Aug 212018
 
 August 21, 2018  Posted by at 8:38 am Finance Tagged with: , , , , , , , , , , , ,  


Henri Matisse The painter and his model 1916-17

 

China’s Biggest Risk May Be Its Property Market – Not The Trade War (CNBC)
Why Do American CEOs Get Paid So Much? (Galbraith)
Trump Says It Is ‘Dangerous’ For Twitter, Facebook To Ban Accounts (R.)
Trump Worries That Mueller Interview Could Be A ‘Perjury Trap’ (R.)
Trump Demands Fed Help On Economy, Complains About Interest Rate Rises (R.)
UK’s Hunt To Call On Trump To Impose Fresh Sanctions On Russia (G.)
‘Secret Directive’ Bans UN Agencies From Helping Rebuild Syria – Lavrov (RT)
UK Household Debt Balloons To £19bn As Bailiff Problems Multiply (Ind.)
NHS Leak Warns Of Brexit Drug Shortages And Disease Risk (G.)
Jacinda Ardern Freezes New Zealand MPs’ Pay To Tackle Rich-Poor Divide (G.)
Salvini Refuses To Let In Refugees After Coastguard Ship Docks (G.)
What Being Back in the Markets Actually Means for Greece (TPP)
The Winners Will Lose and the Losers Will Win (Kunstler)
The Inescapable Weight Of My $100,000 Student Debt (G.)

 

 

“Real estate investment accounts for about two-thirds of Chinese household assets..”

China’s Biggest Risk May Be Its Property Market – Not The Trade War (CNBC)

China’s hot real estate market remains a challenge for authorities trying to maintain stable economic growth in the face of trade tensions with the U.S. In fact, property is the country’s biggest risk in the next 12 months, much greater than the trade war, according to Larry Hu, head of greater China economics at Macquarie. He said he is especially watching whether the real estate market in lower-tier, or smaller, cities will see a downturn in prices or housing starts after recent sharp increases. Real estate investment accounts for about two-thirds of Chinese household assets, according to wealth manager Noah Holdings. The property market also plays a significant role in local government revenues, bank loans and corporate investment.

As a result, a sharp slowdown in the real estate market’s growth and drop in prices would have a negative affect on overall economic growth. So far, the market has been hot: The average selling price for newly built non-governmental housing in 60 tier-three and tier-four cities tracked by Tospur Real Estate Consulting rose 28.1 percent from January 2016 to May 2018. [..] Last week, Nanjing, a tier-two city, announced a ban on corporate purchases of residential properties, following similar moves to limit speculation by Shanghai and some other cities. That’s a good move for controlling risk, according to Joe Zhou, real estate and investment management firm JLL’s regional director for China capital markets. He said the government is not likely to loosen its policy soon and that prices could decline on average.

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“The reliance of tech firms on venture capital and bubble psychology, rather than cash flow..”

Why Do American CEOs Get Paid So Much? (Galbraith)

A new report from the Economic Policy Institute calls attention to the hardy perennial of how much America’s corporate titans make: bosses of the top 350 firms made an average of $18.9m in 2017. That’s a ratio of 312-1 over the median worker in their industries. Big bucks to be sure. And a big change since 1965, when the ratio was just 20-1. But what does it mean? And if there’s a problem, what is it, exactly? What it means, as the EPI economists carefully document, is that the top US corporate chiefs are paid overwhelmingly with stock options, and their income fluctuates with the market. About 80% of the pay packet is in stocks, and the rise of 17% in 2017 after two flat years surely suggests that the top CEOs (not unreasonably) sensed the market peaked last year.

So they cashed in. On the other 20% of the pay packets, no gains occurred. The US numbers have shock value. But bear in mind that they reflect not only the way companies are run, but also changes over decades in the structure of the US economy and tax law, specifically the rise of market valuations in technology and finance at the expense of the major industrial corporations, and a corresponding decline in unions, which held down the ratios in the sectors the industrial firms dominated a half century back. Plus, there is the radical decline in top marginal tax rates on income and capital gains, beginning in 1978, which gave executives strong reasons to restructure their pay away from inside-the-corporation perks (the penthouses and country clubs of yore) and toward cash and capital assets.

The reliance of tech firms on venture capital and bubble psychology, rather than cash flow, deepened this trend. Note also that there is something a bit artificial about the resulting “wealth.” Jeff Bezos may have a net worth of over $150bn, mostly in Amazon stock, but he couldn’t convert it into cash if he wanted to, neither by selling nor by borrowing. Any effort to sell would demolish Amazon’s valuation and hence his own fortune. The rich aren’t like us – they have more money, true, but some of it isn’t really money and it can disappear, by the billions, pretty fast.

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As I wrote yesterday, this will have to change.

Trump Says It Is ‘Dangerous’ For Twitter, Facebook To Ban Accounts (R.)

U.S. President Donald Trump said on Monday that it is “very dangerous” for social media companies like Twitter and Facebook to silence voices on their services. Trump’s comments in an interview with Reuters come as the social media industry faces mounting scrutiny from Congress to police foreign propaganda. Trump has made his Twitter account – with more than 53 million followers – an integral and controversial part of his presidency, using it to promote his agenda, announce policy and attack critics. Trump previously criticized the social media industry on Aug. 18, claiming without evidence in a series of tweets that unnamed companies were “totally discriminating against Republican/Conservative voices.”

In the same post, Trump said “too many voices are being destroyed, some good & some bad.” Those tweets followed actions taken by Apple, Alphabet, YouTube and Facebook to remove some content posted by Infowars, a website run by conspiracy theorist Alex Jones. Jones’ own Twitter account was temporarily suspended on Aug. 15. “I won’t mention names but when they take certain people off of Twitter or Facebook and they’re making that decision, that is really a dangerous thing because that could be you tomorrow,” said Trump.

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Also mentioned yesterday. Chances of a sitdown in the next 10 days don’t look good.

Trump Worries That Mueller Interview Could Be A ‘Perjury Trap’ (R.)

U.S. President Donald Trump said on Monday he was worried that any statements under oath he provides to Special Counsel Robert Mueller could be used to bring perjury charges against him as part of the probe into Russia’s electoral interference. In an interview with Reuters, Trump echoed the concerns of his top lawyer in the probe, Rudy Giuliani, who has warned that any sit-down with Mueller could be a “perjury trap.” The president expressed fears that investigators could compare his statements with that of others who have testified in the probe, such as former FBI Director James Comey, and that any discrepancies could be used against him.

“So if I say something and he (Comey) says something, and it’s my word against his, and he’s best friends with Mueller, so Mueller might say: ‘Well, I believe Comey,’ and even if I’m telling the truth, that makes me a liar. That’s no good.” Despite his concerns, Trump did not comment on whether he would ultimately agree to an interview with Mueller, who is, among other things, investigating whether Trump’s campaign team colluded with Russians during the 2016 election and whether Trump has obstructed justice in the probe. Trump also declined to say whether he might strip Mueller of his security clearance, as he did last week to former CIA Director John Brennan, who had repeatedly criticized Trump’s handling of foreign policy and national security issues.

“I haven’t given it a lot of thought,” he said. [..] Trump asserted that he retained the power to intervene in the probe, but that he had chosen not to do so for the moment. His administration, Trump said, was “a smooth-running machine, except in that world. And I’ve decided to stay out. Now I don’t have to stay out. “I can go in, and I could do whatever — I could run it if I want. But I decided to stay out,” he said. “I’m totally allowed to be involved if I wanted to be. So far, I haven’t chosen to be involved. I’ll stay out.”

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Whatever the predictable comments on this, what he really does is confirm the Fed’s independence.

Trump Demands Fed Help On Economy, Complains About Interest Rate Rises (R.)

U.S. President Donald Trump said on Monday he was “not thrilled” with the Federal Reserve under his own appointee, Chairman Jerome Powell, for raising interest rates and said the U.S. central bank should do more to help him to boost the economy. In the middle of international trade disputes, Trump in an interview with Reuters also accused China and Europe of manipulating their respective currencies. American presidents have rarely criticized the Fed in recent decades because its independence has been seen as important for economic stability.

Trump has departed from this past practice and said he would not shy from future criticism should the Fed keep lifting rates. The president spooked investors in July when he criticized the U.S. central bank’s over tightening monetary policy. On Monday he said the Fed should be more accommodating on interest rates. “I’m not thrilled with his raising of interest rates, no. I’m not thrilled,” Trump said, referring to Powell.

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Nobody Hunt goes to Washington with veiled criticism of Trump. Good luck with that.

UK’s Hunt To Call On Trump To Impose Fresh Sanctions On Russia (G.)

The British foreign secretary, Jeremy Hunt, is to urge Donald Trump to face down Moscow’s threat to western values by imposing wider economic sanctions against Russia and agreeing new rules to protect the legitimacy of democratic elections. In a speech in Washington on Tuesday during his first visit since taking over from Boris Johnson as the UK’s most senior diplomat, Hunt will specifically call for tighter regulation of online political advertising and new measures to prevent cyber attacks on electoral machinery. Hunt will also throw out a challenge to Trump’s protectionist policies by warning a weakening of free trade will only damage western economies, and ultimately western political power.

He will say the emergence of an international order based on the application of law rather than might had led to an exponential growth in trade, leading to extraordinary advances in economic and social prosperity across the globe. He will also call for Nato to set clearer red lines about Russia’s use of chemical weapons and incursions into foreign territory such as the annexation of Crimea in 2014. Without directly challenging the legitimacy of Trump’s election as president in 2016, he will point to the drawbacks in many recent democratic outcomes, saying: “The heart of any democracy is freedom of expression, which allows citizens to access independent information to help decide who to vote for. But the ubiquity of fake news, social media targeting and foreign attempts to manipulate elections have undermined confidence that this can actually happen.”

Any tarnishing of Trump’s electoral mandate is highly perilous territory for a foreign politician, and Hunt will temper his criticism by saying western leaders should not deceive themselves that populism is merely a byproduct of social media spreading fake news.

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Rebuilding Syria can solve a large part of Europe’s refugee problem, and US and UN are holding it back?

‘Secret Directive’ Bans UN Agencies From Helping Rebuild Syria – Lavrov (RT)

Washington’s “absolutely deconstructive” stance is hampering the rebuilding of Syria and constricts the UN in aiding the country until a so called ‘political transition’ takes place, Sergey Lavrov, Russia’s Foreign Minister, said.
“We addressed UNESCO on how they plan to implement the longtime talks, the longtime understanding on attracting the potential of this organization to rebuilding Palmyra,” an ancient city, regarded by the agency as a World Heritage Site, Lavrov said. “From the explanations of why UNESCO has still been unable to get involved in this process actively, we took that there was some kind of a directive from the United Nations headquarters in New York.”

He said that the UN Secretariat, which is the organizations’ executive arms, has “actually issued and distributed a secret directive throughout the UN system in October last year that prohibited the agencies included in this system from participating in any kind of projects aimed at restoring the Syrian economy.” Only humanitarian aid and nothing more” was allowed, the minister told the journalists after talks with Lebanese counterpart, Gebran Bassil, in Moscow. “A term was put forward that restoration of Syria would only be on the agenda after a certain progress is made in the so-called political transition” in the country, he added. The Russian Foreign Ministry also said that due to the “absolutely deconstructive” stance of the US one also shouldn’t expect any positive decisions on rebuilding Syria and return of refugees to the country from the UN Security Council.

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“People can face having their essential services cut off, be kicked out of their home due to rent arrears or even face prison if they get behind on their council tax..”

A country moving backwards.

UK Household Debt Balloons To £19bn As Bailiff Problems Multiply (Ind.)

UK households have fallen behind on essential bills such as council tax and electricity by as much as £18.9bn, according to Citizens Advice, which says it helps someone with bailiff-related problems every three minutes. The total outstanding debt includes almost £7.5bn in tax credit overpayments, £2.84bn owed in council tax and £2.2bn owed to water companies. Household debt has now overtaken consumer credit as the main money problem people contact Citizens Advice about, and the charity said that falling behind on household bills “has more severe consequences than missing consumer credit repayments”, such as overdrafts and personal loans.

“People can face having their essential services cut off, be kicked out of their home due to rent arrears or even face prison if they get behind on their council tax,” Citizens Advice warned. The charity said it had seen a 24 per cent increase in bailiff problems since the government introduced reforms in 2014 that were meant to protect people from unfair bailiff practices. Under the reforms, bailiffs are no longer allowed to make late-night visits to collect debts, and are prevented from using force against people who owe money, amongst other rules.

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Since there is no progress on many essential Brexit elements, this is not some doom fantasy.

NHS Leak Warns Of Brexit Drug Shortages And Disease Risk (G.)

Hospitals face running out of drugs in a chaotic no-deal Brexit, the group that represents NHS hospital and ambulance service has privately warned. Poor co-ordination by ministers and health service bosses means there has been a failure to prepare for the UK to be left without a Brexit deal, a leaked letter from NHS Providers said. “Public health and disease control co-ordination could suffer,” said NHS Providers chief executive Chris Hopson, setting out how a hard Brexit or no deal could negatively effect “the entire supply chain of pharmaceuticals” and “jeopardise” the EU citizens making up the “workforce on which the NHS relies”. Hopson’s letter, sent to NHS England chief executive Simon Stevens and NHS Improvement chief Ian Dalton on Friday, was leaked to the Times.

Hopson said the possibility of a no-deal or hard Brexit “with minimal regulatory alignment appears to be growing … For as long as that risk remains it is important that detailed operation planning is undertaken across the NHS. “Yet trusts tell us that their work in this area is being hampered by the lack of visible and appropriate communication. “Our members have begun planning … but they have hit a problem, in that some activities are clearly best done at a national level and, in the view of trusts, are best co-ordinated by NHS England and NHS Improvement. “However there has been no formal communication to trusts from either of your organisations on this issue.”

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Always risky to cut your immediate colleagues, but makes a ton of sense.

Jacinda Ardern Freezes New Zealand MPs’ Pay To Tackle Rich-Poor Divide (G.)

Jacinda Ardern has frozen the salaries of New Zealand’s MPs, saying the pay rises were out of step with the wider workforce and were adding to the rich-poor divide. The radical move has cross-party support from Ardern’s coalition partners, as well as the opposition National party. MPs’ salaries and allowances would be frozen till July 2019, Ardern said, while “a fairer formula for future pay increases” is developed for those in politics, who earn between NZ$163,000 ($108,000) to more than NZ$450,000 ($300,000). Ardern said the freeze was “the right thing to do” and was not about cost-cutting, but making New Zealand a more equitable nation.

The PM was prompted to take action after the Remuneration Authority recommended MPs receive a 3% pay rise, in a year that is seeing widespread strike action by teachers, nurses and other workers across New Zealand. Ardern earns more than NZ$450,000 a year, making her the fifth-highest paid leader in the OECD, and better paid than Canada’s Justin Trudeau and the UK’s Theresa May. According to a survey by Stuff, 62% of New Zealanders think the country’s prime ministers are paid too much. Australian prime minister Malcolm Turnbull earns the largest salary of any leader in the OECD. “It’s about whether or not it’s right that we receive a 3% pay increase that continues to extend that gap between those on the highest incomes and those on lower and more modest incomes,” Ardern told Radio NZ today.

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The EU MUST come up with a plan.

Salvini Refuses To Let In Refugees After Coastguard Ship Docks (G.)

An Italian coastguard ship with 177 people on board has docked in the Sicilian seaport of Catania, but Italy’s far-right interior minister Matteo Salvini has not given authorisation for the refugees and migrants to disembark. The passengers, who have been stuck on the coastguard boat Ubaldo Diciotti for five days will not be allowed on land until “Europe steps in to help’’, Salvini said. The Diciotti picked up 190 refugees and migrants last Wednesday from an overcrowded boat about 17 sea miles from the island of Lampedusa. Thirteen of them were evacuated for emergency medical treatment. Since then, Rome has insisted that Malta should take the group because their boat first passed through its search-and-rescue area.

But Malta has refused, claiming that the migrants wanted to reach Italy. Questioned by the Italian authorities, the 13 evacuated migrants claimed that the Maltese had escorted them outside its search-and-rescue zone. On Monday afternoon, after three days of negotiations, Italy’s transport minister Danilo Toninelli announced finally on Twitter that “The Diciotti ship will dock in Catania.” But shortly afterwards, sources close to Salvini said he had not given the authorisation to disembark, suggesting the boat was granted permission to dock but the migrants will have to remain on board. Salvini said on Italian TV: “The ship may land in Italy, as long as the 177 migrants are distributed, in a spirit of solidarity by the EU.”

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What does it mean? More debt.

What Being Back in the Markets Actually Means for Greece (TPP)

The devil, as they say in English, lies in the details. Being ‘back in the markets’, ‘turning a page,’ even declaring ‘the end of the Greek Crisis’ have all become commonplace expressions over the past few weeks. But what does this substantively mean? It means that an economy that has shrunk by around 25% saw, due to that shrinkage, its debts go up by about the same amount, despite near 100 billion Euro in debt being wiped off in 2012. Current outstanding Greek debt stands at 343 billion Euro. It now needs to pay a large chunk of that back to get back to where it was in 2008, with 109% debt to GDP.

The years of the Greek crisis (2010-2018) were the years that former finance minister Yanis Varoufakis famously described as the years of ‘extend and pretend.’ The EU would extend more credit (debt) to Greece that Greece would pretend to pay back. While most of the bailout cash prior to 2013 went through Greece back to Northern Banks, after 2013 most of the Debt was held by an opaqueprivate financial institution housed in Luxemburg called the European Stability Mechanism (ESM). It’s the debts held by the ESM, and the loans disbursed by the ESM, that have been the focus of the new game of extend and pretend that is called variously ‘debt-relief’ and Greece ‘being back in the markets.’

Consider the following. The ESM lent 86 Billion Euro to Greece between August 2015 and July 2018. The final tranche of these loans will not be paid back until 2060, with payments beginning in 2034. This ten year deferral of payments along with an interest rate reduction to an average of 1.62% across issues is the much heralded debt relief agreement of June 21st 2018. All things considered, and given real ‘go to the market’ alternatives if you have Greece’s bond rating, this is not a bad deal – on paper. These measures, plus the final bailout cash being added to cash reserves, means that Greece will actually not have to return to the markets for funding for almost two years. Given this, the ‘return to the markets’ comes with some pretty large airbags, all of which makes buying Greek debt more attractive, hence recent bond rating upgrades. So, we are extending, but what are we still pretending?

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“..Pabst Blue Ribbon by the case!”

The Winners Will Lose and the Losers Will Win (Kunstler)

What a revoltin’ development, as Chester A. Riley used to say on “The Life of Riley” TV show back in 1955, when America was great (at least that’s the theory). Riley was an original deplorable before the concept even emerged from the murk of early pop culture. He worked in an aircraft factory somewhere in southern California, which only a few decades prior was the mecca of an earlier generations of losers: the Oakies and other Dust Bowl refugees who went west to pick fruit or get into the movies. Chester A. Riley supported a family on that job as a wing-riveter. All the male characters in the series had been through the Second World War, but were so far removed from the horror that the audience never heard about it.

That was the point: to forget all that gore and get down with the new crazes for backyard barbeque, seeing the USA in your Chevrolet, enjoying that healthful pack of Lucky Strikes in the valley of the Jolly Green Giant… double your pleasure, double your fun… and away go troubles down the drain…. As Tom Wolfe pointed out eons ago, the most overlooked feature of post-war American life was the way that the old US peasantry found themselves living higher on the hog than Louis the XVI and his court at Versailles. Hot and cold running water, all the deliciously engineered Betty Crocker cake you could eat, painless dentistry, and Yankees away games on Channel 11, with Pabst Blue Ribbon by the case! By 1960 or so, along came color TV and air-conditioning, and in places like Atlanta, St. Louis, and Little Rock, you barely had to go outside anymore, thank God! No more heat stroke, hookworm, or chiggers.

It was a helluva lot better than earlier peasant classes had it, for sure, but let’s face it: it was kind of a low-grade nirvana. And a couple of generations beyond “The Life of Riley” the whole thing has fallen apart. There are few hands-on jobs that allow a man to support a family. And what would we even mean by that? Stick the women back in kitchen and the laundry room? What a waste of human capital (even for socialists who oppose capital). The odd thing is that there is increasingly little for this class of people to do besides stand near the door of the WalMart, and if the vaunted tech entrepreneurs of this land have their way with robotics, you can be sure there would be less than nothing for them to do… except crawl off and die quietly, without leaving an odoriferous mess.

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Long read. Steve Keen comments: This will doom the USA to stagnation: a generation with too much debt and no prospect of using credit like the previous generation.

The Inescapable Weight Of My $100,000 Student Debt (G.)

On Halloween in 2008, about six weeks after Lehman Brothers collapsed, my mother called me from Michigan to tell me that my father had lost his job in the sales department of Visteon, an auto parts supplier for Ford. Two months later, my mother lost her job working for the city of Troy, a suburb about half an hour from Detroit. From there our lives seemed to accelerate, the terrible events compounding fast enough to elude immediate understanding. By June, my parents, unable to find any work in the state where they spent their entire lives, moved to New York, where my sister and I were both in school. A month later, the mortgage on my childhood home went into default.

After several months of unemployment, my mother got a job in New York City, fundraising for a children’s choir. In the summer of 2010, I completed my studies at New York University, where I received a BA and an MA in English literature, with more than $100,000 of debt, for which my father was a guarantor. My father was still unemployed and my mother had been diagnosed with an aggressive form of breast cancer. She continued working, though her employer was clearly perturbed that she would have to take off every Friday for chemotherapy. To compensate for the lost time, on Mondays she rode early buses into the city from the Bronx, where, after months of harrowing uncertainty, my parents had settled. She wanted to be in the office first thing.

In January 2011, Chase Bank took full possession of the house in Michigan. Our last ties were severed by an email my father received from the realtor, who had tried and failed to sell the property, telling him he could now cancel the utilities. In May, I got a freelance contract with a newspaper that within a year would hire me full-time – paying me, after taxes, roughly $900 every two weeks. In September 2011, my parents were approved for bankruptcy, and in October, due to a paperwork error, their car was repossessed in the middle of the night by creditors. Meanwhile, the payments for my debt – which had been borrowed from a variety of federal and private lenders, most prominently Citibank – totalled about $1,100 a month.

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Aug 082018
 
 August 8, 2018  Posted by at 8:20 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh The red tree house 1890

 

Tesla Shares Soar After Elon Musk Floats Plan To Take Company Private (G.)
Securities Lawyers Shocked By Elon Musk’s Tweet (CNBC)
Alex Jones Pleads With Donald Trump To Fight ‘Censorship’ (Ind.)
US Think Tank’s Tiny Lab Helps Facebook Battle Fake Social Media (R.)
Trump’s Sanctions Causing Turmoil In Turkey (CNBC)
Turkish Banks Scramble to Stave Off Debt Crisis (DQ)
Europe ‘Needs To Get A Backbone’ On Trump’s Iran Sanctions – Ron Paul (RT)
EU Foreign Policy Chief Calls On Firms To Defy Trump Over Iran (G.)
The Blowup With Canada Is the Latest Saudi Overreach (IC)
London Is The World’s Airbnb Capital (ZH)
My Amsterdam Is Being Un-Created By Mass Tourism (G.)
First Trial Alleging Monsanto’s Roundup Causes Cancer Goes To Jury (R.)
The American Sea of Deception (TD)

 

 

$82 billion in funding arranged? Perhaps the SEC should have a word with Musk about that.

Tesla Shares Soar After Elon Musk Floats Plan To Take Company Private (G.)

Elon Musk has launched a campaign to take Tesla private on a day that included several provocative tweets, a suspension (and resumption) of trading in the company’s shares, reports of a significant Saudi investment, a surge in stock price, and an evocative, Musk-tinged appeal to the Tesla faithful: “The future is very bright and we’ll keep fighting to achieve our mission.” The ride started with Tesla’s stock rising more than 7% after Musk tweeted he was “considering taking Tesla private” and had funding in place to do so at a price of $420 (£325) per share. Shortly afterwards, Tesla published a blogpost written by Musk entitled ‘Taking Tesla private’ that had been sent to all employees.

The tweet appeared to be triggered by a report in the Financial Times that Saudi Arabia has built up a stake in Tesla worth up to $2.9bn. At $420 a share, Tesla would have an enterprise value of about $82bn including debt, well above its stock market value, which reached $63.8bn on Tuesday. Shares closed up 11% at $378. To take Tesla private, Musk would have to pull off the largest leveraged buyout in history, surpassing Texas electric utility TXU’s in 2007. Analysts say Tesla doesn’t fit the typical profile of a company that can raise tens of billions of dollars of debt to fund such a deal. In a follow up tweet, Musk wrote: “I don’t have a controlling vote now and wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.”

