Mar 132025
 
 March 13, 2025  Posted by at 10:34 am Finance Tagged with: , , , , , , , , , ,  35 Responses »


James Ensor The frightful musicians 1891

 

Trump Is the World’s Worst Dictator (Joecks)
Moscow ‘Studying’ 30-day Truce Plan, Makes Steady Battlefield Gains (ZH)
Trump Envoy Witkoff To Present Ceasefire Deal To Russia This Week – White House (RT)
Kremlin Drags Its Feet On Ceasefire Deal As Armies Steamroll Ukraine (JTN)
US Discussed Territorial Concessions With Ukraine – Rubio (RT)
All The Pressure Is Now On Zelensky After Ceasefire Offer (Proud)
Free Trade: Ricardo’s Theory To Dispossess The British Aristocracy (PCR)
Medvedchuk Cautions Trump On Dealing With Kiev (RT)
Why Won’t Europe Step Up and Help Ukraine? (Victor Davis Hanson)
EU Accuses Trump of ‘Blackmailing’ Zelensky! (Pinsker)
800 Billion Euros of Delusional Promises (Dionísio)
This Is Literally The Worst News Democrats Could Get Right Now (Margolis)
Shutdown Schumer, the Shifty Democrats And a Government Standstill (Thorne)
Old Joe’s Fake Oval Office – and Its Fake News Apologists – Exposed (Victoria Taft)
Made in China 2025 – Revisited (Pepe Escobar)

 

 

 

 

One of his people was brutally murdered this week

Inflation

Maloney

 

 

Lavrov and the US new media

 

 

 

 

“Trump is one of the most successful men in the world, but he’s a complete failure at being a dictator.”

Trump Is the World’s Worst Dictator (Joecks)

Dictators crave power. President Donald Trump is using his power to give Americans more freedom. That’s a massive difference. Desperate to find an effective attack against Trump, some Democrats are recycling an old one. They claim he’s an authoritarian. Rep. Ayanna Pressley, D-Mass., invited laid-off federal workers to attend Trump’s recent speech to Congress. She said she was standing “shoulder to shoulder with people in defiance to a dictator.” That type of defiance led Democrats to callously withhold applause from a 13-year-old brain-cancer survivor simply because Trump introduced him. Shameful. Former Georgia gubernatorial candidate Stacey Abrams recently called Trump a “petty tyrant.” The Associated Press claimed that Trump “has embarked on a dizzying teardown of the federal government and attacks on long-standing institutions in an attempt to increase his own authority.”

These accusations aren’t new. Former President Joe Biden and Vice President Kamala Harris frequently labeled Trump a threat to democracy. Last year, historian Jon Meacham called Trump a “tyrant” who would cause the downfall of the American Republic. Trump has fed into this. After he attacked congestion pricing in Manhattan, the White House posted a picture of him wearing a crown. Trump said, “Long live the king.” While that was obviously not a serious claim to monarchical authority, it sent the propaganda press into a tizzy. Many Americans believe the worst about Trump as 41% of Americans say Trump is a dictator, according to a February YouGov poll. Those people aren’t just wrong–they have it backwards. Trump is doing the one thing dictators never do–reduce their own power.

It’d help to define some terms. Merriam-Webster says a dictator is “one holding complete autocratic control.” An autocracy is a “government in which one person possesses unlimited power.” Tyrant has a similar meaning–“an absolute ruler unrestrained by law or constitution.” Therefore, by definition, you can’t be a dictator while increasing freedom and shrinking the size and scope of government. It’s a contradiction. That’s what Trump is doing. He rolled back Biden’s target for electric vehicle sales. He’s unshackled the energy industry. He wants to undo Biden administration restrictions on dishwashers, shower heads and light bulbs. He’s ordered agencies to eliminate 10 previous regulations for every new one they put in place. He’s increasing freedom. He’s also pushing for a significant tax cut. Dictators aren’t known for wanting to let you keep more of your own money.

He’s laid off tens of thousands of federal workers. Another 75,000 federal workers took buyouts. The Department of Government Efficiency is attempting to reduce federal spending by more than $100 billion. He’s shrinking the government he runs. The Trump administration is even gearing up to eliminate the Department of Education. In early March, Education Secretary Linda McMahon laid out “our department’s final mission.” She wants “to send education back to the states and empower all parents to choose an excellent education for their children.” Indoctrinating a nation’s children is a powerful tool for any would-be dictator. Communist dictators wanted kids’ primary loyalty to be to the government. They sought to drive a wedge between children and their parents. Trump wants to give parents more control of their children’s education.

Now, Trump is governing aggressively. The executive orders have been fast and furious. He’s closed the border. He’s clearing out the deep state. He’s rooting out diversity, equity, and inclusion in the government. He’s recognized that men are not women. But an elected official changing government policy isn’t tyranny. That’s the point of having an election. It’d be tyrannical if an unelected, unaccountable bureaucracy could stop a democratically elected president from running the executive branch as he sees fit. Just look at the obstacles Trump faced in his first term. Trump is one of the most successful men in the world, but he’s a complete failure at being a dictator.

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For now it’s just some statements, they haven’t been given the “plan” yet.

Rubio was doing fine so far, but here he leaves the impression that if Russia doesn’t respond to a “plan” they don’t even know, it means they don’t want peace. Confused comments galore.

Moscow ‘Studying’ 30-day Truce Plan, Makes Steady Battlefield Gains (ZH)

The Kremlin says it is “studying” statements issued by the US and Ukrainian delegations following yesterday’s talks in Jeddah, and further describes Russian officials are waiting for a fuller briefing from the US on the proposal. The 30-day ceasefire plan calls for a halt to all the fighting on land, sea and in the air – which can be extended by mutual agreement, with a hoped-for path to a permanent truce based on negotiations in the interim. President Zelensky in a Tuesday X post said the ceasefire will apply to missile, drone and bomb attacks “not only in the Black Sea, but also along the entire front line” – though its as yet unclear what mechanism there will be to monitor this. The joint statement issued from Jeddah said the sides “will communicate to Russia that Russian reciprocity is the key to achieving peace.” Thus nothing will happen unless Moscow agrees.

Washington has agreed to lift the Trump ban on arms and intelligence for Kiev, while at the same Kiev and Washington agreed on inking a deal on Ukraine’s critical minerals “as soon as possible”. Russian state media is meanwhile reporting that President Putin is open to holding a telephone conversation with his US counterpart. On the potential for a new Trump call to discuss progress toward setting up negotiations and a truce, spokesman Dimitry Peskov said Wednesday, “We also do not rule out that the topic of a call at the highest level may arise. If such a need emerges, it will be organized very quickly. The existing channels of dialogue with the Americans make it possible to do this in a relatively short time.”

If it happens this would mark the second call since Trump’s inauguration, after the prior February 12 call. Theoretically this could lead to an in-person meeting between the two leaders if all goes well. Secretary of State Marco Rubio is traveling back from the meeting in Saudi Arabia, and gave some remarks to a press conference in Ireland:
• Deterrence against future attacks on Ukraine will be a crucial element of future negotiations.
• The US-Ukraine minerals deal benefits both nations and deepens Washington’s interest in Ukraine, but “I would not couch it as a security guarantee”.
• European sanctions against Russia will be part of the negotiations, making Europe’s involvement in the process essential.
• Any truce could be effectively monitored, but “one of the things we’ll have to determine is who both sides trust on the ground” to oversee it.

Ukraine continues to hold little to no leverage, given Russia is fast taking back its territory in Kursk as of mid-week. Over a dozen settlements have been liberated, and by all accounts Ukraine forces are in retreat there, also as Russian troops are currently in the center of Sudzha town. One regional source says that the Russian advance has been swift especially after one particularly daring operation: “Reports over the weekend claimed that 800 Russian special forces had crawled for 15 kilometers through an unused section of pipeline, which once carried Russian gas to Europe via Ukraine, in order to carry out a sneak attack on Ukrainian forces in Sudzha,” writes Moscow Times. These developments mean that Putin is even less likely to agree to any temporary pause in fighting. In January statements he had warned the Kremlin will not sign off on any temporary truces – given Ukraine could just use it to rearm, resupply, and regroup. Moscow has less incentive to sign onto a deal unless territorial concessions are part of it, given that at this rate it can just keep advancing in territory, particularly in the Donbass.

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“Steve Witkoff, the president’s special envoy, is making his way to Moscow this week again..”

Trump Envoy Witkoff To Present Ceasefire Deal To Russia This Week – White House (RT)

US President Donald Trump’s special envoy Steve Witkoff will be traveling to Moscow later this week to deliver the US ceasefire proposal for the Ukraine conflict, White House Press Secretary Karoline Leavitt said on Wednesday. US Secretary of State Marco Rubio and National Security Advisor Mike Waltz met with representatives from Kiev in Jeddah on Tuesday to discuss a diplomatic end to the Ukraine conflict. In a joint statement afterward, Ukraine agreed to a 30-day ceasefire, while the US resumed all military aid and intelligence sharing with Ukraine. Waltz held a phone conversation with his “Russian counterpart” on Wednesday to discuss the proceedings, Leavitt told journalists in a media stakeout at the White House. Trump’s envoy will be traveling to Russia in person, she added. “Steve Witkoff, the president’s special envoy, is making his way to Moscow this week again to urge the Russians to sign on to this negotiation,” Leavitt told Fox News on Wednesday.

Russia and the US will hold a “big meeting” on Thursday, Trump told reporters in the Oval Office. When asked about potential US leverage on Moscow to accept the ceasefire deal, the US president warned of “devastating” financial measures he could impose. Moscow is “carefully studying the statements that were made as a result” of the US-Ukraine talks, Kremlin spokesman Dmitry Peskov has said. He cautioned against making rushed statements, and stressed that Russia first needs to receive “detailed information” on the proposed ceasefire teased by Waltz on Tuesday. Moscow has previously opposed any temporary truce in the Ukraine conflict, saying that it would simply be a repeat of the ill-fated 2014-2015 Minsk agreements, which it claims were used by Kiev’s Western backers to rearm them.

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How can you “drag your feet” on a “deal” plan you’re not part of or party to?

Kremlin Drags Its Feet On Ceasefire Deal As Armies Steamroll Ukraine (JTN)

Kremlin spokesman Dmitry Peskov on Wednesday indicated that Moscow was in no rush to reply to the American-Ukrainian plan for a 30-day ceasefire, an announcement that came as Russian armies drove battered Ukrainian troops out of a salient in its own Kursk Oblast and appear poised to advance along the front. On Tuesday, Ukrainian diplomats reached an agreement with American officials to restore military aid and intelligence sharing to Kyiv in exchange for agreeing to an immediate, 30-day ceasefire deal that they would present to the Russians. That exchange followed a public squabble at the Oval Office between Ukrainian President Volodymyr Zelensky and President Donald Trump in which Zelensky was removed from the White House. Zelensky had been in Washington to sign a mineral resources deal that was not executed. Ukraine recommitted to the deal as part of the Wednesday deal.

“Look, you are getting a little ahead of yourself, we don’t want to do that,” Peskov told reporters about the ceasefire, according to Russian outlet RIA Novosti. “Yesterday, when talking to the press, both [Secretary of State Marco] Rubio and [National Security Advisor Mike] Waltz said that they would pass on to us detailed information about the essence of the conversations that took place in Jeddah through various diplomatic channels. First, we need to get that information.” A ceasefire proposal appears to be unpopular with some members of the Russian government, with high-profile politicians condemning the idea. State Duma Deputy Viktor Sobolev, a member of the Duma’s defense committee and notably, an opponent of the pro-Putin coalition, called a temporary ceasefire “absolutely unacceptable,” saying it would allow Ukraine to “regroup and rearm” and “play into the hands of” Kyiv.

Russian troops are currently advancing along the front and posting substantial gains against the Ukrainian military at the moment and a ceasefire would potentially bring that momentum to a halt. Ukrainian forces last year invaded Russia directly, carving out a large swath of territory in the border “oblast,” or region, of Kursk, centered on the city of Sudzha. That location became a cauldron for the Ukrainians as Russia stiffened its defense, and the region became decidedly unstable in recent weeks after the recapture by Russian forces of Sverdlikovo, exposing the Ukrainian flank. A daring operation by Russian special forces, moreover, saw personnel travel through a drained pipeline to attack the Ukrainian rear, which triggered a rout and led to the Russian recapture of Sudzha on Tuesday. Geolocation-based territorial maps show varying degrees of Russian control in the city.

Complicating matters for both sides is their history of dubious and short-lived ceasefires since the outbreak of the Donbas War in 2014. The Minsk I and II Accords both followed a decisive Ukrainian defeat on the battlefields of Ilovaisk and Debaltsevo, respectively. In those battles, Ukraine fought Russian-backed separatists and not the official Russian military. Both sides blame the other for violating both agreements. Explicitly pro-Ukrainian analyst Julian Ropcke, senior editor for security policy at Bild-Zeitung, a German-owned tabloid, highlighted that history and implied a ceasefire deal would lead to a repeat of those incidents. “Amazed to see people thinking a ceasefire deal would stop Russia’s war in Ukraine,” he wrote on X. “After signing Minsk 1 in September 2014, Russia pumped in more troops and kept advancing, capturing Donetsk airport and 20 more towns and villages. After signing Minsk 2 in February 2015, Russia further advanced and captured Debalsteve and five more villages.”

The Russians themselves previously ruled out a ceasefire, with Russian President Vladimir Putin stating last year that he would not accept a temporary agreement and would only allow a ceasefire after a lasting accord had been reached. Minister of Foreign Affairs of the Russian Federation Sergei Lavrov, meanwhile, downplayed the seriousness of a ceasefire proposal ahead of the Ukrainian meeting with the Americans on Tuesday. “Zelensky is saying publicly that he doesn’t want any ceasefire until Americans give him any guarantees that they will destroy Russia with nuclear weapons. It’s not serious,” Lavrov told reporters on a Russia Today webcast. In an interview with bloggers Mario Nawfal, Larry C. Johnson, and Andrew Napolitano published Wednesday, moreover, Lavrov insisted that Trump had no desire to provide Ukraine with security guarantees while Zelensky remained in power.

“He has his own view of the situation, which he bluntly presents every now and then that this war should have never started. That the pulling Ukraine into NATO, is a violation of its constitution, a violation of the declaration of independence of 1991,” Lavrov said. “On the basis of which we recognized Ukraine as a sovereign state for several reasons, including that this declaration was saying no NATO.” The terms of the deal itself remain unclear and the joint statement from the State Department and Ukrainian government did not offer much detail other than a proposal for an immediate 30-day ceasefire, during which they hope to hold negotiations with Moscow. At present, Russia maintains a swath of Ukrainian territory from the Khariv to Kherson Oblasts, providing a land bridge to Crimea, which it annexed in 2014. Russia formally annexed four more regions amid the war but does not fully control any of them. Secretary of State Marco Rubio suggested that the Ukrainians would likely have to give up some territory in a peace deal.

“The most important thing that we have to leave here with is a strong sense that Ukraine is prepared to do difficult things, like the Russians are going to have to do difficult things to end this conflict or at least pause it in some way, shape or form,” Rubio told reporters Tuesday. “I think both sides need to come to an understanding that there’s no military solution to this situation.” The state of the Russian economy has also appeared as a contributing factor. Trump previously threatened the Russians with additional sanctions if they refused to come to the table, though the scope of those sanctions and their potential impact remains unclear. “Based on the fact that Russia is absolutely ‘pounding’ Ukraine on the battlefield right now, I am strongly considering large scale Banking Sanctions, Sanctions, and Tariffs on Russia until a Cease Fire and FINAL SETTLEMENT AGREEMENT ON PEACE IS REACHED,” Trump wrote on Truth Social last week.

Conversely, some analysts believe Putin may use the ceasefire offer to drag out negotiations and demand greater concessions for a pause. Bloomberg News, citing an unnamed person “close to the Kremlin,” reported that he may demand an end to arms shipments to Ukraine. “Putin won’t give a hard ‘yes’ or a hard ‘no,’” Carnegie Russia Eurasia Center Senior Fellow Tatiana Stanovaya told the outlet. “Even in a fantastic situation where Putin makes some gestures toward a truce, it would still be a temporary one and with very harsh conditions.”

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“Moscow has repeatedly stated that the status of these regions is non-negotiable.”

