Mar 222017
 
 March 22, 2017  Posted by at 9:00 am Finance Tagged with: , , , , , , , ,  4 Responses »
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Ray K. Metzker Philadelphia 1963

 


Vancouver Won’t Have A Middle Class Left In The Future (CBC)
Nomi Prins: Financial System Worse Now Than 2007 (EIR)
Kashkari: “A Market Drop Is Unlikely To Trigger A Crisis” (ZH)
Dijsselbloem Says Southern Europe Blew Cash On ‘Drinks And Women’ (Tel.)
Dijsselbloem Not Fit To Be Eurogroup President – Socialist MEP Leader (Pol.)
Dijsselbloem ‘Mail Bomb Target’ (AFP)
Greece Won’t Last In Eurozone In Long Run, Says Bavarian FinMin (R.)
IMF Wants Greek Opposition To Also Commit To Fiscal Targets, Measures (Naft.)
As Bailout Talks Drag, Greece Says May Not Sign EU Rome Treaty (K.)
Fresh Increase In Registered Greek Unemployed (K.)
Italy’s Populist ‘Mad Man’ Extremely Worrying For Eurozone Stability (CNBC)
Germany Rejects Arms Exports To Turkey (Kom)
Turkey Says EU Refugee Deal Near Collapse (BBG)
The Mechanical Turn in Economics and Its Consequences (Inet)
The Kagans Are Back; Wars to Follow (Robert Parry)
Ganges and Yamuna Rivers Granted Same Legal Rights As Human Beings (G.)
More Than 100 Chinese Cities Now Above 1 Million People (G.)
Access To Nature Reduces Depression And Obesity (G.)
The Man Who Planted A Tree And Grew A Whole Family Of Forests (G.)

 

 

How to Kill a City part 831. I should write the article I’ve long had in my head. But this is the trendline. Which will break, but then you have untold millions of ‘homeowners’ with properties worth much less than their mortgages -and a low interest rate is but a detail-, and a banking system threatening to topple. Again.

Vancouver Won’t Have A Middle Class Left In The Future (CBC)

A former city planner warns if Vancouver doesn’t start protecting dedicated housing for middle-income residents, there won’t be a middle class left in the city in the future. “The estimates are by 2030, if you’re a Millennial household with about $72,000 to $75,000 in your income, you won’t be able to be in this housing market at all. In fact, it would take all of your income to buy a very modest place,” explained Larry Beasley, who is currently a professor with the University of British Columbia’s School of Community and Regional Planning. Beasley says the solution to the problem is to create secure middle income housing. “We have a low-income sector that’s all owned by government and it’s basically rental and we have a market sector for all the rest,” he said.

“We need to protect a middle income sector of housing … It would be protected from being in the open market where it could sell at any price and rent at any price … It would be delivered, either rented or sold, time and time again to middle income people.” Although some middle income people get help from their parents, buy further away or buy smaller places, he said, this cushion won’t last forever and eventually middle income residents will be completely shut out of the city’s real estate market. “It doesn’t matter how much you save and it doesn’t matter how much you borrow from government, you still won’t be able to get into the market. People will face some pretty stark choices.” [..] “If you rule out the middle class, you rule out the potential of creativity. You rule out the people who are doing the jobs everyday and you rule out the people who are driving the day-to-day economy.”

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Private debt is much higher than 10 years ago, in far too many places, because of the housing bubbles.

Nomi Prins: Financial System Worse Now Than 2007 (EIR)

Financial analyst, Author and fmr. Goldman Sachs Managing Director, Nomi Prins sits down with EIR’s Paul Gallagher to discuss just how rotten the current financial system is, making a sobering case that we are far worse off today than we were before the 2007-08 crisis. Prins refers to her political and financial road map for 2017, (nomiprins.com) and discusses the important, combined role China and Japan can play in bringing the US back from the brink and into the new paradigm of investment in the real economy.

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Contradictions, Watson?

Kashkari: “A Market Drop Is Unlikely To Trigger A Crisis” (ZH)

Former Goldmanite and current Minneapolis Fed president, Neel Kashkari, conducted another #AskNeel session on Twitter where the dovish FOMC voter (he was the only one to dissent in last week’s rate hike decision) received numerous question. Among them was the following one from Zero Hedge:

His response:

At this point we would like to “timestamp” Kashkari’s claim that a “stock market drop is unlikely to trigger a crisis” It was not clear just how the Fed president separates a market crash from “financial instability”, but Kashkari’s response that the Fed is not concerned about the level of the S&P500, and instead is more focused on comprehensive market stability, is not being taken well by the market which has continued to sell off as Kashkari responds to further questions, among which the following exchanges:

In response to a question about rising inflation, Kashkari said he would tolerate 2.3% inflation for as long as U.S. has had below-target inflation, “if we really believe 2% is a target. That is what a target means” and adds that “Not sure if my colleagues wld really buy into that however.” We wonder how that question would look like if instead 2.3% inflation one used 3.6%, which is the current true level of inflation according to PriceStats. At least the Fed has been polite enough to advise America it will tolerate a material “overshoot” in its inflation target.

When asked about the two latest rate increases, he said that “data didn’t support a hike. Data basically hasn’t changed. Moving sideways rather than toward dual mandate.” He also said that he would like to see plan on balance sheet normalization soon, adding: “I would prefer to see it before we increase the federal funds rate again” and added that the balance sheet “needs to grow as economy and demand for dollars grows. We will shrink but not to 2006 levels.”

In short, Kashkarhi – who allegedly does not care about the level of the  S&P500 – is willing to risk a market crash and a Fed balance sheet-driven bond tantrum. Or, to paraphrase Richard Breslow, “The Fed Is Making This Up As They Go Along“”

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What a douche.

Dijsselbloem Says Southern Europe Blew Cash On ‘Drinks And Women’ (Tel.)

The head of the eurozone’s finance ministers has been criticised for stating that southern European countries blew their money on “drinks and women”. Jeroen Dijsselbloem, the Dutch finance minister who leads the group, made the comments in an interview on Monday with German newspaper Frankfurter Allgemeine Zeitung (FAZ). “During the crisis of the euro, the countries of the north have shown solidarity with countries affected by the crisis,” he said.“As a Social Democrat, I attribute exceptional importance to solidarity. “But you also have obligations. “You cannot spend all the money on drinks and women and then ask for help.” Inside the European parliament, MEPs turned on Mr Dijsselbloem on Tuesday, calling his remarks “insulting” and “vulgar”.

Gabriel Mato, a Spanish MEP, said the remarks were “absolutely unacceptable” and an “insult” to southern member states – claiming he had lost his neutrality as finance chief. Ernest Urtasun, another Spanish MEP, said: “Maybe this is funny for you, but I don’t think it is. I would like to know if this is your first statement as a candidate to renew your post as president of the eurogroup.” Mr Dijsselbloem’s term ends next year, and he is believed to be considering running for re-election. He attempted to brush off the criticism, telling the MEPs: “Don’t be offended.” He continued: “It is not about one country, but about all our countries.” He then attempted to dig himself out of the hole by saying all countries had failed to uphold the financial rules set by the EU. “The Netherlands also failed a number of years ago to comply with what was agreed,” he said. “I don’t see a conflict between regions of the eurogroup.”


If the money was spent on drinks and women, it wasn’t the Greeks

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He never was, because “..it was “not the first time” that Dijsselbloem has expressed opinions “which are openly in contradiction with the line of the European progressive family.”

MEP=Member of European Parliament.

Dijsselbloem Not Fit To Be Eurogroup President – Socialist MEP Leader (Pol.)

Jeroen Dijsselbloem is “not fit to be president of the Eurogroup,” Socialist MEP leader Gianni Pittella said Tuesday, accusing the Dutch finance minister of making “discriminatory comments” about southern EU countries in German media. Without naming names, Dijsselbloem told the Frankfurter Allgemeine on Monday that “countries in crisis” should stick to the deficit targets set by the European Commission and show the same solidarity as northern eurozone states during the financial crisis. “As a social democrat, for me solidarity is extremely important,” Djisselbloem said. “But those who call for it (solidarity) also have duties. I cannot spend all my money on liquor and women and plead for your support afterwards. This principle applies on the personal, local, national and also European level.” On Tuesday, Pittella described these comments as “shameful and shocking.”

“Dijsselbloem went far beyond by using discriminatory arguments against the countries of southern Europe,” he said. “There is no excuse or reason for using such language, especially from someone who is supposed to be a progressive.” Dijsselbloem has been Eurogroup president since January 2013 and was re-elected for a second term in July 2015. However, his Dutch Labor Party (PvdA) did badly in last week’s election and he will almost certainly not stay on as finance minister. Pittella said it was “not the first time” that Dijsselbloem has expressed opinions “which are openly in contradiction with the line of the European progressive family.” “I truly wonder whether a person who has these beliefs can still be considered fit to be president of the Eurogroup,” he added. Portuguese Foreign minister Augusto Santos Silva joined in the criticism, saying Dijsselbloem should not be able “to remain at the head of the Eurogroup and the Portuguese government shares this opinion.”

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Only surprise: What took them so long?

Dijsselbloem ‘Mail Bomb Target’ (AFP)

Eurogroup chief Jeroen Dijsselbloem was targeted by a mail bomb which had been “intercepted,” his spokesman said Tuesday, a day after Greek police found eight “suspect” packages addressed to European officials. “I can confirm that Minister Dijsselbloem was the target of a mail bomb,” Coen Gelinck told AFP. “It was however intercepted,” said Gelinck, declining to give any further information or to confirm whether it was one of the packages found in Athens. Police in the Greek capital found eight packages Monday at the postal service’s main sorting centre north of Athens. The news came after a domestic militant group last week sent mail bombs to the IMF and the German finance ministry.

Monday’s packages were intended for “officials at European countries,” Greek police said. A police source later said the packages were intended for officials at the Eurogroup and other global institutions. Last week, a mail bomb sent to the IMF’s offices in Paris exploded and injured a secretary. A second bomb sent to the German finance ministry was intercepted by security. The investigation so far suggests that both the IMF and the German finance ministry bombs were sent by a far-left group called the Conspiracy of Fire Nuclei, which police thought they had mostly dismantled in 2011.

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Why stay one day longer, then?

Greece Won’t Last In Eurozone In Long Run, Says Bavarian FinMin (R.)

Greece will not last in the eurozone in the long run and officials working on a review of its bailout package should prepare for such a possibility, a senior member of the Bavarian sister party of Chancellor Angela Merkel’s conservatives said. Greece has lost a quarter of its national output since it first sought financial aid in 2010. Its current bailout package is the third in seven years. “Greece is unlikely to survive in the eurozone over the long term,” Bavarian Finance Minister Markus Soeder told the Handelsblatt newspaper in an interview published on Tuesday. Soeder urged officials working on the bailout review to develop a “Plan B” or alternative plan. “We’ll see if Greece meets the conditions. I’m very skeptical,” Soeder said, adding that the participation of the International Monetary Fund was essential.

Soeder’s Christian Social Union is the Bavarian sister party of Merkel’s Christian Democrats and has long accused Greece of failing to implement reforms promised under its bailout packages. Germany faces national elections in September and the anti-euro Alternative for Germany party (AfD), which has been particularly critical of eurozone bailouts, is expected to perform well. Greek Finance Minister Euclid Tsakalotos said on Monday he planned to stay in Brussels for further consultations with his country’s creditors towards finalizing the latest bailout review. He said he hoped for a preliminary deal by April 7. Greece and its international lenders are still at odds over pension, labor and energy market reforms that are needed before new loans can be disbursed to Athens. The IMF has yet to decide whether to participate in Greece’s €86 billion bailout, expressing deep concerns over debt sustainability in the crisis-hit nation.

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And their grandchildren too, while we’re at it?!

IMF Wants Greek Opposition To Also Commit To Fiscal Targets, Measures (Naft.)

The IMF wants Greece’s political opposition to also approve any new agreement for fiscal measures and targets after 2019, French Finance Minister Michel Sapin maintained on Tuesday, an abrupt revelation that would further complicate ongoing negotiations between Athens and its institutional creditors if proved true. The French minister also expressed his surprise over the Fund’s latest demand vis-a-vis the Greek program. “Can you image if they asked us, the French, to ask for the opposition’s commitment,” he said, adding that such a demand is unrealistic. Moreover, he referred to the IMF’s “obsessions” with labor market liberalization and social security reform.

With fiscal targets dictating an annual primary budget surplus of 3.5% (as a percentage of GDP) in the “medium term” after 2019, the IMF has pressed for – and European creditors have accepted – that austerity measures are enacted now in order to ensure that targets are achieved after the third bailout ends in mid 2018. Sapin made the statement in Brussels, a day after yet another Eurogroup meeting ended without a staff-level agreement between creditors and the increasingly embattled leftist-rightist government in Athens. Finally, he said all parties should assume their responsibilities in concluding the now utterly delayed second review of the Greek program, which he said will have repercussions on others, and not just the Greek economy.

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Let’s see you do it, Alexis.

As Bailout Talks Drag, Greece Says May Not Sign EU Rome Treaty (K.)

With Greece’s international creditors indicating that insufficient progress has been achieved for bailout monitors to return to Athens, government sources have threatened to block the Rome Declaration, Kathimerini understands, connecting it to the negotiations on the second review. According to sources, the Greek official participating in preparatory talks ahead of the drafting of a common statement that EU leaders are expected to sign at a summit in Rome on Saturday, regarding the bloc’s common values and principles, told his interlocutors that Greece cannot agree to such a text while being pressed to implement unrealistic demands of the IMF.

Sources said that Greek officials aim to ensure that the joint declaration includes a paragraph referring to European regulations protecting citizens’ labor rights. It is the issue of labor rights — and the IMF’s demands for further liberalization of the sector — that has become the major sticking point in talks between Greece and its lenders. On Monday, finance ministers discussing Greek bailout negotiations deemed that inadequate progress had been achieved for foreign auditors to return to Athens. Finance Minister Euclid Tsakalotos commented that he and other Greek ministers would remain in Brussels for further negotiations in a bid to establish enough common ground for bailout monitors to return to the Greek capital and resume talks.

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Inevitable. All the recovery claims are bogus. The Greek economy CANNOT recover under present conditions.

Fresh Increase In Registered Greek Unemployed (K.)

The number of people registered as unemployed at Greece’s Manpower Organization (OAED) rose by about 6,000 in February to almost 1.1 million at the end of the month, a dramatic rate which is expected to continue until at least the end of 2017. This trend corresponds with the rise seen in the quarterly jobless rate late last year. The sum of OAED-registered unemployed who are seeking work amounted to 936,110 people, with more than half of them (503,431 people or 53.78%) having been registered for at least 12 months. There is a significant difference between men and women, as they break down into 576,491 women (61.58%) and 359,619 men (38.42%). Another 159,756 people were registered who are not seeking work, of whom 32,897 or 20.59% had been on the register for at least a year. The number of unemployment benefit recipients came to 178,105 people last month, of whom 73,205 (41.1%) were seasonal workers in the tourism industry.

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Shoddy journalism. The Party is named M5S, not 5SM. Common knowledge. (Corrected)

And you can’t claim that “Europe should be strong enough to manage a “mad man” like Grillo becoming Italy’s Prime Minister”, because Beppe is not a candidate -for any office-, and won’t be.

Italy’s Populist ‘Mad Man’ Extremely Worrying For Eurozone Stability (CNBC)

Italy’s anti-establishment and anti-euro party Five Star Movement (M5S) represent the greatest threat to euro area stability, analysts told CNBC on Tuesday, as the populist party surged ahead of its political rivals in the latest opinion poll, putting it on course to be the biggest party if elections were called. M5S leader Beppe Grillo has enjoyed a recent, and remarkable, uptick in support, buoyed in part by the divisions in the ruling Democratic Party (PD) as former Prime Minister Matteo Renzi attempts to regain support. Grillo, who has campaigned for Italy to hold a referendum on the single currency if elected, has overseen M5S’s support grow to 32.3%, according to an Ipsos poll published in daily newspaper Correa della Sera on Tuesday.

“If Five Star Movement could secure 30 or 40% of the vote then of course that would be extremely worrying for the euro area’s stability. Whether they can gain an absolute majority… we’ll have to wait and see,” Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics told CNBC via telephone. Italy is due to hold its next national election by early 2018 and, although Europe’s heavy political calendar has pushed the thought of Italy to the back of most investors’ minds, Deutsche Bank analysts argued it is Rome that poses the greatest threat to the euro area’s stability. The German lender suggested its base case scenario is for Renzi’s PD party, currently second in the polls, to fracture as a result of internal feuds. If this were to happen, it would then leave M5S in the driving seat ahead of the country’s general election.