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Social media and its consequences.

Securities Lawyers Shocked By Elon Musk’s Tweet (CNBC)

“If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, it could also be securities fraud,” former SEC Chairman Harvey Pitt told CNBC on Tuesday. “The use of a specific price for a potential going private transaction is highly unprecedented and therefore raises significant questions about what his intent was. So, that would have to be investigated.” [..] Five years ago the Securities and Exchange Commission had to clarify its social media policy after Netflix founder and CEO Reed Hastings set off a firestorm of his own.

Companies can use social media like Facebook and Twitter to announce key information and be OK under Fair Disclosure regulations as long as investors know that they can find that information on the social media accounts. Reg FD was designed to make sure investors could get information at the same time, rather than having select disclosures to some before others. The SEC’s enforcement division had investigated Hasting’s use of a personal Facebook page back in 2012 to say the streaming service’s monthly online viewing had exceeded 1 billion hours for the first time.

The SEC didn’t take any action against Netflix or Hastings but clarified its social media policy. “Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information,” the SEC said in a statement at the time. There might not be any SEC action this time, either, but it’s only a matter of time before an executive gets accused of making a false or misleading statement on social media, said Kevin LaCroix, an attorney focused on management liability issues. “There will be a case someday.”

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A hard one for Trump. Alex Jones is his biggest media asset. But how can Washington stop Silicon Valley?

Alex Jones Pleads With Donald Trump To Fight ‘Censorship’ (Ind.)

Far-right conspiracy theorist Alex Jones has appealed to Donald Trump to pursue an end to “censorship” after the InfoWars host was banned from all but one of the West’s major content platforms. On Monday, Apple deleted most of Mr Jones’s podcasts saying they contained hate speech; Facebook removed four of his pages down for “repeated violations of community standards”; YouTube terminated Mr Jones’s account after he violated a 90-day ban; and Spotify removed one of Jones’s podcasts for “hate content”. In a free-wheeling monologue posted online, the prominent far-right personality praised the president, condemned the mainstream press, and accused China of meddling in US elections.

“Mr President, America knows you’re real. They know the Democrats are the anti-American globalists allied with the ChiComms, radical Islam, the unelected EU, and others,” he said. “If you come out before the midterms and make the censorship the big issue of them trying to steal the election. “And if you make the fact we need an Internet Bill of Rights, and anti-trust busting on these companies, if they don’t back off right now. “And if you don’t come out and point out that the communist Chinese have penetrated and infiltrated and are way, way worse than the Russians …. then they will be able to steal the midterms and start the impeachment.” He said cracking down on China and speaking out against censorship was “the right thing to do”.

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The Atlantic Council doesn’t find the truth, it makes its own. Main Russiagate proponents.

US Think Tank’s Tiny Lab Helps Facebook Battle Fake Social Media (R.)

A day before Facebook announced that it had discovered and disabled a propaganda campaign designed to sow dissension among U.S. voters, it exclusively shared some of the suspicious pages with an online forensics team so busy it hasn’t put a nameplate on the door. The Atlantic Council’s Digital Forensic Research Lab is based in a 12-foot-by-12-foot office in the Washington, D.C., headquarters of the nearly 60-year-old Council www.atlanticcouncil.org, a think tank devoted to studying serious and at times obscure international issues. Facebook is using the group to enhance its investigations of foreign interference. Last week, the company said it took down 32 suspicious pages and accounts that purported to be run by leftists and minority activists.

While some U.S. officials said they were likely the work of Russian agents, Facebook said it did not know for sure. It fell to the lab to point out similarities to fake Russian pages from 2016 during Facebook’s news conference last week. Facebook began looking for outside help amid criticism for failing to rein in Russian propaganda ahead of the 2016 presidential elections. The U.S. Justice Department won indictments against 13 Russians and three companies for using social media in that election to influence voters. U.S. President Donald Trump’s national security team warned last week of persistent attempts by Russia to use social media against the 2018 congressional elections as well.

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All they need to do is release a pastor.

Trump’s Sanctions Causing Turmoil In Turkey (CNBC)

The Turkish lira and benchmark sovereign bond hit a record low as the threat of U.S. sanctions added pressure to already ailing markets. The U.S. dollar rose to 5.4 against the lira on Monday before trading around 5.29 on Tuesday. Turkey’s 10-year bond fell to a record low on Tuesday, pushing its yield up to around 20 percent before hovering around 18.8 percent. Bond prices move inversely to yields. Turkish capital markets have struggled this year as the country deals with a weakening economy. The sharp moves down come after President Donald Trump threatened last month to slap “large sanctions” on the Middle Eastern nation if it refuses to free Andrew Brunson, an evangelical pastor.

The U.S. then announced on Aug. 1 sanctions on Turkey’s justice and interior ministers, prohibiting U.S. citizens from doing business with them. “This is a shot across the bow,” said Marcus Chenevix, an analyst at TS Lombard. “Now, I think the U.S. will give them time to respond. It’s not like the U.S. sees this as a pressing political matter, it just can’t seem to be backing down to these hostage tactics.” Turkey detained Brunson in October 2016, accusing him of spying and trying to overthrow the government after a failed coup earlier that year. Trump demanded in a July 26 tweet the Turkish government release Brunson.

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20% yields on bonds… As the lira has lost 25% or so of its value..

Turkish Banks Scramble to Stave Off Debt Crisis (DQ)

Highly leveraged companies currently face a potent cocktail of soaring borrowing costs and a plunging Lira. As the local currency weakens against the dollar and the euro, it gets harder and harder for local companies to service foreign currency bonds. That’s how a currency crisis becomes a debt crisis. Turkish companies are sitting on $337 billion in debt. With as much as $100 billion in debt scheduled to come due over the course of the next year, Turkish banks are under growing pressure to restructure foreign-currency denominated corporate loans as those companies struggle to service them.

The banks have proposed rules to accelerate the restructuring of company debt and allow lenders to avoid booking these loans as “non-performing loans,” a move that may help prevent defaults from piling up. As has happened in Italy since Europe’s sovereign debt crisis, the banks will try to extend loans indefinitely in order to avoid gaping holes developing on their balance sheets. But it may already be too late. The downgrades, both sovereign and corporate, are coming thick and fast. On July 20, Fitch Ratings downgraded the Long-Term Foreign Currency Issuer Default Ratings (LTFC IDRs) of 24 Turkish banks and their subsidiaries, in many cases by two notches.

The agency also slashed Turkey’s sovereign rating deeper into junk territory, downgrading its Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BB’ from ‘BB+’ with a negative outlook. Moody’s also downgraded the ratings of 17 banks in July. These downgrades will make it even more costly for Turkish banks and the Turkish government to raise funds, with the yield on Turkey’s benchmark 10-year bond soaring to an eye-watering 19% on Tuesday.

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“In time people are going to realize we might have to adjust because countries are not going to tolerate what we have done..”

Europe ‘Needs To Get A Backbone’ On Trump’s Iran Sanctions – Ron Paul (RT)

Washington is powerful, but Europe needs to “stick to its guns” against President Donald Trump’s threats that any countries doing business with Iran will not to do business with the US, according to former Congressman Ron Paul. In an interview with RT, Paul said that while the US can “throw its weight around” the EU needs to “get some backbone” to resist Trump’s threats. “If they stick to their guns I think the United States would have to adjust our policies a bit, because how are they going to enforce that? You know, if China and Russia and other countries and India, they do business with Iran — how are we going to punish them?” he said. Paul acknowledged that standing up to Washington might be difficult if major companies are faced with the threat of losing business in the US. “In time people are going to realize we might have to adjust because countries are not going to tolerate what we have done,” he said.

Asked about the anti-Russia sentiment currently gripping the US, Paul said that the people who are in favor of taking a very negative view of Russia — and who are pushing the narrative that Trump colluded with Russia to win the presidency — are in control in both the media and in Congress. “I think it’s tragic what’s happening, because they have no proof of anything and for some reason these senators have come up with this new [Russia sanctions] bill — Graham and McCain and Menendez — just out of the clear blue, they have no evidence whatsoever of their charges that they have made,” he said. Paul, who has long advocated a non-interventionist foreign policy and taken a negative view of sanctions, said that the US tendency to blame other countries for everything, slapping them with sanctions and then complaining when they retaliate is “very, very bad foreign policy.”

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Catch 22.

EU Foreign Policy Chief Calls On Firms To Defy Trump Over Iran (G.)

The EU is set on a collision course with Donald Trump after its foreign policy chief called for Europeans to increase their business dealings with Iran in defiance of bellicose statements from the US president. As Trump vowed to block those trading with Iran from the US market, the EU stepped up efforts to save the Iran nuclear deal by encouraging its companies to ignore the White House. Federica Mogherini, the EU’s high representative for foreign affairs, said Brussels would not let the 2015 agreement with Tehran die, and she urged Europeans to make their own investment decisions. The EU, China and Russia remain signatories to the joint comprehensive plan of action under which economic sanctions on Iran have been lifted in return for the regime curtailing its nuclear aspirations.

Trump reneged on the deal in May, describing it as “a horrible one-sided deal that should never, ever have been made”. The clash risks destabilising the wider transatlantic relationship weeks after the European commission president, Jean-Claude Juncker, and Trump vowed in the White House rose garden to increase tariff-free trade between the EU and the US and to move on from recent disagreements. During a trip to Wellington, New Zealand, on Tuesday, Mogherini said: “We are doing our best to keep Iran in the deal, to keep Iran benefiting from the economic benefits that the agreement brings to the people of Iran, because we believe this is in the security interests of not only our region but also of the world.

“If there is one piece of international agreements on nuclear non-proliferation that is delivering, it has to be maintained. We are encouraging small and medium enterprises in particular to increase business with and in Iran as part of something [that] for us is a security priority.” Hours earlier, Trump had tweeted: “The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”

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“Have the Saudis gone stark-raving bonkers?”

The Blowup With Canada Is the Latest Saudi Overreach (IC)

Have the Saudis gone stark-raving bonkers? First, they pick a fight with Canada — yeah, that Canada! Maple syrup-loving, hockey-playing, poutine-eating, liberal, multicultural Canada; the land with free health care and a prime minister who wears “Eid Mubarak” socks. On Sunday, Saudi Arabia (over)reacted to a single tweet from the Canadian foreign ministry. The tweet called on the Saudis to “immediately release” imprisoned activist Samar Badawi, sister of Raif, as well as “all other peaceful #humanrights activists.” The Saudi foreign ministry lambasted the Canadians for an “unfortunate, reprehensible, and unacceptable” statement, announced the “freezing of all new trade and investment transactions” with Canada, demanding the Canadian ambassador leave the country “within the next 24 hours.”

At the same time, Saudi trolls took to Twitter to declare their loud support for … Quebec’s independence. Who knew that an absolute Persian Gulf monarchy was so passionate about a French-speaking secessionist movement 6,000 miles away? (Hey, Canadian trolls — if you even exist — my advice would be to retaliate by offering Ottawa’s backing for independence in the restless, Shia-dominated Eastern Province of Saudi Arabia. It’ll drive them totally nuts.) And Saudi Arabia was just getting started. On Monday, the kingdom escalated the row by suspending scholarships “for about 16,000 Saudi students” studying in Canada, the Toronto Star reported, “and ordered them to attend schools elsewhere.” (Can you think of a better example of biting your bigoted nose to spite your intolerant face?)

Then — and this is my favorite part of this whole bizarre episode — a Saudi group put out an image on Twitter of a Canadian airliner flying directly toward Toronto’s tallest building over a warning against interfering in others’ affairs. (The Saudi group later deleted it and apologized) Are. You. Kidding. Me?

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Destruction in its wake.

London Is The World’s Airbnb Capital (ZH)

10 years ago, in early August 2008, the website Airbedandbreakfast.com went online, marking the birth of Airbnb. Back then the three founders, Brian Cheky, Joe Gebbia and Nathan Blecharczyk wanted to help short-term travelers find affordable accommodation and provide renters with an opportunity to make an extra buck by renting out spare rooms or even just the namesake airbed on the floor. However, as Statista’s Felix Richter notes, little did they know that 10 years later their little venture would be one of the hottest private companies in the world, valued at nearly $30 billion.

Over the years, Airbnb has developed into much more than what it was originally meant to be. These days you can rent millions of houses, apartments and rooms on the platform. For many young travelers is has become the favorite if not the only way to find accommodation when travelling. Luckily for Airbnb, its rise coincided with a steep increase in city tourism. In cities such as London, Paris or New York, where hotel rooms are often hard to find and/or expensive, Airbnb has become an affordable and popular way to experience cities in a less touristy way.

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Politicians can’t keep up with tech developments. They’re always late. They sit on their hands until someone else does something.

“..the red light district is no longer under government control at weekends. Criminals operate with impunity; the police can no longer protect citizens; ambulances struggle to reach victims on time.”

My Amsterdam Is Being Un-Created By Mass Tourism (G.)

The word on everyone’s lips is “Venice”. It starts as a whisper, some time in early spring, when the lines in front of the Rijksmuseum get a little longer, and the weekend shopping crowds in the Negen Straatjes begin to test your bike-navigation skills. By the time it’s July those streets are flooded. You don’t even try steering through the crowds. You’d be like Moses, except that God is not on your side, the Red Sea will not part in your favour, and the crowds will wash you away: the middle-aged couples from the US and Germany, here for the museums; and the stag parties from Spain, Italy and the UK, here in their epic attempt to drink all the beer and smoke all the pot.

So you learn to take the long way round to your destination and skip entire areas of Amsterdam – which nevertheless means that, perhaps once every summer, you’ll be down on the pavement after crashing into a distracted tourist who walked in front of your bike, and the whisper becomes a curse: “Fucking Venice!” (The Dutch like to swear in English.) “Venice”is shorthand for a city so flooded by tourists that it no longer feels like a city at all. In the famed 2013 Dutch documentary I Love Venice a tourist asks: “At what time does Venice close?” It’s very funny, except, of course, that it is not funny at all.

This year Amsterdam’s 850,000 inhabitants will see an estimated 18.5 million tourists flock to the city – up 11% on last year. By 2025, 23 million are expected. Last week the city’s ombudsman condemned the red light district as no longer under government control at weekends. Criminals operate with impunity; the police can no longer protect citizens; ambulances struggle to reach victims on time. [..] There are several ways to react. One is to leave town. A study shows that in the past five years 40% of couples relocated to smaller towns after their first child. Many feel this is no longer a city to raise kids.

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Hard to prove, I said it before. But a jury might decide anyway. Huge case, 5,000 more plaintiffs to come.

First Trial Alleging Monsanto’s Roundup Causes Cancer Goes To Jury (R.)

Groundskeeper Dewayne Johnson is one of more than 5,000 plaintiffs across the United States who claim Monsanto’s glyphosate-containing herbicides, including the widely-used Roundup, cause cancer. His case, the first to go to trial, began in San Francisco’s Superior Court of California four weeks ago. Johnson’s lawyer Brent Wisner on Tuesday urged jurors to hold Monsanto liable and punish them with a verdict he said would “actually change the world.” Wisner claimed Monsanto knew about glyphosate’s cancer risk, but decided to bury the information. Monsanto, a unit of Bayer following a $62.5 billion acquisition by the German conglomerate, denies the allegations and says expert testimony on which Johnson and others rely does not satisfy any scientific or legal requirements.

“The message of 40 years of scientific studies is clear: this cancer is not caused by glyphosate,” Monsanto’s lawyer George Lombardi said, according to an online broadcast of the trial by Courtroom View Network. The U.S. Environmental Protection Agency in September 2017 concluded a decades-long assessment of glyphosate risks and found the chemical not likely carcinogenic to humans. The World Health Organization’s cancer arm in 2015 classified glyphosate as “probably carcinogenic to humans.” If it finds Monsanto liable, the jury can decide to award punitive damages on top of the more than $39 million in compensatory damages Johnson demanded. The jury is expected to start deliberating on Wednesday.

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All the Presidents’ lies.

The American Sea of Deception (TD)

U.S. President Franklin D. Roosevelt lied to Congress and the American people when he claimed that the Japanese attack on Pearl Harbor was “unprovoked” by the U.S. and a complete “surprise” to the U.S. military. President Dwight Eisenhower flatly lied to the American people and the world when he denied the existence of American U-2 spy plane flights over Russia. President John F. Kennedy lied about the supposed missile gap between the United States and the Soviet Union. And Kennedy lied when he claimed that the United States sought democracy in Latin America, Southeast Asia and around the world. President Lyndon Johnson lied on Aug. 4, 1965, when he claimed that North Vietnam attacked U.S. Navy destroyers in the Gulf of Tonkin. This provided a false pretext for a massive escalation of the U.S. war on Vietnam, resulting in the deaths of more than 50,000 U.S. military personnel and millions of Southeast Asians.

Regarding Vietnam, Daniel Ellsberg recalled 17 years ago that his 1971 release of the Pentagon Papers exposed U.S. military and intelligence documents “proving that the government had long lied to the country. Indeed, the papers revealed a policy of concealment and quite deliberate deception from the Truman administration onward. … A generation of presidents,” Ellsberg noted, “chose to conceal from Congress and the public what the real policy was. …” President Richard Nixon lied about wanting peace in Vietnam (his agent, Henry Kissinger, actively undermined a peace accord with Hanoi before the 1968 election) and about respecting the neutrality of Cambodia. He lied through secrecy and omission about the criminal and fateful U.S. bombing of Cambodia—a far bigger crime than the burglarizing of the Democratic Party headquarters in the Watergate complex, about which he of course famously lied.

The serial fabricator Ronald Reagan made a special address to the nation in which he lied by saying, “We did not—repeat—we did not trade weapons or anything else [to Iran] for hostages, nor will we.” President George H.W. Bush falsely claimed on at least five occasions in the run-up to the 1990-91 Persian Gulf War that Iraqi forces, after invading Kuwait, had pulled babies from incubators and left them to die.

President Bill Clinton shamelessly lied about his White House sexual shenanigans with Monica Lewinsky. He falsely claimed to be upholding international law and to be opposing genocide when he bombed Serbia for more than two months in early 1999. The serial liar George W. Bush and his administration infamously, openly and elaborately lied about Saddam Hussein’s alleged Iraqi “weapons of mass destruction” and about Iraq’s purported links to al Qaida and the 9/11 jetliner attacks. After the WMD fabrication was exposed, Bush falsely claimed to have invaded Iraq to spread liberty and democracy.

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Jul 282018
 
 July 28, 2018  Posted by at 9:07 am Finance Tagged with: , , , , , , , , , , , ,  


Henri Matisse Window at Tangiers 1912

 

The Big Adjustments in “Real” GDP (WS)
China-US Trade War Would Wipe 20% Off The S&P 500 – UBS (CNBC)
Trump Tariffs: Turning Point In History, End Of Globalisation – Duncan (SCMP)
Julian Assange’s Fate Rests On Death Penalty Assurances -Moreno (CNN)
‘Assange’s Days In Ecuadorian Embassy In London Are Numbered’ – Correa (RT)
Twitter Share Price Drops 17% As Q2 Results Released (Ind.)
Facebook Is Sued After Stock Plunge ‘Shocked’ Market (R.)
Millions Could Be Affected By ‘No-Deal’ Brexit Medicines Shortages (PJ)
Yulia Skripal to Return to Russia When Her Father Gets Better (Sp.)
United Airlines Donates Flights To Reunite Immigrant Families (SFBT)
Greek Overtaxation Hurts Private Consumption (K.)
HRW Slams ‘Appalling’ Conditions Of Migrant Camps In Northern Greece (K.)

 

 

The last hurrah.

The Big Adjustments in “Real” GDP (WS)

What the Bureau of Economic Analysis released today as part of its GDP report was a huge pile of revisions and adjustments going back years. It included an adjustment to the tune of nearly $1 trillion in “real” GDP. And it lowered further its already low measure of inflation. Based on this revised data, second-quarter “real” GDP (adjusted for inflation) increased at a seasonally adjusted annual rate of 4.1% from the prior quarter. Annual rate means that if GDP continues to increase for four quarters in a row at the current rate, the 12-month GDP growth would be 4.1%. This was the highest growth rate since Q3 2014:

The above measure of “real” GDP – the change from prior quarter, but at an annualized rate – is the most volatile measure, producing the biggest-looking results, both up and down, as you can see in the above chart with a plunge of -8.4% in Q4 2008. Few or no other major countries use this measure for that reason. A less volatile measure and producing less big-looking results is the 12-month change in “real” GDP, which the BEA’s data set also provides. This is the inflation adjusted, seasonally adjusted annual rate of GDP growth – in other words, how GDP did over the past 12 months. For the 12 months ending in Q2, it rose 2.8%.

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And then more would follow.

China-US Trade War Would Wipe 20% Off The S&P 500 – UBS (CNBC)

Investors could see steep drops in global stock markets if tensions between China and the United States escalate into a full-blown trade war, analysts at UBS said in a note Friday. Assuming virtually all trade between U.S.-China is affected by tariffs and other protectionist policies, the Swiss bank calculated that profits for S&P firms would take a 14.6% hit, with U.S. and global growth being 245 and 108.5 basis points lower, respectively. However, the bank noted there would also be second-order effects. These “would be larger, with U.S. multinationals doing business in China also likely to be hurt by China retaliation.” Thus, in terms of company valuations, these would take an additional 9.1% hit, bringing a total downside of 21.3% for the U.S. benchmark after some further adjustments by UBS analysts.

So far this year, President Donald Trump has imposed new tariffs on Chinese solar panels, washing machines, steel and aluminum, as well as on other imported goods for intellectual property theft. China has retaliated every time. However, there are more potential tariffs on the way, with Trump threatening to impose new levies worth as much as $200 billion. David Riley, the chief investment strategist at BlueBay Asset Management, told CNBC’s “Street Signs” Friday: “If I was sitting in Beijing, I would be pretty worried.” “I think we are going to get potentially more tariffs imposed on China coming at the end of the month, or early September,” he said.

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“They may be intent on stopping China’s economic growth altogether..”

Trump Tariffs: Turning Point In History, End Of Globalisation – Duncan (SCMP)

The deepening trade dispute between the United States and China could mark a “turning point in history”, ending the system of global trade that brought low-cost goods to consumers and fuelled the rise of the Chinese mainland and other emerging markets in just a few decades, according to noted economist and author Richard Duncan. Bangkok-based Duncan believes the US$50 billion of Chinese products designated for 25% tariffs by the Trump administration – in addition to a proposed 10% tariff on an additional US$200 billion in Chinese goods – may represent the first steps in a policy shift by Washington that goes far beyond what many observers expect.

“I am becoming concerned that they really do intend to put up trade tariffs on a very large scale against China and that perhaps there’s more to this strategy than just balancing trade. They may be intent on stopping China’s economic growth altogether, now that China has become so large they are becoming not only an economic competitor, but potentially a military threat to US global dominance. If that’s the case, this could be a turning point in history,” Duncan said in a new South China Morning Post business podcast. While it is too early to say how the trade talks between the two sides will play out, one concern is that escalating tariffs, beginning with the US$34 billion of Chinese products which went into effect on July 6, are about to become the norm, rather than the exception.

[..] “Over the last 30 years the rapid economic rise of China has really transformed the world, but if the US starts putting tariffs on US$200 billion and US$500 billion of Chinese exports, then China’s economy could go into a very serious crisis,” Duncan said. [..] “I don’t view this as a conflict between the US and China. It is not that simple, it’s not team USA versus team China. There are interests in the United States that have benefited enormously from this arrangement that now exists, in particular, the large US multinationals. They have been able to drive down their labour costs by moving their factories from Detroit and other US cities into China. Their wage costs have collapsed as a result of this move. The share of profits that are split between labour and capital have shifted.”

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Beware international law, Lenin.

Julian Assange’s Fate Rests On Death Penalty Assurances -Moreno (CNN)

British and Ecuadorian authorities have held discussions over the future of Julian Assange, the Ecuadorian president said on Friday, fueling speculation that the WikiLeaks founder may soon be stripped of the country’s diplomatic protection in London. Speaking in Madrid, President Lenín Moreno suggested Ecuador was seeking guarantees that whatever Assange’s eventual fate, he would not face the death penalty. Assange took refuge in the Ecuadorian Embassy in London in 2012 when he was facing allegations of sexual assault in Sweden. The case was eventually dropped but Assange has always feared being extradited to the US, and in the past his lawyers have claimed he could face execution there.