US Discussed Territorial Concessions With Ukraine – Rubio (RT)

American and Ukrainian delegations discussed the issue of territorial concessions during their meeting in Saudi Arabia, US Secretary of State Marco Rubio confirmed on Wednesday. Representatives from Washington and Kiev met in Jeddah on Tuesday to discuss a path toward a peaceful resolution of the Ukraine conflict. Kiev claims sovereignty over Crimea, the Donetsk and Lugansk People’s Republics, and the Kherson and Zaporozhye regions. These territories officially became a part of Russia after each of them held referendums in 2014 and 2022. Moscow has repeatedly stated that the status of these regions is non-negotiable. After a nearly 9.5-hour meeting, the two sides released a joint statement in which Kiev agreed to a 30-day ceasefire while the US announced the resumption of military aid and intelligence sharing with Ukraine.

Speaking to journalists on Wednesday, Rubio, who took part in the meeting, was asked to disclose more details about what had been discussed and whether the issue of territorial concessions had been brought up. The secretary stated that “we had conversations” on the issue but declined to disclose specifics. He emphasized that the key point was figuring out what the negotiation process would look like and what issues would be on the agenda. Rubio called it obvious that the Ukraine conflict cannot be resolved militarily, and that “neither side can militarily achieve their maximalist goals” and that the only way to stop the fighting is through negotiations.

On Monday, ahead of the Jeddah talks, Rubio also indicated that Ukraine would inevitably have to relinquish the goal of regaining all the territory it claims in order to facilitate peace negotiations with Russia. “Obviously, it’ll be very difficult for Ukraine in any reasonable time period to sort of force the Russians back all the way to where they were in 2014,” the secretary told the New York Times. Moscow has not yet commented on the statement released by the US and Ukraine following the talks in Saudi Arabia, nor has it yet reacted to the proposed 30-day ceasefire. Kremlin spokesman Dmitry Peskov has stated that Moscow first expects to receive the details from the US, which should be sent in the coming days.

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“..it wants the big questions addressed front and centre. These include Ukraine’s aspiration to join NATO, the status of the four oblasts annexed by Russia since the start of the war and the protection of the Russian language in Ukraine.”

All The Pressure Is Now On Zelensky After Ceasefire Offer (Proud)

I assess that Russia will agree with the U.S. on a proposed ceasefire in Ukraine. This would put the ball back in Zelensky’s court to sign a peace deal that could destroy him politically and may give President Putin the security assurances he has sought for over seventeen years. In a quite remarkable turn of events, the BBC announced that Britain had helped the U.S. and Ukraine agree on the need for a 30-day ceasefire. This is spin of the most disingenuous kind. The UK has done everything in its power to prevent the possibility of ‘forcing’ Ukraine into negotiations on ending the three-year war. Indeed, just last week, a prominent UK broadsheet reinforced this point in a searing editorial. The British narrative for three years has been that, with sufficient support and strategic patience, Ukraine could impose a defeat on Russia. To use a British military phrase, that plan ‘didn’t survive contact with the enemy’.

Ukraine’s sudden collapse in Kursk, after Russian troops crawled ten kilometres through a gas pipeline that President Zelensky had, with much fanfare, shut down in January, was an astonishing defeat. It was astonishing because it revealed what many western commentators had said since August 2024, that seizing a small patch of land in Russia would turn out to be a strategic blunder for Ukraine. Since the Kursk offensive was launched, Russia has occupied large tracts of land in southern Donetsk, including several important mines and one of Ukraine’s largest power stations. The basic maths show a significant net loss to Zelensky over the past six months. The bigger picture proves that the overall direction of the war has been moving in Russia’s direction since the failed Ukrainian counter-offensive in the summer of 2023. In Ukraine itself, the vultures are already circling in the sky as the body of Zelensky’s now six-year presidential term approaches its final breath.

Arestovich was quick to call for Zelensky to resign after the damaging shoot-out at the Oval Office. Poroshenko has come out to say Ukraine has no choice but to cut a deal. Even Zelensky’s former press spokeswoman has called for peace and implied that the Ukrainian government tries to limit free speech on the subject of a truce. Team Trump is apparently talking to the egregiously corrupt former Prime Minster Yulia Tymoshenko about the future, heaven help us. The domestic political space for Zelensky to keep holding out with meaningless slogans like ‘peace through strength’, and ‘forcing Russia to make peace’ is rapidly closing around him. That Ukraine has come to the negotiating table at all is a sign that it has been given no choice, since America paused the military and intelligence gravy train. There is nothing in the Jeddah meeting that suggests any change in the U.S. position towards Ukraine.

All that the ceasefire does, if Russia agrees to it, is pauses the fighting. Indeed, it goes further than the unworkable Franco-Ukrainian idea to pause the fighting only in the air and sea, allowing Ukraine to keep fighting on the ground. Ironically, the Jeddah formulation favours Russia, as a partial ceasefire would have provided succour to the Ukrainian army which does not enjoy strategic air superiority, despite its mass drone attack on Moscow and other parts of Russia. The joint U.S.-Ukraine statement calls for Ukraine and others to ‘immediately begin negotiations toward an enduring peace that provides for Ukraine’s long-term security’. If Russia agrees to a ceasefire, the clock will start on 30-days of intensive talks aimed at delivering a durable peace. Russia has said consistently that it will not agree to a ceasefire only; it wants the big questions addressed front and centre. These include Ukraine’s aspiration to join NATO, the status of the four oblasts annexed by Russia since the start of the war and the protection of the Russian language in Ukraine.

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“Trump has spoken of substituting tariffs for the income tax. This is a brilliant thought. The income tax taxes labor and capital, factors of production. Thus income tax reduces GDP and living standards.”

Free Trade: Ricardo’s Theory To Dispossess The British Aristocracy (PCR)

In their book, Global Trade and Conflicting National Interests published in 2000 by The MIT Press, Ralph E. Gomory and William J. Baumol proved that the free trade theory with which economists today are still indoctrinated is false. Economists have done their best not to notice that a part of their repertory is invalid. A number of years ago I presented Gomory and Baumol’s analysis to libertarian economists at the Mises Institute. They didn’t like it, but they couldn’t confute it. Over the years I have called attention to the defective theory that economists hold close to their breasts, but it is unpleasant information that they don’t want to hear. With Trump’s talk of tariffs, the invalid free trade theory is being used as a weapon against Trump. Those on Wall Street who are indoctrinated with free trade have been driving down the Dow with their panic.

As for Trump’s tariffs, at the present time it seems that often they are threats leveled at specific countries to get them to do what they should be doing or to get them to give their help to Trump’s agenda. For example, the initial tariffs Trump announced against Mexico and Canada were withdrawn once the two countries agreed to police their borders with the US to help halt the flow of immigrant-invaders into America. It remains to be seen whether a full blown tariff system is put in place. The American market is a large one, and although US consumer demand has been weakened by the offshoring of middle class manufacturing jobs, debt expansion has kept the American consumer market going, and the US remains a lucrative market for foreign produced goods.

It is possible that tariffs could recover their historic role in the financing of the US government. The US government was financed over most of its history by tariffs. It was not until 1918 that the income tax passed in 1913 affected the population, so the US government has been dependent on income taxation only for about a century. As I have explained, the introduction of an income tax resurrected a form of slavery as it gave government ownership rights in our labor. The definition of a free person is a person who owns his own labor. Today people subject to an income tax are in the same position as medieval serfs who owed part of their labor to feudal lords.

Trump has spoken of substituting tariffs for the income tax. This is a brilliant thought. The income tax taxes labor and capital, factors of production. Thus income tax reduces GDP and living standards. Classical economists, unlike the present day “junk economists” as Michael Hudson correctly calls them, said, correctly, that consumption, not factors of production, should be taxed. That is what a tariff does. If you don’t consume goods produced in other countries, you pay no taxation. Countries once understood that being dependent on imports of necessities, such as food, was a threat to national existence. A country could be subdued by the cutoff of food.

The British had the Corn Laws (corn was the term for all grains–wheat, barley, oats) that protected English farmers. The Corn Laws protected the incomes of the landed aristocracy, Britain’s leadership class during the years that Britain was the world power. As income is a basis of power, the rising British middle class wanted the power that was in aristocratic hands. David Ricardo, a bourgeois financier, attacked the incomes of the landed aristocracy with his concocted free trade theory. The repeal of the Corn laws shifted power from one class to another. The bourgeois gained and the aristocrats lost, and the British became dependent on food imports. The repeal was followed by Death Duties that appropriated the estates of the aristocrats, thus destroying the leadership class of Great Britain. Look at the post-aristocratic leadership of Britain. What do you see?

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“What US President Donald Trump does not realize is that as soon as he gets rid of Zelensky… the Ukrainian political system will throw another clown at him..”

Medvedchuk Cautions Trump On Dealing With Kiev (RT)

US President Donald Trump will not be able to reach any kind of agreement with Ukraine’s Vladimir Zelensky, nor with any other politician from his circle who may eventually replace him, exiled Ukrainian opposition leader Viktor Medvedchuk has cautioned. Zelensky’s presidential term officially expired in May 2024 as he has refused to hold a new election, citing martial law imposed during the conflict with Russia. Trump reportedly insisted earlier this week that the Ukrainian leader should hold elections and possibly step down. Writing in an article for the ‘Other Ukraine’ news outlet on Wednesday, Medvedchuk – who was ousted in 2022 – suggested that removing Zelensky might not help achieve peace, as the country’s political system could produce another leader with similarly obstructive tendencies.

“What US President Donald Trump does not realize is that as soon as he gets rid of Zelensky… the Ukrainian political system will throw another clown at him,” Medvedchuk claimed. Medvedchuk cited the recent talks between Zelensky and Trump in the Oval Office, which escalated into an unprecedented public confrontation, as proof that there is a pervasive culture among Kiev’s pro-Western political factions that prioritizes self-interest. Trump and Vice President J.D. Vance ended up accusing the Ukrainian leader of disrespectful behavior, a lack of gratitude, and an unwillingness to pursue peace. “America’s problem is that it’s not just Zelensky who doesn’t understand how he disrespected Trump, but most of his entourage doesn’t… Ukraine’s pro-Western politicians are not accustomed at all to considering the interests of others,” Medvedchuk argued.

He went on to claim that “Zelensky’s Ukraine is raising citizens to be spoiled, hysterical, illiterate, infantile and irresponsible; they believe that everyone owes them, and that they never owe anything to anybody in return.” Medvedchuk was leader of the Opposition Platform – For Life party, formerly the second-largest group in the Ukrainian parliament, until his arrest in April 2022. The party was subsequently banned, and Medvedchuk was sent to Russia in September of that year in exchange for several POWs. He founded the Other Ukraine movement in 2023 and acts as chairman of its council. In January, Zelensky imposed sanctions against him.

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“We have 500 million people in Europe and they’re very upset that 330 million people across the ocean will not help 40 million people fighting 140 million people in Russia…”

Why Won’t Europe Step Up and Help Ukraine? (Victor Davis Hanson)

Europe is greeting Ukrainian President Volodymyr Zelenskyy as if he’s a rock hero and giving us all sorts of dramatic, melodramatic, psychodramatic pronouncements that they are going their own way because of the Trump isolationism, and sometimes it’s Trump Jacksonianism. They can’t count on us. And Ukraine was the catalyst. But let’s look at that issue for a moment. We have 500 million people in Europe and they’re very upset that 330 million people across the ocean will not help 40 million people fighting 140 million people in Russia. In other words, of all the players in this drama, it’s Europe who should be in the driver’s seat. They have 500 million people. And yet, when we look at their expenditures, nine countries out of the 32, 11 years later, have not increased their NATO contributions to 2%. What should they be doing? They should be meeting with the Trump administration and telling the American people why countries in Europe still won’t meet their military responsibilities.

They’re also running a $200-plus billion trade surplus with the United States. They need to tell us—instead of just saying, “We don’t want to get in a tariff war; Trump is a protectionist”—just explain to us why we in Europe believe that we deserve a $200 billion surplus each year with the United States. And maybe you could explain why your tariffs are not symmetrical with ours. We just need to know. We need to know that very quickly, in fact. Another thing we need to know from Europe that we’re not getting, besides their surplus and the inability for all the NATO nations to meet their responsibilities and their promises of 11 years ago, is what is the strategy for Ukraine? They’re very angry that President Donald Trump temporarily cut off some aid to Ukraine to urge Mr. Zelenskyy to consider a truce so he can negotiate a more lasting peace and stop the Stalingrad slaughter between Ukraine and Russia.

I don’t even mean between Ukraine and Russia. It’s basically caused by Russia’s invasion of Ukraine and they’re on the defensive, but Ukraine has not been able, strategically, to show a pathway to strategic resolution and victory. Again, my interest and your interest is, what’s the alternative position by Europe? Is it we have 500 million people, we’re going to rearm, we’re going to divide up tasks? Finns have great artillery. They will supply the artillery to Ukraine. The Swedes and the French have good air forces. They will supply the air cover. The Germans have a tradition of great tank-making. They’re not very productive in tank production today. But perhaps they’ll promise to send 500 tanks. And then outline a position or a trajectory or a pathway where they can force, apparently, Russian President Vladimir Putin all the way back to where he was either in February 2022 or maybe even 2014.

But we don’t get any of that. We don’t get anything but rah-rah talk that we’re all Europeans. We’re not Donald Trump. We’re going to stick together. We’re going to put boots on the ground. We have what? Logistical capacity, armor, air force. Why can’t they just get together and get an exact, detailed plan of military wherewithal, coupled with a strategy, coupled with a renewed commitment to meet their NATO promises, coupled with an explanation to the American people why they feel that $200-plus billion trade surplus is essential to Europe’s survival and it is not a result of asymmetrical and unfair trade practices? That’s all we’re asking for.

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“They want a peace guarantee that’s backed by American blood..”

EU Accuses Trump of ‘Blackmailing’ Zelensky! (Pinsker)

Yesterday’s pacifists are today’s Rambos, it seems: 442 lawmakers in the 720-seat European Parliament just agreed to a joint declaration that “strongly deplores any attempts at blackmailing Ukraine’s leadership into surrender to the Russian aggressor for the sole purpose of announcing a so-called ‘peace deal.’” It passed via landslide: 61%. Not all EU politicians supported the measure: Melonian Nicola Procaccini, co-chair of the Conservatives (ECR), had tried to delay the vote arguing that a strong stance by the chamber would risk undermining the delicate ongoing discussion between the United States and Russia on the conditions of the ceasefire that were agreed yesterday in Jeddah — on which the Kremlin has yet to officially comment — casting a negative light on the efforts of the star-studded administration.

But the parliament rejected his request, and thus the joint resolution submitted by EPP, S&D, ECR, Renew and Greens (which followed a debate last February) passed with 442 votes in favor, 98 against and 126 abstentions. Which means, less than 14% of our “friends” in the EU had the testicular fortitude to oppose this brazenly anti-American statement. Thanks, guys. But perhaps we’re being unfair. Perhaps the EU genuinely, sincerely opposes browbeating a democratic nation — especially one that was just invaded and attacked! — into accepting a permanent, immediate, and unconditional ceasefire. Perhaps this isn’t another example of our European “friends” acting selfishly and cowardly, but a heartfelt moral position. Nah: Fun Fact: Just one year ago, this is the same European Parliament that demanded Israel commit to a ceasefire in Gaza!

Hypocrisy, thy name is EU: The European Parliament was able to call for a permanent, immediate, and unconditional ceasefire in Gaza only last month, on February 28, over 140 days after the genocidal war began. On that day, at the initiative of the Left, the European Parliament’s plenary in Strasbourg amended the 67th article of the 2023 Report on the ‘Human Rights and Democracy in the World and the European Union’s policy on the matter’ to include the call for an “immediate and permanent ceasefire in Gaza, allowing uninterrupted access to food and water for its inhabitants.” [emphasis added] It raises the very obvious question: Israel was attacked by invaders, too. Why is it moral and just to impose a ceasefire on Israel, but “blackmail” to do so to Ukraine? As Politico reported today:

“The European Parliament on Wednesday accused the Trump administration of “blackmailing” Ukraine’s leadership into capitulating to Russia with a forced ceasefire, and denounced Washington’s decision to leave the European Union out of negotiations.” It’s unclear why the European Parliament insisted on using the word “blackmailing.” We’re not threatening to disclose harmful information about Zelensky. Besides, how do you blackmail a guy who’s already been videotaped [playing piano with his dick]: Usually, the “victim” of blackmail is the one who lost his money. Not here: The EU is claiming that Zelensky was blackmailed because Trump DIDN’T pay him. It doesn’t make much sense.The Politico article continued: “The statement also condemned as “counterproductive and dangerous” the current attempts by the Trump administration “to negotiate a ceasefire and peace agreement with Russia over the heads of Ukraine and other European states.”