[..] At the moment, parties in Italy are still looking to draw up a new electoral law, which most observers expect to result in a form of proportional representation that could reward a stable majority government to any party that can secure over 40% of the vote. M5S are significantly below the 40% threshold and have ruled out any desire to form a coalition government. However, Vistesen and Stringa both suggested with some confidence that Italy could expect weak economic growth throughout 2017 and therefore it would be conceivable for Grillo’s M5S to enjoy even greater support in the run up to a vote. Both France and Germany are due to elect new premiers before Italy and Vistesen concluded that, so long as the political favorites are able to win in each country, then Europe should be strong enough to manage a “mad man” like Grillo becoming Italy’s Prime Minister.

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The US will fill in. Or Britain, France.

Germany Rejects Arms Exports To Turkey (Kom)

Germany has rejected more requests for arms exports to Turkey during the past 5 months than in five years between 2010 and 2015, German newspaper Sueddeutsche Zeitung reported on Tuesday. The sharp increase in rejections, mainly handguns, ammunition and parts needed in weapons production, is due to “the risk of a deployment in the context of internal repression or the Kurdish conflict,” according to a written response by State Secretary Matthias Machnig to a question posed by lawmaker Jan van Aken. “Respect for human rights is a matter of particular importance for arms export decisions,” the answer from Machnig of the Federal Ministry for Economic Affairs and Energy also outlined.

“This is a first step,” van Aken told Sueddeutsche Zeitung, “And the next must be that Turkey does not get any weapons from Germany,” the Left Party (Die Linke) law maker said, adding that the Turkish government is waging a war both within its own borders and in Syria while fast becoming a dictatorship. Relations between Germany and Turkey are strained. Turkey’s plans to campaign in Germany ahead of the referendum were refused on several occasions and Turkish politicians, including President Recep Tayyip Erdogan, accused Germany of Nazi measures.

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EU membership is now linked to the death penalty?!

Turkey Says EU Refugee Deal Near Collapse (BBG)

Turkey’s agreement with the European Union to help stem the largest flow of refugees since World War II is inching closer to collapse, according to Turkey’s minister in charge of EU integration. By hosting about 3 million refugees – the most of any nation – and halting their migration to Europe, Turkey has saved the EU from a “racist” backlash that threatens the bloc’s democratic character, Omer Celik said in an interview on Tuesday in Ankara. Describing the deal as one-sided, he said Turkey is under no obligation to continue implementing it, adding that his country’s commitment to seeking EU membership wasn’t unconditional. “We won’t abandon these people to their deaths, but an agreement has two sides and if one side doesn’t abide by its obligations, neither will the other,” Celik said. “If the refugee agreement collapses, what we foresee is clear: we won’t cooperate with any mechanisms acting on behalf of the EU.”

The prospects of Turkey joining the union are dissipating as politicians lash out ahead of a series of votes that could define relations for decades. In Europe, populists are campaigning on anti-Muslim and anti-immigration sentiment, while in Turkey, President Recep Tayyip Erdogan has been appealing to nationalists ahead of an April referendum on endowing his office with full executive authority. European officials have voiced their disapproval of the plebiscite, saying it would undermine democracy in the NATO member. [..] While support in Turkey for EU membership remains high, belief that it will happen has collapsed, Celik said. Ultimately, the issue could be put to the public as part of a referendum on reintroducing the death penalty, he said. “This issue depends on whether relations with the EU are maintained or not.” he said. “It is up to the Turkish people whether to keep the EU process or halt it.”

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I’ve had this sitting in a tab for a while. It’s good that people are now picking it up, but it always seems weird that these things need to be explained this way. Economics truly is a blind field. Nature? Nature of man? Nah..

The Mechanical Turn in Economics and Its Consequences (Inet)

With Adam Smith, and hints before in Ricardo and others, economics took the path of treating the economy as a natural object that should not be interfered with by the state. This fit the Newtonian ethos of the age: science was great, science was mathematics; science was true, right and good. But along the way the discussion in, for example, Montaigne and Machiavelli — about the powers of imagination, myth, emotions, sentiment, human relations and community — was abandoned by the economists. (Adam Smith had written his Theory of Moral Sentiments 20 years earlier and sort of left it behind, though the Wealth of Nations is still concerned with human well-being.) Gibbon’s Decline and Fall of the Roman Empire was published in 1776, the same year as Smith’s Wealth, but hardly read today by most economists.

In philosophy and the arts (romanticism among others) there was great engagement in these issues economics was trying to avoid. But that philosophy and art criticism have not been widely read for many years. The effect of ignoring the human side of lives was to undermine the social perspective of the “political,” by merging it with the individually focused “interest.” So, instead of exploring the inner structure of interest (or later utility or preference), or community feeling and the impact of culture, these were assumed to be irrelevant to the mechanics of the market. Politics, having to do with interest groups and power arrangements, is more vague and harder to model than economic activity. Those who wanted economics to be a science were motivated by the perception that “being scientific” was appreciated by the society of the time, and was the path to rock-solid truth.

But the move towards economics as a science also happened to align with a view of the landed and the wealthy that the economy was working for them, so don’t touch it. We get the equation, embracing science = conservative. This is still with us because of the implication that the market is made by god or nature rather than being socially constructed. Since economics is the attempt at a description of the economy, it was more or less locked in to the naturalist approach, which ignores things like class and ownership and treated capital as part of economic flow rather than as a possession that was useable for social and political power. Even now, economics still continues as if it were part of the age of Descartes and avoids most social, historical and philosophical thought about the nature of man and society. Names like Shaftesbury and Puffendorf, very much read in their time, are far less known now than Hobbes, Descartes, Ricardo, Mill and Keynes.

Karl Polanyi is much less well known than Hayek. We do not learn of the social history such as the complex interplay in Viennese society among those who were classmates and colleagues such as Hayek, Gombrich, Popper and Drucker. The impact of Viennese culture is not known to many economists. The result is an economics that supports an economy that is out of control because the feedback loops through society and its impact of the quality of life – and resentment – are not recognized in a dehumanized economics, and so can’t have a feedback correcting effect. The solution, however, is not to look for simplicity, but to embrace a kind of complexity that honors nature, humans, politics, and the way they are dealt with in philosophy, arts, investigative reporting, anthropology and history. Because the way forward cannot be a simple projection of the past. We are in more danger than that.

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Parry is an authorative voice.

The Kagans Are Back; Wars to Follow (Robert Parry)

Back pontificating on prominent op-ed pages, the Family Kagan now is pushing for an expanded U.S. military invasion of Syria and baiting Republicans for not joining more enthusiastically in the anti-Russian witch hunt over Moscow’s alleged help in electing Donald Trump. In a Washington Post op-ed on March 7, Robert Kagan, a co-founder of the Project for the New American Century and a key architect of the Iraq War, jabbed at Republicans for serving as “Russia’s accomplices after the fact” by not investigating more aggressively. Then, Frederick Kagan, director of the Critical Threats Project at the neocon American Enterprise Institute, and his wife, Kimberly Kagan, president of her own think tank, Institute for the Study of War, touted the idea of a bigger U.S. invasion of Syria in a Wall Street Journal op-ed on March 15.

Yet, as much standing as the Kagans retain in Official Washington’s world of think tanks and op-ed placements, they remain mostly outside the new Trump-era power centers looking in, although they seem to have detected a door being forced open. Still, a year ago, their prospects looked much brighter. They could pick from a large field of neocon-oriented Republican presidential contenders or – like Robert Kagan – they could support the establishment Democratic candidate, Hillary Clinton, whose “liberal interventionism” matched closely with neoconservatism, differing only slightly in the rationalizations used for justifying wars and more wars. There was also hope that a President Hillary Clinton would recognize how sympatico the liberal hawks and the neocons were by promoting Robert Kagan’s neocon wife, Victoria Nuland, from Assistant Secretary of State for European Affairs to Secretary of State.

Then, there would have been a powerful momentum for both increasing the U.S. military intervention in Syria and escalating the New Cold War with Russia, putting “regime change” back on the agenda for those two countries. So, early last year, the possibilities seemed endless for the Family Kagan to flex their muscles and make lots of money. As I noted two years ago in an article entitled “A Family Business of Perpetual War”: “Neoconservative pundit Robert Kagan and his wife, Assistant Secretary of State Victoria Nuland, run a remarkable family business: she has sparked a hot war in Ukraine and helped launch Cold War II with Russia and he steps in to demand that Congress jack up military spending so America can meet these new security threats.

[..] But things didn’t quite turn out as the Kagans had drawn them up. The neocon Republicans stumbled through the GOP primaries losing out to Donald Trump and then – after Hillary Clinton muscled aside Sen. Bernie Sanders to claim the Democratic nomination – she fumbled away the general election to Trump. After his surprising victory, Trump – for all his many shortcomings – recognized that the neocons were not his friends and mostly left them out in the cold. Nuland not only lost her politically appointed job as Assistant Secretary but resigned from the Foreign Service, too. With Trump in the White House, Official Washington’s neocon-dominated foreign policy establishment was down but far from out. The neocons were tossed a lifeline by Democrats and liberals who detested Trump so much that they were happy to pick up Nuland’s fallen banner of the New Cold War with Russia.

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How about the Colorado river, or the Rhine? Can you see it happening?

Ganges and Yamuna Rivers Granted Same Legal Rights As Human Beings (G.)

The Ganges river, considered sacred by more than 1 billion Indians, has become the first non-human entity in India to be granted the same legal rights as people. A court in the northern Indian state of Uttarakhand ordered on Monday that the Ganges and its main tributary, the Yamuna, be accorded the status of living human entities. The decision, which was welcomed by environmentalists, means that polluting or damaging the rivers will be legally equivalent to harming a person. The judges cited the example of the Whanganui river, revered by the indigenous Maori people. people, which was declared a living entity with full legal rights by the New Zealand government last week. Judges Rajeev Sharma and Alok Singh said the Ganges and Yamuna rivers and their tributaries would be “legal and living entities having the status of a legal person with all corresponding rights, duties and liabilities”.

The court in the Himalayan resort town of Nainital appointed three officials to act as legal custodians responsible for conserving and protecting the rivers and their tributaries. It ordered that a management board be established within three months. The case arose after officials complained that the state governments of Uttarakhand and neighbouring Uttar Pradesh were not cooperating with federal government efforts to set up a panel to protect the Ganges. Himanshu Thakkar, an engineer who coordinates the South Asia Network on Dams, Rivers and People, said the practical implications of the decision were not clear. “There are already 1.5bn litres of untreated sewage entering the river each day, and 500m litres of industrial waste,” he said. “All of this will become illegal with immediate effect, but you can’t stop the discharge immediately. So how this decision pans out in terms of practical reality is very unclear.”

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I see slums in your future.

More Than 100 Chinese Cities Now Above 1 Million People (G.)

China now has more than 100 cities of over 1 million residents, a number that is likely to double in the next decade. According to the Demographia research group, the world’s most populous country boasts 102 cities bigger than 1 million people, many of which are little known outside the country – or even within its borders. Quanzhou, for example, on the south-east coast of China, was one of the most cosmopolitan cities in the world a millennium ago, when it served as a hub for traders from across Asia and the Middle East. It is now home to more than 7 million people, nearly 800,000 more than Madrid. But while Madrid is a cultural powerhouse and the centre of Spanish politics, Quanzhou, with its 1,000-year-old mosque and charming cafes, is rarely discussed even within Chinese media, whereas Beijing, Shanghai and Hong Kong continue to get most of the headlines.

Outside China, meanwhile, few will even have heard of Kaifeng, a former imperial capital that was once a terminus on the Silk Road, or Weihai, both cities bigger than Liverpool (estimated population of urban area 880,000). The scale of China’s urban ambitions is staggering: it now has 119 cities bigger than Liverpool. By 2025, according to a report by the McKinsey Global Institute, that number is predicted to have more than doubled. One reason is that the government is actively encouraging rural residents to urbanise. China aims to have 60% of its people living in cities by 2020, up from 56.1% currently, and the World Bank estimates a billion people – or 70% of the country’s population – will be living in cities by 2030. Thousands of government officials have campaigned across the country to convince farmers to move to newly built urban districts, turning centuries-old villages into ghost towns.

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Poorly argued but still true. The Chinese had better plant a zillion trees in those cities of them.

Access To Nature Reduces Depression And Obesity (G.)

People living close to trees and green spaces are less likely to be obese, inactive, or dependent on anti-depressants, according to a new report. Middle-aged Scottish men with homes in deprived but verdant areas were found to have a death rate 16% lower than their more urban counterparts. Pregnant women also received a health boost from a greener environment, recording lower blood pressures and giving birth to larger babies, research in Bradford found. Overall, nature is an under-recognised healer, the paper says, offering multiple health benefits from allergy reductions to increases in self-esteem and mental wellbeing.

A study team of 11 researchers at the Institute for European environmental policy (IEEP) spent a year reviewing more than 200 academic studies for the report, which is the most wide-ranging probe yet into the dynamics of health, nature and wellbeing. The project first appeared as an unpublicised 280-page European commission literature review last autumn, before being augmented for Friends of the Earth Europe with analysis of the links between nature-related health outcomes and deprivation. “The evidence is strong and growing that people and communities can only thrive when they have access to nature,” said Robbie Blake, a nature campaigner for Friends of the Earth Europe, which commissioned the analysis.

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Talking about planting trees:

This is a great story, which should have many people follow the example, for if we would all plant just one tree every day, we would never have a lack of trees again.

And of course I can’t post this without adding a famous French 1953 story by Jean Giono, The Man Who Planted Trees, which inspired Québec’s Frédérick Back to make his 1987 Oscar winning animation. What a masterpiece it still is. Please watch. It’ll make you feel so much better.

The Man Who Planted A Tree And Grew A Whole Family Of Forests (G.)

When Antonio Vicente bought a patch of land in São Paulo state and said he wanted to use it to plant a forest, people called him crazy. It was 1973 and forests were seen by many as an obstacle to progress and profit. Brazil’s then military government encouraged wealthy landowners to expand by offering them generously subsidised credit to invest in modern farming techniques, a move the ruling generals hoped would boost national agriculture. But water, or an impending lack of it, was Vicente’s concern as he worriedly watched the expansion of cattle grazing and industry, the destruction of local forests, and the growth of the population and the rapid urbanisation of the state. One of 14 children, Vicente grew up on a farm where his father worked. He’d watched him cut down the trees at the owners’ orders, for use in charcoal production and to clear more land for grazing cattle.

Eventually the farm’s water springs dried up and never returned. Maintaining forests are essential for water supplies because trees absorb and retain water in their roots and help to prevent soil erosion. So with some donkeys and a small team, he worked on his little patch – 31 hectares (77 acres) of land that had been razed for grazing cattle – and set about regenerating. “The area was totally stripped,” he says, demonstrating by pointing to a painting of the treeless land in 1976. “The water supplies had nearly dried up.” His neighbours, who were cattle and dairy farmers, used to tell him: “You are dumb. Planting trees is a waste of land. You won’t have income. If it’s full of trees, you won’t have room for cows or crops.” But what started off as a weekend gig has now become a full-time way of life. More than 40 years later, Vicente – now 84 – estimates he has replanted 50,000 trees on his 31 hectare Serra da Mantiqueira mountain range property.

“If you ask me who my family are, I would say all this right here, each one of these that I planted from a seed,” he says. [..] Vicente has seen first-hand the devastating effects of mass deforestation. He travelled at one point to Rondonia, now one of Brazil’s most deforested Amazon states, in 1986 during a drive by the Brazilian government to settle the region which proved disastrous as following mass deforestation, the land yielded poor results. “The government were giving the land away for cheap, but the land didn’t serve for anything,” he says. “People cut down the trees but after 3 to 4 years, the soil turned into sand and nothing grows.” Speaking of his own project in the Mantiqueira mountain range: “I didn’t do it for money, I did it because when I die, what’s here will remain for everyone.” He adds: “People don’t call me crazy any more.”

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Mar 142017
 
 March 14, 2017  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , , ,  1 Response »
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Arthur Rothstein Family leaving South Dakota drought for Oregon 1936

 


Wall Street Buzz Over Trump Gives Shiller Dot-Com Deja Vu (BBG)
This Is The Most Overvalued Stock Market On Record – Even Worse Than 1929 (MW)
Wall Street Has Found Its Next Big Short in US Credit Market: Malls (BBG)
Fed, In Shift, May Move To Faster Pace Of Rate Hikes (R.)
The Mystery of the Treasury’s Disappearing Cash (Stockman)
Countries With National Health Insurance Spend Less, Live Longer Than US (M&B)
Rand Paul, Tulsi Gabbard Introduce Bill To Stop The US Arming Terrorists (TAM)
Several States Jointly Sue To Block Trump’s Revised Travel Ban (R.)
Shadow Banking Has Made China’s Credit Markets More Complex And Opaque (BI)
The Pause That Refreshes (Jim Kunstler)
Iceland’s Recovery Shows Benefits Of Letting Over-Reaching Banks Go Bust (Tel.)
Merkel Calls Erdogan Attack ‘Absurd’ as Tensions Escalate (BBG)
UK Parliament Passes Brexit Bill And Opens Way To Triggering Article 50 (G.)
Theresa May Rejects Scotland’s Demand For New Independence Vote (G.)
‘1st In Canada’ Supermarket Donation Plan Aids Food Banks, Tackles Waste (G.)
Stock Of Properties Conceded To The Greek State Or Confiscated Grows (G.)

