone.

“The EU is staking the future of its monetary union not on principles but on semantics.”

• Europe and Greece Are at War Over Nothing (Bloomberg ed.)

Even by the demanding standards of European dysfunction, the continuing standoff between Greece and the other euro countries is impressive. On substance, the distance between the two sides has narrowed almost to nothing — yet the stalemate and the risk of a new financial crisis drag on as if it were vast. The EU is staking the future of its monetary union not on principles but on semantics. Initially, the new Greek government was at fault for making reckless election promises and presenting these to its European Union partners as non-negotiable. It has since climbed down a long way – in particular, dropping its demand for big debt write-downs. Now it wants a new bailout with softer terms and a temporary arrangement to bridge the financing gap between the present deal and the new one.

Reportedly, it’s even willing to call this bridge an “extension.” With Germany’s government leading the demand for strict propriety, Europe’s response has been to say that the current program must be successfully concluded, perhaps with some flexibility, before anything else can be discussed. So here’s the puzzle. What’s the difference between an extension that’s a bridge to a new program and an extension with flexibility pending agreement on a new program? To the sane observer, too little to care. Yet because of this difference, whatever it may be, the euro system threatens to break apart. Funny, isn’t it, that Europe’s voters express growing disenchantment with the whole project?

The situation is all the more absurd because the details of any transitional provisions don’t much matter anyway. What’s crucial are the terms of the new longer-term agreement — which the EU is refusing to discuss until Greece capitulates. The need for a new deal isn’t seriously disputed. The existing bailout imposed too tight a fiscal squeeze, which held back growth. The country’s debt burden therefore failed to shrink as intended in relation to gross domestic product. The error has been widely acknowledged, including by the International Monetary Fund (one of the plan’s architects) and by other EU governments.

“Europe’s crisis is far less likely to give birth to a better alternative to capitalism than it is to unleash dangerously regressive forces..”Europe’s crisis is far less likely to give birth to a better alternative to capitalism than it is to unleash dangerously regressive forces

• How I Became An Erratic Marxist (Yanis Varoufakis)

In 2008, capitalism had its second global spasm. The financial crisis set off a chain reaction that pushed Europe into a downward spiral that continues to this day. Europe’s present situation is not merely a threat for workers, for the dispossessed, for the bankers, for social classes or, indeed, nations. No, Europe’s current posture poses a threat to civilisation as we know it. If my prognosis is correct, and we are not facing just another cyclical slump soon to be overcome, the question that arises for radicals is this: should we welcome this crisis of European capitalism as an opportunity to replace it with a better system? Or should we be so worried about it as to embark upon a campaign for stabilising European capitalism?

To me, the answer is clear. Europe’s crisis is far less likely to give birth to a better alternative to capitalism than it is to unleash dangerously regressive forces that have the capacity to cause a humanitarian bloodbath, while extinguishing the hope for any progressive moves for generations to come.For this view I have been accused, by well-meaning radical voices, of being “defeatist” and of trying to save an indefensible European socioeconomic system. This criticism, I confess, hurts. And it hurts because it contains more than a kernel of truth. I share the view that this European Union is typified by a large democratic deficit that, in combination with the denial of the faulty architecture of its monetary union, has put Europe’s peoples on a path to permanent recession.

And I also bow to the criticism that I have campaigned on an agenda founded on the assumption that the left was, and remains, squarely defeated. I confess I would much rather be promoting a radical agenda, the raison d’être of which is to replace European capitalism with a different system. Yet my aim here is to offer a window into my view of a repugnant European capitalism whose implosion, despite its many ills, should be avoided at all costs. It is a confession intended to convince radicals that we have a contradictory mission: to arrest the freefall of European capitalism in order to buy the time we need to formulate its alternative.

“I want you to bear this empirical reality in mind when you consider the pressure that is being applied to Greece to get it to “stick with the program..”

• For Greece And Many Others, Economic Reform Kills Economic Health (Steve Keen)

A quick quiz: which four countries do you think have done the most to reform their economies over the last seven years? OK, who said Greece, Portugal, Ireland and Spain? No one? Actually, someone did: the OECD. Yes, I kid you not, according to the OECD, the country that has done the most to reform its economy over the last seven years—that is, from before the 2008 economic crisis until well after it—is Greece. Followed at some distance by Portugal, Ireland and Spain. I saw this in a tweet, and even though I am a total sceptic on the value of what conventional economists call “economic reform”, I still couldn’t believe this graphic: surely it was an Onion spoof? I simply had to go searching to see for myself.

And there it was, on page 111 of the OECD’s publication Going For Growth 2015, released on February 9 (in a slightly different form, and with New Zealand pipping in between Ireland and Spain—maybe this graphic was revised later). The top economic reformers were the basket cases of Europe and the world in general. Unemployment in Greece is 27%; in Portugal it’s 15%, Ireland 12%, and Spain 25%. Those are very, very sick economies. And yet they are also the OECD’s top reformers. You are, I hope, wondering “how come? Isn’t reform supposed to be good for you?” Well, that’s the fairy story—sorry, theory—purveyed and fervently believed in by mainstream economists: reform your economies according to our recommendations, and—whatever else happens—your economy will grow more rapidly and be more stable to boot.

Unfortunately for those purveying this fairytale, they also developed metrics by which the degree of reform could be measured, so that a decade later, we can compare the fairy story to the reality. And one quick look shows that we’ve been had. We were told to expect the beautiful Cinderella at the economic ball; instead we got one of her ugly step-sisters. I’ll cover at length someday soon why economic reform as recommended by mainstream economists will normally make your economy more dysfunctional and unstable. For now, I want you to bear this empirical reality in mind when you consider the pressure that is being applied to Greece to get it to “stick with the program” invented for it by the EU.

“Finance Ministry officials assure they have identified resources they could tap if a small extension on Greece’s bailout obligations, up to the first week of March, is granted from the eurozone.”

• February 24 To Be The First Crunch Day For Greek State Coffers (Kathimerini)

February 24 is expected to be the first crucial day for state finances, as projections of cash flows see state coffers starting to run dry on that date. Finance Ministry officials, however, assure they have identified resources they could tap if a small extension on Greece’s bailout obligations, up to the first week of March, is granted from the eurozone. The state of cash reserves – not robust before – has deteriorated further in recent days due to a shortfall in revenues, as a €1 billion hole in January revenues is putting the execution of the state budget in jeopardy and hampering the management of cash reserves. According to figures released yesterday by the Bank of Greece, in January the net cash result of the central administration posted a deficit of €217 million, against a surplus of €603 million in January 2014.

Budget revenues reached €3.1 billion, against 4.4 billion in January 2014, while expenditure dropped to €3.2 billion from €3.6 billion last year. Given these figures, the Finance Ministry estimates that cash reserves will run out next Tuesday. It has the option, however, of using the reserves of general government entities kept in commercial banks in order to cover short-term needs next week. However, the problem that cannot be addressed as things stand concerns needs for the first week of March. Unless something changes drastically to the country’s funding, Greece will not be able to fulfill all of its March obligations. Finance Minister Yanis Varoufakis had called on the ECB to increase the limit of treasury bills to €23 billion from the current 15 billion in a bid to address this shortfall.

The additional funds would have covered the state’s short-term obligations while also providing a cushion until the Greek government is able to strike a deal with its eurozone partners. The request, however, was rejected, as the ECB deemed it an act of direct monetary funding: In practical terms the European Central Bank would have been financing the obligations of a state, which contravenes its regulations.