Russian President Vladimir Putin, they added, was being “rewarded” for Moscow’s ongoing three-year invasion of Ukraine. Even after all these years, Europe’s level of entitlement never ceases to astonish. What Ukraine and the EU really want is an American war guarantee. When you strip away the diplomatic niceties and coded language, Zelensky’s tantrum and EU’s fury can all be boiled down to this: They want a peace guarantee that’s backed by American blood. And because Trump doesn’t believe a Ukrainian war guarantee would “Make America Great Again,” he’s trying to find an off-ramp that averts World War III. He’s trying to stop a war between a nuclear superpower and a near-west ally that’s already cost 1.5 million lives.

By any objective standard, that’s a laudable goal. (If this had been Obama doing the negotiating, the Nobel Prize committee would’ve called an emergency meeting and earmarked him the next 10 awards.)Yet the EU not only objected, they actually called it “blackmail!” Sigh. If only they were willing to stand up to Putin like they stand up to Trump. Because the EU will do everything they can to protect Ukraine… just as long as they don’t have to do any of the fighting themselves.

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“..the EU will discuss proposals to exclude military spending from the limits imposed by the Stability and Growth Pact..”

800 Billion Euros of Delusional Promises (Dionísio)

Von der Leyen has accustomed us to her grandstanding nihilism and disconnection from reality. Listening to her, one might sometimes get the impression that she sees herself as a kind of a god of creation, capable of transforming everything into matter with the mere power of her words. But of course, this is not true! The Russian economy has not collapsed in “tatters”; in fact, it has shown remarkable resilience, with wages growing at their highest rate in 16 years (a 21.6% increase compared to March of last year, and an 11.3% real growth after inflation—a dream for any Portuguese citizen), with the average wage expected to reach $1,113 by 2025, while everything remains cheaper than in any EU country.

It is also not true that the Russians have been stripping semiconductors from washing machines, nor is it true that the G7 has blocked Russian oil exports with their oil caps. In fact, Russia has never exported as much oil as it does today. The broker Ursula von der Leyen was also wrong when she claimed that the U.S. had the cheapest LNG—why would Trump want to lower prices now?—urging European countries to buy more shale gas, in violation of the European corporate sustainability directive, which requires suppliers to comply with environmental sustainability rules. As is well known, shale gas is extracted through fracking, a method highly damaging to the environment and banned in the EU. It seems that for the unelected president of the European Commission, directives are applied according to her whims.

But the latest delusion from the European Commission president is the announcement of a “massive boost”—as she loves these Americanized propaganda slogans with supposed creative power—to European military spending, which has already been increasing over time, but now she proposes to raise it by an additional 840 billion euros. It’s worth noting that she was Germany’s Defense Minister, during the scandal involving the sale of Trident submarines to Portugal, a deal that led to the imprisonment of several intermediaries. During that time too, von der Leyen, when investigated about several businesses, said that she lost the cellphone which helped her avoid jail. Similarly, during her time at the European Commission, she was involved in the vaccine procurement scandal. Certain character traits never disappear, and it’s a pity that these are the traits that determine who gets chosen for such positions. To our detriment.

Of course, the European Commission president could have proposed, instead, a massive diplomatic effort, a vigorous and mobilizing movement for world peace, a series of proposals for disarmament and the reduction of military stockpiles. Would it have worked? Maybe not, but as a leader of a vast population and the guardian of the keys that unlock the doors to death, it was her duty, first and foremost, to make every effort to negotiate not just peace, but a relationship of unity and cooperation across Europe, promoting prosperity and improving the living conditions of its people. Wouldn’t this be expected of any leader who claims to be democratic, humanistic, and a lover of freedom? The first step should never be to deepen the war.

She could even blame Vladimir Putin, demonizing him to unimaginable levels, but always keeping her feet on the ground and acknowledging the enormous responsibility she claims to bear: the guardian of the free world. A “guardian of the free world” is expected to make every effort to preserve that freedom. Instead, von der Leyen has done everything to erode and erase it from the map. Instead of setting an example of elevating and exalting our civilizational values, the European Commission and all the actors parading around the European Council have chosen to adopt a rigid, backward, isolationist, and sectarian stance. “I won’t move from here,” “I won’t talk to them,” “I won’t even think about them!” The EU is the only bloc today that behaves this way, except for Israel with the Palestinians. This should give us much to think about.

But this isn’t even the biggest problem with von der Leyen’s proposal. I’m not even talking about the arbitrariness of a commission composed of unelected bureaucrats proposing draconian rearmament plans, which the Council approves almost unanimously, without criticism, except for Orban. It’s more than that. Von der Leyen doesn’t have the authority to approve such a thing, nor can she force member states to spend this money, or compel them to approve eurobonds that would allow such a magnitude of debt. I’ve mentioned in other articles that by 2026, with a military budget exceeding 600 billion euros, the EU and its member states will already be close to spending 3-4% of GDP on armaments, as Trump desires—the same Trump they claim not to align with. With this increase proposed by von der Leyen, 5% of GDP would be guaranteed.

The truth, however, is that when we look at the proposals, we see that what’s on the table is a line of credit, available to member states, worth 150 billion euros, with the remaining amount coming not from the “European Union,” but from the member states themselves. To facilitate this, the EU will discuss proposals to exclude military spending from the limits imposed by the Stability and Growth Pact, allowing increased investment in armaments to not count toward deficit or public debt limits. In other words, if it’s for weapons, states can borrow as much as they want.

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“..the news of lower inflation..”

This Is Literally The Worst News Democrats Could Get Right Now (Margolis)

The left’s desperate attempts to paint Donald Trump’s second term as an economic disaster are crumbling faster than Hunter Biden’s art career after his daddy left office. After spending four years gaslighting Americans about “Biden’s amazing economy” while families struggled to put food on the table, Democrats have suddenly discovered that inflation exists — and they’re trying to pin it on Trump. How convenient. House Minority Leader Hakeem Jeffries (D-N.Y.) recently embarrassed himself on ABC News when he claimed, “Donald Trump and Republicans consistently promised that they were going to lower the high cost of living, and they’ve done the exact opposite.” That’s not what the facts say at all. Remember when the left couldn’t stop squawking about egg prices? Well, those same Democrats are mysteriously quiet now that egg prices have plummeted.

After reaching an all-time high of $8.17 per dozen in early March, egg prices have plummeted to $5.51. Democrats will be sad to know that this is below the $7 average price when President Trump took office in January. But that’s not all — gas prices have dropped for three straight weeks. Funny how we’re not seeing wall-to-wall media coverage of these positive developments. The Democrats’ economic fearmongering hasn’t aged well. Their claims that Trump would cause runaway inflation have been proven laughably wrong. For Our VIPs: Sorry Dems, but the Trump Recovery Is Underway. The latest economic data shows inflation cooling to 2.8% year-over-year in February, with monthly inflation at just 0.2% — both numbers came in below expectations.

Even CNN had to swallow their pride and report on these positive developments. CNN’s Matt Egan had to concede that the latest economic report was “good news on the economy,” and he emphasized that inflation is “really the number one issue for many Americans.” He noted that both the annual and monthly increases were “a step in the right direction, and both were better than expected.” “This is definitely very encouraging to see,” Egan continued, adding that it is going to “relieve some fears that inflation was perhaps reaccelerating.” He pointed out that February’s report “actually breaks a streak of four straight months… where the inflation rate was going in the wrong direction, right? It was going higher and higher. Finally, we’re seeing it dip.”

Americans may finally be seeing some relief from Bidenomics. Remember how Democrats were lamenting the recent stock market woes? The market has rallied in the wake of the news of lower inflation. This is exactly why Americans are turning their backs on the Democrats’ economic policies. While Biden and his cronies were telling us to lower our expectations and accept sky-high prices as the “new normal,” Trump has been delivering actual results. The stark difference between Democrat rhetoric and reality couldn’t be clearer. Maybe it’s time for Democrats to admit what the rest of us have known all along: their economic policies failed miserably, and Trump’s America First approach delivers results for working families. But don’t hold your breath waiting for that admission — they’re too busy planning their next round of failed talking points.

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Smells like lawfare.

Shutdown Schumer, the Shifty Democrats And a Government Standstill (Thorne)

D.C. Democrats have always ruled the shutdown game. When they are in charge of Congress, they are positively allergic to passing a budget, let alone a balanced one. They prefer to clobber Republicans over the head with shutdown showmanship, ultimately getting their spendthrift way while reaping the fringe benefit of demolished approval ratings for their rival party. Here’s how it works: Democrats sit on their hands and do nothing about spending until the budget deadline looms. Once they are operating in a time-crisis setting, Democrats put forth a grotesque, bloated, and usually immoral omnibus spending bill rife with grift for their friends and economic incontinence. Republicans naturally recoil at this abomination and refuse to vote for it. Democrats and their media allies then bray that Republicans are obstructionists.

If the deadline passes without an agreement, the blame is uniformly heaped upon the Republicans. It is always they, never the blameless Democrats, who shut down the government by refusing to pass the perfectly good spending resolution the Democrats produced. If there is a Democrat president, he does his part by making the shutdown as absurdly public and painful as possible. Who can forget Barack Obama somehow finding employees who were magically exempt from furlough to put up fences around open-air monuments and parks? And to enforce closure of 1,100 square miles of open ocean off the coast of Florida? The compounded applied pressure — generally combined with a greasy offering of pork — is intense enough to shake loose just enough persuadable Republicans to pass everything the Democrats want.

In fact, Republicans were savaged and rolled with this technique enough times that after a while, all the Democrats had to do was threaten to shut down the government to get enough GOP senators to capitulate. But things are different now. Democrats aren’t in power in Congress or the White House, and their media arm has finally lied itself out of relevance. On Tuesday, the Republicans in control of the U.S. House passed a continuing resolution that would keep the government running until this summer — without profligate spending increases — and passed it along to their colleagues in the Senate. Senate Minority Leader Chuck Schumer took to the floor Wednesday, still trying to play the Democrats’ game of blaming the Republicans for his party’s obstructionism. “Funding the government should be a bipartisan effort,” droned Schumer dolorously.

But alas, those dastardly Republicans “chose a partisan path, drafting their continuing resolution without any input — any input! — from congressional Democrats. Because of that, Republicans do not have the votes in the Senate to invoke cloture on the house CR.” Republicans brought this shutdown upon themselves, you see. Meanwhile, said Schumer, the virtuous Democrats were “unified on a clean April 11 CR that will keep the government open and give Congress time to negotiate bipartisan legislation that can pass.” Finally, he expressed his fervent hope that “our Republican colleagues will join us to avoid a shutdown on Friday.” But somehow, the blame does not seem to be falling on the Republicans this time. “With Schumer saying that Democrats are not ready to proceed, the Democrats hold the cards,” explains ABC News Delaware affiliate 6ABC. “If they do not furnish the votes to clear this procedural hurdle and get on to the bill, things could be at a stand still, and a shut down could be on the horizon.”

Meanwhile, House Democrats are urging their Senate colleagues to vote no on the funding bill they almost unanimously opposed when it passed through the House on Tuesday evening. “House Democrats are very clear. We’re asking Senate Democrats to vote ‘no’ on this continuing resolution, which is not clean, and it makes cuts across the board,” said Vice Chair Ted Lieu, flanked by five other members of House leadership at a press conference at the Issues Conference at the Lansdowne Resort. Lieu’s comments came before Schumer pushed for a 30-day clean stopgap bill. House Minority Leader Hakeem Jeffries said that conversations are “continuing” with Schumer all the way down to rank-and-file Democratic members about keeping the Democratic caucus united against the bill. “The House Democratic position is crystal clear as evidenced by the strong vote of opposition that we took yesterday on the House floor opposing the Trump-Musk-Johnson reckless Republican spending bill,” Jeffries said.

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Was anything not fake?

Old Joe’s Fake Oval Office – and Its Fake News Apologists – Exposed (Victoria Taft)

Joe Biden’s stage set is to the Oval Office what Dylan Mulvaney is to women: completely fake. We know that now, but there was a time when the media said all claims that Joe Biden was working from a virtual or fake Oval Office were considered to be “fake news.” Now, with Trump White House adviser Alina Habba personally finding the fake Oval Office set and showing it to the public in a video, people are discovering the story all over again. From January through September 2021, Joe Biden’s water carriers in the media went out of their way to “debunk” the claims that he was doing appearances from a phony Oval Office, a Hollywood-like set. Here’s a Reuters “fact check” that gives you an idea of how completely in-the-bag the White House media were for the man who ran for president from a set in his basement.

“Social media users have shared photos of President Joe Biden in the Oval Office, claiming they provide proof that the office is fake or a film set. The “evidence” includes a supposed change in wallpaper, allegedly darkened windows and claims that former President Trump is walking in the background outside the office. Reuters has examined each of these photos and found none of the claims to be true.” Reuters’ “debunking” went on to link Facebook posts that are no longer available, probably because Mark Zuckerberg’s social media platform instituted censorship on all posts that were from “right wing” sources that took a verbal shot at the man “saving democracy:”

“As so-called evidence, the post includes a series of photos [it] says show that Trump can be seen in the window behind Biden; the color of the rug has changed from Trump’s Oval Office; there is a tank outside the window; the background in the windows behind Biden does not match that of Trump’s Oval Office (here, here); the windows are darkened; the wallpaper is not the same as Trump’s Oval Office; and the post also includes photos of Oval Office movie sets”. When Politifact was at the center of the censorship industrial complex, it, too, “fact checked” the claim in its usual way; it took the claim, changed it, fact-checked the change, and pronounced the whole thing to be false. Here’s Politifact: “Since President Joe Biden was inaugurated in January 2021, false claims that his presidency is staged have proliferated online. We’ve debunked social media posts that a White House event was filmed at Tyler Perry Studios in Atlanta, and that his administration created a fake set for him to get a booster shot.”

Neither was true. Remember: the original claim was that Biden had a fake Oval Office. Charlie Kirk of Turning Point USA took a victory lap when he saw the Biden Administration optics as Joe got a COVID shot on a set: Here’s another Politfact fact check from September 2021 listing a Facebook meme as false. The headline reads, “No, White House didn’t create fake set just for Joe Biden’s booster shot.” The supposed fact-checking outfit was looking into a meme featuring a photo of Joe getting a COVID shot on the Hollywood-style set that said, “[The White House] created a fake set for (President Joe) Biden to get his booster shot. The entire Biden presidency is one giant charade.” You can see what they did there. The claim was that the Oval Office with the COVID shot was fake.

Politifact conflated that claim with the poster’s opinion that the “entire Biden presidency is one giant charade” and then denounced the whole thing as false. (Later, when proven wrong, Politifact went back and changed its fact check to include a revised version of the story it got wrong in a highlighted box with an “If your time is short” prompt to keep eyes off its incorrect story). Have I ever told you about Politi”fact”, as I call it, fact-checking a claim I made on the radio and my website about bike lanes in Portland? I provided photos and everything. The Politi”fact” reporter checked my claim and pronounced me a liar. When I called her out, the fake fact checker admitted that she checked when it was dark so she couldn’t see properly to verify my claim. She never removed her fake “fact check.”

And then, in October 2021, Newsweek tried to paper over Fourth Estate’s fake news about the Hollywood set in a clean-up piece entitled, “Why the White House Built a Fake Oval Office for Joe Biden.” There, the reporter pacified, “But there is a logical explanation as to why the White House has decided to construct a set version of the Oval Office.” This is the back story that Alina Habba referred to when she sent this video from the fake Oval Office this week. The fake Oval Office production set is in the Eisenhower Executive Office Building, which is part of the White House complex.

This map is from the White House tour office. Note how close the West Wing is to the Eisenhower Executive Office Building.

Since it’s so close to the Oval Office (and probably accessible via tunnel or shortcut, but that’s classified), I propose liberating the rooms used by White House Correspondents in the West Wing and relocating the media to the auditorium in the Eisenhower Executive Office Building, where the fake Oval Office is. Move them all, offices and press room — the whole shebang. The West Wing is crammed full as it is, so why not move the fake news to the fake Oval Office?

