Jan 122019
 
 January 12, 2019  Posted by at 10:52 am Finance Tagged with: , , , , , , , , , , , , , ,  


Pablo Picasso Landscape 1920

 

FBI Opened Inquiry Into Whether Trump Was Secretly Working For Russia (NYT)
Democratic Elites Reunite With Neocons (Greenwald)
Exasperated Democrats Try To Rein In Ocasio-Cortez (Pol.)
Fed Paid Banks $38.5 Billion in Interest on “Reserves” in 2018 (WS)
Fed Balance Sheet and Currency In Circulation (WS)
Retailers Are Slashing iPhone Prices Across China (CNBC)
Apple Plans To Launch Three New iPhones This Year (CNBC)
Unclear How Deep, Lasting Germany’s Economic Problems Are: ECB’s Nowotny (R.)
France Vows Tough Response As New ‘Yellow Vest’ Demos Loom (AFP)
Google Sued For Covering Up $90m Payout To Ex-Exec Accused Of Sexcrimes (AFP)
My Walk To Work Shows Me How Homelessness Is Transforming Britain (G.)

 

 

Trump fired Comey, and Comey’s friends opened an inquiry.

Trump called Russiagate a made-up story, and that was reason for the FBI to open an inquiry into Russiagate.

Outlets like the NYTimes look increasingly like Faust, who sold his soul to the devil for short-term gains.

FBI Opened Inquiry Into Whether Trump Was Secretly Working For Russia (NYT)

In the days after President Trump fired James B. Comey as F.B.I. director, law enforcement officials became so concerned by the president’s behavior that they began investigating whether he had been working on behalf of Russia against American interests, according to former law enforcement officials and others familiar with the investigation. The inquiry carried explosive implications. Counterintelligence investigators had to consider whether the president’s own actions constituted a possible threat to national security. Agents also sought to determine whether Mr. Trump was knowingly working for Russia or had unwittingly fallen under Moscow’s influence.

The investigation the F.B.I. opened into Mr. Trump also had a criminal aspect, which has long been publicly known: whether his firing of Mr. Comey constituted obstruction of justice. Agents and senior F.B.I. officials had grown suspicious of Mr. Trump’s ties to Russia during the 2016 campaign but held off on opening an investigation into him, the people said, in part because they were uncertain how to proceed with an inquiry of such sensitivity and magnitude. But the president’s activities before and after Mr. Comey’s firing in May 2017, particularly two instances in which Mr. Trump tied the Comey dismissal to the Russia investigation, helped prompt the counterintelligence aspect of the inquiry, the people said.

The special counsel, Robert S. Mueller III, took over the inquiry into Mr. Trump when he was appointed, days after F.B.I. officials opened it. That inquiry is part of Mr. Mueller’s broader examination of how Russian operatives interfered in the 2016 election and whether any Trump associates conspired with them. It is unclear whether Mr. Mueller is still pursuing the counterintelligence matter, and some former law enforcement officials outside the investigation have questioned whether agents overstepped in opening it.

[..] The second event that troubled investigators was an NBC News interview two days after Mr. Comey’s firing in which Mr. Trump appeared to say he had dismissed Mr. Comey because of the Russia inquiry. “I was going to fire Comey knowing there was no good time to do it,” he said. “And in fact, when I decided to just do it, I said to myself — I said, you know, this Russia thing with Trump and Russia is a made-up story. It’s an excuse by the Democrats for having lost an election that they should’ve won.”

Read more …

A remarkable turnaround. The peaceniks have turned into warmongers.

Democratic Elites Reunite With Neocons (Greenwald)

[..] what is remarkable about the new polling data on Syria is that the vast bulk of support for keeping troops there comes from Democratic Party voters, while Republicans and independents overwhelming favor their removal. The numbers are stark: Of people who voted for Clinton in 2016, only 26 percent support withdrawing troops from Syria, while 59 percent oppose it. Trump voters overwhelmingly support withdraw by 76 percent to 14 percent. A similar gap is seen among those who voted Democrat in the 2018 midterm elections (28 percent support withdrawal while 54 percent oppose it), as opposed to the widespread support for withdrawal among 2018 GOP voters: 74 percent to 18 percent.

Identical trends can be seen on the question of Trump’s announced intention to withdraw half of the U.S. troops currently in Afghanistan, where Democrats are far more supportive of keeping troops there than Republicans and independents. This case is even more stark since Obama ran in 2008 on a pledge to end the war in Afghanistan and bring all troops home. Throughout the Obama years, polling data consistently showed that huge majorities of Democrats favored a withdrawal of all troops from Afghanistan.

With Trump rather than Obama now advocating troop withdrawal from Afghanistan, all of this has changed. The new polling data shows far more support for troop withdrawal among Republicans and independents, while Democrats are now split or even opposed. Among 2016 Trump voters, there is massive support for withdrawal: 81 percent to 11 percent; Clinton voters, however, oppose the removal of troops from Afghanistan by a margin of 37 percent in favor and 47 percent opposed.

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They don’t understand AOC anymore then they understood Trump.

Exasperated Democrats Try To Rein In Ocasio-Cortez (Pol.)

Alexandria Ocasio-Cortez is already making enemies in the House Democratic Caucus — and some of its members are mounting an operation to bring the anti-establishment, democratic socialist with 2.2 million Twitter followers into the fold. The effort, described by nearly 20 lawmakers and aides, is part carrot, part stick: Some lawmakers with ties to Ocasio-Cortez are hoping to coax her into using her star power to unite Democrats and turn her fire on Republicans. Others simultaneously warn Ocasio-Cortez is destined for a lonely, ineffectual career in Congress if she continues to treat her own party as the enemy.

“I’m sure Ms. Cortez means well, but there’s almost an outstanding rule: Don’t attack your own people,” said Rep. Emanuel Cleaver (D-Mo.). “We just don’t need sniping in our Democratic Caucus.” Incumbent Democrats are most annoyed by Ocasio-Cortez’s threat to back primary opponents against members of their ranks she deems too moderate. But their frustration goes beyond that: Democratic leaders are upset that she railed against their new set of House rules on Twitter the first week of the new Congress. Rank and file are peeved that there’s a grassroots movement to try to win her a top committee post they feel she doesn’t deserve.

Even some progressives who admire AOC, as she’s nicknamed, told POLITICO that they worry she’s not using her notoriety effectively. “She needs to decide: Does she want to be an effective legislator or just continue being a Twitter star?” said one House Democrat who’s in lockstep with Ocasio Cortez’s ideology. “There’s a difference between being an activist and a lawmaker in Congress.” It’s an open question whether Ocasio-Cortez can be checked. She’s barely been in Congress a week and is better known than almost any other House member other than Nancy Pelosi and John Lewis. A media throng follows her every move, and she can command a national audience practically at will.

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Yes, we want fewer reserves, but don’t worry, we’ll just pay you more interest on what remains, so you’re fine.

Fed Paid Banks $38.5 Billion in Interest on “Reserves” in 2018 (WS)

The Fed reported its preliminary results this morning for the year 2018. The headline is that it sent $65.4 billion of its profits to the US Treasury Department in 2018, and that this amount had plunged by 18.5% from the remittances, as they’re called, in 2017, and by 44.1% from the peak of $117 billion in 2015. The Fed earns interest income on the huge pile of securities it holds. After covering operating expenses, interest expenses, and some other items, it is required to remit the rest to the Treasury Department – to the taxpayer. Therefore, the amounts in interest expense the Fed pays the banks on their “Excess Reserves” and “Required Reserves” comes out of the taxpayer’s pocket and its transferred to the banks to become bank profits, and thereby bank executive bonuses and stock holder dividends, funded by the dear taxpayers. And this amount was huge in 2018: $38.5 billion!

The $38.5 billion: This is what the Fed paid US banks and foreign banks in the US on their Excess Reserves and Required Reserves on deposit at the Fed. • Required Reserves are the amounts that banks have to keep on deposit at the Fed for liquidity purposes. This is relatively small, $192 billion at year-end, and was roughly flat in 2018. • Excess Reserves are the amounts that banks voluntarily deposit at the Fed to earn risk-free income. The amount peaked in September 2014 at $2.7 trillion and has since fallen to $1.5 trillion. Of that $1.2 trillion drop, $510 billion occurred in 2018.

The interest rate that the Fed paid on both types of reserves was 1.5% at the beginning of 2018, and was raised four times with each rate hike during the year, but less than the 1/4-point hikes of the Fed’s target range for the federal funds rate. At its December meeting, the Fed raised this rate to 2.4%. So the balances of Excess Reserves have plunged, and the interest rate the Fed pays on those reserve balances has jumped. Both factors combined caused the Fed to pay a record $38.5 billion to US banks and foreign banks in the US.

Here is the sordid history of this annual wealth transfer from taxpayers to the banks via the Fed:

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Wolf Richter has much more on this topic in the article, I just wanted to point out that, counterintuitively perhaps, the amount of US currency in circulation has surged. To the mattresses!

Fed Balance Sheet and Currency In Circulation (WS)

The Fed’s balance sheet would be “substantially smaller” after the Fed gets done with its QE unwind, Fed Chairman Jerome Powell said on Thursday. [..] “Don’t know the exact level. That would depend really on the public’s appetite for our liabilities, specifically currency. To us, that’s a liability. And the public has a large appetite for currency….” “So it will be substantially smaller than it is now,” he said. “But nowhere near what it was before, and the reason is, currency was well less than $1 trillion before quantitative easing started and now is moving up toward $2 trillion.” The line item on the Fed’s balance sheet called “currency in circulation” is composed of Federal Reserve Notes – as it says on the wrinkled and thinning wad of twenties in my pocket — and coins. In other words, hard cash.

And as Powell pointed out, this is a liability on the Fed’s balance sheet, not an asset. The Treasury Department produces the bills and coins. But the Fed manages the amounts in circulation via the banking system. Currency in circulation grows when there is a lot of demand for paper-dollar cash. There must always be enough paper-dollars in the banking system to satisfy the demand by customers for the physical dollars. And as Powell pointed out, “the public has a large appetite for currency.” This demand for dollars is on a global basis. People globally are hoarding this stuff, and some countries use it as their primary currency, or as an alternate currency alongside their own trashed currency. When the Financial Crisis set in, folks started hoarding more of it, and demand increased at a steeper rate. This chart shows currency in circulation. The amount more than doubled from $830 billion in February 2008 to $1.72 trillion now:

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$2000 for a phone. Get real. It’s a dead business model.

Retailers Are Slashing iPhone Prices Across China (CNBC)

Apple’s latest iPhone models are facing huge discounts in China as retailers try to sell the struggling devices. That comes as the top-of-the-line Apple smartphones have posted poor China sales on what experts say are too-high prices for the world’s largest smartphone market and a lack of innovative features compared to local competitors like Huawei. The technology giant itself acknowledged earlier this month that unexpectedly low sales in the Chinese market would likely lead to worse-than-anticipated first quarter revenues. One of the most recent iPhone cost cuts in the country came from Suning, a large Chinese retailer, which changed the price of the 128GB version of the iPhone XR from 6,999 yuan ($1,036) to 5,799 yuan ($858) — a 1,200 yuan ($178) discount.

Other third-party sellers on the site had the devices for even cheaper, offering flash sales to try to unload iPhones.[..] Apple’s issues in China are down to two major factors, experts and local consumers say: It got its pricing wrong, and it has failed to introduce features to excite consumers in a forward-thinking technology market. Now, analysts said, competitors have taken market share in the premium smartphone space. In a public letter released on Jan. 2, Apple CEO Tim Cook blamed the slowing Chinese economy and rising trade tensions with the U.S. as one of the key reasons for lowering first quarter sales guidance. Experts, however, told CNBC that much of the iPhone’s China problem comes down to the company setting the wrong prices.

[..] “The trade war is background noise and more of a scapegoat excuse with the real issues being iPhone XR demand and a mispriced product in a competitive Chinese market,” Daniel Ives, managing director of equity research at Wedbush Securities, told CNBC by email. “It’s time for Cook and Apple to look in the mirror, take their medicine around pricing and execution and move forward with the biggest installed base in the world to turn this ship around from this dark chapter in Cupertino,” he added.

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Of course, when your new phones don’t sell, you launch more new phones. Now with 3 cameras. Where’s Steve Jobs?

Apple Plans To Launch Three New iPhones This Year (CNBC)

Apple plans to unveil three new iPhone models this year, including a successor to the XR, The Wall Street Journal reported Friday. The tech giant’s new phones will include new camera features, the Journal reported, citing people familiar with the situation. The higher-end model will be fitted with a triple rear camera, while the lower-end models will have a double rear camera, the report said. One will feature a liquid-crystal display, the display that Apple’s lower-end iPhone XR model comes with. The XR has reportedly struggled to win over Chinese consumers. Apple recently lowered its revenue guidance for the first quarter, alarming investors, and cited lower-than-expected iPhone revenue “primarily in Greater China” as one of the main reasons behind its warning.

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Yeah, they’re not selling enough cars, i.e. they don’t create enough pollution: “What I find particularly unsettling are psychological factors. The whole diesel discussion, combined with the problems in the auto industry, increases uncertainty..”

Unclear How Deep, Lasting Germany’s Economic Problems Are: ECB’s Nowotny (R.)

It is unclear if Germany’s recent economic setbacks are a one-off or a more lasting phenomenon caused by structural problems, particularly in its car industry, European Central Bank policymaker Ewald Nowotny said in remarks published on Saturday. Struggling to adjust to new emission testing standards, Germany’s car manufacturing contracted in the third quarter, dragging overall economic growth into negative territory and raising fears that Europe’s five-year-old growth run may be coming to a premature end. The Bundesbank said in a monthly economic report last month that Germany’s dominant car industry may take longer than previously thought to recover from a slump, weighing on growth in the euro zone’s biggest economy.

“The most important economic question for Europe is whether these are one-off slowdowns or whether structural factors are behind them,” ECB’s Governing Council member Nowotny said in an interview with Austrian newspaper Der Standard, discussing the prospect of a second quarter of negative growth in Germany. “The fear is that particularly in the auto industry we have lasting changes that affect Germany especially,” said Nowotny, who is also governor of the Austrian National Bank. The Bundesbank said in its report last month that while a quick rebound in the auto sector had been forecast, fresh data was disappointing those hopes.

It added that the slump was exacerbated by an overall deterioration in sentiment as well as uncertainty over the future of diesel cars as cities contemplate bans to reduce pollution. “What I find particularly unsettling are psychological factors. The whole diesel discussion, combined with the problems in the auto industry, increases uncertainty,” Nowotny said. “If people defer the purchase of a car by just half a year, that causes a vast fall in demand. There would be lasting and dramatic consequences if there were real structural collapses in the export- and machinery-oriented economy. Germany could become vulnerable,” he said.

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Macron et al are clueless. They keep trying to separate the protesters from the ‘real French’, but they’re the same people.

France Vows Tough Response As New ‘Yellow Vest’ Demos Loom (AFP)

France braced for a fresh round of “yellow vest” protests across the country on Saturday, with the authorities vowing zero tolerance for violence after weekly scenes of rioting and vandalism in Paris and other cities over the past two months. [..] “Those who are calling to demonstrate tomorrow know there will be violence, and therefore they are in part responsible,” Interior Minister Christophe Castaner said in a Facebook interview Friday with Brut, a digital news site favoured by many yellow vests. “Those who think that, a few thousand people, can make us question our institutions, are wrong,” Castaner added later Friday.

Far-right National Rally leader Marine Le Pen, who has presented her party as the longstanding expression of many yellow vest demands, condemned the government’s reaction as “disturbing”. “To accuse all protesters of ‘complicity’ with the thugs: here is a new verbal provocation and legal ineptitude waiting to undermine our rule of law,” she wrote on Twitter. [..] Macron has called for a national debate on voters’ grievances, beginning next week, hoping to sate demands for more of a say in national law-making and tamp down the protesters’ anger. But the process risks being hobbled by record levels of distrust towards politicians and representatives of the state.

A poll by the respected Cevipof political sciences institute released Friday showed 77 percent of respondents thought politicians inspired “distrust”, “disgust” or “boredom”. And it’s uncertain if the public consultations will be enough, with many protesters calling for Macron’s resignation or an immediate referendum on his presidency. “I had some hope with this ‘great debate’, but it’s not looking good because they don’t want to talk about taxes, and they’re the ones who are deciding the subjects,” said Patrick Lerest, a 62-year-old protester in Nemours, southeast of Paris. “I want us to have a real debate,” he said.

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Damning no matter the outcome of the suit. Do no evil. Where is #MeToo?

Google Sued For Covering Up $90m Payout To Ex-Exec Accused Of Sexcrimes (AFP)

Google’s board of directors is being sued for approving a $90m (£70m) payout to a former executive and covering up allegations including that he forced a female employee to perform oral sex. The lawsuit, brought by shareholder James Martin, claims directors made the payment to stop details of the allegations becoming public. It also cites examples of alleged sexual misconduct by other former employees which Google directors kept private. Google’s founders Larry Page and Sergey Brin allowed Mr Rubin to “quietly resign” even after an internal investigation had found the allegations against him credible, the complaint filed in California alleges.

“The directors’ wrongful conduct allowed the illegal conduct to proliferate and continue,” the complaint states. “As such, members of Alphabet’s board were knowing and direct enablers of the sexual harassment and discrimination.” The lawsuit also cites allegations that while Mr Rubin was at Google he engaged in “human sex trafficking – paying hundreds of thousands of dollars to women to be, in Rubin’s own words, ‘owned’ by him”. Mr Page, Mr Brin and other top executives failed in their duty by allowing harassment to occur at their company, approving excessive severance payments and keeping details of the allegations private, the lawsuit alleges. David Drummond, the chief legal officer of Google’s parent company Alphabet, and investor Ram Shriram are named among others in the court filings.

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Why there’s Brexit.

My Walk To Work Shows Me How Homelessness Is Transforming Britain (G.)

Before Christmas, the housing secretary James Brokenshire insisted that the fact the number of people sleeping rough has more than doubled since 2010 has nothing to do with Tory policies. Rather, he said, it was due to drug addiction, family breakdown and the number of foreigners. Brokenshire has since rowed back from this palpably ludicrous claim, admitting that Tories “need to ask ourselves some very hard questions”. Anyone who has seen this for themselves – which is to say, everyone who lives in a British city – could have told him that, because what has really changed is not just the number of homeless people, but who these homeless people are.

At Shelter from the Storm, my local shelter, the co-founder Sheila Scott told me last week that, when she started a decade ago, the people who stayed were “town-square drinkers” and foreign itinerants. Now, half the inhabitants have regular jobs and three-quarters are British. Some leave every night at 2am to work at Amazon factories; some are Uber drivers who took out too many loans to buy their car to do their job. Most have been driven out of their properties by private landlords – and you have only to look at Caledonian Road to see the damage such landlords can do. Many of the shopkeepers have been driven out by what one described to me as “deliberately high rents”, their stores turned into expensive flats.

One private landlord, Andrew Panayi, owns 200 properties in the area, and even though he has been fined for renting substandard properties (one tenant called them “worse than prison cells”), he still keeps a tight grip on the street. These landlords exploit the real problem, which is a lack of social housing and the decimation of social services. Scott says councils now send people directly to her, as they have nowhere else to put them. But they will soon have to send them to a new address: Shelter from the Storm is moving, because a property developer has bought the lot they currently stand on; like so many of the people the charity helps, it is being pushed out of the area.

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Jan 112019
 
 January 11, 2019  Posted by at 10:16 am Finance Tagged with: , , , , , , , , , , , , ,  


Hieronymous Bosch The Haywain Triptych c.1516 (click to enlarge)

 

The Stock Market Just Got Off To Its Best Start In 13 Years (MW)
78% of US Workers Live Paycheck To Paycheck (CNBC)
Fed’s Powell Says He Is ‘Very Worried’ About Growing Amount Of US Debt (CNBC)
Trump Digs In As Shutdown Continues (BBC)
Michael Cohen To Testify Publicly Before Congress In February (G.)
China Set To Lower GDP Growth Target In 2019 (R.)
Can The Chinese Consumer Be Resurrected? (Jim O’Neill)
Why I Asked May If She Is On The Side Of Putin Or The People (Moran)
May’s Brexit Deal ‘Threat To National Security’ – Former MI6 Chief (Ind.)
May Begs Unions To Help Salvage Her Brexit Deal (Ind.)
US Defenses No Match For Russian Hypersonic Missiles – Retired US General (RT)
Bases, Bases, Everywhere… Except in the Pentagon’s Report (Turse)
Oceans Warming Faster Than Expected, Set Heat Record In 2018 (R.)
Julian Assange’s Living Conditions Deteriorate (Cassandra Fairbanks)

 

 

And there’s still people who claim the stock market reflects the economy.

The Stock Market Just Got Off To Its Best Start In 13 Years (MW)

Things are coming up roses in the stock market, lately. The Dow Jones Industrial Average, S&P 500 index and Nasdaq Composite Index are off to their best starts to a year since 2006 after a powerful series of gains. The Dow closed up 0.5% on Thursday, pushing its year-to-date gain to 2.89%, which would mark the best first seven days to a year since 2006, when stocks burst 3.04% higher over the same period. The S&P 500 rose 0.5% on the day and has returned 3.58% thus far this year, its best start since a 3.68% gain 13 years ago, while the Nasdaq Composite booked a 0.4% gain, enough for a 5.3% year-to-date advance, representing its best seven-session to kick off a year since its 5.72% rise also in 2006.

A late-session rally helped to solidify Thursday’s gains, coming after investors digested comments from Federal Reserve Chairman Jerome Powell, who pronounced at the Economic Club in Washington on Thursday afternoon that the economy is in good health, while adding that the central bank would be cognizant of stresses to financial markets amid rate hikes. The comments were a reiteration of Powell’s remarks last week during a broad panel discussion of current and former Fed bosses that helped to placate anxious investors and reverse what was shaping up to be another dismal year.