 

 

“They’re both revolutionary eras..” “This time a ‘Great Leader’ has appeared. The idea is, everything is different.”

Wall Street Buzz Over Trump Gives Shiller Dot-Com Deja Vu (BBG)

The last time Robert Shiller heard stock-market investors talk like this in 2000, it didn’t end well for the bulls. Back then, the Nobel Prize-winning economist says, traders were captivated by a “new era story” of technological transformation: The Internet had re-defined American business and made traditional gauges of equity-market value obsolete. Today, the game changer everyone’s buzzing about is political: Donald Trump and his bold plans to slash regulations, cut taxes and turbocharge economic growth with a trillion-dollar infrastructure boom. “They’re both revolutionary eras,” says Shiller, who’s famous for his warnings about the dot-com mania and housing-market excesses that led to the global financial crisis. “This time a ‘Great Leader’ has appeared. The idea is, everything is different.”

For Shiller, the power of a new-era narrative helps answer one of the most hotly debated questions on Wall Street as stocks set one high after another this year: Why are traders so fixated on the upsides of a Trump presidency when the downside risks seem just as big? For all his pro-business promises, the former reality TV star’s confrontational foreign policy and haphazard management style have bred uncertainty – the one thing investors are supposed to hate most. Charts illustrating the conundrum have been making the rounds on trading floors. One, called “the most worrying chart we know” by SocGen at the end of last year, shows a surging index of global economic policy uncertainty severing its historical link with credit spreads, which have declined in recent months along with other measures of investor fear. The VIX index, a popular gauge of anxiety in the U.S. stock market, has dropped more than 30 percent since Trump’s election.

[..] For Hersh Shefrin, a finance professor at Santa Clara University and author of a 2007 book on the role of psychology in markets, the rally is just another example of investors’ remarkable penchant for tunnel vision. Shefrin has a favorite analogy to illustrate his point: the great tulip-mania of 17th century Holland. Even the most casual students of financial history are familiar with the frenzy, during which a rare tulip bulb was worth enough money to buy a mansion. What often gets overlooked, though, is that the mania happened during an outbreak of bubonic plague. “People were dying left and right,” Shefrin says. “So here you have financial markets sending signals completely at odds with the social mood of the time, with the degree of fear at the time.”

Shiller says when markets are as buoyant as they are now, resisting the urge to pile in is hard regardless of what else might be happening in society. “I was tempted to do it, too,” he says. “Trump keeps talking about a new spirit for America and so you could (A) believe that or (B) you could believe that other investors believe that.” On whether stocks are nearing a top, Shiller can’t say with any certainty. He’s loathe to make short-term forecasts. Despite the well-timed publication of his book “Irrational Exuberance” just as the dot-com bubble peaked in early 2000, the Yale University economist had warned (with caveats) that shares might be overvalued as early as 1996. Investors who bought and held an S&P 500 fund in the middle of that year made about 8 percent annually over the next decade, while those who invested at the start of 2000 lost money. The index sank 49 percent from its high in March 2000 through a bottom in October 2002.

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“Don’t be fooled by the booming headline indexes.”

This Is The Most Overvalued Stock Market On Record – Even Worse Than 1929 (MW)

This is the most dangerous and overvalued stock market on record — worse than 2007, worse than 2000, even worse than 1929. Or so warns Wall Street soothsayer John Hussman in his scariest jeremiad yet. “Presently, we observe the broadest market valuation extreme in history,” writes the chairman of the cautious Hussman Funds investment group, “with the steepest median valuations on record, and the most reliable capitalization-weighted measures within a few percent of their 2000 peaks.” On top of such warning signs as “extreme valuations, bullish sentiment, and consumer confidence,” he adds, “market action has deteriorated in interest-sensitive sectors… As of Friday, more than one-third of stocks are already below their 200-day moving averages.” Don’t be fooled by the booming headline indexes.

More NYSE stocks hit new 52-week lows last week than new 52-week highs, he notes. In a nutshell: Run. OK, so, it is always easy to criticize. Husssman, a professional economist and well-known Wall Street figure, has been here before. He’s been warning about stock-market valuations for several years. He’s in that camp that the permabulls, wrongly, call “permabears.” He’s been wrong — or, perhaps, just very early — many times. But he was, notably, also correct and prescient about both the 2000 and 2008 crashes before they happened, when few others were. Opinions, of course, are free. But facts are sacred. And more than a few are suggesting caution. According to the World Bank, the total U.S. stock market is now valued at more than 150% of annual GDP. That is way above historic norms, and about the same as it was at the market extreme of 2000.

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Where are Americans going to meet now? Online?

Wall Street Has Found Its Next Big Short in US Credit Market: Malls (BBG)

Wall Street speculators are zeroing in on the next U.S. credit crisis: the mall. It’s no secret many mall complexes have been struggling for years as Americans do more of their shopping online. But now, they’re catching the eye of hedge-fund types who think some may soon buckle under their debts, much the way many homeowners did nearly a decade ago. Like the run-up to the housing debacle, a small but growing group of firms are positioning to profit from a collapse that could spur a wave of defaults. Their target: securities backed not by subprime mortgages, but by loans taken out by beleaguered mall and shopping center operators. With bad news piling up for anchor chains like Macy’s and J.C. Penney, bearish bets against commercial mortgage-backed securities are growing.

In recent weeks, firms such as Alder Hill Management – an outfit started by protégés of hedge-fund billionaire David Tepper – have ramped up wagers against the bonds, which have held up far better than the shares of beaten-down retailers. By one measure, short positions on two of the riskiest slices of CMBS surged to $5.3 billion last month – a 50% jump from a year ago. “Loss severities on mall loans have been meaningfully higher than other areas,” said Michael Yannell at Gapstow Capital, which invests in hedge funds that specialize in structured credit. Nobody is suggesting there’s a bubble brewing in retail-backed mortgages that is anywhere as big as subprime home loans, or that the scope of the potential fallout is comparable.

After all, the bearish bets are just a tiny fraction of the $365 billion CMBS market. And there’s also no guarantee the positions, which can be costly to maintain, will pay off any time soon. Many malls may continue to limp along, earning just enough from tenants to pay their loans. But more and more, bears are convinced the inevitable death of retail will lead to big losses as defaults start piling up. The trade itself is similar to those that Michael Burry and Steve Eisman made against the housing market before the financial crisis, made famous by the book and movie “The Big Short.” Often called credit protection, buyers of the contracts are paid for CMBS losses that occur when malls and shopping centers fall behind on their loans. In return, they pay monthly premiums to the seller (usually a bank) as long as they hold the position. This year, traders bought a net $985 million contracts that target the two riskiest types of CMBS. That’s more than five times the purchases in the prior three months.

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Run! Hide!

Fed, In Shift, May Move To Faster Pace Of Rate Hikes (R.)

The Federal Reserve, which has struggled to stoke inflation since the financial crisis and up until now raised rates less frequently than it and markets expected, may be about to hit the accelerator on rate hikes. On Wednesday, the U.S. central bank is almost universally expected to raise its benchmark interest rates, a move that just a few weeks ago was viewed by the markets as unlikely. And with inflation showing signs of perking up, Fed policymakers may signal there could be more than the three rate rises they have forecast for this year. “They do not have as much room to be patient as they did before,” said Tim Duy, an economics professor at the University of Oregon, who expects Fed policymakers to lift their rate forecasts this week.

Policymakers have their eyes on achieving full employment and 2-percent inflation. The faster the economy approaches those goals, Duy said, the quicker the Fed will want to tighten policy to avoid getting behind the curve. “That’s an acceleration in the dots,” he said, referring to forecasts published by the Fed that show policymakers’ individual rate-hike forecasts as dots on a chart. The economy already appears closer to its goals than the Fed had expected in December, the last time it released forecasts. The jobless rate, at 4.7%, is below what policymakers see as the long-run norm, and inflation, at 1.7%, is already in the range they had expected by year end. As Fed policymakers prepare to raise rates this week for the second time in three months, the inflation terrain they face looks steeper than it has been since the financial crisis when one of the central bank’s policy aims was to generate inflation.

There are signs of more inflation globally, the dollar is pushing down less on U.S. prices, domestic inflation expectations have picked up and Friday’s closely watched monthly jobs report showed wages rising 2.8% year-on-year in February, with payrolls rising a sturdy 235,000. The Fed’s preferred inflation measure, the so-called core PCE price index, recorded its biggest monthly increase in five years in January and was up 1.7% year-on-year after a similar gain in December. Most Fed policymakers say such data gives them increasing confidence that inflation will eventually reach the Fed’s goal after years of undershooting.

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“..the bureaucrats have apparently decided to sabotage what they undoubtedly believe to be the usurper in the White House.”

The Mystery of the Treasury’s Disappearing Cash (Stockman)

As of October 24, the U.S. Treasury was flush with $435 billion of cash. That was because the department’s bureaucrats had been issuing debt hand-over-fist and piling up a cash hoard, apparently, for the period after March 15, 2017 when President Hillary Clinton would need to coax another debt ceiling increase out of Congress. Needless to say, Hillary was unexpectedly (and thankfully) retired to Chappaqua, New York. But the less discussed surprise is that the U.S. Treasury’s cash hoard has virtually disappeared in the run-up to the March 15 expiration of the debt ceiling holiday. That’s right. As of the Daily Treasury Statement (DTS) for March 7, the cash balance was down to just $88 billion — meaning that $347 billion of cash has flown out the door since October 24.

And I find that on March 8 alone the Treasury consumed another $22 billion of cash — bringing the balance down to $66 billion! To be sure, there has been no heist at the Treasury Building — other than the normal larceny that is the stock-in-trade of the Imperial City. What’s different this time around is that the bureaucrats have apparently decided to sabotage what they undoubtedly believe to be the usurper in the White House. To this end, they’ve been draining Trump’s bank account rather than borrowing the money to pay Uncle Sam’s monumental bills. This has especially been the case since the January 20 inauguration. The net Federal debt on March 7 was $19.802 trillion — up $237 billion since January 20th. But that’s not the half of it. During that same 47 day period, the Treasury bureaucrats took the opportunity to pay-down $57 billion of maturing treasury bills and notes by tapping its cash hoard.

In all, they drained $294 billion from the Donald’s bank account during that brief period — or about $6.4 billion per day. You wouldn’t be entirely wrong to conclude that even Putin’s alleged world class hackers couldn’t have accomplished such a feat. At this point I could don my tin foil hat because this massive cash drain was clearly deliberate. Last year, for example, during the same 47 day period, the operating deficit was even slightly larger — $253 billion. But the Treasury funded that mainly by new borrowings of $157 billion, which covered 62% of the shortfall. Its cash balance was still $223 billion on March 7. Again, that cash balance is just $66 billion right now. Moreover, the Trump Administration has only a few business days until its credit card expires on March 15 — so it’s also way too late for an eleventh hour borrowing spree to replenish its depleted cash account. (Besides that, I’m predicting a very dangerous market event will start on the 15th.)

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Not that we can’t make it even worse.

Countries With National Health Insurance Spend Less, Live Longer Than US (M&B)

We see health as a basic human right. Every society should provide medical care for its citizens at the level it can afford. And, while the United States has made some progress in improving access to care, the results do not justify the costs. So, while we agree with President Trump’s statement that the U.S. health care system should be cheaper, better and universal, the question is how to get there. In this post, we start by setting the stage: where matters stand today and why they are unacceptable. This leads us to the real question: where can and should we go? As economists, we are genuinely partial to market-based solutions that allow individuals to make tradeoffs between quality and price, while competition pushes suppliers to contain costs.

But, in the case of health care, we are skeptical that such a solution can be made workable. This leads us to propose a gradual lowering of the age at which people become eligible for Medicare, while promoting supplier competition. Before getting to the details of our proposal, we begin with striking evidence of the inefficiency of the U.S. health care system. The following chart (from OurWorldInData.org) displays life expectancy at birth on the vertical axis against real health expenditure per capita on the horizontal axis. The point is that the U.S. line in red lies well below the cost-performance frontier established by a range of advanced economies (and some emerging economies, too). Put differently, the United States spends more per person but gets less for its money.


Life Expectancy and Health Expenditure per capita, 1970-2014

It really doesn’t matter how you measure U.S. health care outlays, you will come away with the same conclusion: the U.S. system is extremely inefficient compared to that of other countries. Today, for example, health expenditures account for more than 17% of U.S. GDP. This is more than twice the average of the share in the 42 other countries shown in the figure, and more than 40% higher than the next highest (which happens to be Sweden at 12%).

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“..considering the Trump administration is directly sending American troops to fight in Syrian territory, perhaps the various rebel groups on the ground have outlived their usefulness..”

Rand Paul, Tulsi Gabbard Introduce Bill To Stop The US Arming Terrorists (TAM)

According to a press release released Friday by the office of Rep. Tulsi Gabbard, Sen. Rand Paul has introduced their bill, the Stop Arming Terrorists Act, in the U.S. Senate. The bipartisan legislation (H.R.608 and S.532) aims to prohibit any federal agency from using taxpayer dollars to provide weapons, cash, intelligence, or any support to al-Qaeda, ISIS, and other terrorist groups. It would also prohibit the government from funneling money and weapons through other countries that are directly or indirectly supporting terrorists.

Gabbard said: “For years, the U.S. government has been supporting armed militant groups working directly with and often under the command of terrorist groups like ISIS and al-Qaeda in their fight to overthrow the Syrian government. Rather than spending trillions of dollars on regime change wars in the Middle East, we should be focused on defeating terrorist groups like ISIS and al-Qaeda, and using our resources to invest in rebuilding our communities here at home.” [..] “The fact that American taxpayer dollars are being used to strengthen the very terrorist groups we should be focused on defeating should alarm every Member of Congress and every American. We call on our colleagues and the Administration to join us in passing this legislation.

Rand Paul provided much-needed support for the bill, stating: “One of the unintended consequences of nation-building and open-ended intervention is American funds and weapons benefiting those who hate us. This legislation will strengthen our foreign policy, enhance our national security, and safeguard our resources.” The legislation is currently co-sponsored by Reps. John Conyers (D-MI); Scott Perry (R-PA); Peter Welch (D-VT; Tom Garrett (R-VA); Thomas Massie (R-KY); Barbara Lee (D-CA); Walter Jones (R-NC); Ted Yoho (R-FL); and Paul Gosar (R-AZ). It is endorsed by Progressive Democrats of America (PDA), Veterans for Peace, and the U.S. Peace Council.

One of Trump’s campaign narratives that resonated deeply with his voter base was an anti-radical Islam agenda, which separated him from Clinton’s campaign as he vowed to “bomb the shit” out of ISIS-controlled oil fields. However, his voter base may or may not be somewhat disillusioned now given that he just approved an arms sale to Saudi Arabia that was so controversial it was even blocked by Obama, a president who made a literal killing from arms sales to the oil-rich kingdom (ISIS adheres to Saudi Arabia’s twisted form of Wahhabist philosophy). In the context of recent events, whether or not the Trump administration will get fully behind Gabbard’s bill remains to be seen. But considering the Trump administration is directly sending American troops to fight in Syrian territory, perhaps the various rebel groups on the ground have outlived their usefulness and the bill will be allowed to proceed unimpeded.

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“The first hurdle for the lawsuits will be proving “standing,” which means finding someone who has been harmed by the policy. With so many exemptions, legal experts have said it might be hard to find individuals who would have a right to sue..”

Several States Jointly Sue To Block Trump’s Revised Travel Ban (R.)

A group of states renewed their effort on Monday to block President Donald Trump’s revised temporary ban on refugees and travelers from several Muslim-majority countries, arguing that his executive order is the same as the first one that was halted by federal courts. Court papers filed by the state of Washington and joined by California, Maryland, Massachusetts, New York and Oregon asked a judge to stop the March 6 order from taking effect on Thursday. An amended complaint said the order was similar to the original Jan. 27 directive because it “will cause severe and immediate harms to the States, including our residents, our colleges and universities, our healthcare providers, and our businesses.” A Department of Justice spokeswoman said it was reviewing the complaint and would respond to the court.

A more sweeping ban implemented hastily in January caused chaos and protests at airports. The March order by contrast gave 10 days’ notice to travelers and immigration officials. Last month, U.S. District Judge James Robart in Seattle halted the first travel ban after Washington state sued, claiming the order was discriminatory and violated the U.S. Constitution. Robart’s order was upheld by the 9th U.S. Circuit Court of Appeals. Trump revised his order to overcome some of the legal hurdles by including exemptions for legal permanent residents and existing visa holders and taking Iraq off the list of countries covered. The new order still halts citizens of Iran, Libya, Syria, Somalia, Sudan and Yemen from entering the United States for 90 days but has explicit waivers for various categories of immigrants with ties to the country.