Read more …

“Made in China 2025” is a plan from 2015.

Made in China 2025 – Revisited (Pepe Escobar)

Now let’s focus on China’s extremely complex domestic equation. At the opening of the Two Sessions, Premier Li Qiang came up with a rallying call for the whole nation to rise up to a series of “very challenging” goals, including growth of 5% in 2025 (it was 4.9% last year). Essentially, to revitalize the economy, Beijing will issue 1.3 trillion yuan (around US$182 billion) in ultra-long special treasury bonds. The deficit-to-GDP ratio was set at around 4%. The official policy of “opening up” will reach the internet, telecoms, healthcare and education industries – meaning more opportunities for foreign investors and possible partnerships up and down the industrial supply chain. All those moving parts of the ambitious Made in China 2025 tech project will be on overdrive: AI, smart terminals, the Internet of things, 5G, plus a new mechanism set up for “future industries” to support hi-tech domains,including biomaterials manufacturing, quantum technology, embodied intelligence and 6G.

Premier Li enthusiastically praised the role of regional growth drivers such as the Greater Bay Area – the super high-tech cluster in Guangdong province linked to Hong Kong. Predictably, he extolled the “one country, two systems” model and the further economic integration of both Hong Kong and Macau. Arguably this is the best analysis anywhere not only of why Hong Kong-based CK Hutchinson had to get rid of its port operations in the Panama Canal, but also because it offers a crisp Chinese evaluation of the “three powers” behind Trump 2.0: Wall Street, heavy industrial capital (energy, steel, mining) and Silicon Valley. CK Hutchison Holdings, founded in Hong Kong by notorious tycoon Li Ka-shing, essentially had to sell 80% of Hutchison Port Group, a subsidiary that owns 43 container ports in 23 countries, including a 90% stake in the Balboa and Cristobal docks at either end of the Panama Canal, because of hardcore geopolitics. Hutchison will continue to control its ports in China, including Hong Kong.

President Trump made a huge fuss about the BlackRock-led deal. The view in Hong Kong is more pragmatic. Hutchinson was not eager to engage in a furious court battle in US courts – not to mention potential sanctions. So they chose to opt for a “strategic exit”. Premier Li noted how consumption in China now is “sluggish” and, somewhat euphemistically, how there were “pressures on job creation and income growth”. Enter a promised “vigorous boost” to household demand, plus the creation of 12 million new urban jobs, with help focusing on fresh university graduates and migrant workers. In parallel, Beijing will expand its military budget by only 7.2% in 2025, reaching roughly 1.78 trillion yuan (US$ 245 billion). That’s not much compared to the Pentagon budget.

It’s quite enlightening to observe the proposals of the Two Sessions – and the tone-setting by Wang Yi – in relation to the analysis by a certified Asian star such as former Singaporean ambassador to the UN Kishore Mahbubani.
Kishore once again resorts to Sun Tzu, explaining how Chinese rulers always privilege the best way to win as not fighting kinetic wars. What matters is to coordinate expansion – epistemologically, educationally, economically, industrially, techno-scientifically, financially, diplomatically, militarily – under the aegis of deterrence. The bottom line is that Beijing will not be trapped by any possible, bombastic provocation coming from Trump 2.0. Once again, it’s all about “coordinated expansion”.

Example. The Australian Strategic Policy Institute, partly funded by the Australian military, and frankly Sinophobic – and Russophobic – at least did something useful by developing a Critical Technology Tracker of 64 current, critical technologies. This is their latest report, from August 2024. It shows that between 2003 and 2007, the US led in 60 of 64 technologies. China led in only 3. Cue to between 2019 and 2023: the US led in only 7, whereas China led in 57 – including semiconductor chipmaking, gravitational sensors, high-performance computing, quantum sensors, and space launch technology.

All that is inextricably linked to the successful planning – and achieved targets – of Made in China 2025. Talk about two five-year plans back to back (Made in China was conceived in 2015). So this is what China 2025 will be all about: serious investments coupled with lots of partnerships with the whole Global South. Once again, in a sort of Sun Tzu framework tweaked by Bruce Lee, China is bound to use Trump 2.0 and the coming mix of confrontation, competition and periodic negotiation as a trampoline to expand its global reach even further. That might be one of the unstated meanings of what Xi Jinping told Putin in Moscow nearly two years ago: “Changes unseen in a century.” Beijing will be sure to find shelter from the storm – any storm. And without having to fight a single kinetic war.

Read more …

 

 

 

 

Mother and son

Humming rain

Puli

 

 

Book of Enoch

 

 

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Dec 232018
 
 December 23, 2018  Posted by at 5:52 pm Primers Tagged with: , , , , , , , , , , , ,  10 Responses »


Diego Velázquez The Spinners 1655-60

 

Dirk Kurbjuweit, deputy editor-in-chief of Germany’s Der Spiegel magazine for the past 4 years, unwittingly put his foot a mile deep in his mouth this week when he reacted to a letter written by US Ambassador to Berlin Richard Grenell. His reaction presents perhaps the most perfect example of the downfall of news, journalism, the media in general, that we’ve seen so far. Most perfect among very stiff competition.

After Der Spiegel itself this week ‘outed’ its award-winning star reporter, Claas Relotius, as someone who had made up many of his lauded articles from scratch, Grenell suggested the magazine, and especially its editorial staff, shouldn’t think they can get away with putting all the blame on just this one guy. He tweeted:

We value policy criticism. We love a free press. But @Spiegel literally fabricated stories saying people (Americans) were racist & xenophobic. They made up events, details, & lies – and no editor checked the stories. Every real journalist should be outraged by this.

And he wrote a letter to Der Spiegel, albeit addressed at the ‘wrong’ editor, Steffen Klussman, who won’t be in the post until after Jan. 1:

The recent revelations of completely fabricated stories, completely fictional people and fraudulent details in Spiegel over the last seven years are very troubling to the US Embassy. These fake news stories largely focused on US policies and certain segments of the American people. It is clear we were targeted by institutional bias and we are troubled by the atmosphere that encouraged this recklessness.

While Spiegel’s anti-American narratives have expanded over the last years, the anti-American bias at the magazine has exploded since the election of President Trump. We are concerned that these narratives are pushed by Spiegel’s senior leadership and reporters are responding to what the leadership wants.

This is where Dirk Kurbjuweit’s foot enters his mouth, stage left, and starts its long journey down:

It is true that one of our reporters in large part fabricated articles, including reports from the United States. We apologize to all American citizens who were insulted or denigrated by these articles. We are very sorry. This never should have happened. In this case, our safeguarding and verification processes failed. We are working hard to clarify these issues and improve our procedures and standards.

I would, however, like to counter you on one point. When we criticize the American president, this does not amount to anti-American bias – it is criticism of the policies of the man currently in office in the White House. Anti-Americanism is deeply alien to me and I am absolutely aware of what Germany has the U.S to thank for: a whole lot. DER SPIEGEL harbors no institutional bias against the United States.

Of course, first of all, Grenell is right, if you let someone write fake stories for 7 years and your editors, which included Kurbjuweit himself, don’t catch one single lie, it looks like you’re letting the fabrications ‘slip through’ on purpose. As Grenell implies, it looks like the entire magazine is/was trying to fabricate the news, not report on it.

But that’s not where Kurbjuweit’s foot is in his mouth. That comes in the second paragraph . Where he effectively says that criticizing America and Americans, including through fully fabricated stories, does not constitute an anti-American bias. Instead, he says, Der Spiegel simply suffers from Trump Derangement Syndrome. In other words, not an anti-American bias, but an anti-Trump bias.

And that, in his view, is apparently fine. And though it is of course not, certainly for an editor of a magazine that has (make that had) a reputation to uphold, who can really blame him? In the American press, all he sees is Trump Derangement Syndrome all the time, in at least 90% of the media. So how can anyone blame a German editor for doing what the New York Times and CNN do 24/7?

The problem with all of this obviously is that all these news outlets are supposed to report the news, and none of them do anymore. They ‘report’ the opinions of their editors and ‘journalists’, and if these people don’t like whoever it is the American people elect as their president, it’s open season.

American media has made it acceptable for foreign media to write fake articles about the US president, which means ridicule of the Office of the President is fine too, and thereby the process by which he was elected. Re-read Kurbjuweit’s statement, that is what he says.

This is a sort of new normal that may well be the main legacy of 2018. It’s where the surge of social media and the internet in general have led us. In the process, they’ve swallowed the truth whole, and we may never see it again.

The truth is not a winning proposition. Fabricating stories and narratives and using them to string readers and viewers along like a modern version of the Pied Piper is a much bigger winner than the truth, and they’re all waking up to this new reality.

 

Der Spiegel’s response to being exposed as liars is to pretend to be open about it, but only by blaming one individual, while sparing the editors who let him roam free for 7 years.

The Guardian, which ran a fabricated story about meetings between Paul Manafort and Julian Assange in London’s Ecuadorian embassy a few weeks ago and was also exposed, has chosen a different approach: they attempt to smother the truth in silence. Both the writers of the story and editor-in-chief Kathy Viner, responsible for publishing blatant lies and fabrications are still on the payroll, there’s been no retraction and no apologies.

But there’s a flipside to this kind of thing. If you try to get away with murdering the truth the way Der Spiegel and the Guardian have done in these two instances, who’s going to read you next time around if they want to know what really happens, and take your words as true? No-one in their sound mind. So it’s necessarily a short term strategy.

Still, while it lasts, it’s profitable. And it’s mighty contagious too. If and when the foreign press no longer feels any qualms about admitting they suffer from Trump Derangement Syndrome, that is because US media have paved that road for them. Before the internet fueled its (dis-)information explosion, this would have been impossible.

It makes you wonder where this will go in 2019. What’s already evident is that you can’t believe your trusted news sources anymore. And it’s not a matter of some articles being true and some not; nothing published by Der Spiegel and the Guardian can be taken for granted as true from here on in, both are done as reliable news sources. Because they’ve been exposed as having lied on purpose, and only once is enough.

Same goes for many of the formerly trusted US MSM. And that should really, really make you wonder where this will take us in 2019. Truth is eroding faster than you can keep up with, and it’s your once trusted voices that lead the erosion. Where are you going to get your news? What and who can you trust?

Here’s a thought: follow the Automatic Earth. And good thing is, you don’t have to like Trump to not like where this is going. We don’t particularly like him either. We just dislike lies and fake news a whole lot more.

 

 

Nov 242016
 
 November 24, 2016  Posted by at 9:49 am Finance Tagged with: , , , , , , , , , , ,  2 Responses »


Kennedy and Johnson Morning of Nov 22 1963

Another Election Year, Another Bunch Of Fake Growth Numbers (John Rubino)
China Vows To Defend Trade Rights In Face Of Trump Tariff Threats (R.)
IMF: Chinese Banks Disguise A Massive Amount Of Bad Debt (BI)
The ‘Ownership Society’ Came And Went – A Long Time Ago (MW)
How (Slightly) Higher Mortgage Rates Maul Housing Bubble 2 (WS)
‘Brexit Will Blow £59 Billion Hole In UK Public Finances’ (G.)
Pro-Brexit Lawmakers Attack Fiscal Watchdog’s Gloomy Outlook (BBG)
Capital Flight From Italy (Reinhart)
Jill Stein Raises Over $2 Million To Request US Election Recounts (G.)
Bernie Sanders Should Visit Trump Sooner Rather Than Later (NYDN)
Merkel Warns Against Fake News Driving Populist Gains (AFP)
Putin: EU Resolution Equating RT to ISIS A ‘Degradation Of Democracy’ (R.)
US Navy’s New $4 Billion Stealth Warship Breaks Down – Again (ZH)
Greece Wants To Conclude EU/IMF Review, Won’t Accept ‘Irrational’ Demands (R.)
Greek Businesses Move Abroad To Escape Austerity (R.)

 

 

“So why the approximately $1.8 trillion surge in government borrowing? Because a robustly-healthy economy was necessary to help the party in power stay in power.”

Another Election Year, Another Bunch Of Fake Growth Numbers (John Rubino)

Some pretty good economic reports have energized various parts of the financial markets lately. Consumer spending is up, GDP is exceeding expectations and even factory orders, that perennial downer, popped this morning. In response the dollar is soaring and interest rates are at breaking out of their multi-decade down-channel. The economy is clearly recovering, implying a return to normality. Right? Nah, it’s just the usual election year illusion. When the presidency is at stake the party in power always pumps up spending in an attempt to put people back to work and create the impression of a well-run country whose leaders deserve more time in the spotlight. After the election, spending returns to trend and the resulting bad news gets buried in “political honeymoon” media coverage.

How do we know this year is following the script? By looking at the federal debt. If the government is borrowing more than usual and (presumably) spending the proceeds, then it’s likely that the economy is getting a bit more than its typical diet of stimulus. So here you go: Note that after seven years of massive increases, the federal debt plateaued in 2015, which is what you’d expect in the late stages of a recovery. With full employment approaching and asset prices high, there should be plenty of tax revenues flowing in and relatively few people on public assistance, so the budget should be trending towards balance. Well, more people are working this year than last, and stock, bond and home prices all rose in the first half of the year. So why the approximately $1.8 trillion surge in government borrowing? Because a robustly-healthy economy was necessary to help the party in power stay in power.

This is a huge jump in government debt, even by recent standards. And its impact is commensurately large, accounting for a big part of the “growth” seen in recent months. But it’s also unsustainable. You don’t double a government’s debt in a single decade (from an already historically high level) and then keep on borrowing. At some point an extreme event or policy choice will put an end to the orgy. Either the markets impose discipline through a crisis of some sort, or the government adopts a policy of currency devaluation or debt forgiveness. And – in a nice ironic twist – the people who did the insanely-excessive borrowing are leaving town, to be replaced by folks who will inherit something unprecedented, with (apparently) no clear idea of what’s coming or what will be necessary in response.

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Protectionism and globalism in one.

China Vows To Defend Trade Rights In Face Of Trump Tariff Threats (R.)

China will defend its rights under WTO tariff rules if US president-elect Donald Trump moves toward executing his campaign threats to levy punitive duties on goods made in China, a senior trade official has said. Zhang Xiangchen, China’s deputy international trade representative, also told a news conference in Washington on Wednesday that a broad consensus of academics, business people and government officials have concluded that China is not manipulating its yuan currency to gain an unfair trade advantage, as Trump has charged. “I think after Mr Trump takes office, he will be reminded that the United States should honour its obligations as a member of the WTO,” Zhang said through an interpreter. “And as a member of the WTO, China also has the right to ensure its rights as a WTO member.”

Trump has said China is “killing us” on trade and that he would take steps to reduce the large US goods trade deficit with China, including labelling Beijing as a currency manipulator soon after he takes office and levying duties of up to 45% on Chinese goods to level the playing field for US manufacturers. Trump said on Monday he will formally exit the 12-country TPP trade deal in January. China is not a signatory to the TPP. Zhang, who spoke at the closing news conference for a two-day technical meeting of US and Chinese trade officials in Washington, was not specific on what steps China would take to protect its rights under WTO rules. The global trading body prohibits members from unilaterally raising tariffs above levels that they have committed to maintain.

China’s state-run Global Times newspaper last week warned that a 45% Trump tariff would paralyse US-China bilateral trade. “China will take a tit-for-tat approach then. A batch of Boeing orders will be replaced by Airbus. US auto and [Apple] iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted,” the newspaper warned.

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Shadow securities. US redux.

IMF: Chinese Banks Disguise A Massive Amount Of Bad Debt (BI)

China’s banks are disguising bad debts by turning them into “securitized packages” rather than writing them down as non-performing loans, according to the IMF. The “untradeable debt” comes from China’s “shadow credit” world, which has generated a massive amount of credit that has the potential to become suddenly illiquid. The debts consist of interbank loans in “a structure potentially susceptible to rapid risk transmission and destabilizing liquidity events,” the IMF says. The amount of “shadow credit” grew 48% in 2015, to RMB 40 trillion ($580 billion), the IMF says, “equivalent to 40% of banks’ corporate loans and 58% of GDP.” If any of this sounds familiar, that’s because it is. It’s similar in principal to the way American banks disguised bad mortgages inside securitized packages before the Great Financial Crisis of 2007-2008.