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Why is everybody quoting a 2017 report?

78% of US Workers Live Paycheck To Paycheck (CNBC)

The partial government shutdown, which began Dec. 22, has now stretched well into the new year. President Donald Trump said Friday that it would continue for “months or even years” until he receives the requested $5 billion in funding for a border wall. The shutdown has left approximately 800,000 federal workers in financial limbo. Around 420,000 “essential” employees are working without pay, while another 380,000 have been ordered to stay home, according to calculations provided to CNBC by Paul Light, a professor of public service at New York University. In some cases, the furloughs have forced government employees to tap into their savings, rely on credit cards or crowdsource funds to make ends meet.

Government workers are far from alone in feeling stressed about not getting paid. Nearly 80% of American workers (78%) say they’re living paycheck to paycheck, according to a 2017 report by employment website CareerBuilder. Women are particularly vulnerable: 81% of them report living paycheck to paycheck, compared with 75% of men. Tony Reardon, president of the National Treasury Employees Union, tells CNBC that the group has heard from hundreds of frantic federal employees. “They’re scared,” he says. “They don’t know how they’re going to put food on the table.” Various #ShutdownStories making that point have gone viral on Twitter.

It’s not merely those earning low wages who are struggling. CareerBuilder reports that nearly 10% of Americans with salaries of $100,000 or more live paycheck to paycheck as well. That means that many workers aren’t able to put anything significant into savings. More than 50% of respondents say that they save less than $100 per month. And a comparable 2017 survey from GOBankingRates found that 61% of Americans don’t have enough money in an emergency fund to cover six months’ worth of expenses. [..] more than 70% of all respondents say that they’re in debt, and a quarter of workers say they weren’t able to make ends meet at the end of every month of the past year.

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Which his own Fed has encouraged like nobody else could.

Fed’s Powell Says He Is ‘Very Worried’ About Growing Amount Of US Debt (CNBC)

Federal Reserve Chairman Jerome Powell is concerned about the ballooning amount of United States debt. “I’m very worried about it,” Powell said at The Economic Club of Washington, D.C. “From the Fed’s standpoint, we’re really looking at a business cycle length: that’s our frame of reference. The long-run fiscal, nonsustainability of the U.S. federal government isn’t really something that plays into the medium term that is relevant for our policy decisions.” However, “it’s a long-run issue that we definitely need to face, and ultimately, will have no choice but to face,” he added. The Fed chief’s comments came as the annual U.S. deficit reaches new sustained highs above $1 trillion, a fact many economists worry could spell trouble for future generations.

Annual deficits have topped $1 trillion before, but never during a time of sustained economic growth like now, raising concern about what would happen if a recession hits. Total U.S. debt is about $21.9 trillion, of which $16 trillion is owed by the public. In part because of continued rate increases under Powell, the interest cost on that debt could start to become a bigger and bigger burden. Wall Street’s “bond king” and respected financial prognosticator Jeffrey Gundlach said in December that the Fed seems to be on a “suicide mission,” raising rates while the government deficit increases as a share of GDP. Normally when the deficit is expanding, the Fed would be lowering interest rates.

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View from the MSM: Trump digs in, not the Dems.

Trump Digs In As Shutdown Continues (BBC)

US President Donald Trump has threatened again to declare a national emergency to fund a border wall without Congress’s approval. “I have the absolute right to declare a national emergency,” he told reporters. The White House has denied reports it is looking at diverting funds set aside for reconstruction projects. A political row over funding the wall has left the US government partially shutdown for 20 days, leaving about 800,000 federal employees without pay. President Trump has refused to sign legislation to fund and reopen the government if it does not include $5.7bn for a physical barrier along the US-Mexico border.

But budget talks have come to a standstill as Democrats – who control the House of Representatives – refuse to give him the money. Republican leaders insist the party stands behind the president, although some Republican lawmakers have spoken out in favour of ending the shutdown. On Thursday, Mr Trump visited a border patrol station in McAllen, in the Rio Grande Valley of Texas. He said that if Congress did not approve funding for the wall, he would “probably… I would almost say definitely” declare a national emergency to bypass lawmakers. But such a move is likely to face legal challenges. The money would also have to come from funds allocated by Congress for other purposes – which some Republicans would also oppose.

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Planning a huge media spectacle. Imagine all the readers and viewers… Trump keeps on giving. Bread and circuses it is.

Michael Cohen To Testify Publicly Before Congress In February (G.)

Donald Trump’s longtime lawyer and aide Michael Cohen says he has accepted an invitation from a top House Democrat to testify publicly before Congress next month. His testimony before the House oversight and reform committee on 7 February will be the first major public oversight hearing for Democrats, who have promised greater scrutiny of Trump after winning control of the House in the 2018 midterm elections. Cohen said in a statement: “I look forward to having the privilege of being afforded a platform with which to give a full and credible account of the events which have transpired.”

The New Yorker, who is to begin a three-year prison sentence in March, is a pivotal figure in investigations by the special counsel Robert Mueller into potential collusion between Russia and the Trump campaign, and by federal prosecutors in New York into campaign finance violations related to hush-money payments to two women who say they had sex with Trump. Elijah Cummings, the committee’s chair, said the panel would avoid interfering with Mueller’s investigation. “We have no interest in inappropriately interfering with any ongoing criminal investigations, and to that end, we are in the process of consulting with Special Counsel Mueller’s office,” Cummings said in a statement.

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But not to the 1.67% predicted by professor Xiang Songzuo, I’m sure.

China Set To Lower GDP Growth Target In 2019 (R.)

China plans to set a lower economic growth target of 6% to 6.5% in 2019 compared with last year’s target of “around” 6.5%, policy sources told Reuters, as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand. The proposed target, to be unveiled at the annual parliamentary session in March, was endorsed by top leaders at the annual closed-door Central Economic Work Conference in mid-December, according to four sources with knowledge of the meeting’s outcome. Data later this month is expected to show the Chinese economy grew around 6.6% in 2018 — the weakest since 1990. Analysts are forecasting a further loss of momentum this year before policy support steps begin to kick in.

“It’s very difficult for growth to exceed 6.5% (this year), and there could be trouble if growth dips below 6%,” said one source who requested anonymity due to the sensitivity of the matter. As the world’s second-largest economy loses steam, China’s top leaders are closely watching employment levels as factories could be forced to shed workers amid a trade war with the United States, despite a more resilient services sector, policy insiders said. Growth of about 6.2% is needed in the next two years to meet the ruling Communist Party’s longstanding goal of doubling gross domestic product and incomes in the decade to 2020, and to turn China into a “modestly prosperous” nation. [..] Local governments could be allowed to issue up to 2 trillion yuan worth of special bonds in 2019, up from 1.35 trillion yuan last year, they said.

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Goldman Sachs to the -image- rescue.

Can The Chinese Consumer Be Resurrected? (Jim O’Neill)

Last week, Apple published a letter to shareholders revising down its expected revenues for the first quarter of 2019, citing an economic slowdown in China, which has become an increasingly important market for iPhone, Mac, and iPad sales. Though tech industry analysts are debating whether internal dynamics at Apple might also explain the change, the company’s new guidance nonetheless adds to the evidence that Chinese consumption is slowing. A sustained decline in Chinese consumption would be even more worrying than the current US-China trade dispute.

Given that US trade policies and other external influences should not have much effect on domestic Chinese spending, the problem may be more deeply rooted in China’s economic model. To understand what is at stake, consider all that has changed just within the past decade. At the end of 2010, domestic consumption accounted for around 35.6% of Chinese GDP, according to official Chinese data. That was remarkably low compared to most other economies, not least the US, where consumption accounted for almost 70% of GDP. In nominal dollar terms, China’s domestic consumption thus was around $2.2tn, or almost five times lower than that of the US ($10.5tn).

Yet China’s high overall growth rate meant that Chinese consumers could potentially play a much larger role, with far-reaching benefits for global brands such as Apple, BMW, Burberry, Ford, and many others. As of 2017, Chinese consumption as a share of GDP had risen to 39.1%, representing just over $5tn in nominal dollar terms. That is an increase of almost $3tn in just seven years. And though Chinese consumer spending still lagged far behind that of the US ($13.5tn in 2017), the gap has narrowed. If China were to continue on the same trajectory in terms of nominal GDP growth and domestic consumption, its consumer spending could increase by another $2tn by 2020, putting it at around half that of the US. Chinese consumers would be more relevant to the global economy than anyone except Americans.

Read more …

From time to time you wonder what’s more hysterical, the Brexit mayhem or the UK’s fabricated Russophobia. This is pretty unbelievable, but it’s become normal.

Layla Moran is a Liberal Democrat MP for Oxford West and Abingdon.

Why I Asked May If She Is On The Side Of Putin Or The People (Moran)

For all the farcical invoking of Blitz spirit, Brexit isn’t merely an absurdist experiment in English nationalist nostalgia – it is the most audacious example yet of a futuristic Russian nationalism that seeks to divide and rule Europe. If we can be judged by our friends then Brexit has no stauncher ally than Vladimir Putin. After all, Donald Trump has proved unreliable. But Putin? It is hard to think of anyone who has done more for the cause (and that is not to take anything away from the years of Brexit monologues by Tory MP Bill Cash). Russian bot farms have been exposed as having supported the Leave campaign. This comes on top of allegations of iffy Russian money funding Brexit campaigns, and Arron Banks’ almost comical inability to explain his donations to Leave.

Comical, that is, if his scarcely thought through Brexit wasn’t driving Britain to what Hilary Clinton has called the single biggest act of deliberate self-harm a nation has ever committed. As if Russian interference in the original referendum was not shocking enough, it is still going on. The Channel 4 drama Brexit: The Uncivil War might have relegated Russian involvement to the briefest postscript, but in reality Putin is still in the trenches fighting for a hard Brexit. At a recent press conference Putin attacked the idea of a referendum on the deal, claiming the original result should be respected. Oh, the irony! Putin, the arch kleptocrat, giving advice on democracy. “Don’t steal Brexit,” he seemed to demand, while probably stealing (sorry, being gifted) another superyacht.

It should have been sufficiently chilling to make even Boris Johnson pause for thought. And all while using the Brexiteer message script of delivering the will of the people. As any student of Russian history could tell you, “the people” are often invoked by the Kremlin, including when justifying the mass murder of innocent people. But rarely does the Kremlin actually ask “the people” for anything so radical as an opinion. For Putin, “the people” are to be manipulated and even killed for his own ends. And Putin’s ends are clear. He wants a weak and divided EU. Ultimately, he seeks to break it up, with the Eastern bloc – brought into the European fold by Margaret Thatcher’s single market – dragged back into the lair of the Russian bear.

Read more …

And why not? If all else fails, scare them.

May’s Brexit Deal ‘Threat To National Security’ – Former MI6 Chief (Ind.)

The former head of MI6 has warned Theresa May’s Brexit deal will “threaten the national security of the country”, in a call for Tory MPs to reject it. The agreement would “place control of aspects of our national security in foreign hands”, claims Sir Richard Dearlove, in an extraordinary letter to Conservative associations. It has also been signed by Lord Guthrie, a former chief of the defence staff, in a bid to stiffen grassroots resistance, ahead of next Tuesday’s vote.= Sir Richard and Lord Guthrie, who are both prominent Leave supporters, write: “Please ensure that your MP votes against this bad agreement.” The prime minister, a former home secretary, has insisted her agreement would protect national security by retaining existing cooperation arrangements during the 21-month transition.

However, she was forced to acknowledge the UK was likely to lose direct access to vital EU security databases after 2012, under the proposed long-term arrangements. In their letter, the ex-security chiefs argue the deal is dangerous because it would weaken membership of Nato and existing “close” defence and intelligence ties with the US. “This withdrawal agreement, if not defeated, will threaten the national security of the country in fundamental ways,” it says. Downing Street hit back immediately, insisting the letter was “completely wrong” and that the Brexit deal offered the broadest security agreement the EU has with any of its partners. But both sides of the Brexit divide seized on the intervention, arch-Brexiteer Owen Paterson calling it a “devastating warning”.

Read more …

After Tuesday all bets are off.

May Begs Unions To Help Salvage Her Brexit Deal (Ind.)

Theresa May has called the leaders of Britain’s biggest unions for the first time since becoming prime minister in a desperate bid to find backing for her Brexit deal. The calls to Unite leader Len McCluskey and the GMB’s Tim Roache – whose unions are Jeremy Corbyn’s biggest financial backers – mark just how far she is being forced to go in the hope of finding support for the deal expected to be rejected by MPs next week. She was scorned by second referendum-backing Mr Roache, who joked after his call that he was “glad the prime minister finally picked up the phone”. The unprecedented move came as she also sought to convince Labour MPs to back her by promising new commitments to maintain workers’ rights in line with EU standards after Brexit.

But expectations that she is heading for a heavy defeat on Tuesday simply grew further, with some estimates suggesting that opposition has actually grown since she delayed the vote on her deal in December. Capitalising on the deep Tory divisions, Mr Corbyn instead invited Conservative MPs to back a motion of no confidence in the government which he is promising to table if Ms May’s plans are defeated. Downing Street confirmed the calls to Mr Roache, whose union has 620,000 members, and Mr McCluskey, representing more than 1.4 million, and admitted it was the first time she had spoken to either of them since her arrival at No 10. The Independent understands the prime minister also attempted to call Dave Prentis, leader of Unison which also has some 1.4 million members, but could not get through because Mr Prentis was travelling.

Read more …

Click here for the original Hill article.

US Defenses No Match For Russian Hypersonic Missiles – Retired US General (RT)

A retired general and chief of staff has warned that the US’ missile defense systems are “simply incapable” of stopping the latest generation of Russian hypersonic missiles – some of which fly at 27 times the speed of sound. Now retired, Maj. Gen. Howard ‘Dallas’ Thompson was once Chief of Staff at US Northern Command in Ohio. In a column published by The Hill on Thursday, Thompson argues that military leaders have neglected to develop proper defenses against the hypersonic threat. There have been some calls for the US to pursue hypersonic weapons in defense policy circles, but America has lagged behind China – which conducted more tests in the last year than the US has is a decade – and Russia, which successfully tested such a missile in December. The ‘Avangard’ missile flew at Mach 27, and will be deployed in 2019.

At present, the US Missile Defense Agency’s sensors and radars are designed for one purpose: to counter an intercontinental ballistic missile (ICBM) fired by an adversary like Iran or North Korea. ICBMs have a predictable flight path, and the US’ Patriot and Terminal High-Altitude Area Defense (THAAD) batteries stand a reasonable chance of intercepting and destroying any incoming missiles. Not so with hypersonics. Missiles like ‘Avangard’ fly low and fast, evading radar detection. They can also engage in evasive maneuvers to dodge surface-to-air rockets or missiles, further lowering the chances of a successful interception.

“The stark reality is that our current missile defense systems, as well as our operational mindset, are simply incapable versus this threat,” Thompson wrote. The retired General’s words are backed up by a recent report from the Government Accountability Office, which concluded that there are “no existing countermeasures” against the threat. Thompson claims that a massive collaborative program between the Department of Defense and arms companies is needed to counter Russian and Chinese advances. “Countering this threat will require U.S. investment in an extensive defensive architecture,” he wrote. “…a highly robust ‘family of systems’ that nonetheless must be envisioned, designed, developed and deployed in a completely holistic manner.”

Read more …

800 bases, of which 300 are unreported?!

Bases, Bases, Everywhere… Except in the Pentagon’s Report (Turse)

Within hours of President Trump’s announcement of a withdrawal of U.S. forces from Syria, equipment at that base was already being inventoried for removal. And just like that, arguably the most important American garrison in Syria was (maybe) being struck from the Pentagon’s books — except, as it happens, al-Tanf was never actually on the Pentagon’s books. Opened in 2015 and, until recently, home to hundreds of U.S. troops, it was one of the many military bases that exist somewhere between light and shadow, an acknowledged foreign outpost that somehow never actually made it onto the Pentagon’s official inventory of bases. Officially, the Department of Defense (DoD) maintains 4,775 “sites,” spread across all 50 states, eight U.S. territories, and 45 foreign countries.

A total of 514 of these outposts are located overseas, according to the Pentagon’s worldwide property portfolio. Just to start down a long list, these include bases on the Indian Ocean island of Diego Garcia, in Djibouti on the Horn of Africa, as well as in Peru and Portugal, the United Arab Emirates, and the United Kingdom. But the most recent version of that portfolio, issued in early 2018 and known as the Base Structure Report (BSR), doesn’t include any mention of al-Tanf. Or, for that matter, any other base in Syria. Or Iraq. Or Afghanistan. Or Niger. Or Tunisia. Or Cameroon. Or Somalia. Or any number of locales where such military outposts are known to exist and even, unlike in Syria, to be expanding.

[..] According to David Vine, author of Base Nation: How U.S. Military Bases Abroad Harm America and the World, there could be hundreds of similar off-the-books bases around the world. “The missing sites are a reflection of the lack of transparency involved in the system of what I still estimate to be around 800 U.S. bases outside the 50 states and Washington, D.C., that have been encircling the globe since World War II,” says Vine

Read more …

The reporting on the issue seems broken.

Oceans Warming Faster Than Expected, Set Heat Record In 2018 (R.)

The oceans are warming faster than previously estimated, setting a new temperature record in 2018 in a trend that is damaging marine life, scientists said on Thursday. New measurements, aided by an international network of 3,900 floats deployed in the oceans since 2000, showed more warming since 1971 than calculated by the latest U.N. assessment of climate change in 2013, they said. And “observational records of ocean heat content show that ocean warming is accelerating,” the authors in China and the United States wrote in the journal Science of ocean waters down to 2,000 metres (6,600 ft). Man-made greenhouse gas emissions are warming the atmosphere, according to the overwhelming majority of climate scientists, and a large part of the heat gets absorbed by the oceans.

That in turn is forcing fish to flee to cooler waters. “Global warming is here, and has major consequences already. There is no doubt, none!” the authors wrote in a statement. Almost 200 nations plan to phase out fossil fuels this century under the 2015 Paris climate agreement to limit warming. [..] Data due for publication next week will show “2018 was the warmest year on record for the global ocean, surpassing 2017,” said lead author Lijing Cheng, of the Institute of Atmospheric Physics at the Chinese Academy of Sciences. He told Reuters that records for ocean warming had been broken almost yearly since 2000. Overall, temperatures in the ocean down to 2,000 metres rose about 0.1 degree Celsius (0.18F) from 1971-2010, he said.

Read more …

Another issue on which reporting seems broken. We’re not getting anywhere.

Julian Assange’s Living Conditions Deteriorate (Cassandra Fairbanks)

I last visited Assange in March, days before the Ecuadorians placed the award-winning journalist in isolation for allegedly violating a draconian ban on all public political comments. [..] In order to visit the publisher last year, I simply organized it with him and his lawyer and went. This time I was required to provide details about my social media, my employer, and my reason for visiting in advance of my arrival and hope to be approved. If I wanted to bring my cell phone, I would have had to provide the brand, model, serial number, IMEI number and telephone number. Providing these details to a foreign nation with extreme surveillance seemed unwise, so I left it behind.

[..] Currently, Assange cannot even have a simple visit with a friend without it being monitored by some shadowy state actor. It’s like a scene from the Stasi spy drama The Lives of Others. While Ecuador presents this surveillance operation as a mission to “protect and support” Assange, this is contradicted by the fact that he isn’t even allowed to confidentially speak with a reporter and friend without being recorded. In May, the Guardian reported that there are “extraordinary reports” from these spies that include daily logs of Assange’s activities inside the embassy, even noting his “general mood.”

As John Pilger pointed out after his visit with Assange on New Year’s Eve, it could be any newspaper publisher or editor stuck in that embassy. For the crime of publishing journalism, Assange has not only had to give up his freedom, but also any semblance of privacy. It’s impossible to overstate how unsettling it feels to have multiple lenses pointed at you wherever you stand. Unable to speak privately, even with a noise machine attempting to muffle the microphones from picking up conversations, we resorted to passing notes. Assange is not only barred from sharing his views online under the new regulations — thanks to the constant surveillance, he can’t even do so among his friends in the embassy where he is arbitrarily detained.

If we value the principle of the freedom of speech — we must do something to stop this madness. While we do not know what Assange has been charged with by the U.S. as it remains under seal, we do know that it is related to his work as a publisher, the only publisher with a record of 100% accuracy. His dedication to truth is so profound that he has never once had to issue a correction or retraction.

Read more …

Jan 062019
 


Rembrandt van Rijn Man with a falcon on his wrist (possibly St. Bavo) 1661

 

This Fed thing just keeps going on, and it needs to stop. There is nothing in the discussion about the Federal Reserve these days that has any value other than it provides even more proof that the Fed has killed off the most essential elements of what once made the US economy function. All markets, stocks, bonds, housing markets, all price discovery, all murdered. No heartbeat. Pining for the fjords.

And instead of addressing that, and I’m not even talking about addressing fixing what is wrong, all I see is neverending stuff about Jay Powell using, or not using, terms such as “patient” or “accommodative”. Like any of it means anything coming from him and his ilk. Other than for making ‘investors’ a quick buck. Like a quick buck could ever trump the survival of entire market systems.

People discussing whether Jay Powell is doing a good job all miss the point. Because Powell should not be doing that job in the first place. The Fed should not have the power to manipulate the US economy anywhere near as much as it does. Because that power is perverting America like nothing else, and the US economy will never recover as long as the Fed holds that power. Is that clear enough? Do we understand that at least?

 

Powell apparently changed his tune Friday in order to let the mirage that the stock market has become, live another day. Almost literally a day, since it will come crumbling down no matter what he does, just a day or so later. It’s all some message hidden in his use of “patience” or “accommodative”. Nothing he does will have any effect in the medium or longer term, and he knows it.

