Feb 192017
 
 February 19, 2017  Posted by at 10:23 am Finance Tagged with: , , , , , , , , ,  4 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


John Vachon Beer signs on truck, Little Falls, Minnesota 1940

 


Fed: From Lender Of Last Resort To Destroyer Of American Wealth (DDMB)
“There’s Something Weird Going On”: The Global Dollar Shortage (ZH)
Merkel Suggests Euro Is Too Low For Germany (R.)
Empowering “Deep State” is Prescription for Destroying Democracy (Greenwald)
Sekulow: Obama Should Be “Held Accountable” For “Soft Coup” Against Trump (ZH)
Russia Calls For ‘Post-West’ World Order – Lavrov (R.)
Lavrov on US Election Hacking Claims: ‘Give Us Some Facts’ (BBG)
Nine People Flee US Border Patrol To Seek Asylum In Canada (R.)
GMO Crops Are Driving Genocide And Ecocide – Keep Them Out Of The EU! (Paul)
‘From Bad To Worse’: Greece Hurtles Towards A Final Reckoning (O.)
Greek Banks Worry Over Sudden Bad Loan Spike In January (K.)
Greeks Turn to the Black Market as Another Bailout Showdown Looms (NYT)
Tensions Escalate In Aegean As Turkish Boat Fires Shots in Greek Waters (K.)
Defend The Sacred (Bell)

 

 

Looks like a must read: [..] a special preview excerpt from FED UP: An Insider’s Take on Why The Federal Reserve is Bad for America by Danielle DiMartino Booth.

She agrees with me: “The one true growth industry? That would be all that high cotton harvested in high finance. Since 2007, world debt has grown by about $60 trillion, enriching legions of investment bankers one bond deal at a time.”

Fed: From Lender Of Last Resort To Destroyer Of American Wealth (DDMB)

Created in 1913 after the Panic of 1907, the Federal Reserve was founded to keep the public’s faith in the buying power of the U.S. dollar. After failing miserably in the 1930s, the Fed aimed to be more responsive. This led the institution to find discipline in the rising macroeconomic models championed by top monetary theorists. During the ensuing “Quiet Period” in American banking, deposit insurance prevented panics, the Fed controlled interest rates and manipulated the money supply, and though occasional disruptions flared, like the failure of Continental Illinois National Bank and Trust Company in 1984, no systemic risk erupted for seventy years. The Fed had tamed the volatile U.S. economy.

Until September 2008, when all hell broke loose in a worldwide panic that completely blindsided and, embarrassed the Federal Reserve. The Fed had used billions of dollars in taxpayer funds to bail out Wall Street fat cats. Everyone blamed the Fed. Just before 9 a.m., the door to the chairman’s office opened. Federal Reserve Chairman Ben Bernanke took his place in an armchair at the center of a massive oval table. The members of the FOMC found their designated places around the table; aides sat in chairs or couches against the wall. With staff, the room contained fifty or sixty people, far more than normal for this momentous occasion. In front of each FOMC member was a microphone to record their words for posterity. To a casual observer, the content of their conversation would be obscured by economic jargon.

This day, their essential task was to vote on whether to take the “fed funds” rate—the interest rate at which banks lent money to each other in the overnight market—to the zero bound. The history-making low rate would ripple throughout the economy, affecting the price to borrow for businesses and consumers alike. Bernanke was calm but insistent. His lifetime of study of the Great Depression indicated this was the only way. His sheer depth of knowledge about the Fed’s mishandling of that tragic period was undoubtedly intimidating. By the end of the meeting, the vote was unanimous. The FOMC officially adopted a zero-interest-rate policy in the hopes that companies teetering on the brink of insolvency would keep the lights on, keep employees on their payrolls, and keep consumers spending. It would even pay banks interest on deposits.

Free cash. We’ll even pay you to take it! As they gathered their belongings, everyone shook hands, all very collegial despite the sometimes vigorous discussion. They journeyed back to their nice homes in the toniest neighborhoods of America’s richest cities: New York, Boston, Philadelphia, Chicago, Dallas, San Francisco, Washington, DC. They returned to their lofty perches, some at the Eccles Building, others to the executive floors of Federal Reserve District Bank buildings, safely cushioned from the decision they had just made. Most of them were wealthy or had hefty defined benefit pensions. Their investments were socked away in blind trusts. They would feel no pain in their ivory towers.

Read more …

A Eurodollar is a dollar held anywhere outside the US.

“There’s Something Weird Going On”: The Global Dollar Shortage (ZH)

While we urge readers to listen to the full interview below, here are some of the highlights, starting with “why the Dollar shortage a symptom of an inherently unstable system.” As Snider explains, “the dollar shortage isn’t so much the shortage per se, it’s the fact that it’s a symptom of what is an inherently unstable system.” He notes that “the reason banks are withdrawing from the system is that it’s just is no longer tenable” and “so there has to be some kind of – whether you want to look at it like another Bretton Woods – conference, a global monetary system, a global monetary get together where people start to analyze solutions to the problem as they are rather than keep trying to apply band aids that are not going to work. ” But, he concludes, “step one of that task is to actually recognize the problem as it is and so doing more stimulus or doing more QE isn’t going to solve anything it isn’t do anything just like prior QEs and prior stimulus haven’t done anything either because the problem is an unstable system.”

Snider focuses on the Eurodollar system, which he defines as a problem of “decay and dysfunction” and explains that “nothing ever happens in a straight line even the Eurodollar problem has not been a singular event. It’s not been a decade long straight line of decay and dysfunction.” He goes on to say that the fact that after enough time these markets have adjusted to the fact that the economy’s going to be bad for a very long time until something actually changes and so true reflation is predicated on something actually changing rather than the hope that something might change.

Looking at history, Snider observes that “what happened in July 2008 obviously was the fact that everyone decided almost all at once that wasn’t the right interpretation of what the Fed was doing nor was it the right interpretation of the dollar system overall. So, that reflation ended in reality which was the dollar system was eroding and it was eroding in a very dangerous way and that’s why oil prices essentially crashed from July till I think January 2009.” An implication of the ongoing reserve currency funding shortage is that, according to Snider, despite the occasional blip (arguably funded by massive Chinese credit creation), “reflation is going to fail and there’s nothing the Fed can do about it.” He goes on to state that “until they fix the global dollar problem we’re not going to fix the global economy and so we’re kind of stuck gyrating between various levels of really bad. We go from the lack of recovery to what looks like a global recession to the lack of recovery and back again” as a result he thinks that “reflation is going to fail.”

[..] Snider summarizes by saying that “the fact that these markets realize that there’s a problem in Eurodollar system, there’s no banking to be had, no additional marginal banking capacity being added and without it none of these stuff really matters, none of these other stuff really matters. That’s the only thing that truly matters” and concludes gloomily that “the probability scenarios for economic and financial future are much darker now than they were three years ago.”

Read more …

It’s blowing the EU apart but its de facto leader says she has “no power to address this problem”. That’s just great.

Merkel Suggests Euro Is Too Low For Germany (R.)

German Chancellor Angela Merkel suggested on Saturday that the euro was too low for Germany but made clear that Berlin had no power to address this “problem” because monetary policy was set by the independent ECB. Merkel made her remarks at the Munich Security Conference as U.S. Vice President Mike Pence looked on. They seemed aimed at addressing recent criticism from a top trade adviser to President Donald Trump, who has accused Germany of profiting from a “grossly undervalued” euro. “We have at the moment in the euro zone of course a problem with the value of the euro,” Merkel said in an unusual foray into foreign exchange rate policy.

“The ECB has a monetary policy that is not geared to Germany, rather it is tailored (to countries) from Portugal to Slovenia or Slovakia. If we still had the (German) D-Mark it would surely have a different value than the euro does at the moment. But this is an independent monetary policy over which I have no influence as German chancellor.” The euro has fallen nearly 25% against the dollar over the past three years, touching a 14-year low of $1.034 in January. But it has since risen to roughly $1.061. In late January, Peter Navarro, the head of Trump’s new National Trade Council, said the euro’s low valuation was giving Germany an edge over the United States and its European Union partners. His comments came weeks after Trump himself said the dollar’s strength against the Chinese yuan “is killing us”, deepening concerns that his administration could pursue a more confrontational, protectionist approach to trade. Merkel and other German officials pushed back forcefully at the time.

Read more …

Lots of Deep State pieces these days. Greenwald provides some balance.

Empowering “Deep State” is Prescription for Destroying Democracy (Greenwald)

The deep state, although there’s no precise or scientific definition, generally refers to the agencies in Washington that are permanent power factions. They stay and exercise power even as presidents who are elected come and go. They typically exercise their power in secret, in the dark, and so they’re barely subject to democratic accountability, if they’re subject to it at all. It’s agencies like the CIA, the NSA and the other intelligence agencies, that are essentially designed to disseminate disinformation and deceit and propaganda, and have a long history of doing not only that, but also have a long history of the world’s worst war crimes, atrocities and death squads. This is who not just people like Bill Kristol, but lots of Democrats are placing their faith in, are trying to empower, are cheering for as they exert power separate and apart from—in fact, in opposition to—the political officials to whom they’re supposed to be subordinate.

And you go—this is not just about Russia. You go all the way back to the campaign, and what you saw was that leading members of the intelligence community, including Mike Morell, who was the acting CIA chief under President Obama, and Michael Hayden, who ran both the CIA and the NSA under George W. Bush, were very outspoken supporters of Hillary Clinton. In fact, Michael Morell went to The New York Times, and Michael Hayden went to The Washington Post, during the campaign to praise Hillary Clinton and to say that Donald Trump had become a recruit of Russia. The CIA and the intelligence community were vehemently in support of Clinton and vehemently opposed to Trump, from the beginning. And the reason was, was because they liked Hillary Clinton’s policies better than they liked Donald Trump’s.

One of the main priorities of the CIA for the last five years has been a proxy war in Syria, designed to achieve regime change with the Assad regime. Hillary Clinton was not only for that, she was critical of Obama for not allowing it to go further, and wanted to impose a no-fly zone in Syria and confront the Russians. Donald Trump took exactly the opposite view. He said we shouldn’t care who rules Syria; we should allow the Russians, and even help the Russians, kill ISIS and al-Qaeda and other people in Syria. So, Trump’s agenda that he ran on was completely antithetical to what the CIA wanted. Clinton’s was exactly what the CIA wanted, and so they were behind her. And so, they’ve been trying to undermine Trump for many months throughout the election. And now that he won, they are not just undermining him with leaks, but actively subverting him. There’s claims that they’re withholding information from him, on the grounds that they don’t think he should have it and can be trusted with it. They are empowering themselves to enact policy.

Now, I happen to think that the Trump presidency is extremely dangerous. You just listed off in your news—in your newscast that led the show, many reasons. They want to dismantle the environment. They want to eliminate the safety net. They want to empower billionaires. They want to enact bigoted policies against Muslims and immigrants and so many others. And it is important to resist them. And there are lots of really great ways to resist them, such as getting courts to restrain them, citizen activism and, most important of all, having the Democratic Party engage in self-critique to ask itself how it can be a more effective political force in the United States after it has collapsed on all levels. That isn’t what this resistance is now doing.

Read more …

The timing is indeed very peculiar.

Sekulow: Obama Should Be “Held Accountable” For “Soft Coup” Against Trump (ZH)

[..] what until recently was a trickle of private data captured about US individuals by the NSA with only a handful of people having full, immersive access, suddenly became a firehose with thousands of potential witnesses across 16 other agencies, each of whom suddenly became a potential source of leaks about ideological political opponents. And with the universe of potential “leaking” culprits suddenly exploding exponentially, good luck finding the responsible party. However, the implications are far more serious than just loss of privacy rights. According to civil right expert and prominent First Amendement Supreme Court lawyer, Jay Sekulow, what the agencies did by leaking the Trump Administration information was not only illegal but “almost becomes a soft coup”, one which was spurred by the last minute rule-change by Obama, who intentionally made it far easier for leaks to propagate, and next to impossible to catch those responsible for the leaks.

This is his explanation: “There was a sea-change here at the NSA with an order that came from president Obama 17 days before he left office where he allowed the NSA who used to control the data, it now goes to 16 other agencies and that just festered this whole leaking situation, and that happened on the way out, as the president was leaving the office. Why did the Obama administration wait until it had 17 days left in their administration to put this order in place if they thought it was so important. They had 8 years, they didn’t do it, number one. Number two, it changed the exiting rule which was an executive order dating back to Ronald Reagan, that has been in place until 17 days before the Obama administration was going to end, that said the NSA gets the raw data, and they determine dissemination.

Instead, this change that the president put in place, signed off by the way by James Clapper on December 15, 2016, signed off by Loretta Lynch the Attorney General January 3, 2017, they decide that now 16 agencies can get the raw data and what that does is almost creates a shadow government. You have all these people who are not agreeing with President Trump’s position, so it just festers more leaks. If they had a justification for this, wonderful, why didn’t they do it 8 years ago, 4 years ago, 3 years ago. Yet they wait until 17 days left. One potential answer: they knew they had a “smoking gun”, and were working to make it easier to enable the information to be “leaked” despite the clearly criminal consequences of such dissemination.

As this point Hannity correctly points out, “it makes it that much more difficult by spreading out the information among 16 other agencies, if they want to target or take away the privacy rights, and illegally tap the phones, in this case General Flynn, it’s going to be much harder to find the perpetrator. Sekulow confirms, noting that back when only the NSA had access to this kind of raw data, there would be a very small amount of people who have access to this kind of data. “But this change in the Obama Administration was so significant that they allowed dissemination to 16 other agencies, and we wonder why there’s leaks.” Sekulow’s conclusion: “President Obama, James Clapper, Loretta Lynch should be held accountable for this.”

Read more …

Russia’s no big fan of -unfetterred- globalization either: “I hope that (the world) will choose a democratic world order – a post-West one – in which each country is defined by its sovereignty.”

Russia Calls For ‘Post-West’ World Order – Lavrov (R.)

Russian Foreign Minister Sergei Lavrov called Saturday for an end to a world order dominated by the West and said Moscow wanted to establish a “pragmatic” relationship with the United States. Lavrov was speaking at the Munich Security Conference shortly after US Vice President Mike Pence told the audience Washington remained “unwavering” in its commitment to the US-led NATO military alliance as it faced a more assertive Russia. Lavrov said that the time when the West called the shots was over and, dismissing NATO as a relic of the Cold War, added: “I hope that (the world) will choose a democratic world order – a post-West one – in which each country is defined by its sovereignty.”

Lavrov said Moscow wanted to build relations with Washington which would be “pragmatic with mutual respect and acknowledgement of our responsibility for global stability.” The two countries had never been in direct conflict, he said, noting that they were actually close neighbours across the Baring Straits. Russia wanted to see a “common space of good neighbour relations from Vancouver to Vladivostok,” he added. Pence was in Europe along with Secretary of State Rex Tillerson and defence chief James Mattis as part of efforts to reassure allies rattled by President Donald Trump’s “America First” stance and his calls for improved ties with Russia despite the continuing crisis in Ukraine.

Read more …

“He said Russia had “many years ago” initiated work at the United Nations to discuss information security. “Our western partners evaded that work..”

Lavrov on US Election Hacking Claims: ‘Give Us Some Facts’ (BBG)

Foreign Minister Sergei Lavrov pushed back against accusations that Russian hackers meddled in last year’s U.S. presidential election, saying no one had put forward any proof and former President Barack Obama’s administration ignored repeated overtures to discuss cyber-security norms. “Somehow when we are blamed, no one asked for facts,” Lavrov said at the Munich Security Summit on Saturday. “Give us some facts.” In his remarks, made in response to an audience question about whether Russia interferes in other countries’ elections, Lavrov portrayed Russia as a leader in efforts to focus on information security. He said Russia had “many years ago” initiated work at the United Nations to discuss information security. “Our western partners evaded that work,” he said.

After Donald Trump won the election in November, the U.S. intelligence community issued an assessment that Russia sought to sway the election in his favor through the hacking of the Democratic National Committee and Hillary Clinton’s campaign staff. In the waning days of his administration, Obama imposed new sanctions on Russia’s military intelligence agency and the successor agency to the KGB, saying the actions had been directed “at the highest level” of the government. [..] “I have seen no facts, there were just some accusations that we tried to hack some Democratic party website; that’s happening in France, Germany, Italy,” Lavrov said. He went on to point blame at the U.S. and make a reference to recent leaks that the CIA may have spied on French political parties before the 2012 election there. WikiLeaks released e-mails making that claim this week.

Lavrov said he had suggested to the Obama administration in 2015 that the two countries discuss working together on cyber-security, and repeatedly asked former Secretary of State John Kerry about the proposal. “For a year we had no reaction from them,” he said. “Then in December last year they said let’s meet, and later they said now we have transitional administration let’s postpone it.”

Read more …

Not the first time in history people flee from the US to Canada.

Nine People Flee US Border Patrol To Seek Asylum In Canada (R.)

Nine asylum-seekers, including four children, barely made it across the Canadian border on Friday as a U.S. border patrol officer tried to stop them and a Reuters photographer captured the scene. As a U.S. Customs and Border Patrol officer seized their passports and questioned a man in the front passenger seat of a taxi that had pulled up to the border in Champlain, New York, four adults and four young children fled the cab and ran to Royal Canadian Mounted Police on the other side. One by one they scrambled across the snowy gully separating the two countries. RCMP officers watching from the other side helped them up, lifting the younger children and asking a woman, who leaned on her fellow passenger as she walked, if she needed medical care. The children looked back from where they had come as the U.S. officer held the first man, saying his papers needed to be verified.

The man turned to a pile of belongings and heaved pieces of luggage two at a time into the gully – enormous wheeled suitcases, plastic shopping bags, a black backpack. “Nobody cares about us,” he told journalists. He said they were all from Sudan and had been living and working in Delaware for two years. The RCMP declined on Friday to confirm the nationalities of the people. A Reuters photo showed that at least one of their passports was Sudanese. The man then appeared to grab their passports from the U.S. officer before making a run for the border. The officer yelled and gave chase but stopped at the border marker. Canadian police took hold of the man’s arm as he crossed. The border patrol officer told his counterpart that the man was in the United States illegally and that he would have detained him. Officers on both sides momentarily eyed the luggage strewn in the snow before the U.S. officer took it, and a walker left on the road, to the border line.

Read more …

Overview of the damage done across the world by GMO.

GMO Crops Are Driving Genocide And Ecocide – Keep Them Out Of The EU! (Paul)

We currently face a desperate, almost farcical push for GM crops in the UK and Europe, characterised by hyperbolic and inaccurate claims. So rather than taking those claims on trust, let’s look at the impacts of GM crops in countries that have adopted them. That means North and South America, where GM crops were first launched in 1996. The cultivation of herbicide tolerant crops in Argentina began in 1996 with GM soya and spread swiftly through the country. As Argentina’s Grupo Reflexion Rural (GRR) wrote to the Vatican in April 2013, “The model was based on the political decision that Argentina, which had once been the grain basket of the world and a producer of healthy and high-quality foods, would be transformed into a producer of animal forage, firstly, to provide fodder for European livestock, and then for livestock in China.”

At first, herbicide tolerant crops seemed to simplify the farming process, especially for larger mechanised farms. Instead of skillful weed management, farmers applied large quantities of the herbicide glyphosate, mainly from the air. Powerful groups of investors helped drive GM soya production. Small farmers could not compete and many have left or been driven off their land, often into urban slums. People who remain in the countryside and small towns find themselves bombarded from the air with increasingly complex mixtures of chemicals intended to combat the problem of increasing weed and pest resistance. Although GM crops were promoted as a means to reduce levels of pesticides used, pesticide use in Argentina has increased massively, “from nine million gallons (34 million litres) in 1990 to more than 84 million gallons (317 million litres) today”.

[..] Europe has been wise to resist the pressure to adopt GM crops for cultivation except for a GM maize mainly grown in Spain. In the face of the evidence from countries with experience of these crops, and their associated cocktails of agrotoxics, why should Europe be forced to consider another GM crop for cultivation? But Europe should go further. The soya boom is driven by markets for animal feed, in the form of soya meal or cake, and biodiesel from soya oil. Vast quantities of both are imported into Europe, making it a major driver of South America’s unfolding GM disaster. The EU should surely stop importing GM animal feeds and oils from North and South America.

Indeed Europe should change its whole approach to livestock and crop production to address human health impacts, biodiversity loss and climate change. Far from being a “museum of world farming” as the UK’s current environment minister, Owen Paterson, likes to claim, Europe could show the way to a rich and varied GM free agriculture that provides nutritious, healthy food and jobs. It would at the same time address the profound degradation of soils and accelerating biodiversity loss, caused to a great extent by the industrial model of agriculture to which genetically engineered crops belong.

Read more …

“All I know is that we are all being pushed,” he said, searching for the right words. “Pushed in the direction of somewhere very explosive, somewhere we do not want to be.”

‘From Bad To Worse’: Greece Hurtles Towards A Final Reckoning (O.)

The assumption is that the prime minister, Alexis Tsipras, will cave in, just as he did when the country came closest yet to leaving the euro at the height of the crisis in the summer of 2015. But the 41-year-old leader, like Syriza, has been pummelled in the polls. Persuading disaffected backbenchers to support more measures, and then selling them to a populace exhausted by repeated rounds of austerity, will be extremely difficult. Disappointment has increasingly given way to the death of hope – a sentiment reinforced by the realisation that Cyprus and other bailed-out countries, by contrast, are no longer under international supervision.

In his city centre office, the former finance minister Evangelos Venizelos pondered where Greece’s predicament was now. “[We are] at the same point we were several years ago,” he joked. “The only difference is that anti-European sentiment is growing. What was once a very friendly country towards Europe is becoming increasingly less so, and with that comes a lot of danger, a lot of risk.” When historians look back they, too, may conclude that Greece has expended a great deal of energy not moving forward at all.

The arc of crisis that has swept the country – coursing like a cancer through its body politic, devastating its public health system, shattering lives – has been an exercise in the absurd. The feat of pulling off the greatest fiscal adjustment in modern times has spawned a slump longer and deeper than the Great Depression, with the Greek economy shrinking more than 25% since the crisis began. Even if the latest impasse is broken and a deal is reached with creditors soon, few believe that in a country of weak governance and institutions it will be easy to enforce. Political turbulence will almost certainly beckon; the prospect of “Grexit” will grow.

“Grexit is the last thing we want, but we may arrive at a point of serious dilemmas,” said Venizelos. “Whatever deal is reached will be very difficult to implement, but that notwithstanding, it is not the memoranda [the bailout accords] that caused the crisis. The crisis was born in Greece long before.” Like every crisis government before it, Tsipras’s administration is acutely aware that salvation will come only when Greece can return to the markets and raise funds. What happens in the weeks ahead could determine if that is likely to happen at all. Back in Syntagma, Costopoulos the good-natured farmer ponders what lies ahead. Like every Greek, he stands to be deeply affected. “All I know is that we are all being pushed,” he said, searching for the right words. “Pushed in the direction of somewhere very explosive, somewhere we do not want to be.”

Read more …

Greek banks never recovered.

Greek Banks Worry Over Sudden Bad Loan Spike In January (K.)

Nonperforming loans last month posted a major spike of almost 1 billion euros, reversing the downward course set in the last few months of 2016. This has generated major concerns among local lenders regarding the achievement of targets for reducing bad loans, as agreed with the Single Supervisory Mechanism (SSM) of the ECB for the first quarter of this year. Bank sources say that after several months of stabilization and of a negative growth rate in new nonperforming exposure,the picture deteriorated rapidly in January, as new bad loans estimated at €800 million in total were created. This increase in a period of just one month is considered particularly high, and is a trend that appears to be continuing this month as well.

Bank officials attribute the phenomenon to uncertainty from the government’s inability to complete the second bailout review, fears for a rekindling of the crisis and mainly the expectations of borrowers for extrajudicial settlements of bad loans. Senior bank officials note that a large number of borrowers will not cooperate with their lenders in reaching an agreement for the restructuring of their debts, in the hope that the introduction by the government of the extrajudicial compromise could lead to better terms and possibly even to a debt haircut

Banks further observe that the issue of the extrajudicial settlement, along with the matter of the deferred tax assets for the tackling of banks’ losses from the write-off or sale of bad loans, are of major significance to the general issue of dealing with the NPL problem, so they have to be arranged rapidly. Even more important to the banking sector is the completion of the pending bailout review, as uncertainty and the re-emergence of fears over a possible Greek exit from the eurozone have frozen the market and encouraged many people to avoid paying their dues in anticipation of negotiations. This unexpected deterioration in the quality of loan portfolios in recent weeks has banks on edge, as NPLs will have to be reduced by €2.5 billion by end-March, which will be particularly difficult to achieve given the fresh addition of another €800 million.

Read more …

Forced out of work by Troika demands.

Greeks Turn to the Black Market as Another Bailout Showdown Looms (NYT)

During seven years of a grinding economic crisis, Dimitri Tsamopoulos has lost at least half the clients from his once bustling tax consultancy. But in the past few months, business has jumped, not because the Greek economy is finally recovering but because it is falling even deeper into the abyss. With the Greek government pushing through more tax increases to comply with austerity requirements, more than 21,000 self-employed workers and small firms have shut down in the past two months, with many seeking help from accountants like Mr. Tsamopoulos to close their books. Yet many are not actually closing their businesses. “Most of these people will keep working,” Mr. Tsamopoulous said, arching an eyebrow from behind his desk as clients waited in a smoky room outside. “But now, they’ll do it on the black market. They’re saying they need a way to survive.”

Greece is the crisis that never quite goes away for the EU, and with another tense negotiation with creditors scheduled for this coming week, the country is struggling to recover from the longest downturn in the eurozone. The budget-slashing policies and reform medicine required by creditors have done little to revive growth, leaving Greece even more dependent on the three international bailouts the country has received since 2010. Few problems are more ingrained, or harder to combat, than the shadow economy, which appears to be growing again as new austerity measures compel once law-abiding Greeks to go off the books. Greece’s black market is estimated at 20 to 25% of the gross domestic product, as more people have stopped reporting their income to avoid paying taxes that, by some estimates, have risen to 70% of an individual’s gross income.

As of last month, unpaid taxes in Greece had soared to €95 billion, up from €76 billion two years ago. Most of that is considered uncollectable. “The heart of the matter for an ever-rising number of citizens and businesses is that they simply do not have the financial resources anymore to meet their rising tax obligations,” said Jens Bastian, an economist and a member of a team of European Union specialists that helped supervise the country’s earlier bailouts. Short on alternatives, he said, “many are falling back into the gray economy.”

Read more …

Again: US and EU need to be very careful about this. And act.

Tensions Escalate In Aegean As Turkish Boat Fires Shots in Greek Waters (K.)

Tension between Greece and Turkey escalated further on Friday after a Turkish coastal patrol boat fired live ammunition during a military exercise in Greek territorial waters in the eastern Aegean Sea. [..] a Greek diplomatic source described the incident in the area around the eastern Aegean island of Farmakonisi, as “a grave violation of international law.” “Turkey’s unacceptable act raises serious concerns about the potential consequences of its behavior on the stability of the wider region,” the same source said. Greek defense officials were reportedly preparing to lodge a demarche with Ankara and brief allies and international organizations on the incident.

According to the Defense Ministry, Turkish authorities issued a navigational telex, or Navtex, the day before informing of a military exercise with live ammunition within Greek territorial waters, east of Farmakonisi, on Friday [yesterday] morning between 7 and 9 a.m. The Greek Defense Ministry responded by issuing a Navtex turning down the Turkish notification, saying it covered Greek territorial waters. Turkish authorities have previously issued similar notifications without executing them. The Greek gunboat Nikiforos was sent to the area to monitor the Turkish Kusadasi vessel, which fired a volley of shots from small caliber (up to 40mm) guns between 7.40 and 7.55 a.m., until it left the area just before 8 a.m.

[..] Friday’s incident occurred in the wake of repeated Turkish violations of Greek air space and increased tensions between Athens and Ankara, which were further fueled last month when Greece’s highest court blocked the extradition of eight Turkish officers to Turkey for their alleged involvement in July’s failed coup. Reacting to the development on Friday, Greece’s conservative opposition requested a meeting of the country’s National Council of Foreign Policy. “We are deeply concerned to witness Turkey’s insistence on provoking [Athens] and maintaining a climate of tension in the Aegean,” New Democracy shadow foreign minister Giorgos Koumoutsakos said in a letter to Foreign Minister Nikos Kotzias.