[..] The first hurdle for the lawsuits will be proving “standing,” which means finding someone who has been harmed by the policy. With so many exemptions, legal experts have said it might be hard to find individuals who would have a right to sue, in the eyes of a court. To overcome this challenge, the states filed more than 70 declarations of people affected by the order including tech businesses Amazon and Expedia, which said that restricting travel hurts their revenues and their ability to recruit employees. Universities and medical centers that rely on foreign doctors also weighed in, as did religious organizations and individual residents, including U.S. citizens, with stories about separated families.

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That’s the whole idea.

Shadow Banking Has Made China’s Credit Markets More Complex And Opaque (BI)

A research note from Goldman Sachs highlights how large, complex and opaque China’s credit market has become over the last decade. In a report called Mapping China’s Credit, analysts Kenneth Ho and Claire Cui write that the rise in China’s total debt started with a RMB 4 trillion ($AU770 billion) stimulus package in 2009 to counter the global financial crisis. Since late 2008, debt to GDP (excluding financial debt) has risen from 158% to 262%. Including financial debt bumps the figure up to 289%. The rise in China’s debt to GDP follows a similar increase in America, where last week bond fund manager Bill Gross discussed the risks associated with the US debt to GDP ratio, which sits at around 350%. The analysts note they’re struggling to break down and make sense of the country’s credit market.

“Given the development of the shadow banking sector, and the introduction of a number of retail investment channels such as wealth management products, it has become much more difficult to analyse and monitor China’s credit growth,” they say. In 2006, 85% of China’s credit was supplied by bank loans (offset by deposits). According to Ho and Cui’s estimates, the share of credit from bank loans has reduced to 53%. In its place, approximately 31% of debt is now supplied through bond and securities markets, and 16% through the shadow banking sector (more on that later). Ho and Cui write that as China’s debt pool has grown, larger state-related companies have seen a significant increase in leverage through traditional loans from state-affiliated banks. In addition, however, a decrease in domestic interest rates has encouraged smaller companies and individual investors to shift savings away from bank deposits.

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“The Democrats reduced themselves to a gang of sadistic neo-Maoists seeking to eradicate anything that resembles free expression..”

The Pause That Refreshes (Jim Kunstler)

Let’s take a breather from more consequential money matters at hand midweek to consider the tending moods of our time and place — while a blizzard howls outside the window, and nervous Federal Reserve officials pace the grim halls of the Eccles Building. It is clear by now that we have four corners of American politics these days: the utterly lost and delusional Democratic party; the feckless Republicans; the permanent Deep State of bureaucratic foot-soldiers and errand boys; and Trump, the Golem-King of the Coming Greatness. Wherefore, and what the fuck, you might ask. The Democrats reduced themselves to a gang of sadistic neo-Maoists seeking to eradicate anything that resembles free expression across the land in the name of social justice.

Coercion has been their coin of the realm, and especially in the realm of ideas where “diversity” means stepping on your opponent’s neck until he pretends to agree with your Newspeak brand of grad school neologisms and “inclusion” means welcome if you’re just like us. I say Maoists because just like Mao’s “Red Guard” of rampaging students in 1966, their mission is to “correct” the thinking of those who might dare to oppose the established leader. Only in this case, that established leader happened to lose the sure-thing election and the party finds itself unbelievably out-of-power and suddenly purposeless, like a termite mound without a queen, the workers and soldiers fleeing the power center in an hysteria of lost identity.

They regrouped briefly after the election debacle to fight an imaginary adversary, Russia, the phantom ghost-bear, who supposedly stepped on their termite mound and killed the queen, but, strangely, no actual evidence was ever found of the ghost-bear’s paw-print. And ever since that fact was starkly revealed by former NSA chief James Clapper on NBC’s Meet the Press, the Russia hallucination has vanished from page one of the party’s media outlets — though, in an interesting last gasp of striving correctitude, Monday’s New York Times features a front page story detailing Georgetown University’s hateful traffic in the slave trade two centuries ago. That should suffice to shut the wicked place down for once and for all!

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What does it say that only one small island can get it right?

Iceland’s Recovery Shows Benefits Of Letting Over-Reaching Banks Go Bust (Tel.)

It looks set to be a week packed with big financial milestones. In the US, the Federal Reserve will raise interest rates, putting the country on a path towards getting back to a normal price for money. In the Netherlands, a tense election may deal the fragile eurozone another blow. In this country, Theresa May could finally trigger Article 50, starting the process of taking the UK out of the European Union. The most significant event, however, as is so often the case, may well be something that hardly anyone is paying attention to. On Sunday, Iceland ended capital controls, finally returning its economy to normal after a catastrophic banking collapse back in 2008 and 2009. Why does that matter? Because Iceland was the one country that defied the global consensus and did not bail out its bankers.

True, there was shock to the system. But it was relatively short, and once the pain was dealt with, the country has bounced back stronger than ever. There is, surely, a lesson in that. It might well be better just to let banks go to the wall. Next time around, we should follow Iceland’s example. The crash of 2008 hit every country in the world. And yet none was quite so completely destroyed as Iceland. A tiny country, home to just 323,000 people, with cod fishing and tourism as its two major industries, it deregulated its finance sector and went on a wild lending spree. Its banks started bulking up in a way that might have made Royal Bank of Scotland’s Fred Goodwin start to wonder if his foot wasn’t pressed too hard on the accelerator. When confidence collapsed, those banks were done for.

In every other country in the world, the conventional wisdom dictated the financiers had to be bailed out. The alternative was catastrophe. Cash machines would stop working, trade would grind to a halt, and output would collapse. It would be the 1930s all over again. The state had no option but to dig deep, and pay whatever it took to keep the financial sector alive. But Iceland did not have that option. Its banks had run up debts of $86bn, an impossible sum for an economy with a GDP of $13bn in 2009. Even Gordon Brown, in full “saving the world’” mode, might have baulked at taking on liabilities of that scale. Iceland did the only thing it could do under the circumstances. It let its banks go bust: as British depositors quickly found out to their cost.

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Much more to come. See my article yesterday, Caesar, Turkey and the Ides of March

Merkel Calls Erdogan Attack ‘Absurd’ as Tensions Escalate (BBG)

Chancellor Angela Merkel derided as “clearly absurd” Turkish President Recep Tayyip Erdogan’s accusation that Germany supports terrorism, as Ankara announced retaliatory measures against the Dutch government amid escalating tensions with Europe. After Erdogan excoriated Merkel’s government for “openly giving support to terrorist organizations” on Monday, the Turkish government announced it would block the Dutch ambassador from re-entering the country. Erdogan has blasted European leaders, including accusing Germany of using “Nazi practices,” after a string of rallies by Turkish ministers on European soil were canceled. “The chancellor has no intention of participating in a competition of provocations” with Erdogan, her chief spokesman, Steffen Seibert, said in an emailed statement on Monday. “She’s not going to join in with that. The accusations are clearly absurd.”

Erdogan is seeking votes from Turkish expatriates in a referendum next month on constitutional changes that would make the presidency his country’s highest authority. He has lashed out at the EU and risked deepening tensions, particularly with Merkel. In an interview on Monday, he said Merkel’s government “mercilessly” supported groups such as the Kurdish PKK group, which has waged a separatist war with the Turkish military for more than three decades. “I don’t want to put all EU countries in the same basket, but some of them can’t stand Turkey’s rise, primarily Germany,” Erdogan told A Haber television. The standoff came to a head over the weekend when the Dutch government prevented Turkish ministers from participating in referendum campaign rallies. Some 3 million Turks outside their country can vote, though fewer than half of them did so in the last general election in 2015.

Merkel struck an unusually strident tone earlier this month, slamming Erdogan for trivializing World War II-era crimes by using a Nazi comparison to censure Germany for canceling ministers’ appearances. Such a tone “can’t be justified,” Merkel said March 6 after Erdogan’s previous outburst. European leaders have been vocal in their disapproval of the referendum, saying the executive-centered system that Erdogan is planning to introduce will concentrate power in the president’s hands at the expense of democracy in a NATO member state and EU membership applicant.

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The fight’s only just starting.

UK Parliament Passes Brexit Bill And Opens Way To Triggering Article 50 (G.)

Theresa May’s Brexit bill has cleared all its hurdles in the Houses of Parliament, opening the way for the prime minister to trigger article 50 by the end of March. Peers accepted the supremacy of the House of Commons late on Monday night after MPs overturned amendments aimed at guaranteeing the rights of EU citizens in the UK and giving parliament a “meaningful vote” on the final Brexit deal. The decision came after a short period of so-called “ping pong” when the legislation bounced between the two houses of parliament as a result of disagreement over the issues. The outcome means the government has achieved its ambition of passing a “straightforward” two-line bill that is confined simply to the question of whether ministers can trigger article 50 and start the formal Brexit process.

It had been widely predicted in recent days that May would fire the starting gun on Tuesday, immediately after the vote, but sources quashed speculation of quick action and instead suggested she will wait until the final week of March. MPs voted down the amendment on EU nationals’ rights by 335 to 287, a majority of 48, with peers later accepting the decision by 274 to 135. The second amendment on whether to hold a meaningful final vote on any deal after the conclusion of Brexit talks was voted down by 331 to 286, a majority of 45, in the Commons. The Lords then accepted that decision by 274 to 118, with Labour leader Lady Smith telling the Guardian that continuing to oppose the government would be playing politics because MPs would not be persuaded to change their minds.

“If I thought there was a foot in the door or a glimmer of hope that we could change this bill, I would fight it tooth and nail, but it doesn’t seem to be the case,” she said. But the decision led to tensions between Labour and the Lib Dems, whose leader, Tim Farron, hit out at the main opposition. “Labour had the chance to block Theresa May’s hard Brexit, but chose to sit on their hands. Tonight there will be families fearful that they are going to be torn apart and feeling they are no longer welcome in Britain. Shame on the government for using people as chips in a casino, and shame on Labour for letting them,” he said.

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We can be independent, but you can not.

Theresa May Rejects Scotland’s Demand For New Independence Vote (G.)

Theresa May has faced down Nicola Sturgeon’s demand for a second referendum on Scottish independence, accusing the SNP leader of “tunnel vision” and rejecting her timetable for a second vote. The prime minister said that the Scottish leader’s plan to hold a second referendum between the autumn of 2018 and spring 2019 represented the “worst possible timing,” setting the Conservative government on a collision course with the administration in Holyrood. The first minister’s intervention had been timed a day ahead of when May had been predicted to trigger article 50, but No 10 later indicated that it would not serve notice to leave the EU until the end of the month. The confirmation of the later date, in the aftermath of the speech, fuelled speculation the prime minister had been unnerved by Sturgeon.

Buoyed by three successive opinion polls putting support for independence at nearly 50/50, Sturgeon said that she had been left with little choice than to offer the Scottish people, who voted to remain in the EU, a choice at the end of the negotiations of a “hard Brexit” or living in an independent Scotland. “The UK government has not moved even an inch in pursuit of compromise and agreement. Our efforts at compromise have instead been met with a brick wall of intransigence,” the first minister said, claiming that any pretence of a partnership of equal nations was all but dead. Downing Street denied that it had ever planned to fire the starting gun on Brexit this week, but critics pointed out that ministers had failed to deny the widespread suggestion in media reports over the weekend. The Guardian understands that May will now wait until the final week of March to begin the process, avoiding a clash with the Dutch elections and the anniversary of the Rome Treaty, and giving the government time to seek consensus in different parts of the country.

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This should be so obvious, and implemented in law everywhere. It already is in France.

‘1st In Canada’ Supermarket Donation Plan Aids Food Banks, Tackles Waste (G.)

Supermarkets in Quebec will now be able to donate their unsold produce, meat and baked goods to local food banks in a program – described as the first of its kind in Canada – that also aims to keep millions of kilograms of fresh food out of landfills. The Supermarket Recovery Program launched in 2013 as a two-year pilot project. Developed by the Montreal-based food bank Moisson Montréal, the goal was to tackle the twin issues of rising food bank usage in the province and the staggering amount of edible food being regularly sent to landfills. Provincial officials said the pilot – which last year saw 177 supermarkets donate more than 2.5m kg of food that would have otherwise been discarded – would now begin expanding across the province.

“The idea behind it is: ‘Hey, we’ve got enough food in Quebec to feed everybody, let’s not be throwing things out,’” Sam Watts, of Montreal’s Welcome Hall Mission, which offers several programs for people in need, told Global News on Friday. “Let’s be recuperating what we can recuperate and let’s make sure we get it to people who need it.” Recent years have seen food bank usage surge across Canada, with children making up just over a third of the 900,000 people who rely on the country’s food banks each month. In Quebec, the number of users has soared by nearly 35% since 2008, to about 172,000 people per month.

The program’s main challenge was in developing a system that would allow products such as meat and frozen foods to be easily collected from grocers and quickly redistributed, said Watts. “There is enough food in the province of Quebec to feed everybody who needs food. Our challenge has always been around management and distribution,” he added. “Supermarkets couldn’t accommodate individual food banks coming to them one by one by one.” More than 600 grocery stores across the province are expected to take part in the program, diverting as many as 8m kg of food per year.

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Austerity. Germans can now buy Greek homes on the cheap. Insane.

Stock Of Properties Conceded To The Greek State Or Confiscated Grows (G.)

The austerity measures introduced by the government are forcing thousands of taxpayers to hand over inherited property to the state as they are unable to cover the taxation it would entail. The number of state properties grew further last year due to thousands of confiscations that reached a new high. According to data presented recently by Alpha Astika Akinita, real estate confiscations increased by 73 percent last year from 2015, reaching up to 10,500 properties. The fate of those properties remains unknown as the state’s auction programs are fairly limited. For instance, one auction program for 24 properties is currently ongoing. The precise number of properties that the state has amassed is unknown, though it is certain they are depreciating by the day, which will make finding buyers more difficult.

Financial hardship has forced many Greeks to concede their real estate assets to the state in order to pay taxes or other obligations. Thousands of taxpayers are unable to pay the inheritance tax, while others who cannot enter the 12-tranche payment program are forced to concede their properties to the state. Worse, the law dictates that any difference between the obligations due and the value of the asset conceded should not be returned to the taxpayer. The government had announced it would change that law, but nothing has happened to date. Property market professionals estimate that the upsurge in forfeiture of inherited property will continue unabated in the near future as the factors that have generated the phenomenon, such as high unemployment, the Single Property Tax (ENFIA) etc, remain in place.

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Mar 042017
 
 March 4, 2017  Posted by at 9:42 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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DPC Pine Street below Kearney after the great San Francisco earthquake and fire 1906

 


Yellen Points To March Rate Hike As Fed Signals End Of Easy Money (R.)
The Fed Is Embarking On A Path That Usually Ends With A Recession (Udland)
A Selloff Is Looming As Fear Stalks The Stock Market Rally (MW)
Medicine In The USA Is A Hostage Racket (Jim Kunstler)
Chevron Warns Future Oil Drilling May Be ‘Economically Infeasible’ (Ind.)
Germany-Turkey War Of Words Escalates (BBC)
UK Could Quit EU Without Paying A Penny (G.)
Greece Should Be Added to ECB’s QE Bond-Buying List (BBG)
To Solve Refugee Crisis, Stop Funding Terrorism – Tulsi Gabbard (TAM)
Austria To Stop Giving Food, Shelter To Rejected Asylum Seekers (ZH)
US Considers Separating Women And Children Who Enter Country Illegally (G.)
Parents Fearing Deportation Pick Guardians For US Children (R.)

 

 

‘The end of easy money’ will only come through collapse.

Yellen Points To March Rate Hike As Fed Signals End Of Easy Money (R.)

The U.S. Federal Reserve’s long-stalled ‘liftoff’ of interest rates may finally get airborne this year as policymakers from Chair Janet Yellen on Friday to regional leaders across the United States signaled that the era of easy money is drawing to a close. Yellen capped off a seemingly coordinated push from the central bank on Friday when she cemented the view that the Fed will raise interest rates at its next meeting on March 14-15, and likely be able to move faster after that than it has in years. It’s a welcome turn for the Fed chair, who has hoped to get rates off the ground throughout her three-year tenure, and now sees the economy on track and investors aligned around the idea.

“At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said at a business luncheon in Chicago. “The process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016,” she added. Stocks were up slightly, and futures tied to rate-hike expectations moved little on Yellen’s remarks. The comments from Fed speakers this week had already pushed market pricing of a March hike to 80%. The Fed has struggled for the past three years to raise interest rates off the zero lower bound as the U.S. economy slowly healed after the Great Recession. Issues from sluggish inflation globally to the dampening effect of a strong dollar and low energy prices blew them off course. By contrast, 2017 may be the year the Fed is able to follow through on its forecast of three rate hikes.

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Central bank manipulation is a craziness that can end in one way only.