Moreno said the previous Ecuadorian government granted Assange asylum because it agreed his life was in danger. “The death penalty does not exist in Ecuador, and we knew that possibility existed… The only thing we want is a guarantee that his life will not be in danger,” Moreno said. In a statement Friday, Moreno’s communication’s office stressed the President “hasn’t ordered, at any moment, the removal of Julian Assange from the Ecuadorian embassy in London.” Ecuador’s government has no desire that Assange remain “in asylum his whole life” and urged “a solution to a problem we inherited,” the statement said. [..] Moreno made it clear that he did not support Assange’s work. “I have never agreed with what Mr. Assange does. I have never supported the interception of private emails to be able to obtain information, regardless of how valuable it may be, to bring to light certain undesirable actions carried out by governments on people.”

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No, really, Correa and Moreno were close friends. I’m convinced the Americans got to Moreno before he became president.

‘Assange’s Days In Ecuadorian Embassy In London Are Numbered’ – Correa (RT)

The days of Julian Assange’s residence in the Ecuadorian embassy in London are numbered, the country’s former president Rafael Correa, who was still at the helm when he offered the WikiLeaks founder asylum, has told RT. Correa’s remarks came amid speculation that his successor, Lenin Moreno, may soon kick Assange out, probably to be arrested by British authorities. According to Assange himself, this would lead to the unsealing of a secret US indictment against him and his extradition to America. Moreno this week said that, sooner or later, the self-exiled anti-secrecy activist will have to leave the Ecuadorean diplomatic mission.

You can be sure that he [Moreno] is a hypocrite. He already has an agreement with the US about what will happen to Assange. And now he’s just trying to sweeten the pill by saying he’s going to have a dialogue” about conditions of the transfer, Correa told RT. “I’m afraid … that Assange’s days in our embassy are numbered.” Ecuador’s President Lenin Moreno, has made no secret that Assange’s refuge was a nuisance for his government, which he inherited from Correa. The Australian has been living at the compound since 2012 and has lately been barred by his Ecuadorean hosts from any communications.

Accusing the incumbent Ecuadorian president of “reducing [Assange] to a hacker who snooped in private emails,” Correa pointed out that Moreno cannot grasp the complexity of Assange’s role in exposing human rights abuses by the US government, or the harsh punishment the 47-year-old will face if extradited to the US. Correa, who now hosts a show on RT’s Spanish service, noted that unless Assange secures safe passage guarantees, he is likely to be prosecuted for espionage and treason “which may carry the death penalty.” While Moreno said on Friday that he is trying to negotiate Assange’s security guarantees, Correa believes that the activist’s fate has already been sealed.

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Twitter’s shadow banning scandal lurks in the background.

Twitter Share Price Drops 17% As Q2 Results Released (Ind.)

Twitter Inc shares have plunged 17% after the social media platform revealed its monthly users dropped by 1 million in the second quarter – and predicted the number will decline further. The decline in monthly users comes as Twitter contends with increasing fake spam accounts and dangerous rhetoric on the platform. Monthly active users are at 335 million in the current quarter, according to a statement released by Twitter on Friday, down from 336 million in the first quarter. Despite the decline, the number of users is up 2.8% from the past year, but Twitter expects the numbers to continue falling as the crusade against spam accounts continues.

“Our second quarter results reflect the work we’re doing to ensure more people get value from Twitter every day,” said Twitter CEO Jack Dorsey in a statement. “We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviours that distort and distract from the public conversation.” According to Dorsey, the company’s machine-learning algorithms are identifying more than 9 million potential spam or fake accounts a week.

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Any fine would be paid by…the same shareholders who sue.

Facebook Is Sued After Stock Plunge ‘Shocked’ Market (R.)

Facebook Inc and its chief executive Mark Zuckerberg were sued on Friday in what could be the first of many lawsuits over a disappointing earnings announcement by the social media company that wiped out about $120 billion of shareholder wealth. The complaint filed by shareholder James Kacouris in Manhattan federal court accused Facebook, Zuckerberg and Chief Financial Officer David Wehner of making misleading statements about or failing to disclose slowing revenue growth, falling operating margins, and declines in active users. Kacouris said the marketplace was “shocked” when “the truth” began to emerge on Wednesday from the Menlo Park, California-based company.

He said the 19% plunge in Facebook shares the next day stemmed from federal securities law violations by the defendants. The lawsuit seeks class-action status and unspecified damages. Shareholders often sue companies in the United States after unexpected stock price declines, especially if the loss of wealth is large. Facebook has faced dozens of lawsuits over its handling of user data in a scandal also concerning the U.K. firm Cambridge Analytica. Many have been consolidated in the federal court in San Francisco.

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“..we make no insulin in the UK. We import every drop of it.”

Millions Could Be Affected By ‘No-Deal’ Brexit Medicines Shortages (PJ)

Many patients — including the prime minister herself — could be “seriously disadvantaged” by disruption to the drug supply chain if the UK exits the EU without a deal, the head of the UK’s medicines regulator has said. In comments made in a “personal capacity” to The Pharmaceutical Journal, Sir Michael Rawlins, chair of the Medicines and Healthcare products Regulatory Agency (MHRA), said that the supply of medicines such as insulin could be disrupted because the UK does not manufacture it and transporting it is complicated as its storage has to be temperature-controlled. Prime minister Theresa May has type 1 diabetes and is known to use insulin to control it.

Rawlins said that the government needed to “work out how” the supply of some medicines are going to be guaranteed in the event of a ‘no-deal’ Brexit. He said: “There are problems and the Department for Exiting the EU and the Department of Health and Social Care (DHSC) needs to work out how it’s going to work. “Here’s just one example why: we make no insulin in the UK. We import every drop of it. You can’t transport insulin around ordinarily because it must be temperature-controlled. And there are 3.5 million people [with diabetes, some of whom] rely on insulin*, not least the prime minister.”

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What happened to the gag order? Oh, wait, this is Sputnik.

Yulia Skripal to Return to Russia When Her Father Gets Better (Sp.)

Yulia Skripal, who was allegedly poisoned alongside her father Sergei Skripal in the UK city of Salisbury in March, will return to Russia when the latter gets better, Yulia’s cousin Viktoria Skripal told Sputnik on Thursday. “[Yulia] said she was doing well and already had a connection to the Internet… She will return home when her father gets better,” Viktoria said. The phone conversation took place on Tuesday, when Sergei Skripal’s mother was celebrating her 90th birthday.

“She was very happy to hear that Sergei was okay,” Viktoria stressed, adding that, according to Yulia, Sergei Skripal still had a respiratory tube in his trachea. On March 4, the Skripals were found unconscious on a bench at a shopping center in Salisbury. The United Kingdom and its allies have accused Moscow of having orchestrated the attack with what UK government claims was the A234 nerve agent, albeit without presenting any proof. Russian authorities have refuted the allegations as groundless.

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United’s CEO is Hispanic.

United Airlines Donates Flights To Reunite Immigrant Families (SFBT)

Several of the nation’s airlines made headlines in June when they told Washington that they would not fly immigrant children separated from their families at the border. Now United is going one step further by donating flights to reunite children that have been separated from their immigrant families. United’s move is garnering favorable attention on social media. “We have great news to share! A growing community of support is coming together to reunite families who were separated at the border. We are so thankful and happy to announce that United Airlines is jumping in and helping,” FWD.us posted on Facebook. “Thanks to this partnership with United, we are able to provide travel to the recently reunited immigrant families to get to their next destination with dignity.”

Another supporter of United’s generosity tweeted, “Thank you @united. You’re good people.” Earlier this week, the Refugee and Immigrant Center for Education and Legal Services, the Texas nonprofit also known as RAICES, said that it planned to donate $3 million as part of a #FlightsForFamilies initiative, The Hill newspaper reported. RAICES is working with FWD.us and Families Belong Together on the effort to reunite immigrant families. RAICES made news last week by declining a $250,000 donation from San Francisco-based Salesforce.com because of the tech company’s contract with U.S. Customs and Border Protection. Chicago-based United Airlines, which operates a major hub in San Francisco, could risk some backlash from wading into the contentious immigration debate, but the carrier may expect most Americans will embrace the idea of reuniting families.

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The troika works like a boa constrictor.

Greek Overtaxation Hurts Private Consumption (K.)

Conditions of weak growth and high unemployment look set to continue in the Greek economy, as despite the increase in exports and investments, private consumption remains stagnant due to overtaxation, according to Alpha Bank’s weekly economic bulletin. “The drop in private consumption in the first quarter of 2018 coincides with households’ limited consumption capacity due to the excessive taxation imposed both through direct and indirect taxes. According to Bank of Greece estimates, private consumption is expected to show a small 0.8% increase in 2018, which will be supported by the increase in employment and the negative mean trend toward savings,” the bulletin read.

The bank’s analysts point out that, with the exception of the significant annual rise of 33% in car sales, all other indexes point to weak growth in private consumer spending: The retail sales volume index grew by just 0.6% on an annual basis in the January-April period, against an increase of 1.1% in the whole of 2017. Also takings from value-added tax slipped 0.3%, illustrating the weak demand in the market, Alpha noted.

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If the EU wanted to stop this, they could. Within days.

HRW Slams ‘Appalling’ Conditions Of Migrant Camps In Northern Greece (K.)

Human Rights Watch (HRW) has issued a scathing report on the “appalling” conditions that migrants and refugees face in northern Greece. HRW said that thousands have been subject to appalling reception and detention conditions, with at-risk groups lacking necessary protection. It added that Greece has failed to ensure minimum standards for pregnant women, new mothers and others arriving via the northeast land border with Turkey, many of whom are fleeing violence or repression in countries including Syria, Afghanistan and Iraq.

The group said that during visits by its members to three government-run centers last May they found that living conditions did not meet international standards in terms of adequate access to healthcare – including for mental health and support for at-risk people including women traveling alone, pregnant women, new mothers, and survivors of sexual violence. Several of the 49 residents at the three facilities that HRW interviewed also reported verbal abuse by police. Two said they witnessed police physically abusing others. Hillary Margolis, a women’s rights researcher at HRW, said, “People told us they were being treated so poorly in these facilities that they felt less than human.” “Greece has a responsibility to uphold basic standards of care for everyone in its custody, regardless of their immigration status,” she added.

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Jul 272018
 
 July 27, 2018  Posted by at 9:23 am Finance Tagged with: , , , , , , , , , , ,  


Pablo Picasso The three dancers 1925

 

The Mirage That Will Be Q2-GDP (Roberts)
Household Debt In UK ‘Worse Than At Any Time On Record’ (G.)
BRICS Nations Pledge Unity As Trade War Threatens (AFP)
Facebook’s $120 Billion Rout Biggest Loss In Stock Market History (CNBC)
Trade Deal With EU Greater In Scope Than Expected – US Official (R.)
Macron ‘Not In Favour’ Of Vast New US-EU Trade Deal (AFP)
EU’s Barnier Kills Off Theresa May’s Brexit Customs Proposals (G.)
Trump Threatens Turkey Sanctions Over Detained Pastor (AP)
US Government Misses Judge’s Midnight Deadline For Reunifying Families (Ind.)
Taxation Strangles Greece’s Growth Prospects (WSJ)
Death Toll From Greek Wildfires Rises To 85, Scores Stll Missing (K.)
Only 13% Of World’s Oceans Are Still Untouched Wilderness (Ind.)

 

 

Another great piece by Lance Roberts. Here’s the part on debt. It now takes $3.71 of debt to create $1 of economic growth. That won’t last.

The Mirage That Will Be Q2-GDP (Roberts)

With wage growth stagnant, corporations struggling to pass through rising commodity and tariff related costs and debt service requirements on the rise as the Fed continues to hike rates, the drag from the consumption side of the economic equation will likely dwarf the current boosts in the next two quarters. Furthermore, as I noted previously, tax cuts and reform, tariffs and other fiscal remedies promoted by the current administration fail to address the main drag to economic growth over time. The debt. “It now requires $3.71 of debt to create $1 of economic growth which will only worsen as the debt continues to expand at the expense of stronger rates of growth.”

In fact, as recently noted by our friends at the Committee for a Responsible Federal Budget, the U.S. deficit is set to surge. To wit: “The White House Office of Management and Budget recently released its annual mid-session review which updated deficit projections in its fiscal year 2019 budget request. The report projected deficits will reach $1.085 trillion in FY 2019 under their budget, which is double the $526 billion called for in the FY 2018 budget.” The report specifically addresses the biggest point of concern:

“The last time the nation experienced trillion-dollar deficits was during a serious economic downturn, no less – lawmakers took the issue seriouly. PAYGO laws were established, a fiscal commission was formed, new discretionary spending caps were implemented and policymakers entered a multi-year debate on how best to bring down long-term debt levels. This time around, with the emergence of trillion-dollar deficits during a period of economic strength – when we should be saving for future downturns – few seem to even take notice. On our current course, debt will overtake the size of the entire economy in about a decade, and interest will be the largest government program in three decades or less. This will weaken both our economy and our role in the world.”

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And more debt. And then some more.

Household Debt In UK ‘Worse Than At Any Time On Record’ (G.)

British households spent around £900 more on average than they received in income during 2017, pushing their finances into deficit for the first time since the credit boom of the 1980s. The Office for National Statistics said the shortfall amounted to nearly £25bn – equal to almost a quarter of the NHS budget – and the overspend was mostly paid for with borrowed money, though households also ran down savings. The figures pose a challenge to the government, which was warned last year that Britain’s consumer credit bubble of more than £200 billion was unsustainable. A dramatic rise in debt-fuelled spending since 2016 has also taken place against the backdrop of the Brexit vote, which triggered a rise in inflation at a time of weak wage growth. .

Analysts warned that a squeeze on household incomes from benefit cuts, lacklustre wages and high inflation would continue to force poorer households to borrow more to pay basic bills. Tom Selby, a research analyst at financial adviser AJ Bell, said the figures presented ministers with a significant challenge as they sought “to build financial resilience in the UK”. Researchers at the ONS said the situation was worse than at any time on record after the £25bn deficit last year surpassed the £300m deficit recorded in 1988. British household finances also slumped from being among the most solvent in the 1990s to being among the most indebted compared with households in other major western countries.

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42% of global GDP.

BRICS Nations Pledge Unity As Trade War Threatens (AFP)

Five of the biggest emerging economies on Thursday stood by the multilateral system and vowed to strengthen economic cooperation in the face of US tariff threats and unilateralism. The heads of the BRICS group – Brazil, Russia, India, China and South Africa – met in Johannesburg for an annual summit dominated by the risk of a US-led trade war, although leaders did not publicly mention President Donald Trump by name. “We express concern at the spill-over effects of macro-economic policy measures in some major advanced economies,” they said in joint statement. “We recognise that the multilateral trading system is facing unprecedented challenges. We underscore the importance of an open world economy.”

Trump has said he is ready to impose tariffs on all $500 billion of Chinese imports, complaining that China’s trade surplus with the US is due to unfair currency manipulation. Trump has already slapped levies on goods from China worth tens of billions of dollars, as well as tariffs on steel and aluminium from the EU, Canada and Mexico. “We should stay committed to multilateralism,” Chinese President Xi Jinping said on the second day of the talks. “Closer economic cooperation for shared prosperity is the original purpose and priority of BRICS.” Russian President Vladimir Putin, who held a controversial meeting with Trump last week, echoed the calls for closer ties among BRICS members and for stronger trade within group. “BRICS has a unique place in the global economy — this is the largest market in the world, the joint GDP is 42% of the global GDP and it keeps growing,” Putin said.

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For what it’s worth.

Facebook’s $120 Billion Rout Biggest Loss In Stock Market History (CNBC)

Facebook on Thursday posted the largest one-day loss in market value by any company in U.S. stock market history after releasing a disastrous quarterly report. The social media giant’s market capitalization plummeted by $119 billion to $510 billion as its stock price plummeted by 19 percent. At Wednesday’s close, Facebook’s market cap had totaled nearly $630 billion, according to FactSet. No company in the history of the U.S. stock market has ever lost $100 billion in market value in just one day, but two came close. On Sept. 22, 2000, Intel shed $90.74 billion in market value as the dot-com bubble burst. Earlier that year, Microsoft lost $80 billion from its market cap in one day.

Other companies that have experienced similar one-day losses in dollar amount include Apple in 2013, when it lost $59.6 billion, and Exxon Mobil in 2008, when it lost $52.5 billion. Facebook’s enormous loss in value came a day after the company reported weaker-than-expected revenue for the second quarter as well as disappointing global daily active users, a key metric for Facebook. The company also said it expects its revenue growth rate to slow in the second half of this year. Several analysts downgraded Facebook’s stock, including Nomura Instinet’s Mark Kelley. “With stagnating core user growth, we think there is too much near- to mid-term uncertainty to recommend shares at this point,” Kelley, who downgraded the stock to neutral from buy, said in a note.

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But who’s winning?

Trade Deal With EU Greater In Scope Than Expected – US Official (R.)

The U.S. administration got more out of a trade deal with the European Union than it had expected and the two will work together to deal with China’s market abuses, a top White House official told Reuters on Thursday. President Donald Trump and Jean-Claude Juncker, president of the European Commission, the EU’s executive body, struck a surprise deal on Wednesday that ended the risk of an immediate trade war between the two powers. “The EU came into the conversation and they were open to the proposals we had made about getting rid of tariffs, non-tariff barriers and subsidies,” said the official, who spoke on condition of anonymity.

Trump agreed on Wednesday to refrain from imposing car tariffs while the two sides launch negotiations to cut other trade barriers. Europe agreed to increase purchases of U.S. liquefied natural gas and lower trade barriers to American soybeans. The official stressed on Thursday that Trump retained the power to implement tariffs on cars if needed and said there was no deadline for the completion of talks. He said Trump was committed to getting zero tariffs from the European Union.= As part of the deal, the United States and Europe will work together on China. The two powers in the past have cooperated on measures to deal with theft of company secrets by Chinese entities.

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France doesn’t want to include agriculture. It gets 100s of billions in subsidies. So Macron talks about steel instead.

Macron ‘Not In Favour’ Of Vast New US-EU Trade Deal (AFP)

French President Emmanuel Macron said Thursday he viewed talks between US President Donald Trump and EU Commission chief Jean-Claude Juncker as “useful”, but he was “not in favour” of a “vast new trade deal” between the European Union and the United States. “European and France never wanted a trade war and the talks yesterday were therefore useful in as far as they helped scale back any unnecessary tension, and working to bring about an appeasement is useful,” the French leader said after a meeting with Spanish Prime Minister Pedro Sanchez in Madrid. “But a good trade discussion… can only be done on a balanced, reciprocal basis, and in no case under any sort of threat,” Macron said. “In this regard, we have a number of questions and concerns that we will clarify”.

Macron said he was “not in favour of us launching a vast trade agreement, along the lines of the TTIP, because the current context does now allow for that,” referring to a transatlantic free-trade deal which stalled two years ago. And he reaffirmed his opposition to including agriculture in any such deal. “I believe that no European standard should be suppressed or lowered in the areas of the environment, health or food, for example.” Macron went on to insist that “clear gestures are needed from the US, signs of de-escalation on steel and aluminium, on which the United States have imposed illegal taxes. That, for me, would constitute a prelude to making further concrete headway” on trade.

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Rinse and repeat.

EU’s Barnier Kills Off Theresa May’s Brexit Customs Proposals (G.)

Michel Barnier has warned that attempts to appeal to EU leaders over his head were a waste of time as he rejected Theresa May’s proposals on customs after Brexit, in effect killing off the Chequers plan. On Friday Theresa May travels to Austria to meet Chancellor Sebastian Kurz and the Czech prime minister Andrej Babis, before heading off on her summer holiday. May’s trip follows the EU chief Brexit negotiator insisting there was no difference of opinion in European capitals to exploit. “Anyone who wants to find a sliver of difference between my mandate and what the heads of government say they want are wasting their time, quite frankly,” he told reporters at a joint press conference with the new Brexit secretary, Dominic Raab, in Brussels.

The British negotiators have become increasingly frustrated with the EU’s attitude to the white paper thrashed out at the prime minister’s country retreat. They feel that it will take an intervention by leaders, most likely at a summit in Salzburg in September, to move the dial in favour of a deal. A number of cabinet ministers have been despatched around EU capitals to make their case for greater flexibility. The impasse in the negotiations was laid bare in the press conference in the European commission’s Berlaymont headquarters as a thunderstorm broke outside. While Raab insisted that with “political will” a deal on trade and on avoiding a border on the island of Ireland was achievable by a crunch summit in October, Barnier offered a damning verdict on a major element of the UK’s vision of the future.

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And the lira plunges some more…

Trump Threatens Turkey Sanctions Over Detained Pastor (AP)

President Donald Trump says the U.S. will hit Turkey with “large sanctions” over a American pastor detained on terror and espionage charges, and he called for the pastor’s immediate release. Tweeting from aboard Air Force One, Trump said: “The United States will impose large sanctions on Turkey for their long time detainment of Pastor Andrew Brunson, a great Christian, family man and wonderful human being.” Trump said Brunson “is suffering greatly. This innocent man of faith should be released immediately!”

Just hours earlier, Vice President Mike Pence said that if Turkey does not take immediate action to free Brunson, “the United States of America will impose significant sanctions on Turkey.” Pence spoke at the close of a three-day conference in Washington on religious freedom. Brunson, 50, an evangelical Christian pastor originally from North Carolina, was let out of jail Wednesday, after 1 1/2 years, to serve house arrest because of “health problems,” according to Turkey’s official Anadolu news agency.

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Hope Judge Sabraw comes down hard on them. When he set the deadlines a month ago, he said: “These are firm deadlines; they’re not aspirational goals.”

US Government Misses Judge’s Midnight Deadline For Reunifying Families (Ind.)

US lawyers and activists have described “chaos and confusion” at immigrant detention facilities as the Trump administration scrambles to reunify the more than 2,500 migrant children it separated from their parents at the border in recent months. The government is rushing to meet a Thursday night deadline set by US District Court Judge Dana Sabraw, who ordered all of the families reunified as part of a lawsuit brought by the American Civil Liberties Union last month. As of Tuesday, officials said they had identified 1,634 parents possibly eligible for reunification with their children, and successfully reunified some 1,012 of them. The government was scheduled to provide an updated count to Judge Sabraw on Friday morning.

But the government also said more than 900 parents may not be eligible for reunification because they had waived their right to reunification, had criminal backgrounds, or were otherwise deemed unfit. Some 462 of those parents had already left the country, the administration said, though it was unclear whether they had volunteered to leave or had been deported against their will. Lee Gelernt, the lead attorney on the case, took issue with this number, saying the Trump administration was “unilaterally picking and choosing who is eligible for reunification”. “We will continue to hold the government accountable and get these families back together,” he said in a statement.

Immigrants’ rights groups warned that many of the parents who had left the country already may have done so under duress or coercion, or armed with bad information. Advocates described parents being pressured by Immigration and Customs Enforcement (ICE) to sign paperwork they didn’t understand, or being told that they would not be reunified with their children unless they agreed to be deported.

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The Wall Street Journal forgets to mention that consumers have nothing left to spend. Growth prospects?

Taxation Strangles Greece’s Growth Prospects (WSJ)

Greece is scheduled to exit its marathon bailout this summer after hitting the tough fiscal targets set by its creditors. But the country has done so by raising taxes so high that they are strangling the small businesses that form the backbone of its economy. At the Dandy restaurant in downtown Athens, owner Charalampos Bonatsos said rising taxes have forced him to lay off half his staff and cut his remaining workers’ wages. He said he still struggles to cope with the last three years’ increases in corporate income tax, property tax and sales tax. “All that matters is reaching the bailout goals. No one cares whether doing business is possible with this policy,” Mr. Bonatsos said.

The tax increases have left Greece with some of Europe’s highest tax rates across several categories, including 29% on corporate income, 15% on dividends, and 24% on value-added tax (a rough equivalent of U.S. sales tax). Individuals pay as much as 45% income tax, plus an extra “solidarity levy” of up to 10%. Furthermore, workers and employers pay social-security levies of up to 27% of their salaries. The elevated taxes under Greece’s bailout program have fallen most heavily on small and midsize businesses and self-employed people. Lawyers and engineers, most of whom are self-employed, are fighting the government in court over having to pay what they say is up to 80% of their average monthly takings in taxes and levies.

Some also have to pay retroactive social-security contributions, to the point where professional associations say some of their members are having to pay more to the state than they make. The painfully high taxes reflect the tough demands of Greece’s main creditors: other eurozone countries led by Germany, and the IMF. Since Greece’s finances spun out of control, its bailout lenders have forced the country to cut its budget deficit from over 15% of GDP in 2009 to a surplus of around 1% in 2017. [..] The tax burden creates a serious disincentive for economic activity. It mainly hits the most productive part of the Greek society,” said George Pagoulatos, professor of economics at the Athens University of Economics and Business. “Greece resembles Scandinavian-style taxation, but its welfare state has nothing to compare to theirs: You don’t get anything in return.”