Back then, US mortgage providers gave out too many loans to people who couldn’t repay them. On its own, that should not have been a problem. A mortgage default only hurts the bank that made the loan. But banks bundled together packages of those mortgages and sold them as “mortgage-backed securities” to other institutions. Bad mortgages were mixed in with good ones, making it impossible for investors to judge their quality. When it became obvious that some of these packages were toxic, no one wanted to buy any them. The market became suddenly illiquid. And the credit derivative hedges and leveraged bets layered upon them magnified the problem throughout the entire banking system, creating the financial collapse that plunged most of the world into recession.

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It was always just a fabricated dream.

The ‘Ownership Society’ Came And Went – A Long Time Ago (MW)

Of all the aftereffects of the housing bust and financial crisis, the steady decline in the homeownership rate might be among the most pernicious. Homeownership is traditionally one of the best means into the middle class, and it’s still popularly equated with the American Dream. But in a presentation last week, St. Louis Federal Reserve economist William Emmons demonstrated that homeownership has been losing ground for decades. What’s more, Emmons showed that higher ownership rates were likely coaxed along by government policies and national priorities appropriate for a certain moment in history and unsustainable beyond that. After the Depression, Emmons noted, New Deal policies “laid the foundation” for a huge increase in homeownership.

Those policies included the creation of a government financial system, such as the Federal Housing Administration, Fannie Mae, and the Federal Home Loan Banks. But just as important was the return of millions of service members from World War II, rising incomes and a prosperous economy, a national push for a country full of suburban single-family homes and highways to connect them all, as well as a national process of Americans “sorting themselves out” by race and class into the broad geographic outlines that would persist for decades. That meant the U.S. enjoyed robust growth – until it didn’t. Not only was there little room left to grow, but other changes began to influence ownership, Emmons said. Americans began to age, pushing off marriage, childbearing and home-buying until later.

The U.S. is also becoming more racially and ethnically diverse. Hispanics and African-Americans have traditionally had more limited opportunities to achieve homeownership – but as Emmons pointed out, citing research from the Harvard Joint Center for Housing Studies, “aspirations to own a home are higher among African-Americans and Latinos than among whites and Asians, despite homeownership rates that are 20 to 30 percentage points lower.” And while much of the impact of the 2008 crash has ebbed, it still continues to impact many people through diminished personal wealth, damaged credit scores, blighted neighborhoods, and some loss of trust in financial institutions.

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How ‘little things’ add up.

How (Slightly) Higher Mortgage Rates Maul Housing Bubble 2 (WS)

After the brutal beating following Election Day, US Treasuries took a breather early this week. But today, the beating resumed and will continue until the mood improves. Mid-day, the 10-year Treasury fell so hard that its yield, which moves in the opposite direction of price, spiked to 2.42%. By the end of the day, the 10-year yield was at 2.36%, up 4 basis points for the day, and up an entire percentage point from July this year: The market is 100% certain that the Fed will stop flip-flopping in mid-December and raise rates by moving the upper limit of the Fed funds target range to 0.75%. The markets see more rate hikes next year. A Fed funds rate with the first “1”-handle since 2008 would be a phenomenon a whole generation of Wall Street gurus has never seen in their professional lives.

Mortgage rates are chasing after Treasury rates. The Mortgage Bankers Association reported today that the 30-year fixed-rate conforming mortgage ($417,000 or less) reached 4.16%, its “highest weekly average since the beginning of 2016.” This caused a flurry of activity. Last week, amid the post-election interest rate spike, mortgage applications plunged. But homebuyers may be trying to lock in whatever rate they can get, before they go even higher, and mortgage applications surged. Ironically, from a historical point of view, nothing major has happened so far. That spike is still small compared to what came before, including the spike during the Taper Tantrum in the summer of 2013, when the Fed started musing about ending QE Infinity. Compared to prior years, rates are still very, very low, but home prices have since soared, and for home buyers even a minor uptick makes a world of difference.

From the peak of Housing Bubble 1, which in San Francisco occurred in 2007, to Q3 2016, the median house price soared 45%. But due to plunging mortgage rates, the monthly housing costs increased only 14%. Now with rates rising, that process is going to reverse. The household income needed to qualify for a 30-year fixed rate mortgage with 20% down on that median $1.3 million house in San Francisco was $251,000 before Election Day. Paragon observes: “By Friday, November 18, the income requirement increased by $13,000. And if the interest rate goes up to 5% (and again, we are not saying it will), an additional $35,000 in annual income would be required.”

Hence, at 5%, a minimum qualifying household income of $286,000 a year. In this scenario, even in less costly markets, there are two things that happen: One, many people have to step down to a lower-priced home, or they don’t buy at all. A market-wide shift of this type puts downward pressure on prices and volume. And two, as people stretch more to buy homes at higher interest rates and higher monthly costs, they have even less money to spend on other things. This creates a new drag on consumer spending. It’s how low mortgage rates not only subsidized the house price bubble but the entire economy by giving consumers more money to spend – not just the US economy but exporter nations around the world.

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Or will it?

‘Brexit Will Blow £59 Billion Hole In UK Public Finances’ (G.)

Philip Hammond conceded that Brexit will blow a £59bn black hole in the public finances over the next five years, as he outlined plans to boost investment in infrastructure and housing to equip the UK economy for life outside the EU. In his first fiscal statement, the chancellor, who had supported remain, sought to strike a cautiously upbeat tone about the country’s prospects, saying the economy had “confounded commentators at home and abroad with its strength and its resilience” since the referendum result last June. But the first official projections conducted after the vote of the likely impact of leaving the EU pointed to significantly weaker growth after Brexit. The Office for Budget Responsibility (OBR) announced that there would be a cumulative £122bn of extra borrowing over the next five years, with £59bn of that as a direct result of Brexit.

Other factors included weaker-than-expected tax revenues, and policy changes, including Hammond’s decision to spend more on infrastructure. George Osborne was expecting to achieve a surplus of £11bn on the public finances by 2020-21; instead, the OBR is now forecasting a £21bn deficit – and public debt is expected to peak at more than 90% of GDP. With little cash to spare, Hammond offered only modest handouts to the “just about managing” families (Jams) Theresa May’s government had said it wanted to help, although he repeatedly used the mantra of “building an economy that works for everyone”. The chancellor announced a renewed freeze in fuel duty, to help motorists – largely paid for with an increase in insurance premium tax from 10% to 12% – and a partial reversal of planned cuts to universal credit.

But Labour said there was no cash for either the NHS or social care, which are under increasing strain with winter approaching. Instead, the main thrust of Hammond’s first set-piece outing at the dispatch box was how to help Britain withstand the challenges of leaving the EU.

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Agree to disagree.

Pro-Brexit Lawmakers Attack Fiscal Watchdog’s Gloomy Outlook (BBG)

Conservative lawmakers attacked Britain’s fiscal watchdog after it warned that Brexit would cost £60 billion ($75 billion) in extra borrowing as the economy falters. The Office for Budget Responsibility’s forecast — the first official assessment of the costs related to leaving the bloc – also stated that exiting the EU would leave Britain with less potential for sustainable growth. Chancellor of the Exchequer Philip Hammond, who presented the forecasts alongside his Autumn Statement Wednesday, said the predictions showed there is an “urgent” need for Britain to tackle its long-term economic weaknesses. “We’ve had an endless slew of gloom and doom, and I just don’t buy it,” said Kwasi Kwarteng, a Tory lawmaker who backed the campaign to leave the EU. “They haven’t exactly had a brilliant track record. I’d take their predictions with a pinch of salt.”

Pro-Brexit lawmakers have been critical of both the OBR and the Treasury for overstating the negative consequences of Brexit. While Hammond made brief references to the opportunities that leaving may bring, his tone was one of caution, with few giveaways and a focus on creating a more productive economy that could weather future shocks. Responding to complaints from pro-Brexit politicians, Hammond told lawmakers that economic forecasting “is not a precise science.” He added: “The OBR very specifically says in its report that there is an unusually high degree of uncertainty in the forecasts it is making because of the unusual circumstances.”

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It’s high time for Italy to go its own separate ways. There’s nothing to gain from the EU anymore, but lots to lose.

Capital Flight From Italy (Reinhart)

Understandably, after the surprise victory in June of the “Leave” campaign in the United Kingdom’s Brexit referendum, and of Donald Trump in the United States’ presidential election, no one has much faith in polls in advance of the Italian vote. There is, however, a disquieting real-time poll of investors’ sentiment: capital flight from Italy has accelerated this year. There is a recent precedent for this. In the summer of 2015, Greece’s short-lived default on its IMF loan and the introduction of capital controls and deposit-withdrawal restrictions were at the center of the eurozone drama. Tensions between the Greek and German governments ran high, and speculation about whether Greece would remain in the eurozone escalated.

The stage has now shifted to the much larger Italian economy. In the current environment of uncertainty, yield spreads on Italian bonds have widened to about 200 basis points over German bunds. Economic and political conditions in the two debt-laden southern European economies differ in important respects; but there are also similarities. Economic growth in both countries has lagged far behind other advanced economies for more than a decade, but most markedly since the Global Financial crisis of 2008-2009. According to IMF estimates, real per capita income in Italy is about 12% below what it was in 2007, with only Greece faring worse. The problem of bank insolvency, endemic in Greece, where nonperforming loans account for more than one-third of bank assets, is not as generalized in Italy.

Still, the uncertain resolution of Italy’s third-largest bank, Monte dei Paschi, together with the Italian government’s limited resources to deal with weak banks, has fueled unease among depositors. Bankers also warn that the plan for Monte dei Paschi’s rescue may be jeopardized by the December referendum, which could trigger another round of decline in share prices. But, for all the talk of a looming banking crisis, the balance-of-payments crisis already underway in Italy since the first half of 2016 is the main factor driving the real-time poll of investors. Prior to the adoption of the euro, an unsustainable balance-of-payments position in Italy (as in other countries with their own currencies) would typically spur the central bank to raise interest rates, thereby making domestic financial assets more attractive to investors and stemming capital flight. With the ECB setting monetary policy for the eurozone as a whole, this is no longer an option for Banca d’Italia.

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Nostalgia for hanging chads.

Jill Stein Raises Over $2 Million To Request US Election Recounts (G.)

Jill Stein, the Green party’s presidential candidate, is prepared to request recounts of the election result in several key battleground states, her campaign said on Wednesday. Stein launched an online fundraising page seeking donations toward a a multimillion-dollar fund she said was needed to request reviews of the results in Michigan, Pennsylvania and Wisconsin. Before midnight EST on Wednesday, the drive had already raised more than the $2m necessary to file for a recount in Wisconsin, where the deadline to challenge is on Friday. Stein said she was acting due to “compelling evidence of voting anomalies” and that data analysis had indicated “significant discrepancies in vote totals” that were released by state authorities.

“These concerns need to be investigated before the 2016 presidential election is certified,” she said in a statement. “We deserve elections we can trust.” The fundraising page said it expected to need around $6m-7m to challenge the results in all three states. Stein’s move came amid growing calls for recounts or audits of the election results by groups of academics and activists concerned that foreign hackers may have interfered with election systems. The concerned groups have been urging Hillary Clinton, the defeated Democratic nominee, to join their cause.

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As I said yesterday in “Trump Moves as America Stands Still”.

Bernie Sanders Should Visit Trump Sooner Rather Than Later (NYDN)

Trump aside, evidently the most clairvoyant messenger of 2016 was Sanders, who got pitifully little support from the Democratic Party establishment — including a raw deal from the DNC, which tilted the scales against him in order to coronate Hillary. His brand of anti-Wall Street, anti-elite populism is ascendant. He is the tribune of the progressive youth, many of whom refused to back Hillary despite her repeated (and hollow) entreaties. So what should Sanders do now? Well, how about meeting with the new President-elect? It might seem incongruous. What would the nationalist, brash Trump have to gain from the aging socialist Sanders? Well, maybe quite a bit. Trump explicitly proclaimed during the campaign that he was going to take a page from Bernie’s playbook, much to the consternation of conservative pundits.

“I’m going to be taking a lot of the things Bernie said and using them,” Trump declared in April. And indeed, Trump followed through on the pledge: He made opposition to the Trans-Pacific Partnership a centerpiece of his campaign, thus emphasizing an area of agreement with Sanders. (Trump has since confirmed that the trade deal will be canceled.) He called for a reduced U.S. military presence abroad. And he even repeatedly defended Sanders before millions of people at the televised debates, pointing out that he’d been screwed over by the DNC and Clinton minions. Naturally, Trump and Sanders will never agree on everything, but where they do see eye-to-eye, why not take advantage?

Two days after the election, Sanders issued a statement noting Trump’s success at connecting with folks “sick and tired of establishment economics, establishment politics and the establishment media.” Sanders then offered to “work with” him on discrete initiatives. Trump has already announced that an infrastructure funding bill is one of his top priorities, so who better than Sanders to help steer the legislative process in the most fruitful possible direction? (Bernie this week characterized Trump’s plan as a “scam,” so why not register those concerns in person?)

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Sounds desperate.

Merkel Warns Against Fake News Driving Populist Gains (AFP)

German Chancellor Angela Merkel warned Wednesday against the power of fake news on social media to spur the rise of populists, after launching her campaign for a fourth term. Speaking in parliament for the first time since her announcement Sunday that she would seek re-election next year, Merkel cautioned that public opinion was being “manipulated” on the internet. “Something has changed – as globalisation has marched on, (political) debate is taking place in a completely new media environment. Opinions aren’t formed the way they were 25 years ago,” she said. “Today we have fake sites, bots, trolls – things that regenerate themselves, reinforcing opinions with certain algorithms and we have to learn to deal with them.”

Merkel, 62, said the challenge for democrats was to “reach and inspire people – we must confront this phenomenon and if necessary, regulate it.” She said she supported initiatives by her right-left coalition government to crack down on “hate speech” on social media in the face of what she said were “concerns about the stability of our familiar order”. “Populism and political extremes are growing in Western democracies,” she warned. Last week, Google and Facebook moved to cut off ad revenue to bogus news sites after a US election campaign in which the global misinformation industry may have influenced the outcome of the vote. But media watchers say more is needed to stamp out a powerful phenomenon seen by some experts as a threat to democracy itself.

Merkel’s conservative Christian Democrats are the odds-on favourites to win the German national election, expected in September or October 2017.

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Well, we already knew the EU has gone crazy.

Putin: EU Resolution Equating RT to ISIS A ‘Degradation Of Democracy’ (R.)

The European Parliament called on the EU and its states to do more to counter Russian “disinformation and propaganda warfare” on Wednesday, drawing an angry response from President Vladimir Putin. A motion endorsing a committee report, which also called for more effort against attempts by Islamic State to radicalize Europeans, passed by 304 votes to 179. Members on the far left and far right were opposed; many in the center-left abstained. “The European Parliament … expresses its strong criticism of Russian efforts to disrupt the EU integration process and deplores, in this respect, Russian backing of anti-EU forces in the EU with regard, in particular, to extreme-right parties, populist forces and movements that deny the basic values of liberal democracies,” the 59-point motion read.

With East-West relations in deep freeze since Moscow responded to an EU pact with Ukraine by annexing Crimea in 2014, the Parliament’s report accused the Kremlin of funding media outlets that spread falsehoods and of sponsoring eurosceptic movements in Western Europe which are growing in strength. Putin said that after lecturing Russia on democracy Europe was now trying to silence dissenting opinions. He told reporters in Moscow: “We are observing a certain, quite obvious, degradation … of how democracy is understood in Western society, in this particular case in the European Parliament.” In Strasbourg, center-left lawmakers said they could not endorse the report because Russia was not alone in posing such threats and they objected to the way it appeared to be given an equivalent status to the non-state militants of Islamic State.

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Not a bug but a feature. Given the multibillion ‘trouble’ with the JSF, what do you think the odds are the military-industrial complex makes broken equipemnt on purpose, for profit?

US Navy’s New $4 Billion Stealth Warship Breaks Down – Again (ZH)

For the second time in two months, The Navy’s new $4 billion stealth warship has broken down. As Military.com reports, the ripped-from-the-pages-of-a-sci-fi mag-looking USS Zumwalt is now in Panama for repairs after suffering a breakdown while passing through the Panama Canal on Monday evening. Military.com’s Hope Hodge Seck reports that a spokesman for U.S. 3rd Fleet, Cmdr. Ryan Perry, told Military.com that the commander of 3rd Fleet, Vice Adm. Nora Tyson, had instructed the USS Zumwalt, the first in a new class of stealthy destroyers, to remain at ex-Naval Station Rodman in Panama to address the engineering casualty. “The timeline for repairs is being determined now, in direct coordination with Naval Sea Systems and Naval Surface Forces,” he said in a statement.