The entire US economy today is about the quick buck. It’s about tomorrow morning only because nobody has the guts to look at 10 years from now. That makes Jay Powell and his whole Federistas staff worse than useless. It makes no difference if perhaps jobs are doing well; the pre-Powell Fed launched a bubble and that bubble will burst one day, a whole series of them will.

The only good thing he can do is get out of the way and let the markets be the markets, to let them discover prices by letting people interact with people. But who exactly in the US has the power to make the Fed go away?

If you were one of the people who thought Jerome Powell was different from the rest of the Fed head honchos, the ones who preceded him, and I’m by no means just talking Greenspan, Bernanke and Yellen, you can now consider yourself corrected.

Powell is not going to keep hiking rates if a bunch of zombie markets keep falling like they did in December 2018, even though that’s just what we should want zombies to do, and even if hiking is the only way to resurrect a degree of normality and functionality into the markets.

Greenspan, Bernanke and Yellen, by the way, like Powell, just serve(d) to give the beast a human face, and one that the actual power brokers can hide behind. Over the past nigh 106 years since the blinded wagons rode to Jekyll island, the individual brokers may have died their natural deaths, but the institution they represented and served blindly, never did.

Seen in that light, the Fed was/is a kind of a forerunner of the 2010 Citizens United legislation that granted corporations the same rights as individual citizens. The -perverse- sense, that is, in which citizens do die, but corporations do not. So they are much more, and much more powerful, than citizens. Citizens Limited should have set a time limit, like the ones all corporations used to have, and the Fed should have had the shortest and strictest limit of all.

And you were worried about Brett Kavanaugh being named to the Supreme Court…

 

Just as an example of how wrong we get these things these days, Let’s turn to Sven Henrich’s piece in MarketWatch this weekend. Henrich is the founder and lead market strategist of NorthmanTrader.com, and g-d bless him, I’m sure he means well, but he gets things so upside down it’s not funny. He writes about that quick buck only, and doesn’t see the future.

It’s like Danielle DiMartino Booth writing on Twitter Friday: “In one word Powell CAVED to pressure 16 days after a taking hard line. The one thing he did do he should have done after last FOMC meeting was convey that the Fed would truly be data dependent going forward. “Gradual” needs to go. Winner: Stock Market. Loser: Powell’s Credibility”.

Danielle is great, and probably much smarter than I am, but she’s also a former Fed employee, and that brings a shade of blindness with it. What are the odds that she will state anytime soon that the Fed can only, possibly, make things worse for the American economy? I don’t think those odds are good.

Back to Sven Henrich. In essence, it’s ridiculous that a news outlet like MarketWatch still has the guts to publish a piece like his, or that someone like him has the guts to write it. Because it means there still are people, perhaps the author(s) and editors among them, who haven’t yet understood what has happened, even after 10 years and change. They are people who think the Fed can do right, that they can fix things if only they find the right policies.

We have to get rid of this illusion because the Fed will not, can not, fix what is wrong with the economy, or the ‘markets for that matter. Quite the contrary, the Fed can only make things worse. We know this because the only way the markets can be fixed, brought back to life indeed, is to let them function, and the only way they can function is when they can discover what things, stocks, bonds, homes etc., are worth, without some unit with unlimited financial power interrupting.

Central banks are founded for one reason only: to save banks from bankruptcy, invariably at the cost of society at large. They’ll bring down markets and societies just to make sure banks don’t go under. They’ll also, and even, do that when these banks have taken insane risks. It’s a battle societies can’t possibly win as long as central banks can raise unlimited amounts of ‘money’ and shove it into private banks. Ergo: societies can’t survive the existence of a central bank that serves the interests of its private banks.

Henrich:

 

Stock-Market Investors, It’s Time To Hear The Ugly Truth

For years critics of U.S. central-bank policy have been dismissed as Negative Nellies, but the ugly truth is staring us in the face: Stock-market advances remain a game of artificial liquidity and central-bank jawboning, not organic growth. And now the jig is up. As I’ve been saying for a long time: There is zero evidence that markets can make or sustain new highs without some sort of intervention on the side of central banks. None. Zero. Zilch. And don’t think this is hyperbole on my part. I will, of course, present evidence.

In March 2009 markets bottomed on the expansion of QE1 (quantitative easing, part one), which was introduced following the initial announcement in November 2008. Every major correction since then has been met with major central-bank interventions: QE2, Twist, QE3 and so on. When market tumbled in 2015 and 2016, global central banks embarked on the largest combined intervention effort in history. The sum: More than $5 trillion between 2016 and 2017, giving us a grand total of over $15 trillion, courtesy of the U.S. Federal Reserve, the European Central Bank and the Bank of Japan:

When did global central-bank balance sheets peak? Early 2018. When did global markets peak? January 2018. And don’t think the Fed was not still active in the jawboning business despite QE3 ending. After all, their official language remained “accommodative” and their interest-rate increase schedule was the slowest in history, cautious and tinkering so as not to upset the markets.

With tax cuts coming into the U.S. economy in early 2018, along with record buybacks, the markets at first ignored the beginning of QT (quantitative tightening), but then it all changed. And guess what changed? Two things. In September 2018, for the first time in 10 years, the U.S. central bank’s Federal Open Market Committee (FOMC) removed one little word from its policy stance: “accommodative.” And the Fed increased its QT program. When did U.S. markets peak? September 2018.

[..] don’t mistake this rally for anything but for what it really is: Central banks again coming to the rescue of stressed markets. Their action and words matter in heavily oversold markets. But the reality remains, artificial liquidity is coming out of these markets. [..] What’s the larger message here? Free-market price discovery would require a full accounting of market bubbles and the realities of structural problems, which remain unresolved. Central banks exist to prevent the consequences of excess to come to fruition and give license to politicians to avoid addressing structural problems.

 

is it $15 trillion, or is it 20, or 30? How much did China add to the total? And for what? How much of it has been invested in productivity? I bet you it’s not even 10%. The rest has just been wasted on a facade of a functioning economy. Those facades tend to get terribly expensive.

Western economies would have shrunk into negative GDP growth if not for the $15-20 trillion their central banks injected over the past decade. And that is seen, or rather presented, as something so terrible you got to do anything to prevent it from happening. As if it’s completely natural, and desirable, for an economy to grow forever.

It isn’t and it won’t happen, but keeping the illusion alive serves to allow the rich to put their riches in a safe place, to increase inequality and to prepare those who need it least to save most to ride out the storm they themselves are creating and deepening. And everyone else can go stuff themselves.

And sure, perhaps a central bank could have some function that benefits society. It’s just that none of them ever do, do they? Central banks benefit private banks, and since the latter have for some braindead reason been gifted with the power to issue our money, while we could have just as well done that ourselves, the circle is round and we ain’t in it.

No, the Fed doesn’t hide the ugly truth. The Fed is that ugly truth. And if we don’t get rid of it, it will get a lot uglier still before the entire edifice falls to pieces. This is not complicated stuff, that’s just what you’re made to believe. Nobody needs the Fed who doesn’t want to pervert markets and society, it is that simple.

 

 

Jan 062019
 
 January 6, 2019  Posted by at 10:25 am Finance Tagged with: , , , , , , , , , , , ,  


Paul Gauguin Osny, rue de Pontoise, Winter 1883

 

You Won’t Hear The Ugly Truth From The Fed (Henrich)
Yellow Vests Torch Cars In Chaos Of France’s 8th Weekend Of Clashes (Exp.)
If Corbyn Backs Brexit, He Faces Electoral Catastrophe (O.)
Brexit Deal Critics Risking Democracy – May (BBC)
EU Dashes May’s Hopes Of Landing Better Brexit Deal (Ind.)
Hackers Release 9/11 Papers, Say Future Leaks To Burn Down US Deep State (RT)
Documents Link UK Govt-Funded Integrity Initiative To Anti-Russia Narrative (RT)
Fears Grow In Africa That The Flood Of Funds From China Will Start To Ebb (O.)
It’s Nancy Pelosi’s Smile That Gets Me (Jim Kunstler)
Ex–NY Times Editor Jill Abramson Says Fox Took Her Words Out Of Context (AP)

 

 

Because the Fed IS the ugly truth.

It is sad that so many people still look at the Fed to save the “markets”. Sad and blind. Like nobody has any interest in having functioning markets and societies, and it’s all only about a quick buck.

You Won’t Hear The Ugly Truth From The Fed (Henrich)

In March 2009 markets bottomed on the expansion of QE1 (quantitative easing, part one), which was introduced following the initial announcement in November 2008. Every major correction since then has been met with major central-bank interventions: QE2, Twist, QE3 and so on. When market tumbled in 2015 and 2016, global central banks embarked on the largest combined intervention effort in history. The sum: More than $5 trillion between 2016 and 2017, giving us a grand total of over $15 trillion, courtesy of the U.S. Federal Reserve, the European Central Bank and the Bank of Japan:

When did global central-bank balance sheets peak? Early 2018. When did global markets peak? January 2018. And don’t think the Fed was not still active in the jawboning business despite QE3 ending. After all, their official language remained “accommodative” and their interest-rate increase schedule was the slowest in history, cautious and tinkering so as not to upset the markets. With tax cuts coming into the U.S. economy in early 2018, along with record buybacks, the markets at first ignored the beginning of QT (quantitative tightening), but then it all changed. And guess what changed? Two things. In September 2018, for the first time in 10 years, the U.S. central bank’s Federal Open Market Committee (FOMC) removed one little word from its policy stance: “accommodative.” And the Fed increased its QT program. When did U.S. markets peak? September 2018.

[..] Global central banks did the dirty work for the Fed between 2016 and 2017, adding ever more artificial liquidity. But then the ECB slowed its QE program and finally ended it in late 2018. How did the DAX (German stock index) handle all that removal in artificial liquidity? Not well.

[..] don’t mistake this rally for anything but for what it really is: Central banks again coming to the rescue of stressed markets. Their action and words matter in heavily oversold markets. But the reality remains, artificial liquidity is coming out of these markets. [..] What’s the larger message here? Free-market price discovery would require a full accounting of market bubbles and the realities of structural problems, which remain unresolved. Central banks exist to prevent the consequences of excess to come to fruition and give license to politicians to avoid addressing structural problems.

Read more …

Macron still does everything wrong. Now he chides the protesters for not accepting a debate on his terms.

Yellow Vests Torch Cars In Chaos Of France’s 8th Weekend Of Clashes (Exp.)

The yellow vest protesters who have entered their eighth week of street rallies are trying to topple President Macron and his administration, according to a French government spokesman. The movement made up largely of working and lower middle-class citizens has won widespread public approval as it is seen by many as a means of making the voices of ordinary men and women heard. But after months of unrest in Paris and other French cities, Benjamin Griveaux said the gilets jaunes are not interested in the three-month debate on the reforms promised by Mr Macron, but instead want to overthrow the young president. Speaking at a press conference on Friday after the weekly cabinet meeting, Mr Griveaux said members of the movement “seek insurrection and basically want to overthrow the government”.

He added: “They are henceforth involved in a political struggle to contest the legitimacy of the government and of the president of the republic. “Those who called for a debate don’t want to participate in a big national debate.” Mr Macron said he intends to write a letter to the French people this month outlining how he will deliver his ambitious plans. [..] ‘Angry France’, one of the group which makes up the yellow vests, rejected the president’s offer of a national debate. A statement issued by the group read: “Mr President, this movement that you don’t recognise is nevertheless spreading and strengthening itself even as your fellow citizens are cudgelled, gassed and detained for hours in an unbelievable lack of respect for citizens’ rights.”

Read more …

Corbyn has already built a disaster.

Westminster voting intention:

CON: 40% (-1)
LAB: 34% (-5)
LDEM: 10% (+3)
GRN: 4% (-)
UKIP: 4% (+1)

via @YouGov, 21 Dec – 04 Jan
Chgs. w/ 17 Dec

If Corbyn Backs Brexit, He Faces Electoral Catastrophe (O.)

I have seldom seen a poll on a subject dividing the nation for which the lessons are so clear. The biggest survey yet conducted on Brexit shows that Remain would comfortably win a referendum held today – and that Labour would crash to a landslide election defeat if it helped Brexit go ahead. YouGov questioned more than 25,000 people between 21 December and last Friday. It tested two referendum scenarios. If the choice is Remain versus the government’s withdrawal agreement, Remain leads by 26 points: 63% to 37%. If the choice is Remain versus leaving the EU without a deal, Remain wins by 16 points: 58% to 42%. The difference is explained by the views of those who voted Leave in 2016.

Many of them want a clean break with Brussels, but back away from an agreement that fails to redeem the promise in 2016 to “take back control”. Among all voters, only 22% support the government’s deal. Among Leave voters the figure is not much higher: 28%. The larger point is that the nature of the choice has changed since 2016 – 52% voted Leave when it was a general aspiration with little apparent downside. Today support for Brexit is significantly lower when Leave is more clearly defined. This pattern is familiar to referendums in different countries: many people support the broad idea of change, but back away when the details are laid out. They want “change”, but not “this change”. That is clearly the case today: 80% of people who voted Leave two years ago still say they want Brexit to go ahead; but the figure falls to 69% if the choice is a “no deal” Brexit, and only 55% if the referendum offers the withdrawal agreement.

The rest say they don’t know, or switch to Remain. (The respective loyalty rates on the other side – Remain voters in 2016 who would stick with Remain today – are significantly higher.) [..] The conventional voting intention question produces a six-point Conservative lead (40% to 34%). This is bad enough for an opposition that ought to be reaping electoral dividends at a time when the government is in crisis. However, when voters are asked how they would vote if Labour failed to resist Brexit, the Conservatives open up a 17-point lead (43% to 26%). That would be an even worse result than in Margaret Thatcher’s landslide victory in 1983, when Labour slumped to 209 seats, its worst result since the 1930s.

Read more …

“..fewer than one in four voters..” support May’s deal. But opposing it risks democracy. You tell me.

Brexit Deal Critics Risking Democracy – May (BBC)

The prime minister has urged MPs to back her Brexit deal, saying it is the only way to honour the referendum result and protect the economy. Writing in the Mail on Sunday, Theresa May said her critics – both Remainers and Brexiteers – risk damaging democracy if they oppose her plan. But a poll carried out for the People’s Vote campaign suggests fewer than one in four voters support her Brexit deal. MPs are due to vote on whether to back Mrs May’s Brexit plan next week. The UK is due to leave the EU on 29 March 2019 – regardless of whether there is a deal with the EU or not. A deal on the terms of the UK’s divorce and the framework of future relations has been agreed between the prime minister and the EU – but it needs to pass a vote by MPs in Parliament before it is accepted.

The House of Commons vote had been scheduled to take place in December but Mrs May called it off after it became clear that not enough MPs would vote for her deal. The debate on the deal will restart on Wednesday, with the crucial vote now expected to take place on 15 January. Writing in the Mail, Mrs May said: “The only way to both honour the result of the referendum and protect jobs and security is by backing the deal that is on the table.” She said “no one else has an alternative plan” that delivers on the EU referendum result, protects jobs and provides certainty to businesses.

“There are some in Parliament who, despite voting in favour of holding the referendum, voting in favour of triggering Article 50 and standing on manifestos committed to delivering Brexit, now want to stop us leaving by holding another referendum,” she said. “Others across the House of Commons are so focused on their particular vision of Brexit that they risk making a perfect ideal the enemy of a good deal. “Both groups are motivated by what they think is best for the country, but both must realise the risks they are running with our democracy and the livelihoods of our constituents.”

Read more …

May is now holding the entire country hostage.

She’s going to have to have that vote soon. But today’s Telegraph reports she wants to delay it again. Because she knows she will lose.

EU Dashes May’s Hopes Of Landing Better Brexit Deal (Ind.)

Theresa May’s hopes of securing the legally binding changes needed to win support for her Brexit deal are fading, after EU sources said it was unlikely there would be a new European summit to approve them. An emergency council like the one held in November would be needed to sanction any changes that would have legal force. But diplomats have told The Independent that any concessions offered would be unlikely to require a meeting. It means any alterations or new language secured by the prime minister will probably not satisfy enough rebel Tories or her DUP partners in government to win the Commons vote expected in the coming weeks. Only this week the DUP warned the prime minister that unless Brussels gave significant ground on the hated Irish backstop it would not support her plans.

MPs return to Westminster next week and begin several days of debate on Ms May’s deal before it is put to a vote that most people expect the prime minister to lose. Downing Street has been trying to play down expectations that Ms May will secure a major change before the vote due on 15 or 16 January, but there had been talk that European officials are holding back one concession that they could make to the UK later in the year. But even for those changes to have legal force, a new summit would need to be called as currently there is only one scheduled for the end of March – far too late to do anything meaningful before the UK drops out of the EU on 29 March. European insiders told The Independent that the idea of a summit had been considered, but this was now looking less likely.

Read more …

They want a lot more money.

Hackers Release 9/11 Papers, Say Future Leaks To Burn Down US Deep State (RT)

The Dark Overlord hacker group has released decryption keys for 650 documents it says are related to 9/11. Unless a ransom is paid, it threatened with more leaks that will have devastating consequences for the US ‘deep state’. The document dump is just a fraction of the 18,000 secret documents related to the September 11, 2001 terrorist attacks believed to have been stolen from insurers, law firms, and government agencies. The Dark Overlord initially threatened to release the 10GB of data unless the hacked firms paid an unspecified bitcoin ransom. However, on Wednesday, the group announced a “tiered compensation plan” in which the public could make bitcoin payments to unlock the troves of documents.

A day later, the Dark Overlord said that it had received more than $12,000 in bitcoin – enough to unlock “layer 1” and several “checkpoints,” comprised of 650 documents in total. There are four more layers that remain encrypted and, according to the group, “each layer contains more secrets, more damaging materials… and generally just more truth.” The hackers are asking for $2 million in bitcoin for the public release of its “megaleak,” which it has dubbed “the 9/11 Papers.” [..] By design, the “layer 1” documents – if authentic – do not appear to contain any explosive revelations. The publications focus mostly on testimonies from airport security and details concerning insurance pay-outs to parties affected by the 9/11 attacks. However, the data dump suggests that the group is not bluffing.

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British smear is second to none.

Documents Link UK Govt-Funded Integrity Initiative To Anti-Russia Narrative (RT)

The Integrity Initiative, a UK-funded group exposed in leaked files as psyop network, played a key role in monitoring and molding media narratives after the poisoning of double agent Sergei Skripal, newly-dumped documents reveal. Created by the NATO-affiliated, UK-funded Institute for Statecraft in 2015, the Integrity Initiative was unmasked in November after hackers released documents detailing a web of politicians, journalists, military personnel, scientists and academics involved in purportedly fighting “Russian disinformation.” The secretive, government-bankrolled “network of networks” has found itself under scrutiny for smearing UK Labour leader Jeremy Corbyn as a Kremlin stooge – ostensibly as part of its noble crusade against anti-Russian disinformation.

Now, new leaks show that the organization played a central role in shaping media narratives after Sergei Skripal and his daughter Yulia were mysteriously poisoned in Salisbury last March. It’s notable that many of the draconian anti-Russia measures that the group advocated as far back as 2015 were swiftly implemented following the Skripal affair – even as London refused to back up its finger-pointing with evidence. Days after the Skripals were poisoned, the Institute solicited its services to the Foreign & Commonwealth Office, offering to “study social media activity in respect of the events that took place, how news spread, and evaluate how the incident is being perceived” in a number of countries. After receiving the government’s blessing, the Integrity Initiative (II) launched ‘Operation Iris,’ enlisting “global investigative solutions” firm Harod Associates to analyze social media activity related to Skripal.

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China’s taken the place of the IMF.

Fears Grow In Africa That The Flood Of Funds From China Will Start To Ebb (O.)

Concerns over Chinese growth could spell problems for Africa and other parts of the developing world. Beijing funded an overseas investment boom in the past few decades as it strove to become the world’s second largest economic superpower, while also buying vast amounts of the natural resources produced by emerging nations. The scale of the expansion forms part of China’s multibillion-dollar “Belt and Road” Initiative, a state-backed campaign to promote its influence around the world, while providing stimulus for its own slowing economy. The transcontinental development project launched by China’s president, Xi Jinping, in 2013 aims to improve infrastructure links between Asia, Europe and Africa, with the aim for China to reap the benefits from increasing levels of global trade.

Mounting tensions between China and the US, however, have acted as a handbrake on rising levels of world trade. The IMF forecasts Chinese growth will slow to 6.2% this year from about 6.6% in 2018, due to escalations in the trade dispute that erupted last year. There are also rising fears over the rapid growth of debt in China used to fuel its expansion over the past decade. With Chinese investment in some African nations worth more than some of those states’ own domestic spending, analysts fear the prospect of weaker investment in future and fading demand for commodity exports. Figures from the United Nations’ development agency, Unctad, show that weakness in global commodity prices in 2014 and 2015 caused foreign direct investment flows into Africa to fall from $55bn in 2015 to $42bn in 2017, showing how Africa might be hit by a Chinese slowdown.

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“Nancy’s smile is full of malice and bad faith..”

It’s Nancy Pelosi’s Smile That Gets Me (Jim Kunstler)

It’s Nancy Pelosi’s smile that gets me…oh, and not in a good way. It’s a smile that is actually the opposite of what a smile is supposed to do: signal good will and good faith. Nancy’s smile is full of malice and bad faith, like the smiles on representations of Shiva-the-Destroyer and Huitzilopochtli, the Aztec sun god who demanded thousands of human hearts to eat, lest he bring on the end of the world. It’s not exactly the end of the world in Washington D.C., but as the old saying goes: you can see it from there! It’s out on the edge of town like one of those sinister, broken-down circuses from the Ray Bradbury story-bag, with its ragtag cast of motheaten lions, crippled acrobats, a crooked wagon full of heartbroken freaks, and a shadowy ringmaster on a mission from the heart of darkness.