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Words fail. Yesterday, heavy rains flooded areas 25km from Mati.

Death Toll From Greek Wildfires Rises To 85, Scores Stll Missing (K.)

The death toll from the deadly blaze that ravaged the coastal town of Mati in east Attica on Monday rose to 85 on Thursday, after a 73-year-old man who was in intensive care in Athens’ Evangelismos hospital died and two more bodies were discovered by rescue crews. Earlier in the day, a fire service spokesperson told journalists the number had risen to 82. Stavroula Malliri said rescuers are looking for missing people but have not yet entered closed houses in affected areas. About 300 firemen and volunteers combed through the area looking for dozens reported missing, among them two 9-year old sisters.

“Understanding the agony of the relatives of those missing, we inform you that the search to find them will not stop until all buildings and areas affected by the blaze have been checked,” she told journalists. Malliri called on the relatives of those missing to visit the forensics department of the University of Athens in Goudi until Friday (8 a.m. to 8 p.m.) where they will be briefed about the procedure followed to identify the victims. The Infrastructure Ministry announced earlier on Thursday that 1,218 buildings (48.93 pct) out of the 2,489 assessed by its engineers since Tuesday were deemed uninhabitable.

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Don’t worry, we’ll get to that yet.

Only 13% Of World’s Oceans Are Still Untouched Wilderness (Ind.)

The area of the ocean that remains undamaged by humans is tiny, according to the first ever comprehensive analysis of “marine wilderness”. Global shipping, fishing operations and pollution running into the sea from land have all taken their toll on the world’s seas, including some of the most remote areas. Areas of true wilderness are vital as they are some of the most diverse parts of the ocean and the last places on Earth still inhabited by sizeable numbers of large predators like sharks. Even the few fragments that remain are threatened as advanced fishing technologies and melting sea ice expose them to human activity. Most of the remaining wilderness, which covers no more than 13% of the world’s oceans, can be found in the polar regions and around remote Pacific Island nations.

The scientists behind the study have called for international agreements to recognise the unique value of these zones. Kendall Jones of the University of Queensland, who led the research, said they were “astonished by just how little marine wilderness remains”. “The ocean is immense, covering over 70% of our planet, but we’ve managed to significantly impact almost all of this vast ecosystem,” he said. Crucially, less than 5% of the remaining wilderness is officially protected. “This means the vast majority of marine wilderness could be lost at any time, as improvements in technology allow us to fish deeper and ship farther than ever before,” explained Mr Jones. “Thanks to a warming climate, even some places that were once safe due to year-round ice cover can now be fished.”

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Jul 262018
 
 July 26, 2018  Posted by at 7:36 am Finance Tagged with: , , , , , , , , , ,  


Roy Lichtenstein Forget it! Forget me! 1962

 

Trump Says Agreed With EU To Work To Lower Trade Barriers (R.)
Republicans Begin Impeachment Proceedings Against Rosenstein (ZH)
The Gray Lady Thinks Twice About Assange’s Prosecution (McGovern)
Facebook Stock Drops 24%, $132 Billion In Lost Market Value (MW)
China Pulls Approval For Facebook’s Planned Venture (R.)
This Stock Market Isn’t As Strong As You Think – Rosenberg (CNBC)
US Household Wealth Is In A Bubble – Part 2 (Colombo)
Prepare for a Chinese Maxi-Devaluation (Rickards)
A Weak US Dollar Will Not Make America Great (Lacalle)
Britain Is Hoarding Food, Medicines And Blood In Case Of No-Deal Brexit (Ind.)
There Is No Majority In UK Parliament For Any Brexit Deal (Ind.)
US Lawmaker Pranked By Sacha Baron Cohen To Resign (AFP)
Gene-Edited Plants And Animals Are GMO Foods – EU Top Court (G.)

 

 

What a good glass of wine can accomplish.

Trump Says Agreed With EU To Work To Lower Trade Barriers (R.)

U.S. President Donald Trump said on Wednesday the United States and the European Union were kicking off talks aimed at lowering trade barriers as officials looked to head off a brewing trade war. “This was a very big day for free and fair trade, a very big day indeed,” Trump told reporters at the White House after meeting with European Commission President Jean-Claude Juncker. “We are starting the negotiation right now but we know very much where it’s going,” Trump said. Speaking with Juncker at his side, Trump said they had agreed in talks to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.”

“We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans; soybeans is a big deal,” he said, adding that Europe would also step up purchases of liquefied natural gas from the United States. “They are going to be a massive buyer of LNG,” Trump said. Trump said the talks would “resolve” both the hefty tariffs the United States had placed on imports of steel and aluminum from the EU and the tariffs Europe had slapped on U.S. goods in response. It was not clear whether the two sides made any progress on the contentious issue of possible U.S. tariffs on imports of automobiles from Europe. But Juncker said they had agreed not to impose any new tariffs while talks were taking place.

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More to fight over.

Republicans Begin Impeachment Proceedings Against Rosenstein (ZH)

House GOP members led by Freedom Caucus Chairman Mark Meadows (NC) have filed formal articles of impeachment against Deputy Attorney General Rod Rosenstein, according to a late Wednesday announcement by Meadows over Twitter. News of the resolution comes after weeks of frustration by Congressional investigators, who have repeatedly accused Rosenstein and the DOJ of “slow walking” documents related to their investigations. Lawmakers say they’ve been given the runaround – while Rosenstein and the rest of the DOJ have maintained that handing over vital documents would compromise ongoing investigations. Not even last week’s heavily redacted release of the FBI’s FISA surveillance application on former Trump campaign Carter Page was enough to dissuade the GOP lawmakers from their efforts to impeach Rosenstein.

In fact, its release may have sealed Rosenstein’s fate after it was revealed that the FISA application and subsequent renewals – at least one of which Rosenstein signed off on, relied heavily on the salacious and largely unproven Steele dossier. In late June, Rosenstein along with FBI Director Christopher Wray clashed with House Republicans during a fiery hearing over an internal DOJ report criticizing the FBI’s handling of the Hillary Clinton email investigation by special agents who harbored extreme animus towards Donald Trump while expressing support for Clinton. Republicans on the panel grilled a defiant Rosenstein on the Trump-Russia investigation which has yet to prove any collusion between the Trump campaign and the Kremlin. “This country is being hurt by it. We are being divided,” Rep. Trey Gowdy (R-SC) said of Mueller’s investigation. “Whatever you got,” Gowdy added, “Finish it the hell up because this country is being torn apart.”

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Waking up?

The Gray Lady Thinks Twice About Assange’s Prosecution (McGovern)

Well, lordy be. A lawyer for The New York Times has figured out that prosecuting WikiLeaks publisher Julian Assange might gore the ox of The Gray Lady herself. The Times’s deputy general counsel, David McCraw, told a group of judges on the West Coast on Tuesday that such prosecution would be a gut punch to free speech, according to Maria Dinzeo, writing for the Courthouse News Service. Curiously, as of this writing, McCraw’s words have found no mention in the Times itself. In recent years, the newspaper has shown a marked proclivity to avoid printing anything that might risk its front row seat at the government trough.

Stating the obvious, McCraw noted that the “prosecution of him [Assange] would be a very, very bad precedent for publishers … he’s sort of in a classic publisher’s position and I think the law would have a very hard time drawing a distinction between The New York Times and WikiLeaks.” That’s because, for one thing, the Times itself published many stories based on classified information revealed by WikiLeaks and other sources. The paper decisively turned against Assange once WikiLeaks published the DNC and Podesta emails. More broadly, no journalist in America since John Peter Zenger in Colonial days has been indicted or imprisoned for their work.

Unless American prosecutors could prove that Assange personally took part in the theft of classified material or someone’s emails, rather than just receiving and publishing them, prosecuting him merely for his publications would be a first since the British Governor General of New York, William Cosby, imprisoned Zenger in 1734 for ten months for printing articles critical of Cosby. Zenger was acquitted by a jury because what he had printed was proven to be factual—a claim WikiLeaks can also make. McCraw went on to emphasize that, “Assange should be afforded the same protections as a traditional journalist.”

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Talk about waking up.

Facebook Stock Drops 24%, $132 Billion In Lost Market Value (MW)

Facebook Inc. is evidently not bulletproof. The social-media behemoth’s stock lost roughly one-fifth of its value in the extended session Wednesday after its earnings report missed expectations on revenue and showed slowing user growth. Weak guidance also rattled investors. Facebook stock dropped about 7% immediately after the earnings report was released, then plummeted to a loss of more than 20% as a conference call with analysts progressed. Close to 34 million shares changed hands in the extended session, well above the average volume of 17 million shares for a regular trading session over the past month. Should the losses hold into Thursday’s regular session, Facebook would lose more than $100 billion in market capitalization and lose the stock’s gains for the year thus far.

As the after-hours session wrapped up, Facebook was trading at $173.50, down 20%. Facebook stock had recovered from a decline earlier this year in the wake of the Cambridge Analytica scandal, one of several controversies and warning signs that the company had managed to weather with little damage to its stock. But declining revenue and user growth, topped by a warning from executives that it will continue, seemed to end that run. “The guidance, it’s nightmare guidance,” GBH Insights head of technology research Daniel Ives said. “If you look at their forecast for the second half of the year in terms of user growth, and the expense profile, it refuels the fundamental worries about Facebook post-Cambridge Analytica.”

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Why would Facebook want to be in China? To help Beijing spy?

China Pulls Approval For Facebook’s Planned Venture (R.)

China has withdrawn its approval for Facebook Inc’s plan to open a new venture in the eastern province of Zhejiang, the New York Times reported on Wednesday, citing a person familiar with the matter. A Chinese government database showed that Facebook had gained approval to open a subsidiary, but the registration has since disappeared, according to checks made by Reuters. The move is a setback for Facebook, which has been struggling to gain a foothold in China, the most populous country in the world, where its website and messaging app Whatsapp remain blocked.

The incident also illustrates how difficult it can be for a U.S. company to navigate the government bureaucracy in a country where so many technology firms have tried and failed. “Terms like ‘The Great Firewall’” often gives outsiders the impression that the Chinese government is totally united on technology policy,” said Matt Sheehan, an expert on China-California relations and fellow at The Paulson Institute think tank. “In reality, within that Firewall are lots of competing fiefdoms and ongoing turf wars.” China’s decision comes amid escalating tensions with the United States after the world’s two largest economies imposed tariffs on each other’s imports.

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It’s just 6 stocks.

This Stock Market Isn’t As Strong As You Think – Rosenberg (CNBC)

Don’t be fooled. This market is weaker than it seems, according to David Rosenberg, chief economist and strategist at Gluskin Sheff. The S&P 500 is up more than 5% in 2018, recovering from a correction earlier in the year. The broad index was also just 1.9% removed from an all-time high reached in late January as of Tuesday’s close. However, Rosenberg notes that while momentum stocks are lifting the market, “many subsectors are well off their highs: Homebuilders. Autos. Banks. Insurance. Consumer products. Telecom. Media. Transports. Utilities. Pharma. And many more.” The S&P automobiles and components industry group is nearly 20% below its 52-week high, while insurance stocks are down 10.8% from their one-year high. The Dow transports index, meanwhile, is 6.5% below its one-year high.

“What has kept the market near record terrain are a mere six stocks — Alphabet, Apple, Amazon, Netflix, Microsoft and Facebook,” Rosenberg said in a note to clients Wednesday. “Strip out these six flashy stocks, and the overall market has done practically nothing year-to-date.” Through mid-July, Alphabet, Apple, Amazon, Netflix, Microsoft and Facebook had contributed nearly 80% to the S&P 500’s gains. These six names have been on fire this year. Netflix and Amazon are up 86% and 57% in 2018, respectively. Microsoft and Facebook have both risen more than 20% while Alphabet and Apple have jumped 19.8% and 14%, respectively. Rosenberg said such concentration in the stock market has not been seen since the late 1990s, just before the dot-com bubble burst. “We know from history how these cycles typically end.”

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Jesse! So many graphs!

US Household Wealth Is In A Bubble – Part 2 (Colombo)

While above-average corporate profitability may sound like a good thing when taken at face value, I view it as another worrisome sign because it’s further evidence of an economy and financial markets that are being juiced by cheap credit and financial engineering. Ultra-low interest rates help to boost corporate profitability by reducing borrowing costs. Cheap credit also gives consumer spending a strong boost, which has a significant effect on our economy that is heavily driven by consumer spending. Low interest rate environments allow the government (federal, state, and local) to borrow more cheaply in the bond market and use it to boost spending, which gives the overall economy a shot in the arm. In addition, artificially-inflated financial markets boost the profitability of the financial sector.

A major risk for the stock market is the mean reversion of corporate profitability, which is a nightmarish prospect when considering how overpriced stocks currently are relative to earnings. This mean reversion is likely to occur as the result of the ending of ultra-cheap credit conditions (when corporate bonds fall back to earth) and through increased competition, which is what Milton Friedman warned about. (Note: critics may try to rebut my assertions by claiming that U.S. corporate profitability is unusually high due to corporations earning a higher percentage of earnings overseas. I’ve accounted for this by using gross national product as the denominator instead of the more commonly used GDP.)

What is particularly alarming about the current U.S. stock market bubble is the fact that it’s driven by a very narrow group of stocks, which means that there isn’t a healthy breadth, or broad strength, behind the bull market. In general, tech stocks have been leading the way – in particular, a group of stocks known as FAANG, which is an acronym for Facebook, Apple, Amazon, Netflix, and Google. The chart below compares the performance of the FAANG stocks to the S&P 500 during the bull market that began in March 2009. While the S&P 500 is up approximately 300%, the FAANGs are up significantly more, with Apple rising by over 1,000%, Amazon rising more than 2,000%, and Netflix surging by over 6,000%.

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Xi is cornered.

Prepare for a Chinese Maxi-Devaluation (Rickards)

If Trump imposes 25% tariffs on Chinese goods, China could simply devalue their currency by 25%. That would make Chinese goods cheaper for U.S. buyers by the same amount as the tariff. The net effect on price would be unchanged and Americans could keep buying Chinese goods at the same price in dollars. The impact of such a massive devaluation would not be limited to the trade war. A cheaper yuan exports deflation from China to the U.S. and makes it harder for the Fed to meet its inflation target. Also, the last two times China tried to devalue its currency, August 2015 and December 2015, U.S. stock markets crashed by over 11% in a matter of a few weeks.

So, if the trade war escalates as I expect, don’t worry about China dumping Treasuries or imposing tariffs. Watch the currency. That’s where China will strike back. When they do, U.S. stock markets will be the first victims. Maybe you think that’s unlikely because it would be such an extreme reaction by China. But you have to put yourself in the shoes of China’s leadership. These aren’t academic issues to China’s leaders. They go to the heart of the government’s very legitimacy. China’s economy is not just about providing jobs, goods and services. It is about regime survival for a Chinese Communist Party that faces an existential crisis if it fails to deliver. The overriding imperative of the Chinese leadership is to avoid societal unrest.

If China encounters a financial crisis, Xi could quickly lose what the Chinese call, “The Mandate of Heaven.” That’s a term that describes the intangible goodwill and popular support needed by emperors to rule China for the past 3,000 years. If The Mandate of Heaven is lost, a ruler can fall quickly. Up to half of China’s investment is a complete waste. It does produce jobs and utilize inputs like cement, steel, copper and glass. But the finished product, whether a city, train station or sports arena, is often a white elephant that will remain unused. Chinese growth has been reported in recent years as 6.5–10% but is actually closer to 5% or lower once an adjustment is made for the waste.

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The US is not export-driven.

A Weak US Dollar Will Not Make America Great (Lacalle)

The US dollar has become the safest asset in the face of mounting evidence that the “beggar thy neighbor” policy and drowning structural problems in liquidity is coming to a close. The reality is that the US dollar is strengthening because of the evidence of a deeper slowdown in China and the massive imbalances built by some emerging economies in the past -large fiscal and trade deficits financed with the cheap inflow of dollars-. As the US economy improves and others face the saturation of past stimuli, it is only logical that the United States sees a high inflow of funds from abroad. And that is good. Keeps US treasury yields low, a high demand for bonds and equities, and a steady increase in capital investment into the US economy.

There are many who think that the US economy will not accept a strong dollar. Allow me to doubt it. The US only exports around 10% of GDP and less than 30% of the profits of the S & P 500 come from exports. In the past nine years, devaluing and lowering rates has hurt the middle class, savers, workers, and high productivity companies. Those that voted for the current administration to make a drastic change on the past mistakes. A devaluation policy hurts more Americans than it helps. Devaluation is simply stealing from your citizens’ savings and disposable income. A strong US dollar reduces inflationary pressures and keeps interest rates low. Both effects are positive for savers, workers, and families as the economy strengthens and wages improve.

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Keep calm and….

Britain Is Hoarding Food, Medicines And Blood In Case Of No-Deal Brexit (Ind.)

Theresa May has urged voters not to worry about Brexit, despite her government setting out plans to stockpile food, blood and medicine in case it goes badly. She said people should take “reassurance and comfort” from news of the plans, to be implemented if the UK crashes out of the EU without an agreement in March next year. The scenario is looking increasingly likely given deep divisions in the Conservatives over Ms May’s approach, her wafer thin commons majority and the EU’s on-going resistance to what the prime minister is proposing. It comes as The Independent launched a campaign to give the British people a Final Say in a referendum on whatever is proposed at the end of Brexit negotiations, with thousands flocking to sign a petition supporting the cause.

Ireland’s deputy prime minister accused the PM of “bravado” in talking up the dangers of a no-deal Brexit, while Tory insiders claim the PM is doing so to warn her rebellious MPs of the consequence of failing to back her unpopular Brexit plans. Ms May confirmed in a TV interview that plans for stocking up on essential goods are underway, in case imports from the EU are cut off by clogged ports or regulatory disputes. But, asked if it was “alarming” for people, the prime minister told Channel 5: “Far from being worried about preparations that we are making, I would say that people should take reassurance and comfort from the fact that the government is saying we are in a negotiation, we are working for a good deal. “I believe we can get a good deal, but, it’s right that we say – because we don’t know what the outcome is going to be – let’s prepare for every eventuality.”

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Inevitable: a general election, a leadership challenge or a people’s vote.

There Is No Majority In UK Parliament For Any Brexit Deal (Ind.)

Imagine you’re back at school and you can’t be bothered to do any work for the most important exams of your entire academic career. Alarmed by your indifference, your parents ask what you propose to do. Imagine how they would react if you told them you were thinking of having an extended summer holiday, to put off the moment of reckoning for as long as possible. Quite frankly, this is where our government now is in the Brexit negotiations. A longer than usual summer recess seems to be the best these great minds can come up with. The problem is we are not in school, Brexit is not homework and the bullies will do more than give us a bloody nose.

The EU is like the strict exam board of governors and appears to have no time for excuses or interest in making Theresa May’s sloppy government look good. It is a measure of May’s desperation that she said in Belfast last week that the EU was trying to achieve an “economic and constitutional dislocation” of our country. That kind of talk may play well with the hard-right Brexiteers who are too painfully holding her and her government hostage, but it doesn’t impress Brussels. May needs to realise that we can all see she is now merely playing for time and there are only a finite number of options open to her: a general election, a leadership challenge or a people’s vote.

[..] The plain truth is that there is no majority in parliament for any deal. The EU thinks the prime minister’s Chequers plan is too favourable to the UK, and the Brexiteers think it’s too favourable to Brussels. A Norway deal would mean accepting free movement and paying large amounts to Brussels; a Canada-style deal means the prospect of a hard border returning to the line on the map that separates Eire and Northern Ireland. Viewed through the lens of May’s parliamentary party, there is no consensus, no coming together on any of these options. Brexit is collapsing under the weight of its own contradictions.

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“he exposed himself and shouted racial slurs..”

US Lawmaker Pranked By Sacha Baron Cohen To Resign (AFP)

A US state lawmaker is resigning after a humiliating appearance on comedian Sacha Baron Cohen’s television show during which he exposed himself and shouted racial slurs. Jason Spencer, a Republican member of the Georgia House of Representatives, had been under pressure from his own party to step down following the embarrassing appearance on Cohen’s series “Who Is America?” Spencer, 43, finally announced on Wednesday that he planned to resign on July 31. He had already lost a primary in May but he could have remained in office until November. Spencer was one of several Republican figures pranked by Cohen on the Showtime series.

Others included former vice president Dick Cheney, who signed a “waterboarding kit” and former Republican vice presidential nominee Sarah Palin. In the episode of “Who Is America” with Spencer, Cohen pretends to be an Israeli anti-terrorism expert, Colonel Erran Morad, offering self-defense training. At one point, Spencer is persuaded to expose his buttocks and chase Cohen while yelling “USA” and racial slurs. Spencer, in a statement this week to The Washington Post, said Cohen “took advantage of my paralyzing fear that my family would be attacked.” Spencer told the Post he had received death threats after introducing a bill that would ban Muslim women from publicly wearing burqas. Palin, the former governor of Alaska, denounced the show as “evil, exploitive, sick ‘humor.'”

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This has been a 10-year debate.

Gene-Edited Plants And Animals Are GMO Foods – EU Top Court (G.)

Plants and animals created by innovative gene-editing technology have been genetically modified and should be regulated as such, the EU’s top court has ruled. The landmark decision ends 10 years of debate in Europe about what is – and is not – a GM food, with a victory for environmentalists, and a bitter blow to Europe’s biotech industry. It also marks a setback for UK scientists who took advantage of a legal grey area to of gene edited camelina crops, augmented with Omega-3 fish oils. Greenpeace said that the ruling meant the British government – along with Belgium, Sweden and Finland – was now obliged to “revoke” the green light for the trials until appropriate precautions had been taken.

In their ruling, the EU judges said: “Organisms obtained by mutagenesis are GMOs [genetically modified organisms] … It follows that those organisms come, in principle, within the scope of the GMO directive and are subject to the obligations laid down [therein].” The court sided with the French agricultural trades union, Confédération Paysanne, which brought the case, arguing that new and unconventional in vitro mutagenesis techniques were likely to be used to produce herbicide-resistant plants, with potential health risks. A study published in the journal Nature last week found that the gene-editing technology Crispr-Cas9 can cause significantly greater genetic distortions than expected, with potential “pathogenic consequences”. Gene editing alters the genomes of a living species by slicing genome strands in a bid to remove undesirable traits, without inserting foreign DNA.

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Jul 242018
 
 July 24, 2018  Posted by at 9:01 am Finance Tagged with: , , , , , , , , , , ,  


Félix Vallotton Sunset, Bronze-Purple 1911

 

Wildfire Kills At Least 50 Near Athens, Families Flee To Beaches (R.)
Ecuador ‘Close To Evicting’ Julian Assange From UK Embassy (Ind.)
NATO Trumped (SCF)
Dying Groundskeeper Testifies In Monsanto Roundup Cancer Trial (G.)
Russia Attacked Us (Jim Kunstler)
Cost To Insure Tesla’s Debt Rises On Growing Default Fears (R.)
The Low-Priced Home Shortage Continues (CNBC)
Exposing the American Okie-Doke (CP)
End ‘Botched’ Brexit, Corbyn Calls On UK To Back His Vision (R.)
Over-Promising Has Crippled Public Pensions (WirePoints)
Rubens Nudes Fall Foul Of Facebook Censors (G.)

 

 

Yesterday around noon the skies here in Athens started turning brown. We learned this was due to a wildfire west of the city. In late afternoon winds began picking up, a lot. Then this happened throughout the evening and night, in a wildfire at the exact opposite side of the city. Latest number of dead is now 54. 26 of them died together just 30 meters from the beach.

Wildfire Kills At Least 50 Near Athens, Families Flee To Beaches (R.)

A wildfire killed at least 50 people and injured more than 150 as it swept through a small resort town near Athens, with huge flames trapping families with children as they fled. The fire which hit Mati, 29 km (18 miles) east of the capital, late Monday afternoon was by far the country’s worst since flames devastated the southern Peloponnese peninsula in August 2007, killing dozens. People scrambled to the sea as the blaze closed in close to the shore. Hundreds were rescued by passing boats but others found their way blocked by smoke and flames. “I was briefed by a rescuer that he saw the shocking picture of 26 people tightly huddled in a field some 30 meters from the beach,” Nikos Economopoulos, head of Greece’s Red Cross, told Skai TV.