“Depending on the number of installments, there will be a reduction to penalties and fines ranging from 30% to 90%..”

• Greek Debt Payment Plan Offers Huge Haircut (Kathimerini)

A new repayment plan for expired debts to the state and social security funds announced by the government on Wednesday provides for a reduction to the fines and penalties levied against debtors as well as for a writedown of the original debt, reaching as much as 50% rate in some cases. The new scheme, which has already generated concern among Greece’s international creditors but also among consistent taxpayers, foresees the repayment of debts in up to 100 monthly installments regardless of their size. The minimum installment will be set at €20, while for debts up to €5,000 there will be no interest attached. Depending on the number of installments, there will be a reduction to penalties and fines ranging from 30% to 90%, and in cases of repayment in a lump sum the penalties will be written off entirely.

Crucially, for debts generated up until December 31, 2013, a part of the original debt can be written off, by as much as 50% in certain cases. The plan further waives the limit of 1 million euros for debts that can be negotiated for settlement, making repayment easier for major state debtors. In presenting the new scheme yesterday, Alternate Finance Minister Nadia Valavani stressed that this will be the very last opportunity given to taxpayers to settle their debts to the state. She added that at a later stage there will be another, more favorable plan, concerning only those who find themselves in financial hardship. Ministry calculations show that out of the €76 billion of outstanding debts by taxpayers and corporations to the state, no more than €9 billion can actually be collected.

Social security funds are anticipating a total of €1.2 billion from debt repayments this year thanks to the new plan, from total arrears of €20 billion. The bill in Parliament, which Prime Minister Alexis Tsipras said on Tuesday would be put before Parliament on Thursday, has been postponed until next week. The official explanation cites a need for technical changes to be made to draft, though it has been suggested that the postponement of the process was decided in order to prevent a reaction from the country’s creditors in this week’s crucial negotiations.

“Whether “doing what is right” in this case means “doing what Varoufakis wants” is, of course, open to debate.”

• Greek Philosophy: Conflict Of Ideas Driving The Crisis (CNBC)

As European politicians ponder how to solve the current impasse over Greece’s debts to international creditors, some of the key players seem to be digging out their philosophy books.The country’s erudite Finance Minister, Yanis Varoufakis, cited German philosopher Immanuel Kant in a New York Times editorial published Tuesday – a nice reminder of Europe’s shared cultural history – as he pled with those reading to help the Greek people escape the bonds of austerity. Kant “taught us that the rational and the free escape the empire of expediency by doing what is right,” he argued.

Whether “doing what is right” in this case means “doing what Varoufakis wants” is, of course, open to debate. Wolfgang Schaueble, the German finance minister, seemed to be adopting a rather dogmatic philosophy, by contrast. When asked about the potential for changes to the existing programme by German state television channel ZDF Tuesday night, he said: “It’s not about extending a credit programme but about whether this bailout programme will be fulfilled, yes or no.”

I don’t think so.

• Greece Runs Up The Austerity White Flag In Brussels (Guardian)

The white flag has been raised over Athens. Greece has bowed to the intense pressure of its eurozone partners and will stick to austerity. After defiantly saying for the past three weeks that it will end the country’s fiscal waterboarding, the Syriza-led government is suing for peace. That, bluntly, is the only way to interpret news that Greece has formally asked for a six-month extension to its bailout agreement. There is no longer the pretence that the bailout is to be replaced by a loan agreement with no strings attached. The hated troika of the European Central Bank, the European Union and the International Monetary Fund will be monitoring Greece’s economy for the next six months, something that has been anathema to Syriza until now.

The Greek government has some demands of its own. It wants to negotiate a new growth deal for the four years until 2019. It is asking for debt relief under the terms of the bailout agreement signed in November 2012. And it wants to be able to take steps to deal with the humanitarian crisis caused by the 25% collapse in the size of the economy over the past five years. None of these demands are unreasonable. Indeed, they are all entirely sensible. As Dhaval Joshi of BCA Research has noted, for every euro the Greek government has saved through spending cuts or tax increases the economy has contracted by €1.2. Austerity has resulted in Greece’s debt to GDP ratio going up, not down. A change of tack is overdue. It is unlikely, though, that Syriza will get much of what it wants. The rest of Europe does not really want to negotiate with Alexis Tsipras and his finance minister, Yanis Varoufakis; it wants capitulation.

What’s more, it is in a position to get it. Tsipras has two big weaknesses. Firstly, Greece is suffering from capital flight and is dependent on emergency support from the ECB for its banks. This funding has just been increased by the ECB but not by as much as Greece would have liked. The life support could be cut off at any time. Secondly, and perhaps more significantly, Greece has failed to deploy its most potent weapon: a threat to leave the euro. For all the talk in Brussels and Berlin that the single currency could withstand a Greek departure from the single currency, the threat of withdrawal would have put the frighteners on. Would the euro group really want to risk chaos given the shaky state of the economy? Would Angela Merkel want to go down in history as the German chancellor responsible for rolling back more than half a century of European integration?

Curiously left out of the ceasefire deal.

• Besieged Ukraine Town Debaltseve Falls (Reuters)

Ukraine pulled thousands of troops out of an encircled town on Wednesday after a massive assault by pro-Russian rebels, who ignored a new ceasefire to seize the strategic railway junction. The fall of the besieged town of Debaltseve was one of the worst defeats of the war for Ukraine’s troops, who proved unable to stop an advance by Moscow-backed rebels fighting for territory the Kremlin calls “New Russia”. President Petro Poroshenko told security chiefs on Wednesday night that six Ukrainian soldiers had been killed during the pullout from Debaltseve. “According to preliminary data, six Ukrainian heroes were killed during the withdrawal, more than 100 were wounded,” he said, according to Interfax news agency.

Twenty-two Ukrainian soldiers had earlier been killed in the town in the past few days, the Ukrainian military high command said, with more than 150 wounded. Poroshenko, who flew to the frontline, nevertheless tried to cast the battle in a positive light, saying that by holding out as long as they had, Ukraine’s troops had exposed “the true face of the bandits and separatists who are supported by Russia”. The Ukrainian troops had held out for three days beyond the start of a Europe-brokered ceasefire, forcing the rebels to disavow the truce to pursue their advance on the town. Ukrainian troops, their faces blackened, some in columns, some in cars, arrived in Artemivsk, about 30 km (20 miles) north of Debaltseve in government-held territory.

Fighting did not halt with the retreat. A Reuters correspondent near Debaltseve saw black smoke rising over the town and heard loud blasts hours after the withdrawal began. “One hundred and sixty-seven wounded have been taken to Artemivsk. They did not pick up a lot of bodies. I don’t know the total figure,” Semen Semenchenko, who heads the Donbass paramilitary battalion, said on Facebook.

Bet you never knew.

• ‘Guantanamo of the East’: Ukraine Locks Up Refugees at EU’s Behest (Spiegel)

Hasan Hirsi has been learning German for the last year and a half, and recently even enrolled in a class that meets for five hours a day, from 1 to 6 p.m. Nevertheless, he still has no words to describe what happened to him before his arrival in Germany. Hirsi, a 21-year-old refugee from Somalia, is huddled on a worn sofa in an apartment in Landau, a small town in southwestern Germany, which he shares with three other Somalian asylum-seekers. He is wearing a gray hoodie and has short, black hair. A retiree from Landau who has volunteered to assist the refugees is sitting next to him. He wants to help Hirsi adjust to his new life in Europe.