The new Democratic majority congress has convened in the spirit of a religious movement devoted to a single apocalyptic objective: toppling the Golden Golem of Greatness who rules in the House of White Privilege. They’re all revved up for inquisition, looking to apply as many thumbscrews, cattle prods, electrodes, waterboards, and bamboo splinters as necessary in pursuit of rectifying the heresy of the 2016 election. The simpleton California congressman Brad Sherman (D-30th dist.) couldn’t contain his glee, like a seven-year-old boy about to pull the wings off a fly. As soon as the Democratic majority was sworn in, he filed his articles of impeachment to impress his Wokester San Fernando Valley constituents out for deplorable blood.

That was even a bit too much for Madam Speaker who reminded Sherman that some scintilla of a predicate crime was required — but surely would be available when Special Counsel Robert Mueller hurls down his tablets of accusation from on high.

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But Kurtz simple quoted directly from her book?! Here’s thinking she got a few angry calls. Genre: if you ever want to work in this town again….

Ex–NY Times Editor Jill Abramson Says Fox Took Her Words Out Of Context (AP)

Jill Abramson, the former editor of the New York Times, said Fox News took her criticism of the newspaper’s Trump coverage in her upcoming book “totally out of context” for a story that appeared this week. The Fox News story, headlined “Former NY Times editor rips Trump coverage as biased,” quotes from Abramson’s book, “Merchants of Truth.” She wrote that although current Times executive editor Dean Baquet publicly said he didn’t want the newspaper to be the opposition party, “his news pages were unmistakably anti-Trump.” With an audience perceived to be mostly liberal, “there was an implicit financial reward for the Times in running lots of Trump stories, almost all of them negative,” she wrote in the book.

In a Saturday tweet, Trump commended Abramson as “100% correct” about the paper’s “[h]orrible and totally dishonest reporting on almost everything they write” and suggested it justified his calling the Times “fake news”. [..] Abramson was executive editor of the New York Times Co. flagship from 2011 to 2014 before being fired following a dispute with Baquet, then one of her deputies. She said in an email interview with the Associated Press that the Fox article’s author, “Media Buzz” host Howard Kurtz, had ignored compliments that she had for the Times and the Washington Post. “His article is an attempt to Foxify my book,” she wrote in the email, saying her book was “full of praise” for the New York Times and the Washington Post “and their coverage of Trump.”

Kurtz said in a phone interview with the AP that he was “sorry to see Jill back away from her own words” and that his report was accurate. “I would have written this story the same way if I were working for any news organization,” said Kurtz, a former Washington Post media columnist. “Her sometimes harsh criticism of her former paper’s Trump coverage leaps off the page and is clearly the most newsworthy element in the book because of her standing as a former executive editor.” [..] Abramson wrote that the more anti-Trump the Times was perceived to be, the more it was mistrusted for being biased. The late publisher Adolph Ochs’s promise to cover the news without fear or favor “sounded like an impossible promise in such a polarized environment, where the very definition of ‘fact’ and ‘truth’ was under constant assault,” she wrote in the book.

Read more …

Jan 052019
 
 January 5, 2019  Posted by at 10:32 am Finance Tagged with: , , , , , , , , , , , , ,  


Alfred Sisley A Village Street in Winter 1893

 

Dow Up 700 Points As Powell Says Fed Will Be Patient With Rate Hikes (CNBC)
US Gains 312,000 Jobs, Shatters Wall Street Forecasts (MW)
Fed’s Mester: Rates Near Neutral Mean Fed Can ‘Take Our Time’ (R.)
Fed’s Balance Sheet Reduction Reaches $402 Billion (WS)
Trump Threatens ‘National Emergency’ Over Wall (BBC)
Mueller Given More Time To Investigate Trump Collusion With Russia (Ind.)
China’s Faltering Economy Gives US Stronger Hand In Trade Talks – Trump (R.)
China Cuts Banks’ Reserve Ratios By 1% As Economy Slows (R.)
“Radical” Ocasio-Cortez Teases 70% Tax On Super Wealthy (ZH)
Lima Group Countries Say Won’t Recognize New Maduro Mandate (AFP)
US Senator: Turkey Must Choose Between US Jets and Russian Missiles (K.)
Europe’s Right Wing Takes Aim at the EU (Spiegel)

 

 

Yeah, yeah, whatever. Jesse Colombo shared this graph, saying the green bar at the far right depicts what happened yesterday.

Dow Up 700 Points As Powell Says Fed Will Be Patient With Rate Hikes (CNBC)

Stocks rallied on Friday after Federal Reserve Chairman Jerome Powell said the central bank will be patient in raising rates, quelling fears of tighter monetary policy in the near future. The Dow Jones Industrial Average rose 700 as Boeing, UnitedHealth and 3M outperformed. The S&P 500 rallied 3.2 percent, with the tech sector gaining more than 4 percent. The Nasdaq Composite climbed 4.1 percent. “As always, there is no preset path for policy,” Powell said.

“And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.” Powell also said the central bank would not “hesitate” to change its balance-sheet reduction plan if it was causing problems. Fears that the Fed may be making a policy error by tightening too fast have contributed to the recent skittishness in financial markets, according to several market experts.

“I think he did what the market hoped he would do,” said Tom Essaye, founder of The Sevens Report. “What he did with these comments is he acknowledged that they need to be more flexible.” “This is worth a bounce, but at the same time, the major issues facing the market are not resolved. We have a potential earnings problem in this market; we have a potential economic growth problem in this market,” Essaye added. “Today’s rally is more a result of the overextended downside from yesterday.”

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Big number, but apparently not high quality.

US Gains 312,000 Jobs, Shatters Wall Street Forecasts (MW)

The U.S. gained 312,000 new jobs in December, capping off the biggest increase in hiring in three years and showing that second longest economic expansion in U.S. history still has plenty of staying power despite growing worries about a slowdown. The surge in hiring was the largest since February. Economists surveyed by MarketWatch had forecast a 182,000 increase. Hiring in November and October was also stronger than originally reported, the government said Friday. The unemployment rate, meanwhile, rose to 3.9% from a 49-year low of 3.7%. The percentage of working-age Americans in the labor force climbed to a one-and-a-half-year high as more people looked for jobs. That’s usually seen as a good sign since it means people think work is easier to find.

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That whole neutral rate thing is just made up by a bunch of academics.

Fed’s Mester: Rates Near Neutral Mean Fed Can ‘Take Our Time’ (R.)

From rising wages to a slowdown in housing, economic evidence is mounting that the U.S. Federal Reserve is at or near a neutral level of interest rates where it can take stock of where the economy stands before deciding on its next moves, Cleveland Federal Reserve president Loretta Mester said on Friday. The comments from a usually hawkish reserve bank president, made in an interview on the sidelines of the American Economic Association annual meeting, add to the sense that the roughly quarterly pace of rate hikes enacted by the Fed for the past two years may take a pause this year absent a surprise jump in inflation or faster-than-expected economic growth.

“We are in a new world,” Mester said, where the obvious need to raise rates has given way to a situation where economic growth is expected to slow, wages are rising on the basis of low unemployment, interest rate sensitive sectors of the economy like housing have ebbed, and the unemployment rate has roughly “stabilized” at a low level. Taken together, Mester said, those are the sorts of developments one would expect in an economy where interest rates were near a neutral level that was neither encouraging nor holding back economic activity. “We really need to be looking at the data and having the economy tell us, do we need to move more? Do we need to move more, faster? Can we wait?” Mester said. “We should take our time and assess….We may be where we need to be.” Overall, she said she felt the Fed was in a “really good spot.”

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Powell can walk back the rates, but he can’t just re-purchase this half trillion in assets. And the ECB and BoJ are leaving the game as well.

Fed’s Balance Sheet Reduction Reaches $402 Billion (WS)

The Fed started the QE unwind in October 2017. As I covered it on a monthly basis, my ruminations on how it would unwind part of the asset-price inflation and Bernanke’s “wealth effect” that had resulted from QE were frequently pooh-poohed. They said that the truly glacial pace of the QE unwind was too slow to make any difference; that QE had just been a “book-keeping entry,” and that therefore the QE unwind would also be just a book-keeping entry; that QE had never caused any kind of asset price inflation in the first place, and that therefore the QE unwind would not reverse that asset-price inflation, or whatever. But in October last year, when all kinds of markets started reversing this asset price inflation, suddenly, the QE unwind got blamed, and the Fed – particularly Fed Chairman Jerome Powell – has been put under intense pressure to cut it out. Yet it continues:

The Fed shed $28 billion in assets over the four weekly balance-sheet periods of December. This reduced the assets on its balance sheet to $4,058 billion, the lowest since January 08, 2014, according to the Fed’s balance sheet for the week ended January 3. Since the beginning of this “balance sheet normalization,” the Fed has now shed $402 billion. According to the Fed’s plan released when the QE unwind was introduced, the Fed is scheduled to shed “up to” $30 billion in Treasuries and “up to” $20 billion in MBS a month – now that the QE unwind has reached cruising speed – for a total of “up to” $50 billion a month. [..] Over the four weeks from December 6 through January 3, the Fed’s holdings of Treasury securities fell by $18 billion to $2,223 billion, the lowest since January 15, 2014. Since the beginning of the QE-Unwind, the Fed has shed $243 billion in Treasury securities:

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Both sides think they are winning this one.

Trump Threatens ‘National Emergency’ Over Wall (BBC)

US President Donald Trump has said he could declare a national emergency to build a US-Mexico border wall without the approval of Congress. It came after he met senior Democrats, who refused his requests for funding. The stand-off has seen Mr Trump withhold support for a bill to fully fund the government until he gets money for the border wall. He said he was prepared for the partial government shutdown – now in its third week – to last years. Around 800,000 federal workers have been without pay since 22 December. Trump aides and lawmakers will meet later on Saturday in a fresh bid to resolve the impasse.

The Republican president initially gave a positive account of the 90-minute meeting at the White House, describing it as “very productive”. But when asked whether he had considered using emergency presidential powers to bypass congressional approval of funding, Mr Trump said he had. “I may do it. We can call a national emergency and build it very quickly. That’s another way of doing it.” “I’m very proud of doing what I’m doing,” the president added. “I don’t call it a shutdown, I call it doing what you have to do for the benefit and safety of our country.” House Speaker Nancy Pelosi said Friday’s meeting had been “contentious”, while Senate Democratic leader Chuck Schumer said: “We told the president we needed the government open. He resisted.”

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Pretty crazy, even if not unexpected.

Trump on Twitter: “How do you impeach a president who has won perhaps the greatest election of all time, done nothing wrong (no Collusion with Russia, it was the Dems that Colluded), had the most successful first two years of any president, and is the most popular Republican in party history 93%?”

Mueller Given More Time To Investigate Trump Collusion With Russia (Ind.)

Robert Mueller has been given additional time to carry out his investigation into Russia’s alleged interference in the 2016 election, and possible collusion between Moscow and the Trump campaign. In a development that may surprise those who have suggested the special counsel’s work was drawing to a close, a judge in Washington DC granted a six-month extension to the grand jury being used to examine evidence. The jury had been impanelled in July 2017 for a standard 18-month term and was set to expire this week. The extension granted by federal judge Beryl Howell means the investigation will continue for some time yet. AP said federal criminal procedure rules allow such extensions when a judge determines it is in the public interest. The extension can only last up to six months.

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High level trade talks next week. Time for China to show some flexibility.

China’s Faltering Economy Gives US Stronger Hand In Trade Talks – Trump (R.)

Donald Trump has said China’s weakening economic growth puts the United States in a strong position as negotiators from the world’s two largest economies prepare for trade talks on Monday. US officials are heading to Beijing this weekend for the first face-to-face talks since Trump and China’s president, Xi Jinping, agreed in December to a 90-day truce in the trade war as they sought to strike a deal. “I think we will make a deal with China,” Trump told reporters at the White House after a meeting with Democratic and Republican lawmakers about the US government shutdown. “I really think they want to. I think they sort of have to.” Beijing on Friday cut bank reserve requirements for a fifth time this year amid slowing growth at home and the punishing US tariffs on exports.

“China’s not doing well now. And it puts us in a very strong position. We are doing very well,” Trump said. “I hope we’re going to make a deal with China. And if we don’t, they’re paying us tens of billions of dollars worth of tariffs – not the worst thing in the world.” [..] The president also downplayed the effects of the economic woes on Apple, which this week blamed slowing iPhone sales in China for a rare reduction in its quarterly sales forecast. When asked if he was concerned about Apple’s revenue cut and share price drop, Trump said: “No, I’m not. I mean look, they’ve gone up a lot.”

Shares of Apple rebounded on Friday after a 10% nosedive on Thursday on the revenue warning. The shares closed at $148.26 on Friday, down about 5.1% for the week. For the 2018 full year, Apple shares fell 7%, although they are up about 24% since Trump took office in January 2017. “They’re going to be fine. Apple is a great company,” Trump said, adding he had repeated his advice to Apple boss Tim Cook to build his company’s products in the United States. “Apple makes its product in China. China is the biggest beneficiary of Apple, more than us, because they build their product mostly in China,” Trump said. “I want Apple to make their iPhones and all of the great things that they make in the United States. And that’ll take place.”

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RRRs are still quite high, true enough. But they’re merely a reflection on the risks inherent in these banks.

China Cuts Banks’ Reserve Ratios By 1% As Economy Slows (R.)

China’s central bank said on Friday it was cutting the ratio of cash that banks must hold as reserves by 100 basis points (bps), or 1 percent, as it looks to reduce the risk of a sharper slowdown in the world’s second-biggest economy. The cut in banks’ reserve requirement ratios (RRR) is the first in 2019 and the fifth in a year by the People’s Bank of China (PBOC) as the economy faces its weakest growth since the global financial crisis and mounting pressure from U.S. tariffs. The reduction is being made in two equal stages, effective Jan. 15 and Jan. 25, the PBOC said. The reserve requirement ratios (RRRs) are currently 14.5 percent for large banks and 12.5 percent for smaller banks. Further cuts in the RRR had been widely expected this year, especially after a spate of weak data in recent months showed China’s economy was continuing to lose steam. The size of the move was on the upper end of market expectations.

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Ocasio fills a void that no other Democrat -at least not incumbent- fits in. That is very similar to what happened with Trump. Pelosi and Schumer will fight her every step of the way.

As for 70% tax rates on highest income and wealth brackets, in the 1950s and 60s those rates were as high as 90%.

“Radical” Ocasio-Cortez Teases 70% Tax On Super Wealthy (ZH)

Rep. Alexandria Ocasio-Cortez (D-NY) suggested in a “60 Minutes” interview scheduled to air Sunday that the highest-earning Americans may need to pay an income tax rate as high as 60 to 70 percent to combat carbon emissions, reports Politico. Speaking with Anderson Cooper in a “60 Minutes” interview scheduled to air Sunday, Ocasio-Cortez said a dramatic increase in taxes could support her “Green New Deal” goal of eliminating the use of fossil fuels within 12 years, a goal which even she acknowledges is ambitious. “What is the problem with trying to push our technological capacities to the furthest extent possible?” Ocasio-Cortez asked. “There’s an element where yeah, people are going to have to start paying their fair share in taxes.”

Ocasio-Cortez pointed out that in a progressive tax rate system, not all income for a high earner is taxed at such a high rate. Rather, rates increase on each additional level of income, with dramatic increases on especially high earnings, such as $10 million. -Politico [..] Ocasio-Cortez relished Anderson Cooper’s characterization of the tax plan as “radical,” before comparing herself to Abraham Lincoln and Franklin D. Roosevelt. “I think that it only has ever been radicals that have changed this country,” said Ocasio-Cortez. “Yeah, if that’s what radical means, call me a radical.”

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Why don’t they first demand the CIA gets out?

Lima Group Countries Say Won’t Recognize New Maduro Mandate (AFP)

Foreign ministers from 12 Latin American countries and Canada said Friday their governments would not accept Nicolas Maduro as Venezuela’s president when he is sworn in for a second six-year term next week. The 14-member Lima Group – with the exception of Mexico – said it would not grant recognition to Maduro’s hardline socialist government, after meeting in the Peruvian capital to discuss ways to step up international pressure on the regime, which has presided over the oil-rich country’s economic collapse. Peru’s Foreign Minister Nestor Popolizio said the group had delivered “a strong political message” ahead of Maduro’s inauguration on January 10.

Maduro was re-elected on May 20 in a ballot boycotted by the main opposition parties and widely condemned by the international community, including the United States which called it a “sham.” “The main message is undoubtedly the non-recognition of the Venezuelan regime’s new term,” Popolizio told reporters. “It is very important that the Lima Group has issued this statement to continue exerting pressure with a view to the restoration of democracy in Venezuela,” the Peruvian minister said. The Group, of which Canada is a member, said Maduro should temporarily transfer power to the opposition-controlled National Assembly until free elections can be held.

[..] Venezuela hit back at the Lima Group, accusing it of fomenting a coup at the behest of the US, which has sanctioned Venezuelan officials and entities. Caracas expressed its “great bewilderment at the extravagant declaration of a group of countries of the American continent which, after receiving instructions from the United States through a videoconference, have agreed to encourage a coup d’etat,” according to a statement read by Venezuela’s foreign minister, Jorge Arreaza. The United States, which is not a member of the group created after deadly anti-Maduro protests in 2017, participated in the meeting for the first time. Secretary of State Mike Pompeo commented by video conference from Washington.

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Turkey allegedly already signed the Russia deal.

US Senator: Turkey Must Choose Between US Jets and Russian Missiles (K.)

Turkey needs to choose between the Lockheed Martin F-35 fighter jets it has ordered from the United States or the acquisition of the Russian S-400 missile system, Democratic Senator Chris Van Hollen told Kathimerini in a recent interview at Congress. Van Hollen warned that Turkey may be subject to US sanctions if it buys the Russian systems under the August 2018 Countering America’s Adversaries Through Sanctions Act (CAATSA), which penalizes governments that buy weapons from Moscow.

“I want to be clear that I am not opposed to the sale of F-35s to Turkey. The big problem I have is that Turkey is a NATO ally and they are saying that they are planning to proceed with the purchase of the Russian S-400 system,” he told Kathimerini. “So I am very much opposed to the F-35 sale going through if the Turks follow through on their plan to purchase the Russian air defense system. The reason is that it would compromise the security of the F-35s and potentially the security of all other NATO aircraft.” “In my view Turkey has a very simple choice. They can purchase the F-35s or they can purchase the S-400. But they can’t have both,” Van Hollen said.

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Oh, those terrible right wingers. Look what they want, it’s f*cking anarchy: “The right wing hopes to transform the European elections into a kind of plebiscite: What kind of Europe do people want?” The Horror! The Horror!

Europe’s Right Wing Takes Aim at the EU (Spiegel)

Right-wing populists have become a feature in the political landscape of almost every European Union member state, while in Italy, Austria, Poland, Hungary, Slovakia, Denmark and Finland, they are either part of the government or support the government. They are no longer merely a fringe phenomenon or a passing anomaly. Rather, they are a movement that could continue to grow — and they are doing all they can to position themselves as such. Despite all of their differences, the target of their ire is the same: the cosmopolitan elite, liberal opinion leaders in the media and EU bureaucrats in Brussels. Their best enemies? German Chancellor Angela Merkel and French President Emmanuel Macron, the latter having proven to be a tireless promoter of deeper European integration.

From the perspective of the right wing, the plans pushed by Macron and his supporters can mean only one thing: Further impositions on “normal people,” upon whom much has already been imposed — things like smoking bans, gay marriages, refugees and expensive environmental protection regulations. The populists claim they are the only ones who speak for the majority of Europeans. And one of their primary goals is a Europe free of immigration. They call their concept the “Europe of Nations.” The right wing hopes to transform the European elections into a kind of plebiscite: What kind of Europe do people want? Open or closed? Traditionalist or tolerant? Should the European bloc become a political union with fewer powers reserved for the nation-states or should it merely be something like a free-trade area in which each individual country can chart its own course?

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Dec 272018
 
 December 27, 2018  Posted by at 9:25 pm Primers Tagged with: , , , , , , , , , , ,  


Francis Tattegrain La ramasseuse d’épaves (The Beachcomber) 1880

 

I haven’t really written about finance since April of this year, and given recent fluctuations in what people persist in calling the markets, maybe it’s time. Then again, nothing has changed since that article in April entitled This Is Not A Market. I was right then, and I still am.

[..] markets need price discovery as much as price discovery needs markets. They are two sides of the same coin. Markets are the mechanism that makes price discovery possible, and vice versa. Functioning markets, that is. Given the interdependence between the two, we must conclude that when there is no price discovery, there are no functioning markets. And a market that doesn’t function is not a market at all.

[..] we must wonder why everyone in the financial world, and the media, is still talking about ‘the markets’ (stocks, bonds et al) as if they still existed. Is it because they think there still is price discovery? Or do they think that even without price discovery, you can still have functioning markets? Or is their idea that a market is still a market even if it doesn’t function?

But perhaps that is confusing, and confusion in and of itself doesn’t lead to better understanding. So maybe I should call what there is out there today ‘zombie markets’. It doesn’t really make much difference. What murdered functioning markets is intervention by central banks, in alleged attempts to save those same markets. Cue your favorite horror movie.

Now Jerome Powell and the Fed he inherited are apparently trying to undo the misery Greenspan, Bernanke and Yellen before him wrought upon the economic system, and people, cue Trump, get into fights about that one. All the while still handing the Fed, the ECB, the BoJ, much more power than they should ever have been granted.

And you won’t get actual markets back until that power is wrestled from their cold dead zombie fingers. Even then, the damage will be hard to oversee, and it will take decades. The bankers and investors their free and easy trillions were bestowed upon will be just fine, thank you, but everyone else will definitely not be.

Central banks don’t serve societies, they serve banks. They fool everyone, politicians first of all, into believing that societies automatically do well if only the demands of banks are met first, and as obviously stupid as that sounds, nary a squeak of protest can be heard. Least of all from ‘market participants’ who have done nothing for the better part of this millennium except feast at the teat of main street largesse.