Read more …

“How do you capture Spirit?”

Defend The Sacred (Bell)

Defend The Sacred: Documentary from Kyle Bell on Vimeo.

Capturing the heart of a movement that is constantly evolving is difficult. How do you capture Spirit? “Defend The Sacred” is a short documentary that attempts to capture the spirit of Indigenous people at Standing Rock.

Read more …

Feb 142017
 
 February 14, 2017  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


David Myers Theatre on 9th Street. Washington, DC July 1939

 


Top Trump Aide Flynn Resigns Over Russia Contacts (AFP)
Judge Grants Injunction Against Trump Travel Ban In Virginia (AP)
Is Trump the New Boris Yeltsin? (Max Keiser)
Bond Traders Fear Yellen Is Planning A ‘St. Valentine’s Day Massacre’ (MW)
Yellen Outlook ‘Irrelevant’ Because Trump Will Reshape Fed (CNBC)
The Fed Is Bad For America – But Getting Rid Of It Isn’t The Answer (DDMB)
Made For Each Other (Jim Kunstler)
Democracies Must Reclaim Power Over The Production Of Money (Pettifor)
China Factory Prices Surge Most Since 2011, Boosting Reflation (BBG)
Putin’s Central Banker Is on a Tear (BBG)
The Euro May Already Be Lost (ETT)
Greece To Exceed Its Primary Surplus Target In 2018 (R.)
Greece Lines Up Rothschild For Debt Advisory Role As Bankruptcy Looms (IW)
To Those Who Kept Me Alive All These Years: Thank You (Chelsea Manning)
Lesbos Doctors Accuse NGOs Of Failing To Care For Refugees (K.)

 

 

I still don’t fully get it. Was Flynn set up? Hard to believe he didn’t know his calls would be recorded and transcribed. He ran US -military- intelligence for a number of years, for pete’s sake. How could he not have known?

Top Trump Aide Flynn Resigns Over Russia Contacts (AFP)

Donald Trump’s national security advisor Michael Flynn resigned amid controversy over his contacts with the Russian government, a stunning first departure from the new president’s inner circle less than a month after his inauguration. The White House said Trump had accepted Flynn’s resignation amid allegations the retired three star general discussed US sanctions strategy with Russia’s ambassador Sergey Kislyak before taking office. Flynn – who once headed US military intelligence – insisted he was honored to have served the American people in such a “distinguished” manner. But he admitted that he “inadvertently briefed” the now Vice President Mike Pence with “incomplete information” about his calls with Kislyak. Pence had publicly defended Flynn, saying he did not discuss sanctions, putting his own credibility into question.

“Regarding my phone calls with the Russian Ambassador. I have sincerely apologized to the President and the Vice President, and they have accepted my apology,” read Flynn’s letter, a copy of which was released by the White House. The White House said Trump has named retired lieutenant general Joseph Kellogg, who was serving as a director on the Joint Chiefs of Staff, to be interim national security advisor. Flynn’s resignation so early in an American administration is unprecedented, and comes after details of his calls with the Russian diplomat were made public – upping the pressure on Trump to take action. Several US media outlets in Monday reported that top Trump advisors were warned about Flynn’s contacts with the Russians early this year. Questions will now be raised about who knew about the calls and why Trump did not move earlier to replace Flynn.

Read more …

The ban is now all but dead. But they’ll throw out another one soon.

Judge Grants Injunction Against Trump Travel Ban In Virginia (AP)

A federal judge Monday granted a preliminary injunction barring the Trump administration from implementing its travel ban in Virginia, adding another judicial ruling to those already in place challenging the ban’s constitutionality. The ruling is significant from a legal standpoint because U.S. District Judge Leonie Brinkema found that an unconstitutional religious bias is at the heart of the travel ban, and therefore violates First Amendment prohibitions on favoring one religion over another. She said the evidence introduced so far indicates that Virginia’s challenge to the ban will succeed once it proceeds to trial. A federal appeals court in California has already upheld a national temporary restraining order stopping the government from implementing the ban, which is directed at seven Muslim-majority countries.

But the ruling by the 9th Circuit Court of Appeals was rooted more in due process grounds, said Virginia Attorney General Mark Herring, a Democrat who brought the lawsuit against Trump in Virginia. “Judge Brinkema’s ruling gets right to the heart of our First Amendment … claim,” Herring said in a conference call Monday night. In her 22-page ruling, Brinkema writes that Trump’s promises during the campaign to implement what came to be known as a “Muslim ban” provide evidence that the current executive order unconstitutionally targets Muslims. “The president himself acknowledged the conceptual link between a Muslim ban and the EO (executive order),” Brinkema wrote. She also cited news accounts that Trump adviser Rudy Giuliani said the executive order is an effort to find a legal way for Trump to be able to impose his Muslim ban. Herring said that “the overwhelming evidence shows that this ban was conceived in religious bigotry.”

Read more …

“The creeping tide of kleptocracy will be appeased at every juncture.”

Is Trump the New Boris Yeltsin? (Max Keiser)

The hope that Trump would take on Wall Street crooks is dead. It was a long shot to begin with but it’s now clear that his level of financial illiteracy and corruption, a hallmark of Obama’s Presidency, is on par, or perhaps even exceeds Obama’s. What we see shaping up in the first few weeks of Trump’s Presidency is his emergence as the new Boris Yeltsin, the puppet idiot installed by America’s neo-cons and Wall St. bankers after the Soviet Union collapsed to drown the country in debt and deceit. Yeltsin was a drunk clown who gave away the country to oligarchs, who turned the country into a kleptocracy – all happening under the laughing approval of President Bill Clinton. Today Trump fills the Yeltsin role in American politics. As Wall St. laughs, Trump begins the process of giving away (read: privatizing) America’s assets to be owned by our new ruling kleptocracy.

Inflation is coming…But not because wages go up, but because price gouging and monopoly pricing starts to dominate our everyday lives with no cheap substitutes coming from overseas due to an increasing global level of distrust and illiquidity among trading partners. Leveraged buyouts fueled by bailouts and free money from the central bankers will continue to kill competition in America. Media, energy, pharmaceutical, finance and agriculture will all be controlled by impregnable monopolies (and Warren Buffett). It’s a pitiful sham and a godawful shame – a situation where Trump’s supporters will, in the not too distant future, turn on him after they’ve had their illusions shattered – but will it be too late? The creeping tide of kleptocracy will be appeased at every juncture. The vanishing middle class will cling to their guns and bibles – hoping for a miracle. They simply will not be able to believe that they could have been so wrong. The triumph of the will.

Read more …

The always colorful language of Albert Edwards.

Bond Traders Fear Yellen Is Planning A ‘St. Valentine’s Day Massacre’ (MW)

Is Federal Reserve Chairwoman Janet Yellen capable of conducting a bond-market bloodbath? That’s what some on Wall Street are wondering. Albert Edwards, market strategist at Société Générale and noted permabear, expects Yellen, who is set to deliver semiannual testimony to the Senate Banking Committee on Tuesday, will trigger a steep bond selloff by talking up the possibility that the central bank will raise interest rates in March. In a note, he refers to the possibility as “The St. Valentine’s Day Massacre,” a homage to the 1929 gangland murder of seven men in a garage in the Lincoln Park neighborhood on Chicago’s North Side. The killings were allegedly planned by famed mobster Al Capone, who was trying to wrest power away from Chicago’s Irish gangsters.

Edwards isn’t the only one who expects Yellen to remind investors that the central bank could raise interest rates at its next meeting for what would be the third time in a decade. “The market is bracing for the possibility that Yellen will talk up the chances of a rate increase in March,” said Guy LeBas, chief fixed income strategist at Janney. Treasury yields, which move inversely to prices, are on track to rise for the third straight day, a selloff that has largely been driven by these concerns, LeBas said. The yield on the 10-year Treasury note rose 3.6 basis points to 2.447%. But a March hike is still viewed as far from likely. Although the central bank back projected back in December that it would raise interest rates three times in 2017, investors have remained skeptical—probably because they’ve been burned by the Fed before.

Read more …

If Brainard leaves too, that makes five seats to fill with Yellen gone early next year.

Yellen Outlook ‘Irrelevant’ Because Trump Will Reshape Fed (CNBC)

With at least three vacancies expected on the Federal Reserve’s Board of Governors this year, the central bank may not be exempt from a Trump-led shakeup, strategist Mark Grant told CNBC on Monday. “The Fed of today is not going to be the Fed of tomorrow,” the chief strategist at Hilltop Securities told “Squawk Box.” Grant, who accurately predicted the Brexit vote and Donald Trump’s victory, said the president and Treasury Secretary nominee Steven Mnuchin will take advantage of filling key vacancies on the Fed board to further their agenda. Grant spoke a day ahead of Fed Chair Janet’s Yellen’s semiannual monetary report to the Senate. The Fed has said it expect to raise interest rates three times this year.

“I think what the Fed says at this point is, for all practical purposes, irrelevant, because Mr. Trump is going to be able to appoint three members of the Fed,” Grant said. “I think they’re going to be business people and the days of an academic, economist Fed are going to be over.” Removing academics from the Fed’s board remains a point of contention, but Grant said the Trump administration is likely to do so with the economic landscape and policy goals in mind. “I also believe that Trump and company, as I call them, know as they put in the infrastructure or the military expansion that there’s going to be a balance to the balance sheet, and … that the new people on the Fed are going to keep interest rates low,” Grant said. “So all this talk of a three interest rate or four interest rate hike, in my opinion, is baloney.”

On Friday, Fed Governor Daniel Tarullo announced plans to leave the board in April, creating a third vacancy. Danielle DiMartino Booth, author of “Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America,” said that there is a high probability that board member Lael Brainard will also leave, creating yet another vacancy. She said Trump’s bold spending plan may require low interest rates (and, in turn, a more dovish Fed), but she wondered about whom the president would appoint to the board. “It’s really going to come down to whether or not he’s got the gumption to totally change the complexion of the Federal Reserve board, or if he steps back and says, ‘You know what, I’ve got to finance all this stuff, so I’m going to put more doves in.’ These are hard decisions,” she said.

Read more …

Fed insider Danielle DiMartino Booth’s new book Fed Up is here.

The Fed Is Bad For America – But Getting Rid Of It Isn’t The Answer (DDMB)

On September 20, 2005, Mark Olson did something ordinary that’s since proved to be extraordinary. Never heard of him? You’re not alone. Nevertheless, the banking expert had the gumption to lob a dissenting vote in his capacity as a governor on the Federal Reserve Board. He joined the estimable company of Edward “Ned” Gramlich, a fellow governor who dissented at the September 2002 Federal Open Market Committee meeting. Gramlich is best known for sounding an early warning on the subprime crisis, and being resolutely dismissed by Alan Greenspan. The two gentlemen represent central banking’s answer to the “Last of the Mohicans,” the sole two dissents that have been recorded by governors since 1995. And that’s a problem. At last check, ‘No” was not a four-letter word.

It’s no longer a secret that an abundance of anger is churning among many working men and women who feel they’ve been excluded by the current economic recovery and the longest span of job creation in postwar history. The funny thing about a sense of abandonment is that more often than not, anger follows. What too few Americans appreciate is how directly the inability to say “no” at the Fed has determined their station in life. But that’s just the case. The Fed directly impacts a slew of the most important decisions we make — the values we instill in our children, the things we buy and how they are financed and how we best prepare for what follows after a lifetime of laboring in the trenches.

Stop and think for a moment about the first time you discovered the miracle of compounding interest, that first bank statement that proved savings does pay. Can your children experience that same sensation? What about the roof over your head and the car you drive? Can you afford the payments or did you stretch to buy more than you could afford, out of sheer necessity? What about your mom and dad’s retirements? Do they say their prayers that the stock market will hang in there and that the safety of their bond holdings will protect them if that’s not the case? All of these dysfunctional dynamics lay at the feet of an academic-led Fed being hellbent on launching unconventional monetary policy with the false prerequisite that interest rates had to be zero before quantitative easing (QE) could be deployed.

Read more …

“The Republican Party is Norma Desmond’s house in Sunset Boulevard, starring Donald Trump as Max the Butler, working extra-hard to keep the illusions of yesteryear going.”

Made For Each Other (Jim Kunstler)

Don’t be fooled by the idiotic exertions of the Red team and the Blue team. They’re just playing a game of “Capture the Flag” on the deck of the Titanic. The ship is the techno-industrial economy. It’s going down because it has taken on too much water (debt), and the bilge pump (the oil industry) is losing its mojo. Neither faction understands what is happening, though they each have an elaborate delusional narrative to spin in the absence of any credible plan for adapting the life of our nation to the precipitating realities. The Blues and Reds are mirrors of each other’s illusions, and rage follows when illusions die, so watch out. Both factions are ready to blow up the country before they come to terms with what is coming down.

What’s coming down is the fruit of the gross mismanagement of our society since it became clear in the 1970s that we couldn’t keep living the way we do indefinitely — that is, in a 24/7 blue-light-special demolition derby. It’s amazing what you can accomplish with accounting fraud, but in the end it is an affront to reality, and reality has a way of dealing with punks like us. Reality has a magic trick of its own: it can make the mirage of false prosperity evaporate. That’s exactly what’s going to happen and it will happen because finance is the least grounded, most abstract, of the many systems we depend on. It runs on the sheer faith that parties can trust each other to meet obligations. When that conceit crumbles, and banks can’t trust other banks, credit relations seize up, money vanishes, and stuff stops working.

You can’t get any cash out of the ATM. The trucker with a load of avocados won’t make delivery to the supermarket because he knows he won’t be paid. The avocado grower will have to watch the rest of his crop rot. The supermarket shelves empty out. And you won’t have any guacamole. There are too many fault lines in the mighty edifice of our accounting fraud for the global banking system to keep limping along, to keep pretending it can meet its obligations. These fault lines run through the bond markets, the stock markets, the banks themselves at all levels, the government offices that pretend to regulate spending, the offices that affect to report economic data, the offices that neglect to regulate criminal misconduct, the corporate boards and C-suites, the insurance companies, the pension funds, the guarantors of mortgages, car loans, and college loans, and the ratings agencies.

The pervasive accounting fraud bleeds a criminal ethic into formerly legitimate enterprises like medicine and higher education, which become mere rackets, extracting maximum profits while skimping on delivery of the goods. All this is going to overwhelm Trump soon, and he will flounder trying to deal with a gargantuan mess. It will surely derail his wish to make America great again — a la 1962, with factories humming, and highways yet to build, and adventures in outer space, and a comforting sense of superiority over all the sad old battered empires abroad. I maintain it could get so bad so fast that Trump will be removed by a cadre of generals and intelligence officers who can’t stand to watch someone acting like Captain Queeg in the pilot house.

Read more …

Ann Pettifor’s new book is out too.

Democracies Must Reclaim Power Over The Production Of Money (Pettifor)

Today, the international monetary system is run by the equivalent of Goethe’s Sorcerer’s Apprentice. In the absence of the equivalent of the Sorcerer – regulatory democracy – financial risk-takers and fraudsters have, since 1971, periodically crashed the global economy and trashed the lives of millions of people. And let’s be clear: there is no such thing as effective global regulation. Ask the Bitcoiners – that is why they operate in the ‘dark web’. The question is this: who should control our socially constructed, publicly-backed financial institutions and relationships? Private, unaccountable, rent-seeking authority? Or public, democratic, regulatory authority? Policy and regulation requires boundaries. Pensions policy, criminal justice policies, taxation policies, policies for the protection of intellectual property – all require boundaries.

Finance capital abhors boundaries. Like the Sorcerer’s Apprentice, global financiers want to be free to use the magic of money creation to flood the global economy with ‘easy’ (if dear) money, and just as frequently to starve economies of any affordable finance. And they want to have ‘the freedom’ to do that in the absence of the Sorcerer – regulatory democracy. If we want to strengthen democracy, then we must subordinate bankers to their role as servants of the economy. Capital control over both inflows and outflows, is, and will always be a vital tool for doing so. In other words, if we really want to ‘take back control’ we will have to bring offshore capital back onshore. That is the only way to restore order to the domestic economy, but also to the global economy.

Second, monetary relationships must be carefully managed – by public, not private authority. Loans must primarily be deployed for productive employment and income-generating activity. Speculation leads to capital gains that can rise exponentially. But speculation can also lead to catastrophic losses. Loans for rent-seeking and speculation, gambling or betting, must be made inadmissible. Third, money lent must not be burdened by high, unpayable real rates of interest. Rates of interest for loans across the spectrum of lending – short- and long-term, in real terms, safe and risky – must, again, be managed by public, not private authority if they are to be sustainable and repayable, and if debt is not going to lead to systemic failure. Keynes explained how that could be done with his Liquidity Preference Theory, still profoundly relevant for policy-makers, & largely ignored by the economics profession.

Read more …

Remember: there can be no inflation without consumer spending going up. Prices may rise for other reasons, but that’s not the same.

China Factory Prices Surge Most Since 2011, Boosting Reflation (BBG)

China’s producer prices increased the most since 2011, with the world’s biggest exporter further lifting the outlook for global inflation. Producer price index rose 6.9% in January from a year earlier, compared with a median estimate of 6.5% in a Bloomberg survey and a 5.5% December gain. Consumer-price index climbed 2.5%, boosted by the week-long Lunar New Year holiday beginning in January this year, versus a 2.4% rise forecast by analysts. Producer prices for mining products surged 31% year-on-year while those for raw materials climbed 12.9%, the National Bureau of Statistics said Tuesday. China is again exporting inflation as factories increase prices after emerging from years of deflation. That fresh strength may moderate in coming months as year-ago comparisons gradually rise and Donald Trump’s policies add uncertainties to the global demand outlook.

Continued pressure for raw materials is forcing companies to increase prices, according to Tao Dong at Credit Suisse in Hong Kong. “Without strong demand, producers have limited space for price hikes,” he said. “But I see a wide range of price increases because the cost push is so severe.” Both consumer and producer inflation will peak soon, Julian Evans-Pritchard, an economist at Capital Economics in Singapore, wrote in a report. “Tighter monetary policy, slowing income growth and cooling property prices should keep broader price pressure contained over the medium-term,” he said. “The latest inflation data add to the case for a continued moderate tightening in monetary policy,” Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, wrote in a report.

“The central bank is likely to continue on that path in the months ahead, as policy makers lean against excess leverage, yuan weakness and capital outflows, and nascent inflationary pressure.” “We haven’t seen significant pass-through effect from PPI to CPI inflation yet, suggesting that the strong rebound in PPI inflation is a reflection of proactive fiscal policies,” Zhou Hao, an economist at Commerzbank in Singapore, wrote in a report. With the Communist Party Congress later this year, “local governments are keen to deliver decent growth figures. Against this backdrop, the infrastructure investment pipeline will remain solid.”

Read more …

It’s almost 2 years ago that I wrote Russia’s Central Bank Governor Is Way Smarter Than Ours. This is a pretty crazy story. Russian banking appears to take place in some kind of black hole, complete with event horizons.

Putin’s Central Banker Is on a Tear (BBG)

In Russia, Peresvet Bank had an edge no other big private financial institution could match. Its largest shareholder was the powerful Russian Orthodox Church. In a 2015 pitch to investors, Peresvet said the backing of the church and the bank s other big owner, Russia’s Chamber of Commerce and Industry, gave it a quasi-sovereign status. For more than two decades, big state companies stashed their cash with the bank, whose ponderous full name Joint Stock Commercial Bank for Charity and Spiritual Development of Fatherland suggested its grand standing. Even so, it took less than a month last fall for the bank, one of Russia’s 50 largest, to come undone and be taken over by the central bank. Peresvet was just the latest casualty in a financial purge presided over by Central Bank chief Elvira Nabiullina, a bookish economist who’s a favorite of Vladimir Putin.

The regulator closed almost 100 banks in 2016, and in a cleanup with few precedents, Nabiullina has shut almost 300 over the past three years. This may be only the beginning. There are about 600 banks left across the world’s largest country, but Fitch Ratings analyst Alexander Danilov, adjusting for population, calculates that as an emerging market Russia would be fine with about 1 in 10 of those. A warning from Fitch signaled Peresvet’s fall: Almost a tenth of its loans were to companies seemingly without real businesses. Then Russian media reported that the chief executive officer, Alexander Shvets, had disappeared. The bank issued denials and publicized positive comments from other analysts. But within days, as depositors clamored for their cash, the bank said it was “temporarily” limiting withdrawals. The regulator took control of the lender four days later.

As of late January the central bank was still trying to determine the scale of Peresvet’s financial woes. Nabiullina, 53, has emerged as one of Putin’s most influential economic advisers following a low-key government career that began in the 1990s, before the Russian leader’s rise to power. Soft-spoken and unassuming, she runs what in Russia is called a “megaregulator.” When it comes to the economics behind Putin’s overarching goal of restoring Russia’s place in the world, there’s no one more influential. As central bank governor, she’s in charge of a banking system whose weak links are an economic burden, driving up the cost of financing so badly needed in the face of stagnant growth. She’s also the chief guardian of Russia’s foreign currency reserves. Those holdings are more than just a tool of monetary policy; according to several senior officials, Putin views them as a vital safeguard of the country’s sovereignty. [..]

Read more …

The eurozone’s core problem: as soon as harder economic times come, the poorer countries are hit hardest. Solution: a transfer union like the US. But that will never be accepted in the EU, because it means giving up more sovereignty.

From Finland’s EuroThinkTank, h/t Mish

The Euro May Already Be Lost (ETT)

The 1st of January 2017 marked the 18th anniversary of the European common currency, the euro. Despite its success from 1999 to 2007, after 2008 the euro has become a burden for many of its members. For example, living standards in Italy and Greece are below the levels when they joined the euro. Finland is the only Nordic country using the euro and it is also the only Nordic country which has not yet recovered from the financial crash of 2008. There have been many proposals on how to fix the euro and the EMU, but they are politically unpopular and unrealistic. In this blog-entry, we will argue that the euro will almost surely fail; we just do not know the exact timing of its demise. The problem of the euro can be visualized in the development of the GDP per capita.

Germany has been successful in the Eurozone, while Greece and Italy have not. France is not doing well either. The jury is still out for Finland. The different growth paths are a symptom of a general problem that has haunted currency unions for centuries. Competitiveness and productivity develop at a different pace in different countries. Over time, this leads to large competitiveness differences among the members of a currency union. These differences do not usually pose a problem during economic booms because strengthening aggregate demand supports ailing fields of production. However, when a currency union faces an economic downturn or a crisis, falling aggregate demand hits less competitive industries and countries hard and the financing costs of less competitive countries jump. This is an asymmetric shock.

The detrimental effects of asymmetric shocks can be mitigated by transferring funds from prosperous to declining member states. When the dollar union of the US threatened to fall apart during the Great Depression, the federal government enacted federal income transfers from prosperous states to aid ailing ones. The federal budget also increased rapidly and, in practice, income transfers became permanent. The no bailout policy of crisis-hit states had already been enacted earlier. According to the ECB, competitiveness of the German economy has improved by around 19.3%, Greece’s competitiveness has improved by around 6.5%, France’s around 3.9%, Finland’s around 1.7% and Italy’s around 0.9% since 1999. Thus, for survival in its present form and size, the Eurozone needs a similar income transfer system, that is, a full political union as in the US.

Read more …

Meaningless numbers.

Greece To Exceed Its Primary Surplus Target In 2018 (R.)

Greece will have a primary surplus in the budget of 3.7% of GDP next year, exceeding the target of 3.5% agreed with its euro zone creditors, the European Commission forecast on Monday. The size of next year’s Greek primary surplus, which is the budget balance before debt-servicing costs, is a bone of contention between euro zone governments and the IMF, which believes it will be only 1.5%. A further disagreement between the two lenders to Greece is what surplus Athens will be able to maintain in the years after 2018. The higher the surplus and the longer it is kept the less is the need for any further debt relief to Greece.

The IMF insists Greek debt, which the Commission forecast on Monday would fall to 177.2% of GDP this year from 179.7% in 2016 and then decline again to 170.6% in 2018, is unsustainably high and that Greece must get debt relief. Germany and several other euro zone countries say that, if Greece does all the agreed reforms, then debt relief will not be necessary. The Commission forecast that Greek investment would triple to 12% of GDP this year and rise further to 14.2% of GDP next year as the economy expands 2.7% in 2017 and 3.1% in 2018 after years of recession. It also forecast Greek unemployment would fall to 22% of the workforce this year from 23.4% last year and decline further to 20.3% in 2018.

Read more …

If all else fails, sell your soul.

Greece Lines Up Rothchild For Debt Advisory Role As Bankruptcy Looms (IW)

Greece is reportedly planning to hire Rothschild as its debt adviser, replacing current adviser Lazard in the role, as it attempts to end a long-running stand off with creditors. According to the Financial Times, government officials in Greece hope to finalise the appointment before a gathering of euro-area finance ministers on 20 February. Unless Greece receives fresh funds it will not be able to make €7bn of debt payments due this July, including €2.1bn to private sector creditors. In the role, Rothschild will reportedly advise the country on negotiations with creditors, potential inclusion in the European Central Bank’s bond-buying programme, and the sale of Greek government bonds.

The deal would replace the Greek government’s current deal with Lazard, which guided the country through its original bailout in 2012. According to the FT, out of Greece’s €323bn of outstanding government debt just €36bn is owned by private investors who hold Greek bonds, while the rest is owned by sector creditors. Last week, yields on two-year Greek bonds rose to their highest level since June last year after the IMF and the EU failed to reach an agreement on how to lend the €7bn required by the country to avoid bankruptcy. The IMF refused to sign up to the aid programme unless the EU grants further debt relief to Greece. However, the head of the eurozone’s €500bn rescue fund has rejected this demand.

Read more …

Power to you, Chelsea.

To Those Who Kept Me Alive All These Years: Thank You (Chelsea Manning)

To those who have kept me alive for the past 6 years: minutes after President Obama announced the commutation of my sentence, the prison quickly moved me out of general population and into the restrictive housing unit where I am now held. I know that we are now physically separated, but we will never be apart and we are not alone. Recently, one of you asked me “Will you remember me?” I will remember you. How could I possibly forget? You taught me lessons I would have never learned otherwise. When I was afraid, you taught me how to keep going. When I was lost, you showed me the way. When I was numb, you taught me how to feel. When I was angry, you taught me how to chill out. When I was hateful, you taught me how to be compassionate. When I was distant, you taught me how to be close. When I was selfish, you taught me how to share.

Sometimes, it took me a while to learn many things. Other times, I would forget, and you would remind me. We were friends in a way few will ever understand. There was no room to be superficial. Instead, we bared it all. We could hide from our families and from the world outside, but we could never hide from each other. We argued, we bickered and we fought with each other. Sometimes, over absolutely nothing. But, we were always a family. We were always united. When the prison tried to break one of us, we all stood up. We looked out for each other. When they tried to divide us, and systematically discriminated against us, we embraced our diversity and pushed back. But, I also learned from all of you when to pick my battles. I grew up and grew connected because of the community you provided.

Read more …

I’ll get back to this soon. It’s good to see others address this issue too.

Lesbos Doctors Accuse NGOs Of Failing To Care For Refugees (K.)

State hospital doctors on the eastern Aegean island of Lesvos, which has been hard particularly hit by the refugee crisis, have complained that nongovernmental organizations receiving European Union funding to help migrants are not doing enough, resulting in them being forced to bear an excessive burden. In a statement released on Monday, the island’s union of state hospital doctors said the two refugee camps at Moria and Kara Tepe do not have any pediatricians, meaning that all sick children from the camps must be treated at local hospitals, which are seriously understaffed. Noting that the NGOs “get paid handsomely” by the EU to help refugees, the union claimed they had “totally failed to provide humane conditions for the refugees.” Several human rights groups have complained about conditions at Greek refugee camps, particularly Moria and Elliniko, in southern Athens.