“The schedule for the ship will remain flexible to enable testing and evaluation in order to ensure the ship’s safe transit to her new homeport in San Diego.” An official confirmed to Military.com that the ship had been transiting south through the canal en route to its new San Diego homeport when the incident occurred. The ship had to be towed to pier by the Panama Canal Authority, the official said. While details about what caused the breakdown were few, Navy Times – which first reported the incident – cited reports about problems with heat exchangers in the ship’s integrated power plant that had contributed to the mishap. [..]The ship also made headlines earlier this month when multiple outlets reported that the missiles fired from its 155mm Advanced Gun System, at $800,000 apiece, were too expensive for the Navy to buy in large quantities [..]

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But they’ve accepted tons of others already?!

Greece Wants To Conclude EU/IMF Review, Won’t Accept ‘Irrational’ Demands (R.)

Greece wants to conclude its bailout review but cannot accept what it sees as irrational demands on labor reform or for extra austerity, Prime Minister Alexis Tsipras said on Wednesday, in his first speech to lawmakers after a cabinet reshuffle. Negotiations between Greece and its official creditors – the EU and the IMF – hit a snag this week due to differences on fiscal targets, energy and labor reforms in the country, where one in four is unemployed. “The Greek government is fully consistent with what was agreed and has proven it has the political will to conclude the second bailout review without meaningless delays,” Tsipras told his Syriza party lawmakers. “But this does not mean we would discuss irrational demands.”

The mission chiefs overseeing Greece’s bailout program implementation left Athens on Tuesday. Government officials said talks would continue but the latest disagreements and a long-standing rift among the creditors on medium-term fiscal targets have clouded Greek hopes for a swift conclusion. Unpopular labor reforms, including collective bargaining, a mechanism to set the minimum wage and giving companies more freedom to lay off workers are the main sticking point in talks with lenders. Tsipras said differences could be bridged if there is political will on all sides, adding that an agreement could be reached by Dec. 5, when euro zone finance ministers will meet in Brussels.

“It is realistic but also absolutely necessary to conclude the talks soon to secure at the scheduled Dec. 5 … meeting the agreement needed on a political level in order to conclude the bailout review,” he said. Tsipras said this would pave the way for talks on debt relief measures, not only in the short term but also in the medium and long term, which would allow Greece to lower primary surplus targets beyond 2018, when its bailout program ends.

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The Troika forces Greece to strangle itself.

Greek Businesses Move Abroad To Escape Austerity (R.)

Greek businessman Prokopis Makris believes moving to Bulgaria three years ago was the best decision he ever made. The accountant shut his failing furniture company in Greece and opened a business helping other entrepreneurs move to Bulgaria to escape a 29% tax rate, which has jumped since Athens adopted austerity as part of an international bailout. “We are bombarded with taxes in Greece, businesses are being annihilated,” he says in his plush office overlooking the town square of Petritsi, a Bulgarian town about 12 km (seven miles) north of the border with Greece. The debt crises faced by Greece and several other European countries led to drastic spending cuts and tax increases to improve government finances.

But the higher taxes punished businesses forcing many to shut or move to lower tax jurisdictions such as Bulgaria or Cyprus, helping those economies but undermining the recovery needed to balance the books at home. The number of Greek owned businesses based in Bulgaria, where the corporate tax rate is only 10%, has risen to 17,000 from 2,000 in 2010, when Greece had its first bailout, according to Bulgarian authorities. The Greek government is concerned. It plans a series of tax audits in cooperation with Bulgaria to determine if these business defections are merely changes of address designed to avoid tax rather than a physical relocation of operations. [..] Six hundred kilometers north of Athens, the Greek-Bulgarian border is teeming with traffic. A ravine through mountains on the Greek side gives way to a sweeping valley where agriculture and vineyards are the mainstay of the local economy.

At two small industrial parks 5 km inside Bulgaria, Greek signs are everywhere, advertising storage and office space. “There are dozens of Greek businesses just in this area alone, from transport companies to textile businesses and construction materials,” said Yiorgos Kalaitzoglou who runs a logistics business out of one of the industrial parks where a sign reads, “Land of Opportunities”. Three years ago, his business was stuttering in Greece. He moved to Bulgaria, leaving his wife and family in Thessaloniki, Greece’s second largest city an hour’s drive away. “The taxman in Greece takes 70 to 90% of earnings, Greece simply doesn’t let you live,” the 50-year-old said as he walked through a warehouse stacked with ladders and paint tubs.

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Jun 052015
 
 June 5, 2015  Posted by at 12:49 pm Finance Tagged with: , , , , , , , , ,  1 Response »


Dorothea Lange Farm boy at main drugstore, Medford, Oregon 1939

Central bankers have promised ad nauseum to keep rates low for long periods of time. And they have delivered. Their claim is that this helps the economy recover, but that is just a silly idea.

What it does do is help create the illusion of a recovering economy. But that is mostly achieved by making price discovery impossible, not by increasing productivity or wages or innovation or anything like that. What we have is the financial system posing as the economy. And a vast majority of people falling for that sleight of hand.

Now the central bankers come face to face with Hyman Minsky’s credo that ‘Stability Breeds Instability’. Ultra low rates (ZIRP) are not a natural phenomenon, and that must of necessity mean that they distort economies in ways that are inherently unpredictable. For central bankers, investors, politicians, everyone.

That is the essence of what is being consistently denied, all the time. That is why QE policies, certainly in the theater they’re presently being executed in, will always fail. That is why they should never have been considered to begin with. The entire premise is false.

Ultra low rates are today starting to bite central bankers in the ass. The illusion of control is not the same as control. But Mario and Janet and Haruhiko, like their predecessors before them, are way past even contemplating the limits of their powers. They think pulling levers and and turning switches is enough to make economies do what they want.

Nobody talks anymore about how guys like Bernanke stated when the crisis truly hit that they were entering ‘uncharted territory’. That’s intriguing, if only because they’re way deeper into that territory now than they were back then. Presumably, that may have something to do with the perception that there actually is a recovery ongoing.

But the lack of scrutiny should still puzzle. How central bankers managed to pull off the move from admitting they had no idea what they were doing, to being seen as virtually unquestioned maestros, rulers of, if not the world, then surely the economy. Is that all that hard, though, if and when you can push trillions of dollars into an economy?

Isn’t that something your aunt Edna could do just as well? The main difference between your aunt and Janet Yellen may well be that Yellen knows who to hand all that money to: Wall Street. Aunt Edna might have some reservations about that. Other than that, how could we possibly tell them apart, other than from the language they use?

The entire thing is a charade based on perception and propaganda. Politicians, bankers, media, the lot of them have a vested interest in making you think things are improving, and will continue to do so. And they are the only ones who actually get through to you, other than a bunch of websites such as The Automatic Earth.

But for every single person who reads our point of view, there are at least 1000 who read or view or hear Maro Draghi or Janet Yellen’s. That in itself doesn’t make any of the two more true, but it does lend one more credibility.

Draghi this week warned of increasing volatility in the markets. He didn’t mention that he himself created this volatility with his latest QE scheme. Nor did anyone else.

And sure enough, bond markets all over the world started a sequence of violent moves. Many blame this on illiquidity. We would say, instead, that it’s a natural consequence of the infusion of fake zombie liquidity and ZIRP rates.

The longer you fake it, the more the perception will grow that you can’t keep up the illusion, that you’re going to be found out. Ultra low rates may be useful for a short period of time, but if they last for many years (fake stability) they will themselves create the instability Minsky talked about.

And since we’re very much still in uncharted territory even if no-one talks about it, that instability will take on forms that are uncharted too. And leave Draghi and Yellen caught like deer in the headlights with their pants down their ankles.

The best definition perhaps came from Jim Bianco, president of Bianco Research in Chicago, who told Bloomberg: “You want to shove rates down to zero, people are going to make big bets because they don’t think it can last; Every move becomes a massive short squeeze or an epic collapse – which is what we seem to be in the middle of right now.”

With long term ultra low rates, investors sense less volatility, which means they want to increase their holdings. As Tyler Durden put it: ‘investors who target a stable Value-at-Risk, which is the size of their positions times volatility, tend to take larger positions as volatility collapses. The same investors are forced to cut their positions when hit by a shock, triggering self- reinforcing volatility-induced selling. This is how QE increases the likelihood of VaR shocks.’

QE+ZIRP have many perverse consequences. That is inevitable, because they are all fake from beginning to end. They create a huge increase in inequality, which hampers a recovery instead of aiding it. They are deflationary.

They distort asset values, blowing up prices for stocks and bonds and houses, while crushing the disposable incomes in the real economy that are the no. 1 dead certain indispensable element of a recovery.

You would think that the central bankers look at global bond markets today, see the swings and think ‘I better tone this down before it explodes in my face’. But don’t count on it.

They see themselves as masters of the universe, and besides, their paymasters are still making off like bandits. They will first have to be hit by the full brunt of Minsky’s insight, and then it’ll be too late.

Dec 162014
 
 December 16, 2014  Posted by at 4:14 pm Finance Tagged with: , , , , , , , ,  6 Responses »


Arthur Rothstein “Bank that failed. Kansas” May 1936

Few may have noticed it to date, but it’s not like we still live in the same world, just with lower oil prices. We live in a different world altogether, with the changes between the new and old brought about by the (impending) disappearance of a lot of – virtual – money, or credit, give it a name, and the difference between oil at $110 and oil at $50.

And for the same reason Dorothy feels it necessary to point out to Toto where they find themselves, we have to tell people out there who may think they are indeed still in Kansas that no, they’re not. Or, if we play around with the metaphor a bit, they’re in Kansas, but a tornado has passed through and rendered the entire state unrecognizable.

A big problem is that for most people, Kansas is what the state tourist bureau (re: US media) says it is, all generously waving corn and sunshine, not the bleak reality they actually live in. It’s not easy to figure things out when so much rests on you being and remaining ignorant.

But whether we like it or not, and understand it or not, there’s a major reset underway as we speak. The fake impression, the false picture, of the economy, delivered by global central bank stimuli over the past years, is starting to unravel, as I talked about in Will Oil Kill The Zombies?. And the central banks are starting to figure out that doing more of the same may not work anymore to keep up keeping up appearances.

Very early today, WTI oil fell through $55, and Brent through $60. As I write this, they’re living dangerously just below the edge of $54 and $59, respectively. And again, this is not because the dollar is particularly strong; as a matter of fact, the greenback has a temporary weak spell vs the pound and the euro (1.5% in 2 weeks?!). Otherwise the damage to oil prices, counted in dollars, would be even greater, and substantially so.

When the United Arab Emirates energy minister over the weekend said OPEC won’t even cut production if prices reach $40 a barrel, he effectively set a new price (-goal). And let’s not forget that lots of oil already sells far below the WTI or Brent standards. It’s a buyers market out there, with plenty panicked producers/sellers. Because if inertia inherent in longer term delivery contracts, some of the shock will come only later, but it will come.

And oil prices will rise again at some point, but what will be left behind will resemble Kansas after a tornado. Besides, don’t expect a rebound anytime soon: I don’t believe for a moment that demand is not overreported (China,Europe, Japan, emerging markets) and production underreported (panicked producers). This baby has a ways to run yet.

But as I’ve discussed many times already, oil is just the spark that sets the world ablaze. The fuel is energy credit, junk bonds, leveraged loans, collateralized loan obligations. And it will spread to adjacent instruments, and then to just about everything, because shorts and losses will have to be covered with any asset that can be sold, loans called in, margin calls issued, etc. Many of these items will end up being valued at 20-30 cents on the dollar at best, and since the whole edifice was built on leveraged credit, those valuations will in many cases mean a death in the family.

The reason why is relatively easy to find if you just follow the – money – trail.

CNBC has an energy trader talking:

Oil Has Become The New Housing Bubble

The same thing that happened to the housing market in 2000 to 2006 has happened to the oil market from 2009 to 2014, contends well-known trader Rob Raymond of RCH Energy. And he believes that just as we witnessed the popping of the housing bubble, we are in the midst of the popping of the energy bubble. “It’s the outcome of a zero interest rate policy from the Federal Reserve. What’s happened from 2009 to 2014 is, the energy industry has outspent its cash flow by $350 billion to go drill all these wells, and create this supply ‘miracle,’ if you will, in the United States.”

“The issue with this has become, what were houses in Florida and Arizona in 2000 to 2006 became oil wells in North Dakota and Texas in 2009 to 2014, and most of that was funded in the high-yield market and by private equity.” [..] when it comes to the price of a barrel of oil itself, Raymond expects to see a rebound once U.S. production dries up. “We live in a $90 to $100 world,” he said. “We just don’t live in it today.”

Obviously, Rob Raymond expects to return to Kansas one day. The boys at Phoenix, via Tyler Durden, are not so sure, I don’t think. They make the good point that a dollar rally is oil negative, making my earlier point about the dollar’s – relative – weakness these days more poignant. “Oil is just the beginning ..”:

Oil’s Crash Is the Canary In the Coal Mine for a $9 Trillion Crisis

The Oil story is being misinterpreted by many investors. When it comes to Oil, OPEC matters, as does Oil Shale, production cuts, geopolitical risk, etc. However, the reality is that all of these are minor issues against the MAIN STORY: the $9 TRILLION US Dollar carry trade. Drilling for Oil, producing Oil, transporting Oil… all of these are extremely expensive processes. Which means… unless you have hundreds of millions (if not billions) of Dollars in cash lying around… you’re going to have to borrow money.

Borrowing US Dollars is the equivalent of shorting the US dollar. If the US Dollar rallies, then your debt becomes more and more expensive to finance on a relative basis. There is a lot of talk of the “Death of the Petrodollar,” but for now, Oil is priced in US Dollars. In this scheme, a US Dollar rally is Oil negative. Oil’s collapse is predicated by one major event: the explosion of the US Dollar carry trade. Worldwide, there is over $9 TRILLION in borrowed US Dollars that has been ploughed into risk assets.

Energy projects, particularly Oil Shale in the US, are one of the prime spots for this. But it is not the only one. Emerging markets are another. Just about everything will be hit as well. Most of the “recovery” of the last five years has been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more “risk assets” (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a standalone story.

If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system. And that’s assuming NO increased leverage from derivative usage. The story here is not Oil; it’s about a massive bubble in risk assets fueled by borrowed Dollars blowing up.

The last time around it was a housing bubble. This time it’s an EVERYTHING bubble. And Oil is just the canary in the coalmine.

Yves Smith goes so far as to ponder a link to the disgraceful spending bill additions signed off on by Congress and Senate a few days ago. The first but is from Tom Adams via e-mail:

Did Wall Street Need to Win the Derivatives Budget Fight to Hedge Against Oil Plunge?

Why are the proponents pushing so hard, with respect to the Dodd-Frank provision on derivatives pushed out of insured banks, to get this done now? Why not just wait until Republicans have control of the House and Senate? Why is Jamie Dimon calling on members now, rather than just waiting? The timing is weird. Perhaps there are political reasons that give various parties cover they want and that’s all there is to it. On the other hand, I’ve been closely watching the blow up in the oil and energy markets and I wonder if there may be a link to the Cromnibus fight.

Much of the recent energy boom has been financed with junk debt and a good portion of that junk debt ended up in collateralized loan obligations. CLOs are also big users of credit default swaps, which was an important target of the Dodd Frank push-out. In addition, over the past 6 months banks were unable to unload a portion of the junk debt originated and so it remained on bank balance sheets. That debt is now substantially underwater.

To hedge, banks are using CDS. Hedge funds are actively shorting these junk debt financed energy companies using CDS (it’s unclear where the long side of those CDS have ended up – probably bank balance sheets and CLOs). Finally, junk financed energy companies have been trying to offset the falling price of oil by hedging via energy derivatives. As it turns out, energy derivatives are also part of the DF push-out battle.

Conditions in the junk and energy markets are pretty dire right now as a result of the collapse in oil, as you know. I suspect there are some very anxious bank executives looking at their balance sheets right now. Since the derivatives push-out rule of Dodd Frank was scheduled to go into affect in 2015, the potential change in managing their exposure may be causing a lot of volatility for banks now – they need to hedge in large numbers at the best rates possible.