“They had tried to find an escape route but unfortunately these people and their kids didn’t make it in time,” he said. A Reuters witness also saw several bodies in the area. Mati is in the eastern Rafina region, a popular spot for Greek holidaymakers, particularly pensioners and children at camps. The 26 deaths came on top of more than 20 casualties reported by government spokesman Dimitris Tzanakopoulos earlier on Tuesday. He said more than 88 adults and 16 children were injured.

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They’re walking this back a little bit.

Ecuador ‘Close To Evicting’ Julian Assange From UK Embassy (Ind.)

Speculation about Mr Assange’s future has grown this month after the Sunday Times said senior officials from Ecuador and Britain have been in discussions since last week about how to remove him from the embassy after revocation of his asylum. “The situation is very serious. Things are coming to a head,” the source, who spoke on condition on anonymity, told Reuters. He said the latest information from inside the embassy was, “It’s not looking good”. However, both the Ecuadorean government and British government sources played down suggestions there was likely to be any imminent movement to break the stalemate.

“The Ecuadorian state will only talk and promote understandings about Mr Assange’s asylum, within the framework of international law, with the interested party’s lawyers and with the British government,” Ecuador’s foreign ministry said in a statement ahead of the visit. “At the moment, due to the complexity of the topic, a short or long-term solution is not in sight.” A British government source also said there was no sign of immediate progress. Last month, Foreign Office minister Alan Duncan told parliament that they were increasingly concerned about Mr Assange’s health. “It is our wish that this is brought to an end, and we would like to make the assurance that if he were to step out of the embassy, he would be treated humanely and properly,” Mr Duncan said. “The first priority would be to look after his health, which we think is deteriorating.”

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“If you don’t get up to 2% (or is it 4%?) and quickly too; I warned you. Goodbye. If you do get your spending up, then you don’t need us. Goodbye.”

NATO Trumped (SCF)

Indicators of European NATO members’ actual readiness and combat capability are stunning; the latest being “Only 4 of Germany’s 128 Eurofighter jets combat ready — report”; “Ground force: Half of France’s military planes ‘unfit to fly'”. “Britain’s ‘withered’ forces not fit to repel all-out attack”. “Europe’s Readiness Problem”. Obviously they’re not expecting a Russian attack any time soon. NATO is, as I have argued here, a paper tiger. It is questionable whether NATO members can conduct any operation without the USA providing satellite navigation and observation, air defence suppression, airborne command and control, inflight tankers, heavy lift and ammunition resupply to name a few deficiencies. So, either the Europeans are not worried; or, as Trump likes to say, they are free riders.

Six months ago I suggested that Trump may be trying to get out of what I called the “Gordian knot of entanglements”. President Trump can avoid new entanglements but he has inherited so many and they are, all of them, growing denser and thicker by the minute. Consider the famous story of the Gordian Knot: rather than trying to untie the fabulously complicated knot, Alexander drew his sword and cut it. How can Trump cut The Gordian Knot of American imperial entanglements? By getting others to untie it. He stomps out of NATO leaving them quaking: if you say Russia is the enemy, why do you act as if it isn’t; and if you act as if it isn’t, why do you say it is? And firing, over his shoulder, the threat: 2% by next January.

I believe it is a threat and a very neat one too: If you don’t get up to 2% (or is it 4%?) and quickly too; I warned you. Goodbye. If you do get your spending up, then you don’t need us. Goodbye.

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Their best shot may be if they can prove that Monsanto suppressed scientists.

Dying Groundskeeper Testifies In Monsanto Roundup Cancer Trial (G.)

Dewayne Johnson said that if he had known what he knew now about Roundup weedkiller, “I would’ve never sprayed that product on school grounds … if I knew it would cause harm … It’s unethical.” Johnson, a former school groundskeeper in northern California who is terminally ill, was testifying Monday in his landmark suit against Monsanto about the cancer risks of the company’s popular weedkiller. He is the first person to take the agrochemical company to trial over allegations that the chemical sold under the Roundup brand is linked to cancer. He spoke for the first time during the trial in San Francisco, detailing his use of Monsanto’s products, his extensive exposure to herbicides, and his belief that the chemicals caused non-Hodgkin lymphoma (NHL), a blood cell cancer.

He also described the suffering he endured as skin lesions took over his body. “I’ve been going through a lot of pain,” said Johnson, a father of three who goes by the name Lee. “It really takes everything out of you … I’m not getting any better.” His doctors have said he may have just months to live. Johnson’s lawyers have argued in court that Monsanto has “fought science” over the years and worked to “bully” researchers who have raised concerns about potential health risks of its herbicide product. At the start of the trial, the attorneys presented internal Monsanto emails that they said revealed the corporation’s repeated efforts to ignore expert’s warnings while seeking favorable scientific analyses and helping to “ghostwrite” positive papers.

Thousands have brought similar legal claims across the US, and a federal judge in California ruled this month that hundreds of cancer survivors or those who lost loved ones can also proceed to trial. Johnson’s case has attracted international attention, with the judge allowing his team to present scientific arguments about glyphosate, the world’s most widely used herbicide.

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“We await the fabled “moment of truth” when the avenging angel of price discovery returns and shatters the illusion that accounting fraud equals prosperity.”

Russia Attacked Us (Jim Kunstler)

The Helsinki summit meeting has the look of a turning point in Mr. Trump’s political fortunes. One irony is that he may escape his enemies’ efforts to nail him on any Russia “collusion” rap only to be sandbagged by financial turmoil as the dog days of summer turn nervously toward autumn. Events will cancel the myth that his actions as president have produced a booming economy. If anything, the activities that make up our economy have only become more vicious rackets, especially the war industries, with all their inducements to counter the imagined Russia threat.

The financial markets are the pillars of the fantasy that the US economy is roaring triumphantly. The markets are so fundamentally disabled by ten years of central bank interventions that they don’t express the actual value of any asset, whether stocks, or bonds, or gold, oil, labor, currencies, or the folly known as crypto-currency. We await the fabled “moment of truth” when the avenging angel of price discovery returns and shatters the illusion that accounting fraud equals prosperity.

The revelation that Mr. Trump is not an economic genius will spur a deeper dive by chimerical Democrats into nanny state quicksand. They will make the new fad of a Guaranteed Basic Income the centerpiece of the midterm election — even though many Democrats will not really believe in it. They are pretending not to notice how broke the USA actually is, and how spavined by unpayable debt. The lurking suspicion of all this is surely behind fantasies such as Russia attacked us, the displacement of abstruse and impalpable fear onto something simple and cartoonish, like the President of the United States.

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“The CDS is saying that there are a lot of people betting this company is going out of business…”

Cost To Insure Tesla’s Debt Rises On Growing Default Fears (R.)

The amount investors must pay to insure their debt holdings in Tesla Inc against declining credit quality rose on Monday to its second-highest price ever, implying the company is at a greater risk of default following a report that sparked concern that Tesla may need to raise funds. Insurance on Tesla’s debt, which is sold as a credit default swap contract, increased from Friday by 13 cents to $5.96 per $100 of Tesla debt. That followed a Wall Street Journal report on Sunday that Tesla had turned to some suppliers for a refund of previously made payments in a bid to make a profit, citing a memo sent by a Tesla global supply manager.

A Tesla spokesperson said on Monday that the company had no comment on the credit default swaps, but said in a statement in response to the WSJ story that Tesla had asked fewer than 10 suppliers to reduce capital expenditure project spending. Tesla said that any changes with these suppliers would improve future cash flows but not affect its ability to achieve profitability in the third quarter. Company founder and Chief Executive Officer Elon Musk may be obligated to tap debt or equity markets again this year, according to analysts, though he has said he would do neither. [..] It cost $5.96 to insure $100 of Tesla’s debt, plus an upfront cost of around 18%, representing a total of 24.1% of the face value of the 2025 bond on Monday. “The CDS is saying that there are a lot of people betting this company is going out of business,” said Thomas Graff, head of fixed income at Brown Advisory.

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Trying to outdo Orwell. First blow a ginormous bubble and then claim there are not enough cheap homes.

The Low-Priced Home Shortage Continues (CNBC)

The nationwide housing shortage continues but is especially troublesome for homebuyers with a budget of $250,000 or less, Susan Wachter, professor of real estate and of finance at the Wharton School of Business at the University of Pennsylvania, told CNBC on Monday. Rising labor, land and material costs are slowing down the supply, “except at higher prices, which is simply not affordable for the great middle, and that’s where we see the hit in … existing sales,” Wachter said on “Power Lunch.” Sales of existing homes are down for the third month in a row due to a shortage of properties, which results in higher prices and pushes some potential buyers out of the market.

Existing home sales fell 0.6% in June, or 2.2% from June 2017. And as prices for new home construction increase, construction in general is on the decline. Housing starts, or the number of new residential housing projects, decreased in June, plunging 12.3%. The loss represents the third month in a row of declines or a nine-month low. “That sets a price point for the existing sale market as well,” Wachter said. And with inventory at historic lows and a lack of new construction, existing homeowners are holding on to their homes longer, Wachter noted.

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I’ll leave this here.

Exposing the American Okie-Doke (CP)

The “founding fathers” deliberately arranged a system of governance that would protect the wealthy minority from the majority. Over time, as it fused with capitalism, this arrangement transformed the US government into a market. Railroad tycoons and robber barons forced their way into this market during the Gilded Age. Big business controlled the “public agenda” throughout the 20th century, with multinational firms taking root in the 1980s and 90s. Ronald Reagan ushered in the neoliberal era, which amounted to an all-out corporate coup of American politics. And, in 2010, the Supreme Court placed its stamp of approval on this system with its Citizens United decision, allowing anonymous donors unlimited access to politics through Political Action Committees (PACs).

In other words, the US government has been a traded commodity for a long time, in many ways since the beginning of the country’s founding. Wealth determines elections (over 90% of the time the campaign with the most money wins). Politicians are commodities that are bought by capitalists. Legislation is a commodity that is bought by lobbyists (employed by capitalists). This is the case for both parties and all politicians (because it is built into the system). The point: If you still believe your 5th-grade textbook and think you have a say in determining public policy in the US, you are furious right now. Because you believe democracy exists and that it was hijacked by a foreign government. However, if you realize democracy (or a republic) does not exist, the Russia/Trump revelations mean only one thing: the traded commodity known as the US government has gone global, following all of the other capitalist markets that have been globalized over the past 40 years.

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Anyone convinced by Corbyn?

End ‘Botched’ Brexit, Corbyn Calls On UK To Back His Vision (R.)

British opposition leader, Jeremy Corbyn will call on the government on Tuesday to back his vision for a new customs union with the European Union to avoid a “botched” Brexit leaving the country “in hock to Donald Trump”. Unveiling a Labour Party campaign to boost manufacturing and keep public contracts in Britain, Corbyn will also increase the pressure on Prime Minister Theresa May over her Brexit plans by suggesting she back his vision of “a brand new customs union”. May is struggling to sell what she calls her business-friendly Brexit to not only the competing factions in her governing Conservative Party but also across Britain just over eight months before the country is due to leave in March.

But Corbyn also faces dissent in his party, with many Labour lawmakers and members calling for him to back a second referendum on any deal and support keeping the closest possible ties with the EU by staying in its single market and customs union. “Theresa May and her warring cabinet should think again, even at this late stage, and reconsider the option of negotiating a brand new customs union,” Corbyn will tell the EEF manufacturers’ organisation in the city of Birmingham. “A botched…Brexit will sell our manufacturers short with the fantasy of a free trading buccaneering future, which in reality would be a nightmare of chlorinated chicken, public services sold to multinational companies and our country in hock to Donald Trump,” he will say, according to excerpts of his speech.

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Extensive report h/t ZH

Over-Promising Has Crippled Public Pensions (WirePoints)

The real problem plaguing public pension funds nationwide has gone largely ignored. Most reporting usually focuses on the underfunding of state plans and blames the crises on a lack of taxpayer dollars. But a Wirepoints analysis of 2003-2016 Pew Charitable Trust and other pension data found that it’s the uncontrolled growth in pension promises that’s actually wreaking havoc on state budgets and taxpayers alike. Overpromising is the true cause of many state crises. Underfunding is often just a symptom of this underlying problem. Wirepoints found that the growth in accrued liabilities has been extreme in many states, often growing two to three times faster than the pace of their economies. It’s no wonder taxpayer contributions haven’t been able to keep up.

The reasons for that growth vary state to state – from bigger benefits to reductions in discount rates – but the reasons don’t matter to ordinary residents. Regardless of how or when those increases were created, it’s taxpayers that are increasingly on the hook for them. Unsurprisingly, the states with the most out-of-control promises are home to some of the nation’s worst pension crises. Take New Jersey, for example. The total pension benefits it owed in 2003 – what are known as accrued liabilities – were $88 billion. That was the PV, or present value, of what active state workers and retirees were promised in pension benefits by the state at the time. Today, promises to active workers and pensioners have jumped to $217 billion – a growth of 176% in just 13 years. That increase in total obligations is four times greater than the growth in the state’s GDP, up only 41%.

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Oh yes, we really need censorship by a bunch of poorly educated kids.

Rubens Nudes Fall Foul Of Facebook Censors (G.)

Rubens nudes have entranced those visiting the world’s great art galleries for some 400 years. Contemporaries on whom the Flemish master is said to have had a profound impact include Van Dyck and Rembrandt … but none of this has passed muster with Facebook’s censors. In a move that has prompted a semi-playful complaint to the company’s chief executive, Mark Zuckerberg, it has taken down a series of promotions on social media for the Belgian region of Flanders because they feature works by the artist famous for his Baroque paintings of voluptuous women and cherubs. Advertisements containing sexually oriented content, including artistic or educational nudes, apart from statues, are prohibited on the site.

In an open letter signed by most of the museums in Flanders, the Flemish tourist board, Toerisme Vlaanderen, has written to Zuckerberg to ask for a rethink. “Breasts, buttocks and Peter Paul Rubens’ cherubs are all considered indecent”, the letter says. “Not by us, but by you … Even though we secretly have to laugh about it, your cultural censorship is making life rather difficult for us.” Posts removed have even included an advert featuring Rubens’ The Descent from the Cross, in which Jesus is naked in his loincloth. The Flemish tourist board has pushed its point by releasing a short video in which the “nude police” drag away visitors at the Rubens House in Antwerp to stop them from gazing at the implicated paintings.

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Jul 132018
 
 July 13, 2018  Posted by at 9:20 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh View of Saintes-Maries-de-la-Mer 1888

 

Stock Markets See the US Winning the Trade War, Defying Propaganda (WS)
A Decade On, Pre-Crisis Mortgages Linger For Big Banks, Homeowners (R.)
Fed’s Escape From Crisis Holdings Could Hit Dead End (R.)
Social Security, Medicare To Add Another $50 Trillion to Our National Debt (JM)
China’s Record Trade Surplus With US Further Inflames Trade Tensions (R.)
Approval Of Brexit Negotiations Lowest On Record (Orb)
No Brand Of Brexit Can Command A Commons Majority (G.)
Donald Trump Is Right. NATO Is A Costly White Elephant (G.)
Trump Ready To Help Some NATO States Buy US Arms (R.)
Who Wants To Disrupt Strategic Balance In The Black Sea Region? (SCF)
Germany Puts Last Bailout Tranche to Greece on Hold (GR)
Europe’s Remarkable Ability To Remain In Denial (Varoufakis)
US Judge Asked To Create Mental Health Fund For Migrant Children (R.)
Facebook Users Marked With “Treason” Label (ZH)

 

 

“Now they had a fig leaf – the threat of future tariffs – behind which to hide their long-planned offshoring strategies.”

Stock Markets See the US Winning the Trade War, Defying Propaganda (WS)

The trade war talk has been going on since the presidential campaign but markets just brushed it off and rallied. In 2018, the trade war verbiage moved to the foreground. But until June 14, the administration vacillated between thinking about tariffs and putting the trade war “on hold,” depending on who was doing the talking or tweeting. This vacillation ended on June 14 (Thursday) evening, when it was reported that Trump had approved to hit an initial list of $50 billion in goods (1,300 products) from China with tariffs of 25%. At the time, the administration was also preparing a second list of products, accounting for another $100 billion in imports from China.

On the evening of June 19 (Monday), Trump threatened to hit another $200 billion of imports from China with tariffs of 10%. And on Tuesday, the Shanghai stock market plunged. Markets were taking it seriously. Since then, Corporate America’s propaganda machine – the same that for the past two decades had extolled the unrivalled virtues of offshoring production to cheap countries – fired up the mainstream media, which launched into incessant, deafening, repetitive, and manipulative coverage of how these tariffs would hurt US jobs more than anything.

Two glorious examples are Harley-Davidson and GM, which had been laying off workers and shutting plants in the US for years as they were offshoring production to cheap countries. For example, in July 2017, Harley-Davidson announced layoffs in the US as it was building a factory in Thailand. GM has been laying off workers in the US since 2016, even as it opted to produce more models in Mexico. Now they had a fig leaf – the threat of future tariffs – behind which to hide their long-planned offshoring strategies.

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TBTF banks have no incentive to come clean.

A Decade On, Pre-Crisis Mortgages Linger For Big Banks, Homeowners (R.)

A decade on big U.S. banks are still running down and selling off crisis-era mortgages, a process executives point to as weighing on loan growth. Eager to see a turning point in loan books, analysts count these portfolios as one factor, along with home equity loan runoff and new mortgage demand, to watch for when deciphering the true loan growth picture as U.S. second-quarter bank earnings start on Friday. Wells Fargo and Bank of America executives have flagged portfolios from prior to the 2008-2009 crisis era where banks are no longer originating similar new products when they are asked to predict a turning point in consumer loans. “These are portfolios of a bygone era that were very, very painful for the banks,” said Gerard Cassidy at RBC Capital Markets.

“They are not plain vanilla portfolios, which means they are more costly to manage. It may just not be worth the headache.” Analysts have said higher loan growth is critical to driving bank’s stock prices, but they anticipate only a modest acceleration year over year, driven primarily by commercial and industrial loans, not residential. “Remember that there’s a portion of that book that, again, is pre-crisis,” Chief Executive Tim Sloan said about Wells Fargo’s mortgage book at a May conference. He added the bank continues to examine the older portfolio’s risk-return tradeoff and sells assets when the opportunity arises, factors “that could have some impact” on growth.

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Backpedalling.

Fed’s Escape From Crisis Holdings Could Hit Dead End (R.)

Not long ago the Federal Reserve expected to quietly shed nearly half of its $4.5-trillion portfolio by around 2022, leaving little trace of the extraordinary steps it took to face down the financial crisis. But an unexpected market kink could force the Fed to scrap the plan two or three years early and permanently leave it holding $1 trillion more than it wanted. The U.S. central bank is making adjustments on the fly and keeping its options open. “I don’t think that’s problematic in any way” to halt the process “somewhat earlier,” William Dudley, the former New York Fed president and key architect of the portfolio strategy, told reporters last month.

Yet if the world’s largest holder of U.S. bonds tossed out its play book and effectively took on a more accommodative stance, the result could be an across-the-board easing of market borrowing costs, the foreign-exchange value of the dollar, and of the growing strains on emerging markets. “The evidence that we have suggests that the ultimate size of the balance sheet will be bigger than what people expected,” said Matthew Luzzetti, senior economist at Deutsche Bank Securities in New York. All of this amounts to the final chapter in the Fed’s unprecedented decision over the last decade to buy some $3.5 trillion in mortgage and Treasury bonds in an effort to boost riskier investments, hiring and economic recovery from recession. In a nod to a stronger U.S. economy, the Fed since 2015 has raised interest rates well above zero and, since October of last year, begun shrinking its balance sheet to a more normal but yet-unspecified size.

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“As of this year, both programs are in negative cash flow, meaning Congress must provide additional cash to pay the promised benefits.”

Social Security, Medicare To Add Another $50 Trillion to Our National Debt (JM)

The official, on-the-books federal debt is currently about $21.2 trillion, according to the US National Debt Clock. $21.2T is the face amount of all outstanding Treasury paper, including so-called “internal” debt. This is about 105% of GDP and it’s only the federal government. If you add in state and local debt, that adds another $3.1 trillion to bring total government debt in the US to $24.3 trillion or more than 120% of GDP. Then there’s corporate debt, home mortgages, credit cards, student loans, and more. Add it all together and total debt is about 330% of GDP, according to the IIF data I cited in Debt Clock Ticking. We are in hock up to our ears. In calculating debt, however, we don’t factor in Social Security and Medicare. These aren’t yet debt because they have dedicated revenue streams: payroll taxes.

Most Medicare recipients also pay premiums. To date, these revenue sources have covered current expenditures and more, allowing the programs to build up reserves. But that’s about to change. As of this year, both programs are in negative cash flow, meaning Congress must provide additional cash to pay the promised benefits. It will get worse, too. The so-called “trust funds” are going to run dry sooner or later, and it may be sooner. This month’s annual trustee report estimated Social Security will run out of reserves in 2034, and the hospitalization part of Medicare will go dry in 2026. Just for the record, those “trust funds” don’t exist except as an accounting fiction. It is like you saving $100,000 for your child’s education and then borrowing all the money from your child’s education fund.

You can pretend that you have set aside $100,000 for your child’s future education, but when it comes time to make those payments, you’ll have to pull it out of current income or liquidate other assets. The US government has borrowed (or used or whatever euphemism you want to apply) all the money in those trust funds. So, talking about running out of reserves in 2034 or 2026 is rather meaningless. We’ve already run out of reserves. Any time a politician talks about putting a “lock box” around Social Security or Medicare trust funds, he or she is either staggeringly ignorant or lying.

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Stockpiling ahead of the crash?!

China’s Record Trade Surplus With US Further Inflames Trade Tensions (R.)

China’s trade surplus with the United States swelled to a record in June as its overall exports remained solid, a result that could further inflame a bitter trade dispute with Washington. The data came after the administration of U.S. President Donald Trump raised the stakes in its trade row with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items. China’s trade surplus with the United States, which is at the center of the tariff tussle, widened to a record monthly high of $28.97 billion, up from $24.58 billion in May, according to Reuters calculations based on official data going back to 2008.

Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further ratchet up pressure on China after both sides last week imposed tit-for-tat tariffs on $34 billion of each other’s goods. Washington has warned it may ultimately impose tariffs on more than $500 billion worth of Chinese goods – nearly the total amount of U.S. imports from China last year. The dispute has jolted global financial markets, raising worries a full-scale trade war could derail the world economy. Chinese stocks fell into bear market territory and the yuan currency has skidded, though there have been signs in recent days its central bank is moving to slow the currency’s declines.

[..] China’s exports to the United States rose 13.6 percent in the first half of 2018 from a year earlier, while its imports from the U.S. rose 11.8 percent in the same period. Separate data showed Chinese shipments to U.S. ports rose more than expected in June, suggesting some retailers moved up orders to insulate themselves from the intensifying trade war that threatens to send up costs on a growing number of consumer products. For January-June China’s trade surplus with the United States rose to $133.76 billion, compared with about $117.51 billion in the same period last year.

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May will have to find something else.

Approval Of Brexit Negotiations Lowest On Record (Orb)

Approval of the Brexit negotiations has seen a significant fall in July – now the lowest on record. Last month 36% approved of the negotiations and it is now 29%. In June, 32% agreed that Theresa May would get the right deal for Britain in the Brexit negotiations – this has now fallen to 26% – the lowest again on record. These 2,027 interviews were carried out before the resignation of Brexit Secretary David Davis and Foreign Secretary Boris Johnson.

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Perhaps the biggest one of a million problems.

No Brand Of Brexit Can Command A Commons Majority (G.)

Theresa May’s new cabinet has now rallied behind her Chequers plan, set out fully in the government’s white paper on future UK-EU relations. However, far from settling the Brexit debate, recent events have given rise to another nightmare scenario that is only just beginning to take shape: that every conceivable Brexit outcome may now not command a parliamentary majority. The conventional wisdom in Westminster is that since the general election last year, there is no House of Commons majority for a hard Brexit. With a working majority of only 13, including the Democratic Unionists, it would take just seven Tory MPs to oppose it. But there are at least 20-30 pro-European Tories minded to do so.

Yet May’s softer Brexit blueprint has also significantly increased the prospect of Eurosceptic Conservative MPs voting against her EU deal when it is put to parliament later this year. In the febrile atmosphere at Westminster this week, there have been rumours that up to 70 Tories could oppose it – especially if, as seems likely, May makes further concessions in order to win the EU’s backing for a bespoke deal, instead of having to choose between a Canada or Norway-style agreement. Hints in the white paper about a preferential system for EU migrants, despite May’s rhetoric about ending free movement of labour, will fuel the Tory revolt.