Read more …

Feb 032017
 
 February 3, 2017  Posted by at 11:06 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Pierre-Auguste Renoir The Return of the Boating Party 1862


Trump’s Economic Policy Makes Perfect Sense: Albert Edwards (CNBC)
Big Clash Looming (Kath.)
The IMF Should Get Out of Greece (Ashoka Mody)
Italians Are Outright Economic Losers in the Era of the Euro (BBG)
China Net 2016 Outflows At Record $725 Billion (R.)
Reality Vs. The “Recovery” Narrative (Mises)
Markets Are Experiencing Cognitive Dissonance (Rickards)
Scots to Vote on Tuesday on May’s Draft Law to Trigger Brexit (BBG)
America’s Student Loans Problem Is Much Bigger Than Anybody Realized (TAM)
Originalism: Neil Gorsuch’s Constitutional Philosophy (G.)
Angela Merkel Lectures Turkish President Erdogan On Upholding Freedoms (SMH)
Turkey Refugee Deal With EU at Risk, Erdogan Adviser Warns (BBG)
Small Steps Taken To Improve Conditions At Lesvos Migrant Camp (K.)

 

 

“The only things where the US excels are the ability of companies to get credit and resolving insolvency. So US companies excel at leveraging up and going bust – great!”

Trump’s Economic Policy Makes Perfect Sense: Albert Edwards (CNBC)

As the early days of the Donald Trump administration draw global opprobrium, Societe Generale’s famously bearish strategist Albert Edwards is offering unlikely support. “A lot of what he says on the economic front makes perfect sense to me.” Edwards claimed in his latest note published Thursday. Edwards said the new administration might be a “neo-liberal nightmare” but when the controversial topic of immigration was removed, there was clarity in Trump’s thinking. “We have long written on these pages that Germany is one of the biggest currency manipulators in the world. Germany aggressively refutes any criticism, let alone does anything about it (unlike China),” penned Edwards.

Trump’s team has attacked Germany for using the “grossly undervalued” euro to gain unfair trade advantages with the U.S. as well as trading partners within the European Union. The comments, published Tuesday, sent the euro to an eight-week high against the dollar. Edwards wrote that unless Germany changes its current position it “will have huge implications for both financial markets and the sustainability of the euro zone.” He said while the U.S. Treasury and the European Commission appeared unwilling to take on Berlin, it looked like the Trump administration would act assertively. Edwards, a self-described socialist, also said Trump’s plan to strip back regulation affecting U.S. corporates “rings true”.

“US corporate competitiveness is poor and deteriorating. The World Bank, for example, ranks the US a derisory 51st on how easy it is to start a business,” he wrote. “The only things where the US excels are the ability of companies to get credit and resolving insolvency. So US companies excel at leveraging up and going bust – great!” Edwards described America as a low tax and spend nation that has strangled its corporate sector. He said small business, traditionally the growth engine for jobs, is particularly burdened by regulation and concluded “There is much work indeed for The Donald.”

Read more …

Can Greece break from the EU and rebuild its “traditional alliances with the US and the UK”?

Big Clash Looming (Kath.)

The United States and Germany are gearing up for a serious clash. Washington’s aim this time is not Germany’s military defeat, as was the case twice last century, but curbing its economic hegemony. Before being sworn in as US president, Donald Trump said that he believed Berlin was using the European Union as a vehicle for its further economic expansion, and the tycoon was right on the money. Speaking to the BBC a few days ago, the man tipped as America’s new ambassador to the European Union, Ted Malloch, expressed his belief that the euro could collapse within the next 18 months. It was a risky prediction, but suggestive of the views prevailing in Washington right now.

The third worrying statement came from the head of the US president’s National Trade Council, Peter Navarro, who told the Financial Times that the euro is a German currency in disguise – an apt observation – that is “grossly undervalued” so that Germany can retain a competitive edge over the United States. His comment is nothing short of a direct challenge and a sign of a more serious confrontation waiting to happen. What is extremely interesting is that Wolfgang Schaeuble, the most fervent of champions of monetary stability and the euro, has so far avoided making a response. Maybe he is aware that when it comes to the US, his firepower is somewhat limited, so he contains his barbs to judgmental comments against Greece and terrorizing Europe’s south.

German Chancellor Angela Merkel muttered something about the European Central Bank’s independence and European Council President Donald Tusk said Trump is a threat to the EU – this is Europe; these are its political leaders, people waiting in fear for America to unfold its policy. This would all be a matter of academic interest were it not for the fact that the looming clash between a US-British alliance and the European establishment poses a major threat to regional stability, and of course to Greece. Bad luck and political imprudence have resulted in Greece being cut off from its own traditional alliances with the US and the UK, now especially so. Given the recent tension with Turkey and the fact that in previous difficult periods Europe stood by as conflict was avoided only thanks to the US’s intervention, it is evident that there are more important issues than the pending bailout review that Athens should be focusing on.

Read more …

Germany should get out of Greece too. And Brussels. Take a hike and get paid back in drachma. Or better yet, pay back your own gambling banks instead of letting Greeks do it.

The IMF Should Get Out of Greece (Ashoka Mody)

The IMF’s involvement in Greece has been an unmitigated disaster: Time and again, its failure to heed crucial lessons has visited suffering upon the Greek people. When the fund’s directors meet on Monday, they should agree to forgive the country’s debts and get out. The IMF should never have gotten into Greece in the first place. As late as March 2010, with concerns about the Greek government’s ability to pay its debts roiling markets, Europe’s leaders wanted the IMF to stay away. Europeans feared that the fund’s financial assistance to one of their own would signal broader weakness in the currency union. As Jean-Claude Juncker famously put it: “If California had a refinancing problem, the United States wouldn’t go to the IMF.”

Nonetheless, German Chancellor Angela Merkel decided that the IMF’s presence was the signal needed to persuade German citizens that Greece needed urgent financial support and that strict discipline in the use of those funds would be enforced. Merkel’s political priorities coincided with the interests of Managing Director Dominique Strauss Kahn, who was desperate to pull the IMF out of irrelevance. From that moment on, the IMF became Europe’s – mainly Germany’s – instrument in Greece. Then came the cardinal error: At the IMF’s Board, over the fierce opposition of several executive directors, the Europeans and Americans pushed through a bailout program that, contrary to the fund’s rules, did not impose losses on Greece’s private creditors. The decision was based on a spurious claim that “restructuring” private debt would trigger a global financial meltdown.

Thus, European governments and the IMF lent Greece a vast sum to repay its existing creditors. Greece’s debt burden remained unchanged and onerous, and the most vulnerable Greeks were forced to accept crippling austerity to repay the country’s new official creditors. The economy quickly and predictably went into a tailspin. Even when the IMF recognized the error of its ways, it didn’t change course. An internal “strictly confidential” report, later made public, acknowledged that the program was riddled with “notable failures,” including the lack of private debt restructuring and excessive austerity. But the IMF never took responsibility. Instead, it demanded even more austerity throughout 2014.

In December, the public rebelled and brought the opposition Syriza party to power, which only made the IMF’s demands more insistent. At this point, the evidence that the strategy was pushing Greece to economic and financial collapse was overwhelming. It was like requiring a trauma patient to run around the block before being admitted to intensive care. Yet as usual, the inevitable suffering was blamed on Greece’s unwillingness to cooperate.

Read more …

“[Italy] GDP per capita in real terms shrank 0.4% in the last 18 years..” “In Germany, the euro region’s largest economy, per-capita output rose by 26.1% since 1998.”

Italians Are Outright Economic Losers in the Era of the Euro (BBG)

Almost two decades after the creation of the euro single currency, Italians are proving to be the big losers among the 19 member countries. GDP per capita in real terms shrank 0.4% in the last 18 years, according to Bloomberg calculations based on data from the European Union statistics office up to 2015 and estimates for 2016. While Italy’s economy expanded 6.2% since 1998, its population increased by 6.6% over the period – thus accounting for the per-head drop. “The comparison with other countries clearly shows that the Italian economy has expanded at too-slow a pace over the period,” said Loredana Federico, an economist at UniCredit Bank AG in Milan. “It will be very difficult for Italy to close, in the years to come, the gap with other economies that already returned to the pre-crisis level or even surpassed it.”

Eleven members of the EU introduced the euro as an accounting currency in January 1999; they were later joined by Greece. The actual notes and coins were introduced in January 2002, and expansion of the zone has since continued, with Lithuania becoming the 19th member in 2015. Italy’s per-capita GDP has fared even worse than Greece, which was severely hit by the financial crisis. The value of all goods and services produced in that country rose in the last 18 years by 4% on an individual basis, Bloomberg calculations show. In Germany, the euro region’s largest economy, per-capita output rose by 26.1% since 1998. That makes the citizens of Chancellor Angela Merkel’s nation the winners among all of the bloc’s main economies.

Read more …

“If U.S.-based multinational corporates start to repatriate their profits from China, outflows could worsen further in 2017..”

China Net 2016 Outflows At Record $725 Billion (R.)

Capital outflows from China surged last year to a record $725 billion and could pick up further if U.S. firms face political pressure to repatriate profits, the Institute of International Finance said on Thursday. The Washington DC-based group, one of the most authoritative trackers of capital movements in and out of the developing world, estimates net Chinese outflows last year were $50 billion higher than in 2015, dwarfing the inflows other emerging economies received. Net outflows in 2014 had been just $160 billion from China, which has seen capital flight pick up in the past couple of years from local businesses and households, partly on expectations that the yuan would weaken against the dollar.

The outflows, which caused a $320 billion decline last year in Chinese foreign exchange reserves, have prompted authorities to strengthen capital curbs. The yuan fell 6.5% against the dollar last year, the biggest ever yearly fall. The IIF estimated China outflows at a heavy $95 billion in December and noted that a rise in protectionism, especially in the United States after the election of President Donald Trump, could exacerbate the situation. Trump and his top trade adviser this week criticised Germany, Japan and China, saying the three key U.S. trading partners were devaluing their currencies to the detriment of U.S. companies and consumers. “If U.S.-based multinational corporates start to repatriate their profits from China, outflows could worsen further in 2017,” the IIF said, referring to pledges of tax breaks to U.S. firms that bring overseas profits back to the country.

But excluding China, the picture for emerging markets appeared brighter, the IIF said, noting net capital inflows last year had amounted to $192 billion, versus $123 billion in 2015. In January, inflows into the stocks and bonds of a group of big emerging economies stood at a five-month high of $12.3 billion, the group added. “January was a much better month for emerging markets but it is too early to tell if this reflects hope for a better outlook – or this is just the eye of the storm,” the IIF note added. The capital exodus from China, however, dominates the picture – the IIF last November forecast the developing world would suffer net capital outflows of $206 billion in 2017, with the vast majority accounted for by China.

Read more …

“Needless to say, Yellen’s credibility, to use a word of the mainstream, should be absolutely shattered.”

Reality Vs. The “Recovery” Narrative (Mises)

As Jeffrey Lacker leads the pack on the Fed’s “concern of overheating” front, last Friday’s 2016 fourth quarter GDP numbers completely contradict the narrative. Coming in at a paltry 1.85% growth rate, the Fed was handed yet another excuse to push off the so-called “normalization of interest rates” further into the future. The Fed’s FOMC again confirmed as much at its February meeting. The Fed has stated for years – since 2008 – that it needed to keep interest rates low in order to support a sustainable recovery. The Fed was allegedly paying close attention to it’s Congressionally-sourced dual mandate to determine when it could start allowing rates to rise. But now it is 2017 and the Fed’s bureaucratic statistics relating to unemployment and price inflation say things are just dandy.

But the GDP numbers, which purport to measure growth, scream the opposite. This is the Fed’s predicament. They’ve held that the dual mandate was their only guide, but it’s becoming quickly evident how irrelevant those numbers are. As it turns out, the third quarter’s 3.5% GDP number was not a sign of coming paradise, but was rather a mocking anomaly. In the past six quarters, only once (third quarter 2016) did the GDP growth rate come in above 2%. Moreover, things are getting worse, not better. 2016’s average growth rate was worse than both 2014 and 2015. Needless to say, Yellen’s credibility, to use a word of the mainstream, should be absolutely shattered. Stimulus and quantitative solutions have been an epic failure.

In light of this, the Fed’s decision to raise the target Federal Funds rate over the coming months is especially painful. Should they choose to do so, they do it in the face of a growth rate that is barely treading water. But if they choose to prolong these target rate hikes, they do so as their own dual mandate components tell them they should be normalizing monetary policy by now.

Read more …

“The problem with a financial panic is that panicked investors don’t care if the president is a Democrat or a Republican; they just want their money back.”

Markets Are Experiencing Cognitive Dissonance (Rickards)

Despite Trump’s best efforts and positive policies, a collapse could happen any day unless radical steps are taken to prevent it — such as breaking up big banks and banning derivatives. I’ve been warning about this for a while, but now mainstream economists see the danger too. Nobel Prize winner Robert Shiller, for example, sees a stock market crash coming that could be worse than 1929 or 2000. I hope he’s wrong. The problem with a financial panic is that panicked investors don’t care if the president is a Democrat or a Republican; they just want their money back. The same dynamic applies to natural disasters like tsunamis and earthquakes. Once the disaster starts, the dynamics have a life of their own and don’t care if the victims are liberals or conservatives.

Everyone gets hurt just the same. I’m not hoping for it, but this is a lesson Trump may learn the hard way. Above I said collapse means a violent stock market correction, a falling dollar and major rallies in bonds and gold. I expect the latter. The long-term trends favor gold if U.S. growth continues disappoint. The strong dollar story can’t last, so it won’t. The Trump administration has clearly signaled that the day of the strong dollar is over. When you see a coordinated attack on the dollar from the White House, the Treasury and the Fed, you can bet the dollar will weaken. That means a higher dollar price for gold. The dollar may get one last boost from a Fed rate hike in March, but after that, even the Fed will acknowledge that they got it wrong again and start another easing cycle with happy talk and forward guidance.

Read more …

Starting to look like a run-up to a Mexican stand-off.

Scots to Vote on Tuesday on May’s Draft Law to Trigger Brexit (BBG)

The Scottish Parliament will vote Tuesday on U.K. Prime Minister Theresa May’s draft law to formally trigger Brexit, a signal that the Scots want their views to be considered as the premier prepares to embark on two years of talks to leave the EU. May’s bill, which would allow her to invoke Article 50 of the EU’s Lisbon Treaty, the formal trigger for exit discussions, passed its first vote in Parliament in London on Wednesday. The draft law will now undergo three days of line-by-line debate in a so-called Committee Stage starting on Monday. Members of Parliament have so far filled a 128-page document with scores of proposed amendments to the 137-word bill, which will then be put to its final vote in the lower chamber, the House of Commons, before being sent up to the House of Lords.

“It is now essential that the Scottish Parliament’s views are heard prior to the end of the committee stage of the Article 50 bill in the House of Commons, so we will lodge a motion to allow Parliament to express its view,” Scottish Minister for U.K. Negotiations on Scotland’s Place in Europe Michael Russell said on Thursday in an e-mailed statement. “I believe that Parliament will send a resounding message that Scotland’s future is in Europe.” The plan by Russell’s Scottish National Party amounts to a political warning to May to heed its concerns as she prepares to negotiate a so-called “hard” Brexit, pulling Britain out of the EU’s single market and customs union, which allow free trade within the bloc. The Scottish vote has no power to affect whether May triggers Brexit because the Supreme Court ruled last month that the semi-autonomous legislature doesn’t get to vote on the process.

The SNP produced a detailed plan for Brexit before Christmas that seeks to force May to negotiate to keep Scotland in the single market, even if the rest of the country pulls out. SNP leaders have repeatedly said that Brexit may lead to another independence referendum in Scotland, which voted overwhelmingly to remain in the EU. May had aimed to trigger Brexit by the end of March without consulting with the central Parliament in London, but was forced to do so after losing a court ruling and subsequent appeal to the Supreme Court. She still aims to stick to her timetable, and is fast-tracking the Article 50 bill through Parliament, aiming to complete its passage through the Lords in early March.

Read more …

Institutionalization: The idea that success comes exclusively through attending a university has created a stigma against some of the most valuable occupations.

America’s Student Loans Problem Is Much Bigger Than Anybody Realized (TAM)

The Department of Education recently released a memo admitting that repayment rates on student loans have been grossly exaggerated. Data from 99.8% of schools across the country has been manipulated to cover up growing problems with the $1.3 trillion in outstanding student loans. New calculations show that more than half of all borrowers from 1,000 different institutions have defaulted on or not paid back a single dollar of their loans over the last seven years. This comes in stark contrast to previous claims and should call into question any statistics provided by government agencies. The American people haven’t fully grasped the long-term implications of loaning a trillion dollars to young people who have no credit or assets.

Increases in tuition seen over the past two decades have become a point of controversy and angst for those who don’t fully understand the contributing factors. Between 1995 and 2015, the average cost of a public, four-year university skyrocketed by well over 200%. Although federal student aid programs are often championed as a necessity, they have been instrumental in making higher education unaffordable. The opportunity to pay for college by working a part-time job evaporated as soon as huge sums of money were handed out to anyone with a pulse. Since students no longer pay their tuition upfront, colleges are able to raise prices in perpetuity, knowing the government will step in and make credit easier and easier to obtain. As an added bonus, outstanding student loans account for 45% of the government’s financial assets.

Subsidizing the lives of an entire generation has turned personal growth and advancement into a choice instead of a necessity. After all, why take risks or work your way up from the bottom when with just a signature, the life you’ve always wanted could be laid at your feet? It’s not hard to figure out why so many people are tempted to take advantage of the instant gratification that comes from student loans, but like everything else in life, they have a price. The same safety net that delays the anxiety of the future also ensures that monthly payments will be owed for decades to come. Procrastinating when faced with pivotal life decisions is an instinct that used to be overcome as a teenager, but today it is worn like a badge of honor well into adulthood.

The policies of intervention haven’t stopped at federal aid, and loan forgiveness is now being offered to those willing to work in the public sector or at a non-profit for ten years. This perverse incentive only serves to drive those desperately in debt further towards government dependence. Productive jobs are created when the needs of others are met in the free market, not by joining the ranks of the state for self-preservation. The idea that success comes exclusively through attending a university has created a stigma against some of the most valuable occupations. The lack of real skill sets has lead to a shortage of welders, electricians, carpenters, and other trade workers. Instead of learning through experience with apprenticeships, many students have embraced four years of sleeping in, drinking heavily, and getting an increasingly useless degree.

Read more …

Makes law look like religion.

Originalism: Neil Gorsuch’s Constitutional Philosophy (G.)

At his unveiling on Tuesday night as Donald Trump’s choice to fill the US supreme court vacancy, Neil Gorsuch paid homage not to the man standing beside him, who had just nominated him to one of the most powerful judicial positions in the country, but to a document written 230 years ago. Gorsuch, a federal appellate judge based in Denver, promised that should he get through the confirmation process he would act as a “faithful servant” to what he called “the greatest charter of human liberty the world has ever known”. He was referring to the US constitution, the supreme law of the land drafted in 1787. He was not being rhetorical. Gorsuch describes himself as an “originalist”, indicating that he places overwhelming importance on the original meaning of the constitution as it was understood by “we the people” at the time it was written.

That puts him in a very select group of judges – maybe no more than 30 – who identify themselves as “originalists”. What unites them is that they put as much emphasis on the original understanding of the US constitution as Christian fundamentalists say they put on the original wording of the Bible. Until his death last year, one of the most prominent members of the group was Antonin Scalia, the supreme court justice whom Gorsuch is now lined up to replace. Scalia helped spread the word of originalism among conservative judges in the 1980s as a way of pushing back on what he considered to be the increasingly outlandish opinions of his progressive peers. Judges were there, Scalia argued, not to make up their own laws or politically motivated judgments, but to cleave faithfully to the meaning of the framers’ writings as they were understood back in the 18th century by the American people.

“Originalists ask what the constitution meant at the time it was written, and then argue that the meaning is fixed – it doesn’t change because the world has changed and we now have new problems to deal with,” said Lawrence Solum, a professor at Georgetown Law who is a leading theorist of constitutional originalism. David Feder, a Los Angeles-based lawyer, had first-hand experience of what that meant to Gorsuch in practice when he worked as his law clerk on the federal 10th circuit court of appeals. “Whenever a constitutional issue came up in our cases, [Gorsuch] sent one of his clerks on a deep dive through the historical sources. ‘We need to get this right,’ was the motto – and right meant ‘as originally understood’,” Feder recalled recently in the Yale Journal of Regulation.

Read more …

Yeah, Erdogan really strikes me as a guy who would take kindly to being lectured by a woman.

And if the US are actually going to extradite Gulen, they will lose a lot of support in the region.

Angela Merkel Lectures Turkish President Erdogan On Upholding Freedoms (SMH)

German Chancellor Angela Merkel stressed the importance of freedom of opinion in talks with Turkish President Recep Tayyip Erdogan, during a visit meant to help improve frayed ties between the two NATO allies. In her first trip to Ankara since a failed military coup in Turkey last year, Dr Merkel said she had agreed with Mr Erdogan on the need for closer cooperation in the fight against terrorism, including against the Kurdistan Workers’ Party (PKK). Germany and Turkey have been at odds over Ankara’s crackdown on dissidents since the abortive July 15 coup, as well as its allegations – rejected by Berlin – that Germany is harbouring Kurdish and far-left militants.

“With the [attempted] putsch, we saw how the Turkish people stood up for democracy and for the rules of democracy,” Dr Merkel told a news conference on Thursday, when asked about concern over proposed constitutional changes that would strengthen Mr Erdogan’s powers. “In such a time of profound political upheaval, everything must be done to continue to protect the separation of powers and above all freedom of opinion and the diversity of society,” she said, adding she had also raised the issue of press freedom. “Opposition is part of democracy,” Dr Merkel said.

[..] Turkish Deputy Prime Minister Veysi Kaynak said on Wednesday that Berlin was sheltering members of what Ankara calls the “Gulenist Terrorist Organisation” (FETO), referring to the network of US-based Muslim cleric Fethullah Gulen, whom Turkey blames for the coup bid. “If the Gulenists involved in the coup are fleeing to Germany, the Justice Ministry may send information and documents,” Mr Erdogan said, adding that the United States should take quicker action on an extradition request for Mr Gulen. US President Donald Trump’s National Security Adviser,Michael Flynn, has in recent months suggested that Mr Gulen might be extradited as a show of Washington’s support for its Middle Eastern NATO ally. Turkey’s defence minister has urged Berlin to reject the asylum applications and warned that a failure to do so could damage relations. Berlin has said the applications will be considered on a case-by-case basis.

Read more …

Nothing good will come on continuing Europe’s current ‘policy’ with regards to Turkey. It will take Trump or Putin to tell Erdogan to shut up.

Turkey Refugee Deal With EU at Risk, Erdogan Adviser Warns (BBG)

An accord meant to stem the flow of refugees into Europe could collapse if Greece and Germany don’t extradite fugitive Turkish military officers involved in the botched July coup, a chief adviser to Turkish President Recep Tayyip Erdogan said. Erdogan has repeatedly threatened to throw open Turkey’s borders, accusing the European Union of failing to keep its side of the deal, which has run into turbulence following the Turkish government’s crackdown over the coup. Under the agreement, Turkey agreed to block the flow of refugees across its border into Europe in exchange for cash assistance and eased visa requirements for Turkish citizens.

“If Greece and Germany continue their negative attitude toward Turkey, then Turkey has no other option but to relax its hold on migrants,” Erdogan aide Ilnur Cevik said in an interview shortly before Germany’s Chancellor Angela Merkel sat down with Erdogan in Ankara, in part to discuss the accord. “Turkey has nothing to lose because Turkey has not gained anything” from the agreement, Cevik said. Greece has refused to extradite eight fugitive Turkish officers while about 40 others Turkey accuses of involvement in July’s failed coup sought asylum in Germany. “Merkel is coming to explain the unexplainable,” Cevik said. “We see that Germany continues to harbor those who have staged a coup in Turkey, he said.

Read more …

There are 57(!) NGOs ‘active’ on Lesbos.

Small Steps Taken To Improve Conditions At Lesvos Migrant Camp (K.)

Following the deaths of three migrants in less than a week and criticism from humanitarian groups, the government has started making progress in improving conditions at the Moria processing center on the eastern Aegean island of Lesvos. Steps have included moving 300 people, mostly families, to another facility at Kara Tepe and providing winter tents to 700 camp residents who were staying in shelters designed for summer despite the cold weather. Plans are also under way to develop a plot right beside the Moria center that has been leased by the Danish Red Cross but left unutilized because of reactions by locals against any initiatives to expand the camp. Meanwhile, Doctors Without Borders has accused the government of failing to provide migrants and refugees with basic necessities. The Moria camp is a “death camp for refugees and migrants,” the NGO said in an announcement on Thursday.

Read more …

Jan 242017
 
 January 24, 2017  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , ,  8 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Jack Delano Cars being precooled at the ice plant, San Bernardino, CA 1943


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

 

 

A country well on its way to irrelevance.

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

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

Read more …

So much for the overvalued dollar.

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

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

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

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

Read more …

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

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

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

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

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

Read more …

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

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

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

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

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

Read more …

From a much longer article on volatility trading.

Trump is the start of Global Regime Change (Artemis)

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

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

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

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

Read more …

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

Protest In The Era Of Trump (Krieger)

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

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

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

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

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

Read more …

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

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

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

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

Read more …

Shake the cage.

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

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

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

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

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

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

Read more …

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

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

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

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

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

Read more …

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

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

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

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

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

Read more …

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

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

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

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

Read more …

Europe’s shameful disgrace deepens and widens.

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

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

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

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

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

Read more …

Jan 082017
 
 January 8, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Trump: Only ‘Fools’, ‘Stupid People’, See Good Ties With Russia as Bad (BBG)
At Home and Abroad, Obama’s Trail of Disasters (BGlobe)
Russians Ridicule US Charge That Kremlin Meddled to Help Trump (NYT)
How RT Became The Star Of CIA, FBI & NSA’s Anticlimactic ‘Big Reveal’ (McD)
No One Can Afford To Stop The New Consumer Credit Crisis (G.)
China’s Foreign Exchange Reserves Fall To Lowest Since February 2011 (R.)
The Growing Threat to Global Trade: a Currency War (Forsyth)
Fed’s Powell Urges Congress to Take Another Look at Volcker Rule (BBG)
New Policies Coming To America Could Take Weight Off Fed: Powell (R.)
Economists Want to Be Members of Donald Trump’s Team (BBG)
EU Collapse ‘No Longer Unthinkable’ – German Vice Chancellor Gabriel (R.)
Greeks’ Mental Health Suffering (Kath.)

 

 

This is Trump’s Trump Card. Stop the empty rhetoric, and stop the warfare. If he can do that, he’ll go down in history as a great president.

Trump: Only ‘Fools’, ‘Stupid People’, See Good Ties With Russia as Bad (BBG)

Facing calls to strike back at Russia for what U.S. intelligence agencies have termed Moscow’s interference with the 2016 U.S. presidential election campaign, Donald Trump instead suggested warmer relations between the two countries. The president-elect took to Twitter on Saturday to discuss the potential U.S.-Russia relationship under his administration, a day after U.S. spy chiefs briefed him on the Russian measures they said were directed by President Vladimir Putin. “Having a good relationship with Russia is a good thing, not a bad thing,” Trump said in a series of three tweets. “Only ‘stupid’ people, or fools, would think it is bad! We have enough problems around the world without yet another one.” “When I am President, Russia will respect us far more than they do now,” Trump assured his 19 million Twitter followers.

On Friday, top U.S. intelligence officials met with the president-elect at Trump Tower in New York to present evidence that Putin personally ordered cyber and disinformation attacks on the U.S. campaign. Putin developed “a clear preference” for Trump to win, the agencies said in a declassified summary of their findings. The agencies said they “assess Putin and the Russian government aspired to help President-elect Trump’s election chances when possible by discrediting Secretary Clinton and publicly contrasting her unfavorably to him,” according to the report. “All three agencies agree with this judgment. CIA and FBI have high confidence in this judgment; NSA has moderate confidence,” the report said. “Moscow will apply lessons learned from its Putin-ordered campaign aimed at the U.S. presidential election to future influence efforts worldwide, including against U.S. allies and their election processes.”

On Saturday, posts from the Twitter account of the Russian Embassy in the U.K. dismissed the report, calling it “a pathetic attempt at tainting Americans’ vote by innuendo couched in Intel new-speak.” “All accusations against Russia are based on ‘confidence’ and assumptions,” Alexey Pushkov, a member of the Russian Parliament’s upper house, said on Twitter. As Trump’s transition team did in a statement in December, Pushkov drew a parallel with the U.S. intelligence finding of the early 2000s that Iraq’s Saddam Hussein had weapons of mass destruction. The report was released shortly after intelligence chiefs briefed Trump on their findings that Russia was responsible for the hacking of Democratic Party computers and the leaking of e-mails damaging to Democratic presidential nominee Hillary Clinton. Russia has repeatedly denied the accusations.