In the past few days we’ve had both -stock- market rallies and plunges of 5% or so, and people have started to realize that is not normal, and it scares them. So you get Tyler posting DataTrek’s Nicolas Colas saying “Healthy” Markets Don’t Rally 1,086 Points On The Dow. Well, he’s kinda right, but there hasn’t been a healthy market in 10+ years, and he’s missed that last bit. Like most people have who work in those so-called ‘markets’.

 

Here’s why Colas is right, but doesn’t understand why. Price discovery is the flipside of the coin that is a functional market, because it allows for people to see why something is valued at the level it is, by a large(r) number of participants. Take that away and it is obvious that violent price swings may start occurring as soon as the comforting money teat stutters, or even just threatens to do so; a rumor is enough.

In physics terms, price discovery, and therefore markets themselves -provided they’re ‘healthy’ and ‘functioning’- delivers negative feedback to the system, i.e. it injects self-correcting measures. Take away price discovery, in other words kill the market, and you get positive feedback, where -simplified- changes tend to lead to ever bigger changes until something breaks.

Also, different markets, like stocks, bonds, housing, will keep a check on each other, so nothing will reach insane valuations. If they tend to, people stop buying and will shift their money somewhere else. But when everything has an insane value, how would people know what’s insane anymore, and where could they shift that is not insane?

It doesn’t matter much for ‘market participants’, or ‘investors’ as they prefer to label themselves, they shift trillions around on a daily basis just to justify their paychecks, but for mom and pop it’s a whole different story. In between the two you have pension funds, whose rapid forced move from AAA assets to risk will strangle mom and pop’s old-age plans no matter what.

 

People inevitably talk about the chances of a recession happening, but maybe they should first ask what exactly a recession, or a bear market, is or means when it occurs in a zombie (or just plain dead) market.

If asset ‘values’ have increased by 50% because central banks and companies themselves have bought stocks, it would seem logical that a 10% drop doesn’t have the same meaning as it would in a marketplace where no such manipulation has taken place. Maybe a 50% drop would make more sense then.

The inevitable future is that people are going to get tired of borrowing as soon as it becomes too expensive, hence unattractive, to do so. Central banks can still do more QE, and keep rates low for longer, but that’s not an infinity and beyond move. It a simple question of the longer it lasts the higher will be the price that has to be paid. One more, one last, simple question: who’s going to pay? We all know, don’t we?

 

That’s where the Fed is now. You can let interest rates rise, as Powell et al are indicating they want to do, but that will cut off debt growth, and since debt is exclusively what keeps the economy going, it will cut into economic growth as well. Or you can keep interest rates low (and lower), but then people have less and less idea of the actual value of assets, which can, and eventually necessarily will, cause people to flee from these assets.

Powell’s rate hikes schedule looks nice from a normalizing point of view, and g-d knows what normal is anymore, but it would massacre the zombie markets the Fed itself created when it decided to kill the actual markets. You can get back to normal, but only if the Fed retreats into the Eccles Building and stays there until 2050 or so (or is abolished).

They won’t, the banks whose interests they protect will soon be in far too dire straits, and bailouts have become much harder to come by since 2008. It’ll be a long time before markets actually function again, and we won’t get there without a world of pain. Which will be felt by those who never participated in the so-called markets to begin with. Beware of yellow vests.

To top off the perversity of zombie markets, one more thing. Zombie markets build overcapacity. One of the best things price discovery brings to an economy is that it lets zombies die, that bankrupt companies and bankrupt ideas go the way of the dodo.

That, again, is negative feedback. Take that away, as low rates and free money do, and you end up with positive feedback, which makes zombies appear alive, and distorts the valuation of everything.

Most of what the ‘popular’ financial press discusses is about stocks, what the Dow and S&P have done for the day. But the bond markets are much bigger. So what are we to think when the two are completely out of sync -and whack-?

 

Oh well, those are just ‘the markets’, and we already know that they are living dead. Where that may be less obvious, if only because nobody wants it to be true, is in housing markets. Which, though this is being kept from you with much effort, are what’s keeping the entire US, and most of Europe’s, economies going. And guess what?

The Fed and Draghi have just about hit the max on home prices (check 2019 for the sequel). Prices have gotten too high, Jay Powell wants higher interest rates, Draghi can’t be left too far behind him because EU money would all flow to the US, and it’s all well on its way to inevitability.

And anyway, the only thing that’s being achieved with ever higher home prices is ever more debt for the people who buy them, and who will all be on the hook if those prices are subject to the negative feedback loops healthy markets must be subject too, or else.

The only parties who have profited from rising home prices are the banks who dole out the mortgages and the zombie economy that relies on them creating the money society runs on that way. We have all come to rely on a bunch of zombies to keep ourselves from debt slavery, and no, zombies are not actually alive. Nor are the financial markets, and the economies, that prop them up.

Among the first things in 2019 you will see enormous amounts of junk rated debt getting rated ever -and faster- lower , and the pace at which ever more debt that is not yet junk, downgraded to(wards) junk, accelerating. It looks like the zombies can never totally take over, but that is little comfort to those neck deep in debt even before we start falling.

And as for the ‘players’, the economic model will allow again for them to shove the losses of their braindead ventures onto the destiny of those with ever lower paying jobs, who if they’re lucky enough to be young enough, start their careers in those jobs with ever higher student debts.

You’d think that at some point they should be happy they were never sufficiently credit-worthy to afford one of the grossly overpriced properties that are swung like so many carrots before their eyes, but that’s not how the system works. The system will always find a way to keep pushing them deeper into the financial swamp somehow.

The last remaining growth industry our societies have left is inequality, and that’s what our central banks and governments are all betting on to keep Jack Sparrow’s Flying Dutchman afloat for a while longer. Where the poor get squeezed more so the 1% or 10% get to look good a little longer.

But in the end it’s all zombies all the way down, like the turtles, and some equivalent of the yellow vests will pop up in unexpected places. My prediction for next year.

It doesn’t look to me that a year from now we’ll see 2019 as a particular peaceful year, not at all like 2018. I called it from Chaos to Mayhem earlier, and I’m sticking with that. We’re done borrowing from the future, it’s getting time to pay back those loans from that future.

And that ain’t going to happen when there are no functioning markets; after all, how does anyone know what to pay back when the only thing they do know is everything is way overvalued? How wrong can I be when I say debts will only be paid back at fair value?

2019, guys, big year.

 

 

Dec 252018
 
 December 25, 2018  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , , , ,  


Caravaggio Nativity with St. Francis and St. Lawrence 1600

 

The Stock Market Just Booked Its Ugliest Christmas Eve Plunge — Ever (MW)
Japan’s Nikkei Drops 5% After Wall Street Slide Deepens (CNBC)
US Crude Plunges 6.7%, Settling At 18-Month Low At $42.53 (CNBC)
‘The Worst Is Yet To Come’: Experts Say Global Bear Market Coming (CNBC)
In Defense of the Fed (Stephen S. Roach)
Trump, Annoyed By Resignation Letter, Pushes Out Mattis Early (R.)
Mnuchin Holds Calls With Heads Of America’s 6 Biggest Banks Amid Shutdown (F.)
Facebook Is The ‘Biggest Concern’ Among The FAANGs (CNBC)
China Won’t Resort To Massive Monetary Stimulus Next Year – PBOC (CNBC)
Gatwick Drones Pair ‘No Longer Suspects’ (BBC)
Gatwick Police Say They Cannot Discount Possibility There Was No Drone (Ind.)
‘Home Alone’: Bored Trump Tweets Up Storm During Christmas Shutdown (RT)

 

 


Bette Davis and Joan Crawford were not each other’s biggest fans

 

 

I kid you not: plenty people are blaming this on Trump, too.

The Stock Market Just Booked Its Ugliest Christmas Eve Plunge — Ever (MW)

Never mind finding coal in your stocking for the holidays. Wall Street investors scored a rare — and unwanted — gift this year. The S&P 500 index fell by 2.7% Monday, marking the first session before Christmas that the broad-market benchmark has booked a loss of 1% or greater — ever. That statistic has been confirmed by Dow Jones Market Data, which said the largest decline in the index on the trading day before Christmas was Dec. 23 in 1933.

The Dow Jones Industrial Average finished down 653 points, or 2.9%, representing its worst decline on the session prior to Christmas in the 122-year-old blue-chip gauge’s history. Check out the table below from Dow Jones Market Data:

U.S. stock indexes ended trading at 1 p.m. Eastern Time on Christmas Eve and will be closed on Christmas. The current dynamic in the market has it set for its worst monthly and yearly decline in about a decade, amid nagging concerns that the Federal Reserve is normalizing interest rates too rapidly, and that a continuing tariff dispute between China and the U.S. could devolve and help lead to a domestic recession, as international economies are already demonstrating signs of a slowdown. Also stoking anxiety was a tweet from Treasury Secretary Steven Mnuchin to assess the health of the banking system, which has raised some questions about liquidity among those institutions that had not previously been raised. Treasury officials insist that the calls to bank executives were just a routine checkup.

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The ongoing success of Abenomics.

Japan’s Nikkei Drops 5% After Wall Street Slide Deepens (CNBC)

Japan’s Nikkei retreated to a 20-month low on Tuesday after a slide on Wall Street deepened with a series of unnerving U.S. political developments. The Nikkei share average ended the day down 5.01 percent at 19,155.74 after brushing its lowest since late April 2017. The day’s performance put the index well into bear market territory — off more than 20 percent since its October high. Japan’s broader Topix closed 4.88 percent lower at 1,415.55 after touching 1,412.90, its weakest since November 2016.

Meanwhile, in China, the Shanghai Index posted losses of more than 2 percent by mid-day, but then gained some ground back into the afternoon. Chinese sectors lost ground across the board, led by financial shares and energy firms as oil prices slumped. So far this year, the Shanghai stock index is down about 24 percent. Those Asia moves followed Wall Street stocks extending their steep sell-off on Monday, with the S&P 500 down nearly 15 percent so far this month, as investors were rattled by the U.S. Treasury secretary’s convening of a crisis group and by other political developments.

Many financial markets in Asia, Europe and North America are closed on Tuesday for Christmas Day. “Negative sentiment has replaced logic, as is often the case during a sell-off. A third of the selling is induced by panic, another third by loss-cutting and the remaining third by speculators trying to make a profit from the market rout,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. “The sell-off is triggered almost entirely by developments in the U.S. markets, rather than by negative factors unique to the domestic market.”

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Oil swings too much to be safe.

US Crude Plunges 6.7%, Settling At 18-Month Low At $42.53 (CNBC)

U.S. crude plunged nearly 7 percent on Monday, hitting its lowest levels in a year and half, as the oil market fell in tandem with equities amid deepening turmoil in Washington DC. The Dow Jones Industrial Average plummeted more than 600 points, while the S&P 500 closed in bear market territory. Both stock indexes were buffeted by headlines out of Washington, including a government shutdown and President Donald Trump’s reported desire to fire Federal Reserve chair Jerome Powell over the central bank’s interest rate increases.

The selling in global risk assets on Christmas Eve deepened a nearly three-month slide in oil prices. From peak to trough, U.S. crude has fallen nearly 45 percent from its 52-week high at the start of October. Brent has fallen as much as 42 percent over the same period. “For now, there’s no place to hide in any of these markets. Oil’s being taken down with the stock market and the negative sentiment that’s sweeping across really everything, and for now the downward pressure is going to persist,” John Kilduff, founding partner at energy hedge fund Again Capital told CNBC’s “Closing Bell” on Friday.

Read more …

The so-called experts see themselves as mighty smart when all they’ve done is suck from the fed’s trough. Humbug!

‘The Worst Is Yet To Come’: Experts Say Global Bear Market Coming (CNBC)

Volatility on Wall Street has led shares across the globe on a wild ride in recent months, resulting in a number of stock markets dipping into bear territory. That’s set to worsen in the new year, experts told CNBC on Monday. Bear markets — typically defined as 20 percent or more off a recent peak — are threatening investors worldwide. In the U.S., the Nasdaq Composite closed in a bear market on Friday and the S&P 500 entered one on Monday. Globally, Germany’s DAX and China’s Shanghai Composite have also entered bear market levels. Major market risks remain, experts said. The Federal Reserve is likely to continue raising interest rates and worries about a global economic slowdown — made worse by a trade war between the U.S. and China — are mounting.

“I would love to be more optimistic but i just don’t see too many positives out there. I think the worst is yet to come next year, we’re still in the first half of a global equity bear market with more to come next year,” Mark Jolley, global strategist at CCB International Securities, told CNBC’s “Squawk Box.” For Jolley, the big risk lies in the credit markets. With the Fed projecting another two interest rate hikes in 2019, companies will find it increasingly difficult to service their debt causing some to default or get downgraded, he said. Such weakness in the credit markets will spill over to stocks, noted Jolley. “My core scenario will be a credit event, which will further weigh on equity markets, which will definitely weigh on high growth sectors like tech,” he said.

More generally, investors have fewer reasons to be optimistic now because the Fed tightening monetary policy means there will be less money for investments, said Vishnu Varathan, head of economics and strategy at Mizuho Bank. “There is really no conviction for markets to buy back because they’re not sure this is the bottom, and so they are thinking this is the proverbial falling knives,” Varathan told CNBC’s “Squawk Box.”

Read more …

The Fed spent the past 10 years making sure its member banks kept on making indecent amounts of money. And now they need to be defended?

In Defense of the Fed (Stephen S. Roach)

I have not been a fan of the policies of the US Federal Reserve for many years. Despite great personal fondness for my first employer, and appreciation of all that working there gave me in terms of professional training and intellectual stimulation, the Fed had lost its way. From bubble to bubble, from crisis to crisis, there were increasingly compelling reasons to question the Fed’s stewardship of the US economy. That now appears to be changing. Notwithstanding howls of protest from market participants and rumored unconstitutional threats from an unhinged US president, the Fed should be congratulated for its steadfast commitment to policy “normalization.”

It is finally confronting the beast that former Fed Chairman Alan Greenspan unleashed over 30 years ago: the “Greenspan put” that provided asymmetric support to financial markets by easing policy aggressively during periods of market distress while condoning froth during upswings. Since the October 19, 1987 stock-market crash, investors have learned to count on the Fed’s unfailing support, which was justified as being consistent with what is widely viewed as the anchor of its dual mandate: price stability. With inflation as measured by the Consumer Price Index averaging a mandate-compliant 2.1% in the 20-year period ending in 2017, the Fed was, in effect, liberated to go for growth.

And so it did. But the problem with the growth gambit is that it was built on the quicksand of an increasingly asset-dependent and ultimately bubble- and crisis-prone US economy. Greenspan, as a market-focused disciple of Ayn Rand, set this trap. Drawing comfort from his tactical successes in addressing the 1987 crash, he upped the ante in the late 1990s, arguing that the dot-com bubble reflected a new paradigm of productivity-led growth in the US. Then, in the early 2000s, he committed a far more serious blunder, insisting that a credit-fueled housing bubble, inflated by “innovative” financial products, posed no threat to the US economy’s fundamentals. As one error compounded the other, the asset-dependent economy took on a life of its own.

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Someone better collect some pieces on Mattis from 2 years ago. Won’t look anything like the sainthood declarations he’s getting today.

Trump, Annoyed By Resignation Letter, Pushes Out Mattis Early (R.)

U.S. President Donald Trump on Sunday said he was replacing Defense Secretary Jim Mattis two months earlier than had been expected, a move officials said was driven by Trump’s anger at Mattis’ resignation letter and its rebuke of his foreign policy. On Thursday, Mattis had abruptly said he was quitting, effective Feb. 28, after falling out with Trump over his foreign policy, including surprise decisions to withdraw all troops from Syria and start planning a drawdown in Afghanistan. Trump has come under withering criticism from fellow Republicans, Democrats and international allies over his decisions about Syria and Afghanistan, against the advice of his top aides and U.S. commanders.

The exit of Mattis, highly regarded by Republicans and Democrats alike, added to concerns over what many see as Trump’s unpredictable, go-it-alone approach to global security. Trump said Deputy Defense Secretary Patrick Shanahan would take over on an acting basis from Jan. 1. In announcing his resignation, Mattis distributed a candid resignation letter addressed to Trump that laid bare the growing divide between them, and implicitly criticized Trump for failing to value America’s closest allies, who fought alongside the United States in both conflicts. Mattis said that Trump deserved to have a defense secretary more aligned with his views.

Trump, who tweeted on Thursday that Mattis was “retiring, with distinction, at the end of February,” made his displeasure clear on Saturday by tweeting that the retired Marine general had been “ingloriously fired” by former President Barack Obama and he had given Mattis a second chance.

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The only interesting question: why go public with something so ordinary?

Mnuchin Holds Calls With Heads Of America’s 6 Biggest Banks Amid Shutdown (F.)

No need to panic. That was the message Treasury Secretary Steven Mnuchin sought to convey after holding unscheduled Sunday afternoon calls with the heads of the largest banks in America, Jamie Dimon of JPMorgan, Brian Moynihan of Bank of America, Michael Corbat of Citigroup, Tim Sloan of Wells Fargo, David Solomon of Goldman Sachs and James Gorman of Morgan Stanley. In a statement released by Treasury, Mnuchin said these CEOs confirmed “markets continue to function properly.” These bankers also assured Mnuchin their firms have the liquidity to fund themselves and their lending activities, and reported no clearance or margin issues on their trades, Treasury said.

A decade ago, such calls and terse press releases were routine Sunday events as Treasury officials, the Federal Reserve, and bank heads worked together to stem the worst financial panic since the Great Depression. This time, however, Mnuchin’s unusual efforts come amid a growing economy where credit is flowing freely. Instead of a financial panic, his comments seemed aimed at market concerns coming from political turmoil in Washington.

On Monday, Mnuchin will convene a call with the President’s Working Group on financial markets “to discuss coordination efforts to ensure normal market operations,” bringing together the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Commission.

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They’re all grossly overvalued.

Facebook Is The ‘Biggest Concern’ Among The FAANGs (CNBC)

One industry analyst has sounded the alarm on Facebook, calling the company the “biggest concern” among the so-called FAANG stocks. “The digital economy operates on trust, and they’ve broken trust on so many levels,” Ray Wang, principal analyst and founder at Silicon Valley-based Constellation Research, told CNBC’s “Squawk Box” on Monday. The FAANG stocks consist of Silicon Valley tech giants Facebook, Amazon, Apple, Netflix and Google-parent Alphabet.

Wang said many of Facebook’s trust woes have been “centralized” around Chief Operating Officer Sheryl Sandberg, who was in the spotlight after a New York Times report in mid-November about the executive and the social media company’s internal operations. The Times report came on the back of a series of scandals and incidents which have mired Facebook in controversy and sent its stock sinking in 2018. As of its last close after extended hours trade on Dec. 21, the company’s stock price was more than 40 percent off its 52-week high. Asked about the possibility of Sandberg departing from Facebook, Wang said it was “in the rumor category.”

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China’s afraid of the exchange rate.

China Won’t Resort To Massive Monetary Stimulus Next Year – PBOC (CNBC)

China will not resort to “flood-like” stimulus in monetary policy next year, although it will consider more cuts as needed to reserves held at commercial banks, local media quoted a central bank adviser as saying in a report on Tuesday. The Chinese economy will face downward pressure in 2019, while the pace of growth will gradually stabilize, the 21st Century Business Herald quoted Sheng Songcheng, an advisor to the People’s Bank of China (PBOC), as saying. “Monetary policy will remain prudent and won’t be a ‘flood.’ Otherwise, funds will likely flow into the property sector again,” Sheng was quoted as saying by the state-backed newspaper.

There remains room for further cuts in banks’ reserve requirement ratios (RRRs), and Sheng does not recommend broad-based reductions in interest rates, it said. China will bolster support next year for its economy, the world’s second-largest, by cutting taxes and keeping liquidity ample, the official Xinhua news agency said after last week’s Central Economic Work Conference, an annual closed-door gathering of party leaders and policymakers. [..] On exchange rates, the central bank adviser said China should defend the yuan at the key seven-per-dollar level. “The key threshold of seven per dollar is very important. If the yuan weakens past that crucial point, the cost of stabilizing the exchange rate will be greater,” Sheng was quoted as saying.

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The level of incompetence is sobering.

Police tell BBC News they “cannot discount the possibility that there may have been no drone at all”.

Gatwick Drones Pair ‘No Longer Suspects’ (BBC)

A man and woman arrested in connection with drone sightings that grounded flights at Gatwick Airport have been released without charge. The 47-year-old man and 54-year-old woman, from Crawley, West Sussex, had been arrested on Friday night. Sussex Police said there had been 67 reports of drone sightings – having earlier cast doubt on “genuine drone activity”. Det Ch Supt Jason Tingley said no footage of a drone had been obtained. And he said there was “always a possibility” the reported sightings of drones were mistaken.

However, he later confirmed the reported sightings made by the public, police and airport staff from December 19 to 21 were being “actively investigated”. “We are interviewing those who have reported these sightings, are carrying out extensive house-to-house inquiries, and carrying out a forensic examination of a damaged drone found near the perimeter of the airport.” Det Ch Supt Tingley said it was “a working assumption” the device could be connected to their investigation, but officers were keeping “an open mind”.

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‘We are working with human beings saying they have seen something..’ Cue 150,000 ruined holidays.

Gatwick Police Say They Cannot Discount Possibility There Was No Drone (Ind.)

Detectives investigating the Gatwick drone attacks which caused three days of chaos for passengers say it is possible there never were any drones. Police do not have any footage of the flying machines at the airfield and are relying on accounts from witnesses and the discovery of a damaged device. The revelation by Detective Chief Superintendent Jason Tingley came after the couple arrested by Sussex Police on Friday night were released without charge. Asked about speculation there never was a drone, he said: “Of course, that’s a possibility. We are working with human beings saying they have seen something. “Until we’ve got more clarity around what they’ve said, the detail – the time, place, direction of travel, all those types of things – and that’s a big task.”