But Hirsi is finding it difficult to forget the past. Indeed, he still has nightmares about Ukraine, a place where he became stranded for a lengthy stay on his way to Europe. He now refers to the country as “hell.” Staring at the floor, Hirsi says: “It is difficult.” He repeats the same word, “difficult,” in different languages. After fleeing from Somalia in the summer of 2008, Hirsi tried several times to reach Europe through Ukraine. He was detained once each by Ukrainian and Hungarian border patrols, and twice by police in Slovakia. Ukrainian security forces robbed, beat and tortured him, he says. After being apprehended, he spent almost three years in four different Ukrainian prisons – for committing no crime other thanseeking shelter and protection in Europe.

Most migrants reach Europe through Italy or Greece and many of them die on the way. A broad coalition, ranging from Pope Francis to German President Joachim Gauck, is demanding better protection for refugees on Europe’s southern border and the United Nations refugee agency, UNHCR, describes the route across the Mediterranean as the world’s deadliest. But when it comes to the eastern route, and the fate of migrants like Hasan Hirsi, interest has thus far been limited. SPIEGEL and “Report Mainz,” a program on Germany’s ARD public television network, have now taken a closer look at the stories of refugees who were locked up in Ukrainian prisons for months during their journeys to Europe.

Bad smell.

• Ukraine Finance Minister’s American ‘Values’ (Robert Parry)

Ukraine’s new Finance Minister Natalie Jaresko, who has become the face of reform for the U.S.-backed regime in Kiev and will be a key figure handling billions of dollars in Western financial aid, was at the center of insider deals and other questionable activities when she ran a $150 million U.S.-taxpayer-financed investment fund. Prior to taking Ukrainian citizenship and becoming Finance Minister last December, Jaresko was a former U.S. diplomat who served as chief executive officer of the Western NIS Enterprise Fund (WNISEF), which was created by Congress in the 1990s and overseen by the U.S. Agency for International Development (U.S. AID) to help jumpstart an investment economy in Ukraine.

But Jaresko, who was limited to making $150,000 a year at WNISEF under the U.S. AID grant agreement, managed to earn more than that amount, reporting in 2004 that she was paid $383,259 along with $67,415 in expenses, according to WNISEF’s public filing with the Internal Revenue Service. Later, Jaresko’s compensation was removed from public disclosure altogether after she co-founded two entities in 2006: Horizon Capital Associates (HCA) to manage WNISEF’s investments (and collect around $1 million a year in fees) and Emerging Europe Growth Fund (EEGF) to collaborate with WNISEF on investment deals. Jaresko formed HCA and EEGF with two other WNISEF officers, Mark Iwashko and Lenna Koszarny. They also started a third firm, Horizon Capital Advisors, which “serves as a sub-advisor to the Investment Manager, HCA,” according to WNISEF’s IRS filing for 2006.

U.S. AID apparently found nothing suspicious about these tangled business relationships – and even allowed WNISEF to spend millions of dollars helping EEGF become a follow-on private investment firm – despite the potential conflicts of interest involving Jaresko, the other WNISEF officers and their affiliated companies. For instance, WNISEF’s 2012 annual report devoted two pages to “related party transactions,” including the management fees to Jaresko’s Horizon Capital ($1,037,603 in 2011 and $1,023,689 in 2012) and WNISEF’s co-investments in projects with the EEGF, where Jaresko was founding partner and chief executive officer. Jaresko’s Horizon Capital managed the investments of both WNISEF and EEGF.

Interesting lawsuit.

• Are the World’s Biggest Banks Moving Money for Terrorists? (Bloomberg)

Steven Vincent had just left a money exchange in the southern Iraqi city of Basra when a group of men in police uniforms drove up in a white truck and grabbed him and his translator. It was Aug. 2, 2005. Vincent, a freelance American journalist, had reported on the war for two-and-a-half years. British troops occupied Basra, but he operated without an embed arrangement. British and Iraqi authorities later found Vincent on the outskirts of the city shot dead. The Iraqi translator survived. Three days earlier the New York Times had published an op-ed article by Vincent, Switched Off in Basra, in which he described the infiltration of the local police by Iranian-backed Islamic extremists. Steven was executed for what he wrote, says his widow, Lisa Ramaci.

She’s set up a foundation in his name that donates money to the families of Iraqis injured or killed because of their work with U.S. journalists. And Ramaci did something else. In November she joined a lawsuit on behalf of relatives of U.S. soldiers and civilians who’ve died in Iraq as a result of violence linked to Iranian-backed militias and terrorist groups. The suit, filed in federal court in Brooklyn, seeks hundreds of millions of dollars not from death squads, whose members aren t likely to show up with lawyers in tow. Instead, it targets five of the largest banks in the world: HSBC, Credit Suisse, Barclays, Standard Chartered, and Royal Bank of Scotland. Defendants, the suit declares, committed acts of international terrorism. The suit, known as Freeman v. HSBC, takes its name from lead plaintiff Charlotte Freeman, whose husband, Brian, an Army captain, died in a Jan. 20, 2007, attack by Iranian-trained militants in Karbala, Iraq.

This far-fetched-seeming attempt to pin culpability for violent deaths on bankers relies on an intricate theory of causation: The European-based banks have handled hundreds of billions of dollars in international transfers for Iranian financial institutions. The Iranian financial institutions, in turn, have moved money for the Islamic Revolutionary Guard Corps (IRGC), an elite Iranian paramilitary organization, and for Hezbollah, the militant Shia movement based in Lebanon and backed by Iran. The Revolutionary Guard and Hezbollah have trained and armed Shia groups in Iraq that have kidnapped, shot, and blown up Americans, including Vincent and Freeman. Can the global banking industry be held liable for the detonation of improvised explosive devices and destruction of lives? It may sound wild-eyed or quixotic, but that s what we re trying to do, says Gary Osen, the New Jersey lawyer who recruited the 230 plaintiffs for Freeman v. HSBC.

Debt Rattle February 12 2015

Feb 122015

February 12, 2015 Posted by Raúl Ilargi Meijer at 11:38 am Finance Tagged with: bailout, ceasefire, ebola, Eurogroup, extension, extinction, Greece, IMF, Podemos, Syriza, Ukraine 1 Response »

Byron In Chinatown, Pell Street, New York 1900

• Eurogroup Fails to Agree to Next Greek Bailout Steps (Bloomberg)

• Rejected Eurogroup Draft Spoke Of “Extending” Greek Bailout (Reuters)

• Greece And Eurozone In Stalemate Over Debt Burden (Guardian)

• Greece Said to Offer Euro Area Four Principles for Talks (Bloomberg)

• Germany Faces Impossible Choice As Greek Austerity Revolt Spreads (AEP)

• Eurozone Leaders Believe Syriza Must Fail And Be Seen To Fail (Telegraph)

• If The Greek Olive Branch Is Rejected, Europe May Fall (Pablo Iglesias)

• 86 Names Missing from Greek ‘Lagarde List’ (Greek Reporter)

• Ukraine Gets IMF-Led $40 Billion Aid Accord to Avert Default (Bloomberg)

• Ukrainian Cease-Fire Sealed After All-Night Minsk Peace Summit (Bloomberg)

• Putin Top Advisor: US Eyes Ukraine for Regime Change in Russia (Zero Hedge)

• Oil Firms ‘Need Fresh Strategies’ To Operate in Future of $50 Oil (BBC)

• Global Oil Layoffs Exceed 100,000 (Bloomberg)

• Goldman: Why Oil Crashed—and Why Lower Prices Are Here to Stay (Bloomberg)

• Have Banks Overplayed Their Hand Fighting Wall Street Regulation? (Bloomberg)

• Audit The Fed – And Shackle It, Too (David Stockman)

• ‘No Solution To Brazil’s Crisis’ (CNBC)

• Sweden’s Riksbank Cuts Key Rate to Negative (Bloomberg)

• Mediterranean Sinking ‘Kills 300 Migrants Bound For Europe (BBC)

• New Ebola Cases Rise For Second Week In A Row (BBC)

• Australia On Brink Of ‘Extinction Calamity’ (BBC)

The idea was always to stretch the meeting till Monday.