Trump said negligence by the DNC had allowed the hacking to go ahead. “Only reason the hacking of the poorly defended DNC is discussed is that the loss by the Dems was so big that they are totally embarrassed!” Trump tweeted on Saturday. By contrast, “the Republican National Committee had strong defense!” he said — although the intelligence report said that Russia had targeted both major parties.

Read more …

I guess kudo’s are due to the Boston Globe, generally in the same false news camp as the WaPo and NYT, for publishing this.

At Home and Abroad, Obama’s Trail of Disasters (BGlobe)

As he prepares to move out of the White House, Barack Obama is understandably focused on his legacy and reputation. The president will deliver a farewell address in Chicago on Tuesday; he told his supporters in an e-mail that the speech would “celebrate the ways you’ve changed this country for the better these past eight years,” and previewed his closing argument in a series of tweets hailing “the remarkable progress” for which he hopes to be remembered. Certainly Obama has his admirers. For years he has enjoyed doting coverage in the mainstream media. Those press ovations will continue, if a spate of new or forthcoming books by journalists is any indication. Moreover, Obama is going out with better-than-average approval ratings for a departing president. So his push to depict his presidency as years of “remarkable progress” is likely to resonate with his true believers.

But there are considerably fewer of those true believers than there used to be. Most Americans long ago got over their crush on Obama, as they repeatedly demonstrated at the polls. In 2010, two years after electing him president, voters trounced Obama’s party, handing Democrats the biggest midterm losses in 72 years. Obama was reelected in 2012, but by nearly 4 million fewer votes than in his first election, making him the only president ever to win a second term with shrunken margins in both the popular and electoral vote. Two years later, with Obama imploring voters, “[My] policies are on the ballot — every single one of them,” Democrats were clobbered again. And in 2016, as he campaigned hard for Hillary Clinton, Obama was increasingly adamant that his legacy was at stake. “I’m not on this ballot,” he told campaign rallies in a frequent refrain, “but everything we’ve done these last eight years is on the ballot.” The voters heard him out, and once more turned him down.

As a political leader, Obama has been a disaster for his party. Since his inauguration in 2009, roughly 1,100 elected Democrats nationwide have been ousted by Republicans. Democrats lost their majorities in the US House and Senate. They now hold just 18 of the 50 governorships, and only 31 of the nation’s 99 state legislative chambers. After eight years under Obama, the GOP is stronger than at any time since the 1920s, and the outgoing president’s party is in tatters. Obama urged Americans to cast their votes as a thumbs-up or thumbs-down on his legacy. That’s what they did. In almost every respect, Obama leaves behind a trail of failure and disappointment.

Read more …

Yes, even the NYT lets slip a line or two about the lack of evidence in the ridiculous US intelligence ‘report’. The article should have stopped at that, but continues in a sort of Macchiavellian spirit (actually uses the term too), trying to save some face.

Russians Ridicule US Charge That Kremlin Meddled to Help Trump (NYT)

Spies are usually thought of as bystanders who quietly steal secrets in the shadows. But the Russian versions, schooled in techniques used during the Cold War against the United States, have a more ambitious goal — shaping, not just snooping on, the politics of a nation that the Soviet-era K.G.B. targeted as the “main adversary.” That at least is the conclusion of a declassified report released on Friday that outlines what America’s top intelligence agencies view as an elaborate “influence campaign” ordered by President Vladimir V. Putin of Russia aimed at skewing the outcome of the 2016 presidential race. But the absence of any concrete evidence in the report of meddling by the Kremlin was met with a storm of mockery on Saturday by Russian politicians and commentators, who took to social media to ridicule the report as a potpourri of baseless conjecture.

In a message posted on Twitter, Alexey Pushkov, a member of the defense and security committee of the upper house of the Russian Parliament, ridiculed the American report as akin to C.I.A. assertions that Iraq had weapons of mass destruction: “Mountain gave birth to a mouse: all accusations against Russia are based on ‘confidence’ and assumptions. US was sure about Hussein possessing WMD in the same way.” Margarita Simonyan, the editor in chief of RT, a state-funded television network that broadcasts in English, who is cited repeatedly in the report, posted her own message on Twitter scoffing at the American intelligence community’s accusations. “Aaa, the CIA report is out! Laughter of the year! Intro to my show from 6 years ago is the main evidence of Russia’s influence at US elections. This is not a joke!” she wrote.

Even Russians who have been critical of their government voiced dismay at the United States intelligence agencies’ account of an elaborate Russian conspiracy unsupported by solid evidence. Alexey Kovalev, a Russian journalist who has followed and frequently criticized RT, said he was aghast that the report had given so much attention to the television station. “I do have a beef with RT and their chief,” Mr. Kovalev wrote on Twitter, “But they are not your nemesis, America. Please chill.”

Read more …

And Bryan McDonald finished off what the NYT started: “..it appears that we should swallow how RT succeeded where the combined might of CNN, NBC, CBS, The WaPo and the NYT and others failed in influencing the US election.”

How RT Became The Star Of CIA, FBI & NSA’s Anticlimactic ‘Big Reveal’ (McD)

The eagerly awaited Director Of National Intelligence’s (DNI) report “Assessing Russian Activities and Intentions in Recent US Elections” didn’t need such a long winded title. They could have just called it: “We Really Don’t Like RT.” Almost every major western news outlet splashed this story. But it was probably the New York Times’ report which was the most amusing. America’s “paper of record” hailed the DNI’s homework as “damning and surprisingly detailed.” Then a few paragraphs later admitted the analysis contained no actual evidence. Thus, in a few column inches, the Gray Lady went from describing the DNI’s release as something conclusive to conceding how it was all conjecture. “The declassified report contained no information about how the agencies had collected their data or had come to their conclusions,” the reporter, one David E. Sanger, told us.

He then reached further into his bag of tricks to warn how it is “bound to be attacked by skeptics.” Yes, those skeptics. Aren’t they awful? Like, imagine not accepting an intelligence document at face value? Especially when it warns that a nuclear armed military superpower is interfering in the American democratic process, but then offers not a smidgen of proof for its assertions. Not to mention how it appears to have been put together by a group of people with barely a clue about Russia. For instance, RT progams such as “Breaking The Set” and “The Truthseeker” are mentioned in a submission supposed to be about how RT supposedly cost Hillary Clinton the US Presidential Election. But both of these programmes went off air around two years ago. And, back then, Clinton wasn’t even the Democratic Party candidate for the 2016 contest.

[..] So how bad is this report? You’d have to say on a scale of 1-10, it’d be eleven. The core message appears to be that having a point of view which is out of sync with the liberal popular media is considered a hostile act by US spooks. And it’s specifically the liberal press’ worldview they are defending here. Now, it’s up to you to judge whether this support, from state actors, is justified or not. The DNI’s submission is ostensibly the work of highly qualified intelligence experts, but everything you learn about RT comes from publicly available interviews and Tweets posted by this channel’s own people. Yet, we are supposed to believe how the best Russia brains of three agencies – the CIA, FBI and NSA – laboured to produce this stuff? That said, the latter doesn’t appear to be fully on board, offering “moderate” confidence, in contrast to the other’s “high confidence.”

Approximately a third of the document centers on RT. And it appears that we should swallow how RT succeeded where the combined might of CNN, NBC, CBS, The WaPo and the NYT and others failed in influencing the US election. Not to mention the reality where 500 US media outlets endorsed Clinton and only 25 President-elect Donald Trump. It’s time to scream: “stop the lights!” [..] The DNI’s report is beyond bad. And it’s scary to think how outgoing President Obama has stirred up a nasty diplomatic battle with Russia based on intelligence so devoid of insight and quality. There is nothing here which suggests the authors have any special savvy or insight. In fact, you could argue how a group of students would’ve assembled something of similar substance by simply reading back issues of The New York Times. But the biggest takeaway is that it’s clear how the calibre of Russia expertise in America is mediocre, if not spookily sparse. And while this report might be fodder for amusement, the actual policy implications are nothing short of dangerous.

Read more …

And that’s by no means only true for Britain.

No One Can Afford To Stop The New Consumer Credit Crisis (G.)

Consumer debt has raised its ugly head again. According to the latest figures, the total has soared back to a level last seen just before the 2008 financial crash. To the untrained eye, the dramatic increase in spending using credit cards and loans might appear to prefigure a disaster of epic proportions. Excessive consumer debt played a big part in the collapse of Northern Rock, and looking back, this landmark banking disaster appears to have been the harbinger of an even bigger catastrophe when, a year later, Lehman Brothers fell over. This is not a view shared by the Bank of England, which says it need only keep a watching brief. Its complacency is born of forecasts of the ratio between household debt and GDP made by the Office for Budget Responsibility.

At the moment, the household debt to GDP ratio is around 140%, compared with almost 170% in 2008. The OBR’s latest analysis predicts that, over the next five years, the combination of consumer and mortgage debt will rise only gradually and fall well short of its pre-crisis peak. There is nothing wrong with judging household debt as a proportion of annual national income to gauge sustainability and the likelihood that borrowers can afford to pay it back. There is nothing wrong with it as long as you assume that GDP has been evenly shared out since the crash and that the people doing the borrowing have higher incomes, thanks to the higher GDP, to cope with repayments. Except that the Bank of England knows most people’s incomes have flatlined for years. It need look no further than official figures, which make it clear that the vast majority have missed out on the gains from GDP growth.

Incomes per head have barely recovered since 2008 and are only marginally ahead. Figures put together by the TUC last year from the official annual survey of hours and earnings paint an even gloomier picture. If they are only half right, the capacity of workers on low and average pay to manage debt payments is significantly diminished. It has estimated that, nationally, workers are more than £2,000 a year worse off after inflation is taken into account than they were in 2008 and more than £4,000 worse off in London. This should tell the central bank and the Treasury that a rise to £192bn in unsecured consumer debt in November – only a little short of the £208bn peak – is most definitely a cause for concern. And it therefore makes no sense to brush aside fears about rising debt levels by pointing to higher GDP. A debt-to-GDP figure is just not that relevant when the incomes of the people taking on the debt are stagnant.

Read more …

Beijing counting down the days till january 20. It still has $3 trillion left, but 90% or so of that is not available.

China’s Foreign Exchange Reserves Fall To Lowest Since February 2011 (R.)

China’s foreign exchange reserves fell for a sixth straight month in December but by less than expected to the lowest since February 2011, as authorities stepped in to support the yuan ahead of U.S. President-elect Donald Trump’s inauguration. China’s reserves shrank by $41 billion in December, slightly less than feared but the sixth straight month of declines, data showed on Saturday, after a week in which Beijing moved aggressively to punish those betting against the currency and make it harder for money to get out of the country. Analysts had forecast a drop of $51 billion. For the year as a whole, China’s reserves fell nearly $320 billion to $3.011 trillion, on top of a record drop of $513 billion in 2015. While the $3 trillion mark is not seen as a firm “line in the sand” for Beijing, concerns are swirling in global financial markets over the speed with which the country is depleting its ammunition to defend the currency and staunch capital outflows.

Some analysts estimate it needs to retain a minimum of $2.6 trillion to $2.8 trillion under the IMF’s adequacy measures. If pressure on the yuan persists, analysts suspect China will continue to tighten the screws on outflows via administrative and regulatory means, while pouncing sporadically on short sellers in forex markets to discourage them from building up excessive bets against the currency. But if it continues to burn through reserves at a rapid rate, some strategists believe China’s leaders may have little choice but to sanction another big “one-off” devaluation like that in 2015, which would likely roil global financial markets and stoke tensions with the new Trump administration. The yuan depreciated 6.6% against the surging dollar in 2016, its biggest one-year loss since 1994, and is expected to weaken further this year if the dollar’s rally has legs.

Adding to the pressure, Trump has vowed to label China a currency manipulator on his first day in office, and has threatened to slap huge tariffs on imports of Chinese goods. That has left Chinese eager to get money out of the country, creating what some researchers describe as a potentially destructive negative feedback loop, where fears of further yuan falls spur outflows that pile fresh pressure on the currency. “For 2016 as a whole we estimate total capital outflows to have been around $710 billion,” Capital Economics’ China economist Chang Liu told Reuters in an email. Capital Economics estimated net outflows in November and December alone were $76 billion and $66 billion, respectively.

Read more …

Trump will be willing to negotiate, but there’s doesn’t seem to be much, if any, room for China to move.

The Growing Threat to Global Trade: a Currency War (Forsyth)

While Trump has talked of imposing a so-called border tax on imports or tariffs, currencies are at the nexus of trade and are the quickest means to try to influence trade flows. In that regard, he has threatened to declare China a “currency manipulator” on Day One of his administration for allegedly pushing down the yuan to gain an export advantage. The risk is that this will escalate into a currency war, with both sides attempting to gain a trade advantage, and that it ultimately ends up disrupting global trade and financial markets. As with any war, this one should be avoided at all costs. But the events of the past year suggest never say never. [..] China, of course, is central to Trump’s strategy to reduce the U.S. trade deficit.

Harris writes that this includes three actions: naming China a currency manipulator; bringing trade cases against it under the WTO and U.S. rules; and using “every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets.” In addition, last week the president-elect named Robert Lighthizer as U.S. trade representative, adding him to the hawkish team of Peter Navarro, director of the new National Trade Council, and Commerce Secretary-designate Wilbur Ross. While the U.S. and China may find common ground on environmental regulation in China, given the unbreathable air in Beijing and other cities, Harris thinks it’s unlikely China would concede that it is manipulating its currency.

“China is currently fighting to prevent currency weakness, selling its foreign currency reserves to offset private capital flight from the country,” he continues. China’s reserves have fallen by about $1 trillion, to just over $3 trillion as of November; the latest data, due this weekend, will be closely watched to see how much Beijing’s cache has been depleted. That said, “some academics in China are suggesting the country should respond to being declared a ‘manipulator’ by letting the currency float, triggering even more weakness,” adds Harris. Other observers see such a course as dangerous. Danielle DiMartino Booth, writing in her latest Money Strong missive, quotes Leland Miller, president of China Beige Book, a private research group, that the last thing Beijing wants is a floating yuan.

“It would hurt them much more than anyone else and be greeted with massive retribution from every corner of the world. There would be countervailing devaluations and would cause global contagion,” he contends. “It would also be a major blow to [President] Xi’s credibility during a politically sensitive year, since he’s pledged to not float the currency. And it would NOT stanch outflows; all it would do is exacerbate them.”

Read more …

The independent Fed talking politics?!

Fed’s Powell Urges Congress to Take Another Look at Volcker Rule (BBG)

Federal Reserve Governor Jerome Powell urged Congress to rewrite the Volcker Rule that restricts proprietary trading, while urging “a high degree of vigilance” against the buildup of financial risks amid improving U.S. growth. “What the current law and rule do is effectively force you to look into the mind and heart of every trader on every trade to see what the intent is,” Powell said Saturday at the American Finance Association meeting in Chicago. “Is it propriety trading or something else? If that is the test you set yourself, you are going to wind up with tremendous expense and burden.” Powell’s comments compare to Fed Chair Janet Yellen, who has supported the sweeping bank rules of the 2010 Dodd-Frank Act in the wake of the global financial crisis. President-elect Donald Trump has vowed to dismantle Dodd-Frank. The Volcker Rule restricts banks with taxpayer-backed deposits from making certain types of speculative “proprietary” trades.

“We don’t want the largest financial institutions to be seriously engaged in propriety trading,” Powell said. “We do want them to be able to hedge their positions and create markets.” Powell said that the Volcker Rule, as enacted by U.S. lawmakers, doesn’t achieve that goal. “I feel the Congress should take another look at it.” In the text of his remarks, Powell urged more monitoring of financial risks following a period of record low interest rates, citing commercial real estate as one area of concern. “More recently, with inflation under control, overheating has shown up in the form of financial excess,” Powell said. “The current extended period of very low nominal rates calls for a high degree of vigilance against the buildup of risks to the stability of the financial system.”

Read more …

Is this simply the Fed trying to pass on the blame?

New Policies Coming To America Could Take Weight Off Fed: Powell (R.)

A push by Washington for more business-friendly regulation and fiscal support for the economy could improve America’s mix of policies which in recent years have relied too much on the Federal Reserve, Fed Governor Jerome Powell said. Powell, speaking on Saturday at a conference, did not mention the incoming Trump administration by name but his comments suggest some Trump policies will be welcomed by U.S. central bankers who have been urging other institutions to do more to help the economy. “We may be moving more to a more balanced policy with what sounds like more business-friendly regulation and possibly more fiscal support,” Powell told an economics conference in Chicago. President-elect Donald Trump, who takes office on Jan. 20, has promised to double America’s pace of economic growth, “rebuild” its infrastructure and slash regulatory burdens.

About half of the Fed’s 17 policymakers factored a fiscal stimulus into their economic forecasts published in December, according to minutes from the Fed’s December policy meeting. That expected stimulus has led several policymakers to say the Fed will likely raise rates more quickly, but Powell said new policies could also ease the Fed’s burden. “Monetary policy (might be) able to hand it off and I think that’s a healthier thing,” he said. “We may be moving to a more balanced policy mix.” Following a Congress-enacted fiscal stimulus during and immediately after the 2007-09 recession, the Fed in recent years has been widely seen as the economic authority working the hardest to help the economy. But throughout 2016, Fed policymakers worried publicly that the U.S. economy was stuck in a low growth path and central banking tools could do little to fix this. Central bankers urged Congress and the U.S. president to pass laws that would help make U.S. businesses and workers more productive.

Read more …

“..it might be more of a matter of Trump not wanting many economists in his administration..”

Economists Want to Be Members of Donald Trump’s Team (BBG)

Economists aren’t shying away from joining Donald Trump’s administration and would be willing to pitch in if asked, according to former economic policy makers now in academia. “The president will be able to get any economist he asked for,” said Glenn Hubbard, who served President George W. Bush as chairman of his Council of Economic Advisers from 2001 to 2003 and is now dean of Columbia University’s Graduate School of Business. Hubbard spoke Saturday in Chicago at the American Economic Association annual conference. A delay in naming a new CEA chair and reports that the position might go to CNBC commentator Lawrence Kudlow spawned speculation that leading academic economists were reluctant to join a team headed by an avowed skeptic of free trade.

“I don’t see that,” said John Taylor, an economics professor who served in the Bush administration as under secretary of Treasury for international affairs and now teaches at Stanford University. “It’s a pretty exciting time and lots of things are going on,” said Taylor, who worked in three other administrations as well. Alan Krueger, who led the CEA in the White House of President Barack Obama from 2011 to 2013 before passing the torch to incumbent Jason Furman, suggested that it might be more of a matter of Trump not wanting many economists in his administration, rather than the other way around. “I worry more about the demand side than the supply side,” said the Princeton University professor said. The audience laughed.

Read more …

Should have thought of that earlier. Because this has been evident for a very long time: Germany is the biggest beneficiary of the European community – economically and politically.” Just look at the graph I inserted at the bottom of this article.

EU Collapse ‘No Longer Unthinkable’ – German Vice Chancellor Gabriel (R.)

Germany’s insistence on austerity in the euro zone has left Europe more divided than ever and a break-up of the European Union is no longer inconceivable, German Vice Chancellor Sigmar Gabriel told Der Spiegel magazine. Gabriel, whose Social Democrats (SPD) are junior partner to Chancellor Angela Merkel’s conservatives in her ruling grand coalition, said strenuous efforts by countries like France and Italy to reduce their fiscal deficits came with political risks. “I once asked the chancellor, what would be more costly for Germany: for France to be allowed to have half a percentage point more deficit, or for Marine Le Pen to become president?” he said, referring to the leader of the far-right National Front. “Until today, she still owes me an answer,” added Gabriel, whose SPD favors a greater focus on investment while Merkel’s conservatives put more emphasis on fiscal discipline as a foundation for economic prosperity.

The SPD is expected to choose Gabriel, their long-standing chairman who is also economy minister, to run against Merkel for chancellor in September’s federal election, senior party sources said on Thursday. Asked if he really believed he could win more votes by transferring more German money to other EU countries, Gabriel replied: “I know that this discussion is extremely unpopular. But I also know about the state of the EU. It is no longer unthinkable that it breaks apart,” he said in the interview, published on Saturday. “Should that happen, our children and grandchildren would curse us,” he added. “Because Germany is the biggest beneficiary of the European community – economically and politically.”

Read more …

Thanks, Angela.

Greeks’ Mental Health Suffering (Kath.)

More than half of Greeks complain of mental health problems, with stress, insecurity and disappointment among the issues most commonly cited, according to the results of a nationwide survey by the National School of Public Health, known by its acronym ESDY. Over half of the 2,005 adults polled (53.9%) said their mental health had not been good over the past month due to stress, depression or other emotional problems. A quarter (24.8%) of respondents, identified poor physical or mental health as causing problems in their daily lives. A total of 15% said they felt insecurity, anxiety and fear, with 14% citing anger and frustration, 9.7% complaining of depression and sadness, 8.2% of stress and 44.6% citing all these ailments.

Four in 10 (42.6%) said they only enjoyed their lives “moderately” and one in 10 said they thought their lives had little or no meaning. The findings came as official figures showed that cases of depression rose from 2.6% of the population in 2008 to 4.7% in 2015. Responding to broader questions about their health and lifestyle, 20% of those polled said their diets had been insufficient over the past month due to low finances. According to health sector experts, however, the repercussions of the economic crisis on citizens’ health are less severe than many had feared. In comments to Kathimerini, Yiannis Kyriopoulos, a professor of health economics at the ESDY, said the findings of the study “simply observe a slowdown in the improvement of health indicators.”

Read more …

Jan 062017
 
 January 6, 2017  Posted by at 10:23 am Finance Tagged with: , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Joel Meyerowitz Girl On A Scooter 1965


Intel Report Says US Identifies Go-Betweens Who Gave Emails To WikiLeaks (CNN)
All US Envoys Appointed By Obama Told To Quit By Inauguration Day (R.)
FBI Never Requested Access To Allegedly Hacked DNC Server (DM)
The Coup Against Truth (Paul Craig Roberts)
Rebuild the Fed From the Bottom Up (DiMartino Booth)
Annual US Auto Sales Fell for First Time since 2009 (WS)
Dismal Holiday Sales At Macy’s And Kohl’s Cast Gloom Over Sector (R.)
Half Of Jobless US Men Not In The Labor Force Take Daily Pain Medication (AP)
The Real Reasons Brexit Is Succeeding (Ashoka Mody)
Economics is in Crisis – BOE’s Haldane (G.)
Why Has The UK Economy Defied Predictions Of Doom? (G.)
UK Unsecured Consumer Credit Grows At Annual Rate Of 11% (G.)
No End In Sight For Europe’s Banking Troubles (CNBC)

 

 

What a circus this has become. No matter how hard they try, they still have to admit that “..there is no single intercepted communication that qualifies as a “smoking gun” on Russia’s intention to benefit Trump’s candidacy or to claim credit for doing so.” As for the go-betweens, WikiLeaks will never give info on sources.

Intel Report Says US Identifies Go-Betweens Who Gave Emails To WikiLeaks (CNN)

US intelligence has identified the go-betweens the Russians used to provide stolen emails to WikiLeaks, according to US officials familiar with the classified intelligence report that was presented to President Barack Obama on Thursday. In a Fox News interview earlier this week, WikiLeaks founder Julian Assange denied that Russia was the source of leaked Democratic emails that roiled the 2016 election to the detriment of President-elect Donald Trump’s rival, Democrat Hillary Clinton. Meanwhile, US intelligence has received new information following the election that gave agencies increased confidence that Russia carried out the hack and did so, in part, to help Trump win. Included in that new information were intercepted conversations of Russian officials expressing happiness at Trump’s win. Another official described some of the messages as congratulatory.

Officials said this was just one of multiple indicators to give them high confidence of both Russian involvement and Russian intentions. Officials reiterated that there is no single intercepted communication that qualifies as a “smoking gun” on Russia’s intention to benefit Trump’s candidacy or to claim credit for doing so. Vice President Joe Biden said in an interview with PBS NewsHour that an unclassified version of an intel report provided to him will be released “very shortly” and will “lay out in bold print what” the US knows about the hacking. “I think it will probably confirm what a lot of the American people think,” he said, adding that it would “state clearly” the Russians involvement in the hacking.

In response to the interview, Trump tweeted on Wednesday, “Julian Assange said “a 14 year old could have hacked Podesta” – why was DNC so careless? Also said Russians did not give him the info!” Trump has been publicly skeptical of Russia’s involvement in the hacking, as well as has been publicly deriding the US intelligence community for its unanimous conclusion that Russia hacked Democratic Party groups and individuals to interfere in the US presidential election. Officials told CNN there’s been a disconnect between Trump’s remarks about the intelligence community and his behind-the-scenes behavior when he’s present at private intel briefings.

Read more …

Oh lovely.

All US Envoys Appointed By Obama Told To Quit By Inauguration Day (R.)

U.S. President-elect Donald Trump’s transition team has issued a blanket mandate requiring politically appointed ambassadors installed by President Barack Obama to leave their posts by Inauguration Day, the U.S. ambassador to New Zealand said on Friday. “I will be departing on January 20th,” Ambassador Mark Gilbert said in a Twitter message to Reuters. The mandate was issued “without exceptions” through an order sent in a State Department cable on Dec. 23, Gilbert said. He was confirming a report in the New York Times, which quoted diplomatic sources as saying previous U.S. administrations, from both major political parties, have traditionally granted extensions to allow a few ambassadors, particularly those with school-age children, to remain in place for weeks or months.

The order threatens to leave the United States without Senate-confirmed envoys for months in critical nations like Germany, Canada and Britain, the New York Times reported. A senior Trump transition official told the newspaper there was no ill will in the move, describing it as a simple matter of ensuring Obama’s overseas envoys leave the government on schedule, just as thousands of political aides at the White House and in federal agencies must do. Trump has taken a strict stance against leaving any of Obama’s political appointees in place as he prepares to take office on Jan. 20, aiming to break up many of his predecessor’s signature foreign and domestic policy achievements, the newspaper said.

Read more …

And why not? Throw on some more…

FBI Never Requested Access To Allegedly Hacked DNC Server (DM)

The FBI never asked the Democratic National Committee if it could examine a computer server that was the subject of cyber attacks last year. Instead federal law enforcement relied on data that, Crowdstrike, a private computer security company, gathered from the device. The FBI later endorsed the conclusion that Russian intelligence services were behind the hacking, and that their goal was to help Donald Trump win the November presidential election. ‘The DNC had several meetings with representatives of the FBI’s Cyber Division and its Washington Field Office, the Department of Justice’s National Security Division, and U.S. Attorney’s Offices, and it responded to a variety of requests for cooperation,’ DNC deputy communications director Eric Walker told BuzzFeed, ‘but the FBI never requested access to the DNC’s computer servers.’

Trump’s incoming press secretary Sean Spicer told reporters on a Thursday morning conference call that ‘the DNC is on the record saying the FBI never contacted them to validate claims by Crowdstrike, which is the third-party tech security firm, and never actually requested the hacked server.’ ‘You know, I would equate this to no one actually going to a crime scene to actually look at the evidence,’ Spicer declared. Walker said there were no restrictions on what the FBI could request from its private security company’s findings. ‘Beginning at the time the intrusion was discovered by the DNC, the DNC cooperated fully with the FBI and its investigation, providing access to all of the information uncovered by CrowdStrike – without any limits,’ he said.

Read more …

Restructuring US intelligence can be a hazardous occupation.

The Coup Against Truth (Paul Craig Roberts)

Washington is so intent on its anti-Russian propaganda that Congress has passed, and Obama has signed, an intelligence bill that contains a section, Title V, that authorizes active measures to counter purveyors of false news. These purveyors are alternative media websites, such as this one, that challenge the official lies. The truthful alternative media is accused of being under Russian influence. Last summer a website shrouded in secrecy was created that recently posted a list of 200 websites alleged to be under Russian influence, either directly or indirectly. The Washington Post irresponsibly published a long article endorsing the fake news of 200 websites working for the Russian government. In other words, the suppression of the truth is the last defense of the corrupt American ruling establishment.