The Fed Is Embarking On A Path That Usually Ends With A Recession (Udland)

Stocks are at record highs. And while the Trump administration’s early days have been filled with internal political chaos, the market’s reaction has continued to remain positive. On Wednesday, when U.S. stocks had their best day of the year, the popular SPY ETF, which tracks the S&P 500, saw $8.2 billion in new inflows, its single-best day since December 2014. But something else happened on Wednesday that should have equity bulls quite a bit more concerned: markets got behind the idea the Federal Reserve will raise interest rates in March and, perhaps, be more aggressive about raising rates in than previously expected.On Friday, Fed Chair Janet Yellen signaled that a March rate hike is on the table and said the pace of the Fed raising rates in 2017 would likely exceed that seen in 2015 and 2016.

And while an accomodative Fed has been seen as a backstop for markets during the post-crisis bull run higher, a tighter Fed is bad news for stocks because when rates begin to rise, the end of the bull market has already been signaled. As we highlighted in our daily market outlook post, David Rosenberg at Gluskin Sheff wrote Thursday that, “Monetary policy is profoundly more important to the markets and the economy than is the case with fiscal policy, though all the Fed is doing now is removing accommodation.” Rosenberg added that, “there have been 13 Fed rate hike cycles in the post-WWII era, and 10 landed the economy in recession. Soft landing are rare and when they have occurred, they have come in the third year of the expansion, not the eighth.”


The gray bars mark recessions. Ahead of recessions, rates usually rise. Right now, rates are set to rise.

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Fear vs greed.

A Selloff Is Looming As Fear Stalks The Stock Market Rally (MW)

Wall Street’s so-called fear index has started to move in lockstep with stock prices and that has one money manager warning of an impending selloff even as market sentiment remains fairly stable. Jesse Felder, founder of the Felder Report and an alumni of Bear Stearns, on Friday shared a chart that showed an increasingly positive correlation between the S&P 500 and the CBOE Market Volatility Index. “Normally stocks and the VIX move in opposite directions…and it makes sense that rising stock prices mean less fear and vice versa,” said Felder. However, that reverse relationship has started to change in recent days as expectations of a market correction mount.

The VIX is a measure of the market’s expectation for volatility over the next 30 days and is calculated from the implied volatilities of S&P 500 index options. A low reading indicates a placid market while a higher number suggests elevated uncertainty. “The options market is pricing in greater volatility ahead even though stocks don’t yet reflect this same dynamic,” Felder told MarketWatch. “Over the past few years this signal has preceded anywhere from a 2% to a 10% correction.”

That this trend comes on top of the 10-year Treasury yield’s nearly 40% surge over the past year as the Federal Reserve prepares to tighten monetary policy suggest risky assets such as equities will face significant selling pressure. Analysts are projecting the Fed to raise interest rates three times this year, a view reinforced by comments from Fed Chairwoman Janet Yellen on Friday that a rate hike at the next Federal Open Market Committee in mid-March is likely. “The Fed looks like it will take its third step toward tightening here soon so it might pay to remember the old Wall Street adage ‘three steps and a stumble.’ For these reasons, I think the chance of a major reversal is higher than it has been in the past,” he said.

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“Some things are too big to fail; some are too broken to fix.”

Medicine In The USA Is A Hostage Racket (Jim Kunstler)

The ObamaCare quandary. A fiasco for sure. Under it, not uncommonly, a family pays $12,000-a-year for a policy that carries a $5,000 deductible. That’s an interesting number in a land were most people don’t even have enough ready cash for routine car repairs. The cruel and idiotic injustice of such a set-up could only happen in a society that has normalized pervasive lying, universal accounting fraud, and corporate racketeering. I personally doubt the existing health care system can be reformed. Anyway, we’re starting in the wrong place with it. The part that nobody talks about is the psychopathic pricing system that drives medicine. The average cost for a normal (non-surgical) hospital childbirth in America these days is $10,000. WTF? An appendectomy: between $9,000 and $20,000 depending on where. WTF?

These days, a hip replacement runs about $38,000. Of course, you will never find out what a treatment or procedure costs before-the-fact. They simply won’t tell you. They’ll say something utterly ridiculous like, “we just don’t know.” You’ll find out when the bills roll in. Last time I had a hip replacement, I received a single line-item hospital charge report from the insurance company that said: “Room and board, 36 hours… $23,000.” Say what? This was apart from the surgeon’s bill and the cost of the metal implant, just for occupying a bed for a day and a half pending discharge. They didn’t do a damn thing besides take my blood pressure and temperature a dozen times, and give me a few hydrocodone pills.

The ugly truth, readers, is that medicine in the USA is a hostage racket. They have you in a tight spot at a weak moment and they extract maximum payment to allow you to get on with your life, with no meaningful correlation to services rendered — just whatever they could get. Until these racketeers are compelled under law to post their prices openly and transparently, no amount of tweaking the role of insurers or government policy will make any difference. Note, too, that there is a direct connection between the outrageous salaries of hospital executives and their non-transparent, dishonest, and extortionist pricing machinations. The pharma industry is, of course, a subsidiary racket and needs to be subject to the kind of treatment the Department of Justice used to dispense to the likes of the Teamsters Union.

The healthcare system probably will not be reformed, but rather will collapse, and when it does, it will reorganize itself in a way that barely resembles current practice. For one thing, citizens will have to gain control over their own disastrous behavior, especially their eating, or else suffer the consequences, namely an early death. Second, the hospital system must be decentralized so that localities are once again served by small hospitals and clinics. The current system represents a mergers-and-acquisitions orgy that went berserk the past quarter century. The resulting administrative over-burden at every medical practice in the land is a perfectly designed fraud machine for enabling rackets. Preliminary verdict: congress will get nowhere in 2017 trying to fix this mess. Some things are too big to fail; some are too broken to fix. The coming debacle in finance, markets, and currencies will speed its demise.

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Because of climate legislation.

Chevron Warns Future Oil Drilling May Be ‘Economically Infeasible’ (Ind.)

In an industry first, one of the world’s biggest oil companies has warned it could face legal action over climate change. Chevron, the California-based multinational, admitted it could be the subject of “governmental investigations and, potentially, private litigation” because of its role in causing global warming. And the firm added that regulations designed to reduce greenhouse gas emissions might also render the “extraction of the company’s oil and gas resources economically infeasible”. Environmentalists suggested the decision to admit the threat to the company could be a reaction to legal case brought last year against Exxon Mobil by the Boston-based Conservation Law Foundation, which alleges the fossil fuel company tried to discredit climate science despite knowing the risks in order to make money.

Chevron was one of a number of oil firms targeted in a campaign by the Union of Concerned Scientists in the US to “stop funding climate disinformation”. And, in an official filing about the state of its financial health to the US Securities and Exchange Commission (SEC), the company lays out possible reasons why it might have been in its interest to cast doubt on scientific evidence that its products are causing a problem. Laws requiring the reduction of emissions – like legislation that could be in the UK Government’s long-delayed Emissions Reduction Plan – “may result in increased and substantial … costs and could, among other things, reduce demand for hydrocarbons”, Chevron said in a section called “risk factors”.

“In the years ahead, companies in the energy industry, like Chevron, may be challenged by an increase in international and domestic regulation relating to greenhouse gas emissions,” it said. “Such regulation could have the impact of curtailing profitability in the oil and gas sector or rendering the extraction of the company’s oil and gas resources economically infeasible.”

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Makes me fear for Greece.

Germany-Turkey War Of Words Escalates (BBC)

A row between Ankara and Berlin over a series of cancelled Turkish political rallies in Germany is continuing to escalate. On Friday, Turkish President Recep Tayyip Erdogan accused Berlin of “aiding and harbouring” terror. He said a German-Turkish journalist detained by Turkey was a “German agent” and a member of the outlawed Kurdish militant group, the PKK. A source in Germany’s foreign ministry told Reuters the claims were “absurd”. Earlier German Chancellor Angela Merkel said she respected local authorities’ decisions to cancel rallies that Turkey’s justice and economy ministers had been scheduled to address. Turkey is trying to woo ethnic Turkish voters ahead of a key referendum. About 1.4 million Turks living in Germany are eligible to vote in the April referendum, in which President Erdogan aims to win backing for sweeping new powers.

The constitutional changes would boost Mr Erdogan’s presidency and significantly weaken parliament’s role. Turkish officials have been angered after local German officials withdrew permission for rallies in Gaggenau, Cologne and Frechen. Gaggenau authorities had said there was insufficient space for the rally, while Cologne officials said they had been misled about the purpose of the event. Turkish Justice Minister Bekir Bozdag, who had been due to speak in Gaggenau, said he saw “old illnesses flaring up” between the two Nato allies. Meanwhile, Turkish Foreign Minister Mevlut Cavusoglu accused the German government of backing opposition to Mr Erdogan’s planned constitutional changes. He said: “You are not Turkey’s boss. You are not a first class [country] and Turkey is not second class. We are not treating you like that, and you have to treat Turkey properly. “If you want to maintain your relations with us, you have to learn how to behave.”

Germany’s foreign ministry said the central government had nothing to do with the cancellations, and Ankara should refrain from “pouring oil on the fire”. The growing row is troubling for Chancellor Merkel because she persuaded Turkey to help block the surge of migrants – many of them Syrian refugees – into the EU. Separately, the Dutch government on Friday described plans for a Turkish referendum campaign rally in Rotterdam as “undesirable”. Turkish Foreign Minister Mevlut Cavusoglu was reportedly meant to attend the rally scheduled for 11 March. Ties between Berlin and Istanbul are also strained over Turkey’s arrest of Deniz Yucel, a journalist who works for Die Welt. Mr Yucel “hid in the German embassy as a member of the PKK and a German agent for one month”, Mr Erdogan said. “When we told them to hand him over to be tried, they refused.” German’s foreign ministry called the spy claims “absurd”. Ms Merkel, referring to the case earlier, told reporters in Tunis: “We support freedom of expression and we can criticise Turkey.”

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The EU’s position in the talks will weaken as the union crumbles.

UK Could Quit EU Without Paying A Penny (G.)

The UK could walk away from the European Union in 2019 without paying a penny, the House of Lords has said, in a report bound to raise tensions with Brussels in the run-up to Brexit talks. The British government would have no legal obligation to either pay a €60bn Brexit bill mooted by the European commission or honour payments into the EU budget promised by the former prime minister David Cameron, according to analysis by the House of Lords EU financial affairs sub-committee. In a report published on Saturday, the committee argues that the British government would be on strong legal ground if it chose to leave the EU without paying anything, adding that Brussels would have no realistic chance of getting any money.

The peers stress, however, that if the government wants goodwill from EU countries and a deal on access to European markets, agreement on the budget will be important. “The UK appears to have a strong legal position in respect of the EU budget post-Brexit and this provides important context to the article 50 negotiations,” said Lady Falkner of Margravine, the Liberal Democrat peer who chairs the sub-committee. “Even though we consider that the UK will not be legally obliged to pay into the EU budget after Brexit, the issue will be a prominent factor in withdrawal negotiations. The government will have to set the financial and political costs of making such payments against potential gains from other elements of the negotiations.”

[..] The peers’ argument will be toxic to the EU’s chief Brexit negotiator, Michel Barnier, whose staff drew up the mooted bill ranging from €55bn-€60bn. This covers the UK’s share of EU civil staff pensions, unpaid bills and decommissioning nuclear power plants. Barnier is expecting the UK to pay into the EU budget in 2019 and 2020, putting the UK on the hook for payments worth £12.4bn, agreed by Cameron in 2013. The EU’s €1tn, seven-year budget was negotiated in late 2013 by EU leaders including the British prime minister. It is due to expire at the end of 2020, although bills may be trickling in until 2023. This reflects that payments for EU-funded infrastructure projects, such as roads or airports, are not settled until two to three years after being promised.

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There is no reason for the ECB not to include Greece. Never was. It’s pure economic strangulation.

Greece Should Be Added to ECB’s QE Bond-Buying List (BBG)

Greece and its creditors look poised to strike a deal that will allow the nation to draw down aid and avoid defaulting on its debts in July. That sounds good, but it is, in fact, just a fudge. What’s needed instead is for the country to regain access to capital markets in its own right. To help make that happen, the European Central Bank should add Greek bonds to the list of securities eligible for purchase under its quantitative easing program.

The deal Greece is about to agree with its European partners and the IMF is the latest in a long line of compromises that have failed to address the core issue – that Greece’s debts, now 170% of economic output, are so burdensome they are preventing a recovery. The IMF is right to argue that Greece needs additional debt relief on the €174 billion it owes to the European Financial Stability Facility and the European Stability Mechanism. With elections looming this year in the Netherlands, France and Germany, however, details about that relief will probably have to wait until next year; voters don’t want to hear about Greek bailouts right now. But the ECB can act swiftly to include Greek bonds in its asset purchase program.

German Chancellor Angela Merkel has told ECB President Mario Draghi that she’s willing to let inclusion in his QE program be used as an incentive to persuade Greece to agree to the new deal, the Greek news service Kathimerini reported on Wednesday, without identifying the source of its information. Draghi has made a new agreement between Greece and its lenders a condition of adding Greek debt to the 60 billion euros of bonds the central bank will buy from April, as it scales back the monthly program from 80 billion euros. Greek Prime Minister Alexis Tsipras told lawmakers last week that he’s hopeful the latest bailout review can be completed by March 20, when euro-region finance ministers are scheduled to meet in Brussels.

While Greek yields have declined in recent weeks, they remain too high for the country to attempt to tap the markets. Greece’s two-year borrowing cost of about 7%, for example, compares with just 2% for Italy and 1.7% for Spain, both of which have benefited from the support of ECB purchases:

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“..never once laying blame to the U.S. military establishment for spending over $1 billion a year arming Syrian rebels.”

To Solve Refugee Crisis, Stop Funding Terrorism – Tulsi Gabbard (TAM)

Democratic Congresswoman Tulsi Gabbard, the politician who previously accused the U.S. of arming ISIS, is still calling on the U.S. government to stop its disastrous regime change policies in the Middle East. According to a press release made public on Tuesday, Gabbard has again called for the U.S. to stop aiding terrorists like al-Qaeda and ISIS. Gabbard’s guest at the presidential address to Congress, a Kurdish refugee activist, also called for an end to the U.S. policy of “regime change in Syria.” Gabbard said:

“In the face of unimaginable heartbreak, Tima has been a voice for the voiceless, a champion for refugees worldwide, and a strong advocate for ending the regime change war in Syria. I am honored to welcome her to Washington tonight as we raise our voices to call on our nation’s leaders to end the counterproductive regime change war in Syria that has caused great human suffering, refugees, loss of life, and devastation. We urge leaders in Congress to pass the Stop Arming Terrorists Act and end our destructive policy of using American taxpayer dollars to provide direct and indirect support to armed militants allied with terrorist groups like al-Qaeda and ISIS in Syria, who are fighting to overthrow the Syrian government.”

Gabbard also reportedly told Russian state-owned news station RT: “For years, our government has been providing both direct and indirect support to these armed militant groups, who are working directly with or under the command of terrorist groups like Al-Qaeda and ISIS, all in their effort and fight to overthrow the Syrian government.” The activist, Tima Kurdi, is more widely known as the aunt of a three-year-old boy who drowned on the shores of Turkey in September 2015. The image went viral on social media and was easily manipulated by the mainstream media to further the United States’ agenda in the region, never once laying blame to the U.S. military establishment for spending over $1 billion a year arming Syrian rebels.

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Welcome to Europe. It’s the same as America.

Austria To Stop Giving Food, Shelter To Rejected Asylum Seekers (ZH)

In a bill aimed at encouraging asylum seekers to leave voluntarily, Austrian lawmakers are considering halting the provision of food and accommodation to migrants who are denied asylum and refuse to leave the country. Austria took in roughly 90,000 asylum seekers in 2015, more than 1 percent of its population, as it was swept up in Europe’s migration crisis when hundreds of thousands of people crossed its borders, most on their way to Germany. As Reuters notes, it has since tightened immigration restrictions and helped shut down the route through the Balkans by which almost all those people – many of them fleeing war and poverty in the Middle East and elsewhere – arrived. Asylum applications fell by more than half last year.

Asylum seekers in Austria get so-called basic services, including free accommodation, food, access to medical treatment and €40 pocket money a month. But now, Austria’s centrist coalition government on Tuesday agreed on a draft law which would allow authorities to stop providing accommodation and food to rejected asylum seekers who refuse to leave the country. “The first thing is basically that they don’t get anything from the Austrian state if they don’t have the right to stay here. Is that so hard to understand?” As Politico reports, Interior Minister Wolfgang Sobotka said the law, which will need approval by parliament, was designed to encourage rejected asylum seekers to leave voluntarily.

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This is getting too absurd.

US Considers Separating Women And Children Who Enter Country Illegally (G.)

Women and children crossing together illegally into the United States could be separated by US authorities under a proposal being considered by the Department of Homeland Security, according to three government officials. Part of the reason for the proposal is to deter mothers from migrating to the United States with their children, said the officials, who have been briefed on the proposal. The policy shift would allow the government to keep parents in custody while they contest deportation or wait for asylum hearings. Children would be put into protective custody with the Department of Health and Human Services, in the “least restrictive setting” until they can be taken into the care of a US relative or state-sponsored guardian.