• Eurogroup Fails to Agree to Next Greek Bailout Steps (Bloomberg)

Euro-area governments left tough decisions on the future of Greece’s bailout for next week, after talks failed to bridge differences over the aid program that the Greek government blames for economic hardship. With Greece’s current bailout expiring at the end of February, finance ministers met for six hours in Brussels without signing off on any conclusions on the way forward for the region’s most-indebted nation. That leaves open how Greece can avoid running out of cash and avert a possible exit from the 19-nation currency union. Attention now shifts to a summit of European Union leaders on Thursday in Brussels, a day after German Chancellor Angela Merkel and French President Francois Hollande traveled to meet Russian President Vladimir Putin to negotiate a cease-fire in Ukraine.

Merkel had left bargaining with Greece to the finance ministers. “We understand each other much, much better now than we did this morning,” Greek Finance Minister Yanis Varoufakis told reporters after the finance chiefs broke up without a deal early Thursday in Brussels. “Europe manages to find agreements even if it’s at the last moment.” The euro fell as much as 0.3% to $1.1303 after Jeroen Dijsselbloem, the Dutch finance minister who chairs the euro group’s talks, said ministers couldn’t agree on a common approach. The euro briefly spiked to as high as 1.1352 earlier, when officials suggested an accord on steps forward was within reach.

“We covered a lot of ground but didn’t actually reach a joint conclusion on how to take the next steps,” Dijsselbloem said at a press conference. “There has to be a political agreement on the way forward.” Finance chiefs will return to Brussels on Feb. 16 to try to break the deadlock after Greek negotiators were said to have wavered on a commitment to extending the country’s existing bailout from the Troika. Greek Prime Minister Alexis Tsipras’s campaign pledge to end the bailout — and its austerity mandates — hung over the talks. Agreed language on a bailout extension was within reach, only to be rejected later by Greek negotiators who said they had to consult with superiors in Athens, German Finance Ministry spokesman Martin Jaeger said.

There will be no extension. Syriza has said that 1000 times.

• Rejected Eurogroup Draft Spoke Of “Extending” Greek Bailout (Reuters)

A draft statement by euro zone finance ministers on how to handle Greece’s finances spoke of “extending” its current bailout deal as a “bridge” to a new package, according to a copy of the draft that was rejected by Athens. The new Greek government, elected on a mandate to end deeply unpopular international bailout terms, has insisted there can be no “extension” once that deal expires at the end of the month. But EU partners fear financial chaos without such an accord. A draft of the planned Eurogroup statement, seen by Reuters, read: “Today the Eurogroup took stock of the current situation in Greece and the state of the current adjustment programme. In this context, the Eurogroup has engaged in an intensive dialogue with the new Greek authorities.

“The Greek authorities have expressed their commitment to a broader and stronger reform process aimed at durably improving growth prospects”. At the same time, the Greek authorities reiterated their unequivocal commitment to the financial obligations to all their creditors. “On this basis, we will now start technical work on the further assessment of Greece’s reform plans. The Greek authorities have agreed to work closely and constructively with the institutions to explore the possibilities for extending and successfully concluding the present programme taking into account the new government’s plans. If this is successful this will bridge the time for the Greek authorities and the Eurogroup to work on possible new contractual arrangements. We will continue our discussions at our next meeting on Monday 16 February.”

Mexican standoff.

• Greece And Eurozone In Stalemate Over Debt Burden (Guardian)

The Greek government’s confrontation with its eurozone creditors over its campaign to relieve its staggering debt burden while relaxing the terms of five years of austerity resulted in stalemate late on Wednesday. The first proper negotiations between Greece and eurozone finance ministers failed to make any progress or result in a joint statement. While no immediate agreement had been expected, the emergency meeting had been tipped to produce a framework for talks to be finessed over the next few days before another meeting next Monday. Jeroen Dijsselbloem, the Dutch finance minister who chaired the Brussels meeting, announced that this aim was not met. It appeared that the new leftwing government in Athens was isolated in seeking to extract better terms from Europe.

Alexis Tsipras, the new Greek prime minister, seems to have ordered his finance minister, Yanis Varoufakis, to stand firm against the pressure to make any concessions. Tsipras is due in Brussels on Thursday for his debut on the European stage at an EU summit. Following 10 days of touring Europe in a failed attempt to woo Berlin, Frankfurt and other key capitals to alter the terms of trade between Athens and the eurozone, Varoufakis went into negotiations with the other finance ministers at a specially convened session in Brussels. Entering and leaving the meeting, he was uncharacteristically taciturn.

The stalemate could see Greece running out of cash next month, unilaterally defaulting on the bailout programme with the ECB, the European Commission and the IMF, and being forced to leave the single currency. That prospect is viewed as a disaster fraught with risks in Brussels, Paris and Rome. But Berlin, whose voice matters more than most in the negotiations, is reliably said to be “extremely relaxed” about the Greek crisis and opposed to tearing up the agreements that Greece is formally bound to under the bailout terms.

“..popular protests “across Greece and Europe” are “the source of our strength.”

• Greece Said to Offer Euro Area Four Principles for Talks (Bloomberg)

Greek Finance Minister Yanis Varoufakis presented his European counterparts with four principles for a new financing deal, according to two euro-area officials, as Greece battles to stave off a cash crunch and stay in the currency bloc. Greece wants a deal that provides for financial stability, financial sustainability and debt restructuring, while addressing Greece’s humanitarian crisis, Varoufakis said during talks Wednesday in Brussels without offering details, according to the officials, who asked not to be named because the talks are private. Finance ministers of the 19 euro nations met on Wednesday after Germany and Greece took clashing positions heading into negotiations that will continue Feb. 16 in the Belgian capital.

Dutch Finance Minister Jeroen Dijsselbloem, who heads the meetings, said the ministers wanted to hear Greece’s proposals. “I don’t expect an outcome today,” Dijsselbloem told reporters in Brussels before the talks. Extra money “is not on the table right now” and Greece needs to stick to its reform path, he said. Greece’s bailout package will expire this month if the euro area’s most-indebted nation can’t reach a deal with its creditors. Asked by a reporter before the meeting whether Greece’s exit from the euro area is on the table, Varoufakis said: “Of course not.” In Athens, thousands rallied in front of the Greek parliament in support of the government’s anti-austerity stance. Prime Minister Alexis Tsipras posted a photo of the rally on his Twitter account, saying popular protests “across Greece and Europe” are “the source of our strength.”

“You can defend EMU policies, or you can defend your political base, but you cannot do both.”