During the last 24 years three Washington regimes have murdered millions of peoples in nine or more countries along with US civil liberty. To cover up these vast crimes, unparalleled in history, the presstitutes have lied, slandered, and libeled. And the Washington criminal regime holds itself up to the world as the indispensable protector of democracy, human rights, truth, and justice. As the Russian Foreign Ministry spokeswoman said recently, what makes America exceptional is the use of might in the service of evil. Washington brands not only its opponents but all who speak the truth “Russian agents,” hoping that the demonization of Russia has sufficiently frightened the population that Americans will turn their backs to those who speak the truth.

It would seem obvious even to the insouciant that an establishment that has gone so far out on a limb that the CIA director publicly attributes the election of Donald Trump to Russian interference but is unable to produce a shred of evidence—indeed in the face of totally conclusive evidence to the contrary—is determined to hold on to power at all costs. The CIA’s open, blatant, and unprecedented propaganda attack against a president-elect has caused Trump to throw down the gauntlet to CIA director John Brennan. There are reports that Trump intends to revamp and reorganize the intelligence agency. The last president who said this, John F. Kennedy, was murdered by the CIA before he could strike against them. Kennedy believed that he could not take on the CIA until he was re-elected. The delay gave the CIA time to arrange his assassination.

Trump appears to understand his danger. He has announced that he intends to supplement his Secret Service protection (which was turned against JFK) with private security. Isn’t it striking? The president of Russia states publicly that Washington is driving the world to thermo-nuclear war and that his warnings are ignored. The president-elect of the United States is under full-scale attack from the CIA and knows that he cannot trust his official security force. One might think that these extraordinary topics would be the only ones under discussion. But you can find such discussion only on a few alternative media websites, such as this one, branded by PropOrNot and the Washington Post as “under Russian influence.”

Read more …

Why am I under the impression that what Danielle DMB is describing is still an inside(r) job? Can economists clean up the Fed? Can it be cleaned up at all?

Is it as hazardous as redoing intelligence?

Rebuild the Fed From the Bottom Up (DiMartino Booth)

Today the institution of the Fed is as intellectually entrenched as it has ever been. It has become the largest employer of people with doctorates in economics. It has hired or contracted with more than 1,000 of these economists, who actively endeavor to validate, rather than question, orthodox theories and policies. The pipeline of talent filling new positions at the Fed is sourced from the same stagnant academic pool that produced the current leadership. Is it any wonder criticism within the Fed has been quashed? Now the door is open for an outsider to bring the outside world back into the Fed. The last time that all seven governor positions on the Federal Reserve Board were occupied was in 2013. Trump can expeditiously fill these seats, but, more important, he can remake the culture inside the Fed.

Armies of consultants have presumably been busy making a list of potential board nominees. If these advisers have the interests of those who voted for Trump at heart, they will look for individuals who have been on the receiving end of monetary policy and therefore understand it. They will find CEOs who would rather have invested in the future of their companies, thus creating more jobs and opportunities, rather than be pressured to buy back their shares with cheap debt because of regulatory uncertainty. They will seek out the handful of pension fund managers who have insisted on using assumptions for lower rates of return, to better reflect the reality of lower returns on fixed-income securities, and who resisted the siren call of inappropriate investments to offset the dearth of options in a low-interest-rate world.

They will seek rational critics of Fed policy who empathize with, not roundly dismiss, the plight of savers in this environment. Once a full complement of possible nominees is in place, the new administration can concentrate on redrawing the institution to reflect the tremendous change the U.S. economy has undergone in the more than 100 years since the Fed first came into being. Right now, there are 12 Fed districts. Some regions of the U.S. have become more economically powerful over the years. California is the largest economy followed by Texas. They should have their own Fed districts. A third one could encompass most of the rest of the West. At the same time, the regions that have become less economically relevant should be consolidated.

For example, Missouri no longer merits two Feds. St. Louis can be incorporated into the Chicago Fed, along with Cleveland. New York is the third-largest state economy. It seems economically reasonable, from Philadelphia north, to have two Fed districts rather than three. Then give the presidents of the 10 districts that remain permanent votes on the Federal Open Market Committee. This is a necessary act to begin dismantling the over-concentration of power at the board in Washington and at the New York Fed.

Read more …

Turning their back on their gods?

Annual US Auto Sales Fell for First Time since 2009 (WS)

The media hoopla has been deafening. In December, “new vehicles sales” – defined as the number of new cars, trucks, and SUVs that dealers sold to their customers, including fleets – rose 3.1%. That was stronger than “expected.” And in the media reports, there was euphoria between the lines. Automakers and dealers had certainly tried. Inventories are high, layoffs and plant closings have already been announced, and so every effort was made to move the iron and pull out the year. No incentive was spared to get the job done. With this gain in December, total sales for 2016 edged up 0.4% to a record 17.55 million vehicles, according to Autodata. Sales of light trucks and SUVs rose 7.2% for the year, but sales of cars sagged 8.1%. Gasoline is cheap, and Americans love big implements.

Car sales at GM dropped 4.3% in 2016, at Ford 13.0%, and at Fiat Chrysler a catastrophic 33.5%! Plants that build cars were the ones mostly (but not exclusively) hit by shutdowns and layoffs. Then there was the whole to-do about Trump, Ford, and the plant in Mexico. Alas, while some automakers posted record sales for the year, the biggest automakers were not among them. And you probably didn’t see this in the media unless you started digging through the data yourself. Somehow this one slipped by the media’s attention. Because something ugly happened in 2016, something we haven’t seen since 2009. For ALL of the big three US automakers, plus for a number of others, sales in 2016 actually fell. For them it was the first annual sales decline since nightmare-year 2009.

Here they are, in terms of the annual decline in their total vehicles sales, as measured by dealer sales to their customers (in descending order of sales): • GM -1.3% • Ford -0.1% • Toyota -2.0% • Fiat-Chrysler -0.4% • Volkswagen -3.3% • BMW -9.7% • Mazda -6.7%. The sales of these seven automakers combined amounted to 11.5 million vehicles in 2016, or 65% of total US sales! And combined, their sales were down 1.5% from the prior year. So this is what Ford meant earlier this year, when it began mentioning the “car recession.”

Read more …

‘T is the season to be folly.

Dismal Holiday Sales At Macy’s And Kohl’s Cast Gloom Over Sector (R.)

Disappointing holiday-season sales at Macy’s and Kohl’s underscored the uphill task facing department stores to win back shoppers, who are increasingly turning to online retailers and spending less on apparel. Macy’s shares fell as much as 14% on Thursday, their biggest percentage drop in seven months. Kohl’s stock dropped as much as 20.5%, its biggest decline in more than 14 years. Both reported lower-than-expected sales for November and December and cut their full-year profit forecasts on Wednesday. Macy’s, known the world over for its flagship Herald Square store in Manhattan and its annual Thanksgiving Day parade, is considered a bellwether for department stores. However, it is expected to relinquish its position as the largest U.S. apparel retailer to Amazon.com as soon as this year as it struggles to compete on prices and the convenience offered by online shopping.

Amazon said last week it had its “best ever” holiday season, shipping more than 1 billion items worldwide. Shares of other department store operators, including J.C. Penney and Nordstrom also fell as the dismal showing took investors by surprise. Expectations were high that department stores would get a good boost from a strong holiday shopping season. The National Retail Federation had forecast that 2016 holiday period sales would rise 3.6% to $656 billion. A jump in spending in the last days of December was expected to make up for a slow start to the shopping season. “The strength around Thanksgiving and Christmas was insufficient to offset the sales weakness in the balance of the quarter,” Stifel, Nicolaus & Co analyst Richard Jaffe wrote. “In addition, these peak selling periods were characterized by greater promotions which contributed to weaker than anticipated gross margin as well,” he said in a client note. Struggling Sears, the operator of Sears and Kmart stores, reported a 12-13% drop in same-store sales for November and December on Thursday.

Read more …

Brought up as a mere detail in the AP article, but what a striking one. We’re talking many millions of men: “Health problems and the opioid epidemic may also be a major barrier to work, according to research by Alan Krueger, a Princeton economist and former Obama adviser. Nearly half of men ages 25 through 54 who are neither working nor looking for work take pain medication daily, Krueger found.” Go back 100 years and imagine this then.

Half Of Jobless US Men Not In The Labor Force Take Daily Pain Medication (AP)

If President-elect Donald Trump is going to meet his pledge to energize the U.S. economy, there’s a simple yet tough way to do so: Put more men to work. The proportion of men in their prime working years who either have a job or are looking for one has been dropping for decades — and limiting economic growth in the process. The full brunt of the 60-year decline burst into view during the 2016 election. Trump triumphed in part by vowing to restore jobs at steel mills, auto plants and coal mines — the types of work that had once employed legions of men who lacked a college education. Bringing more non-college-educated men into the workforce is a Herculean challenge that has long bedeviled economists. Among the root causes:

• Automation. Factory robots and computer software have eliminated the need for many workers, wiping out an array of jobs that once provided a middle class lifestyle. • Global competition. U.S. workers have been competing for jobs with cheaper foreign workers, a trend that’s led to some offshoring of jobs and curbed pay in some industries. • Criminal records. Stricter criminal laws have left over 20 million Americans with felony convictions and prison records — a fourfold increase from 30 years earlier. That background has made it hard for them to get hired. • Prescription drug use. Nearly half of jobless men who are no longer looking for work are on pain medication, research has found.

Still, Trump appears to endorse a straightforward fix: Bump up economic growth, and workers will land good jobs at decent wages. “Many are dropping out of the labor force because they cannot find good-paying jobs in an economy operating near stall-speed,” the Trump campaign said before the election. To chart the problem and any progress Trump might achieve over the next four years, his team has pointed to an obscure gauge called the “labor force participation rate.” This is the proportion of people who are either working or looking for work. It excludes anyone who’s stopped searching for a job.

Read more …

Mody’s been smoking the real good stuff. Bankers leave? Great! Housing market crashes? Even better! Pound plummets? Fantastic!

It’ll all add up to Britain becoming “a beacon amidst the desolate and depressing decay of Western politics and social norms.”

The Real Reasons Brexit Is Succeeding (Ashoka Mody)

Banks are expected to leave for the European continent, taking with them jobs and tax revenues. But if banks do leave, that would be another good outcome for the British economy. Banks have fuelled the finance-property price nexus and have drawn the best talent to flip financial assets. A smaller banking sector will mean a more balanced British economy. And as for those who expect that the economy will suffer when the details of the divorce with the European Union are revealed, their logic does not work. It is the uncertainty of what lies ahead that should depress the economy. Once details become clearer, businesses will adapt. The fact that six months after the decision, the economy is doing so well is a judgement that Brexit could deliver a net economic dividend.

But the greater prize from Brexit lies in a possible political dividend. Western democracy is under the threat of authoritarian populism. Mainstream political parties, having for long failed to heed the calls of those being left behind, are being pushed aside by charlatans. The Brexit vote was a cry of despair by the poorly educated and those employed in dead-end jobs; many such Brexiters have reason to fear that their children will do even worse than them. Through their vote to leave the European Union, the most vulnerable have given another opportunity to the Conservative Party rather than to a Government run by self-promoting and destructive extremists.

Brexit will happen. Prime Minister Theresa May’s Government must heed the true message of the Brexit vote. The task is to regenerate the communities that have turned into wastelands and spread quality education to prepare ever larger numbers of British citizens for the rigours of a 21st century competitive global economy. If the Government succeeds in this greater task, then Britain would not only have done well for itself, it would become a beacon amidst the desolate and depressing decay of Western politics and social norms.

Read more …

The crisis in economics should not be confused with that inside the BOE, where Carney turned political to influence the Brexit vote. In vain.

Economics is in Crisis – BOE’s Haldane (G.)

The Bank of England’s chief economist has admitted his profession is in crisis having failed to foresee the 2008 financial crash and having misjudged the impact of the Brexit vote. Andrew Haldane, said it was “a fair cop” referring to a series of forecasting errors before and after the financial crash which had brought the profession’s reputation into question. Blaming the failure of economic models to cope with “irrational behaviour” in the modern era, the economist said the profession needed to adapt to regain the trust of the public and politicians. Haldane described the collapse of Lehman Brothers as the economics profession’s “Michael Fish moment” (a reference to when the BBC weather forecaster predicted in 1987 that the UK would avoid a hurricane that went on to devastate large parts of southern England).

Speaking at the Institute for Government in central London, Haldane said meteorological forecasting had improved markedly following that embarrassing mistake and that the economics profession could follow in its footsteps. The bank has come under intense criticism for predicting a dramatic slowdown in the UK’s fortunes in the event of a vote for Brexit only for the economy to bounce back strongly and remain one of the best performing in the developed world. Haldane is known to be concerned about mounting criticism of experts and the potential for Threadneedle Street’s forecasts to be dismissed by politicians if errors persist. Former Tory ministers, including the former foreign secretary William Hague and the former justice secretary Michael Gove, last year attacked the Bank of England governor, Mark Carney, for predicting a dramatic slowdown in growth if the country voted to leave the EU.

Prominent Brexit campaigners have also besieged the central bank. Before the vote, the foreign secretary, Boris Johnson accused the bank of risking undermining economic confidence by issuing warnings about the potential effects of a vote for Brexit. During her conference speech following the vote, on 6 October, the prime minister, Theresa May, criticised the bank’s reaction to the vote after it cut interest rates further and boosted its package of stimulus measures by £60bn to £435bn.Gove said last week that when he said experts needed to be challenged, he meant economists in particular. In a debate with Stephanie Flanders, the former BBC economics editor, he cited an academic study to support his argument that expert economists were not good at making predictions.

Gove said: “Sometimes we’re invited to take experts as though they were prophets, as though their words were carved in tablets of stone and that we had to simply meekly bow down before them and accept their verdict. “I think the right response in a democracy, to assertions made by experts, is to say ‘show us the evidence, show us the facts’. And then, if experts or indeed anyone in the debate can make a strong case, draw on evidence and let us think again – then of course they deserve respect.”

Read more …

For the answer, check the article below this one.

Why Has The UK Economy Defied Predictions Of Doom? (G.)

First it was manufacturing. Then it was construction. Now the hat-trick of upbeat economic news has been completed by the strongest performance by the services sector in 17 months. It goes without saying that this is not what the Treasury or the Bank of England expected at the time of the EU referendum last June. At the time, there was talk of the economy plunging straight into recession. This week’s reports from purchasing managers point to growth of 0.5% in the final three months of 2016 compared with 0.6% in the third quarter. Post-referendum forecasts for 2016 were quickly shredded by the Bank of England when it became clear that activity had not collapsed. Likewise, predictions for 2017 may also soon be revised upwards. There are a number of reasons for this. Firstly, the economy had momentum in late 2016 which will persist into the first few months of 2017.

Secondly, the international outlook is looking brighter than it was a few months ago. Donald Trump’s tax-cutting agenda means the US economy is going to grow rapidly this year and that’s good news for UK exporters. Finally, the stance of both fiscal and monetary policy in the UK has become more growth friendly since the referendum. Philip Hammond throttled back on the government’s austerity plans in last November’s autumn statement, reinforcing the impact of Bank of England’s decision three months earlier to cut interest rates and embark on a new round of quantitative easing. When it cut rates to 0.25% in August the Bank signalled that a further cut was likely to be needed. Clearly, that is no longer going to happen. Official borrowing costs will remain where they are for now but there is a good chance of the next move from Threadneedle Street being a rate rise.

Read more …

This is why “The UK Economy Defied Predictions Of Doom”.

UK Unsecured Consumer Credit Grows At Annual Rate Of 11% (G.)

Britain went on a bit of a borrowing binge as Christmas approached. Unable to resist all the bargains on offer on Black Friday, shoppers pulled out the plastic. The rise in unsecured consumer debt in November was the biggest for more than a decade. News of the increase in consumer debt is not exactly a surprise. When the Bank of England cut interest rates in August last year, the aim was to making borrowing cheaper and therefore more attractive. The message came through loud and clear: UK households need little encouragement to buy on the never-never. Unsecured credit is growing at an annual rate just shy of 11% Rising consumer debt is not necessarily a problem. When unemployment is low and real incomes are rising, it can make perfectly good sense to borrow for a big-ticket item, especially when, as on Black Friday, it is on offer at a knockdown price and when interest rates are so low.

But anybody who believes consumers can continue to amass credit at 11% a year is living in cloud cuckoo land. The UK has been through these credit cycles many times in the past, and things have never ended well. Annual growth in unsecured borrowing is edging back up towards the 16% peak reached in the early 2000s, as is unsecured debt as a proportion of disposable income. The danger comes when unemployment rises, real incomes are squeezed or interest rates start to go up. At that point, borrowing becomes less a matter of personal choice and more a sign of financial distress. Britain is not at that point – yet. Consumers are not optimistic about the outlook for the economy but they are relatively happy about the state of their own finances. That could change as inflation starts to climb.

Read more …

100% guaranteed.

No End In Sight For Europe’s Banking Troubles (CNBC)

There is another pressing issue to solve in Europe’s banking system: Novo Banco – a Portuguese bank that emerged from the collapse of the country’s biggest lender. The Portuguese Central Bank and government have to find a solution for Novo Banco by August – a deadline agreed with European regulators, after previous failed attempts to recover the 4.9 billion euros ($5.2 billion) used to save the bank. Portugal’s Finance Minister Mario Centeno told a newspaper on Wednesday that “all options are on the table”, including a nationalization. Earlier last year, the government had rebuffed calls for the nationalization of the bank. Such a solution could spark further political turmoil at a sensitive time in European Union politics.

“It’s here (in the stability of the Portuguese government) where I find risks,” Diogo Teixeira dos Santos, chief executive officer at Optimize Investment Partners, told CNBC over the phone. Nationalizing the bank would be more of a political problem rather than an economic issue, he explained. Portugal is being governed by a minority-socialist led government, who enjoys parliamentary support from two leftist parties (the Left Bloc and the Communist Party). Though there are no general elections scheduled for 2017, it is clear that there are divergent views between the three parties when it comes to Novo Banco, which could shake the stability of the government.

The Left Bloc has previously mentioned that Novo Banco should be state owned, but the government continues to push for a private solution – just like the Italian government did for Monte dei Paschi, until the political turmoil forced a state intervention. More importantly, the leftist parties want the solution to have zero impact for taxpayers. The government lent nearly 4 billion euros to the rescue of the bank – an amount that it hopes to recover with a sale. Any losses from the sale will have to be paid gradually by the other Portuguese banks. But, even the best private option at the moment has “a potential impact on public accounts,” Lisbon’s central bank said Wednesday. The bank announced that an offer from Lone Star, a U.S. fund, is the best placed in ongoing negotiations.

Read more …

Dec 182016
 
 December 18, 2016  Posted by at 9:43 am Finance Tagged with: , , , , , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Dorothea Lange Country store, Person County, NC Jul 1939


Here’s How Americans Spent Their Money In The Last 75 Years (MW)
Global Debt, Equity Markets Lose $1 Trillion In Value This Week (ZH)
January 2017 Earnings Is Going To Be a Bloodbath (EconMatters)
Trump Talked, the Fed Listened: Shrink the Balance Sheet, Bullard Says (WS)
Pentagon Says China to Return Drone; Trump Says They Can Keep It (BBG)
Free Cash in Finland. Must Be Jobless. (NYT)
Monte dei Paschi to Start Taking Orders for Shares on Monday (BBG)
Hillary’s Campaign The Most Incompetent In Modern History (Davis)
Just Who Is Undermining Election? Russians Or CIA? (Albuquerque Journal Ed.)
‘Shocking’ Rise in Number of Homeless Children in UK B&Bs at Christmas (G.)
Tsipras’s Spending Spree May Be Relief To Greeks But It Won’t End Crisis (G.)

 

 

The rise in spending on housing should initiate a national debate. And not just in the US. It makes you wonder about the real dimensions of the ‘housing bubble’. Is it perhaps 75 years old already?

Here’s How Americans Spent Their Money In The Last 75 Years (MW)

Housing expenses have almost always been the largest drain on American budgets, unchanged in over 70 years. Between 1941 and 2014, Americans spent money on most of the same things, with a few changes. Housing has persisted as a large area of spending for Americans, as has the food category. However, spending on food and clothing has fallen when adjusting for inflation while spending on education and health care has risen quickly. That’s according to Bureau of Labor Statistics data, adjusted for inflation and representing median spending of all Americans, charted here.


click for larger version

There is one exception to housing’s dominance, in 1941, when spending on food averaged $8,311 annually, topping the $7,537 spent on shelter that year. Interestingly, in 1941 the government included alcohol in the food spending category, which inflates the food spending data for that year. In other years, alcohol was given its own category. Americans spent the most on clothing in 1961, at an average of $4,157. In every year measured since 1961, spending on clothing fell, even when accounting for inflation. At the same time, Americans began spending more on education, transportation and health care. Spending on education has increased far more than any other category, jumping from $242 in 1941 to $1,236 in 2014. Education spending increased at a particularly fast rate between 1984 and 1994 and onward. While spending on health care increased between 1941 and 2014, overall spending dipped between 1973 and 1984, but then began rising rapidly thereafter.

Read more …

@Boomfinance: “Bonds are collateral assets. Collateral is needed to expand Credit. This is Debt Deflation writ large. Yes?”

Global Debt, Equity Markets Lose $1 Trillion In Value This Week (ZH)

Thanks to Janet Yellen’s rate-hike-hawkishness (but, but, but, we’re still ultra-easy), global equity and debt markets lost over $1 trillion in value – the biggest weekly loss since early May (weak China data and huge surge in dollar). Global bonds lost over $430 billion in market value this week (Yellen hawkishness and China bond carnage) but stocks lost even more ($525 billion) as China financial turmoil added to the world’s woes (and “three rate hikes next year” and fiscal stimulus efficacy questions did not help).

Having retraced back to pre-Trump levels before The Fed statement this week, the combination of China turmoil and Janet’s un-dovishness sent global stocks and bonds down over $1 trillion on the week – the worst week globally since May 2016 (when the dollar surged amid China weakness and slowing EU growth forecasts)

In fact, while US bank stockholders are ebullient at The Trump presidency-to-be, the rest of the world has lost a combined $1.5 trillion in market value across its bonds and stocks (thanks in major part to Janet’s help this week).

Read more …

No holding back here.

January 2017 Earnings Is Going To Be a Bloodbath (EconMatters)

We discuss a preview of January`s Earnings releases and how massive the gap down in most of these stocks will be when they report in a month. There have already been two earning`s guide downs from industrial companies this past week in UTX, and HON. But with the run up in financials and energies for the last month we are going to experience big $5 chunks taken out of these stocks and massive after hours and pre-market gap downs that will cause entire sectors to sell off during earnings in January. It is just going to be brutal, expect 500 point down days in the Dow during this upcoming earnings period. You have seasonal stocks that selloff every year like Apple and Amazon, as the 4th quarter is their best by far for sales and revenues.

And you have energy companies with exorbitant p/e ratios like COP, XOM, CVH that are priced for $115 dollar oil not $55 oil that 4th quarter earnings releases are going to bring some fundamental realities back to investors of how overpriced these stocks are right here. You have “dogshit” stocks like C, BAC that are serial underperformers in the financial sector along with WFC with its legal problems and operating distractions of the past year, and JPM which has moved too far entirely too fast and the amount of Monkey Hammering Selling Smack downs of these financials upon reporting is going to be outright brutal for investors stupid enough not to have taken profits before earnings. Not to mention all the other broken companies that have been lifted up in this 4th quarter rally, and are going to be taken out to the woodshed for a red beating when they report.

Throw in all those idiot investors who don`t take profits for tax reasons who will wish they did as everybody sells in the new year at the same time running for the tax exits together, and this January 2017 Earnings period is going to be outright one of the worst we have seen since last January`s massive stock selloff. It is the difference between being able to use a selling algorithm program that gets a decent price for the closing of the position versus taking what the market gives you during selloff and gap down closing of positions where profits are annihilated in a very short timespan. Investors need to evaluate all of the parameters when making tax deferral decisions, and it isn`t as simple as they always mistakenly calculate when making these boneheaded simpleton calculations.

No wonder they cannot outperform the market, you have to take profits into strength, not weakness when everybody and their brother is selling. Why Investors continue to exhibit the same stupid patterns is beyond me, but the smart ones will be selling in the next two weeks to beat the carnage selling that occurs in January due to tax deferral selling, and reality setting in that no amount of Trump Magic can make these pig stocks earnings for the 4th quarter look good relative to the current stock prices. It is going to get ugly folks!

Read more …

Nice piece from Wolf Richter. He recognizes the inherent risks: “Trump, as President, would be more than embarrassed to see financial markets sag under his watch.”

Trump Talked, the Fed Listened: Shrink the Balance Sheet, Bullard Says (WS)

Bullard would start by allowing maturing securities to roll off the balance sheet without replacing them with new asset purchases, he said. That would shrink the balance sheet. And it would make financial conditions more restrictive. Shedding assets accumulated on the Fed’s balance sheet is the ultimate form of tightening. It would pull liquidity out of the markets and force them to stand on their own wobbly feet. And he’s a dove! He sees only one rate hike next year. Until recently, he saw only one rate hike, period – the one we just got – and no additional hikes over the next few next years. But he’s ogling the balance sheet. If shrinking the balance sheet is too radical for now, the Fed could replace longer term securities as they mature with short-dated securities, he said. This would make unwinding the balance sheet easier, once the decision is made.

These short-dated securities could just be allowed to mature without replacement. It could go pretty quickly. “My preference would be to allow some runoff in the balance sheet,” he said. But before markets could spiral into a paroxysm, he added that he didn’t think efforts to shrink the balance sheet were “imminent.” He has been a voting member of the Federal Open Market Committee, which makes the decisions on rates, QE, and balance sheet shrinkage. But next year, he’ll rotate into a non-voting slot. So he’s just setting some trial balloons adrift. A few Fed heads have dared to suggest that they’d want to shrink the balance sheet eventually, possibly after everyone’s life expectancy expires. They’d want to raise rates first, and if the economy hasn’t fallen into a recession or worse by then, it might be time to think about letting the balance sheet contract.

But the economy might never get to where there are some sort of normal rates without a recession. And a recession would start the whole process of rate cutting and perhaps QE all over again, and the balance sheet might never be shrunk in this scenario. Bullard doesn’t want to wait that long. For good reason. QE has caused enough distortions. Shrinking the balance sheet by allowing bonds to roll off, while keeping the fed funds rate relatively low, for example at 1.5% by next year, would cause long term rates to rise sharply while keeping a lid on short-term rates. It would steepen the yield curve. In this scenario, the 10-year yield – at 1.38% in July and now at 2.6% – might go to 4% or beyond.

It would have an epic impact on Trump’s “artificial stock market.” It would cause all kinds of mayhem, because Trump was right: The epic bond market bubble and the stock market rally that has pushed all conventional metrics off the charts have been fueled by the Fed. The effects of removing, to use Trump’s term, the “artificial” elements from the stock market could be interesting. We’d have to avert our eyes from the carnage in the bond market. And Housing Bubble 2, with 30-year fixed-rate mortgages at 6%? That’s historically low and worked just fine ten years ago (it helped create Housing Bubble 1). But with the inflated home prices of today, it would mark a big reset.

Today’s equations won’t work at these interest rates. The fireworks could be astounding. But in the big picture, it would just unravel some of the excesses of the past few years, bring a hue of normalcy to the markets, and refocus attention on the real economy instead of wild financial speculations. Trump, as he was talking during the campaign, should appreciate that. Trump, as mega-investor, might get queasy. And Trump, as President, would be more than embarrassed to see financial markets sag under his watch.

Read more …

China knows Trump is a dealmaker. Just like they are. They must have chuckled at his response. But not officially of course.

Pentagon Says China to Return Drone; Trump Says They Can Keep It (BBG)

The Pentagon said China will return a U.S. Navy underwater drone after its military scooped up the submersible in the South China Sea late this week and sparked a row that drew in President-elect Donald Trump, who said on Twitter the Chinese stole it, so they can keep it. “Through direct engagement with Chinese authorities, we have secured an understanding that the Chinese will return the UUV to the United States,” Pentagon spokesman Peter Cook said in a statement on Saturday, referring to the unmanned underwater vehicle the U.S. said had been operating in international waters. China’s ministry of defense pledged an “appropriate” return of the drone on its Weibo social media account, while also criticizing the U.S. for hyping the incident into a diplomatic row.