Currently, families contesting deportation or applying for asylum are generally released from detention quickly and allowed to remain in the United States until their cases are resolved. A federal appeals court ruling bars prolonged child detention. Donald Trump has called for ending so-called “catch and release”, in which people who cross illegally are freed to live in the United States while awaiting legal proceedings. Two of the officials were briefed on the proposal at a 2 February town hall for asylum officers by US Citizenship and Immigration Services asylum chief John Lafferty. A third DHS official said the department was actively considering separating women from their children but has not made a decision. About 54,000 children and their guardians were apprehended between 1 October 2016, and 31 January 2017, more than double the number caught over the same time period a year earlier.

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The sadness is deafening.

Parents Fearing Deportation Pick Guardians For US Children (R.)

Parents who immigrated illegally to the United States and now fear deportation under the Trump administration are inundating immigration advocates with requests for help in securing care for their children in the event they are expelled from the country. The Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA) advocacy group has been receiving about 10 requests a day from parents who want to put in place temporary guardianships for their children, said spokesman Jorge-Mario Cabrera. Last year, the group said it received about two requests a month for guardianship letters and notarization services. At the request of a nonprofit organization, the National Lawyers Guild in Washington D.C. put out a call this week for volunteer attorneys to help immigrants fill out forms granting friends or relatives the right to make legal and financial decisions in their absence.

In New Jersey, immigration attorney Helen Ramirez said she is getting about six phone calls a day from parents. Last year, she said, she had no such calls. “Their biggest fear is that their kids will end up in foster care,” Ramirez said. President Donald Trump’s administration has issued directives to agents to more aggressively enforce immigration laws and more immigrants are coming under scrutiny by the authorities. For parents of U.S. citizens who are ordered removed, the U.S. Immigration and Customs Enforcement (ICE) agency “accommodates, to the extent practicable, the parents’ efforts to make provisions” for their children, said ICE spokeswoman Sarah Rodriguez. She said that might include access to a lawyer, consular officials and relatives for detained parents to execute powers of attorney or apply for passports and buy airline tickets if the parents decide whether or not to take the children with them.

Randy Capps of the Migration Policy Institute (MPI), a Washington-based non-profit that analyzes the movement of people worldwide, said that while putting contingency plans in place is a good idea, he does not think the level of fear is justified. During the previous administration of President Barack Obama, a Democrat, the likelihood of both parents being deported was slim, Capps said. He doubts there will be a huge shift under Republican Trump toward deporting both parents. “The odds are still very low but not as low as they were – and this is just the beginning of the administration,” he said.

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Mar 022017
 
 March 2, 2017  Posted by at 10:13 am Finance Tagged with: , , , , , , , ,  2 Responses »
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DPC League Island Navy Yard, Philadelphia. USS Brooklyn spar deck 1898

 


Trump Will Create a Debt Crisis Like Never Before – David Stockman (Fox)
The End Of A 100 Year Global Debt Super Cycle Is Way Overdue (EC)
US Personal Income Climbs 0.4% In January, More Than Expected (RTT)
US Real Personal Spending Crashes Most Since 2009 (ZH)
Will Trump Build A Wall Protecting US Banks From Global Rules? (Davies)
Once Again, Trump Succeeded Where He Was Supposed To Fail (WaPo)
Greece’s Latest Drama Imperils Banks’ Baby Steps Toward Recovery (BBG)
Juncker: Greek Prime Minister Loves Me Deeply, And So Do Greeks (KTG)
Jean-Claude Juncker Sets Five Paths For EU’s Future (BBC)
They Really Knew How to Do Populist Revolts in 1672 (BBG)
World’s Oldest Fossils -4 Billion Years- Found In Canada (G.)
Overfishing Wipes Out 90% Of Caribbean Predatory Fish (DM)

 

 

I think Trump should start inviting Dave over to the White House. You know, just listen. Reagan’s budget director knows how things work.

Trump Will Create a Debt Crisis Like Never Before – David Stockman (Fox)

While President Trump is expected to tout his administration’s accomplishments one month into his term during a speech before a joint session of Congress Tuesday night, former Reagan Budget Director David Stockman said he doesn’t see much progress being made. “I’ve thrown in the towel because he’s not paying attention and he’s not learning anything and he’s making ridiculous statements,” Stockman told the FOX Business Network’s Neil Cavuto. During the address, Trump is expected to talk about the new budget blueprint, which Stockman said doesn’t add up. “We don’t need a $54 billion increase in defense when the budget already is ten times bigger than that of Russia. We don’t need $6 trillion of defense spending over the next decade because China is going nowhere except trying to keep their Ponzi scheme together.”

President Trump will also talk about the GOP replacement for Obamacare. Stockman said he wasn’t sold on Speaker Ryan’s plan. “If you look at the Ryan draft that came out over the weekend, it’s basically Obamacare-like. It’s not really repealing anything,” he said. “It’s basically reneging and turning the Medicaid expansion into a block grant, turning the exchanges into tax credits [and] it’s still going to cost trillions of dollars.” Last week, Trump’s Treasury Secretary Steven Mnuchin, told FOX Business the administration is “focused on an aggressive timeline” to produce a tax reform plan by August, but in Stockman’s opinion, tax reform won’t happen this year. He also warned that the administration’s run up against the debt ceiling this summer could lead to a debt crisis. “I don’t think we will see the tax cuts this year at all,” he said. “There is going to be a debt ceiling crisis like never before this summer and that’s what people don’t realize. They’ve burned up all the cash that Obama left on the balance sheet for whatever reason.”

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“..the question is not what could go wrong since it is guaranteed that all these liabilities will implode at some point. And when they do, it will bring misery to the world of a magnitude that no one could ever imagine.”

The End Of A 100 Year Global Debt Super Cycle Is Way Overdue (EC)

Central banks are designed to create debt, and since 1913 the U.S. national debt has gotten more than 6800 times larger. But of course it is not just the United States that is in this sort of predicament. At this point more than 99% of the population of the entire planet lives in a nation that has a debt-creating central bank, and as a result the whole world is drowning in debt. When people tell me that things are going to “get better” in 2017 and beyond, I find it difficult not to roll my eyes. The truth is that the only way we can even continue to maintain our current ridiculously high debt-fueled standard of living is to grow debt at a much faster pace than the economy is growing. We may be able to do that for a brief period of time, but giant financial bubbles like this always end and we will not be any exception.

Barack Obama and his team understood what was happening, and they were able to keep us out of a horrifying economic depression by stealing more than nine trillion dollars from future generations of Americans and pumping that money into the U.S. economy. As a result, the federal government is now $20 trillion in debt, and that means that the eventual crash is going to be far, far worse than it would have been if we would have lived within our means all this time. Corporations and households have been going into absolutely enormous amounts of debt as well. Corporate debt has approximately doubled since the last financial crisis, and U.S. consumers are now more than $12 trillion in debt. When you add all forms of debt together, America’s debt to GDP ratio is now about 352%. I think that the following illustration does a pretty good job of showing how absolutely insane that is…

If your brother earns $100,000 in annual income and borrowed $10,000 on his credit card, he could consume $110,000 worth of stuff. In this example, his debt to his personal GDP is just 10%. But what if he could get more credit year after year and reached a point where his total debt reached $352,000 but his income remained the same. His personal debt-to-GDP ratio would now be 352% If he could borrow at super low interest rates, maybe he could sustain the monthly loan payments. Maybe? But how much more could he possibly borrow? What lender would lend him more? And what if those low rates began to rise? How much debt can his $100,000 income cover? Essentially, he has reached the end of his own debt cycle.

The United States is certainly not alone in this regard. When you look all over the industrialized world, you see similar triple digit debt to GDP figures. When this current debt super cycle ultimately ends, it is going to create economic pain on a scale that will be unlike anything that we have ever seen before. The following comes from King World News…

“That is the inevitable consequence of 100 years of credit expansion from virtually nothing to $250 trillion, plus global unfunded liabilities of roughly $500 trillion, plus derivatives of $1.5 quadrillion. This is a staggering total of $2.25 quadrillion. Therefore, the question is not what could go wrong since it is guaranteed that all these liabilities will implode at some point. And when they do, it will bring misery to the world of a magnitude that no one could ever imagine. It is of course very difficult to forecast the end of a major cycle. As this is unlikely to be a mere 100-year cycle but possibly a 2000-year cycle. It is also impossible to forecast how long the decline will take. Will it be gradual like the Dark Ages, which took 500 years after the fall of the Roman Empire? Or will the fall be much faster this time due to the implosion of the biggest credit bubble in world history? The latter is more likely, especially since the bubble will become a lot bigger before it implodes.”

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The next two items struck me as a combination: income goes up (take that with a truckload of salt), but spending goes down. Confidence indicator?!

US Personal Income Climbs 0.4% In January, More Than Expected (RTT)

While the Commerce Department released a report on Wednesday showing a slightly bigger than expected increase in U.S. personal income in the month of January, the report also showed that personal spending rose by less than expected. The report said personal income climbed by 0.4% in January after rising by 0.3% in December. Economists had been expecting another 0.3% increase. Disposable personal income, or personal income less personal current taxes, rose by 0.3% for the second straight month. Real spending, which is adjusted to remove price changes, actually fell by 0.3% in January after rising by 0.3% in December. With income rising faster than spending, personal saving as a percentage of disposable personal income ticked up to 5.5% in January from 5.4% in December. A reading on inflation said to be preferred by the Federal Reserve showed that core consumer prices were up 1.7% year-over-year in January, unchanged from the previous month.

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What made Americans stop spending? I thought Trump made them feel so good?

US Real Personal Spending Crashes Most Since 2009 (ZH)

While the key number analysts were looking for in today’s Personal Spending data was the PCE Price Index, both headline and core, which rose by 1.9% and 1.7% respectively, the latter coming in as expected, just shy of the Fed’s 2.0% inflation target, the internals on US incomes and spending were just as notable. Here, the silver lining of a rise in incomes (+0.4% MoM vs +0.3% exp) was dashed by a disappointingly slow growth in spending (+0.2% vs +0.5% prev). With incomes rising more than spending, the savings rate predictably ticked up from multi year lows, rising from 5.4% to 5.5% in January.

On the income side, the increase in personal income was almost entirely from service-producing industries wages, which increased by $22.5BN, while Goods-producing was higher by just $4 billion. Additionally, Social Security transfer benefits added another $9 billion. However, for the ‘average joe’, facing a rising cost of goods, real personal spending plunged 0.3% in January: the biggest drop since September 2009.

Finally, as a result of surging inflation, and disposable incomes suddenly unable to keep up, the real annual growth in disposable income per capita fell to just 1.5%, the weakest in over 3 years and a red flag for those calling for another renaissance for US consumers.

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It’s about the Fed.

Will Trump Build A Wall Protecting US Banks From Global Rules? (Davies)

As President Trump struggles to staff his administration with sympathisers who will help transpose tweets into policy, the exodus of Obama appointees from the federal government and other agencies continues. For the financial world, one of the most significant departures was that of Daniel Tarullo, the Federal Reserve governor who has led its work on financial regulation for the last seven years. It would be a stretch to say that Tarullo has been universally popular in the banking community. He led the charge in arguing for much higher capital ratios, in the US and elsewhere. He was a tough negotiator, with a well-tuned instinct for spotting special pleading by financial firms. But crocodile tears will be shed in Europe to mark his resignation.

European banks, and even their regulators, were concerned by his enthusiastic advocacy of even tougher standards in Basel 3.5 (or Basel 4, as bankers like to call it), which would, if implemented in the form favoured by the US, require further substantial capital increases for Europe’s banks in particular. In his absence, these proposals’ fate is uncertain. But Tarullo has also been an enthusiastic promoter of international regulatory cooperation, with the frequent flyer miles to prove it. For some years, he has chaired the Financial Stability Board’s little-known but important Standing Committee on Supervisory and Regulatory Cooperation. His commitment to working with colleagues in international bodies such as the FSB and the Basel Committee on Banking Supervision, to reach global regulatory agreements enabling banks to compete on a level playing field, has never been in doubt.

Already, some of those who criticised him most vocally in the past are anxious about his departure. Who will succeed him? The 2010 Dodd-Frank Act created a vice-chair position on the Federal Reserve Board – which has never been filled – to lead the Fed’s work on regulation. Will that appointee, whom Trump now needs to select, be as committed as Tarullo to an international approach? Or will his principal task be to build a regulatory wall, protecting US banks from global rules? We do not yet know the answers to these questions, but Fed watchers were alarmed by a 31 January letter to Fed chair Janet Yellen from Representative Patrick McHenry, the vice-chairman of the House committee on financial services. McHenry did not pull his punches. “Despite the clear message delivered by President Donald Trump in prioritising America’s interest in international negotiations,” McHenry wrote, “it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability, or the authority to do so. This is unacceptable.”

In her reply of 10 February, Yellen firmly rebutted McHenry’s arguments. She pointed out that the Fed does indeed have the authority it needs, that the Basel agreements are not binding, and that, in any event, “strong regulatory standards enhance the stability of the US financial system” and promote the competitiveness of financial firms. But that will not be the end of the story. The battle lines are now drawn, and McHenry’s letter shows the arguments that will be deployed in Congress by some Republicans close to the president. There has always been a strand of thinking in Washington that dislikes foreign entanglements, in this and other areas. While Yellen’s arguments are correct, the Fed’s entitlement to participate in international negotiations does not oblige it to do so, and a new appointee might argue that it should not.

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Nice piece. What you see when you take a step back. And this is from WaPo.

Once Again, Trump Succeeded Where He Was Supposed To Fail (WaPo)

There’s a confusion at the heart of every presidential address to Congress. It’s supposed to be a grave occasion of solidarity around the principles of our shared republic, but it has the cheesy and disingenuous air of a campaign event. The address combines the solemnity of ceremony with mindless hyperpartisan hoopla — the shouting and booing, the symbolic gimmickry and, above all, the absurd tradition of signifying one’s agreement or displeasure by either standing to applaud or remaining seated after every phrase of the speech. The address is designed for a traditional Democratic or Republican president. He’s meant to embolden his party and browbeat the opposition, with a few light gestures at unity and consensus. His allies are supposed to look gleeful and applaud his every gesture; his opponents are supposed to sit glumly on their hands and show the nation that they, at least, aren’t engaging in this misguided hysteria.

The address is designed, in other words, for a more or less ideologically coherent speech. But Donald Trump, as everybody knows, doesn’t care about ideological coherence. His ideas don’t fall along recognizable philosophical lines, with the result that his audience of lawmakers, ready to boo or cheer in the usual ways, often seemed unsure how to respond. Once again, then, Trump succeeded in a setting where nearly everybody — including me — thought he would fail. The Democrats looked especially awkward. So much of their detestation of Trump arises not from policy differences but from horror at his gaucherie and bizarre rhetorical excesses. But none of that is relevant in a State of the Union-style address. Subtract the issues of Obamacare repeal, immigration and the president’s hard-line policies on domestic security — the latter two of which don’t lend themselves to clear ideological allegiances — and much of what Trump had to say could have been said by any Democratic president.

Even on the topic of health care, Trump offered several proposals that, taken on their own, most Democrats probably wouldn’t object to, hence making it rather difficult for them to do what they would have preferred to do, namely glower at the president’s let-them-eat-cake obstructionism. What were Democrats supposed to do when, for instance, Trump vowed “to make child care accessible and affordable, to help ensure new parents have paid family leave, to invest in women’s health, and to promote clean air and clear water, and to rebuild our military and our infrastructure”? I guess … we’ll applaud? Clap, clap? Republicans, meanwhile, found themselves applauding for something not very unlike President Obama’s stimulus plan of 2009. “To launch our national rebuilding,” Trump said, “I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States — financed through both public and private capital — creating millions of new jobs.”

I’m not sure what “financed through both public and private capital” means, but Trump’s jobs plan sounded to my ear like some socialist Five-Year Plan from the 1970s — making it all the more entertaining to watch congressional Republicans cheering like football fans who misheard the penalty call. I wonder if Tuesday night’s address was a kind of adumbration of Trump’s presidency — his adversaries deprived of half their reasons for hating him, his allies stupidly wondering what happened to their principles, the nation’s commentators once again explaining why the president succeeded when he was supposed to fail, and voters reluctantly appreciating this hyperactive agitator who — for all his problems — at least keeps things interesting.

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Give Greece full access to all European finance tools while it’s in the eurozone, or at some point it won’t be.