• Germany Faces Impossible Choice As Greek Austerity Revolt Spreads (AEP)

The political centre across southern Europe is disintegrating. Establishment parties of centre-left and centre-right – La Casta, as they say in Spain – have successively immolated themselves enforcing EMU debt-deflation. Spain’s neo-Bolivarian Podemos party refuses to fade. It has endured crippling internal rifts. It has shrugged off hostile press coverage over financial ties to Venezuela. Nothing sticks. The insurrectionists who came from nowhere last year – with Trotskyist roots and more radical views than those of Syriza in Greece – are pulling further ahead in the polls. The latest Metroscopia survey gave Podemos 28pc. The ruling conservatives have dropped to 21pc. The once-great PSOE – Spanish Workers Socialist Party – has fallen to 18pc and risks fading away like the Dutch Labour Party, or the French Socialists, or Greece’s Pasok.

You can defend EMU policies, or you can defend your political base, but you cannot do both. As matters stand, Podemos is on track to win the Spanish elections in November on a platform calling for the cancellation of “unjust debt”, a reversal of labour reforms, public control over energy, the banks, and the commanding heights of the economy, and withdrawal from Nato. Europe’s policy elites can rail angrily at the folly of these plans if they wish, but they must answer why ex-Trotskyists threatening to dismantle market capitalism are taking a major EMU state by storm. It is what happens when 5.46m people lack jobs, when 2m households still have no earned income, and when youth unemployment is still running at 51.4pc, and home prices are down 42pc, six years into a depression.

It is pointless protesting that Spain’s economy is turning the corner, a contested claim in any case. There comes a point when a society breaks and stops believing anything its leaders say. The EU elites themselves have run their currency experiment into the ground by imposing synchronized monetary, fiscal, and banking contraction on the southern half of EMU, in defiance of known economic science and the lessons of the 1930s. It is they who pushed the eurozone into deflation, and thereby pushed the debtor states into accelerating compound-interest traps. It is they who deployed the EMU policy machinery to uphold the interest of creditors, refusing to acknowledge that the root cause of Europe’s crisis was a flood excess capital flows into vulnerable economies.

It is they who prevented a US-style recovery from the financial crisis, and they should not be surprised that such historic errors are coming back to haunt. The revolt in Italy has different contours but is just as dangerous for Brussels. Italians may not wish to leave the euro but political consent for the project but broken down. All three opposition parties are now anti-euro in one way or another. Beppe Grillo’s Five Star movement – with 108 seats in parliament – is openly calling for a return to the lira. Mr Grillo proclaims that Syriza is carrying the torch for all the long-suffering peoples of southern Europe, as it is in a sense. “What’s happening to Greece today, will be happening to Italy tomorrow. Sooner or later, default is coming,” he said.

How the right wing sees things.

• Eurozone Leaders Believe Syriza Must Fail And Be Seen To Fail (Telegraph)

In current discussions of what Greece might or might not get in the way of concessions from the Eurozone, there has so far been relatively little appreciation of one basic political reality: as far as the governments of Spain, Portugal, Ireland, probably Italy and perhaps even France are concerned, Syriza must fail and must be seen to fail. Why? The reasons differ slightly between countries. The easiest case to see is perhaps Spain. In Spain, the governing party is the centre-right Partido Popular led by Mariano Rajoy. It is currently facing pressure from a far-left party, Podemos, allied to Syriza. Indeed the Podemos leader Pablo Iglesias even campaigned in partnership with Syriza and, following Syriza’s victory, at his own party’s rally he proclaimed: “Syriza, Podemos – we will win [venceremos]!”

Podemos is currently leading in the polls, ahead of an election later this year. The very last thing Rajoy can afford is for Syriza’s approach to be seen to succeed, emboldening and vindicating Podemos. As for Portugal and Ireland, where the governments stuck to bailout conditions despite the domestic pain, how would they sell concessions to Syriza to their own voters? Suppose they go back and say: “We were suckers. We shouldn’t have made all those cuts. Instead, what we really should have done was to raise the minimum wage, hire back the public sector staff that had been fired, say we weren’t going to pay our debts to our eurozone partners, cosy up to the Russians and tell the Germans they didn’t feel nearly guilty enough about World War II. Then everyone would have said we were ‘rock stars’ and and forgiven our debts.” Do you reckon that would go down well?

As for the Italians, the Syriza leaders are terribly keen to claim that Greece and Italy are in much the same position and that there should therefore be a general debt amnesty across the eurozone. The Italians, on the other hand, are less keen on this comparison. Over the weekend, the Greek finance minister stated: “Let’s face it, Italy’s debt situation is unsustainable”. The Italian Finance Minister Pier Carlo Padoan replied on Twitter that his Greek counterpart’s remarks were “out of place” and that Italy’s debt is “solid and sustainable”. If the Italians, at any point, seek any relaxation of the fiscal strictures their eurozone partners have placed upon them, you can rest assured they will not be claiming that they are just like Greece or that anything that happens in Greece sets a precedent for them.

Letter from Spain’s oppostion leader: “..the diktats of those who still appear to be running things in Europe have failed, and the victims of this inefficiency and irresponsibility are Europe’s citizens.”

• If The Greek Olive Branch Is Rejected, Europe May Fall (Pablo Iglesias)

During his swearing-in speech as Greece’s prime minister, Alexis Tsipras was clear: “Our aim is to achieve a solution that is mutually beneficial for both Greece and our partners. Greece wants to pay its debt.” The European Central Bank’s (ECB) response to the Greek government’s desire to be conciliatory and responsible, was also very clear: negative. Either the Greek government abandons the programme on which it was elected, and continues to do the very thing that has been disastrous for Greece, or the ECB will stop supporting Greek debt. The ECB’s calculation is not only arrogant, it is incoherent. The same central bank that recognised its mistakes a few weeks ago and began to buy government debt is now denying financing to the very states that have been arguing for years that the role of a central bank should be to back up governments in protecting their citizens rather than to rescue the financial bodies that caused the crisis.

Now, instead of acknowledging that Greece deserves at least the same treatment as any other EU member state, the ECB has decided to shoot the messenger. Excesses of arrogance and political short-sightedness cost dear. The new despots who are trying to persuade us that Europe’s problem is Greece are putting the European project itself at risk. Europe’s problem is not that the Greeks voted for a different option from the one that led them to disaster; that is simply democratic normality. Europe’s threefold problem is inequality, unemployment and debt – and this is neither new nor exclusively Greek. Nobody can deny that austerity has not solved this problem, but rather has exacerbated the crisis.

Let’s spell it out: the diktats of those who still appear to be running things in Europe have failed, and the victims of this inefficiency and irresponsibility are Europe’s citizens. It is for this precise reason that trust in the old political elites has collapsed; it is why Syriza won in Greece and why Podemos – the party I lead – can win in Spain. But not all the alternatives to these failed policies are as committed as Syriza and Podemos are to Europe and to European democracy and values. The Greeks have been pushed to the point of disaster, yet the Greek government has reached out and shown great willingness to cooperate. It has requested a bridge agreement that would give both sides until June to deal with what is little short of a national emergency for the majority of the Greek population.

Interesting to see how hard Syriza will go after these guys.

• 86 Names Missing from Greek ‘Lagarde List’ (Greek Reporter)

The notorious “Lagarde List” should include a total of 2,148 names and not the 2,062 that are listed so far, according to a report in Ta Nea newspaper. The Lagarde List is a spreadsheet containing over 2,000 names of possible Greek tax evaders with undeclared deposits at Swiss HSBC bank’s Geneva branch. It is named after former French finance minister Christine Lagarde who passed it to the Greek government in October 2010 to help them tackle tax evasion. Lagarde is now Managing Director of the International Monetary Fund. The list was hidden by Greek officials and it became known two years later when it was exposed by investigative journalist Costas Vaxevanis.