Mr Tingley said one of the “working theories” was that the damaged drone found close to the airport in Sussex was responsible for causing the disruption. “Always look at it with an open mind, but actually it’s very basic common sense that a damaged drone, which may have not been there at a particular point in time has now been seen by an occupier, a member of the public, and then they’ve told us, ‘we’ve found this’. “Then we go and forensically recover it and do everything we can at that location to try and get a bit more information.” [..] Gatwick Airport has offered a £50,000 reward through Crimestoppers for information leading to the arrest and conviction of those responsible for the chaos.

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It doesn’t matter what anybody does, Trump still hoards the attention.

‘Home Alone’: Bored Trump Tweets Up Storm During Christmas Shutdown (RT)

With the US government shut down due to the dispute over funding President Donald Trump’s border wall, and his family in Florida, the chief executive has chosen to spend the Christmas holiday taking potshots at critics on Twitter. Funding for about a quarter of US government services ran out on Friday at midnight, as Senate Democrats refused to endorse a House funding bill that would’ve given Trump $5.7 billion for the border wall. Trump was supposed to celebrate Christmas at Mar-a-Lago with his family, but elected to stay in the White House instead, tweeting up a storm.

Trump tweeted twenty times on Thursday, as the shutdown loomed. He continued posting on Friday (ten), Saturday (seven) and Sunday (eight), then ramped up the schedule on Monday, with ten tweets by the early afternoon. In addition to his usual complaints about “Fake News” and Democrats, Trump has also taken aim at the Federal Reserve, praised Saudi Arabia, and dismissed Washington’s envoy to the anti-ISIS coalition as an “Obama appointee” who gave Iran $1.8 billion “in CASH” as part of the “horrific” nuclear deal. He also complained, tongue firmly in cheek, about being “all alone (poor me) in the White House waiting for the Democrats to come back and make a deal on desperately needed Border Security.”

Though Trump’s Twitter tirades usually trigger the trolls, that last one brought up a multitude of call-backs to the president’s cameo in 1992’s Christmas comedy ‘Home Alone 2: Lost in New York.’

Read more …

Dec 222018
 
 December 22, 2018  Posted by at 10:14 am Finance Tagged with: , , , , , , , , , , ,  


Mattia Preti The Adoration of the Shepherds 1660-99

 

More Than Half A Million Americans Will Be Homeless This Christmas (F.)
Dow Dives 400 Points To End Its Worst Week In 10 Years (CNBC)
NY Fed President John Williams: Central Bank Is Listening To The Market (CNBC)
Shutdown Begins As Trump, Democrats Wrestle Over Border Wall (ZH)
A Fretful Holiday (Kunstler)
Chinese Leaders Promise Tax Cuts To Boost Flagging Economic Growth (CNBC)
Goldman Sachs Facing Class Action Lawsuits Over 1MDB Scandal (G.)
Corbyn: Brexit Would Go Ahead Even If Labour Won Snap Election (G.)
Der Spiegel To Run 23-Page Special On Reporter Who Faked Stories (AFP)
WikiLeaks Exposes US Embassies Stockpiling Spy Gear (RT)
UN Tells UK: Allow Assange To Leave Ecuador Embassy Freely (R.)
UN Experts Call For Assange’s Release As He Loses Last Appeal Over Rules (RT)
Risks Of ‘Domino Effect’ Of Tipping Points Greater Than Thought (G.)

 

 

That’s all? Hard to believe. But whatever the real number, isn’t this what Christmas is about, and what should dominate the news?

More Than Half A Million Americans Will Be Homeless This Christmas (F.)

More than half a million Americans are going to be homeless this coming holiday season. Despite seven years of steady progress and decline, the homeless population has now increased slightly for the second year running. A report from the Department of Housing and Urban Development has found that just under 553,000 people are homeless, with approximately 65% staying in sheltered accommodation. Out of every 10,000 people in the United States, 17 experienced homelessness on a single night in 2018.

Half of all people experiencing homelessness are in one of five states – California (129,972 people), New York (91,897), Florida (31,030), Texas (25,310) and Washington (22,304). Unsurprisingly, the problem is far more visible in urban areas and over half of all homeless people live in one of the country’s 50 largest cities. In fact, nearly a quarter of all people sleeping rough did so in either New York or Los Angeles. The Big Apple has one of the lowest levels of unsheltered homeless at 5% while in Los Angeles, 75% of people were found in unsheltered locations.

Read more …

Some serious money was lost. But no-one will admit it.

Dow Dives 400 Points To End Its Worst Week In 10 Years (CNBC)

Stocks plunged again on Friday, sending the Dow Jones Industrial Average to its worst week since the financial crisis in 2008, down nearly 7 percent. The Nasdaq Composite Index closed in a bear market and the S&P 500 was on the brink of one itself, down nearly 18 percent from its record earlier this year. The Federal Reserve’s rate hike on Wednesday drove the losses this week and fears of an extended government shutdown only added to the pain on Friday. The Dow Jones Industrial Average fell 414.23 points to finish at 22,445.37 in turbulent trading that sent the blue-chip index up as much as 300 points earlier in the day, only to trade back in negative territory less than one hour later.

The initial rally upward on Friday came as Federal Reserve Bank of New York President John Williams told CNBC that the central bank could reassess its interest rate policy and balance sheet reduction in the new year if the economy slows. But those gains slowly disappeared as investors used that short-term pop as a chance to sell more. The broader S&P 500 fell 2.1 percent on Friday to close at 2,416.58, while the tech-heavy Nasdaq Composite shed 2.99 percent to 6,332.99 with big losses in technology stocks including Facebook, Amazon and Apple. Stocks accelerated to their lows after President Donald Trump’s trade adviser, Peter Navarro, told Nikkei that it would be “difficult” for the U.S. and China to arrive at a permanent economic agreement after a 90-day ceasefire in the trade tensions.

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Yeah, first you kill the markets and then you listen to them. Makes a lot of sense.

NY Fed President John Williams: Central Bank Is Listening To The Market (CNBC)

New York Federal Reserve President John Williams told CNBC on Friday that the central bank is listening “very carefully” to the market’s concerns on growth, but believes the U.S. economy is in good shape. Fed Chairman Jerome Powell and other central bank leaders are moving to more data dependency, Williams said, which includes listening to people in financial markets as well as local businesses. “We are listening very carefully to what’s happening in markets for two reasons. One is financial conditions have [an] important influence on [the] economic outlook,” Williams said on “Squawk on the Street” in an interview with CNBC’s Steve Liesman.

“Second, I think we are hearing something important from markets, and that is a concern risk to the economy and potential further slowdown than we currently expect in our base case.”It’s not just looking at the “hard GDP data” or “CPI data,” he added. “We’re listening to the message of the market.” Williams appeared on CNBC after the Fed on Wednesday raised its benchmark interest rate for a fourth time this year and lowered its rate hike projection for 2019 from three to two. He said Friday that this week’s rate increase was “fully justified and makes sense,” but he added the Fed is open to reconsidering its views on rate hikes next year. Stocks rose sharply during Friday’s interview, but then faded.

Read more …

Nothing better to do for Christmas.

Shutdown Begins As Trump, Democrats Wrestle Over Border Wall (ZH)

The US government has been partially shut down for the third time this year after Congress failed to agree on a comrpomise path forward as lawmakers continued to negotiate over funding for President Trump’s border wall. Senate negotiators from both parties agreed to keep talking in search of a spending deal as the House and Senate adjourned Friday night without an agreement to avoid at least a partial shutdown starting at midnight Earlier in the day, Trump scuttled an agreement that would have kept the government open until February after coming under heavy criticism from conservative talk show hosts and allies in the House because the measure didn’t include the $5 billion he wanted for the wall. According to Bloomberg, negotiations between the White House and Democrats went on late into Friday night.

Trump’s emissaries were Vice President Mike Pence, White House budget director Mick Mulvaney and senior adviser Jared Kushner, who shuttled between private meetings with lawmakers on Capitol Hill. And while negotiations to resolve the impasse are underway, it was unclear if parts of the government will remain shuttered for days or weeks as many expect a protracted fight with both side having dug in. Ending the shutdown which affects nine of 15 federal departments and dozens of agencies, requires Democratic leaders and Trump to reach a compromise, which so far has been elusive as both sides hardened their positions. The House and Senate are scheduled to convene at noon on Saturday, but lawmakers were told they’ll be given 24 hours notice of any planned votes.

The failure of elected officials to keep the government fully operating caps a chaotic week in Washington, during which Trump announced a withdrawal of all U.S. forces from Syria, a draw-down of U.S. forces in Afghanistan, and the resignation of Defense Secretary Jim Mattis. Senator Richard Shelby of Alabama, chairman of the Appropriations Committee, said Republicans made an offer on a funding measure and were waiting for a response from Senate Democratic leader Chuck Schumer of New York. “I am hopeful,” he said of the negotiations. “We’ve made some overtures.” Talks revolved around providing less money for border barriers and more restrictions than Trump initially demanded, however the president was said to balk at anything less than the $5 billion he demanded.

https://twitter.com/realDonaldTrump/status/1076239448461987841/photo/1

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“The USA is worse than broke. It’s down to liquidating its rehypothecated hypotheticals.”

A Fretful Holiday (Kunstler)

The stopgap spending bill before congress — to avert a government shut-down — is based on the comical idea that the money is actually there to spend. Everyone with half a brain knows that it’s not money but “money,” a hypothetical abstraction composed of hopes and wishes. The USA is worse than broke. It’s down to liquidating its rehypothecated hypotheticals. After all, financialization added up to money with its value removed. The global credit markets seem to be sensing this as the tide of borrowings retreats, exposing all the wretched, slimy creatures wheezing in the exposed mudflats who have no idea how to service their old loans or generate credible new ones. But, no matter. We’ll continue pretending until the US$ flies up its own cloacal aperture and vanishes.

Contingent on that exercise is “money” for Mr. Trump’s promised-and-requested border wall. The wall is really a symbol for the nation’s unwillingness to set a firm policy on immigration. Half of the political spectrum refuses to even make a basic distinction between people who came here legally and those who snuck in and broke the law. They’ve super-glued themselves to that position not on any plausible principle, but because they’re desperate to corral Hispanic votes — and notice how eager they are to get non-citizens on the voting rolls. Their mouthpiece, The New York Times, even ran an op-ed today, None of Us Deserve Citizenship, (is that even grammatical?) arguing that we should let everybody and anybody into the country because of our longstanding wickedness.

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This scares me: “substantially increase the size of local government special bonds..”

Chinese Leaders Promise Tax Cuts To Boost Flagging Economic Growth (CNBC)

China’s top leaders have ended a vital economic meeting with a fiscal pledge to support economic growth next year. According to state media, Beijing policymakers will keep liquidity “ample” and cut taxes on a bigger scale in a bid to keep 2019 growth within a “reasonable range.” The world’s second-largest economy grew at 6.5 percent year-on-year in the third quarter of 2018, marking the weakest pace since the global financial crisis in 2008. “The pro-active fiscal policy should enhance efficiency, implement larger-scale tax cuts and fee reductions, and substantially increase the size of local government special bonds,” Xinhua said in a translation provided by Reuters. The media outlet added that a “prudent monetary policy should be neither too loose nor too tight, keeping liquidity reasonable ample.”

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Goldman blames a bunch of Malaysian government-related guys.

Goldman Sachs Facing Class Action Lawsuits Over 1MDB Scandal (G.)

Goldman Sachs has been hit with two class action lawsuits on behalf of investors who claim they were misled over the bank’s involvement in the 1MDB scandal. Two separate cases have been filed at district court in New York over the past 48 hours by Pomerantz LLP and Rosen Law Firm. They allege that Goldman Sachs failed to disclose its dealings in a fraud and money laundering scheme around the Malaysian state development fund to investors, who bought shares between 2014 and 2018. The bank’s share price has fallen 29% since early November, when reports started to link it with closer involvement in the scandal.

News reports claimed Lloyd Blankfein, who was the CEO and is now chairman of Goldman Sachs, held initial meetings with Malaysian financier Jho Low, who has been accused of masterminding the fraud. Pomerantz and Rosen Law Firm have not disclosed how much they are seeking in damages through their respective class action suits. Goldman Sachs said in a statement: “The 1MDB bond offerings were meant to raise money to benefit Malaysia; instead, a huge portion of those funds were stolen for the benefit of members of the Malaysian government and their associates. The lawsuits are without merit and we intend to vigorously contest them.”

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What Corbyn would do an interview with Guardian I don’t know. They happily smeared him as an anti-Semite not long ago. And report he said Stupid Woman.

Corbyn: Brexit Would Go Ahead Even If Labour Won Snap Election (G.)

Jeremy Corbyn has defiantly restated Labour’s policy of leading Britain out of the European Union with a refashioned Brexit deal, shrugging off intense pressure from Labour MPs and activists for the party to throw its weight behind a second referendum. The Labour leader insisted that even if his party won a snap general election in the new year, he would seek to go to Brussels and try to secure a better deal – if possible, in time to allow Brexit to go ahead on 29 March. “You’d have to go back and negotiate, and see what the timetable would be,” he said. [..]

Twenty-four hours after the furore in the House of Commons in which he was accused of insulting the prime minister, the Labour leader appeared much more relaxed on a visit to the Hope Centre, a homelessness charity in Northampton whose campaign against eviction he is supporting. He admitted he had lost his temper when confronted with a wall of jeering Conservative MPs at prime minister’s questions after May had accused him of lacking a clear Brexit policy. “I was extremely angry: the last point I’d made was, they’d suddenly found £4bn to prepare for no deal. £4bn. At the same time, police officers have lost their jobs; 100,000 vacancies in the NHS, a housing crisis; a homeless man dies on the steps of Westminster; and she and the Conservative party turned the whole thing into some pantomime joke,” he said.

Conservative MPs challenged Corbyn’s claim that he muttered “stupid people” and not “stupid woman”, as many viewers of video footage believed. But he was unrepentant. “It’s interesting their sudden concern about these matters. Where is their concern about the homeless people of this country?” he said, repeatedly jabbing a finger on the table to emphasise his point. “Where is their concern about universal credit? Where is their concern about 200,000 children living in poverty in this country?” [..] As to what stance Labour would take if a referendum were held, Corbyn said, “it would be a matter for the party to decide what the policy would be; but my proposal at this moment is that we go forward, trying to get a customs union with the EU, in which we would be able to be proper trading partners.”

And he struck a distinctly Eurosceptic note by again highlighting Labour’s concerns about the state aid rules that form part of the architecture of the single market. “I think the state aid rules do need to be looked at again, because quite clearly, if you want to regenerate an economy, as we would want to do in government, then I don’t want to be told by somebody else that we can’t use state aid in order to be able to develop industry in this country,” he said.

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The Guardian ignores all evidence it makes up entire reports, the Spiegel tries to make it look like it was just one bad apple (and no-one had a clue for 7 years).

But they both play the same game. And its name is not Truth.

Der Spiegel To Run 23-Page Special On Reporter Who Faked Stories (AFP)

The German news weekly Der Spiegel is to publish a 23-page special report on how one of its award-winning reporters faked stories for years and dealt a blow to media credibility. Claas Relotius, 33, resigned after admitting making up stories and inventing protagonists in more than a dozen articles in the magazine’s print and online editions. Since the scandal was revealed by the magazine on Wednesday, other mainstream German outlets including Die Welt and Die Zeit, which once used Relotius as a freelancer, have also begun poring through articles that he wrote for them.

“Tell it like it is,” wrote Der Spiegel on its latest magazine cover page, in an allusion to the publication’s motto coined by its founder, Rudolf Augstein, that also hangs at the entrance of its headquarters in Hamburg. In its editorial, the magazine said the scam, involving subjects including Syrian orphans and a Holocaust survivor, was the “worst thing that can happen to an editorial team”. It also apologised for the mistake and promised to “do everything to boost our credibility again”.

[..] Der Spiegel said it was “lucky that one of our employees managed to uncover this case”. But for others, the damage was already done, particularly at a time when disinformation campaigns are posing a constant challenge to the credibility of the mainstream media. “The losers are all the journalists in the country who carry out their research in difficult or dangerous circumstances, as well as members of the editorial teams, who check through texts for quality and accuracy,” said Süddeutsche Zeitung in an editorial. It noted that politicians in the far-right party Alternative für Deutschland (AfD) had seized on the case as “evidence of the dysfunctionality of the quality media”.

The AfD, whose supporters often attack the mainstream media as the “lying press”, has been openly gloating over the scandal. One of its MPs, Götz Frömming tweeted: “Ironically, the Spiegel – the self-claimed leading media outlet that likes to slag off Trump, AfD and Co., has been for years delivering the best FakeNews via Relotius.” The public broadcaster Deutsche Welle appealed to people not to condemn all mainstream media because of the “dangerous, isolated case”. It said: “Before him there have also been other fraudsters who have fuelled the accusation of a lying press. But THE lying press doesn’t exist. Most of us are honestly, sincerely doing our work to give children like Alin and Ahmed from Aleppo a voice.”

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shoppinglist.wikileaks.org

WikiLeaks Exposes US Embassies Stockpiling Spy Gear (RT)

US embassies abroad have been buying spying tools, papers released by WikiLeaks show. The documents revealed that one embassy has ordered almost 100 spy cams masked as ties, caps, pens, buttons and watches. The US Embassy Shopping List, a collection of over 16,000 procurement requests filed by US embassies around the globe, was published by WikiLeaks on Friday, a day after a targeted DDoS attack briefly disabled all of its Twitter accounts. Although the trove of quotation requests are more of an open secret, since they are considered public information, WikiLeaks created a searchable database listing even those procurement documents that are no longer linked on the embassies’ websites.

While the bulk of the documents appear to be routine requests for janitor or carpenter services, or, in the case with the US embassy in Moscow, to plant summer flowers at the ambassador’s residence, some hint at the existence of secretive surveillance operations. For instance, in August, the US embassy in El Salvador requested a curious list of items to be procured by a responsible vendor, tellingly described as “tactical spy equipment.” The list includes 94 spying devices, masquerading as everyday objects, including nine pens, 11 lighters, 11 shirt buttons, 12 watches and 12 pairs of glasses, as well as more conventional tools such as hidden cameras and binoculars.

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Reuters is pretty much useless on the topic.

UN Tells UK: Allow Assange To Leave Ecuador Embassy Freely (R.)

U.N. rights experts called on British authorities on Friday to allow WikiLeaks founder Julian Assange to leave the Ecuador embassy in London without fear of arrest or extradition. The U.N. Working Group on Arbitrary Detention reiterated its finding published in February 2016 that Assange had been de facto unlawfully held without charge in the embassy, where he has now been holed up for more than six years. He initially took asylum to avoid being extradited to Sweden, where authorities wanted to question him as part of a sexual assault investigation. That investigation was dropped.

Assange, whose website published thousands of classified U.S. government documents, denied the Sweden allegations, saying the charge was a ploy that would eventually take him to the United States where a prosecutors are preparing to pursue a criminal case against him. Britain says Assange will be arrested for skipping bail if he leaves the embassy, but that any sentence would not exceed six months, if convicted. It had no immediate comment on the experts’ call, but in June, foreign office minister Alan Duncan said Assange would be treated humanely and properly.

“… the only ground remaining for Mr. Assange’s continued deprivation of liberty is a bail violation in the UK, which is, objectively, a minor offence that cannot post facto justify the more than six years confinement that he has been subjected to since he sought asylum in the Embassy of Ecuador,” the U.N. experts said in a statement. “It is time that Mr. Assange, who has already paid a high price for peacefully exercising his rights to freedom of opinion, expression and information, and to promote the right to truth in the public interest, recovers his freedom,” they said.

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RT does this much better than Reuters.

UN Experts Call For Assange’s Release As He Loses Last Appeal Over Rules (RT)

A UN-endorsed team of experts has urged London to “immediately” allow WikiLeaks co-founder Julian Assange to leave the Ecuadorian Embassy, as the court of last resort denied his appeal over a newly imposed set of ‘censure’ rules. Seong-Phil Hong, chair-rapporteur of the Working Group on Arbitrary Detention, and Michel Forst, special rapporteur on the situation of human rights defenders, reiterated calls for the UK to abide by international law and allow Assange to leave the Ecuadorian Embassy without any precondition.

“It is time that Mr Assange, who has already paid a high price for peacefully exercising his rights to freedom of opinion, expression and information, and to promote the right to truth in the public interest, recovers his freedom,” the UN experts demanded in a statement on Friday. The experts argued that “pre-trial detention must be only imposed in limited instances,” adding that the charges Assange faces in the UK for skipping his bail while applying for asylum cannot justify his six years within the embassy’s walls. Assange became holed up in the Ecuadorian Embassy in London in 2012 after being granted asylum by then-Ecuadorian president Rafael Correa. Assange, who was in the UK at the time, was unable to go to the airport for fear of being arrested and handed over to the US, where he is wanted for exposing diplomatic and military secrets, and has had to stay in the embassy since.

[..] Despite the UN experts’ support, Assange suffered a setback with the Ecuadorian justice system. On Friday, Pichincha Provincial Court reaffirmed a decision by a lower court to throw out his appeal against a new set of house rules. The rules laid out in a special protocol in October restricted Assange’s visitation rights, made him refrain from political statements, pay his own medical bills, and take better care of his cat. Shortly after the regulation was imposed, Assange gave the cat away, with reports circulating that he has become virtually isolated in the embassy after all the staff he had personally known left.

Speaking before the court via a video-link last week, Assange warned that the new rules would “inevitably lead to a health crisis for me, resulting in my death or hospitalization or a political excuse to illegally hand me over to the British, and therefore to the United States, where I face a potential life sentence.” In late October, a judge rejected his request to change the protocol, arguing that the government has the right to impose any rules it wants inside the premises. Assange’s lawyer Carlos Poveda admitted that the whistleblower is stuck with the rules since all legal options to revise them have been “exhausted.”