Greece’s Latest Drama Imperils Banks’ Baby Steps Toward Recovery (BBG)

Since the last eruption of Greece’s long-running crisis in 2015, banks in Europe’s most troubled economy have shored up capital, staunched losses and set up a plan to reduce their mountains of bad debt. Now, fresh tensions over the country’s bailout are putting that progress at risk. About 1.3% of deposits were pulled from the banks in January, while bad loans crept higher, an increase Bank of Greece Governor Yannis Stournaras blamed on borrowers using the deadlock with creditors as an excuse to avoid making their payments. Greek officials are meeting in Athens this week with representatives of the euro area and IMF to set out the policies Greece must undertake to unlock more loans. The government foresees an accord in March or early April, but the scale of pending issues raises concerns they may be politically hard to sell at home.

“The longer it takes for the impasse to be concluded, the more damaging it will be for the banks,” said Federico Santi, an analyst with Eurasia Group. The biggest lenders – Piraeus Bank, National Bank of Greece, Eurobank and Alpha Bank – made headway since 2015, when 26% of total deposits fled on concern Greece might abandon the single currency. That run was only halted when the banks were shut for three weeks, controls were placed on withdrawals and the movement of money abroad and Greece agreed to an €86 billion bailout, its third since 2010. A €14.4 billion recapitalization in November 2015 by the government-owned Hellenic Financial Stability Fund and private investors strengthened the banks’ balance sheets. The HFSF – funded through euro-area loans – remains the largest investor in all but one of the banks.

For the first time since 2010, three of the four are expected to report an annual profit when they announce results starting next week. Crucially, the banks are embarking on a three-year plan, overseen by regulators, to shrink their bad loans. [..] Until the banks begin offloading this bad debt, there’s scant chance they’ll be able to provide businesses with the credit they need to grow. “These NPLs are clogging the wheels of the entire economy,” said Paris Mantzarvas, an analyst at Athens-based Pantelakis Securities.

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“I’m the most popular European politician in Greece.”

Juncker: Greek Prime Minister Loves Me Deeply, And So Do Greeks (KTG)

European Commission President Jean-Claude Juncker said on Wednesday he is the most popular European politician in Greece during a joint press conference with European Parliament President Antonio Tajani in Brussels, following the presentation of the Commission’s “White Paper” on the future of the EU. Asked by a journalist why he does not comment on France’s domestic politics where presidential hopeful Marine Le Pen has announced a referendum for an exit from the EU if elected, when he had intervened dynamically against the position of Greek Premier Alexis Tsipras when he announced a referendum in 2015, Juncker replied:

“You’re the only person in Europe who believes I was among those who criticized the Greek prime minister. The Greek prime minister loves me deeply, and so do Greeks. I’m the most popular European politician in Greece. You should have known that, if you have seen by relationship with the Greek prime minister, who I greatly value. Just as I have deep sympathy or even love for the Greek people.” He then pointed at Commission spokesman Margaritis Schinas and said he is briefed by him on daily developments in Greece. Concerning Le Pen, Juncker said he doesn’t want to become part of her propaganda.

[..] Outlining the five options of Europe’s future, Juncker acknowledged the existential struggle the EU is facing due to crises over Brexit, migration and the eurozone. He said it was not a “definitive view” from the Commission but a way to “make clear what Europe can and cannot do.” Among others, Juncker said: “The future of Europe should not become hostage to elections, party political or short term views of success.” “However painful Brexit may be, it will not stop the EU as it moves forward into the future.” “Summit after summit we promise we will bring down the unemployment figures, particular youth unemployment … but the EU budget provides only 0.3% of European social budgets: 99.7% is with the national governments.” “We must make clear what Europe can and cannot do.” “Permanent Brussels-bashing makes no sense because there is no basis for it.”

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It’s falling apart in his hands.

Jean-Claude Juncker Sets Five Paths For EU’s Future (BBC)

European Commission President Jean-Claude Juncker has revealed his five future “pathways” for the European Union after Brexit. His white paper looks at various options, from becoming no more than a single market to forging even closer political, social and economic ties. The 27 leaders of EU countries will discuss the plans, without Britain, at a summit in Rome later this month. The meeting will mark the EU’s 60th anniversary. Germany’s foreign minister, Sigmar Gabriel, has already responded to dismiss the idea of the EU purely being a single market.

Path one: ‘Carrying on’ – The remaining 27 members stick on the current course, continuing to focus on reforms, jobs, growth and investment. There is only “incremental progress” on strengthening the single currency. Citizens’ rights derived from EU law are upheld.

Path two: ‘Nothing but the single market’ – The single market becomes the EU’s focus. Plans to work more on migration, security or defence are shelved. The report says this could lead to more checks of people at national borders.Regulation would be reduced but this could create a “race to the bottom” as standards slip, it says. It becomes difficult to agree new common rules on the mobility of workers, so free movement of workers and services is not fully guaranteed.

Path three: ‘Those who want to do more’ – If member countries want to work more with others, they can. Willing groups of states can form coalitions on key areas, such as defence, internal security, taxation and justice. Relations with outside countries, including trade negotiations, remain managed at EU level on behalf of all member states.

Path four: ‘Doing less, more effectively’ – The EU focuses on a reduced agenda where it can deliver clear benefits: technological innovation, trade, security, immigration, borders and defence. It leaves other areas – regional development, health, employment, social policy – to member states’ own governments.EU agencies tackle counter-terrorism work, asylum claims and border control. Joint defence capacities are established. The report says all this would make a simplified, less ambitious EU.

Path five: ‘Doing much more together’ – Feeling unable to meet the today’s challenges alone or as part of the existing group, EU members agree to expand the union’s role. Members agree “to share more power, resources and decision-making across the board”. The single currency is made central to the project, and EU law has a much larger role.

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Great piece of history from my place of birth. Well, bit bloody…

They Really Knew How to Do Populist Revolts in 1672 (BBG)

Johan de Witt, the boy wonder who effectively ran the Republic of the Seven United Netherlands from 1653 to 1672, was an early believer in inbox zero. In his office in the westernmost corner of the Binnenhof, the complex of buildings in The Hague that is still the nerve center of the Dutch government, Johan worked until his desk was empty: the official letters that he had read aloud during the meeting, the envelopes from relatives, friends and other contacts, his list of decisions taken and his notes from the last meeting. He didn’t go home until everything had been dealt with. As soon as a note was finished, he scattered sand over the lines to dry the ink, and he hung it on a wall-mounted wire – many of Johan’s surviving letters have holes in them. This hanging stack, called a lias, also had the advantage that everything was arranged nicely together and finished work wasn’t in the way.

When Johan was finished, the clerks could go to work copying everything according to his strict instructions. That’s my translation of a passage from Dutch journalist-turned-historian Luc Panhuysen’s 2005 double biography of De Witt and his older brother and right-hand-man, Cornelis. The book is titled “De ware vrijheid,” which means “the true freedom,” Johan de Witt’s term for the two decades during which he managed his country on behalf of its merchant class, and the noble House of Orange had no say. The brilliant, hard-working, hyper-organized Johan used that freedom to build what in modern parlance we might call a meritocratic technocracy, bent on globalization and economic growth. For a while, it was spectacularly successful. It didn’t end well, though! The brothers were killed not far from the Binnenhof in August 1672 and cut to pieces by an angry mob, with body parts finding their way to buyers as far away as England.

In these days of populist revolts against globalizing technocratic elites, the De Witts’ story seemed like it might be worth revisiting. That, and it provided a great excuse to walk around The Hague on Tuesday with the erudite and engaging Panhuysen, who has gone on to write books about the “disaster year” of 1672 and the long-running conflict, beginning the same year, between Dutch prince (and eventual English king) William III and French King Louis XIV. “What Johan and Cornelis de Witt had to deal with was that they were regular civilian boys who at the same time had to govern and exude authority,” Panhuysen said. Political opponents could say: “God sent us the House of Orange to break us free from the Spanish. Who are these De Witt brothers?”

The De Witt boys weren’t self-made men – their father was a successful wood merchant who bought his way into government – but Johan in particular did rise to the top largely on merit. He was a brilliant mathematician, a translator and elaborator of the geometry of Rene Descartes. A government report that he wrote on annuity pricing is now seen as one of the founding documents of both actuarial science and financial economics. In 1650, at age 25, Johan was chosen as raadpensionaris – a sort of city manager – of his hometown of Dordrecht, the oldest city in Holland, which was by far the richest and most powerful of the seven Dutch provinces. In 1653, representatives of Holland’s other cities asked him to become the province’s raadpensionaris, sometimes translated as grand pensionary. After taking 10 days to think it over, he accepted.

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The secret of life will never cease to fascinate.

World’s Oldest Fossils -4 Billion Years- Found In Canada (G.)

Scientists say they have found the world’s oldest fossils, thought to have formed between 3.77bn and 4.28bn years ago. Comprised of tiny tubes and filaments made of an iron oxide known as haematite, the microfossils are believed to be the remains of bacteria that once thrived underwater around hydrothermal vents, relying on chemical reactions involving iron for their energy. If correct, these fossils offer the oldest direct evidence for life on the planet. And that, the study’s authors say, offers insights into the origins of life on Earth. “If these rocks do indeed turn out to be 4.28 [bn years old] then we are talking about the origins of life developing very soon after the oceans formed 4.4bn years ago,” said Matthew Dodd, the first author of the research from University College, London.

With iron-oxidising bacteria present even today, the findings, if correct, also highlight the success of such organisms. “They have been around for 3.8bn years at least,” said the lead author Dominic Papineau, also from UCL. The team says the new discovery supports the idea that life emerged and diversified rapidly on Earth, complementing research reported last year that claimed to find evidence of microbe-produced structures, known as stromatolites, in Greenland rocks, which formed 3.7bn years ago. However, like the oldest microfossils previously reported – samples from western Australia dating to about 3.46bn years ago – the new discovery is set to be the subject of hot debate.

The discovery of the structures, the authors add, highlights intriguing avenues for research to discover whether life existed elsewhere in the solar system, including Jupiter’s moon, Europa, and Mars, which once boasted oceans. “If we look at similarly old rocks [from Mars] and we can’t find evidence of life, then this certainly may point to the fact that Earth may be a very special exception and life might just have arisen on Earth,” said Dodd. Published in the journal Nature by an international team of researchers, the new study focuses on rocks of the Nuvvuagittuq supracrustal belt in Quebec, Canada.

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When I read things like this: ‘A live shark is worth over a million dollars in tourism revenue over its lifespan’, I lose all hope. It’s valuing nature in dollars that dooms it. And then you get this from the guys trying to save it.

Overfishing Wipes Out 90% Of Caribbean Predatory Fish (DM)

While predatory fish are key to the Caribbean’s ecosystem and coastal economy, researchers have worryingly found that 90% have been wiped out by over-fishing. But experts say there is hope for Caribbean reefs yet, as they have identified large reefs, known as ‘supersites’, which can support huge numbers of predatory fishes. If the dwindling fish species are reintroduced, they could help repair the damage inflicted by over-fishing. ‘A live shark is worth over a million dollars in tourism revenue over its lifespan because sharks live for decades and thousands of people will travel and dive just to see them up close,’ said study coauthor and marine biologist Dr Abel Valdivia. ‘There is a massive economic incentive to restore and protect sharks and other top predators on coral reefs.’

The University of North Carolina team’s work suggests that supersites – reefs with many nooks and crannies on their surface that act as hiding places for prey – should be prioritised for protection. Other features that make a supersite are the amount of available food, size of the reef and proximity to mangroves. ‘On land, a supersite would be a national park like Yellowstone, which naturally supports an abundance of varied wildlife and has been protected by the federal government,’ said coauthor and marine biologist Professor John Bruno. The team surveyed 39 reefs across the Bahamas, Cuba, Florida, Mexico and Belize to determine how many fish had been lost.

They compared fish biomass on pristine sites to fish biomass on a typical reef. They then estimated the biomass in each location and found that 90% of predatory fish were gone due to over-fishing. What they didn’t expect to find was a ray of hope – a small number of reef locations that, if protected, could help the predatory fish populations recover. ‘Some features have a surprisingly large effect on how many predators a reef can support,’ said study coauthor Dr Courtney Ellen Cox. For example, researchers believe that the Columbia Reef within the fisheries closures of Cozumel, Mexico, could support an average of 10 times the current level of predatory fish if protected.

Read more …

Feb 282017
 
 February 28, 2017  Posted by at 10:29 am Finance Tagged with: , , , , , , , ,  No Responses »
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Ben Shahn L.F. Kitts general store in Maynardville, Tennessee 1935

 


A Hole in the Head (Jim Kunstler)
Trump’s Fed Can Start a Central Bank Revolution (BBG)
Trump Puts Final Touches on Speech Focusing on Economy, Defense (BBG)
Number Of Distressed US Retailers At Highest Level Since Great Recession (MW)
The Housing Crisis (Renegade)
China’s Continuing Credit Boom (NYFed)
ADB Says Emerging Asia Infrastructure Needs $26 Trillion by 2030 (BBG)
Greece Said to Expect Revised Bailout Proposal for Tuesday Talks
French Court Probes Leave Le Pen Unscathed as Fillon Bid Falters (BBG)
Shell 1991 Film Warned Of Climate Change Danger (G.)
Britain’s Child Migrant Program: Why 130,000 Children Were Shipped Abroad (G.)
Slavery Claims As UK Child Sex Abuse Inquiry Opens (AFP)

 

 

Theory vs practice is a worthy discussion….

A Hole in the Head (Jim Kunstler)

We need a new civil war like we need a hole in the head. But that’s just it: America has a hole in its head. It’s the place formerly known as The Center. It didn’t hold. It was the place where people of differing views could rely on each other to behave reasonably around a touchstone called the National Interest. That abandoned place is now cordoned off, a Chernobyl of the mind, where figures on each side of the political margin fear to even sojourn, let alone occupy, lest they go radioactive. Anyway, the old parties at each side of the political transect, are melting down in equivalent fugues of delusion, rage, and impotence — as predicted here through the election year of 2016. They can’t make anything good happen in the National Interest.

They can’t control the runaway rackets that they engineered in legislation, policy, and practice under the dominion of each party, by turns, going back to Lyndon B. Johnson, and so they have driven themselves and each other insane. Trump and Hillary perfectly embodied the climactic stage of each party before their final mutual sprint to collapse. Both had more than a tinge of the psychopath. Trump is the bluff that the Republicans called on themselves, having jettisoned anything identifiable as coherent principles translatable to useful action. Hillary was an American Lady Macbeth attempting to pull off the ultimate inside job by any means necessary, her wickedness so plain to see that even the voters picked up on it. These two are the old parties’ revenge on each other, and on themselves, for decades of bad choices and bad faith.

[..] Something like this has happened before in US history and it may be cyclical. The former Princeton University professor and President, Woodrow Wilson, dragged America into the First World War, which killed over 53,000 Americans (as many as Vietnam) in only eighteen months. He promulgated the Red Scare, a bit of hysteria not unlike the Race and Gender Phobia Accusation Fest on the Left today. Professor Wilson was also responsible for creating the Federal Reserve and all the mischief it has entailed, especially the loss of over 90% of the dollar’s value since 1913. Wilson, the perfect IYI of that day.

The reaction to Wilson was Warren Gamaliel Harding, the hard-drinking, card-playing Ohio Main Street boob picked in the notorious “smoke-filled room” of the 1920 GOP convention. He invoked a return to “normalcy,” which was not even a word (try normality), and was laughed at as we now laugh at Trump for his idiotic utterances such as “win bigly” (or is that big league?). Harding is also known for confessing in a letter: “I am not fit for this office and should never have been here.” Yet, in his brief term (died in office, 1923), Harding navigated the country successfully through a fierce post-World War One depression simply by not resorting to government intervention.

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… also when it comes to the Fed.

Trump’s Fed Can Start a Central Bank Revolution (BBG)

President Donald Trump will select three members of the Federal Reserve board during his term in office, including a replacement chair for Janet Yellen when her appointment expires early next year. He should seize the chance to refresh the Fed with faces from the business community, adding executives to the roster of PhD economists who currently run monetary policy in most of the world. The Fed appointments come at a key juncture in U.S. economic policy, one that makes business knowhow an even more valuable commodity for a rate-setter than usual. Trump’s fiscal policies will set a new backdrop for the monetary policy environment, given his intention to cut personal and business tax rates and boost investment in the nation’s infrastructure.

So appointing executives to the Fed who’ve had to take fiscal and monetary policy into account when making decisions on where and when to build new factories or make other capital expenditure decisions makes sense. Torsten Slok, the chief international economist for Deutsche Bank, sent around a chart last week showing how the composition of the Fed has become increasingly focused on PhD economists: It’s little wonder that in this populist age central bank independence is under attack. As Bloomberg News reported on Monday, the rise of populism is putting pressure on central banks as “institutions stuffed with unelected technocrats wielding the power to affect the economic fate of millions.” Leavening the boards of policy makers with executives who’ve made hiring and firing decisions and have helped build companies would be a way to address the perception that decisions about borrowing costs are made in ivory towers by economists who’ve all read the same textbooks but don’t inhabit the same world as the people they’re supposed to serve.

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Entertainment 2017-style.