The newspaper report says that after research by the International Consortium of Investigative Journalists, there are 86 new names of Greeks who have undeclared deposits in the Swiss bank. They are all natives of Greece, but have declared residency in other countries, thereby not listed on the original list. Also, the investigation shows that there are another 41 names who are linked to the accounts of potential tax evaders already on the list. So far, very few names on the list have been audited. Former finance minister Giorgos Papaconstantinou is accused of distorting the spreadsheet and erasing names of his relatives on the list and will be referred to the Special Court.

Even deeper into debt slavery.

• Ukraine Gets IMF-Led $40 Billion Aid Accord to Avert Default (Bloomberg)

Ukraine reached a preliminary accord to expand an International Monetary Fund-led bailout to $40 billion to avert a default as the 10-month conflict in the nation’s east damages the economy and drains resources. An IMF team, which has been in the Ukrainian capital since Jan. 8, will recommend the Washington-based lender’s board sign off on the package, Managing Director Christine Lagarde said Thursday in Brussels. The package includes contributions from other sources, including the EU, Lagarde told reporters. Ukraine, rocked by a pro-Russia insurgency in its industrial heartland, is struggling with the deepest recession since 2009, foreign reserves at an 11-year low and the world’s worst-performing currency.

The country’s fiscal and economic condition will help determine whether it remains oriented toward the U.S. and EU or is drawn into Russia’s orbit amid the worst standoff since the end of the Cold War. “It’s an ambitious program, it’s a tough program and it’s not without risk,” Lagarde told reporters. “But it’s also realistic.” Ukraine’s April 2023 Eurobond was little changed at 53.19 cents on the dollar at 10:23 a.m. in Kiev, lowering the yield two basis points to 19%. The government of Ukraine faces debt repayments of $11 billion this year and has said it will approach foreign bondholders over easier terms once IMF financing is in place. The accord still needs IMF board approval. Ukraine’s allies stepped in with funding pledges in the run-up to the IMF talks being completed.

The U.S. promised as much as $2 billion in loan guarantees, while the European Union said it would disburse €1.8 billion euros. Leaders of Russia, Ukraine, France and Germany are meeting in Minsk, Belarus on Thursday to reach a peace deal in the conflict that has killed at least 5,400 people, the United Nation estimates. The U.S., EU and Ukraine blame Russia for aiding the rebels. President Vladimir Putin denies the charges. “The hope will be to send a signal to Putin and to Ukrainians that the West stands behind Ukraine and will not let it fail financially,” Timothy Ash at Standard Bank said.

Meaningless?!

• Ukrainian Cease-Fire Sealed After All-Night Minsk Peace Summit (Bloomberg)

The leaders of Russia, Ukraine, Germany and France agreed on a cease-fire to stem the conflict that’s devastated eastern Ukraine and triggered the worst crisis in more than 20 years between Russia and its former Cold War foes. The deal envisages a truce starting Feb. 15 and reaffirms some commitments from a failed September bid to end the conflict, Russian President Vladimir Putin told reporters in the Belarusian capital of Minsk. The accord was struck early Thursday after all-night talks between Ukrainian President Petro Poroshenko, Putin, German Chancellor Angela Merkel and French President Francois Hollande.

The collapse of previous cease-fires has stoked skepticism as to whether this one will hold. Ten months of fighting have killed more than 5,000 people, ravaged Ukraine’s economy and propelled Russia toward recession through U.S. and European sanctions. Raising pressure to deliver a settlement, the run-up to the summit was accompanied by escalating violence and calls for the U.S. to supply weapons to Ukraine’s struggling army. “The conflict will continue, even with this agreement,” Joerg Forbrig, a senior program director at the German Marshall Fund in Berlin, said by phone. “Eastern Ukraine is now basically lost to central government control.”

“The situation in Ukraine is being used as a pretext for the active ‘repression’ of our country..”

• Putin Top Advisor: US Uses Ukraine To Get Regime Change in Russia (Zero Hedge)

Following the humiliation of tonight’s much anticipated Eurogroup meeting in which for the first time ever the ensuing disarray was so profound the panicked European finance ministers couldn’t even find a quorum consensus to produce even the tersest of official statements, there was some hope that the second round of negotiations currently taking place in Minsk to find a solution to the Ukraine civil war would at least partially redeem Europe’s faltering negotiating reputation. Alas, as of this moment, that does not appear to be the case, and as Reuters reports citing a Kiev presidential aide, that Minsk talks on Ukraine crisis could last six more hours. “We’ve got another 5-6 hours of work. At least. But we should not leave here without an agreement on an unconditional ceasefire. There’s a battle of nerves underway,” aide Valeriy Chaly said in a Facebook post.

Well, if it is indeed a “battle of nerves”, something tells who the victor will be, considering all his peers are just a little more preoccupied with the potential collapse of their artificial monetary and political union. Yet, just like the previous Minsk “agreement”, even if by some miracle there is a solution this time around, the probability peace will be maintained is slim to none. The reason is not simply because the Ukraine civil war will go on until there is a terminal partition between the pro-western West part of the country, and the pro-Russian eastern regions. The real reason may be what one of Vladimir Putin’s top security advisors, the secretary of the Security Council, Nikolai Patrushev said earlier today, when he told a Russian state newspaper that the U.S. was orchestrating events in Ukraine in a bid to overthrow Mr. Putin’s government.

He also expressed certainty that the West’s financial aid for Kiev would only bring the Ukrainian economy to a “dead end.” “The situation in Ukraine is being used as a pretext for the active ‘repression’ of our country,” Mr. Patrushev, who ran Russia’s Federal Security Service during Mr. Putin’s first eight years as president, said in an interview with the Rossiyskaya Gazeta, published Wednesday. And, if accurate, Patrushev’s assessment is that the US will not stop short of what effectively will be world war: “The Americans are trying to involve the Russian Federation in an interstate military conflict, cause regime change [in Russia] and ultimately dismember our country via events in Ukraine,” he said.

Most won’t be able to.

• Oil Firms ‘Need Fresh Strategies’ To Operate in Future of $50 Oil (BBC)

Many oil and gas firms will need to transform the way they operate in order to grasp future opportunities in the sector, according to a report. PwC said companies should be looking to deploy fresh strategies, following a sustained fall in the price of oil. It suggested they should look to reduce costs “in a sustainable manner” and find efficiencies by keeping tax costs in control. Other suggestions included divesting non-core parts of their business. PwC argued that firms might also want to identify and invest in strategic acquisitions to secure market position in key areas. The report’s authors said the UK oil and gas sector would have been in a much better place “to weather the oil price maelstrom”, had it heeded 30%-40% cost reduction warnings which surfaced 12-18 months ago.

The report said there was still time for firms to “learn the harsh lessons of past languor” by adopting fresh strategies. But it also warned that to achieve that, they needed to get away from “short term knee-jerk reactions” seen in previous downturns – or risk damaging the long term future of the industry. PwC cited significant downsizing undertaken during the downturn of 1999-2000, arguing that the industry had struggled since then with talent retention. It said “aggressive price negotiation” and contract revisions with the oil services sector would also do little to create a collaborative environment. The report argued that companies must answer “hard questions” about whether they can continue to invest in the sector, or if they should instead “move on”.