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“The risks are greater than assumed..” is starting to sound old. Preaching to the long converted.

Risks Of ‘Domino Effect’ Of Tipping Points Greater Than Thought (G.)

Policymakers have severely underestimated the risks of ecological tipping points, according to a study that shows 45% of all potential environmental collapses are interrelated and could amplify one another. The authors said their paper, published in the journal Science, highlights how overstressed and overlapping natural systems are combining to throw up a growing number of unwelcome surprises. “The risks are greater than assumed because the interactions are more dynamic,” said Juan Rocha of the Stockholm Resilience Centre. “The important message is to recognise the wickedness of the problem that humanity faces.”

The study collated existing research on ecosystem transitions that can irreversibly tip to another state, such as coral reefs bleaching and being overrun by algae, forests becoming savannahs and ice sheets melting into oceans. It then cross-referenced the 30 types of shift to examine the impacts they might have on one another and human society. Only 19% were entirely isolated. Another 36% shared a common cause, but were not likely to interact. The remaining 45% had the potential to create either a one-way domino effect or mutually reinforcing feedbacks.

[..] Until recently, the study of tipping points was controversial, but it is increasingly accepted as an explanation for climate changes that are happening with more speed and ferocity than earlier computer models predicted. The loss of coral reefs and Arctic sea ice may already be past the point of no return. There are signs the Antarctic is heading the same way faster than thought. Co-author Garry Peterson said the tipping of the west Antarctic ice shelf was not on the radar of many scientists 10 years ago, but now there was overwhelming evidence of the risks – including losses of chunks of ice the size of New York – and some studies now suggest the tipping point may have already been passed by the southern ice sheet, which may now be releasing carbon into the atmosphere.

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Dec 212018
 
 December 21, 2018  Posted by at 10:42 am Finance Tagged with: , , , , , , , , , , , , , , ,  


Pieter Bruegel the Elder Hunters in the snow 1565

 

Dow Drops 470 Points To 14-Month Low In Day 2 Of Big Losses After Fed Hike (CNBC)
As Fear Rises On Wall Street, Strategists Warn The Worst Is Yet To Come (CNBC)
US Defense Chief Mattis Quits As Trump Pulls From Syria, Afghanistan (AFP)
House Passes Spending Bill With Border Wall Money, Senate Showdown Next (CNBC)
China Denies ‘Slanderous’ Economic Espionage Charges From US Allies (R.)
Russian Media Regulator Starts Checking Legality Of BBC’s Operations (R.)
Gatwick Runway Reopens After Days Of Drone Disruption (G.)
There’s A National Emergency All Right – But It Isn’t Brexit (G.)
Germany’s Hidden Crisis – Social Decline In The Heart Of Europe (G.)
Malaysia Seeks $7.5 Billion In Reparations From Goldman Sachs Over 1MDB (R.)
Singapore Said To Expand 1MDB Criminal Probe To Include Goldman Sachs (BBG)
Carlos Ghosn Re-Arrested On New Charges In Japan (BBC)
New Tree Species Became Extinct Before It Was Named (Ind.)

 

 

Jay Powell pricks the bubbles. Painful and inevitable. But if he ever decides to lower rates again next year, look for the bubbles to return. That’s his dilemma.

Dow Drops 470 Points To 14-Month Low In Day 2 Of Big Losses After Fed Hike (CNBC)

U.S. stocks swooned for a second day Thursday after the Federal Reserve raised benchmark interest rates and said that it would continue to let its massive balance sheet shrink at the current pace. Fears of a government shutdown also sent stocks tumbling to new lows Thursday afternoon. The Dow Jones Industrial Average fell 464.06 points to 22,859.6, bringing its two-day declines to more than 800 points and its 5-day losses to more than 1,700 points. The S&P 500 fell 1.5 percent to finish at 2,467.41 as technology stocks underperformed. The Nasdaq Composite fell 1.6 percent and closed at 6,528.41, briefly dipping into bear market territory amid big losses in Amazon and Apple.

The Nasdaq is 19.7 percent below its recent high. Companies in the S&P 500 have lost a total of $2.39 trillion in market cap this month. The Cboe Volatility Index — one of the market’s best gauges of marketplace fear — rose above 30. The Dow and Nasdaq posted their lowest closes since October 2017, while the S&P 500 finished at its lowest level since September 2017. The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down more than 10 percent each this month. The S&P 500 is now in the red for 2018 by 7.7 percent.

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Yeah, all these experts. Who cares? There’s not nearly enough fear yet.

As Fear Rises On Wall Street, Strategists Warn The Worst Is Yet To Come (CNBC)

“The market’s in no man’s land,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. Stocks have broken through the lows of the year, and technicians are scurrying to find the next support levels. On the S&P 500, he said 2,400 is a potential psychological area of support. The market plunged Thursday against the backdrop of a congressional feud with the White House over a continuing budget resolution, but the markets were more focused on the worries that have been festering over global growth and the potential for recession. “You can guarantee if the government shuts down it’s going to very soon reopen,” said Boockvar.

“This could be a carry through from yesterday, that’s legitimate. The problem now is this is the first time in years in this bull market that people are doing tax-loss selling. That’s helping to exaggerate the move. You’re also having redemptions.” Since the Fed announced its rate hike Wednesday, the Dow was down 815 points. The sharp drop in stocks since early October was unexpected and even more crushing recently, since December is typically a positive time for stocks. The 10 percent decline so far in the S&P 500 is its worst December performance since 1931. If it remains this way, it would the first time ever that December is the worst month of the year for the index.

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Have all those people who now say Mattis is the wisest and most balanced in the White House, forgotten why he’s called Mad Dog?

US Defense Chief Mattis Quits As Trump Pulls From Syria, Afghanistan (AFP)

US Defense Secretary Jim Mattis resigned Thursday, leading a chorus of protests at home and abroad after President Donald Trump ordered a complete troop pullout from Syria and a significant withdrawal from Afghanistan. Trump steadfastly defended his sudden push for retrenchment, vowing that the United States would no longer be the “policeman of the Middle East” and saying the 2,000-strong US force in Syria was no longer needed as the Islamic State group had been defeated. Mattis, a battle-hardened retired four-star general seen as a moderating force on the often impulsive president, made little attempt to hide his disagreements with Trump.

“Because you have the right to have a secretary of defense whose views are better aligned with yours,” Mattis said in a letter to Trump, “I believe it is right for me to step down from my position.” Mattis hailed the coalition to defeat Islamic State as well as NATO, the nearly 70-year-old alliance between North America and Europe whose cost-effectiveness has been questioned by the businessman turned president. “My views on treating allies with respect and also being clear-eyed about both malign actors and strategic competitors are strongly held and informed by over four decades of immersion in these issues,” Mattis wrote. One day after the surprise announcement on Syria, a US official told AFP that Trump had also decided on a “significant withdrawal” in a much larger US operation – Afghanistan.

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No government into Christmas?

House Passes Spending Bill With Border Wall Money, Senate Showdown Next (CNBC)

The House passed a temporary spending bill Thursday with money for President Donald Trump’s proposed border wall, further muddying the scramble to dodge a partial government shutdown by Friday. The chamber approved the measure to keep the government running into February by a 217-185 vote. But the path forward now is murky. The bill likely will not clear the Senate because it includes more than $5 billion for the border barrier, increasing the chances that funding for seven agencies lapses after the midnight Friday deadline. Senators were told Thursday to prepare for potential votes Friday. The chamber convenes at noon. The Senate unanimously approved a bill Wednesday night to keep the government running through Feb. 8 — without border wall money.

Trump insisted Thursday that he would not sign it. It forced House Republicans to include the wall money in the new bill. Both House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer have flatly said congressional Democrats will not approve wall money. As Republicans need Democratic votes to pass spending legislation in the Senate, a partial shutdown is all but assured if the GOP insists on funding for the barrier. It is unclear if Republicans will abandon that goal in an effort to keep the government running past Friday. During a televised Oval Office fracas last week, Pelosi challenged Trump by saying he did not have the votes for wall money in the House. It turns out he did.

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We can do it, but they can’t.

China Denies ‘Slanderous’ Economic Espionage Charges From US Allies (R.)

China’s Foreign Ministry said on Friday it resolutely opposed “slanderous” accusations from the United States and other allies criticizing China for economic espionage, urging Washington to withdraw its accusations. The United States should also withdraw charges against two Chinese citizens, the ministry said, adding that China had never participated in or supported any stealing of commercial secrets and had lodged “stern representations” with Washington. “We urge the U.S. side to immediately correct its erroneous actions and cease its slanderous smears relating to internet security,” it said, adding that it would take necessary measures to safeguard its own cybersecurity and interests.

It has long been an “open secret” that U.S. government agencies have hacked into and listening in on foreign governments, companies and individuals, the ministry added. “The U.S. side making unwarranted criticisms of China in the name of so-called ‘cyber stealing’ is blaming others while oneself is to be blamed, and is self-deception. China absolutely cannot accept this.” U.S. prosecutors indicted two Chinese nationals linked to China’s Ministry of State Security intelligence agency on charges of stealing confidential data from American government agencies and businesses around the world. Prosecutors charged Zhu Hua and Zhang Shilong in hacking attacks against the U.S. Navy, the space agency NASA and the Energy Department and dozens of companies. The operation targeted intellectual property and corporate secrets to give Chinese companies an unfair competitive advantage, they said.

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More of the same: We can do it, but they can’t. The west wants to blame RT for all sorts of stuff beacuse that fits the Russophobe narrative.

Russian Media Regulator Starts Checking Legality Of BBC’s Operations (R.)

Russia’s media regulator said on Friday it would carry out checks to determine if the BBC World News channel and BBC internet sites complied with Russian law, a move it described as a response to British pressure on a Russian TV channel. Roskomnadzor, the regulator, said in a statement its checks were Russia’s response to a decision by British media regulator Ofcom, which on Thursday said that Russian broadcaster RT had broken impartiality rules in some of its news and current affairs programs. “The results of our check will be announced separately,” the Russian regulator said. Ofcom said on Thursday it was considering imposing some kind of sanction on RT, which is financed by the Russian state.

It took issue in particular with its coverage of the poisoning in Britain of former Russian spy Sergei Skripal and his daughter. Britain has accused agents working for Russia’s military intelligence agency, the GRU, of committing the crime, an allegation Moscow denies. British Media Secretary Jeremy Wright also weighed in on Thursday, saying what he called RT’s mask as an impartial news provider was slipping. RT rejected Ofcom’s findings, saying Ofcom had ignored its explanations and not paid “due regard” to its rights. Commenting on the launch of the Russian investigation on Friday, Margarita Simonyan, RT’s editor-in-chief, said on Twitter that Ofcom had hinted that it planned to strip her channel of its broadcasting license in Britain. “(Welcome to the) brave new world,” she wrote.

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Days of panic due to one or two drones, at an airport that has just one runway to begin with?!

Gatwick Runway Reopens After Days Of Drone Disruption (G.)

The first flights have resumed at Gatwick airport after a series of drone sightings caused days of disruption, affecting more than 100,000 passengers. Airlines warned customers to continue to check their flight’s status on Friday morning as the airport worked to “introduce a limited number of flights over the coming hours”. The runway had remained closed throughout Thursday night, forcing passengers to search for accommodation or shelter at the airport, and bringing demands for new aviation regulations to tackle the threat. The airport’s chief operating officer, Chris Woodroofe, said 120,000 passengers’ flights had been disrupted by the incident.

On Thursday night police said there had been more than 50 sightings of the drone in 24 hours from when the runway was first closed. Night-flight restrictions had been lifted at other airports, so “more planes could get into and out of the country”, the transport secretary, Chris Grayling said. “This is clearly a very serious ongoing incident in which substantial drones have been used to bring about the temporary closure of a major international airport,” he said. “The people who were involved should face the maximum possible custodial sentence for the damage they have done. The government is doing everything it can to support Sussex police.”

Shooting down the drone was being considered as a “tactical option” after other strategies to stop it had failed. Amid disbelief that the drone incident could be enough to bring one of the UK’s key airports to a standstill, the perpetrator or perpetrators eluded a search conducted by 20 units from two police forces in the surrounding area.

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Britain just stumbles from crisis to crisis, hidden from view by discussions about someone saying Stupid Woman.

There’s A National Emergency All Right – But It Isn’t Brexit (G.)

[..] there is a world beyond Brexit. True, it lacks the frenzied drama of cabinet walkouts, prime ministerial straw-clutching or humiliation served cold in Brussels. But things still happen – it’s just that they haven’t won much attention. It has been a good month to bury bad news. So allow me to disinter some of the headlines deep inside the newspapers. Since we’re counting small things, let’s start with children. Last week it was reported that a primary school in Great Yarmouth had opened its own food bank. It was launched by the headteacher, Debbie Whiting, after she saw pupils under 11 so hungry they were stealing from others’ lunchboxes.

This week, more than half of teachers surveyed by the National Education Union expressed fears that some of their kids won’t have enough to eat this Christmas. They reported a boy turning up wearing his trousers back to front, in order to hide the holes in the knees, and a class where one in three children sleep in their uniforms because they have no pyjamas. If anything qualifies as a national emergency, it should be this. A new generation growing up without adequate food and clothing ought to be leading TV bulletins and shaming government ministers into action. What dominates instead is blue-on-blue match commentary, because Jacob Rees-Mogg is box office while poor people can be slipped in just before the “And finally”.

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“..of all German women in work only one in three earns the minimum wage…”

Germany’s Hidden Crisis – Social Decline In The Heart Of Europe (G.)

The cover of Oliver Nachtwey’s book depicts a VW Beetle, emblem of Teutonic manufacturing prowess since Hitler’s day, driving off a cliff. Is the country that got used to imposing its values on feebler client nations – bailing out southern Europeans with their oversized public sectors, rampant tax avoidance and long lunches – in trouble? The Germany described by this Frankfurt School professor is a basket case – post-growth, post-democratic, with the first fascists in the Bundestag since the Third Reich. Despite being Europe’s richest country, it has higher numbers of working poor than any other EU state; almost one in four of its workers is paid less than the €9.30 (£8.40) minimum wage, many requiring state support.

Sociologist Ulrich Beck in the giddy 1980s called Germany an elevator society, in which millions of skilled workers upgraded from VWs to Audis and expected their children to rise still further in social status and wealth. The elevator may have seized up for a while after reunification, but only five years ago Germany seemed unstoppable. Every German, Beck thought, was in the same lift. No longer. Not only has downward mobility become more evident but the poor get poorer, the rich get richer, the older get tenure, the younger join the precariat. Sure, greater equality of opportunity means more women work than ever before, but of all German women in work only one in three earns the minimum wage.

“So while German women are more equal in terms of rights, inequality between women has never been greater than it is today,” Nachtwey argues. This is symptomatic of what he calls regressive modernisation and of the following paradox: “The more a society is based on equality of opportunity, the more unequal it becomes, and the more legitimate its inequalities”. Legitimate? The losers are perceived to be those who deserve to lose, the winners those who deserve to win. And the losers are the usual suspects – women, immigrants, those who have no qualifications. A Germany that once prided itself on social mobility, and whose sociologists once crazily imagined class distinctions were over, has become, in terms of class, as sclerotic as Britain.

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There’s a class action case looming as well.

Malaysia Seeks $7.5 Billion In Reparations From Goldman Sachs Over 1MDB (R.)

Malaysia is seeking US$7.5 billion in reparations from Goldman Sachs over its dealings with scandal-linked state fund 1MDB, the Financial Times reported on Friday (Dec 21), citing the country’s finance minister. Malaysian prosecutors this week filed charges against Goldman Sachs in connection with its role as underwriter and arranger of three bond sales that raised US$6.5 billion for 1Malaysia Development Berhad (1MDB), the first criminal action against the US bank over the scandal. Goldman Sachs has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to the bank about the proceeds of the bond sales.

In addition to the bonds’ total value, Goldman Sachs should also return US$1 billion to cover US$600 million in fees paid to the bank and bond coupons that were “higher than the market rate”, the FT quoted Malaysian finance minister Lim Guan Eng as saying. The three 10-year bonds carried coupons ranging from 4.4 per cent to 5.99 per cent. Lim also told the FT that reparations should at least be more than US$1.8 billion, the sum Goldman Sachs has told investors it had set aside to cover potential losses related to 1MDB legal proceedings. “Their figure is US$1.8 billion. Ours is US$7.5 billion,” Lim said. Goldman Sachs told the FT: “The 1MDB bond offerings were meant to raise money to benefit Malaysia; instead, a huge portion of those funds were stolen for the benefit of members of the Malaysian government and their associates.”

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The squid screwed up royally. But no-one at Goldman will be arrested.

Singapore Said To Expand 1MDB Criminal Probe To Include Goldman Sachs (BBG)

Singapore has expanded a criminal probe into fund flows linked to scandal-plagued 1MDB to include Goldman Sachs, which helped raise money for the entity, people with knowledge of the matter said. Police in the city-state had been examining Goldman’s relationship with the Malaysian state investment company since at least late 2017, but until recently, the firm’s local unit itself wasn’t a focus of any investigation, said the people, asking not to be named discussing sensitive information.

Authorities are trying to determine whether some of the roughly $600 million in fees from the three bond deals Goldman arranged for 1MDB from 2012 to 2013 flowed to the Singapore subsidiary, they said. Singapore’s widened probe opens a potential new battle front for Goldman, less than a week after Malaysia filed the first criminal charges against the firm over a relationship that spawned one of the biggest scandals in its history. Singapore is coordinating closely with the U.S. Justice Department, which is also investigating Goldman and has filed criminal charges against two former senior bankers at the firm, the people said.

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He’s been at it for a while: “..prosecutors now accuse Mr Ghosn of shifting a private investment loss of over $16m onto Nissan in the wake of the 2008 financial crisis.”

Carlos Ghosn Re-Arrested On New Charges In Japan (BBC)

Former Nissan chairman Carlos Ghosn has been re-arrested on fresh charges, Japanese media report, dashing any hopes he could be released on bail. Mr Ghosn has spent the last month in prison, accused of misusing funds and hiding $80m of income. But on Thursday a court rejected a request by the prosecution to extend his detention, which meant he could apply to be released on bail. Friday’s arrest is on a new charge of aggravated breach of trust. According to Japanese broadcaster NHK, prosecutors now accuse Mr Ghosn of shifting a private investment loss of over $16m onto Nissan in the wake of the 2008 financial crisis.

A towering and revered figure in the auto industry, Mr Ghosn has not yet responded to the latest allegation – but he has consistently denied all prior accusations made against him. He was first arrested in Tokyo in November as allegations of financial misconduct surfaced. The BBC’s Mariko Oi says that ever since Carlos Ghosn stepped off his private jet only to be taken into police custody, the case has gripped Japan with speculation rife over what could be behind such a stunning fall from grace. The case has been highly unusual – not least for a high profile chief executive to be spending time in jail – but also because of its legal twists such as yesterday’s when the court rejected an application to extend his detention..

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Animal species are much easier to worry over. Maybe that’s not all that smart.

“..at least six other studies failed to turn up any sign that the tree still exists. Tens of thousands of plant species globally face similar risks.”

New Tree Species Became Extinct Before It Was Named (Ind.)

Scientists have identified a new species of tree that is thought to have become extinct before it was even named. The tree, which has now been called Vepris bali, is believed to have been unique to a forest reserve in west Africa, but forest clearing and agricultural development have wiped it out. Scientists are studying the vepris species for the antimicrobial and antimalarial properties of their essential oils. Researchers hope several other vepris trees will be identified and named in Cameroon before they also disappear. A specimen was collected by a forester, Edwin Ujor, in the Bali Ngemba Forest Reserve in Cameroon in 1951.

The specimen was thought to belong to the genus vepris, which has 80 species, mostly found across Africa. But the tree has not been seen anywhere since. Researchers from the Royal Botanic Gardens, Kew, and the country’s University of Yaoundé I examined the original specimens and used molecular phylogenetic studies to identify the new species. They say the tree is now either critically endangered or already extinct.

Repeated efforts to find the species between 2000 and 2004 and at least six other studies failed to turn up any sign that the tree still exists. Tens of thousands of plant species globally face similar risks. According to the International Plant Names Index, only about 5 per cent of all known species have ever been formally assessed for their extinction risk. The authors wrote: “This makes it a priority to discover, document and protect such species before they become globally extinct.” The Bali Ngemba Forest Reserve, an officially protected forest, is part of the Bamenda highlands, an area so denuded of its natural forest vegetation that it is now known in Cameroon as “the grasslands”.

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Dec 202018
 
 December 20, 2018  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , , , ,  


Giovanni Bellini Madonna and Child with St. John the Baptist and Female Saint 1500-04

 

It’s 100 days to Brexit (Ind.)
Powell Breaks The Market (ZH)
A Major Technical Breakdown Just Occurred In Stocks (Colombo)
Peter Schiff : Not A Bear Market But ‘A House Of Cards The Fed Built’ (MW)
Asian Shares Battered After Fed Raises Rates For Fourth Time (G.)
Short-Term Funding Bill Announced To Stop Trump’s Government Shutdown (Ind.)
Trump Plans Full Withdrawal Of US Troops From Syria (AFP)
Don’t Hold Your Breath on US Troop Withdrawal from Syria (CN)
US Occupation of Middle East Doesn’t Suppress Terrorism, It Causes It (Murray)
Big Pharma Returning To US Price Hikes In January After Pause (R.)
Italy Avoids EU Sanctions After Reaching 2019 Budget Agreement (G.)
French Police Threaten To Join Protesters (NW)
London’s Gatwick Airport Shut Down After Drones Spotted Overhead (AP)
Der Spiegel Says Top Journalist Faked Stories For Years (G.)
Finless Porpoise, China’s Smiling Angel, Fights To Survive (AFP)

 

 

Yes it is. And so of course the UK talked about one thing only. Did Corbyn call Theresa May a ‘stupid woman’ or did he say ‘stupid people’ about a group of Tories, as a whole contingent of lipreaders claimed?