Is it possible that bank concerns (especially Citi and JP Morgan) about the potential energy-related losses are why Dodd Frank has to be changed now?

Then Yves herself explains:

To unpack this for generalists, CLOs or collateralized loan obligations, are used to sell highly leveraged loans, which are typically created when private equity firms take companies private. In the last big takeover boom of 2006-2007, which was again led by private equity buyouts, banks were left with tons of unsold CLO inventory on their balance sheets. The games banks played to underreport losses (such as doing itty bitty trades with each other or friendly hedge funds to justify their valuations) and the magnitude of the damage didn’t get the attention they warranted because all eyes were on the bigger subprime/CDO implosion.

This CLO decay could eventually be more serious than the losses after the 2006-7 buyout boom. This time, the lending was less diversified by industry. Although it hard to get good data, by all account shale gas companies have been heavy junk bond issuers, and energy-related investments have also been disproportionately represented in recent acquisitions. The high representation of energy bonds in junk issuance means they are also the largest single industry exposure in junk bond ETFs, which were wobbly even before oil started taking its one-way wild ride.

Zero Hedge turns again to the high yield (junk bond) energy spread graph(s), and rightly so, because what’s visible here is how extreme the situation has already become. Already, because we’ve barely even left Kansas and started our adventure. There’s a long way to go yet, and there’s no way back. This will have to play out. (BTW, OAS is Option-Adjusted Spread)

Energy High-Yield Credit Spreads Blow Above 1000bps For First Time Ever

For the first time on record, HY Energy OAS has broken above 1000bps – signifying dramatic systemic business risk in that sector (despite a modest rebound today in crude prices). The energy sector is entirely frozen out of the credit markets at this point with desk chatter that there is no bid for this distressed debt at all and air-pockets appear everywhere as each new trade reprices the entire sector. The broad high-yield ‘yield’ and ‘spread’ markets are now under significant pressure – both pushing to the cycle’s worst levels. HY Energy weakness is propagating rapidly into the broad HY markets:

This suggests significant weakness to come for Energy stocks:

This cannot end well (unless the Fed decides monetizing crude in addition to TSYs and E-Minis is part of its wealth preservation, pardon “maximum employment, stable prices, and moderate long-term interest rates” mandate…)

The problem with that last bit, monetizing crude, is as I’ve said, and Zero Hedge quoted me on that a few days ago, that saving the US oil industry that way would also mean bailing out Putin and Maduro, which would seem a political no-go. There’s also the fact that the American people may not appreciate the Fed driving oil prices higher just as they get a chance to spend less on gas while they’re hurting. Another no-go.

I don’t see them do it. If they bail out anyone, it’ll be the banks again if these start bleeding too much from energy stocks, bonds, loans, derivatives and related losses. I’m thinking the oil industry will have to save itself through defaults, mergers and acquisitions. Let Shell buy BP, and let them buy up broke shale companies on the cheap and slowly kill off production. Looks like a plan. America should have gone for financial independence, not energy independence, come to think of it.

As for the American people, to play with the Kansas metaphor a little more, it’s going to feel like the Fed and the Treasury kicked them out of Kansas. Or North Dakota, if you must. And you may be thinking: who cares about living in Kansas, but it’s a metaphor. And Dorothy felt right at home, remember? It was paradise, or at least her comfort zone. In other words, the real question is how you are going to feel about being kicked out cold and hard of your comfort zone. Because that is what this low oil price ‘adventure’ will end up doing to a lot of people.

But do let’s put it in perspective: it doesn’t stand on itself, neither the oil prices nor the financial losses they will engender. We’re watching, in real time, the end of the fake reality created by the central banks.

Jun 102014
 
 June 10, 2014  Posted by at 6:30 pm Finance Tagged with: , ,  3 Responses »


Arthur Rothstein Drought refugees from Glendive, MT, leaving for WA July 1936

It’s common knowledge at this point, even if there’s never a shortage of voices who will insist on denying it, that many of the numbers we see allegedly describing our economic realities, are not real at all. Unemployment, GDP, the issue is familiar. And if the US government, or any government for that matter, thinks it’s such a great idea to “massage” their numbers, then to quite an extent those of us who pay attention can shrug them off as largely irrelevant, even if they greatly distort many people’s views of where we find ourselves. The nonsense comes in so fast and furious we need to realize we can’t win ’em all. But we should never be tempted into thinking much of what we read are anything else than fake, virtual zombie numbers. Still, it’s when fake numbers get real life consequences that we need to raise our voices, even if that’s for the umpteenth time. A report issued yesterday by the Boston Consulting Group (BCG) makes for such a moment. Here’s what the BBC had to say:

Global Private Wealth Rises To $152 Trillion

The amount of private wealth held by households globally surged more than 14% to $152 trillion last year, boosted mainly by rising stock markets. Asia-Pacific, excluding Japan, led the surge with a 31% jump to $37 trillion, a report by Boston Consulting Group says. [..] The report takes into account cash, deposits, shares and other assets held by households. But businesses, real estate and luxury goods are excluded. [..]

The amount of wealth held in equities globally grew by 28% during the year [..] Economies in Asia have been key drivers of global growth in the recent years. China has been the biggest driver – with private wealth in the country surging more than 49% in 2013. The wealth held in the region is expected to rise further, to nearly $61 trillion by the end of 2018.

And since the BBC missed some numbers that Bloomberg caught, and vice versa, here’s the latter as well:

China Riches Fuel Asia as World Wealth Tops $150 Trillion

China leapfrogged Germany and Japan in the past five years to trail only the U.S. in a ranking of countries by private financial wealth. China’s $22 trillion is expected to increase more than 80% to $40 trillion by 2018, while the U.S. may grow to $54 trillion from $46 trillion over the same period, BCG said. Globally, stock-market gains averaged 21% in 2013, providing the primary driver of growth in private wealth, especially in North America, Europe and Japan [..] North America wealth gained 16% to $50.3 trillion.

India, which may more than double private wealth assets to $5 trillion by 2018, and Russia, where wealth may advance more than 80% to $4 trillion. BCG expects rich households to have almost $200 trillion worldwide by 2018, with the Asia-Pacific region contributing about half of global growth.

I guess the crucial question here is: how is this wealth? What is wealth to begin with? And how did these huge surges come about in the first place? We know that central banks and governments, who typically these days are as independent from each other as your run of the mill Siamese twin can be, have a role. The Chinese communist party – what’s in a name? – has pumped an estimated $25 trillion into its economy since 2008, and let the shadow banks add another, let’s take a wild guess, $5-$10 trillion or so?! The Qingdao copper, aluminum, timber, peanut oil and what have we scheme seems to indicate a widespread and accepted practice of rehypothecating assets, whether they actually exist or not. The scheme is far too profitable to have remained some small scale thingy. I saw John Mauldin today put the total damage (or is that profit?) at $1.3 billion, but we might as well add a few zeroes.

The US added many more trillions in stimulus. I’d say $15 trillion, easily. The ECB has been a bit more cautious – which is why everyone wants them to do more -, but when you add it all up, 28 separate countries, governments and central banks and all that, put them at $10 trillion minimum. And Japan is, well, Japan, they were at it much sooner, early 1990s, and Abenomics is the everything-on-red move; I can’t see that being less than $15 trillion. And that’s just the 4 biggest economies; you think the rest didn’t chime in? This is where you’re inclined to say that before you know it you’re talking real money. But it’s not. That’s exactly what it’s not. The entire thing has been made up out of thin air, and to make matters much worse, it’s been borrowed too.

Creating credit out of thin air equals borrowing from the future. Even though we – prefer to – see that as hardly relevant. Which is a deception all by itself, insult and injury. Everything about our so called recoveries appears to be true only because of stimulus measures. We buy ourselves a feel-good time today at the expense of those who come after us. Well, unless we achieve this magical ‘escape velocity’, but how can we expect to do that when all gains since 2008, dollar for dollar when you look at the ‘stimulating’ numbers, appear to be originating in central bank inputs? Without them, we’re standing still, at best.

But the Chinese, who have issues in their housing industry, and their growth numbers, and their exports, yada yada, saw their private wealth rise by close to 50% in just one year, 2013. Now, I didn’t read the full Boston Consulting Group report, but I know for a fact that neither the BBC nor Bloomberg even hinted at a possible connection between that number and the $25+ trillion Beijing poured into China’s economy. But here’s the clincher: The Chinese can make up as much ‘money’ out of nothing as they want, and the rest of the world will accept it as currency, because they all do the same, albeit on a somewhat smaller scale. So all the zombie Middle Kingdom money gets to buy up half of Africa, the best beaches in Greece, entire streets in London and New York, and no-one in charge is batting an eye because if they doth protest, they’d have to reveal their own out of thin air deception that props up the FTSE and the S&P.

Yeah, sure, but the (not so) funny zombie yuan displaces Greeks and Londoners and New Yorkers and Africans, who if they had access to similar fake funny cash could have just stayed where they are and outbid the Chinese for their tribes’ and parents’ own properties. Now they have to leave because there’s a game or contest going on of who can out-nothing the other.

The world’s private wealth didn’t increase one bit. The entire world borrowing from their children’s future did. And that’s a recipe for zombie disaster. Only not today. Which is what is keeping us fooled, but we do we like it that way? Are we not smart enough, or don’t we want to be? That increase in wealth the BCG ‘study’ reports is a big loud bad red-flashing warning sign, but our once reliable media talk about it as if somehow it’s a good thing. And we gobble that up as gospel because we can’t face the truth about our own lives.

We’d rather have the most audacious zombie printers – both domestic and abroad – take our land and our homes and the chairs we sit in away from under our behinds than fess up that we ourselves screwed up royally. If we observe our place in the world from that angle, how can we possibly claim we do not get what we deserve? Mind you, though, that’s the only thing we’re going to get. But it gets both better and worse: the payload isn’t going to hit us most, but our kids. And I’m wondering: do you find that comforting?

What a report on zombie wealth like this tells us is not that things are getting better, it’s telling us they’re getting worse at a fast clip. The more fake numbers, the further we slip and slide away from having functioning societies. It’s not our wealth that increases, but our debt.

Global Private Wealth Rises To $152 Trillion (BBC)

The amount of private wealth held by households globally surged more than 14% to $152 trillion (£90tn) last year, boosted mainly by rising stock markets. Asia-Pacific, excluding Japan, led the surge with a 31% jump to $37tn, a report by Boston Consulting Group says. The number of millionaire households also rose sharply. The report takes into account cash, deposits, shares and other assets held by households. But businesses, real estate and luxury goods are excluded. “In nearly all countries, the growth of private wealth was driven by the strong rebound in equity markets that began in the second half of 2012,” the firm said in its report. “This performance was spurred by relative economic stability in Europe and the US and signs of recovery in some European countries, such as Ireland, Spain and Portugal.” The amount of wealth held in equities globally grew by 28% during the year, Boston Consulting Group (BCG) said.

Economies in Asia have been key drivers of global growth in the recent years. And households in the region have benefitted from this growth. Within the region, China has been the biggest driver – with private wealth in the country surging more than 49% in 2013. High saving rates in countries such as China and India has also been a key contributing factor to this surge. The wealth held in the region is expected to rise further, to nearly $61tn by the end of 2018. “At this pace, the region is expected to overtake Western Europe as the second-wealthiest region in 2014, and North America as the wealthiest in 2018,” BCG said. The pace of wealth creation in China was also evident in the growth in the number of millionaire households – in US dollar terms – in the country, rising to 2.4 million in 2013, from 1.5 million a year ago. Overall, the total number of millionaire households in the world rose to 16.3 million in 2013, from 13.7 million in 2012.

Read more …

Could?

How Europe’s Amazing Bond Rally Could End In New Crisis (The Tell)

Take a good look at the chart above. It’s a picture of investors going crazy for Spanish government bonds in a low-interest rate, loose monetary-policy environment in Europe. But buyer beware — analysts warn that the rally in peripheral Europe’s sovereign bonds could come to an abrupt end if the region’s sluggish growth rates and worringly low inflation levels don’t pick up. For the first time since April 2010, the yield on 10-year Spanish bonds on Monday fell below the borrowing costs of 10-year U.S. notes as part of a wider rally for European assets. Spain’s 10-year yield slipped to 2.556%, inching below the 2.623% recorded for the U.S. counterpart, according to Tradeweb data.

Not only is this a major improvement from Spain’s plus-7% yields from the height of the euro-zone crisis in 2012, but the current trading level is also a fresh multi-century all-time low, according to Deutsche Bank. And Spain isn’t the only euro-zone nation to see its borrowing costs comfortably decline. Irish 10-year borrowing costs fell to a record low of 2.39% on Monday as well, while Italy’s yield on 10-year bonds are around the lowest level since 1945, according to Deutsche Bank.

“If anyone is in any doubt how extraordinary this period is in economic history then please take a look,” said Deutsche Bank’s Jim Reid in a note on Monday morning.

Read more …

Answer: More theft.

The ECB & The Fed: After 5-Years Of Coordinated Theft, What Next? (Alhambra)

With Japan providing no competition for global bond assets (their 10 year yields a paltry 0.6%), the hands down winner in the global developed bond market rate competition would appear to be the US Treasury. That assumes, of course, that currency values are determined by interest rate differentials, something that is widely believed but hard to square with the available historical data. Rates do matter at some point, but one would probably be better advised to buy currencies based on expectations of economic growth. If the ECB s monetary easing is successful in raising the growth prospects of Europe, stocks there seem likely to attract a bid (not that they ve been lacking for buyers; European stocks are up 160% from the lows). That might derail Draghi’s plans for a lower Euro if the demand for European stocks outstrips the demand for bonds.

It might also depend on the effectiveness of the newly announced policies, something that is far from assured. Like the US, Europe s growth problems are mostly structural and potentially impervious to more monetary easing. And certainly, Japan s experience with unconventional monetary policy would not seem to provide any reason for optimism about its ultimate effectiveness. They’ve been trying for over two decades to escape the malaise of poor demographics, high taxation and a coddled corporate culture through monetary pumping only to find themselves deeper in debt and still searching for consistent growth. Notably, the lack of growth and the lowest interest rates in the world hasn’t been conducive to a cheaper yen (until recently) and Draghi may find himself facing the same conundrum.

Indeed, there has been a plethora of research released over the recent past suggesting that too easy monetary policy is itself causing the very deflationary tendency it is designed to combat. The Minneapolis Fed chief, Narayana Kocherlakota first mentioned the possibility way back in 2011 but quickly backed off. The St. Louis Federal Reserve s Stephen Williamson published a paper last November arguing that the Fed s purchase of so many Treasuries was actually pulling down inflation rates. Last but not least the Bank for International Settlements (the central banks central banker), taking a longer term view, said recently that the world s addiction to monetary stimulus may be expansionary in the short term but contractionary over the long term as it just steals growth from the future.

Read more …

Where the money is these days.

Currency Carry Trades Rise in ECB’s Negative-Rate World (Bloomberg)

Mario Draghi is becoming one of currency traders’ only friends. With the $5.3 trillion-a-day foreign-exchange market poised to deliver its worst first-half returns on record, the carry trade is about the only way traders are making money by exploiting differences in global borrowing costs as volatility tumbles. That strategy became more profitable after the European Central Bank president cut interest rates on June 5. “The ECB has signaled risk is on again,” Eric Busay, a Sacramento-based money manager at the California Public Employees’ Retirement System, the largest U.S. public pension fund with $294 billion in assets, said in a June 6 phone interview. “People are concerned when to exit the trade and they understand the rush to exit could be crowded. But at the same time, you have to be in it to win it.”

A Deutsche Bank AG index that measures returns from a trade that buys the world’s five highest-yielding currencies, including South Africa’s rand and the New Zealand dollar, has jumped 1.3% since Draghi’s announcement, bringing its advance to 4.4% this year. Deutsche Bank’s Currency Valuation Excess Return index that makes investments based on relative purchasing power was little changed since Draghi cut rates, while the Currency Momentum Excess Return gauge, which buys assets that are rising the fastest, declined 0.6%. The indexes gained 0.7% and lost 4.6% this year. Draghi’s announcement of rate cuts and hints of further measures to come gave markets the confidence that global central banks aren’t finished with the policies that are suppressing volatility and allowing carry trades to thrive.