But it stressed the need for the industry to take a long-term view, adding that “intelligent and strategic cost-cutting” could “position players well through this turmoil”. Brian Campbell, oil and gas capital projects director at PwC and co-author of the report, said: “With economists predicting low oil prices throughout 2015, UK oil and gas firms are not out of the woods by any means. “They are still at risk of an economic triple-whammy: as the falling oil price reduces income, incremental investment may no longer be economic with a risk that field life diminishes and decommissioning is accelerated. “The stark reality is that firms need to be able to operate in an environment where oil averages at $50 per barrel – only then can it be truly fit for the future.”

Just starting.

• Global Oil Layoffs Exceed 100,000 (Bloomberg)

The promise of plentiful jobs and salaries as high as a quarter-million dollars a year lured Colombia native Clara Correa Zappa and her British husband to Perth, Australia, at the height of the continent’s oil and gas frenzy. Engineers were in high demand in 2012, when oil prices exceeded $100 a barrel, making the move across the world a no-brainer. Within two years, though, oil plunged to less than half the 2012 price and Zappa lost her job as a safety analyst. Now she’s worried her husband, who also works in the commodities industry, could also lose his job. Such anxieties are rising at a time when the number of energy jobs cut globally have climbed well above 100,000 as once-bustling oil hubs in Scotland, Australia and Brazil, among other countries, empty out, according to Swift Worldwide Resources, a staffing firm with offices across the world.

“It’s shocking,” Zappa, 29, said in a telephone interview. There is “so much pressure for him to keep his job and even work extra.” Her concerns mirror those of tens of thousands of workers who migrated to oil and gas boomtowns worldwide in the years of $100-a-barrel crude, according to Tobias Read, Swift’s chief executive officer. While much of the focus on layoffs has centered on the U.S., where the shale fields that created the glut have seen the steepest cutbacks, workers in oil-related businesses across the globe are suffering, he said. “The issue is one of uncertainty, of whether there’s a job out there,” Read said in a phone interview. “For seven years, there was a shortage of staff. Now for the first time, there’s a surplus. Currently almost no one is hiring.”

“The idea is that the stock market is a pretty good indicator of economic demand.” Really? Nothing to do with QE?

• Goldman: Why Oil Crashed—and Why Lower Prices Are Here to Stay (Bloomberg)

Oil prices have gotten crushed for the last six months. The extent to which that was caused by an excess of supply or by a slowdown in demand has big implications for where prices will head next. People wishing for a big rebound may not want to read farther. Goldman Sachs released an intriguing analysis on Wednesday that shows what many already suspected: The big culprit in the oil crash has been an abundance of oil flooding the market. A massive supply shock in the second half of last year accounted for most of the decline. In December and January, slowing demand contributed to the continued sell-off. Goldman was able to quantify these effects.

Goldman’s model is simple on its face, looking at just two variables over time: the price of oil and the value of U.S. stocks (as measured by the S&P 500). The idea is that the stock market is a pretty good indicator of economic demand. So when stocks move in tandem with oil prices, demand is in the driver’s seat. When the price of oil moves in the opposite direction of stocks, the shock is coming from supply.

“The message is clear that Warren’s attacks on the industry have made even moderate Democrats skittish to stand up for banks..”

• Have Banks Overplayed Their Hand Fighting Wall Street Regulation? (Bloomberg)

The financial industry is finding that winning in Washington comes at a cost. Wall Street lobbied aggressively and succeeded late last year in persuading lawmakers to roll back rules for the $700 trillion derivatives market. Instead of generating momentum for further changes to the Dodd-Frank Act, the victory sparked a populist uprising among Democrats that’s had wide-ranging consequences, including stymieing less controversial requests from regional banks like Capital One Financial Corp. “A short while ago there was bipartisan agreement on a number of common sense improvements,” said Rob Nichols, president of the Financial Services Forum that represents the chief executives of Wall Street’s biggest banks. “Unfortunately, that bipartisan agreement is gone.”

Financial companies and their employees spent $169 million on the November elections and had expectations that their bid to loosen regulations would get easier with Republicans in control of both the House and Senate. Now, there is second-guessing that banks overplayed their hand, according to lobbyists. The December win on swaps rules has become a rallying cry for Senator Elizabeth Warren, a frequent critic of Wall Street, and spurred repeated White House vows to defend Dodd-Frank. The fallout has frustrated banks, which hope it’s temporary. Democrats who previously said they wanted to revise the law now won’t even discuss it. Republicans are altering their strategy for attacking Dodd-Frank. And lobbyists have been hindered in their efforts to persuade Senate Democrats to champion changes to financial rules.

A sign of the political headwinds has been regional banks’ difficulty winning bipartisan support for a bill that would free them from stringent oversight imposed on lenders with at least $50 billion of assets. Capital One considers getting the threshold increased a top legislative goal this year, according to people with knowledge of the matter. The company’s inability to persuade Democrats to lead the charge in the Senate, particularly home state Senator Mark Warner of Virginia, has reverberated through the ranks of financial lobbyists, according to two people involved in the talks. The message is clear that Warren’s attacks on the industry have made even moderate Democrats skittish to stand up for banks, the people said. Capital One’s discussions with Warner aren’t unique, said company spokeswoman Tatiana Stead. “We have had identical and multiple discussions with his Senate colleagues and other elected officials,” she said.

“..this whole chorus of Fed governors – yesterday’s lineup included Richard Fisher and Charles Plossner – defending the sacred “independence” of the Federal Reserve is downright Kafkaesque.”

• Audit The Fed – And Shackle It, Too (David Stockman)

The reason to be fearful about the economic and financial future is that we are in the thrall of a mainstream consensus that is downright meretricious. In attacking Rand Paul’s audit legislation, for instance, one of the time-servers on the Fed Board of Governors, Jerome H. Powell, let loose the following gem: “As recent U.S. history has shown, elected officials have often pushed for easier policies that serve short-term political interests…..” Perhaps Mr. Powell is a descendent of Rip Van Winkle – and missed the last 20 years of history while doing LBOs at the Carlyle Group and helping Congress improve upon its enviable record of fiscal management while at the Bipartisan Policy Center. But whatever he was doing—snoozing or otherwise distracted – it most assuredly was not gathering evidence that “elected officials” were putting undue pressure on the Fed for “easier policies”.

For crying out loud there is exactly zero evidence that “politicians” had anything to do with zero interest rates. And ZIRP defines the ultimate level of “ease” according to Bernanke himself, who famously described his policies as positioned at the “zero bound”. Indeed, given the very earliest expected date for “lift-off” in June, the Fed will have pinned the money market rate at zero for 80 months running. This unprecedented tsunami of “easy money”, of course, happened with nary a Congressman or Senator darkening the door at the Eccles Building. Folks, this whole chorus of Fed governors – yesterday’s lineup included Richard Fisher and Charles Plossner – defending the sacred “independence” of the Federal Reserve is downright Kafkaesque.

Rather than protecting the Fed from meddling politicians, it is the American public that desperately needs protection from the depredations of an unelected monetary politburo that runs the entire financial system. Let’s say you have saved a quarter million bucks over a lifetime of working and scrimping, but wish to keep it safe and liquid in your retirement years. Well thank you “independent” governors of the Fed for the privilege of owning a bank CD that generates 40 bps or the grand sum $2.75 per day. That’s one visit to Starbucks each morning, but forget the cappuccino. It’s just black coffee for you!

When will this bomb burst?