Trump Puts Final Touches on Speech Focusing on Economy, Defense (BBG)

President Donald Trump was still working Monday evening on the final touches of an address to Congress that will focus on economic opportunity and national security, administration officials said. The officials, who briefed reporters on the eve of the address on the condition of anonymity, said the speech will offer a vision of where Trump wants to take the country as well as an early accounting of campaign promises he has already delivered on through executive actions such as the U.S. withdrawal from the Trans-Pacific Partnership trade agreement. They declined to say whether the president would offer more concrete proposals on major goals, such as rebuilding U.S. infrastructure, rewriting the tax code and replacing the Obamacare health plan.

Trump’s speech comes as the new president tries to stabilize his administration after a turbulent start marked by struggles implementing an initial flurry of executive orders and a controversy over contacts between Trump advisers and Russian officials that led to the resignation of his national security adviser. While Trump’s inauguration speech offered a gloomy portrait of an America racked by violence and economic decay, White House press secretary Sean Spicer said earlier Monday that the address to Congress will strive for an optimistic vision focused on “the renewal of the American spirit.”

Surveys show a deep partisan divide over the president’s performance. A Wall Street Journal/NBC News poll released Monday showed Trump’s approval rating at 44% – a record low for a new president. But 85% of Republicans see Trump favorably, versus just 9% of Democrats. National security was the key theme of an early glimpse of the budget the White House offered on Monday. Administration officials said the president’s first budget would seek to boost defense spending by $54 billion – offset by an equivalent cut from other discretionary spending.

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How to kill a city part 827.

Number Of Distressed US Retailers At Highest Level Since Great Recession (MW)

The number of U.S. retailers ranked at the most-distressed level of the credit-rating spectrum has more than tripled since the Great Recession of 2008-2009 and is heading toward record levels in the next five years, Moody’s Investors Service said Monday. The rating agency is the latest to weigh in on the state of the sector, and has 19 names in its retail and apparel portfolio, 14% of which are now trading at Caa/Ca. That’s deep into speculative, or “junk,” territory. It’s also a percentage close to the 16% considered distressed during the 2008/2009 period, said a Moody’s report led by retail analyst Charles O’Shea. The rise is part of a wider trend affecting sectors across Moody’s coverage that has retail replacing oil and gas as the most-troubled industry.

Retailers are in the midst of a secular shift to online sales led by juggernaut Amazon.com and that’s forcing many of them to spend heavily on their e-commerce operations. At the same time, mall traffic has slowed dramatically as consumer behavior changes, forcing many to discount heavily, hurting profit margins. The 19 issuers on Moody’s list have more than $3.7 billion of debt maturing in the next five years, with about 30% of that total coming due by the end of 2018. The number is even higher when private credit is included. “While credit markets continue to provide ready access for companies spanning the rating spectrum—allowing many to proactively refinance debt and bolster balance sheets—that could change abruptly if market conditions or investor sentiment shift,” said O’Shea.

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How to kill a city part 828.

The Housing Crisis (Renegade)

Why is UK housing now so out of reach for so many people? Yes, property has been a safe bet, but we ask what are the economic risks and the social side effects of ever-increasing house prices? Host Ross Ashcroft is joined by Dr Rebecca Ross and economist Professor Steve Keen.

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These numbers are beyond fantasy.

China’s Continuing Credit Boom (NYFed)

Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005. The country’s share of total global credit is nearly 25%, up from 5% ten years ago. By some measures (as documented below), China’s credit boom has reached the point where countries typically encounter financial stress, which could spill over to international markets given the size of the Chinese economy. To better understand the associated risks, it is important to examine the drivers of China’s expansion in credit, the increasing complexity of its financial system, and evidence that its supply of credit may be growing more rapidly than reported. Note, however, that there are several features of China’s financial system that reduce the threat of a financial disruption.

Nonfinancial debt in China has increased from roughly $3 trillion at the end of 2005 to nearly $22 trillion, while banking system assets have increased sixfold over the same period to over 300% of GDP. In 2016 alone, credit outstanding increased by more than $3 trillion, with the pace of growth still roughly twice that of nominal GDP. As a result, the “credit-to-GDP gap”—the difference between the debt-to-GDP ratio and its long-run trend—has reached almost 30 percentage points. The international experience suggests that such a rapid buildup is often followed by stress in domestic banking systems. Roughly one-third of boom cases end up in financial crises and another third precede extended periods of below-trend economic growth.

As seen in the chart below, rising nonfinancial sector debt was driven initially by a surge in corporate borrowing in response to the global financial crisis. This additional debt was comprised mostly of medium- and long-term corporate loans related to infrastructure and property projects.

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Better start printing then.

ADB Says Emerging Asia Infrastructure Needs $26 Trillion by 2030 (BBG)

Asia’s infrastructure race is just getting started. Emerging economies across the region will need to invest as much as $26 trillion on building everything from transport networks to clean water through 2030 to maintain growth, eradicate poverty and offset climate change. That’s according to an Asian Development Bank report released Tuesday that highlights the need for massive construction and upgrading of public works and for much greater private sector investment. Leaving out spending to mitigate climate change, some $22.6 trillion will still be needed over the same period, the ADB said. Big-ticket investment of $14.7 trillion is needed for power, $8.4 trillion for transport, $2.3 trillion for telecommunication costs and $800 billion for water and sanitation, adjusted for climate change.

The bulk of infrastructure work is needed in East Asia, which accounts for 61% of the ADB estimate. As a percentage of GDP, the Pacific leads all other sub regions needing investment valued at 9.1% of GDP, followed by South Asia at 8.8%. The new projection of a $1.7 trillion annual infrastructure need, adjusted for climate change, is more than double the $750 billion that the Manila-based development bank estimated in 2009–though the latest report looks at 45 of the ADB’s developing members compared with 32 last time and uses 2015 prices compared to 2008 ones.

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Hard to see how this sadistic play can survive the various elections.

Greece Said to Expect Revised Bailout Proposal for Tuesday Talks

Greece’s auditors are pulling together a list of policies the country needs to implement to unlock additional bailout funds as they prepare for the resumption of talks with Athens on Tuesday, two people familiar with the matter said. Greece has asked European lenders for a draft Supplemental Memorandum of Understanding and the IMF for a Memorandum of Economic and Financial Policies as it braces for details of creditor demands, the people said, declining to be identified as negotiations between the two sides aren’t public. The government expects an accord in March or early April, but the scale of pending issues raises concerns they may be politically hard to sell at home, they said.

Greek Prime Minister Alexis Tsipras’s government last Monday agreed to legislate structural reforms demanded by the IMF that will lower the threshold of tax-free income and amend the pension system by 2019, effectively crossing what it had once characterized as a red line. The government says the deal won’t increase austerity since the new legislation will include stimulus measures in addition to belt-tightening reforms. Tsipras told lawmakers on Friday that the bailout review can be completed by March 20 when euro–area finance ministers are set to meet in Brussels. It could drag on to the next Eurogroup meeting on April 7th given the number of outstanding issues that need to be resolved, the people said. Greece is looking for a “global deal” by May that would also include potential decisions on medium-term debt-relief measures and the inclusion of Greek bonds in the ECB’s debt-purchase program.

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Because Fillon is the establishment.

French Court Probes Leave Le Pen Unscathed as Fillon Bid Falters (BBG)

Prosecutors’ interventions in the French election have so far done more damage to the establishment’s one-time champion than the nationalist firebrand vowing to overthrow the system. The Republican Francois Fillon and National Front leader Marine Le Pen both say the criminal probes they face are political plots against them, but it’s only Fillon, a church-going 62-year-old former prime minister, who has been set back by the allegations. Le Pen’s suspected misuse of her allowance from the European Parliament hasn’t hurt her at all. “The National Fronts is seen as persecuted by the system so their supporters think that if everyone else has gotten rich of the system, it’s good for them to get some of that money back,” said Jean-Yves Camus, a political scientist linked to the Jean Jaures research institute.

“Fillon tried to use the conspiracy angle but it doesn’t work because he’s from the system.” On Tuesday, a committee of lawmakers in Brussels will consider a request from the French courts to strip Le Pen of her parliamentary immunity over two separate cases of defamation and publishing violent images of Islamic State killings on Twitter. The committee is due to release its recommendations to the EU parliament next week, and the full chamber will vote on the issue later in March. Le Pen is battling a range of mainstream politicians asking for one more chance to address voters’ concerns about lackluster economic growth and the perceived threat of immigration and terrorism. Instead, she’s offering voters a chance to upend the status quo by putting up border controls, stopping mass immigration and pulling out of the euro.

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This is a surprise to anyone?

Shell 1991 Film Warned Of Climate Change Danger (G.)

The oil giant Shell issued a stark warning of the catastrophic risks of climate change more than a quarter of century ago in a prescient 1991 film that has been rediscovered. However, since then the company has invested heavily in highly polluting oil reserves and helped lobby against climate action, leading to accusations that Shell knew the grave risks of global warming but did not act accordingly. Shell’s 28-minute film, called Climate of Concern, was made for public viewing, particularly in schools and universities. It warned of extreme weather, floods, famines and climate refugees as fossil fuel burning warmed the world. The serious warning was “endorsed by a uniquely broad consensus of scientists in their report to the United Nations at the end of 1990”, the film noted.

“If the weather machine were to be wound up to such new levels of energy, no country would remain unaffected,” it says. “Global warming is not yet certain, but many think that to wait for final proof would be irresponsible. Action now is seen as the only safe insurance.” A separate 1986 report, marked “confidential” and also seen by the Guardian, notes the large uncertainties in climate science at the time but nonetheless states: “The changes may be the greatest in recorded history.” The predictions in the 1991 film for temperature and sea level rises and their impacts were remarkably accurate, according to scientists, and Shell was one of the first major oil companies to accept the reality and dangers of climate change.

But, despite this early and clear-eyed view of the risks of global warming, Shell invested many billions of dollars in highly polluting tar sand operations and on exploration in the Arctic. It also cited fracking as a “future opportunity” in 2016, despite its own 1998 data showing exploitation of unconventional oil and gas was incompatible with climate goals.

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What nation kicks out its own children…

Britain’s Child Migrant Program: Why 130,000 Children Were Shipped Abroad (G.)

More than 130,000 children were sent to a “better life” in former colonies, mainly Australia and Canada, from the 1920s to 1970s under the child migrant programme. The children, aged between three and 14, were almost invariably from deprived backgrounds and already in some form of social or charitable care. It was believed, they would lead happier lives. Charities such as Barnardo’s and the Fairbridge Society, the Anglican and Catholic churches and local authorities helped with the organisation of the emigration. Once there, the children were often told they were orphans to better facilitate their fresh start. The parents – many of them single mothers forced to give up their child for adoption because of poverty or social stigma – believed this was giving them best chance in life, though often did not have details of where their offspring were sent to.

The reality, for some of those children, was a childhood of servitude and hard labour at foster homes: on remote farms, at state-run orphanages and church-run institutions. They were often separated from siblings. Some were subjected to physical and sexual abuse. In 2010, the then prime minister, Gordon Brown, issued an official apology, expressing regret for the “misguided” programme, and telling the Commons: “To all those former child migrants and their families … we are truly sorry. They were let down. “We are sorry they were allowed to be sent away at the time when they were most vulnerable. We are sorry that instead of caring for them, this country turned its back”. He announced a £6m fund to reunite families that had been torn apart. The last children sailed in 1967. But it is only recently, as their stories have been told, that details of the abuse, and the official sanction which made it possible, has become public.

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…only to have them enslaved and abused.

Slavery Claims As UK Child Sex Abuse Inquiry Opens (AFP)

England’s mammoth inquiry into historical child sex abuse was told of the “torture, rape and slavery” suffered by child migrants shipped to Australia, at its first public hearings on Monday. The wide-ranging Independent Inquiry into Child Sexual Abuse opened by looking at the schemes that sent thousands of vulnerable children to far-flung parts of the Commonwealth in the decades after World War II. David Hill broke down as he told the inquiry of the “endemic” sexual abuse at the school he was sent to in Australia. “I hope this inquiry can promote an understanding of the long-term consequences and suffering of those who were sexually abused,” he said. “Many never recover and are permanently afflicted with guilt, shame, diminished self-confidence, low self-esteem, fear and trauma.”

British Prime Minister Theresa May set up the inquiry in 2014 when she was interior minister. The British Empire sent some 150,000 children abroad over 350 years, according to a 1998 parliamentary study, although the probe started Monday by looking at use of the practice after World War II. It was justified as a means of slashing the costs of caring for lone children and providing disadvantaged young people with a fresh start, while meeting labour shortages in the Commonwealth and populating colonial-era lands with white British settlers. Between 1945 and 1970, youngsters were sent mainly to Australia, but also Canada, New Zealand and what is now Zimbabwe — often without the consent of their families.

But the promise of a good upbringing and an exciting new life in the sun was often, in reality, a world of forced labour, brutal treatment and sexual assault in remote institutions run by churches and charities. “They sent us to a place that was a living hell,” victim Clifford Walsh told the BBC. Oliver Cosgrove was sent to Australia in 1941, one of an estimated 5,000 to 6,000 children shipped there from 1922 to 1967. “Those who were abused tried in vain to tell others, who they hoped and believed might assist them. But they didn’t,” his representative told the inquiry. “This was a systematic and institutional problem.”

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Feb 192017
 
 February 19, 2017  Posted by at 10:23 am Finance Tagged with: , , , , , , , , ,  4 Responses »
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John Vachon Beer signs on truck, Little Falls, Minnesota 1940

 


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

 

 

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

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

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

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

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

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

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

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A Eurodollar is a dollar held anywhere outside the US.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The timing is indeed very peculiar.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Overview of the damage done across the world by GMO.

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

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

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

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

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

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

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

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

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

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

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

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Greek banks never recovered.

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

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

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

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

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Forced out of work by Troika demands.

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

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

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

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

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

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

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

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

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

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“How do you capture Spirit?”

Defend The Sacred (Bell)

Defend The Sacred: Documentary from Kyle Bell on Vimeo.

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

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Feb 142017
 
 February 14, 2017  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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David Myers Theatre on 9th Street. Washington, DC July 1939

 


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

 

 

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

Top Trump Aide Flynn Resigns Over Russia Contacts (AFP)

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

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

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

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

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

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

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

Is Trump the New Boris Yeltsin? (Max Keiser)

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

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

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The always colorful language of Albert Edwards.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Made For Each Other (Jim Kunstler)

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

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

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

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

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Ann Pettifor’s new book is out too.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

From Finland’s EuroThinkTank, h/t Mish

The Euro May Already Be Lost (ETT)

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

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

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

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Meaningless numbers.

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

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

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

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If all else fails, sell your soul.

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

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

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

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Power to you, Chelsea.

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

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

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

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

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

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

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Feb 032017
 
 February 3, 2017  Posted by at 11:06 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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Pierre-Auguste Renoir The Return of the Boating Party 1862


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

 

 

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

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

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

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

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

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

Big Clash Looming (Kath.)

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

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

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

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

The IMF Should Get Out of Greece (Ashoka Mody)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Reality Vs. The “Recovery” Narrative (Mises)

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

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

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

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

Markets Are Experiencing Cognitive Dissonance (Rickards)

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

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

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

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

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

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

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

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

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

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

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

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

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

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Makes law look like religion.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Jan 242017
 
 January 24, 2017  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , ,  8 Responses »
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Jack Delano Cars being precooled at the ice plant, San Bernardino, CA 1943


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

 

 

A country well on its way to irrelevance.

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

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

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So much for the overvalued dollar.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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From a much longer article on volatility trading.

Trump is the start of Global Regime Change (Artemis)

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

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

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

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

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

Protest In The Era Of Trump (Krieger)

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

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

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

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

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

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

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

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

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

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Shake the cage.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Europe’s shameful disgrace deepens and widens.

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

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

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

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

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

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Jan 082017
 
 January 8, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , ,  2 Responses »
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Trump: Only ‘Fools’, ‘Stupid People’, See Good Ties With Russia as Bad (BBG)
At Home and Abroad, Obama’s Trail of Disasters (BGlobe)
Russians Ridicule US Charge That Kremlin Meddled to Help Trump (NYT)
How RT Became The Star Of CIA, FBI & NSA’s Anticlimactic ‘Big Reveal’ (McD)
No One Can Afford To Stop The New Consumer Credit Crisis (G.)
China’s Foreign Exchange Reserves Fall To Lowest Since February 2011 (R.)
The Growing Threat to Global Trade: a Currency War (Forsyth)
Fed’s Powell Urges Congress to Take Another Look at Volcker Rule (BBG)
New Policies Coming To America Could Take Weight Off Fed: Powell (R.)
Economists Want to Be Members of Donald Trump’s Team (BBG)
EU Collapse ‘No Longer Unthinkable’ – German Vice Chancellor Gabriel (R.)
Greeks’ Mental Health Suffering (Kath.)

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The independent Fed talking politics?!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Thanks, Angela.

Greeks’ Mental Health Suffering (Kath.)

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

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

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