It followed assurances from Beijing that the governments were working to resolve the spat, punctuated by a tweet from Trump denouncing the seizure as “unprecedented.” The drone incident was disclosed by the Pentagon on Friday. China’s ministry said the U.S. “hyped the case in public,” which it said wasn’t helpful in resolving the problem. The U.S. has “frequently” sent its vessels and aircrafts into the region, and China urges such activities to stop, the ministry said in its Weibo message. Trump slammed the Chinese navy’s capture of the vehicle in a message to his 17.4 million Twitter followers. “China steals United States Navy research drone in international waters – rips it out of water and takes it to China in unprecedented act,” Trump wrote Saturday hours after the Chinese government said it had been in touch with the U.S. military about the incident.

In a follow-up Twitter message, the president-elect said: “We should tell China that we don’t want the drone they stole back – let them keep it!” The tensions unleashed by the episode underscored the delicate state of relations between the two countries, weeks before Trump’s inauguration. Trump has threatened higher tariffs on Chinese products and questioned the U.S. approach to Taiwan, which Beijing considers part of its territory. Meanwhile, China is growing more assertive over its claims to disputed sections of the South China Sea.

Read more …

An ‘experiment’ targeted at 2000 specific people has nothing to do with Universal Basic Income. These ‘experiments’ are only valid when it’s truly universal, or at least nationwide. And when they involve people with AND without jobs. You simply can’t do ‘universal’ on a small scale.

Free Cash in Finland. Must Be Jobless. (NYT)

No one would confuse this frigid corner of northern Finland with Silicon Valley. Notched in low pine forests just 100 miles below the Arctic Circle, Oulu seems more likely to achieve dominance at herding reindeer than at nurturing technology start-ups. But this city has roots as a hub for wireless communications, and keen aspirations in innovation. It also has thousands of skilled engineers in need of work. Many were laid off by Nokia, the Finnish company once synonymous with mobile telephones and more recently at risk of fading into oblivion. While entrepreneurs are eager to put these people to work, the rules of Finland’s generous social safety net effectively discourage this. Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance.

For laid-off workers from Nokia, simply collecting a guaranteed unemployment check often presents a better financial proposition than taking a leap with a start-up in Finland, where a shaky technology industry is trying to find its footing again. Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income. The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka?

Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature. The answers — to be determined over a two-year trial — could shape social welfare policy far beyond Nordic terrain. In communities around the world, officials are exploring basic income as a way to lessen the vulnerabilities of working people exposed to the vagaries of global trade and automation. While basic income is still an emerging idea, one far from being deployed on a large scale, the growing experimentation underscores the deep need to find effective means to alleviate the perils of globalization.

Read more …

Covered by taxpayers.

Monte dei Paschi to Start Taking Orders for Shares on Monday (BBG)

Banca Monte dei Paschi di Siena SpA will begin taking orders for shares as soon as Monday as it aims to complete raising €5 billion of capital before Christmas, people with the knowledge of the matter said. Monte Paschi will attempt to sell stock through Thursday, said the people, who asked to not be named because the plan isn’t public yet. The price and total number of shares to be sold will be determined based on investor demand and on the outcome of the separate debt-to-equity swap, the people said. CEO Marco Morelli, who took over in September, is racing to find backers for his effort to clean up the bank’s balance sheet.

The failure of the recapitalization would be a blow to Italy’s sputtering efforts to revive a banking industry that’s burdened with about €360 billion in troubled loans, dragging down the economy by limiting lending. The lender earlier this week extended a debt-for-equity swap that is one of the three main interlocking pieces of the bank’s capital-raising plan. The bank also plans a cash infusion from anchor investors and a share sale. The offer, involving the exchange of about 4.5 billion euros of Tier 1 and Tier 2 securities, is set to end at 2 p.m. on Dec. 21. Monte Paschi, facing a Dec. 31 deadline to complete the fundraising, also will promote an exchange on 1 billion euros of hybrid securities issued in 2008 known as FRESH at 23.2% of face value, the lender said in a filing on its website.

Read more …

Almost funny.

Hillary’s Campaign The Most Incompetent In Modern History (Davis)

It wasn’t sexism, or racism, or the FBI, or fake news, or the Russians, which cost Hillary Clinton the presidential election. According to a blockbuster campaign dispatch published by Politico on Wednesday, sheer incompetence was the real cause of Clinton’s electoral implosion in November. Clinton’s loss was caused not by one bad decision here or there, the Politico report shows, but by a cascade of mind-bogglingly stupid decisions made throughout the campaign. For example, there was the time campaign surrogates were ordered to stay and campaign in Iowa, which Clinton lost by 10 points, instead of working to get out the vote for Clinton in Michigan:

Everybody could see Hillary Clinton was cooked in Iowa. So when, a week-and-a-half out, the Service Employees International Union started hearing anxiety out of Michigan, union officials decided to reroute their volunteers, giving a desperate team on the ground around Detroit some hope. They started prepping meals and organizing hotel rooms. SEIU — which had wanted to go to Michigan from the beginning, but been ordered not to — dialed Clinton’s top campaign aides to tell them about the new plan. According to several people familiar with the call, Brooklyn was furious. Turn that bus around, the Clinton team ordered SEIU. Those volunteers needed to stay in Iowa to fool Donald Trump into competing there, not drive to Michigan, where the Democrat’s models projected a 5-point win through the morning of Election Day.

Then there was the time the campaign, instead of spending its cash in competitive states the candidate needed to win to clinch an electoral college victory, sent millions to the Democratic National Committee, which used the money to run up vote totals in uncompetitive states so Clinton would win the popular vote:

But there also were millions approved for transfer from Clinton’s campaign for use by the DNC — which, under a plan devised by Brazile to drum up urban turnout out of fear that Trump would win the popular vote while losing the electoral vote, got dumped into Chicago and New Orleans, far from anywhere that would have made a difference in the election.

There was also the time Clinton didn’t even bother to show up at a Michigan event for the United Auto Workers, a key union constituency on which Democrats traditionally rely for get-out-the-vote (GOTV) efforts throughout the Rust Belt:

Clinton never even stopped by a United Auto Workers union hall in Michigan, though a person involved with the campaign noted bitterly that the UAW flaked on GOTV commitments in the final days, and that AFSCME never even made any, despite months of appeals.

The Clinton campaign also completely ignored cries for last-second, all-hands-on-deck GOTV help in Michigan on election day. According to Politico, Brooklyn-based campaign staff waved off data showing massive shortfalls in urban turnout and insisted the Democrat would win the state by at least five points:

On the morning of Election Day, internal Clinton campaign numbers had her winning Michigan by 5 points. By 1 p.m., an aide on the ground called headquarters; the voter turnout tracking system they’d built themselves in defiance of orders — Brooklyn had told operatives in the state they didn’t care about those numbers, and specifically told them not to use any resources to get them — showed urban precincts down 25%. Maybe they should get worried, the Michigan operatives said. Nope, they were told. She was going to win by 5. All Brooklyn’s data said so.

Clinton would eventually lose the state by 11,000 votes, less than one quarter of one %age point of all votes cast in the state. In the end, though, it appears that hubris may have been Hillary’s ultimate downfall. Hours before polls closed and long before returns began trickling in, Clinton’s top staffers weren’t scrambling for every last vote. Instead, they were busy measuring the Oval Office curtains and searching for champagne bottles to uncork to celebrate their historic victory. “In at least one of the war rooms in New York, they’d already started celebratory drinking by the afternoon, according to a person there,” Politico reported. “Elsewhere, calls quietly went out that day to tell key people to get ready to be asked about joining transition teams.” Oops.

Read more …

An editorial that means sense. Maybe America’s papers are not all doomed to oblivion after all.

Just Who Is Undermining Election? Russians Or CIA? (Albuquerque Journal Ed.)

Congress needs to dust off its Magic 8 Ball. At this point, how else are our elected representatives going to get to the bottom of allegations that Russia and its president, Vladimir Putin, tried to influence the U.S. general election? After all, the CIA isn’t being very open – at least not with our elected representatives. Instead of briefing the House Intelligence Committee about the alleged Russian role in hacked emails made public during the campaign – which Democrats desperately seek to blame for Hillary Clinton’s loss – the agency is leaking conclusions without facts to the Washington Post, New York Times and television networks. The media, naturally, are quick to report the anonymous bits of “blame Putin” information to the public. So to the extent Putin meddled, our own spies have at least matched his efforts to discredit our electoral system.

To recap: Private emails from the Democratic National Committee and Clinton campaign were made public via WikiLeaks, allegedly through hacking, even though the FBI had tried to warn the DNC back in September 2015 of problems with its security system. The agency couldn’t get past the party’s technical help desk – harking back to Hillary’s email security problems on her own private server. The media reported on the leaks daily – and if a reporter had obtained the same information from inside sources, there would be no controversy at all. Today’s uproar is over the source – not the substance. But the CIA’s alleged conclusion – that Russia intervened to help Trump win – does not square with comments made Nov. 17 by James Clapper, director of National Intelligence. He said he lacked “good insight” about whether there was a connection between the WikiLeaks releases and Russia.

Congressional Republican leaders are taking the allegations seriously. “The Russians are not our friends,” Senate Majority Leader Mitch McConnell said. House Speaker Paul Ryan called any Russian intervention “especially problematic because, under President Putin, Russia has been an aggressor that consistently undermines American interests.” But Intelligence Committee member Peter King of New York flatly accused the U.S. intelligence community of waging a disinformation campaign aimed at undermining Trump’s credibility – if not changing the course of the Electoral College. Not surprisingly, President Obama is seizing a newfound political opportunity and is taking a new interest despite earlier claims of knowing all along of Russian shenanigans but choosing not to go public with whatever evidence he had – none of which he has produced.

[..] The source of the campaign leaks remains an interesting question, but one unlikely to be answered credibly unless the CIA coughs up its findings to Congress. Cooperation also might help answer the question of possible Russian motives if it was involved: Was it to cast doubt on the U.S. election system? If so, it was highly successful with the help of our own intelligence community and desperate Democrats who simply can’t accept that Trump won 306 Electoral College votes. Though the CIA based its supposed findings of pro-Trump intervention on the fact that no Republican emails were leaked before the election, the Republican National Committee says it wasn’t hacked. And Wikileaks co-founder Julian Assange stands firm in his claim the Russians were not the source of the leaks.

Cyber hacking has become one of the mainstays of life – Yahoo most recently was hacked of more than one billion user accounts. And intervention into foreign elections is something many nations, including the United States, do regularly. Obama recently tried to influence the Brexit vote. And while nobody should feel good about foreign interests intervening in U.S. elections, the reluctance of the U.S. intelligence community to share its information with official sources charged with making decisions about national security, while leaking information via media outlets, is very disturbing, raising the spectre of a political coup by our nation’s intelligence forces.

Read more …

Maybe Britain needs a full-size reboot.

‘Shocking’ Rise in Number of Homeless Children in UK B&Bs at Christmas (G.)

The number of children living in temporary accommodation this Christmas, including in bed and breakfasts, has risen by more than 10% since last year to 124,000, according to the latest government figures. The numbers of children forced into temporary housing in the run up to Christmas have described as “shocking” by the country’s leading charity for the homeless. The data, released by the Department for Communities and Local Government, also reveals a rise of more than 300% since 2014 in the number of families in England who are being housed illegally (for more than the statutory maximum period of six weeks) in B&Bs by local authorities, because they cannot find any alternative places. Campbell Robb, Shelter’s chief executive, said: “The latest figures show that councils are increasingly struggling to help homeless families.

“But the number of children placed in B&Bs illegally is truly shocking, and there’s a worrying rise in families moved away from their support network to a new area. We know first-hand the devastating impact this can have on their lives.” He blamed a “perfect storm” of welfare cuts and rising rents, together with a lack of social and affordable housing, that was creating impossible pressure for local authorities. “Councils know that neither option is acceptable but increasingly find themselves with no alternatives,” he said. “Welfare cuts have made private rents unaffordable and that – combined with unpredictable rent rises and a lack of genuinely affordable homes – mean many families are struggling to get by.

“With the loss of private rented homes the single biggest cause of homelessness, it’s no wonder that’s so many families are turning to their council, desperate for help.” [.] The number of households that have become homeless after an eviction over the last year is up 12% compared to a year ago at 18,820 while the total number of households in temporary accommodation has risen to 74,630, up 9% on a year earlier. While 21,400 homeless households have been moved away to a different council area – a 15% rise in the last year.

Read more …

Helena Smith is the Guardian’s Athens correspondent. I haven’t met a Greek who knows of her and had positive things to say. But this is insane. I know editors make headlines, not reporters, but calling Tsipras’ move to soften the crisis blow a little for pensioners, and to feed children at school who don’t eat at home, a “spending spree”, that is way beyond the pale. Shameless.

Tsipras’s Spending Spree May Be Relief To Greeks But It Won’t End Crisis (G.)

Alexis Tsipras, the Greek prime minister, likes to shake things up and, in recent days, he has reverted to form. After 16 months of faithfully toeing the line, the leader rebelled, cautiously at first and then almost jubilantly, casting off the fiscal straightjacket that has encased his government with thinly veiled glee. First came the announcement that low-income pensioners, forced to survive in tax-heavy post-crisis Greece on €800 or less a month, would receive a one-off, pre-Christmas bonus. Then came the news that Greeks living on Aegean isles which have borne the brunt of refugee flows would not be subject to a sales tax enforced at the behest of creditors keeping the debt-stricken country afloat.

Finally, another announcement both antagonising and pointed: 30,000 children living in poverty-stricken areas of northern Greece will henceforth be entitled to free meals in schools. The reaction wasn’t instant but, when it came, it was delivered with force. The European Stability Mechanism, the eurozone’s financing arm, announced that short-term relief measures, agreed only a week before to ease Greece’s debt pile, would be frozen with immediate effect. It did not take long before the German finance ministry, under the unwavering stewardship of Wolfgang Schäuble, followed suit, requesting that creditor institutions assess whether Tsipras had acted in flagrant violation of Athens’ bailout commitments with his unilateral moves.

The leftist insisted that the aid – €61m in supplementary support for pensions and €11.5m for the school meals – would be taken from the primary surplus his government, unexpectedly, had managed to achieve. The assistance would help “heal the wounds of crisis”. “We want to … alleviate all those who have over these difficult years made huge sacrifices in the name of Europe,” he announced before holding talks with German chancellor Angela Merkel late Friday.

Read more …

Dec 172016
 
 December 17, 2016  Posted by at 10:14 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Dorothea Lange Country filling station, Granville County, NC 1939


Debt Nation: The Problem, the Solutions (Valentin Schmid)
American Credit Card Debt Nears All Time Highs (BI)
It’s Been A Nightmare Year For Australian Retail (News.com.au)
Italy Prepares To Pump €15 Billion Into Ailing Banks (R.)
Euro Parity With Dollar ‘Only A Matter Of Time’ – ING (CNBC)
The Fed Is Pushing China Into A Messy Catch-22 (CNBC)
China Vows To Contain Asset Bubbles, Avert Financial Risk In 2017 (R.)
Cold War Hysteria vs. US National Security (Stephen F. Cohen)
Obama Says Russia Is A Smaller, Weaker Country Than The US (CNBC)
Obama Goes Off the Clinton Script (WSJ)
Schaeuble Could Destroy Eurozone, Not Just Greece (EUO)
Greek PM Tells Merkel ‘Wounds Of Crisis’ Must Be Healed (R.)

 

 

Excellent overview of debt-related issues. Steve’s Debt Jubilee warrants serious discussion at high levels. But it’s not happening.

Debt Nation: The Problem, the Solutions (Valentin Schmid)

There are only two ways to wipe out debt if it cannot be repaid by increases in output. The worst for the economy, even though it may be the fairest, is bankruptcy and debt deflation or destruction. A company or an individual—and sometimes a government—just says it can’t repay its debt. The lender takes control of the assets, if there are any, and tries to recover as much of the loan as possible, making up for the shortfall with its capital provision. This is exactly what happened during the Great Depression, when companies and individuals defaulted in droves, driving thousands of banks into bankruptcy as well. “If you borrowed money to buy a house or a machine, you couldn’t repay the debt, no matter how productive you were. Deflation penalized producers who misjudged the value of their assets at the time,” said Oliver.

Private debt declined 20% from 1930 to 1933 but GDP declined 38%, so the debt-to-GDP ratio actually increased from 175 to 225%, according to data from Debt Economics. “Deflation can increase the level of private debt to GDP, because GDP falls faster than private debt. Paying down the debt, withdrawing money from circulation and reducing its velocity, reduces GDP more than the decline in the debt,” said Keen. So this exercise is best avoided, which is precisely what central banks did during the 2008 crisis with their QE programs and bank bailouts. They managed to avoid a second Great Depression, but they didn’t get rid of the private debt. Despite the evident flaws in a system that has provided incentives for borrowers and lenders to indulge in too much debt for their own good, there are creative ways to reset the system and at least get the economy growing again.

“Every debt collapse in history has had a combination of debt forgiveness and inflation. That is how debt problems are dealt with historically,” said Oliver. Western central banks have tried to create inflation through their QE programs but weren’t successful because of deflationary pressures: overcapacity in China, technological innovation, and the fact that their money printing ended up in the hands of financial actors, who bought a lot of stocks, rather than real people, who would repay debt and buy goods and services. Many economists, including Keen, therefore call for QE for the private sector, rather than the banks, a concept dubbed “helicopter money.” “The creative way to get around it, is use the government’s capacity to create money. You use the same power the central banks did with QE but pay it into private sector accounts rather than commercial bank accounts. Households and companies can use it to pay down debt and those who don’t have debt, can get a cash injection,” he said.

Read more …

“..America’s putative economic strength might be a mirage [..] the economy may in fact be a lot weaker than all the happy indicators are leading people to believe.”

American Credit Card Debt Nears All Time Highs (BI)

By most accounts, the American economy seems to be humming along very nicely. Unemployment just hit a nine-year low, the stock market this month climbed to all-time highs, and consumer confidence is as chipper as its been in two years. But at least one indicator suggests that much of the US is actually struggling financially: Americans are piling on credit card debt at record levels that we haven’t seen since the financial crisis. Households added $21.9 billion in credit card debt in the third quarter — the largest increase for that period since 2007 — bringing the amount of outstanding credit card debt to $927.1 billion, according to the latest study from WalletHub. That matches the mark in 2007 before the recession began, and it’s the highest tally since the end of 2008, when the global economy was experiencing a full-on implosion.

Racking up credit card debt isn’t inherently bad, so long as it’s being paid back. And so far, Americans are defaulting on their credit card debt at near historically low levels. Charge-off rates – the percentage of credit card debt that the companies are unable to collect on — are only at 2.86%, compared with 3.95% in 2007 the quarter before the Great Recession began and in excess of 10% in the years following the crisis, according to WalletHub. But holding a balance is a lousy move from a personal finance perspective — a sign of financial fragility. The fact that the average household with debt now owes $7,941 to credit card companies, according to WalletHub, suggests that America’s putative economic strength might be a mirage – that the economy may in fact be a lot weaker than all the happy indicators are leading people to believe.

Read more …

Something’s off.

It’s Been A Nightmare Year For Australian Retail (News.com.au)

It’s been a nightmare year for Australian retail, with a parade of the nation’s best-known brands decimated one after another. And experts say things will only get worse if business leaders and governments do not pick up their game. First it was Dick Smith Electronics, then the Woolworths-owned Masters home improvement chain that went under. Now, thousands more workers will be jobless at Christmas after a fresh slew of corporate collapses rounded out 2016. Payless Shoes this week announced plans to close its doors by the end of February, hot on the heels of Howards Storage World’s demise, and that of children’s fashion label Pumpkin Patch.

While Treasurer Scott Morrison seized on the latest bad news to bolster the Coalition’s tax reform agenda, market watchers say there is far more that needs to be done. Retail analyst Barry Urquhart of Marketing Focus said neither corporate leaders nor government had acknowledged what he called “an attitudinal recession” that was restraining businesses. While the nation was yet to tip into an official recession – despite having just marked its worst quarterly performance since the global financial crisis – Australians remained apprehensive about their futures, he said. And any business that failed to respond to this by recapturing the public imagination with a compelling, value-driven offering would simply fall by the wayside.

Read more …

JPMorgan’s role is interesting. So is Beppe Grillo’s view of that role: “Italy’s opposition 5-Star Movement has called for JPMorgan’s fees to be voided if taxpayers have to come to the rescue..”

Italy Prepares To Pump €15 Billion Into Ailing Banks (R.)

Italy’s government is ready to pump €15 billion into Monte dei Paschi di Siena and other ailing banks, sources said, as the country’s third-largest lender pushes ahead with a private rescue plan that is widely expected to fail. The world’s oldest bank has until Dec. 31 to raise €5 billion in equity or face being wound down by the European Central Bank, potentially triggering a wider banking and political crisis in Italy. If needed, the government will pump €15 billion into the Siena-based lender and several other smaller banks to prevent that, two sources close to the matter said on Thursday. One source said unlisted regional banks Banca Popolare di Vicenza and Veneto Banca, which were rescued this year by a state-backed fund, would also get support from the state.

The government would make the €15 billion available in a decree on Dec. 22, La Repubblica newspaper said on Thursday, adding that Banca Carige could also benefit. Italy’s banking sector is saddled with €356 billion of bad loans, around a third of the euro zone’s total and a legacy of the 2008-2009 global financial crisis when, unlike Spain or Ireland, Italy did not act to help its banks. Monte dei Paschi di Siena, advised by investment banks JPMorgan and Mediobanca, plans to raise equity to remove €28 billion in bad loans from its books. Italy’s opposition 5-Star Movement has called for JPMorgan’s fees to be voided if taxpayers have to come to the rescue. “We would have never done a deal like that with JPMorgan. In any case we would not pay the commissions (if the bank had to be nationalized,” Alessio Villarosa, a 5-Star lawmaker, said.

Read more …

It’s not going to stop at parity.

Euro Parity With Dollar ‘Only A Matter Of Time’ – ING (CNBC)

Divergence in monetary policy between the United States and Europe will bring parity between the value of the euro and dollar, according to ING. On Thursday the euro hit a low of 1.0364 against the dollar, the lowest level since August 2003 when it traded as low as 1.0357. Dollar strength is the key driver as investors believe the Federal Reserve will adopt a higher rate rise path in 2017 as the U.S. economy gathers momentum. Conversely, the ECB has just announced it will inject a further €540 billion of QE stimulus into the stuttering EU economy.

Analysts at ING wrote Friday that with European inflation struggling to edge higher and yesterday’s dip in to the 1.03 handle, euro/dollar parity is now firmly in view. “With the U.S. economy close to reaching escape velocity (and sustainable 2% inflation), it will only reinforce the downside risks to EUR/USD.” “Expect some consolidation around the 1.0450-1.0500 area, but this week’s fresh EUR/USD low means that the move down to parity is now only a matter of time,” the note reads.

Read more …

“..either hike the interest rate (as) the U.S. does, or they give up the exchange rate..”

The Fed Is Pushing China Into A Messy Catch-22 (CNBC)

An interest rate decision in the United States is causing a dilemma for Beijing. The U.S. dollar index surged to a near 14-year high after the Fed’s rate hike on Wednesday and its surprise forecast for three more increases — instead of the two that were expected previously — to come in 2017. Higher interest rates in the United States make it tempting for China to raise its own rates, because Beijing doesn’t want more money to flee the country into higher-yielding U.S. bonds. That flight also hurts China’s currency, the yuan. But Beijing could get its economy into trouble by hiking rates, since its continued economic growth is very heavily driven by borrowing. “You had this pressure that was already building, and the Fed has basically complicated and added to that with a more hawkish message,” said Logan Wright at Rhodium Group.

China’s yuan subsequently fell to its lowest level since 2008, and the country’s 10-year bond yield jumped to its highest level in more than a year. Declines in five-year and 10-year Chinese bond futures were reportedly so drastic Thursday that trade was halted due to a market trading limit. “The bond market itself, it’s raising a lot of attention, and it’s likely reflecting [that] policymakers in China are facing a difficult choice right now,” said Kai Yan, an economist at the IMF. He noted that “the speculation in the market is high because the central bank wants to stand in front of currency pressure to prevent capital outflow.” Chinese policymakers must “either hike the interest rate (as) the U.S. does, or they give up the exchange rate,” Yan said. “It is likely they will do a combination of the two.”

[..] China’s financial and economic challenges have been on the back burner for U.S. markets for much of the past year. The yuan’s depreciation versus the dollar has been largely ignored by global markets, as economic updates out of China have held up thanks largely to a flood of debt that’s propping up the country’s economy. Earlier this year, the Fed was seen as giving China some breathing room to stabilize its currency and economic growth. The U.S. central bank cited international concerns in avoiding a rate hike in the fall of 2015 and reducing its expectations for 2016 rate increases. Those decisions from the Fed helped keep the dollar steady, allowing China to avoid a significant depreciation of its currency. Now, however, some say the Fed may be less concerned about China since the U.S. economy is on firmer footing and can expect big domestic government spending from President-elect Donald Trump’s proposals.

Read more …

“Houses are for people to live in, not for people to speculate..” Sounds nice, but real estate has been a major contributor to China’s economy and GDP.

China Vows To Contain Asset Bubbles, Avert Financial Risk In 2017 (R.)

China will stem the growth of asset bubbles in 2017 and place greater importance on the prevention of financial risk, while keeping the economy on a path of stable and healthy growth, media said, citing leaders at an economic planning meeting. China has seen growth stabilize this year, but corporate leverage and credit continue to expand, increasing risks to the world’s second-largest economy as it looks to push forward structural reforms. The annual meeting is attended by China’s top leaders and is closely watched by investors for clues on policy priorities and main economic targets for the year ahead. Monetary policy will be kept “prudent and neutral” in 2017, leaders attending the Central Economic Work Conference said in a statement, as reported by the official Xinhua news agency on Friday.

“Monetary policy will be kept prudent and neutral, adapt to new changes in money supply … and strive to smooth monetary policy transmission channels and improve mechanism to help maintain liquidity basically stable,” they said. The People’s Bank of China has maintained a prudent monetary policy since 2011, raising or cutting interest rates in line with shifts in the economy. The pro-active fiscal policy has been in place since the depths of the global crisis. The property market will be a focus of risk control, as authorities will restrain property bubbles and prevent price volatility, they said. The leaders called for a strict limit on credit flowing into speculative buying in the property market and for a boost in the supply of land for cities where housing prices face stiff upward pressure. “Houses are for people to live in, not for people to speculate,” Xinhua said, citing the statement.

Read more …

Cohen of course is America’s no. 1 expert on Russia.

Cold War Hysteria vs. US National Security (Stephen F. Cohen)

Thus far, no actual facts or other evidence have been made publicly to support allegations that the hacking was carried out on the orders of the Russian leadership, that Russian hackers then gave the damaging materials to WikiLeaks, or that the revelations affected the electoral outcome. Nor are Russian President Putin’s alleged motives credible. Why would a leader whose mission has been to rebuild Russia with economic and other partnerships with the West seek to undermine the political systems of those countries, not only in America but also in Europe, as is charged? Judging by the public debate among Russian policy intellectuals close to the Kremlin, nor is it clear that the Kremlin so favored the largely unknown and unpredictable Trump.

But even if Putin was presented with such a possibility, he certainly would have understood that such Russian interference in the US election would become known and thus work in favor of Clinton, not Trump. (Indeed, a major tactic of the Clinton campaign was to allege that Trump was a “Putin puppet,” which seems not to have helped her campaign with voters.) Still worse, since the election these allegations have inspired a growing Cold War hysteria in the American bipartisan political-media establishment, still without any actual evidence to support them. One result is more neo-McCarthyite slurring of people who dissent from this narrative. Thus a New York Times editorial (December 12) alleges that Trump had “surrounded himself with Kremlin lackeys.” And Senator John McCain ominously warned that anyone who disagreed with his political jihadist vendetta against Putin “is lying.”