May’s embrace for a softer Brexit has therefore changed the Commons arithmetic – and the political calculations that come with it. It is now Labour MPs, rather than Tory ones, who may prove critical. In recognition of this, May has been reaching out to Labour MPs in the hope that soft Brexit supporters vote for her deal, neutralising the impact of the Eurosceptics voting against it. In an unusual move, David Lidington, the Cabinet Office minister and May’s de facto deputy, briefed Labour (as well as Liberal Democrat and SNP) MPs on the Chequers plan. But Labour won’t want to save May. Their leader, Jeremy Corbyn, will almost certainly whip Labour MPs to oppose May’s deal, in the hope that the ensuing chaos will result in an election.

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What I said a few days ago.

Donald Trump Is Right. NATO Is A Costly White Elephant (G.)

Nato was founded in 1949 in response to Stalin’s blockade of Berlin. It was meant to “keep the Soviet Union out, the Americans in, and the Germans down”. Since then, it has welcomed the American nuclear shield, at vast cost to America. Otherwise, its only military achievements have been the breakup of Yugoslavia and the loss of a squalid 17-year war in Afghanistan. Neither has anything to do with the North Atlantic. Nothing better symbolised this than Theresa May’s bizarre gift to Trump this week of 450 British troops for Kabul. Nato was about deterring an attack on Europe from Russia. In 1945, the west agreed the Potsdam settlement, accepting the Soviets’ “sphere of influence” over eastern Europe.

Thus when Russia invaded Hungary in 1956 and Czechoslovakia in 1968, there was no question of Nato, or Europe, retaliating. The iron curtain was iron. Come 1989 and the collapse of Potsdam Europe, Nato did not approach a broken Russia to agree some new settlement. It did the opposite. To protests from Russia’s weakened leader, Boris Yeltsin, it gathered former Warsaw Pact states under its wing and advanced its border east towards Russia. It embraced Poland, Czechoslovakia and Hungary, then the Baltic states, Romania and Bulgaria. It was like Khrushchev stationing missiles in Cuba. Only Germany counselled caution.

Nato’s provocation was so blatant as to be an open invitation to any new populist leader in Moscow to exploit Russia’s bruised patriotism: hence Vladimir Putin. He and his kleptocratic cronies are virtually a Nato creation. But the fact that America was party to the provocation does not invalidate Trump’s question. What is Nato’s policy beyond needling Russia and feebly relying on the American shield?

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But in the end, it’s all about money. That’s why NATO still exists. Nothing to do with security.

Trump Ready To Help Some NATO States Buy US Arms (R.)

U.S. President Donald Trump said on Thursday he was ready to help smaller NATO countries to buy U.S. weapons as he pushed them to spend more on their own defense. Speaking after a NATO summit, at which he said nations had agreed on new spending pledges, Trump said some less wealthy members had asked during meetings in Brussels if he could help them buy U.S. arms equipment, but did not name the countries. Asked about pressures on countries with weaker finances, he said, “We have many wealthy countries with us today but we have some that aren’t so wealthy and they did ask me if they could buy the military equipment, and could I help them out, and we will help them out a little bit,” he told a news conference.

“We are not going to finance it for them but we will make sure that they are able to get payments and various other things so they can buy – because the United States makes by far the best military equipment in the world: the best jets, the best missiles, the best guns, the best everything.” Trump claimed a personal victory at the summit after telling European allies to increase spending or lose Washington’s support. The White House has been pushing a “Buy American” initiative which aims to help drum up billions of dollars more in arms business. The initiative has raised concerns in Europe, where some see increased weapons sales as a key goal of Trump’s repeated calls for NATO members to increase their military spending.

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Americans have no business there. Go home.

Who Wants To Disrupt Strategic Balance In The Black Sea Region? (SCF)

The US-led series of drills in and around Ukraine’s Black Sea coastline is part of NATO exercise Sea Breeze that kicked off on July 9 to last until July 21. The training event involves an international armada representing 19 countries, including such non-NATO states as Ukraine, India, Georgia, the United Arab Emirates and Moldova. All in all, 29 warships, 1 submarine, and 25 aircraft are involved in the exercise held in Odessa and Mykolayiv and the northwestern Black Sea region. The Black Sea regional security is actually an issue paid little attention to. It’s not addressed by an international forum. NATO official documents adopt an openly provocative language to challenge Russia.

The North Atlantic Alliance always emphasizes the Black Sea’s role as a critical intersection. The US-led NATO activities have been intensifying since 2014 to turn the region into another hotbed along with the South China Sea and the Baltic. Turkey, Bulgaria, and Romania, three of the six Black Sea countries, are NATO members. Ukraine and Georgia are the bloc’s close partners aspiring for membership. The alliance has a significant military presence in Romania, including a US Aegis Ashore BMD system capable of firing long-range cruise missiles at Russia.

American military presence in Romania and Bulgaria is gradually growing. The US plans to deploy up to 2,500 troops at Novo Selo, Bulgaria. The facility is large enough to accommodate as many as 5,000 servicemen. Heavy tanks deployment is envisaged. The 1997 NATO-Russia Founding Act, where NATO pledged not to deploy “substantial forces” near Russia, seems to be forgotten. The US Navy’s policy is aimed at ramping up its presence there. The presence of American warships perilously close to Russia’s borders is undoubtedly provocative. For comparison, the Russian Navy does not stage regular maneuvers in the Caribbean Sea with such allies as Cuba, Nicaragua and Venezuela though nothing prevents it from doing so.

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First, Berlin forces Greece to keep the islands loaded with refugees. Then it forces them to load more taxes on the already destroyed economies there.

Germany Puts Last Bailout Tranche to Greece on Hold (GR)

Germany blocked a final 15 billion-euro ($17.5 billion) bailout payment to Greece after the government in Athens postponed a value-added tax (VAT) hike on a handful of islands that have been hit hard by the influx of migrants. For the tranche to be unblocked by early August, Finance Minister Euclid Tsakalotos pledged at yesterday’s Eurogroup that the measure to retain the 30 percent VAT discount on Lesvos, Chios, Samos, Leros and Kos will end in January 2019, and that the loss of 28 million euros of revenues will be offset from other sources.

The SYRIZA-led government postponed the VAT hike in the islands without consulting Greece’s creditors. Germany was eager to send a message to Athens that it will not tolerate any deviation from the program in the future. Commentators say that the Eurogroup decision shows how difficult it will be for the southern country to regain financial sovereignty even as it exits an eight-year bailout regime in August.

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Given how Greece gets treated, denial doesn’t sound like the correct term.

Europe’s Remarkable Ability To Remain In Denial (Varoufakis)

Europe’s establishment is luxuriating in two recent announcements that would have been momentous even if they were only partly accurate: the end of Greece’s debt crisis, and a Franco-German accord to redesign the eurozone. Unfortunately, both reports offer fresh proof of the European Union (EU) establishment’s remarkable talent for never missing an opportunity to miss an opportunity. The two announcements did not come in the same week by accident. The Greek debt implosion, back in 2010, was the ugly symptom of the eurozone’s design flaws, which is why it triggered a domino effect across the continent. Greece’s continuing insolvency reflects the deep disagreements within the Franco-German axis concerning eurozone redesign.

While three French presidents and the same German chancellor were failing to agree on the institutional changes that would render the eurozone sustainable, Greece was asked to bleed quietly. In 2015, the Greeks staged a rebellion, which Europe’s establishment ruthlessly crushed. Neither Brexit nor the EU’s steady delegitimation in the eyes of European voters managed to convince the establishment to change its ways. French President Emmanuel Macron’s election seemed the last hope for the new Berlin-Paris accord needed to prevent a suffocating Italy from triggering the next—this time lethal—domino effect.

Under Macron, new, hopeful ideas were proposed: a common budget for the eurozone; a new safe debt instrument and quasi-federal tax-raising capacities; a common unemployment insurance fund; common bank deposit insurance and a common pot from which to recapitalize failing banks. Moreover, a new investment fund would mobilize idle savings across Europe, without adding to the fiscal stress of member states. A year later, with Italy on a collision course with the EU, the Meseberg Summit between German Chancellor Angela Merkel and Macron delivered an agreement on eurozone reform. A few days later, the Eurogroup of eurozone finance ministers delivered its own “solution” to the Greek debt crisis.

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Sensible.

US Judge Asked To Create Mental Health Fund For Migrant Children (R.)

A civil rights group asked a federal judge on Thursday to order the U.S. government to provide mental health counseling for the around 2,000 immigrant children separated from their parents by officials at the U.S.-Mexican border. The request by the American Civil Liberties Union follows a chaotic week for U.S. immigration officials, who failed to meet a court-ordered deadline on Tuesday for reuniting children under the age of five. The government “must establish a fund to pay for professional mental health counseling, which will be used to treat children who are suffering from severe trauma as a result of their forcible separation from their parents,” said the ACLU in court papers filed late Thursday.

The group said the cost of the fund could be determined at a future date. The rights group brought the lawsuit that prompted U.S. Judge Dana Sabraw in San Diego last month to order the government to reunite families separated at the border. The family separation policy was instituted as part of President Donald Trump’s efforts to curtail illegal immigration. The administration ended the practice last month after widespread protests. The government, in the same court filing on Thursday, acknowledged that it had missed a Tuesday deadline for reuniting the youngest children with their parents, but said it had now complied with the judge’s order.

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How does anyone make this, too, about Russia? It’s your own people who use this for spying on you. Targeting ‘Russians’ is just a way to divert your attention from that.

Facebook Users Marked With “Treason” Label (ZH)

Beleaguered social media giant Facebook has removed “treason” from their database of the keywords assigned to users for advertising purposes, the company stated Wednesday after Danish state broadcaster DR reported its existence. Company spokesman Joe Osborne replied “National treason was an advertising interest because of its historical significance, but as it is an illegal act, we have removed it.” Facebook tags its more than 2 billion users with a wide variety of keywords depending on their interests – from shopping habits to political and religious views in order to sell more efficiently targeted advertising.

This makes Facebook a sublime sales channel for companies. Categorizing users in areas of interest means that companies with ads on Facebook can buy into an almost perfect audience. Eg. garden equipment for people with special interest in gardens, etc. But categorization also allows intelligence services in all countries to look at the population over the shoulder. DR suggests that the a government such as Russia could have used the “treason” tag to locate around 65,000 Facebook users who had been marked with the keyword. The article notes that they do not know “if the Russian authorities have used Facebook’s “treason” keyword” for nefarious purposes – adding “Only the Russian authorities know that.”

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Jul 042018
 


Edward Hopper People in the sun 1963

 

The Velocity of Money… and Revolution (Brin)
Ecology: The Keystone Science (Hawes)
Facebook Flags, Removes Declaration of Independence Text as Hate Speech (Rea.)
Theresa May To Pitch ‘Softest Possible Brexit’ Plan (R.)
UK Government ‘Will Miss Fuel Poverty Target By More Than Six Decades’ (G.)
‘Unknown Substance’ Leaves Pair Critically Ill In Salisbury Hospital (G.)
As The State Is Dismantled, Who Will Save Britain’s Wildlife? (Monbiot)
City Properties Should Be Homes For People First – Not Investments (G.)
Ecuador Wants Ex-President Correa Extradited (DW)
Most Of Europe’s Rivers And Lakes Fail Water Quality Tests (G.)
More Than 200 Migrants Drown In Mediterranean In Three Days (G.)
Albatross

 

 

Lowest since 1949.

The Velocity of Money… and Revolution (Brin)

A recent Mauldin missive correctly cites the most disturbing symptom of trouble in the U.S. economy: a plummet in Money Velocity (MV). To quote John: “You may be asking, what exactly is the velocity of money? Essentially, it’s the frequency with which the same dollar changes hands because the holders of the dollar use it to buy something. Higher velocity means more economic activity, which usually means higher growth. So it is somewhat disturbing to see velocity now at its lowest point since 1949, and at levels associated with the Great Depression.” Somewhat… disturbing? That’s at-best an understatement, since no other economic indicator is as telling. MV is about a bridge repair worker buying furniture, that lets a furniture maker get dentures, so a dentist can pay her cleaning lady, who buys groceries….

There are rare occasions when MV can be too high, as during the 1970s hyper-inflation, when Jimmy Carter told Paul Volcker “Cure this, and to hell with my re-election.” But those times are rare. Generally, for all our lives, Money Velocity has been declining into dangerous sluggishness, falling hard since the 80s, rising a little in the 90s, then plummeting. Alas, while fellows like Hunt and Mauldin are at last pointing at this worrisome symptom, they remain in frantic denial over the cause. Absolutely, it is wealth disparity that destroys money velocity. Bridge repair workers and dentists would spend money – if they had any. We have known – ever since Adam Smith gazed across the last 4000 years – that a feudal oligarchy does not invest in productive capacity.

Nor does it spend much on goods or services that have large multiplier effects (that give middle class wage earners a chance to keep money moving). Instead, aristocrats have always tended to put their extra wealth into rentier (or passive rent-seeking) property, or else parasitic-crony-vampiric cheating through abuse of state power. Do not let so-called “tea party” confederate lackeys divert you. The U.S. Revolution was against a King and Parliament and royal cronies who commanded all American commerce to pass through their ports and docks and stores, who demanded that consumer goods like tea be sold through monopolies and even paper be stamped to ensure it came from a royal pal. Try actually reading the Declaration of Independence. “Taxation without representation” was about how an oligarchy controlled Parliament through jiggered districts and cheating, and used that power to funnel wealth upward.

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“The gravy train is running out of steam..”

Ecology: The Keystone Science (Hawes)

A missing piece from most critiques of modern capitalism revolves around the misunderstanding of ecology. To put it bluntly, there will be no squaring the circle of mass industrial civilization and an inhabitable Earth. There is no way for energy and resource use, along with all the strife, warfare, and poverty that comes along with it, to continue under the business as usual model that contemporary Western nations operate under. There is also the problem of constructing millions of solar panels and gigantic wind farms to attempt to bring the entire world’s population to a middle class existence based on a North American, or even European levels of energy use.

All of the hypothetical robots and artificial intelligence to be constructed for such a mega-endeavor needed to enact such a project would at least initially rely on fossil fuels and metals plundered from the planet, and only lead to more rapacious destruction of the world. The dominant technological model is utterly delusional. Here I would urge each of us to consider our “human nature” (a problematic term, no doubt) and the costs and the manner of the work involved: if each of us had to kill a cow for food, would we? If each of us had to mine or blast a mountain for coal or iron, or even for a wind turbine, would we do it? If each of us had to drill an oil well or bulldoze land for a gigantic solar array next to many endangered species or a threatened coral reef, would we?

My guess would be no, for the vast majority of the population. Instead, we employ corporations and specialists to carry out the dirty work in the fossil fuel industries and animal slaughtering, to name just a few. Most of us in the West have reaped the benefits of such atrocities for the past few centuries of the industrial revolution. That era is coming to a close, and there’s no turning back. The gravy train is running out of steam, and our age of comfort and the enslavement of a global proletariat to produce and gift-wrap our extravagances will hopefully be ending shortly, too. Some may romanticize loggers, factory workers, oil drillers, coal miners, or steel foundries but the chance is less than a needle through a camel’s eye that those jobs are coming back in a significant way.

Overpopulation in much of the world continues to put strain upon habitat and farmlands to provide for the Earth’s 7.5 billion and growing humans. Tragically, many with the most influence on the Left today, such as Sanders, Corbyn, and Melenchon want to preserve industrial civilization. Theirs is an over-sentimental outlook which warps their thinking to want to prop up a dying model in order to redistribute wealth to the poor and working classes. Empathy for the less fortunate is no doubt a good thing, but the fact remains that the real wealth lies in our planet’s natural resources, not an artificial economy, and its ability to regenerate and provide the fertile ground upon which we all rely. If we follow their narrow path, we are doomed.

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Happy 4th of July, Zuck.

Facebook Flags, Removes Declaration of Independence Text as Hate Speech (Rea.)

America’s founding document might be too politically incorrect for Facebook, which flagged and removed a post consisting almost entirely of text from the Declaration of Independence. The excerpt, posted by a small community newspaper in Texas, apparently violated the social media site’s policies against hate speech. Since June 24, the Liberty County Vindicator of Liberty County, Texas, has been sharing daily excerpts from the declaration in the run up to July Fourth. The idea was to encourage historical literacy among the Vindicator’s readers. The first nine such posts of the project went up without incident.

“But part 10,” writes Vindicator managing editor Casey Stinnett, “did not appear. Instead, The Vindicator received a notice from Facebook saying that the post ‘goes against our standards on hate speech.'” The post in question contained paragraphs 27 through 31 of the Declaration of Independence, the grievance section of the document wherein the put-upon colonists detail all the irreconcilable differences they have with King George III. Stinnett says that he cannot be sure which exact grievance ran afoul of Facebook’s policy, but he assumes that it’s paragraph 31, which excoriates the King for inciting “domestic insurrections amongst us, and has endeavored to bring on the inhabitants of our frontiers, the merciless Indian Savages.”

The removal of the post was an automated action, and Stinnett sent a “feedback message” to Facebook with the hopes of reaching a human being who could then exempt the Declaration of Independence from its hate speech restrictions. Fearful that sharing more of the text might trigger the deletion of its Facebook page, The Vindicator has suspended its serialization of the declaration. In his article, Stinnett is remarkably sanguine about this censorship. While unhappy about the decision, he reminds readers “that Facebook is a business corporation, not the government, and as such it is allowed to restrict use of its services as long as those restrictions do not violate any laws. Plus, The Vindicator is using Facebook for free, so the newspaper has little grounds for complaint other than the silliness of it.”

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Time to place a bet that Brexit will not happen.

Theresa May To Pitch ‘Softest Possible Brexit’ Plan (R.)

British Prime Minister Theresa May will present to her team a new proposal for trade with the European Union that in effect comprises the “softest possible Brexit”, ITV’s political editor reported on Tuesday, citing sources. Britain’s exit from the bloc next year will mark its biggest trading and foreign policy shift in almost 50 years. But May has struggled to unite pro- and anti-Brexit camps in her cabinet and party around a plan for future trade with the EU. So far, May’s advisers have come up with two options, neither of which have the full support of her party. Both have already been dismissed in principle by EU officials.

With the clock ticking toward a March departure date and passions running high, May is holding a meeting of senior ministers on Friday at which she will pitch a compromise third option, ITV political editor Robert Peston said. She will ask her cabinet to back a plan that would see Britain collect duties on imports at the rate of the EU’s common customs tariff, in effect making Britain the EU’s tax collector, according to Peston. May and her officials believe this would avoid the need for border checks between the Republic of Ireland and Northern Ireland, Peston wrote in a Facebook post.

Opposition lawmaker Hilary Benn, who chairs parliament’s Brexit committee, said he thought it was “unlikely that the EU will agree to outsource the collection of its own tax revenues to a third country”. Peston also said May’s proposal would include IT and camera technology to help reduce bureaucracy around the border, as well as British alignment with EU standards for goods and agricultural products. On services, which make up the bulk of Britain’s economy, Peston said May wants to offer the EU preferential rights for its citizens who want to live and work in Britain, in exchange for better access to the EU’s services market.

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Thatcher on steroids.

UK Government ‘Will Miss Fuel Poverty Target By More Than Six Decades’ (G.)

The government will miss a key fuel poverty target by more than half a century at the current rate homes are being insulated and upgraded, a leading thinktank has warned. Ministers are drastically off course on ensuring as many fuel-poor homes – those which people cannot afford to keep adequately heated – as possible are upgraded to energy efficiency band C by 2030 in England, according to the IPPR. The target will not be met by 2091 at the earliest, a report by the thinktank found. England has about 2.5m fuel-poor households, and the hardship they face paying energy bills is set to rise this year because of price hikes.

“At its current rate of delivery, hundreds of thousands of fuel-poor households will be left out in the cold until the end of the century,” said Luke Murphy, associate director for energy, climate, housing and infrastructure at IPPR. The thinktank said the main scheme for tackling the problem – the energy companies obligation (ECO) – was not working, and called on the government to reform it. It is estimated only 11% fuel-poor homes had reached band C by 2017, up from 8% in 2015. The IPPR looked at the rate that energy efficiency measures were installed under the ECO between April 2017, when the scheme was rebooted, and February 2018.

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Give me a break.

‘Unknown Substance’ Leaves Pair Critically Ill In Salisbury Hospital (G.)

A major incident has been declared in Wiltshire after it was suspected two people might have been exposed to an unknown substance in Amesbury. The man and woman, both in their 40s, were in a critical condition at Salisbury district hospital, Wiltshire police said. A number of scenes in the Amesbury and Salisbury area were cordoned off as a precaution, although the force said it was not yet clear if they were the victims of a crime. One of the sites cordoned off and guarded by three officers was the town’s baptist church, a modern red brick building, a few minutes’ drive away from the address where the man and woman were found.

Local radio station Spire FM reported that Queen Elizabeth Gardens in the centre of Salisbury had also been sealed off as part of the investigation. Public Health England (PHE) advised that it did not believe there to be a “significant health risk” to the wider public, although its advice was being continually assessed. The incident comes exactly four months after the former Russian spy Sergei Skripal and his daughter, Yulia, were left poisoned on 4 March by a suspected military nerve agent in Salisbury, around eight miles from Amesbury. Police said the man and woman were found unconscious at an address in Muggleton Road on Saturday evening and it was initially believed that they had taken illegal drugs, however further tests were being carried out.

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Absolutely nobody.

As The State Is Dismantled, Who Will Save Britain’s Wildlife? (Monbiot)

It feels like the collapse of the administrative state – and this is before Brexit. One government agency after another is losing its budget, its power and its expertise. The result, for corporations and the very rich, is freedom from the restraint of law, freedom from the decencies they owe to other people, freedom from democracy. The public protections that constrain their behaviour are being dismantled. An example is the cascading decline in the protection of wildlife and environmental quality. The bodies charged with defending the living world have been so enfeebled that they now scarcely exist as independent entities. Natural England, for example, has been reduced to a nodding dog in the government’s rear window.

Its collapse as an autonomous agency is illuminated by the case that will be heard next week in the high court, where two ecologists, Tom Langton and Dominic Woodfield, are challenging its facilitation of the badger cull. That the cull is a senseless waste of life and money is well established, but this is only one of the issues being tested. Another is that Natural England, which is supposed to assess whether the shooting of badgers causes wider environmental harm, appears incapable of discharging its duties.

As badger killing spreads across England, it intrudes upon ever more wildlife sites, some of which protect animals that are highly sensitive to disturbance. Natural England is supposed to determine whether allowing hunters to move through these places at night and fire their guns has a detrimental effect on other wildlife, and what the impact of removing badgers from these ecosystems might be. The claimants allege that it has approved the shooting without meaningful assessments.

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Sadiq Khan and Ada Colau, mayors of London and Barcelona. Don’t understand that social housing doesn’t solve the problem.

City Properties Should Be Homes For People First – Not Investments (G.)

For a number of years, cities around the world have been facing increasingly global and aggressive speculation in their property markets – from speculators who see housing in our cities as an asset from which to profit, rather than homes for the people we represent. In many cases, speculators take decisions from thousands of miles away. Yet for us their impact on the life and soul of our cities is very close to home. Our city centres risk being hollowed out as vibrant communities are displaced, local shops are closed, and the cost of housing rises exorbitantly. Our community groups and local government, as the part of civic life closest to local people and the most sensitive to their everyday problems, have often been the first to warn of the risks that these practices bring with them regarding the very survival of our cities.

For city leaders to be able to tackle this problem, they urgently need greater resources and powers both to increase their stocks of social-rented and other genuinely affordable housing and to strengthen tenants’ rights. Cities are not simply a collection of buildings, streets and squares. They are also the sum of their people. They are the ones who help create social ties, build communities and evolve into the places where we are so proud to live.

That is why we are determined to change the way that housing works in the cities we represent. We are building more social-rented and other genuinely affordable homes, doing all we can to strengthen the rights of tenants, and clamping down on bad practices of developers and landlords wherever we are able to. But we face a complex problem and one that operates at a global level. We still lack the powers and resources that would allow us properly to regulate the housing market, to protect tenants’ rights to remain in their homes, and to make homelessness and rough sleeping things of the past.

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Punished for supporting Assange?!

Ecuador Wants Ex-President Correa Extradited (DW)

Ecuador requested an Interpol red notice for ex-President Rafael Correa on Tuesday, hoping to have him extradited from Belgium. Correa claims the decision to request his detention and extradition from Belgium are part of an attempt by his former ally, the current president Lenin Moreno, to humiliate him and make him suffer. Correa had been ordered by Ecuadorean Judge Daniella Camacho to present himself before an Ecuadorean court every two weeks as part of the proceedings into the attempted kidnapping in Colombia of former opposition lawmaker Fernando Balda in 2012.