• ‘No Solution To Brazil’s Crisis’ (CNBC)

Brazil’s central bank won’t be able to save the country with monetary policy, economists warned, after downgrading their 2015 growth outlook to zero as stagflation drags the once vibrant economy. “There is no near-term solution to deepening stagflation,” said Dev Ashish, Latin America economist at Societe Generale in a note on Wednesday. “Fiscal and monetary orthodoxy is not expected to yield any fruit in the near to medium term.” Annual inflation shot up to a twelve-year high of 7.1% in January, according to official data on Friday, well above the central bank’s 4.5% target range. With inflation widely expected to remain elevated, analysts in Brazil revised their 2015 gross domestic product (GDP) growth forecast to zero, according to a central bank survey this week.

South America’s largest nation is estimated to have grown less than 1% last year. Brazil’s central bank – the Banco Central do Brasil (BCP) – engaged in an aggressive tightening cycle last year to combat inflation. It pushed the benchmark short-term interest rate, the Selic, to its current multi-year high of 12.25%. Markets widely expect more rate hikes in the coming months. Analysts don’t have faith in the central bank’s toolbox. Rate hikes dampen economic growth, so the success of additional monetary tightening depends on how effectively the government manages its finances, but that depends on economic growth, SocGen said. The bank expects public debt to rise nearly 70% over the next two years on the back of weak GDP.

Panic.

• Sweden’s Riksbank Cuts Key Rate to Negative (Bloomberg)

Sweden’s central bank cut its main interest rate below zero and unexpectedly unveiled plans to start buying government bonds to jolt the largest Nordic economy out of a deflationary spiral. The Riksbank lowered its repo rate to minus 0.10% from zero. A cut had been predicted by six of the 18 economists surveyed by Bloomberg, while the remainder forecast no change. Policy will “soon” be made “more expansionary” by buying 10 billion kronor ($1.2 billion) in government bonds with maturities of one to five years, the Stockholm-based bank said. It pledged to keep the repo rate negative until underlying inflation is close to 2%, which the bank predicts will happen in the second half of 2016. Policy makers will take further steps if necessary, the bank said.

“To ensure that inflation rises toward the target, the Riksbank is prepared to quickly make monetary policy more expansionary, even between the ordinary monetary policy meetings, should the need arise,” it said. Policy makers are delving deeper into their toolbox, joining the European Central Bank in unleashing unconventional measures as deflation risks becoming entrenched. The bank, led by Governor Stefan Ingves, last year reversed course and scrapped a policy of keeping rates up to guard against a build-up in household debt. The reluctance to ease in the face of slowing inflation and high unemployment was characterized as “sadomonetarist” by Nobel laureate Paul Krugman.

The krona slumped as much as 2.1%, and was down 1.4% at 9.62 per euro as of 10:33 a.m. in Stockholm. The yield on Sweden’s benchmark five-year note fell 10 basis points to 0.8%. Two-year yields slid to minus 0.24%. “We didn’t expect the Riksbank to buy government bonds as early as now, but rather that they would wait and see if this would be needed,” said Olle Holmgren, an analyst at SEB. “They are also maybe even clearer in signaling willingness to do even more if needed. This is softer than we thought.”

Europe’s biggest disgrace is still not being tackled.

• Mediterranean Sinking ‘Kills 300 Migrants Bound For Europe (BBC)

At least 300 migrants are feared dead after the boats carrying them from the North African coast sank in the Mediterranean Sea, the UN says. UNHCR regional director Vincent Cochetel called the incident a “tragedy on an enormous scale”. Nine survivors who were brought to Lampedusa by the Italian coast guard are believed to be from West Africa. Initial reports on Monday suggested that at least 29 migrants had died after their dinghy overturned. The UNHCR said the migrants had departed from Libya on Saturday in four dinghies. Mr Cochetel said, “Europe cannot afford to do too little too late”, and called the tragedy, “a stark reminder that more lives could be lost if those seeking safety are left at the mercy of the sea.” In November, Italy ended a year-long operation aimed at rescuing seaborne migrants.

Known as Mare Nostrum, it was launched in October 2013 in response to a tragedy off Lampedusa in which 366 people died. The aim of the mission was to look for ships carrying migrants that may have run into trouble off the Libyan coast. There is no way of knowing for sure whether these men, women, and children would have been saved if the former Italian search-and-rescue operation known as Mare Nostrum was still running. But having spent a week on board an Italian navy frigate, I can be sure they would have done their utmost to save as many lives as possible. The EU’s Triton border patrol is not designed to do that. It cannot pre-empt trouble in international waters – it can only act when lives are immediately at risk. The Italian operation was set up differently. The naval crews knew they had one single purpose – to prevent death.

Some time back, EU leaders pledged that not a single life would again be lost as a result of these large scale tragedies at sea. The EU now runs a border control operation, called Triton, with fewer ships and a much smaller area of operations. The UNHCR says almost 3,500 people died attempting to cross the Mediterranean Sea to reach Europe in 2014, making it the world’s most dangerous sea crossing for migrants. More than 200,000 people were rescued in the Mediterranean during the same period, many under the Mare Nostrum mission prior to its abolition, and the UNHCR expects the figure to remain high in 2015. In a speech before the European Parliament in November, Pope Francis called for a “united response to the question of migration”, warning that the Mediterranean could not be allowed to become a “vast cemetery”.

“In another development, US President Barack Obama has said he will withdraw nearly all US troops helping to combat the disease in Liberia.”

• New Ebola Cases Rise For Second Week In A Row (BBC)

The number of new cases of Ebola has risen in all of West Africa’s worst-hit countries for the second week in a row, the World Health Organization (WHO) says. This is the second weekly increase in confirmed cases in 2015, ending a series of encouraging declines. The WHO said on Wednesday that Sierra Leone had registered 76 of the 144 new cases, Guinea 65 and Liberia three. More than 9,000 people have died from Ebola since December 2013. The WHO said that the increase highlights the “considerable challenges” that must still be overcome to end the outbreak. “Despite improvements in case finding and management, burial practices, and community engagement, the decline in case incidence has stalled,” the UN health agency said in a statement. In another development, US President Barack Obama has said he will withdraw nearly all US troops helping to combat the disease in Liberia.

“No other country has had such a high rate and number of mammal extinctions over this period, and the number we report for Australia is substantially higher than previous estimates..”

• Australia On Brink Of ‘Extinction Calamity’ (BBC)

Australia has lost one in ten of its native mammals species over the last 200 years in what conservationists describe as an “extinction calamity”. No other nation has had such a high rate of loss of land mammals over this time period, according to scientists at Charles Darwin University, Australia. The decline is mainly due to predation by the feral cat and the red fox, which were introduced from Europe, they say. Large scale fires to manage land are also having an impact. As an affluent nation with a small population, Australia’s wildlife should be relatively secure from threats such as habitat loss. But a new survey of Australia’s native mammals, published in the journal Proceedings of the National Academy of Sciences, suggests the scale of the problem is more serious than anticipated.

Since 1788, 11% of 273 native mammals living on land have died out, 21% are threatened and 15% are near threatened, the study found. Marine mammals are faring better. “No other country has had such a high rate and number of mammal extinctions over this period, and the number we report for Australia is substantially higher than previous estimates,” said conservation biologist John Woinarski, who led the research. “A further 56 Australian land mammals are now threatened, indicating that this extremely high rate of biodiversity loss is likely to continue unless substantial changes are made. “The extent of the problem has been largely unappreciated until recently because much of the loss involves small, nocturnal, shy species with [little] public profile – few Australians know of these species, let alone have seen them, so their loss has been largely unappreciated by the community.”