A kind of witch hunt may be unfolding, not only of the kind The Washington Post tried to instigate with its bogus “report” of scores of American websites said to be “fronts for Russian propaganda,” but at the highest level. Thus, Trump’s nominee for secretary of state is said to be “a friend of Putin” as a result of striking a deal for Exxon-Mobil for Russian oil reserves, something he was obliged to do as the company’s CEO. Several motives seem to be behind this bipartisan American campaign against the President-elect, who is being equated with Russian misdeeds. One is to reverse the Electoral College vote. Another is to exonerate the Clinton campaign from its electoral defeat by blaming that instead on Putin and thereby maintaining the Clinton wing’s grip on the Democratic Party. Yet another is to delegitimate Trump even before he is inaugurated. And certainly no less important, to prevent the détente with Russia that Trump seems to seek.

Read more …

Obama sounds smaller and weaker here.

Obama Says Russia Is A Smaller, Weaker Country Than The US (CNBC)

In his final news conference of the year, President Barack Obama emphasized that Russia cannot change or significantly weaken the U.S., adding that Russia is a smaller and weaker country. He said Russia’s economy “doesn’t produce anything that anybody wants to buy,” except oil, gas and arms. The only way Russia can affect the U.S., he said, is “if we lose track of who we are” and “abandon our values.” “Mr. Putin can weaken us just like he’s trying to weaken Europe if we start buying into notions that it’s OK to intimidate the press, or lock up dissidents or discriminate against people,” he said. When asked if he would specifically name Russian President Vladimir Putin as directly responsible for the election hacking, Obama said he wanted to give the intelligence community a chance to gather the information necessary.

He added, however, that “not much happens in Russia without Vladimir Putin,” reaffirming that the hacking happened at the highest levels of the Russian government. “This is a pretty hierarchical operation,” he said. “Last I checked, there’s not a lot of debate and democratic deliberation, particularly when it comes to policies directed at the United States.” Obama reaffirmed his message of political unity and bipartisanship, urging the country to reunite across party lines to defend itself against Russia and others. “Our vulnerability to Russia or any other foreign power is directly related to how divided, partisan, dysfunctional our political process is,” he said. “That’s the thing that makes us vulnerable.”

Read more …

“His main complaint is that “I don’t think she was treated fairly” by the press corps and the Russian hacks became “an obsession that dominated the news coverage.”

Obama Goes Off the Clinton Script (WSJ)

Hillary Clinton told her donor base at Manhattan’s Plaza Hotel on Thursday that Russian cyber attacks were both “a personal beef against me” and meant to undermine “the integrity of our democracy,” and Democrats fanned out this week to spread this Kremlin-hacked-the-election narrative. President Obama was asked about all this in his year-end Friday press conference, but even he couldn’t square the contradictions. As liberals assailed the legitimacy of Donald Trump’s victory, Mr. Obama defended “the integrity of our election system,” noting that there is no evidence that ballots weren’t counted fairly. So much for those Jill Stein, Clinton-endorsed recounts, or the conspiracies about compromised voting machines. The President also explained that the emails stolen from John Podesta and the Democratic National Committee were “not some elaborate, complicated espionage scheme.”

He said intelligence and law enforcement were “playing this thing straight” and disclosed sufficient information about the hacks for “the American public to make an assessment as to how to weigh that going into the election.” Mr. Obama conceded that some of the leaked content was “embarrassing or uncomfortable” but all in all “pretty routine stuff.” His main complaint is that “I don’t think she was treated fairly” by the press corps and the Russian hacks became “an obsession that dominated the news coverage.” Really? The Podesta and DNC emails mostly revealed that the Clinton apparat don’t much like conservative Catholics or Bernie Sanders. Mr. Trump’s offenses against beauty queen Alicia Machado in the 1990s and his Billy Bush video were far bigger stories. The emails that really harmed Mrs. Clinton were those she stored on a personal server as Secretary of State, because the arrangement was potentially criminal and underscored doubts about her political character and judgment.

Read more …

Not could, will. Curious that Dijsselbloem’s solo act in deciding to halt Greek debt relief doesn’t get more attention.

Schaeuble Could Destroy Eurozone, Not Just Greece (EUO)

The sudden suspension of Greece’s short-term debt relief measures on Wednesday evening (14 December) has sparked fierce criticism by a number of EU officials. EU commissioner Pierre Moscovici, European Parliament president Martin Schultz, French president Hollande and finance minister Michel Sapin, along with many MEPs from the GUE/NGL, S&D and the Greens groups, have echoed support for Greece and prime minister Alexis Tsipras’s decision to give a one-time relief package to low-income pensioners. In essence, there has been no official decision taken by the Eurogroup, the European Stability Mechanism (ESM), or the European Council. Instead, there’s been unilateral action from the head of the Eurogroup without prior coordination with his colleagues.

Creditors should respect their own part of the deal and conclude the second review of the bailout programme, and acknowledge that there are open issues that need be addressed. The Greek government is fully implementing the bailout deal, moving on to needed reforms, providing safety nets for the vulnerable social groups. It’s possible Tsipras’s announcement was brought about by German finance minister Schaeuble and other circles pushing Greece to the limit. But in truth, we need not investigate who has taken the decision but instead focus on substantial issues. These issues include lowering primary surplus targets after 2018 and loosening tax rates so that the economy can become stable and growth can reach sustainable levels.

Even with such strict deadlines, the Greek government has achieved all fiscal targets for 2016, increasing public income and reaching a higher primary surplus than expected. This positive development prompted Tsipras, a few days ago, to announce a one-time relief package for low-income pensioners; a substantive decision after 12 consecutive pension cuts between 2010 and 2014, a loss of more than 30% of national GDP, during the same period, with a considerable part of the population facing poverty and social exclusion. The Greek government’s urgent measures are the least this government can do to temporarily do something for the worse off.

Dimitrios Papadimoulis is vice president of the European Parliament and head of the Syriza party delegation.

Read more …

Merkel sides with Schaeuble.

Greek PM Tells Merkel ‘Wounds Of Crisis’ Must Be Healed (R.)

Greek Prime Minister Alexis Tsipras told German Chancellor Angela Merkel on Friday his country was set for strong economic growth and this would help to “heal the wounds of crisis” after years of austerity imposed under international bailouts. On a visit to Berlin, Tsipras was keen to emphasise Greek progress on reforms demanded by Germany as the EU’s most powerful economy and paymaster – a situation that has made Merkel a hate figure for some Greeks. The trip’s timing was also significant, as Greece wrangles with its creditors over terms for its current bailout, the latest of three. On Thursday it snubbed its lenders by passing legislation to give pensioners a one-off Christmas bonus.

Tsipras told reporters before meeting Merkel that he would inform the chancellor of the positive momentum of the Greek economy and his government’s “spectacular overachievement” of revenue targets. “The projections for the Greek economy are extremely positive for next year,” Tsipras said, adding authorities expected 2.7% growth in 2017 and 3.1% in 2018. But Greece’s economic development should not simply be confined to statistics and numbers, he added. “We want it to heal the wounds of crisis and to alleviate all those who have over these difficult years made huge sacrifices in the name of Europe,” Tsipras said.

Merkel showed little willingness to take a position on the disputed question of whether the pre-Christmas payout to pensioners was compatible with bailout obligations. Standing next to Tsipras, she said decisions lay in the hands of the Troika institutions handling negotiations with Greece but “the Greek prime minister’s assessment of the situation will certainly play a role in our discussions.” A German Finance Ministry spokesman said the institutions involved in Greece’s aid programme were critical of Athens in a preliminary report assessing the unilaterally announced measure. “To make the aid programme a success, it’s essential that measures are not decided unilaterally or are not taken back without advance notice,” said spokesman Dennis Kolberg.

Read more …

Dec 152016
 
 December 15, 2016  Posted by at 8:50 am Finance Tagged with: , , , , , , , , , ,  1 Response »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


William Henry Jackson Hand cart carry, Adirondacks, New York 1902


Dollar at 14-Year Peak as Fed Rejuvenates Trump Rally (R.)
Dollar Jumps as Fed Pulls the Trigger While Stocks, Debt Decline (BBG)
Fed Fallout Escalates: China Bond Market Crashes Most On Record (ZH)
Higher US Interest Rates Next Year Could Make Big Problems For China (CNBC)
Shadow Banking in China Appears to Have Made a Roaring Comeback (BBG)
Trump Meets With Tech Titans: “No Formal Chain Of Command Around Here” (CNBC)
Canada’s Gravity-Defying Household Debt Swells to C$2 Trillion (BBG)
EU Politicians Believe UK Post-Brexit Trade Deal Could Take Decade (G.)
Ex-UK Ambassador: Clinton Emails Leaked By “Disgusted” Dem. Whistleblower (DM)
US Accuses Vladimir Putin Of “Personal Involvement” In Election Hack (ZH)
Eurozone Suspends Short-Term Debt Relief for Greece (WSJ)
Greek Opposition Leader To Seek Backing In Brussels For Snap Polls (Kath.)

 

 

Moving fast. A lot of global debt gets much more expensive to pay off.

Dollar at 14-Year Peak as Fed Rejuvenates Trump Rally (R.)

The dollar rose to a 14-year peak against a basket of major currencies on Thursday after the Federal Reserve boosted the number of projected interest rate hikes for 2017, rejuvenating the month-long Trump rally and knocking emerging market currencies. The Fed’s 25 basis-point interest rate increase on Wednesday was widely anticipated by financial markets though they appeared to have been caught out by the central bank signal of three hikes in 2017, up from around two flagged at its September policy meeting. The relatively hawkish Fed stance came as U.S. president-elect Donald Trump takes over with promises to boost growth through tax cuts, spending and deregulation. “The rate hike projections for 2017 being increased to three shows that Fed’s board is having to factor in the impact of Trump’s policies,” said Junichi Ishikawa at IG Securities in Tokyo.

The dollar index extended its overnight rally and was up 0.5% at 102.270. It touched 102.620, its highest since January 2003. The euro was down 0.2% at $1.0512 after sliding to $1.0468, a trough not seen in 21 months. The greenback set a 10-month high of 117.860 yen early on Thursday and was last up 0.3% at 117.390. The allure of higher U.S. yields took a predictable toll on emerging Asian currencies. The Chinese yuan fell to its lowest levels in more than eight years, after the central bank set the daily mid-point at the lowest since mid 2008. Low-yielding currencies such as the Singapore dollar and Korean won came under pressure, as investors grew anxious over the risk of capital being sucked out of regional economies toward dollar-based assets.

Read more …

Yellen hiked rates and dotplot.

Dollar Jumps as Fed Pulls the Trigger While Stocks, Debt Decline (BBG)

The dollar rallied, while Treasury yields spiked as the Federal Reserve signaled a steeper path for in interest rates going forward after their first hike to borrowing costs in 2016. U.S. equities slumped the most since October. The greenback climbed to its strongest level in 10 months versus the yen, advancing against most of its major peers as as traders speculated that U.S. rates may be elevated faster than previously thought. Utilities and energy shares drove the S&P 500 Index down 0.8% as two-year Treasury yields soared to their highest level in seven years. The dollar’s gains sent oil tumbling as gold also retreated. Emerging-market currencies were among the biggest decliners, while Asian index futures diverged amid the yen’s drop.

“The bottom line is that this is more hawkish than the markets expected,” said Dennis Debusschere at Evercore ISI in New York. “I don’t think the shift higher in the dots was priced in. The consensus going in was that they’d wait until they had details of the fiscal program before they actually raised the rate forecast, and they did that before they saw the details.” What was only the second U.S. rate increase in a decade tied off a volatile year for markets, with investors whipsawed by ructions in Chinese trading, then the shock wins for Brexit and Donald Trump. The Fed moving further into tightening territory puts it at the vanguard of a shift globally from easing monetary policy toward an increased focus on fiscal stimulus.

After hiking by 25 basis points, the central bank said it expects three rate increases in 2017, up from two in its September forecasts. Speaking to reporters after the decision, Fed Chair Janet Yellen sought to downplay the significance of that change in the projections. “This is a very modest adjustment in the path of the federal funds rate,” Yellen said during the press conference. The decision to raise rates is “a vote of confidence in the economy,” she said, noting that some fed officials, but not all, incorporated the assumption of a change in fiscal policies when making their forecasts.

Read more …

“.. it appears the final bastion of safety has cracked”.

Fed Fallout Escalates: China Bond Market Crashes Most On Record (ZH)

After a bubblicious surge higher over the last few months (as China’s hot money swishes from one trending-higher market to another), China’s bond market is collapsing. As Chinese money-markets tighten into new year, yuan weakens, and capital outflows accelerate, so it appears the final bastion of safety has cracked. Chinese bond futures crashed overnight by the most on record, erasing in a week the gains of the last 18 months. The rally began in 2014, buoyed by slowing economic growth and a monetary-easing cycle that kicked off in November that year. Now that is over…

As Chinese liquidity pressures ripple up from the short-term repo markets…

Offshore Yuan has tumbled 5 handles since The Fed raised rates…

And Japanese stocks cannot hold a bid despite the weaker yen. It appears Janet’s message about Trump’s fiscal plan is starting to sink in.

Read more …

“They’re playing whack-a-mole constantly. They try to bring down one bubble, and something pops up somewhere else. They do that, and something comes up somewhere else..”

Higher US Interest Rates Next Year Could Make Big Problems For China (CNBC)

Rising interest rates in the United States have an obvious effect on the world’s biggest economy — but less obvious is the impact those rates could have on the second biggest. Higher interest rates in the United States could make it harder for China to manage its exploding debt, as the Asian giant increasingly depends on borrowing in order to keep growing — while simultaneously trying to block capital from fleeing for more fruitful shores in America. “If the Federal Reserve [keeps increasing] interest rates in the United States, the single biggest casualty of that this time is going to be China, because there’s so much money just waiting to leave” the country, said Ruchir Sharma at Morgan Stanley. Sharma spoke Tuesday evening as part of a panel at the Asia Society in New York.

Sharma pointed out that over the last year, China has moved from one bubble to another: commodities, stocks and, currently, real estate. That is not a sustainable way for China to grow, he said, especially considering that China’s “debt increase over the last five years has been 60 percentage points as a share of its economy.” “They’re playing whack-a-mole constantly. They try to bring down one bubble, and something pops up somewhere else. They do that, and something comes up somewhere else,” said Sharma, who noted that housing prices in China’s largest cities have increased between 30 and 50% over the last 18 months alone. Fed officials on Wednesday approved the first U.S. interest rate increase in a year. The 0.25 percentage point hike was widely expected, but the more aggressive pace for future increases outlined by the Fed — three next year instead of the two that were previously expected — was not.

Rising U.S. rates typically mean better yields for U.S. Treasurys and a stronger U.S. dollar. And indeed, both bond yields and the greenback immediately moved higher after Wednesday’s announcement. “I certainly think we could hit a 3 (percent on the 10-year Treasury yield) by the first quarter” of next year, Rick Rieder, CIO, global fixed income at BlackRock, told CNBC on Wednesday. The 10-year was last at 3% in January 2014. [..] the ability to keep financing its “massive debt binge” is impaired, Sharma said, if too much money bleeds out of the system. And China needs a lot of money — and more and more of it — to keep hitting the largely arbitrary 6% GDP growth rate that Beijing has mandated for the country. “Today in China, it’s taking $4 in debt to create a dollar of GDP growth,” said Sharma

Read more …

Oh no, it was never gone. It’s only been growing the whole time.

Shadow Banking in China Appears to Have Made a Roaring Comeback (BBG)

Time to don the tin hats? Chinese shadow-banking activity registered a surprise jump in November, throwing into sharp relief how policy makers are struggling to make good on their vow to rein in the runaway loan growth that threatens the stability of the financial sector. Often cast as one of the weakest links in the global financial system given the potential threat it poses to Asia’s largest economy, shadow credit – which consists of trust loans, entrusted loans and bank-acceptance bills –rose sharply to 479 billion yuan ($69 billion), after having dropped to 55 billion yuan in October. The surprise rebound may be a reaction to expectations for continuing yuan weakness as companies look to increase their local-currency liabilities at the expense of dollar-denominated obligations.

“Today’s surprising data will likely trigger some regulatory concerns,” David Qu, China economist at Australia & New Zealand Banking, wrote in a note to clients on Wednesday, citing the size and opacity of off-balance sheet lending from trust companies, brokerages, micro-lenders, pawn-shops and even real-estate companies. The rise could reflect “short-term speculation due to expectations of renminbi depreciation and producer-price inflation,” analysts at Nomura Holdings Inc, led by Zhao Yang, wrote in a report on Wednesday. Efforts to curtail shadow lending may exacerbate this month’s liquidity squeeze, as the yield on 10-year government bonds shoots up to 3.24% from 2.74% at the end of October – their highest level in more than a year.

“If Chinese regulators start to restrict shadow banking activities, there may be spillover effects to the bond market due to liquidity tightening,” Qu adds, referring to the prospect that redemptions from wealth-management funds would force asset managers to trim their bond positions. Last month’s credit binge wasn’t confined to the shadow financial system. Total social finance, the broadest measure of new lending, expanded the most since March at 1.74 trillion yuan, up from 896.3 billion yuan in October. [..] The 11.8% increase on a year-on-year basis was driven by household lending growth, reflecting how property curbs have yet to kick in, as well as expansion in the shadow-banking sector.

Read more …

Tens of billions eating crow at that table. Trump knows exactly what Bezos, Cook etc. said about him not long ago. Eric Schmidt just about ran Hillary’s campaign.

Trump Meets With Tech Titans: “No Formal Chain Of Command Around Here” (CNBC)

A confab of tech titans had a “productive” meeting with President-elect Donald Trump at Trump Tower on Wednesday, Amazon CEO Jeff Bezos told CNBC, as Trump moved to mend fences with Silicon Valley before taking office in January. Apple, Alphabet, Microsoft, Amazon, Facebook, Intel, Oracle, IBM, Cisco and Tesla were among the C-suite executives in attendance, with Apple CEO Tim Cook and Tesla CEO Elon Musk expected to get private briefings, according to transition staff. During the campaign, Trump issued a number of barbs directed at Bezos and his businesses, but at the meeting both men appeared nothing but complimentary. “I found today’s meeting with the president-elect, his transition team, and tech leaders to be very productive,” Bezos said.

“I shared the view that the administration should make innovation one of its key pillars, which would create a huge number of jobs across the whole country, in all sectors, not just tech—agriculture, infrastructure, manufacturing—everywhere.” Though many tech leaders actively opposed his election, Trump said at the meeting he was interested in helping tech do well — and that the executives can call any time, since there’s no formal chain of command. “We want you to keep going with the incredible innovation,” Trump said. “There’s no one like you in the world….anything we can do to help this go along, we’re going to be there for you. You can call my people, call me — it makes no difference — we have no formal chain of command around here.”

Read more …

As someone commented on Twitter: “Carney’s baby is all grown up”.

Canada’s Gravity-Defying Household Debt Swells to C$2 Trillion (BBG)

The appetite for bank borrowing remained unabated in the third quarter, setting fresh records for total credit and mortgage borrowing, Statistics Canada reported Wednesday. The widely-followed ratio of household debt to after-tax income rose to another record high of almost 167%. The numbers will intensify concern among policy makers the economy has become over-reliant on bank borrowing, and is vulnerable to a housing downturn and rising interest rates. The latest report covers the three months before Finance Minister Bill Morneau tightened mortgage lending rules again in October, a move designed to discourage Vancouver and Toronto home buyers from signing larger mortgages than they could handle.

“Household indebtedness continues to defy gravity and remains the Achilles heel of the Canadian economy,” said Charles St-Arnaud at Nomura Securities, who has worked in Canada’s finance department and central bank. “Continued increase in yields and job losses remain the biggest risks.” Credit-market debt climbed to C$2.005 trillion ($1.53 trillion) from C$1.980 trillion in the prior quarter. Those obligations jumped by 1.3% in the third quarter, faster than the 0.9% gain in household income. Total consumer debt exceeded the size of Canada’s economy for a second straight quarter, accounting for 101.2% of gross domestic product in the July-to-September period. Debts have climbed alongside the Vancouver and Toronto housing boom, fueled by job growth and rock-bottom borrowing costs.

Read more …

Elections, anyone?

EU Politicians Believe UK Post-Brexit Trade Deal Could Take Decade (G.)

Europe’s politicians believe a trade deal with the UK could take up to a decade or more and could still fail in the final stages, Downing Street has been warned by the UK’s ambassador to the EU. Sir Ivan Rogers, who conducted David Cameron’s renegotiation with the EU prior to the referendum, is reported to have told the prime minister that European politicians expected that a deal would not be finalised until the early to mid-2020s, according to the BBC. That deal could still be rejected by any of the 27 national parliaments during the ratification process. It is understood Rogers was reporting back conversations he had had with European politicians, rather than giving his own advice to the British government. “It is wrong to suggest this is advice from our ambassador to the EU,” a Number 10 spokesman said. “Like all ambassadors, part of his role is to report the views of others.”

Former Tory minister Dominic Raab, a leave campaigner, said it was “reasonable to set out a worst-case scenario of five to 10 years to iron out all the detail of a trade deal.” He told BBC Radio 4’s Today programme: “The crucial question is whether we maintain barrier-free trade in the meantime, in which case there’s no real problem. I have to say it’s very unlikely in the interim that the EU would want to erect trade barriers.” The reports come after Brexit secretary, David Davis, told a select committee hearing that “everything is negotiable” within a year and a half of the formal article 50 notification in March. The deal would then take about six months to be agreed by European leaders, the European parliament and the British parliament, he said.

Read more …

Try these on for size: “Murray is a controversial figure who was removed from his post as a British ambassador amid allegations of misconduct.” Misconduct? Well: “Murray was a vocal critic of human rights abuses in Uzbekistan while serving as ambassador between 2002 and 2004, a stance that pitted him against the UK Foreign Office.”

Ex-UK Ambassador: Clinton Emails Leaked By “Disgusted” Dem. Whistleblower (DM)

A Wikileaks envoy today claims he personally received Clinton campaign emails in Washington D.C. after they were leaked by ‘disgusted’ whisteblowers – and not hacked by Russia. Craig Murray, former British ambassador to Uzbekistan and a close associate of Wikileaks founder Julian Assange, told Dailymail.com that he flew to Washington, D.C. for a clandestine hand-off with one of the email sources in September. ‘Neither of [the leaks] came from the Russians,’ said Murray in an interview with Dailymail.com on Tuesday. ‘The source had legal access to the information. The documents came from inside leaks, not hacks.’ His account contradicts directly the version of how thousands of Democratic emails were published before the election being advanced by U.S. intelligence.

Murray is a controversial figure who was removed from his post as a British ambassador amid allegations of misconduct. He was cleared of those but left the diplomatic service in acrimony. His links to Wikileaks are well known and while his account is likely to be seen as both unprovable and possibly biased, it is also the first intervention by Wikileaks since reports surfaced last week that the CIA believed Russia hacked the Clinton emails to help hand the election to Donald Trump. Murray’s claims about the origins of the Clinton campaign emails comes as U.S. intelligence officials are increasingly confident that Russian hackers infiltrated both the Democratic National Committee and the email account of top Clinton aide John Podesta. In Podesta’s case, his account appeared to have been compromised through a basic ‘phishing’ scheme, the New York Times reported on Wednesday.

U.S. intelligence officials have reportedly told members of Congress during classified briefings that they believe Russians passed the documents on to Wikileaks as part of an influence operation to swing the election in favor of Donald Trump. But Murray insisted that the DNC and Podesta emails published by Wikileaks did not come from the Russians, and were given to the whistleblowing group by Americans who had authorized access to the information. ‘Neither of [the leaks] came from the Russians,’ Murray said. ‘The source had legal access to the information. The documents came from inside leaks, not hacks.’ He said the leakers were motivated by ‘disgust at the corruption of the Clinton Foundation and the tilting of the primary election playing field against Bernie Sanders.’

‘I don’t understand why the CIA would say the information came from Russian hackers when they must know that isn’t true,’ he said. ‘Regardless of whether the Russians hacked into the DNC, the documents Wikileaks published did not come from that.’ Murray was a vocal critic of human rights abuses in Uzbekistan while serving as ambassador between 2002 and 2004, a stance that pitted him against the UK Foreign Office.

Read more …

“The former CIA official said the Obama administration may feel compelled to respond before it leaves office. “This whole thing has heated up so much,” he said. “I can very easily see them saying, `We can’t just say wow, this was terrible and there’s nothing we can do.'”

Well, if Obama is truly getting involved, he has 4 days in which to turn 37 Republican electors against Trump. As for the potential fallout, which may include various forms of social conflict should the Trump victory be overturned in the 11th hour at the Electoral College, then Putin will truly win as a result of what may then follow.

US Accuses Vladimir Putin Of “Personal Involvement” In Election Hack (ZH)

And just like that the narrative of Russia hacking the presidential election has escalated to the highest possible level, and has officially jumped the shark. Moments ago, following a month-long barrage of unsubstantiated stories in the press accusing the Russian government of indirectly hacking the US presidential election, which culminated with last night’s 8,000 word NYT expose, and which followed a schism between the FBI and CIA, in which the former disputed the latter’s “fuzzy and ambiguous” claims that Russia sought to influence the presidential elections, moments ago the NBC News reported that U.S. intelligence officials believe with “a high level of confidence” that Russian President Vladimir Putin became personally involved in the covert Russian campaign to interfere in the U.S. presidential election.

Perhaps because the official narrative has so far been unable to gather traction with the previous “shotgun approach” in which just “Russia” was accused of handing the election to Trump, four short days before the Electoral College vote, the narrative has changed and it now involves the very pinnacle of Russia’s government: the president himself. Citing two senior officials with direct access to the information, NBC reports that “new intelligence shows that Putin personally directed how hacked material from Democrats was leaked and otherwise used. The intelligence came from diplomatic sources and spies working for U.S. allies, the officials said.” So why did Putin hack a few million rust belt Americans into believing that their lives under Obama, and by extension Hillary, were bad enough that they demanded a change? NBC provides the following spoonfed logic:

Putin’s objectives were multifaceted, a high-level intelligence source told NBC News. What began as a “vendetta” against Hillary Clinton morphed into an effort to show corruption in American politics and to “split off key American allies by creating the image that [other countries] couldn’t depend on the U.S. to be a credible global leader anymore,” the official said.

Ultimately, the CIA has assessed, “the Russian government wanted to elect Donald Trump.” And this is where the latest turn in the story falls apart, because even NBC – which will blast this report on prime time TV to all America – admits “the FBI and other agencies don’t fully endorse that view”, but it adds “few officials would dispute that the Russian operation was intended to harm Clinton’s candidacy by leaking embarrassing emails about Democrats.”

Read more …

As I said, looks like Tsipras has had enough.

Eurozone Suspends Short-Term Debt Relief for Greece (WSJ)

Greece’s European creditors suspended proposed debt-relief measures for the country after the Greek government surprised them by announcing it would boost welfare benefits for low-income pensioners, a sign of escalating tensions over the country’s bailout. The moves come as Athens and its international creditors—which include the eurozone and the IMF—are struggling to conclude their latest review of the country’s rescue plan of as much as €86 billion ($92 billion) in loans. “The institutions have concluded that the actions of the Greek government appear to not be in line with our agreements,” a spokesman for Jeroen Dijsselbloem, the Dutch finance minister who presides over the group of his eurozone counterparts, said in a statement on Twitter.

“No unanimity now for implementing short-term debt measures,” he added. The step puts further pressure on Greece’s government, which is considering calling snap elections in 2017 as it grapples with slumping popularity and is losing hope of winning concessions on deeper debt relief or austerity from the eurozone and the IMF. Greece’s embattled Prime Minister Alexis Tsipras surprised Greeks and the country’s creditors last week with handouts that his government hadn’t previously discussed with bailout supervisors, which represent eurozone governments and the IMF. Mr. Tsipras promised 1.6 million pensioners a Christmas bonus of between €300 and €800. He also suspended a planned increase in sales tax for Aegean islands that have received large numbers of refugees from the Middle East and elsewhere.

Eurozone officials expressed frustration that the country’s creditors were not told in advance by Greece of its plans—widely seen as a lure to voters ahead of elections—and said the new measures would have to be assessed to determine whether they were in line with the country’s bailout commitments. “We will adhere to the [bailout] program to the letter, but whatever outperformance in revenue arises by following to the program, we will not ask anyone in order to give this money to those most in need,” Mr. Tsipras said Tuesday from the small island of Nisyros.