The former premier, whose wife is Belgian, has been living in Belgium since July last year, and has reported to the consulate in Brussels every 15 days starting June 2. On Tuesday, the judge claimed her orders for Correa to present himself to a court had been violated. According to a statement on Twitter, the public prosecutor requested the pre-trial detention of Correa for non-compliance. He called for Interpol to be notified through a red alert for Correa’s capture and extradition.

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Our waters are for dumping garbage.

Most Of Europe’s Rivers And Lakes Fail Water Quality Tests (G.)

The vast majority of Europe’s rivers, lakes and estuaries have failed to meet minimum ecological standards for habitat degradation and pollution, according to a damning new report. Only 40% of surface water bodies surveyed by the European Environmental Agency (EEA) were found to be in a good ecological state, despite EU laws and biodiversity protocols. England was one of the poorer performers to emerge from the State of Our Waters report, which studied 130,000 waterways. The EU’s environment commissioner, Karmenu Vella, said there had been a slight improvement in freshwater quality since 2010. “But much more needs to be done before all lakes, rivers, coastal waters and groundwater bodies are in good status,” he added. “Tackling pollution from agriculture, industry and households requires joint efforts from all water users throughout Europe.”

Scotland dramatically outperformed England in the clean water stocktake which covers the 2010-15 period, with water standards similar to much of Scandinavia. Precise comparisons are difficult as reporting methodologies vary across Europe but water quality in England was in the bottom half of the European table, and had deteriorated since the last stocktake in 2010. Peter Kristensen, the report’s lead author told the Guardian that higher population densities, more intensive agricultural practices, and better monitoring of waterways had all contributed to the result. “England is comparable to countries in central Europe with a high proportion of water bodies failing to reach good status,” he said. “The situation is much better in Scotland, where only around 45% of sites failed [to meet minimum standards].”

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It’s actually getting worse.

More Than 200 Migrants Drown In Mediterranean In Three Days (G.)

More than 200 migrants have drowned at sea in the Mediterranean in the past three days, taking the death toll for the year to more than 1,000 and prompting fears that human traffickers are taking greater risks because of a crackdown imposed by the Italian government and the Libyan coastguard. The UN refugee agency in Tripoli reported on Monday that 276 refugees and migrants were disembarked in the Libyan capital on Monday, including 16 survivors of a boat carrying 130 people, of whom 114 were still missing at sea. Further shipwrecks were found at the weekend. On Tuesday the Libyan coastguard reported a further seven deaths and a further 123 migrants rescued.

The 1,000 deaths landmark was reached on 1 July. It is the fourth year in succession that more than 1,000 migrants have died trying to reach Europe via the Mediterranean Sea. Othman Belbeisi, the chief of mission in Libya at the International Organization for Migration (IOM), claimed the “alarming increase” in deaths at sea was out of the ordinary. “Smugglers are exploiting the desperation of migrants to leave before there are further crackdowns on Mediterranean crossings by Europe,” he said. Overall the number of migrants reaching Italy by sea is down on last year’s figures, but the proportion of those trying to reach Italy that are drowning is rising, prompting claims that the stricter Italian government policy is to blame.

Figures prepared by Matteo Villa, a research fellow at the Italian thinktank ISPI, show that so far in 2018 only half of those leaving Libya have made it to Europe, down from 86% last year. The data shows 44% have been brought back by the Libyan coastguard, compared with 12% last year. A total of 4.5% died or had gone missing, compared with 2.3% last year. But in June, almost one in 10 died or went missing upon departure from the Libyan coast – the highest proportion ever.

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I can’t watch this.

Albatross

In the heart of the great Pacific, a story is taking place that may change the way you see everything. ALBATROSS is offered as a free public artwork. Watch the 3-minute trailer now:

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Jul 032018
 


Edward Hopper Summer interior 1909

 

Buybacks Are The Only Thing Keeping The Stock Market Afloat (CNBC)
Stock Markets Look Ever More Like Ponzi Schemes (Murphy)
A Japanese Tsunami Out Of US CLOs Is Coming (HC)
The Eurozone’s Coming Debt Crisis (Lacalle)
The ‘Dirty Dozen’ Sectors Of Global Debt (Rochford)
UK’s Latest Brexit Proposal Is Unrealistic, Say EU Officials (G.)
Nassim Taleb Slams “These Virtue-Signaling Open-Borders Imbeciles” (ZH)
Merkel Dodges Political Bullet With Controversial Migrant Deal (AFP)
Austria Says To ‘Protect’ Its Borders After German Migrant Deal (AFP)
Is Facebook A Publisher? In Public It Says No, But In Court It Says Yes (G.)
Tesla’s All-Nighter To Hit Production Goal Fails To Convince Wall Street (R.)
The New York Times Squares off with the Truth, Again (AHT)
Anthony Kennedy and Our Delayed Constitutional Crisis (GP)
‘Snowden is the Master of His Own Destiny’ – Russia (TeleSur)

 

 

And then QE ends.

Buybacks Are The Only Thing Keeping The Stock Market Afloat (CNBC)

Stocks right now are hanging by a thread, boosted by a bonanza of corporate buying unrivaled in market history and held back by a burst in investor selling that also has set a new record. Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year. “Corporate cash is going to find a home, and it’s either going to be in buybacks, dividends or M&A activity. What it’s not going to be is in capex,” said Art Hogan, chief market strategist at B. Riley FBR.

“Individuals are looking at the turbulence we’ve seen this year that we had not seen last year. That creates its own sort of exit sign for investors who don’t want to deal with that.” The numbers showing where each side put their cash in the second quarter are striking. Companies announced $433.6 billion in share repurchases during the period, nearly doubling the previous record of $242.1 billion in the first quarter, according to market research firm TrimTabs. Dow components Nike and Walgreens Boots Alliance led the most recent surge in buybacks, with $15 billion and $10 billion, respectively, last week. In all, 31 companies announced buybacks in excess of $1 billion during June.

At the same time, investors dumped $23.7 billion in stock market-focused funds in June, also a new record. For the full quarter, the brutal June brought global net equity outflows to $20.2 billion, the worst performance since the third quarter of 2016, just before the presidential election. The selling is particularly acute in mutual funds, which saw $52.9 billion in outflows during the quarter and are typically more the purview of the retail side.

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“People think their savings and pensions are safe because of rising share prices. They do not realise it is all a con-trick.”

Stock Markets Look Ever More Like Ponzi Schemes (Murphy)

The FT has reported this morning that: “Debt at UK listed companies has soared to hit a record high of £390bn as companies have scrambled to maintain dividend payouts in response to shareholder demand despite weak profitability.” They added: “UK plc’s net debt has surpassed pre-crisis levels to reach £390.7bn in the 2017-18 financial year, according to analysis from Link Asset Services, which assessed balance sheet data from 440 UK listed companies.” So what, you might ask? Does it matter that companies are making sense of low-interest rates to raise money when I am saying that government could and should be doing the same thing?

Actually, yes it does. And that’s because of what the cash is being used for. Borrowing for investment makes sense. Borrowing to fund revenue investment (that is training, for example, which cannot go on the balance sheet but still adds value to the business) makes sense. But borrowing to pay a dividend when current profits and cash flow would not support it? No, that makes no sense at all. Unless, of course, you are CEO on a large share price linked bonus package and your aim is to manipulate the market price of the company. It is that manipulation that is going on here, I suggest. These loans are being used to artificially inflate share prices.

The problem is systemic. In the US the problem is share buybacks, which I read recently have exceeded $5 trillion in the last decade, meaning that US companies are now by far the biggest buyers of their own shares. That is, once again, market manipulation. And this manipulation does matter. People think their savings and pensions are safe because of rising share prices. They do not realise it is all a con-trick. And companies claim that their pension funds are better funded as a result of these share prices, and so they are meeting their obligations to their employees when that too is a con-trick. They may be insolvent when the truth is known, so serious is the fraud.

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Japan plays a strange role in the global economy. It won’t be able to keep that up much longer. The Bank of Japan has many options; none are good.

A Japanese Tsunami Out Of US CLOs Is Coming (HC)

Japan is at the very centre of the global financial system. It has run current account surpluses for decades, building the world’s largest net foreign investment surplus, or its accumulated national savings. Meanwhile, other nations, such as the US, have borrowed from nations like Japan to live beyond their own means, building net foreign investment deficits. We now have unprecedented levels of cross-national financing.

Much of Japan’s private sector saving is placed in Yen with financial institutions who then invest overseas. These institutions currency hedged most of their foreign assets to reduce risk weighted asset charges and currency write down risks. The cost of hedging USD assets has however risen due to a flattening USD yield curve and dislocations in FX forwards. As shown below, their effective yield on a 10 year US Treasury (UST) hedged with a 3 month USDJPY FX forward has fallen to 0.17%. As this is below the roughly 1% yield many financial institutions require to generate profits they have been selling USTs, even as unhedged 10 year UST yields rise. The effective yield will fall dramatically for here if 3 month USD Libor rises in line with the Fed’s “Dot Plot” forecast for short term rates, assuming other variables like 10 year UST yields remain constant.

As Japanese financial institutions sell US Treasuries, which are considered the safest foreign asset, they are shifting more into higher yielding and higher risk assets; foreign bonds excluding US treasuries as well as foreign equity and investment funds. This is a similar pattern to what we saw prior to the last global financial crisis. In essence, Japan’s financial institutions are forced to take on more risk in search of yield to cover rising hedge costs as the USD yield curve flattens late in the cycle. Critically as the world’s largest net creditor they facilitate significant added liquidity for higher risk overseas borrowers late into the cycle.

I follow these flows closely. One area I think is rather interesting is US Collateralised Loan Obligations (CLOs) which Bloomberg reports “ballooned to a record last quarter thanks in large part to unusually high demand from Japanese investors”. CLOs are essentially a basket of leveraged loans provided to generally lower rated companies with very little covenant protection. Alarmingly, some US borrowers have used this debt to purchase back so much of their own stock that their balance sheets now have negative net equity. A recent Fed discussion paper shows in the following chart that CLOs were the largest mechanism for the transfer of corporate credit risk out of undercapitalised banks in the US and into the shadow banking sector. Japanese financial institutions have been the underwriter of much of that risk in their search for yield.

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“This reduction in costs is financed by pensioners and savers who are forced to invest in these debt instruments, often by institutional mandate.”

The Eurozone’s Coming Debt Crisis (Lacalle)

The European Central Bank (ECB) has signaled the end of its asset purchase program and even a possible rate hike before 2019. After more than 2 trillion euros of asset purchases and a zero interest rate policy, it is long overdue. The massive quantitative easing (QE) program has generated very significant imbalances and the risks far outweigh the questionable benefits. The balance sheet of the ECB is now more than 40 percent of the eurozone GDP. The governments of the eurozone, however, have not prepared themselves at all for the end of stimuli. They often claim that deficits have been reduced and risks contained. However, closer scrutiny shows that the bulk of deficit reductions came from lower cost of government debt.

Eurozone government spending has barely fallen, despite lower unemployment and rising tax revenues. Structural deficits remain stubborn, and in some cases, unchanged from 2013 levels. In other words, the problems are still there, they were just hidden for a while, swept under the rug of an ever-expanding global economy. The 19 eurozone countries have collectively saved 1.15 trillion euros in interest payments since 2008 due to ECB rate cuts and monetary policy interventions, according to German media outlet Handelsblatt. This reduction in costs is financed by pensioners and savers who are forced to invest in these debt instruments, often by institutional mandate.

However, that illusion of savings and budget stability will rapidly disappear as most Eurozone countries face massive amounts of debt coming due in the 2018–2020 period and wasted precious years of quantitative easing without implementing strong structural reforms. The recent troubles of Italian banks are just one precursor of things to come. Taxes rose for families and small and medium-sized enterprises, while current spending by governments barely fell, competitiveness remained poor, and a massive 1 trillion euro in nonperforming loans raises doubts about the health of the European financial system.

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Good overview. Crises wherever you look.

The ‘Dirty Dozen’ Sectors Of Global Debt (Rochford)

When considering where the global credit cycle is at, it’s often easy to form a view based on a handful of recent articles, statistics and anecdotes. The most memorable of these tend to be either very positive or negative otherwise they wouldn’t be published or would be quickly forgotten. A better way to assess where the global credit cycle is at is to look for pockets of dodgy debt. If these pockets are few, credit is early in the cycle with good returns likely to lie ahead. If these pockets are numerous, that’s a clear indication that credit is late cycle.

In reviewing global debt, twelve sectors standout for their lax credit standards and increasing risk levels. There’s excessive risk taking in developed and emerging debt, as well as in government, corporate, consumer and financial sector debt. This points to global credit being late cycle. Central banks have failed to learn the lessons from the last crisis. By seeking to avoid or lessen the necessary cleansing of malinvestment and excessive debt, this cycle’s economic recovery has been unusually slow. Ultra-low interest rates and quantitative easing have increased the risk of another financial crisis, the opposite of the financial stability target many central bankers have.

For global debt investors, the current conditions offer limited potential for gains beyond carry. With credit spreads in many sectors at close to their lowest in the last decade, there is greater potential for spreads to widen dramatically than there is for spreads to tighten substantially. Keeping credit duration low, staying senior in the capital structure and shifting up the rating spectrum will cost some carry. However, the cost of de-risking now is as low as it has been for a long time. If the risks in the dirty dozen sectors materialise in the medium term, the losses avoided by de-risking will be a multiple of the carry foregone.

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I’d say it’s about time for the British to wake up to the damage May et al are inflicting on the nation.

UK’s Latest Brexit Proposal Is Unrealistic, Say EU Officials (G.)

A draft of Theresa May’s Brexit plan has already been dismissed as unrealistic by senior EU officials, who say the UK has no chance of changing the European Union’s founding principles. The prime minister is gathering her squabbling ministers at Chequers on Friday for a one-day discussion to thrash out the UK’s future relationship with the EU. But EU sources who have seen drafts of the long-awaited British white paper said the proposals would never be accepted. “We read the white paper and we read ‘cake’,” an EU official told the Guardian, a reference to Boris Johnson’s one-liner of being “pro having [cake] and pro-eating it”. Since the British EU referendum, “cake” has entered the Brussels lexicon to describe anything seen as an unrealistic or far-fetched demand.

May’s white paper is expected to propose the UK remaining indefinitely in a single market for goods after Brexit, to avoid the need for checks at the Irish border. While the UK is offering concessions on financial services, it wants restrictions on free movement of people – a long-standing no-go for the EU. Jean-Claude Piris, a former head of the EU council’s legal service, said it would be impossible for the EU to split the “four freedoms” underpinning the bloc’s internal market, which are written into the 1957 treaty that founded the European project: free movement of goods, services, capital and people. “The EU is in difficulties at the moment; the one and only success which glues all these countries together is a little bit the money and the internal market,” Piris said. “If you fudge the internal market by allowing a third state to choose what they want … it is the beginning of the end.”

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Not easy to find the right position on the topic. But Europe seems to show that uncontrolled immigration leads to the rise of right wing movements. Merkal gave birth to Salvini.

Nassim Taleb Slams “These Virtue-Signaling Open-Borders Imbeciles” (ZH)

As liberals across America continue to attempt to one-up one another with the volume of virtue they can signal, specifically on the question of ‘open borders’ – especially since ‘jenny from the bronx’ victory over the weekend, none other than Nassim Nicholas Taleb unleashed a trite 3-tweet summary of how farcical this argument is…

What intellectuals don’t get about MIGRATION is the ethical notion of SYMMETRY:

1) OPEN BORDERS work if and only if the number of pple who want to go from EU/US to Africa/LatinAmer equals Africans/Latin Amer who want to move to EU/US

2) Controlled immigration is based on the symmetry that someone brings in at least as much as he/she gets out. And the ethics of the immigrant is to defend the system as payback, not mess it up. Uncontrolled immigration has all the attributes of invasions.

3) As a Christian Lebanese, saw the nightmare of uncontrolled immigration of Palestinians which caused the the civil war & as a part-time resident of N. Lebanon, I am seeing the effect of Syrian migration on the place.

So I despise these virtue-signaling open-borders imbeciles.

Silver Rule in #SkinInTheGame

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Mutti’s holding centers.

Merkel Dodges Political Bullet With Controversial Migrant Deal (AFP)

German Chancellor Angela Merkel survived a bruising challenge to her authority with a compromise deal on immigration but faced charges Tuesday that it spelt a final farewell to her welcoming stance toward refugees. In high-stakes crisis talks overnight, Merkel had put to rest for now a dangerous row with her hardline Interior Minister Horst Seehofer that had threatened the survival of her fragile coalition government. In separate statements, Merkel praised the “very good compromise” that she said spelt a European solution, while Seehofer withdrew a resignation threat and gloated that “it’s worth fighting for your convictions”.

In a pact both sides hailed as a victory, Merkel and Seehofer agreed to tighten border controls and set up closed holding centres to allow the speedy processing of asylum seekers and the repatriations of those who are rejected. They would either be sent back to EU countries that previously registered them or, in case arrival countries reject this – likely including frontline state Italy – be sent back to Austria, pending an agreement with Vienna. CSU general secretary called the hardening policy proposal the last building block “in a turn-around on asylum policy” after a mass influx brought over one million migrants and refugees.

But criticism and doubts were voiced quickly by other parties and groups, suggesting Merkel may only have won a temporary respite. Refugee support group Pro Asyl slammed what it labelled “detention centres in no-man’s land” and charged that German power politics were being played out “on the backs of those in need of protection”. Bernd Riexinger of the opposition far-left Die Linke party spoke of “mass internment camps” as proof that “humanity got lost along the way” and urged Merkel’s other coalition ally, the Social Democrats (SPD), to reject the plan.

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And Merkel made Kurz possible, too.

Austria Says To ‘Protect’ Its Borders After German Migrant Deal (AFP)

Austria’s government warned Tuesday it could “take measures to protect” its borders after Germany planned restrictions on the entry of migrants as part of a deal to avert a political crisis in Berlin. If the agreement reached Monday evening is approved by the German government as a whole, “we will be obliged to take measures to avoid disadvantages for Austria and its people,” the Austrian government said in a statement. It added it would be “ready to take measures to protect our southern borders in particular,” those with Italy and Slovenia. German Chancellor Angela Merkel reached a deal Monday on migration with her rebellious interior minister, Horst Seehofer, to defuse a bitter row that had threatened her government.

Among the proposals is a plan to send back to Austria asylum seekers arriving in Germany who cannot be returned to their countries of entry into the European Union. Austria said it would be prepared to take similar measures to block asylum seekers at its southern borders, with the risk of a domino effect in Europe. “We are now waiting for a rapid clarification of the German position at a federal level,” said the statement, signed by Austria’s conservative Chancellor Sebastian Kurz and his allies of the far-right Freedom party, Vice Chancellor Heinz-Christian Strache and Interior Minister Herbert Kickl. “German considerations prove once again the importance of a common European protection of the external borders,” the statement said.

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Wonder what the strategy meetings were like.

Is Facebook A Publisher? In Public It Says No, But In Court It Says Yes (G.)

Facebook has long had the same public response when questioned about its disruption of the news industry: it is a tech platform, not a publisher or a media company. But in a small courtroom in California’s Redwood City on Monday, attorneys for the social media company presented a different message from the one executives have made to Congress, in interviews and in speeches: Facebook, they repeatedly argued, is a publisher, and a company that makes editorial decisions, which are protected by the first amendment. The contradictory claim is Facebook’s latest tactic against a high-profile lawsuit, exposing a growing tension for the Silicon Valley corporation, which has long presented itself as neutral platform that does not have traditional journalistic responsibilities.

The suit, filed by an app startup, alleges that Mark Zuckerberg developed a “malicious and fraudulent scheme” to exploit users’ personal data and force rival companies out of business. Facebook, meanwhile, is arguing that its decisions about “what not to publish” should be protected because it is a “publisher”. In court, Sonal Mehta, a lawyer for Facebook, even drew comparison with traditional media: “The publisher discretion is a free speech right irrespective of what technological means is used. A newspaper has a publisher function whether they are doing it on their website, in a printed copy or through the news alerts.” [..] Mehta argued in court Monday that Facebook’s decisions about data access were a “quintessential publisher function” and constituted “protected” activity, adding that this “includes both the decision of what to publish and the decision of what not to publish”.

David Godkin, an attorney for Six4Three, later responded: “For years, Facebook has been saying publicly … that it’s not a media company. This is a complete 180.” Questions about Facebook’s moral and legal responsibilities as a publisher have escalated surrounding its role in spreading false news and propaganda, along with questionable censorship decisions. Eric Goldman, a Santa Clara University law professor, said it was frustrating to see Facebook publicly deny that it was a publisher in some contexts but then claim it as a defense in court. “It’s politically expedient to deflect responsibility for making editorial judgements by claiming to be a platform,” he said, adding, “But it makes editorial decisions all the time, and it’s making them more frequently.”

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He did pull it off. But it may be too little too late. Biggest no-no: Model 3 was supposed to be $35,000. ended up at $78,000.

Tesla’s All-Nighter To Hit Production Goal Fails To Convince Wall Street (R.)

Tesla’s burning the midnight oil to hit a long-elusive target of making 5,000 Model 3 vehicles per week failed to convince Wall Street that the electric carmaker could sustain that production pace, sending shares down 2.3% on Monday. Tesla met the target by running around the clock and pulling workers from other projects, workers said. The company also took the unprecedented step of setting up a new production line inside a tent on the campus of its Fremont factory, details of which Chief Executive Elon Musk tweeted last month. Tesla’s heavily-shorted shares rose as much as 6.4% to $364.78 in early trading, but sank after several analysts questioned whether Tesla would be able to sustain the Model 3 production momentum, which is crucial for the long-term financial health of the company.

“In the interim, we do not see this production rate as operationally or financially sustainable,” said CFRA analyst Efraim Levy. “However, over time, we expect the manufacturing rate to become sustainable and even rise.” Levy cut CFRA’s rating on Tesla stock to “sell” from “hold.” Tesla, which Chief Executive Elon Musk hailed on Sunday as having become a “real car company,” said it now expects to boost production to 6,000 Model 3s per week by late August, signaling confidence about resolving technical and assembly issues that have plagued the company for months. Tesla also reaffirmed a positive cash flow and profit forecast for the year. Tesla has been burning through cash to produce the Model 3. Problems with an over-reliance on automation, battery issues and other bottlenecks have potentially compromised Tesla’s position in the electric car market as a host of competitors prepare to launch rival vehicles.

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NATO is “justified by the need to manage the security threats provoked by its enlargement.”.

The New York Times Squares off with the Truth, Again (AHT)

Whenever I’m having a rough day and need a pick-me-up, I turn to The New York Times’ editorial page. It’s always a gas to see how far the empire’s leading propaganda outfit is prepared to go in its mission to pull the wool over we the people’s gullible little eyes. The good editors have come through for me again with their latest entry, “Trump and Putin’s Too-Friendly Summit.” (Original title: “Trump and Putin: Best Frenemies for Life”). No doubt the original headline was deemed rather too impish for such a serious newspaper—it might, for instance, have alerted readers to the fact that the editorial’s content is not to be taken very seriously—and so was understandably jettisoned.

“One would think,” the editors write, “that the president of the United States would let Mr. Putin know that he faces a united front of Mr. Trump and his fellow NATO leaders, with whom he would have met days before the [Putin] summit in Helsinki.” Alas, during said meeting Trump reportedly remarked that “NATO is as bad as NAFTA”—the “free trade” agreement that has succeeded in decimating most of the manufacturing jobs spared by the automation wrecking ball. In other words, Trump does not necessarily think it’s a good idea to encircle Russia with a hostile military alliance whose existence, according to geopolitical expert Richard Sakwa, is “justified by the need to manage the security threats provoked by its enlargement.” (If you haven’t read Professor Sakwa’s comprehensive study of the Ukrainian crisis, Frontline Ukraine, put it at the top of your summer reading list.)

One notes the Turgidsonian delight with which the Times reminds us that, should push come to shove, we’ve got those Russki bastards outgunned. Of course, gullibles like you and I are to pay no mind to the fact that such a confrontation (a military one, for the Times brought up NATO) would almost certainly involve a nuclear exchange, rendering the disparity in manpower that so excites the Times totally meaningless. No, what’s important is that NATO has twenty-nine member states and counting, while the Warsaw Pact was dissolved twenty-seven years ago: ergo, unless he wants the old mailed fist, Putin had better ask “how high?” when we tell him to jump. One would be hard-pressed to come up with a more delusional assessment of where things stand.