Read more …

A dumb-ass assessment from Mo. Get a life …

What If the Fed Has Created a Bubble? (El-Erian)

Investors might be surprised to learn that they have a lot riding on something that they pay very little attention to: macro-prudential regulation, or what central banks and other government agencies do to reduce the risk of systemic financial disasters. The aim of such regulation is to lower both the probability and potential costs of financial accidents. It does so by enhancing the resilience of the system, establishing circuit breakers to prevent problems in one area from contaminating others and, at the extreme, containing the detrimental impact on the broader economy when failures occur.

Macro-prudential regulation has been significantly enhanced in the aftermath of the global financial crisis. Authorities around the world have imposed higher and more intelligent capital requirements, required financial institutions to value their assets more conservatively and to hold more easy-to-sell assets, placed constraints on allowable risk-taking, insisted on more stable funding, and demanded greater provisions against bad loans. The impact of the revamped regulation has gone far beyond the targeted banks and other financial companies. It has allowed central banks to be bolder in maintaining and evolving exceptional monetary and credit stimulus, which in turn has significantly bolstered the prices of stocks, bonds and other assets as a means of stimulating the economy.

The more confident central bankers are in their macro-prudential approach, the greater their willingness to persist with stimulus policies today that could involve a bigger risk of financial instability down the road — a trade-off that has been noted recently by Minneapolis Fed President Narayana Kocherlakota, Boston Fed President Eric Rosengren and former Fed Governor Jeremy Stein. Essentially, the Fed has been pushing stock and bond prices up to “bubblish” levels, in the expectation that they will inspire the kind of consumer spending, physical investments and hiring required to subsequently justify them. The hope is that the convergence will occur in the context of full employment and inflation near the Federal Reserve’s target of 2%. So far, though, the wedge between asset prices and economic reality remains large, as last week’s juxtaposition of new stock-market highs and still-anemic wage-inflation data demonstrated.

Read more …

Farrell thinks the climate will carry Hillary to the White House in a throne. What has she done lately?

The 1 Big Reason GOP Will Lose The Presidency In 2016 (Paul B. Farrell)

Warning to GOP: A new poll says you can kiss the presidency goodbye for 10 more long years: Why? “Voters have little tolerance for a presidential candidate in 2016 who doesn’t believe that climate change is caused by human activity.” More on that below. But that means the GOP is destined to be on the outside of the White House for 10 more years, playing by the same total-defense playbook that didn’t work the last two presidential elections. Why? You can’t blame the tea party. Nor voter suppression and self-defeating immigration policies. Not minimum wages, debt, taxes, abortion, gun laws, pipelines nor same-sex marriage. Not health care, inequality nor the weak recovery. Not even rapidly shifting demographics. Yes, these trends will increase your handicap, radically changing the GOP’s next-generation base. But that’s not why the GOP won’t win back the presidency.

And what about taking back the Senate? Don’t cheer too loudly. That advantage won’t last long. More defensive battles fighting an incumbent president with veto power. Bad for the image. And then, in 2016, not only the presidency is up from grabs, 23 GOP senators and only 10 Dems are up for re-election. It gets worse: From now till the 2014 elections, the GOP will double down with the same hard-right strategy that plays well to a conservative base. But then from 2014 to 2016 you must shift to a center-left strategy to appeal to the emerging new American voter if you want to win over a national fan base for 2016. But that doubling-down also puts the GOP in a double-bind: By 2016, any left-leaning candidate will anger the hard-right base that wins back the Senate in 2014. A huge dilemma.

GOP’S biggest problem 2014-2024? The one and only … Big Oil Yes, Big Oil will be the GOP’s biggest problem for years. And the big reason the GOP can kiss the presidency goodbye. Why? Big Oil won’t change. For one, they’ll fight any carbon tax. But to win the presidency, the GOP must change. A classic double bind. That’s why no Republican will occupy the White House likely till 2024. One reason: Big Oil, ExxonMobil, Shell, BP, ConocoPhillips, Chevron, and, of course, the Koch billionaires. Yes, the GOP’s in love with Big Oil. The money keeps them in Washington. They’re mutually dependent, addict-and-supplier, obsessed-and-object, master-and-servant, trapped in a symbiotic dance of death. So blindly dependent they can’t see, cannot break free of their dependency.

One has the money and power, needs to manipulate the law. The other craves money, status and an illusion of power. A classic dependency syndrome. Both hold tight, won’t wake up, till it’s too late after they bottom-out, trigger a collapse, like 2000 and 2008, that takes down the economy, forces them to create a new business model, new political game strategy. Unfortunately, the collapse will be traumatic, painful, not only for Big Oil, the GOP, also a million car owners, and the world economy. So for years to come, the so-called “Party of Big Business” will keep losing the presidency because their Big Oil suppliers control the GOP votes, dictate how to vote, and when the GOP gets its fix. But for now, Big Oil’s game plan is profitable: A pittance to politicians yields billions in tax breaks, favorable regulations, a fabulous return on investment for Big Oil.

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I have a fourth: QE.

3 Reasons The Dow Doesn’t Deserve To Be At 17,000 (MarketWatch)

We’re straddling 17,000 on the Dow Jones Industrial Average. But it just doesn’t feel right. It has to be the most unenthusiastic rally in a generation — maybe more. It’s not that there isn’t reason to be buying stocks. We are now five years into an economic recovery that began in mid-2009, according to the National Bureau of Economic Research. It’s been a slow slog. It’s been paced. Those are actually good reasons to be buying stocks. A rapidly growing economy, which coincided with the dot-com boom and the housing bubbles, usually go belly up as quickly as they rise.

And the stock market always leads the economy. Investors tend to buy cheap and ride the wave of ever-increasing earnings and premiums added to their holdings. But a 155% rise in the Dow since the 2009 nadir of the financial crisis? A 31% rise in the past 18 months? Yes, the gains look that more striking because of the lows we hit in the Great Recession. Still, that’s a fantastic run considering that last week we finally recovered the jobs lost since the financial and housing crises hit. At that point the Dow was 18% lower than it is today. There are many reasons this rally feels empty. But here are the biggest, most obvious reasons:

No one is really buying. Stock prices are edging higher, but it’s not retail investors driving the trend. Lipper reported that investors last week actually pulled $921 million from U.S. stock mutual funds in the week ended June 4, and $451 million the previous week.

Corporate earnings are flat. You’d think that as the market reaches this milestone, corporate profits would be churning, or a least growing. They aren’t. The Bureau of Economic Analysis reports that its measure of corporate profits declined 9.8% in the first quarter. It was the largest drop since the fourth quarter of 2008, and during the past four quarters, corporate profits have fallen 3%. Market analyst and adviser Doug Short noted last week that the market SPX is overvalued in the range of 51% to 85% when measured by price-to-earnings ratios and the lesser known Q ratio (total price of the market divided by replacement cost).

There are no alternative investments. Rather than higher prices for goods and services and a devalued currency, the real consequence of the Federal Reserve’s efforts to stimulate the economy through lower interest rates, bond buying and easy credit seems to be inflation in the stock market.

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Not that hard a guess to make.

Goldman Explains How The China Commodity Unwind Will Happen (Zero Hedge)

Over a year ago we were the first to bring the topic of China’s shadow banking system’s problematic rehypothecation issues to the general trading public. In “The Bronze Swan Arrives: Is The End Of Copper Financing China’s “Lehman Event”?” we explained how the Chinese commodity financing deals (CCFDs) worked and how they would inevitably be a systemic event for the nation so dependent on the shadow banking system for its credit (and its “growth”). The day has arrived when the Bronze Swan is landing (and it’s unlikely to be soft). As we have discussed recently, the probe into ‘missing’ collateral (or multiple-used collateral) at China’s Qingdao warehouse is a major problem… and now Goldman confirms, the Qingdao situation likely to continue ongoing CCFD unwind and has the potential to leave foreign banks with undercollateralized loans and/or losses. Via Goldman Sachs:

Qingdao situation and the copper market outlook – According to reports, an onshore trading company is being investigated for allegedly pledging commodities (aluminium and copper) multiple times with different banks in order to gain access to cheap FX funding (specifically via repurchase agreements, or “repo” business). This has the potential to leave foreign banks with undercollateralized loans and/or losses. Given this, a number of foreign banks may suspend their repo business in China, as well as shrink their commodity financing positions in China in general. The Qingdao issue could be a catalyst for further CCFD unwinding In our view the developments in Qingdao are likely to continue the significant scaling back of FX inflows from foreign banks into China via commodity financing business.

This would disincentivize the physical holding of commodities in bonded warehouses, increasing ‘visible’ inventories and placing more downward pressure on physical (cash prices) than upward pressure on futures prices. As foreign banks reduce their exposure to Chinese commodity financing deals (CCFDs), the profitability of these could be reduced meaningfully (via an increase of US rates and/or a lower FX loan quota to CCFD participants), more physical metal previously tied up in financing deals would be freed up for the physical market, helping ease the current temporary regional tightness. With respect to copper in particular, we expect more copper will either flow back to China or LME, depending on which market is relatively stronger. Indeed, there are signs of unwinding in near-dated tightness in the market recently, as indicated by the significant easing of both Shanghai premia and LME time spreads (Exhibits 2).

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We don’t know the half of it.

Lean Retirement Faces U.S. Generation X as Wealth Trails (Bloomberg)

Good timing is not the age group’s forte. Many took out mortgages just before prices plunged, making them the most disadvantaged by the housing crisis, while the 2008 stock-market slump dealt them a further setback. Only one-third of Generation X households had more wealth than their parents held at the same age, even though most earn more, The Pew Charitable Trusts found. When their working years end, Gen-Xers might have to live on just half of their pre-retirement income, compared with 60% for the Baby Boom generation, Pew said last year. “Generation X is at this really critical historical spot,” said Diana Elliott, a research officer in financial security and mobility at Pew, a non-profit global research and public policy organization in Washington. “They are not doing well relative to the last generation. It should give us concern as a country.” [..]

Gen-Xers lost about half of their wealth between 2007 and 2010, according to a Pew Economic Mobility analysis last year. Even before the housing collapse, they were having trouble keeping up with their parents in building assets, according to Pew, which defines Generation X as people born between 1966 and 1975. “Gen-Xers are the least financially secure and the most likely to experience downward mobility in retirement,” the Pew analysis found last year. The bursting of the dot-com bubble, which culminated in a 67% drop in the Nasdaq from 2000 to 2002, was a particularly severe blow to Gen-Xers just starting their careers. While most didn’t directly own stocks, the economy slipped into recession and unemployment for 25- to 34-year-olds in 2003 hit its highest level in almost a decade.

Student loans also slowed asset-building, said Signe-Mary McKernan, an economist at the Washington-based Urban Institute. “Under the impact of successive booms and busts, many Xers have struggled to afford a family or keep their home, much less do better than their parents,” Neil Howe, co-author with William Strauss of books on generations in American history, said at a May 8 research symposium in St. Louis. “Then came the Great Recession, which hit Xers much harder.” The median income for 35- to 44-year-olds dropped 9.1% in the three years ended in 2010, according to the Federal Reserve’s Survey of Consumer Finances. Incomes of those age 35 or less, including the youngest Gen-Xers and Millennials, fell 10.5%. While incomes of 35- to 44-year-olds deteriorated less than those of younger Americans, their net worth slumped by 54%, the most for any age group, as the value of stock holdings and properties declined. The median net worth of those younger than 35 declined 25%.

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Jobs Friday: What The Bubblevision Revelers Missed (David Stockman)

Yes, the nonfarm payroll clocked in at 138.5 million jobs and thereby retraced for the first time the point at which it stood 77 months ago in December 2007. This predictably elicited another milestone of progress squeal from the mainstream media. So you have to wonder. Did these people skip history class? Do they understand the vital idea of context ? Are they so mesmerized by paint-by-the-numbers agit prop from Wall Street and Washington that they have come to mindlessly embrace the notion that any number that is better than the last print is all that it takes regardless of composition, quality or longer-term trend? Thus, consider the ancient days of the Reagan era. Back then there were actually 15.0 million new jobs by the time that 77 months had elapsed after the June 1982 bottom.

And these were honest-to-goodness new jobs that had never before existed, not born again jobs of the type that CNBC has made a jobs Friday fetish out of ever since the Great Recession was officially declared over in June 2009. So if you want to try a little context absurdity recall this. So far we have created a trifling 100k new jobs since the last cyclical peak. During the equivalent 77 months in the Reagan era the US economy actually generated 150 times more jobs! And, no, that wasn t due to a demographic windfall of new employable bodies. During that 77 month period the civilian population age 16 and over increased by 8% or 13.3 million. This means that 113% of the growth in the pool of employable adults was converted into job-holders.= This time around, the pool of working age adults grew by quite respectable 14.4 million; and that amounted to a not shabby gain of 6% from December 2007.

But self-evidently, during the 77 months since then virtually zero percent of the labor pool growth was converted into job holders. So the yawning difference between the Reagan era and now is not a surfeit of demography, but a dearth of job creation. And this has nothing to do with Ronald Reagan hagiography since the jobs gains of the 1980s were purchased in part with grotesque peacetime deficits of a magnitude never seen previously. Nor would they be seen again until the Bush-Obama era showed what real fiscal profligacy looks like. But the larger point is that each cycle since the 1980s has generated net new jobs, albeit at a steadily declining rate. The truth of the matter is that we have now reached the point where no new payroll jobs have appeared for 77 months which is to say, over the entire span of a historically ordinary peak-to-peak business cycle. Rather than a cause for celebration, therefore, the Friday jobs print ought to stand out as a wake-up call.

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And even that …

Britain Readies ‘Last Resort’ Measures To Keep The Lights On (Telegraph)

Britain may be forced to use “last resort” measures to avert blackouts in coming winters, Ed Davey, the energy secretary, will say on Tuesday. Factories will be paid to switch off at times of peak demand in order to keep households’ lights on, if Britain’s dwindling power plants are unable to provide enough electricity, under the backstop measures from National Grid. The Grid is expected to announce that it will begin recruiting businesses that will be paid tens of thousands of pounds each simply to agree to take part in its scheme. They will receive further payments if they are called upon to stop drawing power from the grid. It is also expected to press ahead with plans to pay mothballed gas power plants to ready themselves to be fired up when needed. “Both the new demand and supply balancing services will be used only as a last resort – and are a safety net to protect households in difficult circumstances, such as a hard winter or very high surges in demand,” Mr Davey will say.

Critics have suggested the measures, which were first mooted last summer, would represent a return to 1970s-style power rationing. But Mr Davey will refute this, saying: “It is entirely voluntary. Nobody will get cut off. No economic activity will be curtailed.” Mr Davey is on Tuesday also expected to publish a new gas “risk assessment” in response to the Ukraine crisis. He said this would show Britain could “comfortably” withstand extreme cold weather or the loss of key supplies. Energy regulator Ofgem warned last summer that Britain’s spare power capacity margin – the difference between peak demand and supply – could fall as low as 2pc in winter 2015-16 as old power plants close and new ones are not yet built. The risk of blackouts could be as high as one in four unless consumers cut demand, it said.

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Your world.

Thousands Of Irish Orphans Were Used As ‘Drug Guinea Pigs’ (RT)

Over 2,000 care-home kids were secretly vaccinated against diphtheria in the 1930s in medical trials undertaken by international drugs giant Burroughs Wellcome, Irish media reveal. Among the testing sites was a recently discovered mass grave. The medical records cited by the Irish Daily Mail show that some 2,051 children and babies across several Irish care homes may have been subjected to the practice. Michael Dwyer, of Cork University’s School of History, found the data after foraging through tens of thousands of archive files and old medical journals. What he did not find is whether any consent was gained for these alleged illegal drug trials or any records of the effects on the infants involved.

Dwyer discovered that the tests were carried out shortly before the drugs were made readily available in the UK. The homes involved included Bessborough, County Cork, and Sean Ross Abbey in Roscrea, County Tipperary. “What I have found is just the tip of a very large and submerged iceberg,” Dwyer told the paper. “The fact that reports of these trials were published in the most prestigious medical journals suggests that this type of human experimentation was largely accepted by medical practitioners and facilitated by authorities in charge of children’s residential institutions.” The Newstalk Breakfast on Monday show also found out that nearly 300 children living in care homes in the 1960s and 70s were used as guinea pigs in medical trials. Ireland had no laws pertaining to medical testing until 1987.

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