Read more …

Can you imagine the opposition in your country doing this? They would risk being persecuted for treason. In Europe, it’s the new normal. But he might as well ask Putin.

Greek Opposition Leader To Seek Backing In Brussels For Snap Polls (Kath.)

In talks with officials on the sidelines of a summit of the European People’s Party in Brussels that started Wednesday, conservative New Democracy leader Kyriakos Mitsotakis is to press his argument that Greece needs snap elections to sweep away the current leftist-led government and bring in a more reform-friendly administration. Mitsotakis is to meet Thursday with European Commission President Jean-Claude Juncker and European Economic and Monetary Affairs Commissioner Pierre Moscovici, among others.

ND sources are hoping that EU officials will welcome Mitsotakis’s call for political change, coming as it does just a few days after Prime Minister Alexis Tsipras unsettled the country’s creditors by announcing Christmas bonuses for thousands of pensioners and vowing to keep in place a value-added tax discount for remote islands that the government had promised its lenders to revoke. The meetings come as ND leads leftist SYRIZA by a wide margin in opinion polls. Mitsotakis’s argument is that snap polls would not be destabilizing, as they had been in January 2015, as ND is a reformist power compared to the SYRIZA coalition with Independent Greeks which the conservative party describes as “unreliable and opportunistic” in its policy-making.

Read more …

Nov 302016
 
 November 30, 2016  Posted by at 11:06 am Finance Tagged with: , , , , , , , , , ,  6 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Wyland Stanley Bulletin press car: Mitchell auto at Yosemite National Park 1920


OK, I get it: Companies Clamor for Cheap Labor, Fed Delivers (WS)
Trump Notches a Win as Carrier Agrees to Keep 1,000 Jobs in U.S.
Asia Is About to Face a Significant Dollar Stress Test (BBG)
Property Bubble ‘Most Important Macro Issue In China’ – Deutsche (BI)
China’s Foreign Investment ‘Shopping Spree’ Over?! (SCMP)
RBS Fails Bank Of England Stress Test (Ind.)
UK Shoppers ‘Resolutely Gloomy’ About The Future Of The Economy (Ind.)
The ‘Washington Post’ ‘Blacklist’ Story Is Shameful and Disgusting (Taibbi)
US Intelligence Experts Urge Obama To End Snowden’s ‘Untenable Exile’ (G.)
The End Of Empires: Rome Vs. America (SHTFP)
The Rediscovery of Men (Jim Kunstler)
Major Global Firms Buy Indonesia Palm Oil Produced By Child Labor (R.)
North Dakota Moves To Block Supplies From Reaching Pipeline Protesters (R.)
The Areas America Could Abandon First (BBG)
Turkey Has Secret Plan To Send 3,000 Refugees To Greece Every Day (Ind.)

 

 

Makes it easier to bring jobs back home, too.

OK, I get it: Companies Clamor for Cheap Labor, Fed Delivers (WS)

Despite all the frothy excitement about the stock market’s new highs, and the drooling today over the new highs reached by Housing Bubble 2, exceeding the prior crazy highs of Housing Bubble 1 even according to the Case-Shiller Index, and despite eight years of super-low interest rates, and a million other things that are hyped constantly, median household incomes, the crux of the real economy, is still a dreary affair. Sentier Research released its median household income measure for October today. Adjusted for inflation, it edged up 0.6% from a year ago to $57,929. But it’s down 1.3% from January 2008, and it’s down 1.5% from its peak in 2002. It has fallen 0.5% since January. That’s not a propitious trend. The report put it this way: “Median annual household income in 2016 has not been able to maintain the momentum that it achieved during 2015.” This chart by Doug Short shows the stagnating inflation-adjusted debacle (blue line) and the nominal income (red line):

[..] Even minuscule but consistent understatement of CPI in relationship to actual price changes as experienced by the median household wreaks havoc on their inflation-adjusted income. Since 2000, official inflation has amounted to 42%. If CPI is understated by just a fraction every year, multiplied by 16 years, it would knock several%age points off real median household income. This translates into reduced purchasing power, which is exactly what many people have been experiencing. This whole affair – the devious impact of inflation on household income – becomes even clearer in this chart by Doug Short at Advisor Perspectives. It shows the% change over time, starting in 2000: The beautifully soaring illusion of nominal income (red line), and the dreary reality of wage stagnation or worse, after inflation (blue line):

Read more …

Not even a rounding error, but it gets more headlines than jobs are saved.

Trump Notches a Win as Carrier Agrees to Keep 1,000 Jobs in U.S.

Carrier agreed to keep about 1,000 jobs at an Indiana factory that had been set to move to Mexico, marking a victory for President-elect Donald Trump on an issue that had become a rallying cry during his campaign. “We are pleased to have reached a deal” with Trump and Vice President-elect Mike Pence to keep the work in the U.S., Carrier said Tuesday in a tweet. Trump tweeted that he’ll travel to Indiana on Thursday to make the announcement. Carrier said earlier this year it would move the furnace plant’s operations, eliminating 1,400 U.S. jobs, to keep production costs competitive.

The decision garnered national notice after a worker’s cell-phone video of the announcement to employees took off on social media and generated criticism of Carrier parent United Technologies, which is also a major defense contractor that supplies engines for U.S. fighter jets. Trump, as well as Democratic U.S. Senator Bernie Sanders, seized on the announcement and used the company in their presidential campaigns as an example of how U.S. workers were being hurt by trade deals. In April, Trump said he would impose a hefty tax on Carrier’s Mexican-made products and “within 24 hours, they’re going to call back: ‘Mr. President, we’ve decided to stay. We’re coming back to Indianapolis.’”

Read more …

When the reserve currency stops flowing, beware.

Asia Is About to Face a Significant Dollar Stress Test (BBG)

For Asian markets, 2017 could be the year of the dollar crunch. Foreign portfolio flows have taken a sharp downturn since Donald Trump’s election victory, with $15 billion fleeing Asian bonds and stocks this month alone — close to 30% of year-to-date inflows to the region, according to Deutsche Bank — as a strengthening greenback and a bevy of protectionist policies from the president-elect darken the growth prospects for emerging markets. Lending spreads, domestic demand and the resolve of domestic central banks to offset liquidity shortages will be tested next year, analysts warn, as key sources of dollar flows to the region trade and portfolio inflows may unravel if Trump makes good on his key campaign proposals.

A slew of investment banks this week, including Deutsche Bank, Citigroup, Morgan Stanley and Societe Generale, reckon the pain for emerging markets will intensify in 2017, citing, in part, the rising cost of servicing dollar debts amid a strengthening greenback relative to local currencies, and higher Fed policy rates. “The [debt-servicing] challenge looks even fiercer for non-US borrowers who have borrowed in dollars — dollar strength will make it harder to repay the debt,” SocGen analysts, led by Brigitte Richard-Hidden, wrote in a report on Tuesday. “There are plenty of them, as the outstanding dollar-denominated credit to the rest of the world has more than doubled over the past 10 years to nearly $10 trillion,” analysts at the French bank conclude. “EM countries and corporations in particular have been keen on borrowing in dollars ([to the tune of] $3.2 trillion).”

At the heart of the challenge, according to analysts: a tighter U.S. trade position with the region in the coming years, which would shrink the pool of dollars floating overseas and make it harder for emerging markets to settle cross-border trade and service hard-currency debts. “Each of these sources of dollars – whether from trade, portfolio flows or debt issuance – could be at risk in the new post-election regime,” Deutsche Bank strategists, led by Mallika Sachdeva, wrote in a research note on Monday. “This could mean a reduction in trade surpluses in the region: exports could suffer from protectionist efforts.”

Read more …

Much of the world is a Chinese property bubble, especially major cities.

Property Bubble ‘Most Important Macro Issue In China’ – Deutsche (BI)

China’s debt-fuelled property boom, and potential bust, will be one of the biggest issues facing the country’s policymakers in 2017, according to Deutsche Bank. Deutsche Bank economists, led by Zhiwei Zhang and Li Zeng, said the real estate bubble is “the most important macro issue in China,” in a note to clients. They point to rapid hikes in land sales and auction prices, as well as mounting debt levels, as needing attention. Land sales accounted for more than a third of local government revenue, Deutsche Bank said, and mortgages made up 43% of all new loans issued in renminbi. The difference between the starting price and final price in land auctions continues to rise rapidly and “this shows some developers continue to expect sharp property price inflation to come,” the analysts said. Here’s the chart:

And here’s the debt chart showing sharp increases for this year:

“Chinese policymakers are aware the market risks overheating and will act accordingly.” “In the next few months we believe the government will put further pressure on developers by tightening broad credit growth,” Zhang and Zeng said. “Property sales and investment growth will likely slow further in 2017Q1. Local government land revenue may weaken by 2017Q2.” On Monday analysts at Morgan Stanley raised the alarm about increased household borrowing, led by mortgages, in a note to clients. China’s debt to GDP rose to 276% in the third quarter this year from 249% in 2015. “This has been mainly driven by a rapid rise in new mortgages from RMB 1.7 trillion in 2014 to RMB 4.6 trillion in the past 12 months,” according to a note circulated to clients. With the debt overhang growing, the economic benefits of borrowing more are shrinking. It took nearly eight units of debt to produce one unit of GDP growth in 2016, compared with around four in 2014.

Read more …

Want to bet?

China’s Foreign Investment ‘Shopping Spree’ Over?! (SCMP)

The central government is embarking on a massive policy shift designed stem capital outflow by curbing mainland China’s outbound investment, sources informed of official instructions have told the South China Morning Post. Tighter control of outbound investment is likely to put an end to a trophy asset shopping spree by well-connected companies such as Anbang Insurance and Dalian Wanda, with Beijing is ready to cut the supply of foreign exchange for such deals. Shanghai’s municipal foreign exchange authority had told bank managers in the city that all overseas payments under the capital account bigger than US$5 million would have to be submitted to Beijing for special clearance before proceeding, the sources said. China’s central bank talks up the yuan against US dollar ‘uncertainties’

While the move did not necessarily mean all such deals would be vetoed, the regulatory procedures that would have to be navigated before completing them would take much longer, the sources said. A separate document seen by the Post, said to be the minutes of a central bank meeting on cross-border capital controls, said that from September next year Beijing would ban deals involving investment of more than US$10 billion, mergers and acquisitions valued at more than US$1 billion outside a Chinese investor’s core business, and foreign real estate deals by state-owned enterprises involving more than US$1 billion. [..] Mainland China’s foreign exchange reserves have fallen by US$873 billion since hitting an all-time high of US$3.99 trillion in June 2014. The reserves fell by US$46 billion last month, the largest monthly fall since January, but that understates the size of mainland China’s capital flight because residents are also moving yuan assets abroad.

Read more …

It’ll be allowed to blunder on. TBTF.

RBS Fails Bank Of England Stress Test (Ind.)

The Royal Bank of Scotland (RBS) has failed key hurdles in a Bank of England stress test, forcing the lender to draw up new plans in case of a financial crisis. The toughest stress test yet assessed how the UK’s seven biggest lenders would cope with hypothetical scenarios including a recession, a housing crash and a halving of the oil price. RBS, which is still 73% owned by the government after its bailout in 2008, has emerged as the worst hit in the annual health check of the banking system. This means the lender must take action to protect itself against a sharp slump in the economy. RBS has issued a plan intended to bolster its financial strength by an estimated £2bn, which has been accepted by the BoE.

The bank has also reduced its “risky” assets by £10.4bn or 21% to £38.6bn. Ewen Stevenson, RBS chief financial officer, said the bank is committed to creating a “stronger, simpler and safer” bank for their customers and their shareholders. He said: “We have taken further important steps in 2016 to enhance our capital strength, but we recognise that we have more to do to restore the bank’s stress resilience including resolving outstanding legacy issues.” Barclays and Standard Chartered also struggled under the test, however neither was required to submit a revised capital plan. The test also covered HSBC, Lloyds Banking Group, Santander and Nationwide.They did not reveal any capital inadequacies in the test, the BoE said.

Read more …

“the big theme is the reduced confidence in the UK economy looking back and ahead..”

UK Shoppers ‘Resolutely Gloomy’ About The Future Of The Economy (Ind.)

Shoppers are now “resolutely gloomy” about the country’s economic future and are putting off big purchases as uncertainty mounts, according to a respected survey. The GfK Consumer Confidence Barometer, which surveys 2,000 people, recorded a measure of –22 for confidence in the economy over the next year, down from -17 in October and –9 in September. A negative number means more people think things will get worse than vice versa. Major purchases took the biggest hit according to the report, with the index falling 9 points from 14 in October to 5 in November. People’s view of their personal financial situation over the next twelve months also fell. However, both measures are above their respective post-referendum nadirs.

Spending has so far kept up as buyers stock up on Christmas gifts but the prospect of sharply increasing prices, stagnant wages and further uncertainty over access to the UK’s single market have all weighed heavily on shoppers’ expectations over the past month. Earlier in November, the Bank of England made a dramatic rise to its inflation forecast, predicting it will almost triple from 1% to 2.7% in 2017 as the effects of a weakened pound are felt. National Institute for Economic and Social Research was even more pessimistic, saying it expected inflation to quadruple to about 4% in the second half of next year. Joe Staton, Head of Market Dynamics at GfK, said, “the big theme is the reduced confidence in the UK economy looking back and ahead. We are viewing our economy over the past 12 months with increasing despondency.” Staton said that “despite strong GDP numbers”, shoppers are “resolutely gloomy about the outlook” for the economy.

Read more …

Me, I’m wondering where we are when everyone feels compelled to comment on such obvious nonsense. This morning when going through the news I kept on seeing photos of Trump and Romney having dinner. What’s the news? What’s the value? Don’t these people have more important things to do than to report on that?

The ‘Washington Post’ ‘Blacklist’ Story Is Shameful and Disgusting (Taibbi)

Last week, a technology reporter for the Washington Post named Craig Timberg ran an incredible story. It has no analog that I can think of in modern times. Headlined “Russian propaganda effort helped spread ‘fake news’ during election, experts say,” the piece promotes the work of a shadowy group that smears some 200 alternative news outlets as either knowing or unwitting agents of a foreign power, including popular sites like Truthdig and Naked Capitalism. The thrust of Timberg’s astonishingly lazy report is that a Russian intelligence operation of some kind was behind the publication of a “hurricane” of false news reports during the election season, in particular stories harmful to Hillary Clinton. The piece referenced those 200 websites as “routine peddlers of Russian propaganda.”

The piece relied on what it claimed were “two teams of independent researchers,” but the citing of a report by the longtime anticommunist Foreign Policy Research Institute was really window dressing. The meat of the story relied on a report by unnamed analysts from a single mysterious “organization” called PropOrNot – we don’t know if it’s one person or, as it claims, over 30 – a “group” that seems to have been in existence for just a few months. It was PropOrNot’s report that identified what it calls “the list” of 200 offending sites. Outlets as diverse as AntiWar.com, LewRockwell.com and the Ron Paul Institute were described as either knowingly directed by Russian intelligence, or “useful idiots” who unwittingly did the bidding of foreign masters.

Forget that the Post offered no information about the “PropOrNot” group beyond that they were “a collection of researchers with foreign policy, military and technology backgrounds.” Forget also that the group offered zero concrete evidence of coordination with Russian intelligence agencies, even offering this remarkable disclaimer about its analytic methods: “Please note that our criteria are behavioral. … For purposes of this definition it does not matter … whether they even knew they were echoing Russian propaganda at any particular point: If they meet these criteria, they are at the very least acting as bona-fide ‘useful idiots’ of the Russian intelligence services, and are worthy of further scrutiny.”

Read more …

How long would he remain alive though?

US Intelligence Experts Urge Obama To End Snowden’s ‘Untenable Exile’ (G.)

The campaign to persuade Barack Obama to allow the NSA whistleblower Edward Snowden to return home to the US without facing prolonged prison time has received powerful new backing from some of the most experienced intelligence experts in the country. Fifteen former staff members of the Church committee, the 1970s congressional investigation into illegal activity by the CIA and other intelligence agencies, have written jointly to Obama calling on him to end Snowden’s “untenable exile in Russia, which benefits nobody”. Over eight pages of tightly worded argument, they remind the president of the positive debate that Snowden’s disclosures sparked – prompting one of the few examples of truly bipartisan legislative change in recent years.

They also remind Obama of the long record of leniency that has been shown by his own and previous administrations towards those who have broken secrecy laws. They even recall how their own Church committee revealed that six US presidents, from Franklin Roosevelt to Richard Nixon, were guilty of abusing secret powers. “There is no question that Snowden broke the law. But previous cases in which others violated the same law suggest leniency. And most importantly, Snowden’s actions were not for personal benefit, but were intended to spur reform. And they did so,” the signatories write. The Church committee, or the US Senate select committee to study government operations with respect to intelligence activities, to give it its full name, sat in 1975-76 at a time of deep public anxiety about the rogue work of federal agencies.

The aftershocks of Watergate were still being felt, and Seymour Hersh had exposed in the New York Times mass illegal activities by the CIA, including routine surveillance of anti-war groups. As the 15 staff members point out, the committee investigation led to the disclosure of jaw-dropping illegal acts including the planting of an FBI informant inside the civil rights group the NAACP, attempts to push Martin Luther King into killing himself, and Cointelpro, the vast program run secretly by the FBI to disrupt progressive organisations in the US.

Read more …

Great little history lesson. Whether or not to agree with the assumptions behind it is another matter.

The End Of Empires: Rome Vs. America (SHTFP)

The year was 451, and the battle of Chalons (also known as Catalaunian Fields and Campus Martius) was fought between a coalition of Roman legionnaires, Germanic Visigoths, and Gauls against the Huns. Flavius Aetius was the Roman commanding general, and he led his forces to defeat Attila, king of the Huns and commander of the Hun armies. The loss caused Attila to withdraw and skirmish into Italy, but again (this time through diplomacy and concessions) he withdrew in 452, returning into what is now modern Hungary. Attila died in 453, and the Hun menace to Europe had ended. Aetius had been the declining (and fragmented) Western Roman Empire’s best chance to restructure itself. He had fought in Gaul and throughout Italy and Europe for decades, sometimes even with support from the Huns before Attila began his quest for empire.

A master strategist, tactician, diplomat, and warrior, he effectively stemmed the collapse of the Western Roman Empire for another 25 years. In all probability, he may have been able to turn things around for a longer period of time. This was not to be, as he was assassinated by none other than the Emperor Valentinian III and his henchman Heraclius on 22 September 454. The emperor killed the very man who had protected and assured his throne, and worse: now there was no true strategist to take the reins of military command. The last great Roman general was no more, and the Western Roman Empire continued to decline and fragment. [..] Less than 25 years after the battle of Chalons had given it a fighting chance, the Western Roman Empire was no more. [..]And here we are, as history repeats itself, in the last days of the American Empire.

Now ready to assume the Purple and ascend to the seat of power, Donald Trump is going to command and lead (we hope). The campaigns for the midterm elections will begin in November of 2017, therefore Trump has less than one year to begin to reverse the devastation wrought by two consecutive Obama terms that have, in eight years, placed the country on its deathbed and measured it for burial. In a four-year term of office, Donald Trump has to do the job that Aetius did for Rome in two decades, with the last year of that term being wasted on the primary focus of his reelection. What is the difference between Rome and America? A vast geographical area, influxes of alien migrants, an economy that is faltering, a military less than at its best, immorality, vice, and corruption at every turn, societal degradation and a welfare state, and foreign nations ready to pounce characterize both empires.

Read more …

“Hillary Clinton’s campaign was engineered from the get-go to complete the demolition of American manhood..”

The Rediscovery of Men (Jim Kunstler)

Donald Trump was about as far from my sense of the male ideal as anything short of the Golem. His accomplishments in life — developing hotels that look like bowling trophies and producing moronic TV shows — seem as flimsy as the plastic golden heraldry plastered on his casinos. His knowledge of the world appears to be on the level of a fifth grader. He can barely string together two coherent sentences off-teleprompter. I was as astonished as anyone by the disclosure of his “grab them by the pussy” courtship advice to little Billy Bush. In my experience, it seemed a very poor strategy for scoring some action, to say the least. In a better world — perhaps even the America he imagines to have been great once — Donald Trump would be a kind of freak among men, a joke, a parody of masculinity.

But then consider the freak show that American culture has become in our time and it shouldn’t be surprising that a cartoon nation has ended up with a cartoon of a man as head-of-state. In fact, I doubt that there even is any remaining collective idea of what it means to be a man here in terms of the ancient virtues. Honor? Dignity? Patience? Prudence? Fuhgeddabowdit. The cultural memory of all that has been erased. The apotheosis of Trump may remind a few people of all that has been lost, but we’re starting from nearly zero in the recovery of it. Consider also the caliber of the male persons who stepped into the arena last spring when the election spectacle kicked off. Only Bernie Sanders came close to representing honorable manhood — in the form of your irascible old “socialist” uncle from Brooklyn — while the rest of them acted like Elmer Fudd, Mighty Mouse, and Woody Woodpecker. And then when the primary elections ended, Bernie drove a wooden stake into his own heart in a bizarre act of political hara-kiri.

Hillary Clinton’s campaign was engineered from the get-go to complete the demolition of American manhood in what turned out to be a reckless miscalculation. “I’m with her (and against him).” Too much in recent American history has been against “him” and a great many of the hims out there began to notice that they were being squeezed out of the nation’s life like watermelon seeds. Most particularly, men were no longer considered necessary in whatever remained of the family unit. This went against the truth of the matter, of course, because nothing has been more harmful to everyday life than the absence of fathers. And this was connected to the secondary calamity of men losing their roles in the workplace — and the loss of self-respect connected with that. So the election awakened some sleeping notion that life was wildly out of balance in America. And being so out of balance, it swung wildly in the other direction.

Read more …

All major food firms are involved. Shun all products that contain palm oil. It’s incredibly damaging in many ways.

Major Global Firms Buy Indonesia Palm Oil Produced By Child Labor (R.)

Global consumer companies, including Unilever, Nestle, Kellogg and Procter & Gamble, have sourced palm oil from Indonesian plantations where labor abuses were uncovered, Amnesty International said on Wednesday. Children as young as eight worked in “hazardous” conditions at palm plantations run by Singapore-based Wilmar International and its suppliers on the Indonesian islands of Kalimantan and Sumatra, Amnesty said in a report. Amnesty, which said it interviewed 120 workers, alleges that many of them worked long hours for low pay and without adequate safety equipment. The palm oil from these plantations could be traced to nine multinational companies, it said.

“Despite promising customers that there will be no exploitation in their palm oil supply chains, big brands continue to profit from appalling abuses,” said Meghna Abraham, senior investigator at Amnesty. The NGO said it chose Wilmar as the focus of its investigation as the company is the world’s largest processor and merchandiser of palm and lauric oils, controlling more than 43% of the global palm oil trade. Other companies operating palm plantations in Indonesia include Golden Agri-Resources, Indofood Agri Resources and Astra Agro Lestari.

Read more …

What a blemish on the US this is.

North Dakota Moves To Block Supplies From Reaching Pipeline Protesters (R.)

North Dakota officials on Tuesday moved to block supplies from reaching oil pipeline protesters at a camp near the construction site, threatening to use hefty fines to keep demonstrators from receiving food, building materials and even portable bathrooms. Activists have spent months protesting plans to route the $3.8 billion Dakota Access Pipeline beneath a lake near the Standing Rock Sioux reservation, saying the project poses a threat to water resources and sacred Native American sites. State officials said on Tuesday they would fine anyone bringing prohibited items into the main protest camp following Governor Jack Dalrymple’s “emergency evacuation” order on Monday. Earlier, officials had warned of a physical blockade, but the governor’s office backed away from that.

Law enforcement would take a more “passive role” than enforcing a blockade, said Maxine Herr, a spokeswoman for the Morton County Sheriff’s Department. “The governor is more interested in public safety than setting up a road block and turning people away,” Herr said by telephone. Officers will stop vehicles they believe are headed to the camp and inform drivers they are committing an infraction and could be fined $1,000. These penalties should serve as a hindrance, according to Cecily Fong, a spokeswoman for the North Dakota Department of Emergency Services. “So that effectively is going to block that stuff (supplies), but there is not going to be a hard road block,” Fong said by telephone.

Read more …

One can be quite specific here. Insurers so far don’t act because the government doesn’t.

The Areas America Could Abandon First (BBG)

So far this year, the Federal Emergency Management Agency has spent $1.1 billion on what are called Individual Assistance payments, which help households recover from natural disasters. There are no limits on the number of times a household can apply, so the program isn’t just a safety net; for some people, it’s effectively a subsidy to live in areas that are especially vulnerable to hurricanes, floods and storm surges. That hasn’t gone unnoticed in Washington. In 1999, a Nebraska congressman introduced a bill preventing some properties with multiple claims from getting help – not just disaster relief, but also subsidized flood insurance. Two years later, the George W. Bush administration’s first budget proposed denying aid to the “worst offending repetitive loss properties.”

Under President Barack Obama, FEMA proposed reducing disaster aid for public buildings damaged more than once in the previous decade if local governments hadn’t done anything to protect them. None of those proposals took effect. But as extreme weather gets worse, those federal subsidies will only become more expensive – increasing the need to rethink government support for those who choose to live in harm’s way. “Climate change is real and will lead to even more frequent and costly disasters,” Rafael Lemaitre, FEMA’s director of public affairs, told me. “We must continue to work with states to implement longer-term projects and strategies that mitigate against climate change.” That means it’s time to consider an impolitic question: If federal support gets rolled back, which areas will people have the greatest incentive to leave?

To answer that, I asked FEMA which parts of the country have the most households that repeatedly get Individual Assistance payments, which are a useful proxy for exposure to all types of extreme weather. The agency gave me a list of 1,930 counties where at least one address had requested such aid more than once since 1998 – 1.3 million households in total. That data, which the agency said it had never before compiled, is reflected in the graphic below; the shading represents the number of households per capita that have applied for FEMA aid multiple times.

Unsurprisingly, the areas where households are most likely to repeatedly request aid are generally along coasts. The surprise is how they’re distributed: Rather than being spread uniformly along shorelines, a small number of counties account for the most repeat claims – one more reminder that the burden of climate change will not fall evenly. That’s also true within the most affected counties. The charts below show the number of households per capita requesting disaster aid more than once since 1998, by ZIP code, for four areas with especially high concentrations of repetitive claims. These charts don’t just map the losers from any reduction in federal support: At a more basic level, they show some of the places Americans will face the most pressure to abandon because of extreme weather — at least, people who can’t afford the full cost of recovering from natural disasters.

Read more …

Unverified, but not at all unlikely.

Turkey Has Secret Plan To Send 3,000 Refugees To Greece Every Day (Ind.)

The Turkish government has a secret plan to allow 3,000 refugees to sail to Greece every day, intelligence officials have claimed. Greek analysts claim thousands of dinghies and motorboats have massed along the Turkish coast as the refugee deal agreed between Ankara and Brussels looks set to unravel. Turkish President Erdogan threatened to open the borders if the EU continued to block talks on the country’s accession to the union. The European Parliament voted to temporarily halt membership talks amid concerns about the brutal crackdown on dissent in the country following an attempted military coup in July. Mr Erdogan warned: “If you go any further, these border gates will be opened.

Neither me nor my people will be affected by these dry threats. It wouldn’t matter if all of you approved the vote”. The deal reached in March meant any refugee who arrived on Italian or Greek shores would be sent back to Turkey in exchange for EU member countries accepting another refugee from a Turkish camp on a “one for one” basis. Ankara will also received aid money to help it care for the refugees within its borders, visa free travel for its citizens and the speeding up of membership talks. But according to Greek newspaper Proto Thema, Ankara has given up on hope of Brussels living up to its side of the deal and could start allowing the refugees to flee “within a matter of weeks”.

Greek intelligence expert Athanassios Drougas told The Times: “No one is underestimating Mr Erdogan and his unpredictability these days. “These plans, along with explicit threats that the Turkish president has made in recent weeks, have Greece’s joint chiefs of staff seriously concerned. “They are fearful and they have told the political leadership here that if Turkey opens the floodgates yet again, Greece, in its current state of financial and social distress, will not be able to withstand the shock. It will spell war or wreak the havoc of one. “With Europe in a mess, Mr Erdogan feels he has a free hand in trying to blackmail the bloc using the refugee crisis as leverage.”

Read more …