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“We are in that constitutional crisis now, but just at the start of it.”

Anthony Kennedy and Our Delayed Constitutional Crisis (GP)

Like “swing vote” Justice Sandra Day O’Connor before him, “swing vote” justice Anthony Kennedy has been one of the worst Supreme Court jurists of the modern era. With swing-vote status comes great responsibility, and in the most consequential — and wrongly decided — cases of this generation, O’Connor and Kennedy were the Court’s key enablers. They • Cast the deciding vote that made each decision possible • Kept alive the illusion of the Court’s non-partisan legitimacy. Each of these points is critical in evaluating the modern Supreme Court. For two generations, it has made decisions that changed the constitution for the worse. (Small “c” on constitution to indicate the original written document, plus its amendments, plus the sum of all unwritten agreements and court decisions that determine how those documents are to be interpreted).

These horrible decisions are easy to list. They expanded the earlier decision on corporate personhood by enshrining money as political speech in a group of decisions that led to the infamous Citizens United case (whose majority opinion, by the way, was written by the so-called “moderate” Anthony Kennedy); repeatedly undermined the rights of citizens and workers relative to the corporations that rule and employ them; set back voting rights equality for at least a generation; and many more. After this next appointment, many fear Roe v. Wade may be reversed. Yet the Court has managed to keep (one is tempted to say curate) its reputation as a “divided body” and not a “captured body” thanks to its so-called swing vote justices and the press’s consistent and complicit portrayal of the Court as merely “divided.”

The second point above, about the illusion of the Court’s legitimacy, is just as important as the first. If the Court were ever widely seen as acting outside the bounds of its mandate, or worse, seen as a partisan, captured organ of a powerful and dangerous political minority (which it certainly is), all of its decisions would be rejected by the people at large, and more importantly, the nation would plunged into a constitutional crisis of monumental proportions. We are in that constitutional crisis now, but just at the start of it. We should have been done with it long ago. Both O’Connor and Kennedy are responsible for that delay.


Image credit: Mike Thompson / Detroit Free Press

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A tale of two refugees
Putin: Snowden is free to do whatever he wants
Lenin: I ordered Assange to be gagged and isolated and am coordinating “next steps” with US

‘Snowden is the Master of His Own Destiny’ – Russia (TeleSur)

United States President Donald Trump is expected to pressure Russia to hand over NSA whistleblower Edward Snowden in exchange for sanctions relief at the upcoming Trump-Putin summit; however, Russia has emphasized that they “are not in a position” to expel Snowden and will “respect his rights” if any such attempt is made. “I have never discussed Edward Snowden with (Donald Trump’s) administration,” Russian Foreign Minister Sergey Lavrov said to Channel 4 reporters. “When he (Putin) was asked the question, he said this is for Edward Snowden to decide. We respect his rights, as an individual. That is why we were not in a position to expel him against his will because he found himself in Russia even without a U.S. passport, which was discontinued as he was flying from Hong Kong.”

Snowden, who is being prosecuted in the United States for leaking classified documents that showed surveillance abuse by U.S. intelligence agencies, was given political asylum in Russia after his passport was revoked. “Edward Snowden is the master of his own destiny,” Lavrov said. Trump is meeting with Russian President Vladimir Putin on July 16 in Helsinki, where Putin is expected to push for an end to U.S. sanctions. Trump has said he would like better relations with Russia, perhaps as a way of pulling them away from China, but Trump’s opponents in the United States are already applying political pressure on him for holding the summit, in the midst of the tensest U.S.-Russian relations since the height of the Cold War.

The fate of Wikileaks founder Julian Assange also lay in the balance when U.S. Vice President Mike Pence met with Ecuador’s President Lenin Moreno this week. “The vice president raised the issue of Mr. Assange. It was a constructive conversation. They agreed to remain in close coordination on potential next steps going forward,” a White House official said in a statement.

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Jun 092018
 
 June 9, 2018  Posted by at 8:16 am Finance Tagged with: , , , , , , , , , ,  


Edward Hopper Summertime 1943

 

Why Trump Is Targeting G-7 Nations On Trade (MW)
More Than Half Of American Homes Are Overvalued, CoreLogic Warns (ZH)
America Is House-Rich But Cash-Poor (MW)
Cities Struggle To Fend Off “Unstoppable Juggernaut” Of Chinese Homebuyers (ZH)
The Summer of Discontent (Jim Kunstler)
Facebook Shared Sensitive User Info Via “Secretive” Data Deals (ZH)
Canada First G7 Nation To Make Marijuana Legal (G.)
Trump Voices Support For Bipartisan Pot Legislation (Pol.)
7 In 10 Americans Are Overwhelmed By News, More Among Republicans (ZH)
Berlin Still Has ‘No Evidence’ From UK That Moscow Is Behind Skripal Case (RT)
Tourists To Med Told To Ditch Plastic To Avoid Huge Rise In Beach Litter (G.)
Microplastics In Our Mussels: The Sea Is Feeding Human Garbage Back To Us (G.)

 

 

Deficits and reserve currencies. Joined at the hip.

Why Trump Is Targeting G-7 Nations On Trade (MW)

President Trump has threatened Canada and France with higher tariffs if they don’t ease up on what he considers unfair policies, sparking fresh worries that a simmering dispute over trade will boil over and damage the world’s leading economies. The president clashed with Canadian Prime Minister Justin Trudeau and French President Emmanuel Macron in an extraordinary series of tweets ahead of meeting of G-7 leaders in Quebec. The G-7 consists of the U.S., U.K., Canada, France, Germany, Japan and Italy. The U.S. has run huge trade deficits for years through both Republican and Democratic presidents. In 2017, the trade gap in goods rose to a nine-year high of $807 billion (the deficit was a smaller $552 billion if services are included).

China accounted for 47% of the U.S. trade deficit in goods in 2017, but the G-7 countries were responsible for another quarter. Germany ran the biggest trade surplus with the U.S., followed by Japan and Italy. The U.S. runs smaller deficits in goods with France and Canada, according to government figures. The U.S. actually posted a small surplus with Canada in 2017 if services are included, largely reflecting how much Canadians spend when visiting the 50 states. The U.K. is the only country with which the U.S. ran a goods and overall surplus.

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Long time pal Jesse Colombo posted this on Twitter. I wrote back:

“Sorry, my friend Jesse, but every single US home is overvalued. It just depends on the vantage point you look from. All prices have been distorted by the Fed’s policies, not just half of them. Arguably some more than others, but can that be the core argument here?”

More Than Half Of American Homes Are Overvalued, CoreLogic Warns (ZH)

A history of economic cycles dating back to the mid-1800s reveals a troubling outlook for today’s Central Bank induced bull market of hopes and dreams, which could be in the later innings. It is quite evident that Americans have quit saving as their gig-economy jobs have left them in financial ruin – now being squeezed by the higher cost of living. The charades of economic stability could continue for a little longer, with President Trump’s stealth quantitative easing program to Wall Street via debt-financed tax reform, which has induced a massive wave of more than $2.5 trillion in stock buybacks — a gift to corporate America.

No matter where one looks, the valuation of many financial assets are overextended, and new evidence today from CoreLogicshows this troubling picture very late into an economic cycle: More than half of U.S. residential real estate markets were overvalued in April. CoreLogic reports that residential real estate prices nationwide increased 6.9% year over year from April 2017 to April 2018. The firm’s Home Price Index (HPI) also shows a 1.2% rise on the month-over-month basis from March to April 2018. This has certainly sparked the debate of housing affordability across the nation with many millennials struggling to achieve the American dream.

CoreLogic Market Condition Indicators showed that 40% of the 100 largest metropolitan areas were overvalued in April, compared to 28% undervalued, and 32% in line with valuations. The report uncovers a shocking discovery that of the nation’s top 50 largest residential real estate markets, 52% were overvalued in April.

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Since they’re all overvalued, any talk of house-rich is shaky.

America Is House-Rich But Cash-Poor (MW)

The very same day Lindsay learned he wouldn’t qualify for a refinance, help arrived. It was a direct mail solicitation, in the form of a fake check “payable to Michael Lindsay for $186,000.” A company called Unison was offering money in exchange for an ownership stake in the Lindsay house. Lindsay investigated, and found Unison’s process both “professional” and “informative,” he said. “It had come down to the fact that the only other option I had was to sell the house,” Lindsay told MarketWatch. He hated that idea, since his two boys, who’d already been through so much, were thriving in their school district. And while he didn’t want to rule out downsizing, there was just too much emotion attached to the home where the boys had been born, where he and Vanessa had tracked their growth through pencil marks in the garage.

Ultimately, Lindsay said, “It just felt crazy that there was so much equity in the home and I couldn’t get at it.” He signed on with Unison. After just three weeks, the company had dispersed $200,000 in cash to pay off Lindsay’s creditors and allow him to do much-needed deferred maintenance on the house. Unison’s product, which it calls HomeOwner, has been around for years, but it’s really hit its stride in the past year or so. The housing market has not only recovered from the Great Recession, it’s heated up. According to an analysis from Attom Data, nearly 14 million Americans are now “equity rich” – meaning they have at least 50% equity in their homes. It bears repeating that many owners and communities are not so lucky: over a million Americans are underwater, and some cities and towns are still reeling under the weight of abandoned and vacant homes and stagnant micro-economies.

But for most of the country, rapidly rising home prices and a dearth of anything else to buy means people are staying in their homes longer, allowing them to accrue more and more equity: $15 trillion worth, to be exact. That may sound like a first-world problem, but as Lindsay’s example illustrates, all the equity in the world is worthless if it’s locked in an untouchable asset while medical bills, home improvement costs, and other expenses are mounting. And since home equity is usually most concentrated among those who’ve lived in their homes the longest, that’s often retirees – the people most in need of certain cash flow.

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Central banks and Chinese buyers.

Cities Struggle To Fend Off “Unstoppable Juggernaut” Of Chinese Homebuyers (ZH)

As we’ve pointed out time and time again, foreign – mainly Chinese – buyers seeking to park their ill-gotten gains beyond the reach of the Communist Party have – in addition to global capitals like New York City and London – favored a handful of cities in the Pacific Northwest, as well as Australia and New Zealand. Many of these cities – for example, Vancouver – have seen property values rise to levels that are unaffordable for local buyers. While the influx of capital helped fuel an economic recovery in the aftermath of the crisis, home values soon reached crisis levels that demanded action by local officials. Some places have tried to use taxes to deter foreign buyers. In some instances, the taxes worked – at least temporarily.

But with the flow of buyers refusing to slow despite efforts by the Chinese government to stop money moving offshore, many of these cities are getting desperate. And after years of occasional headlines, it appears the crisis has finally become dire enough for the mainstream press to start paying attention. To wit, government officials in Canada and Australia who spoke with the Wall Street Journal for a story about how Chinese homebuyers expressed concern that widespread foreign ownership has created bubbles in local real-estate markets. Even as Australia and New Zealand and some Canadian cities have raised taxes on foreign buyers, many are worried that home values will continue to climb, foiling policy makers best efforts to control them.

Since it passed an 8% foreign buyers tax last summer, Sydney says foreign buying hasn’t let up. Jon Ellis, chief executive of Investorist, an online portal for cross-border property transactions, said Chinese property buyers are an “unstoppable juggernaut”. In some markets with large Mandarin-speaking populations, locals can spot real-estate ads in Mandarin at bus stations and benches in the surrounding area. In response, Vancouver imposed a 15% foreign buyers tax back in 2016. When that didn’t work, city officials worked with the province on something more aggressive.

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“We’ll be fortunate if we can turn out brooms and scythes twenty years from now, let alone flying Teslas.”

The Summer of Discontent (Jim Kunstler)

The ill-feeling among leaders of the G-7 nations — essentially, the West plus Japan — was mirrored early this morning in the puking financial market futures, so odious, apparently, is the presence of America’s Golden Golem of Greatness at the Quebec meet-up of First World poobahs. It’s hard to blame them. The GGG refuses to play nice in the sandbox of the old order. Like many observers here in the USA, I can’t tell exactly whether Donald Trump is out of his mind or justifiably blowing up out-of-date relationships and conventions in a world that is desperately seeking a new disposition of things. The West had a mighty good run in the decades since the fiascos of the mid-20th century. My guess is that we’re witnessing a slow-burning panic over the impossibility of maintaining the enviable standard of living we’ve all enjoyed.

All the jabber is about trade and obstacles to trade, but the real action probably emanates from the energy sector, especially oil. The G-7 nations are nothing without it, and the supply is getting sketchy at the margins in a way that probably and rightfully scares them. I’d suppose, for instance, that the recent run-up in oil prices from $40-a barrel to nearly $80 has had the usual effect of dampening economic activity worldwide. For some odd reason, the media doesn’t pay attention to any of that. But it’s become virtually an axiom that oil over $75-a-barrel smashes economies while oil under $75-a-barrel crushes oil companies.

[..] There is also surprisingly little critical commentary on the notion that Mr. Trump is seeking to “re-industrialize” America. It’s perhaps an understandable wish to return to the magical prosperity of yesteryear. But things have changed. And if wishes were fishes, the state of the earth’s oceans is chastening to enough to give you the heebie-jeebies. Anyway, we’re not going back to the Detroit of 1957. We’ll be fortunate if we can turn out brooms and scythes twenty years from now, let alone flying Teslas. This will be the summer of discontent for the West especially. The fact that populism is still a rising force among these nations is a clue of broad public skepticism about maintaining the current order. No wonder the massive bureaucracies vested in that order are freaking out. I’m not sure Mr. Trump even knows or appreciates just how he represents these dangerous dynamics.

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Since this is their business model, period, it’s time to stop them.

Facebook Shared Sensitive User Info Via “Secretive” Data Deals (ZH)

If you feel like there’s been a new embarrassing revelation about Facebook’s privacy practices every day this week, well, you’re not entirely wrong. In the third bombshell report to drop since Moday, the Wall Street Journal is reporting that Facebook struck customized data-sharing deals with a select group of companies, granting several of them special access to user records well after the point in 2015 when Facebook said it had shifted its privacy policies in response to learning that a researcher had improperly taken Facebook user data and sold it to Cambridge Analytica. The unreported agreements were known internally as whitelists.

They reportedly allowed certain companies to access sensitive information like phone numbers and a metric called “friend that measured the degree of closeness between users and others in their network,” the people said. The whitelist deals were struck with companies as diverse as Nissan and RBC Capital. The deals represented Facebook bending over backwards to allow special data access to a broader universe of companies, many of whom were valuable advertisers. Others needed the access to wind down unfinished projects after the new developer regulations. But some were granted the special access for “unspecified reasons” that WSJ apparently couldn’t crack.

WSJ also raises further questions about who had access to the data of billions of Facebook users and why they had access – and, what’s more, why didn’t Mark Zuckerberg mention any of this during the Congressional hearings? Facebook said companies were granted this special access as something of a workaround after Facebook stopped granting unfettered access to developers in 2015. Many of the details published in the report appeared vague – for example, WSJ couldn’t pin down how many Facebook clients had been granted this privilege. Perhaps that’s why they published it after 4 pm Eastern on a June Friday.

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Pot and opioids. Many more questions than answers.

Canada First G7 Nation To Make Marijuana Legal (G.)

Even places that have already taken the legalization plunge are hoping Canada will solve some mysteries. After Colorado legalized marijuana five years ago, for example, organized crime reacted by ramping up supplies of “black tar heroin, opiates and harder drugs”, said Dr Larry Wolk, the state’s top public health official. But Wolk says he is interested to watch that process unfold on a bigger scale in Canada, where the new law is expected to deal a much more significant blow to the black market. Any new mix of illicit drugs in the country could have new effects on public health. “What’s the impact of marijuana legalization on the opioid crisis?” he asked as an example.

“Does it actually act as a substitute so that people can get off opiates for chronic pain? Is there a positive impact? Or is it a negative impact, because as a result there’s more opiates in the black market? Is [pot] a gateway? We don’t really have an answer.” One delicate balance for Canadian authorities has been guessing at what kind of pricing will be low enough to eradicate illicit sales – yet not so low as to entice new users. Canada’s finance minister, Bill Morneau, recently said the goal is “keeping cannabis out of the hands of kids and out of the black market. That means keeping the taxes low so we can actually get rid of the criminals in the system”.

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The end of Sessions as AG? We’ll take it. While thinking about all the young black kids whose lives have been screwed for small amounts of pot.

Trump Voices Support For Bipartisan Pot Legislation (Pol.)

President Donald Trump said Friday he “probably will end up supporting” bipartisan legislation to bar the federal government from interfering with marijuana legalization laws at the state level, putting him at odds with efforts by his own Justice Department to crack down on the substance nationwide. The bill, unveiled by Sens. Cory Gardner of (R-Colo.) and Elizabeth Warren (D-Mass.), lawmakers of two states that have voted to legalize certain types of pot use, would in effect give states the right to determine their own approach to regulating the drug.

Pressed on whether he supports the measure while addressing reporters outside the White House on Friday, the president said he supports it now and will “probably” support it going forward. “I really do. I support Senator Gardner,” Trump said of the lawmaker’s bill. “I know exactly what he’s doing, we’re looking at it. But I probably will end up supporting that, yes.” The remarks stand in contrast to the actions of his own Justice Department, which under the direction of Attorney General Jeff Sessions has moved aggressively to crack down on the proliferation of laws to decriminalize and legalize cannabis.

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The less news people read, the more exhausted they are?!

7 In 10 Americans Are Overwhelmed By News, More Among Republicans (ZH)

In a period in which most Americans feel mentally exhausted by news flow — from Facebook’s trending stories to Twitter’s hashtags to Trump’s spontaneous tweeting — and of course, how could we not forget, the mainstream media’s constant barrage of very fake news, approximately 70% of Americans feel “overwhelmed by the amount of news there is,” according to a Pew Research Center survey conducted from Feb. 22 to March 04, 2018. Nearly 68% of Americans feel mentally exhausted by the high-rate of news in the modern era, compared with just 30% of Americans who enjoyed the amount of news they get.

Pew said today’s “feelings of information overload” is similar to how Americans felt during the 2016 presidential election. While it certainly seems like Americans are consuming too much media, Republicans are experiencing more news fatigue than anyone else. Roughly 77% of Republicans and Republican-leaning independents are mentally drained from the constant bombardment of news headlines, compared with just 61% of Democrats and Democratic-leaning independents, said Pew. The report detailed that avid news watchers were less likely to experience mental fatigue than those who sparingly read headlines. For those who chase headlines “most of the time,” 62% reported psychological exhaustion, meanwhile, 78% of those who less frequently get news say they are overwhelmed.

The human brain which created this modern world is just not wired to process the vast amounts of information from news networks and social media. Americans are sleepwalking into a period of too much stimulation in tense periods, which could result in irrational decision making. America is stressed — its people are stressed — and there is just too much damn news. What could go wrong from here?

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That’s a surprise…NOT.

Berlin Still Has ‘No Evidence’ From UK That Moscow Is Behind Skripal Case (RT)

The German government has zero evidence from the British authorities that could back London’s claims that Moscow was behind the poisoning of the Skripals, German media reports. More than three months since the start of the probe into the poisoning of former Russian double agent Sergei Skripal and his daughter Yulia, the UK is still conspicuously tight-lipped when it comes to any real evidence that could prove its accusations against Russia. On Wednesday, the German government informed a parliamentary oversight committee during a closed hearing that it still has not received any evidence suggesting that Russia might well be behind the incident that took place in early March, German TV station RBB reports.

“It is [still] only known that the poison used in the attack was a nerve agent called Novichok, which was once produced in the Soviet Union,” Michael Goetschenberg, a correspondent of German ARD and an expert on security services, told RBB, commenting on the results of the hearing, which he is familiar with. Apart from this information, which was released by the British authorities soon after the incident, no new data on Russia’s alleged implication in this case was provided to Germany so far, he added. German intelligence has also found no Russian trace in this case so far, Goetschenberg said. “The BND, Germany’s foreign intelligence… has also contacted its own sources and tried to verify the information [about Russia’s potential involvement] in some way,” he told RBB, adding that it eventually failed to find any evidence pointing to Moscow as well.

Following the poisoning, which London blamed on Moscow using the now infamous wording “highly likely,” the UK and its allies expelled dozens of Russian diplomats, with Moscow giving a mirror response. Russia has categorically denied any involvement, and has complained that the victims were not allowed visits by Russian lawyers and diplomats, and the results of the investigation were kept secret. The Russian envoy to the UK has on several occasions alleged that London was even trying to “destroy” evidence in the probe.

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It is very easy for governments to simply ban the stuff. But for some reason they don’t. Selling the stuff and then asking people not to use it seems Kafkaesque. At best.

Tourists To Med Told To Ditch Plastic To Avoid Huge Rise In Beach Litter (G.)

Tourists are being urged to reduce their use of plastic as new figures reveal holidaymakers cause a 40% spike in marine litter in the Mediterranean each summer. Nearly all the waste created by the surge in tourism over the summer months in countries like Italy, France and Turkey is plastic litter, says WWF in a new report. In a matter of weeks over the holiday season the rise in plastic marine pollution contributes to the estimated 150m tonnes of plastic in the ocean. WWF said in its report the majority of plastic waste polluting the Mediterranean Sea comes from Turkey and Spain, followed by Italy, Egypt and France – countries to which more than 34 million British holidaymakers are preparing to travel this year.

Tanya Steele, chief executive of WWF, said holidaymakers were leaving behind a toxic legacy of plastic waste. “The birds, fish and turtles of the Mediterranean are choking on plastic … plastic is ending up in the fish and seafood we eat on holiday. “We’re asking people to think about how they can cut down on the amount of single-use plastic they use and throw away on holiday,” she said. Steele urges holidaymakers to drink tap water where it is safe to do so, refuse plastic straws and skip the purchase of inflatable pool toys. “We can all be part of the solution and not the problem,” she said. In Europe plastics account for 95% of the waste in the open sea, posing a major threat to marine life, says WWF.

After China, Europe is the second largest producer of plastic in the world, producing 27m tonnes of plastic waste. The continent dumps up to an estimated 500,000 tonnes of macroplastics and 130,000 tonnes of microplastics in the sea every year, the report says. But delays and gaps in plastic waste management in most Mediterranean countries mean only a third of the 60m tonnes of plastic produced is recycled. Half of all plastic waste in Italy, France and Spain ends up in landfills. Home to almost 25,000 plant and animal species – of which 60% are unique to the region – the Mediterranean holds only 1% of the world’s water but contains 7% of all of the world’s microplastic waste. Plastics have also been found in oysters and mussels, while crisp packets and cigarettes have been found in large fish, WWF says.

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“Shakespeare’s Ariel looked down into the ocean and saw “something rich and strange”; we look down and see our consuming society reflected back at us.”

Microplastics In Our Mussels: The Sea Is Feeding Human Garbage Back To Us (G.)

Shellfish are the natural filter systems of our seas, mechanisms of purity. So, to discover in a report released on World Oceans Day that mussels bought from UK supermarkets were infested with microplastic seems like a final irony in the terrible story of the plasticisation of the sea. According to the study by the University of Hull and Brunel University London, 70 particles of microplastic were found in every 100 grams of mussels. There’s a vital disconnection here – highlighted by the bottled water you drink to wash down your moules-frites, and the fact that 89% of ocean trash comes from single-use plastic. No sea is immune from this plague, nor any ocean creature, from the modest mussel or zooplankton to the great whales.

I have just returned from Cape Cod, where, due to pollution and other anthropogenic effects, the North Atlantic right whale may be extinct by 2040 – a huge mammal about to vanish from the sight of the shores of the richest, most powerful nation on Earth. On the pristine, remote Cisco Beach on Nantucket, I watched a grey seal watching me – only to realise the sleek pelage of its midriff was bound with an orange plastic bag. Last month, off St Ives in Cornwall, I saw a cormorant tugging helplessly at a monofilament of fishing line that had trussed its bill to its arched neck. The underwater photographer Andrew Sutton sends a selfie from Costa Rica: he is holding miles of illegal plastic long line, tangled like a grotesque bouquet.

From Sri Lanka to the Mediterranean, our summer holiday idylls become places of mortality. That we cannot look underneath what Herman Melville called “the ocean’s skin” is part of the problem. It is as if, defeated by the sea’s mystery, we punish it for defying our dominion. And so, it wreaks its revenge, feeding our own rubbish back to us. Shakespeare’s Ariel looked down into the ocean and saw “something rich and strange”; we look down and see our consuming society reflected back at us.

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