They sure know what’s important, and what not.

It’s 100 days to Brexit (Ind.)

The vote of the House of Commons on the Brexit deal will now be in the week beginning 14 January, the prime minister confirmed on Monday. She hopes that her MPs are slowly coming round to the deal as the least worst option. She may also hope that Jeremy Corbyn gives his MPs a free vote, in which case enough of them may vote for her deal as a way of avoiding another referendum. It still seems more likely that Theresa May will lose, in which case the Brexit timetable will slip further. She would probably then ask the Commons to vote again after it had rejected the other options.

The one that is easiest to eliminate would be that of leaving the EU without a deal, even if it were dressed up as a “managed no deal” – at least, it ought to be easy to eliminate this option, but, until all the hoops have been jumped through, a no-deal Brexit remains the default, which is why there was such a fuss about no-deal planning at yesterday’s cabinet. The more difficult course for parliament to rule out is that of postponing Brexit and holding a referendum. If Corbyn backs a final say referendum, a Commons vote could be close, but, if May can defeat that option, she could then ask MPs to vote again on her deal. That seems to be her plan: to wear parliament down. That way she might finally win the vote at a second attempt a week later, in the week beginning 21 January – or even after that.

By then, the country would be running out of time to complete Brexit by 29 March. The problem is that a vote to approve the deal, important though it is, is only one of the things that need to be done to take us out of the EU. Once the deal has been approved, parliament also has to pass legislation to give effect to the withdrawal agreement in UK law. This will be called the EU (Withdrawal Agreement) Bill – yet another bill that sounds similar to all the others. It will be a complex and contentious bill that will be tricky to get through a hung parliament. In particular, it will contain a mechanism to entrench parts of the withdrawal agreement in UK law and make it hard for future parliaments to change them.

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Well, not really. Powell and his predecessors built such a huge zombie that it can’t be called a market. So he’s not breaking a market but a zombie, and how exactly can that be a bad thing?

Powell Breaks The Market (ZH)

“Everything was awesome” and then Jay Powell said… Some years ago, we took away the lesson that the markets were very sensitive to news about the balance sheet, so we thought carefully about how to normalize it and thought to have it on automatic pilot, and use rates to adjust to incoming data. That has been a good decision, I think, I don’t see us changing that…. we don’t see balance sheet runoff as creating problems” And everything broke…

Overnight futures show hopeful buying – “surely The Fed will deliver and capitulate… for goodness sake, someone has to rescue my FANG portfolio!!??” – But The Fed did not – cutting their rate outlook by a mere one hike, with plenty still seeing 3 hikes ahead in 2019…

The market now expects 18bps of RATE CUTS in 2020!!!

And Futures collapsed…

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Same here with my buddie Jesse: comparing what happens with today’s zombie, with functioning markets of the past, is dangerous and of limited value.

A Major Technical Breakdown Just Occurred In Stocks (Colombo)

The much-anticipated December Fed meeting has finally come and gone, and the stock market did not like what it heard. The Fed raised rates by 0.25% and cut its expectation for 2019 rate hikes from three to two. Because the Fed didn’t sound as dovish as many investors would have liked, the S&P 500 promptly fell 1.54% to a fresh 2018 low. From a technical perspective, today’s action is extremely concerning because the S&P 500 broke the key 2,550 to 2,600 support zone that I’ve been showing for the past couple months. Today’s breakdown increases the probability of further bearish action unless the index somehow manages to close back above that zone.

The longer-term S&P 500 chart shows how critical today’s breakdown is. Today’s breakdown is the second important technical breakdown in recent months (the first one being the break below the trendline that formed in early-2016, which I said was a bad omen). Assuming today’s breakdown remains intact, 2,100 (the 2015 and 2016 highs) is the next price target and support level to watch.

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Peter Schiff appears to agree with me, only he calls it a house of cards, not a zombie.

Peter Schiff : Not A Bear Market But ‘A House Of Cards The Fed Built’ (MW)

Where in the world is Peter Schiff, as the stock market entered an apparent unraveling phase? Find the chief executive of Euro Pacific Capital, a longtime gold bug and market pundit, on a beach in Puerto Rico, where he’s taken up residence as he watches the equity market get rocked. “I’m watching the U.S. economy implode from the beach,” Schiff told MarketWatch during a recent phone interview. “We’re in a lot of trouble,” he said. “This isn’t a bear market, we’re in a house of cards that the Fed built,” he said. Indeed, despite recent attempts to rebound, the Dow Jones is on track for its worst year since 2008 — down by about 3.5% — when the financial crisis brought global markets to their knees, according to Dow Jones Market Data.

The same goes for the S&P 500 which would also notch its worst year in a decade, if its roughly 4% decline thus far this year hold. Schiff is a polarizing figure on Wall Street, a man that critics say has harbored a persistent and unrealized post-crisis narrative for the Fed’s monetary policy, with predictions of soaring inflation and a dollar collapse. However, the prominent investor should be worthy of investors’ attention, on the back of his prescient calls ahead of the 2008 financial crisis, which earned him plaudits as one of the few able to spot a global economic crisis emanating from the housing market.

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“The Fed’s been a huge friend of the stock market and they are now a little bit of an enemy and will probably become worse of an enemy..”

Asian Shares Battered After Fed Raises Rates For Fourth Time (G.)

Asian stock markets have taken a battering after the US Federal Reserve voted to raise borrowing costs for the fourth time this year, signalling a further squeeze on liquidity around the world. In Tokyo, the Nikkei closed down nearly 3% to its lowest point for 14 months as the Fed’s pledge to continue with “gradual” rate hikes next year sent shivers through financial markets. Shares in Hong Kong and Seoul were both down more than 1% while stocks in Sydney finished at a two-year low. Futures trading pointed to a drop of 2% in the FTSE100 index in London and the Dax in Frankfurt when when the markets open on Thursday morning.

Investors’ confidence that the global economy is headed for a significant slowdown was further weakened when China’s central bank introduced a new lending facility for small private businesses, which was seen as a targeted rate cut designed to kickstart the spluttering economy. The move by the People’s Bank of China shows the two biggest economies are out of step with Beijing responding to a rate hike in the US with a de facto cut. The Shanghai Composite share index was down nearly 1% in afternoon trade while the yuan wad fixed 0.22% lower against the US dollar. [..] “The Fed’s been a huge friend of the stock market and they are now a little bit of an enemy and will probably become worse of an enemy before this is all over,” Bob Doll, Nuveen chief equity strategist and senior portfolio manager, told Bloomberg.

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McConnell saves the day…

Short-Term Funding Bill Announced To Stop Trump’s Government Shutdown (Ind.)

Senate Majority Leader Mitch McConnell has introduced a short-term spending bill to finance the US government and avoid a shutdown at the end of the week Mr McConnell, the leading Republican in the Senate, said that the funding bill known as a continuing resolution “will ensure continuous funding for the federal government” until 8 February. The short-term bill needs to be approved by both the Senate and the House of Representatives before it can proceed to President Donald Trump’s desk to be signed into law. Mr McConnell’s bill comes as Congress races against time before funding for the government runs out on Friday at midnight, amid a contentious push by Mr Trump to make $5bn worth in funding for his controversial border wall a requirement for any spending agreement.

But, while Mr Trump had indicated that he would take responsibility for a shutdown in order to make a point about the wall, the White House has since stepped back from that threat. We have other ways that we can get to that $5 billion”, White House Press Secretary Sarah Huckabee Sanders said on Tuesday. On the Senate floor, Mr McConnell lashed out at Democrats, who will reclaim their House majority in January, for failing to give Mr Trump any of the $5bn he has asked for. “This seems to be the reality of our political moment,” Mr McConnell said. “It seems like political spite for the president may be winning out over sensible policy.”

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We’re going to see endless and contradictory ‘analyses’ of this. It’s already drawn out the likes of Lindsey Graham and Mario Rubio and exposed them as deep state soldiers.

Trump Plans Full Withdrawal Of US Troops From Syria (AFP)

The United States will withdraw its troops from Syria, a US official told AFP on Wednesday, after President Donald Trump said America has “defeated ISIS” in the war-ravaged country. The stunning move will have extraordinary geopolitical ramifications and throws into question the fate of US-backed Kurdish fighters who have been tackling Islamic State jihadists. “We have defeated ISIS in Syria, my only reason for being there during the Trump Presidency,” the Republican president tweeted. The US official told AFP that Trump’s decision was finalized Tuesday. “Full withdrawal, all means all,” the official said when asked if the troops would be pulled from all of Syria.

Currently, about 2,000 US forces are in Syria, most of them on a train-and-advise mission to support local forces fighting IS. The official would not provide a timeline for a withdrawal, saying only: “We will ensure force protection is adequately maintained, but as quickly as possible.” Echoing Trump, White House spokeswoman Sarah Sanders said IS has been defeated territorially, noting the US-led coalition that includes dozens of nations would continue fighting IS. “These victories over ISIS in Syria do not signal the end of the Global Coalition or its campaign,” Sanders said in a statement. “We have started returning United States troops home as we transition to the next phase of this campaign.”

[..] Republican Senator Lindsey Graham, a Trump ally, said the president’s decision was shortsighted. “President @realDonaldTrump is right to want to contain Iranian expansion,” Graham said on Twitter. “However, withdrawal of our forces in Syria mightily undercuts that effort and put our allies, the Kurds at risk.” Charles Lister, a senior fellow at the Middle East Institute, called the decision “extraordinarily short-sighted and naive.” “This move will look like a ‘withdrawal,’ not a ‘victory,’ and yet more evidence of the dangerous unpredictability of the US president,” Lister said. “This is not just a dream scenario for ISIS, but also for Russia, Iran and the Assad regime, all of whom stand to benefit substantially from a US withdrawal.”

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It is quite possible that the deep state will eventually swallow Trump’s announcement whole. However, if he had gone through the usual channels to make his announcement, they would have caught it before it became public. That’s why he has Twitter.

Don’t Hold Your Breath on US Troop Withdrawal from Syria (CN)

The announcement on Wednesday that the U.S. will withdraw all remaining troops from Syria within the next month looked at first like a rare victory for Donald Trump in his admittedly erratic opposition to senseless wars of adventure. “We have defeated ISIS in Syria, my only reason for being there,” the president tweeted with an unmistakable air of triumph. Don’t get your hopes up. Just about everything in these initial reports is either wrong or misleading. One, the U.S. did not defeat the Islamic State: The Syrian Arab Army, aided by Russia, Iran, and Hezbollah militias did. Two, hardly was ISIS the only reason the U.S. has maintained a presence in Syria. The intent for years was to support a coup against the Assad government in Damascus—in part by training and equipping jihadists often allied with ISIS.

For at least the past six months, the U.S. military’s intent in Syria has been to counter Iranian influence. Last and hardly least, the U.S. is not closing down its military presence in Syria. It is digging in for an indefinite period, making Raqqa the equivalent of the Green Zone in Baghdad. By the official count, there are 503 U.S. troops stationed in the Islamic State’s former capital. Unofficially, according to The Washington Post and other press reports, the figure is closer to 4,000—twice the number that is supposed to represent a “full withdrawal” from Syrian soil. It would be nice to think Washington has at last accepted defeat in Syria, given it is preposterous to pretend otherwise any longer.

Damascus is now well into its consolidation phase. Russia, Iran, and Turkey are currently working with Staffan de Mistura, the UN’s special envoy for Syria, to form a committee in January to begin drafting a new Syrian constitution. It would also be nice to think the president and commander-in-chief has the final say in his administration’s policies overseas, given the constitution by which we are supposed to be governed. But the misleading announcement on the withdrawal of troops, followed by Trump’s boastful tweet, suggest something close to exactly the opposite. As Trump finishes his second year in office, the pattern is plain: This president can have all the foreign policy ideas he wants, but the Pentagon, State, the intelligence apparatus, and the rest of what some call “the deep state” will either reverse, delay, or never implement any policy not to its liking.

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The Grand Coalition includes the media.

US Occupation of Middle East Doesn’t Suppress Terrorism, It Causes It (Murray)

Even the neo-con warmongers’ house journal The Guardian, furious at Trump’s attempts to pull US troops out of Syria, in producing a map to illustrate its point, could only produce one single, uncertain, very short pen stroke to describe the minute strip of territory it claims ISIS still control on the Iraqi border. Of course, the Guardian produces the argument that continued US military presence is necessary to ensure that ISIS does not spring back to life in Syria. The fallacy of that argument can be easily demonstrated. In Afghanistan, the USA has managed to drag out the long process of humiliating defeat in war even further than it did in Vietnam.

It is plain as a pikestaff that the presence of US occupation troops is itself the best recruiting sergeant for resistance. In Sikunder Burnes I trace how the battle lines of tribal alliances there today are precisely the same ones the British faced in 1841. We just attach labels like Taliban to hide the fact that invaders face national resistance. The secret to ending the strength of ISIS in Syria is not the continued presence of American troops. It is for America’s ever closer allies in Saudi Arabia and the Gulf to cut off the major artery of money and arms, which we should never forget in origin and for a long time had a strong US component. The US/Saudi/Israeli alliance against Iran is the most important geo-political factor in the region today.

It is high time this alliance stopped both funding ISIS and pretending to fight it; schizophrenia is not a foreign policy stance. There has been no significant Shia Islamic terrorist or other threat against the West in recent years. 9/11 was carried out by Saudi Sunni militants. Al Qaida, ISIS, Al Nusra, Boko Haram, these are all Sunni groups, and all Saudi sponsored. It is a matter of lunacy that the West has adopted the posture that it is Iran – which has sponsored not one attack on the West in recent memory – which is the threat in the Middle East.

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Trump will have to act, or risk looking like a fool.

Big Pharma Returning To US Price Hikes In January After Pause (R.)

Novartis and Bayer are among nearly 30 drugmakers that have taken steps to raise the U.S. prices of their medicines in January, ending a self-declared halt to increases made by a pharma industry under pressure from the Trump administration, according to documents seen by Reuters.The hikes will pose a new challenge to President Donald Trump’s pledge to lower the costs of prescription medications in the world’s most expensive pharmaceutical market. The U.S. Department of Health and Human Services (HHS) has proposed a slew of policies aimed at lowering prices and passing more of the discounts negotiated by health insurers on to patients.

Those measures are not expected to provide relief to consumers in the short-term, however, and fall short of giving government health agencies direct authority to negotiate or regulate drug prices. 28 drugmakers filed notifications with California agencies in early November disclosing that they planned to raise prices in 60 days or longer. Under a state law passed last year, companies are required to notify payers in California if they intend to raise the U.S. list price on any drug by more than 16 percent over a two-year period. [..] “Requests and public shaming haven’t worked” to lower drug prices, said Michael Rea, chief executive of RX Savings Solutions, which helps health plans and employers seek lower cost prescription medicines. “We expect the number of 2019 increases to be even greater than in past years.”

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I think Salvini will get away with presenting this as a victory. But I may be wrong. How far removed is it from what Tsipras pulled in summer 2015? And how much is it like Macron and the yellow vests?

Italy Avoids EU Sanctions After Reaching 2019 Budget Agreement (G.)

Italy has managed to avert EU sanctions after reaching a compromise with the European commission over its 2019 budget. The Italian prime minister, Giuseppe Conte, said the government had managed to reach an agreement to reduce the deficit target to 2.04% of GDP from 2.4%. This has been achieved without making drastic changes to key budget proposals such as the promise of a universal basic income and lowering the pension age. “Over the last few weeks we worked to bring the positions closer without ever moving backwards with respect to the objectives the Italian people set us in the 4 March election,” Conte said.

“The economic-financial estimates about the measures that attracted the most attention of our European partners revealed that the resources [needed] were less than forecast.” The yield, or effective interest rate, on Italian 10-year government bonds fell to 2.79%, the lowest level since September. Less than two months ago the yield, the price the Italian government has to pay to borrow, rose to 3.8%. However, Valdis Dombrovskis, a European commission vice-president, described the agreement with Italy as a “borderline compromise” that fails to provide long-term solutions to the country’s economic problems. “But it enables us, for now, to avoid opening a debt procedure, as long as the negotiated measures are fully applied,” he said at a press conference in Brussels.

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Hilarious: “Police have accumulated some 23 million hours of overtime that is yet to be paid.”

French Police Threaten To Join Protesters (NW)

The French government is desperately trying to keep its exhausted police force onside following weeks of violent protests demanding economic reforms, improved living standards and the resignation of President Emmanuel Macron. On Wednesday, French officials met with police trade union leaders to work out a deal to soothe anger in law enforcement ranks regarding overwork, unpaid overtime and difficult working conditions, Le Monde reported. But some activists are calling on police to walk out on government negotiations, close down police stations and join the “gilets jaunes”—or yellow vest—protesters with whom they have been facing off since November 17. Negotiations between three unions—Alliance, UNSA-Police and Unity-SGP-FO—and Interior Minister Christophe Castaner on Tuesday failed to reach a settlement.

As talks resumed on Wednesday, France 24 reported that activists were calling on forces across the country to commit to a “slowdown” and only respond to emergencies until the dispute had been settled. Police have accumulated some 23 million hours of overtime that is yet to be paid. According to The Local France, police union leader Frédéric Lagache explained, “Faced with this irresponsibility [of the government], we are forced to be irresponsible in our actions.” The Alliance and Unity-SGP-FO unions called for a “black day for the police” on Wednesday. The Alliance is using Twitter and Facebook to rally support for what it calls “Act 1” of the police protests, using the name given to the ongoing demonstrations held by the gilets jaunes. The group has also threatened to hold “Act II” and “Act III” if required.

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I’m thinking one word here: copycats. Too easy not to try at home.

London’s Gatwick Airport Shut Down After Drones Spotted Overhead (AP)

London’s Gatwick Airport shut down late Wednesday while officials urgently investigated reports that two drones were flying above the airfield. The airport suspended all flights, causing severe disruptions just days before Christmas during one of the heaviest travel times of the year. Police and aviation authorities were still investigating early Thursday as incoming flights were diverted to other locations in Britain and nearby countries. Passengers complained on Twitter that their flights had landed at London Heathrow, Manchester, Birmingham and other cities. Other flights were sent to France and the Netherlands. One traveler whose flight was diverted tweeted that passengers were not being told when they could continue to their destination.

Gatwick advised travelers via Twitter to check flights scheduled for Thursday before heading to the airport. It also advised anyone planning to pick up arriving passengers to check first. Any problem at Gatwick causes a ripple effect throughout Britain and continental Europe, particularly during a holiday period when the air traffic control system is under strain. It is a busy airport 27 miles south of London, hosting a variety of short- and long-haul flights and serving as a major hub for the budget carrier easyJet. Gatwick normally operates throughout the night but the number of flights is restricted because of noise limitations. The airport website says it usually handles 18 to 20 flights overnight during the winter months.

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Yes, it’s priceless to read the Guardian on fake news.

Craig Murray tweets: ..The Guardian today published a story about a German journalist who invented stories, but still has never apologised for its own 100% fabricated Luke Harding piece about Manafort’s “visits to Assange in the Embassy”, and Harding and Viner are still employed..

Der Spiegel Says Top Journalist Faked Stories For Years (G.)

The German news magazine Der Spiegel has been plunged into chaos after revealing that one of its top reporters had falsified stories over several years. The media world was stunned by the revelations that the award-winning journalist Claas Relotius had, according to the weekly, “made up stories and invented protagonists” in at least 14 out of 60 articles that appeared in its print and online editions, warning that other outlets could also be affected. Relotius, 33, resigned after admitting to the scam. He had written for the magazine for seven years and won numerous awards for his investigative journalism, including CNN Journalist of the Year in 2014.

Earlier this month, he won Germany’s Reporterpreis (Reporter of the Year) for his story about a young Syrian boy, which the jurors praised for its “lightness, poetry and relevance”. It has since emerged that all the sources for his reportage were at best hazy, and much of what he wrote was made up. The falsification came to light after a colleague who worked with him on a story along the US-Mexican border raised suspicions about some of the details in Relotius’s reporting, having harboured doubts about him for some time.

The colleague, Juan Moreno, eventually tracked down two alleged sources quoted extensively by Relotius in the article, which was published in November. Both said they had never met Relotius. Relotius had also lied about seeing a hand-painted sign that read “Mexicans keep out”, a subsequent investigation found. Other fraudulent stories included one about a Yemeni prisoner in Guantanamo Bay, and one about the American football star Colin Kaepernick.

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Sometimes I think that if all my friends are leaving, why would I stay behind?

Finless Porpoise, China’s Smiling Angel, Fights To Survive (AFP)

In an oxbow lake along the middle reaches of the Yangtze River, a breathy sigh pierces the surface stillness as one of China’s most endangered animals comes up for a gulp of hazy air. A slick black back with no dorsal fin arches briefly above the water line before plunging back down. Such glimpses of the shy Yangtze finless porpoise, the only aquatic mammal left in China’s longest river and known in Chinese as the “smiling angel” for its perma-grin, are increasingly rare. Pollution, overfishing, hydroelectric dams and shipping traffic have rendered them critically endangered, worse off even than China’s best-known symbol of animal conservation, the panda.


AFP Photo/Johannes EISELE

China’s government estimates there were 1,012 wild Yangtze finless porpoises in 2017, compared to more than 1,800 giant pandas, which is no longer endangered. But researchers see signs of hope. Porpoise numbers fell by nearly half from 2006-2012 to an estimated 1,040. But the rate of decline has slowed markedly since then, suggesting that conservation may be making a dent. A central component of the rescue effort is the introduction of porpoises to several conservation areas off the busy river, where researchers say numbers have been actually increasing. [..] Chinese officials are keen to avoid a repeat of the “baiji”, or Yangtze dolphin, the river’s only other aquatic mammal, which since 2006 has been considered extinct in a huge conservation setback for China. Losing the “smiling angel” would be a further tragedy, conservationists say.

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