Nov 252018
 
 November 25, 2018  Posted by at 9:51 am Finance Tagged with: , , , , , , , , , , , ,  


Floris van Schooten Still-Life with Glass, Cheese, Butter and Cake 1st half 17th century

 

Assange Lawyers Barred From Visiting Client Ahead Of US Court Hearing (ZH)
‘He Has Moved Incredibly Quickly’: Mueller Nears Trump Endgame (G.)
One Of The Most Spectacularly Misleading Uses Of Statistics Ever (Porter)
Russia A Greater Threat Than ISIS or Al-Queda – New British Army Chief (PA)
European Security Held Hostage By Washington’s Geopolitical Games – Lavrov (RT)
Why Theresa May’s Brexit Deal Is Terrible For The UK (Coppola)
UK Food Banks Fear Winter Crisis (G.)
UK Parliament Seizes Cache Of Facebook Internal Papers (O.)
Trump Says Asylum Seekers To Wait In Mexico, Incoming Government Denies (R.)
Amazon To Contribute Over Half Of Q4 Earnings Growth For S&P 500 Retail (MW)
JPMorgan Spots The Next Big Problem: A Plunge In Global Bond Demand (ZH)
Bear Necessities: The Charts That Predict Market Downturns (MW)
EU Unhappy With China Penetrating Greek Energy Market (K.)
Climate Change Will Wreck Economic Growth – US Government Report (MW)

 

 

These are dark days.

Assange Lawyers Barred From Visiting Client Ahead Of US Court Hearing (ZH)

After being cooped up for six years inside the Ecuadorian Embassy in London, the Department of Justice is finally closing in on Julian Assange, and the government of Ecuadorian President Lenin Moreno is doing everything in its power to evict its most infamous tenant. To wit, lawyers for Assange have been refused entry to the Ecuadorian Embassy in London, WikiLeaks announced in a tweet, which has only helped to spur fears that Assange will soon be evicted. And what’s worse, he’s being denied access to legal counsel at a time of desperate need. WikiLeaks said the Ecuadorian government refused to allow Assange’s lawyers, Aitor Martinez and Jen Robinson, to meet with their client this week, which is a huge problem for the whistleblower, because Assange is facing a US court hearing Tuesday, and needs to meet with his legal team to prepare.

The hearing is being called to remove the secrecy order on the charges against Assange (which were only publicly revealed because of a copy and paste error). “The hearing is on Tuesday in the national security court complex at Alexandria, Virginia,” WikiLeaks tweeted, adding it is to “remove the secrecy order on the US charges against him.” Visitors to Assange were only recently readmitted after being cut off by the Ecuadorian government. The government also restored Assange’s communications in October. But this was accompanied by restrictions on Assange’s communications. In another sign that Moreno is preparing to oust Assange, the Ecuadorian government recently terminated the credentials of Ecuador’s London ambassador Abad Ortiz without explanation. As Wikileaks explained: “Now all diplomats known to Assange have now been transferred away from the embassy.”

Read more …

The Guardian has a guy named David Taylor in new York doing a series, in which yesterday he called Robert Mueller: ‘America’s straightest arrow’. Yeah, that’s the same Mueller who lied through his teeth about WMD in Iraq as FBI chief. Taylor lists ‘four distinct parts’ of Mueller investigation, and is fully oblivious to the fact that all four have been thoroughly dismantled long ago. Taylor and the Guardian count on you not reading anything but them.

In a few words:
1• Manafort is not linked to Trump-Russia collusion, not even Mueller suggests that
2• See article below
3• There was no hacking that we know of, and certainly not in connection with WikiLeaks and/or Democratic party
4• Papadopoulos was set up, and only a bit player

‘He Has Moved Incredibly Quickly’: Mueller Nears Trump Endgame (G.)

The investigation, which cost more than $16.6m in its first 11 months, can be broken down into four distinct parts which have all led to indictments:

1• Manafort and his business connections to Russia following years of work in support of the former Ukrainian president Viktor Yanukovych.

2• Russian use of fake social media accounts to influence the 2016 election.

3• Russian hacking of the Democratic party and the Clinton aide John Podesta – and the subsequent leak of thousands of emails by WikiLeaks.

4• Trump campaign connections to Russia – including the Trump Tower meeting and the adviser George Papadopoulos’s involvement with a professor who told him the Russians had “dirt” on Clinton including “thousands of emails”.

Anne Milgram, a law professor at New York University and a former prosecutor and attorney general of New Jersey, said Mueller and his 17 lawyers had done “a terrific job”. “Months have gone by – people think it’s a long time – it is not in criminal justice,” she said. “He has moved incredibly quickly, got a lot of co-operation agreements, charges, done an extraordinary job of running down Russian hacking of the election.”

Read more …

As per the second point in the article above, here’s Gareth Porter ripping that to shreds.

One Of The Most Spectacularly Misleading Uses Of Statistics Ever (Porter)

What Facebook general counsel Colin Stretch testified before the Senate Judiciary Committee on October 31, 2017 is a far cry from what the Times claims. “Our best estimate is that approximately 126,000 million people may have been served one of these [private Russian company, Internet Research Agency, ‘IRA’-generated] stories at some time during the two year period,” Stretch said. Stretch was expressing a theoretical possibility rather than an established fact. He said an estimated 126 million Facebook members might have gotten at least one story from the IRA –- not over the ten week election period, but over 194 weeks during the two years 2015 through 2017—including a full year after the election.

That means only an estimated 29 million FB users may have gotten at least one story in their feed in two years. The 126 million figure is based only on an assumption that they shared it with others, according to Stretch. Facebook didn’t even claim most of those 80,000 IRA posts were election–related. It offered no data on what proportion of the feeds to those 29 million people were. In addition, Facebook’s Vice President for News Feed, Adam Moseri, acknowledged in 2016 that FB subscribers actually read only about 10 percent of the stories Facebook puts in their News Feed every day. The means that very few of the IRA stories that actually make it into a subscriber’s news feed on any given day are actually read.

And now, according to the further research, the odds that Americans saw any of these IRA ads—let alone were influenced by them—are even more astronomical. In his Oct. 2017 testimony, Stretch said that from 2015 to 2017, “Americans using Facebook were exposed to, or ‘served,’ a total of over 33 trillion stories in their News Feeds.” To put the 33 trillion figure over two years in perspective, the 80,000 Russian-origin Facebook posts represented just .0000000024 of total Facebook content in that time.

Shane and Mazzetti did not report the 33 trillion number even though The New York Times’ own coverage of that 2017 Stretch testimony explicitly stated, “Facebook cautioned that the Russia-linked posts represented a minuscule amount of content compared with the billions of posts that flow through users’ News Feeds everyday.” The Times‘ touting of the bogus 126 million out 137 million voters, while not reporting the 33 trillion figure, should vie in the annals of journalism as one of the most spectacularly misleading uses of statistics of all time.

Read more …

The new army chief himself is the greatest threat.

Russia A Greater Threat Than ISIS or Al-Queda – New British Army Chief (PA)

Russia “indisputably” poses a far greater threat to national security than Islamic terrorist groups such as al-Qaida and Isis, the new head of the British army has warned. General Mark Carleton-Smith said the UK cannot be complacent about the threat Russia poses “or leave it uncontested”. The former SAS commander said Russia had made plain its preparedness to use force to expand its interests, while it had also been “systematic” in its efforts to exploit cyber space and undersea military arenas. “The Russians seek to exploit vulnerability and weakness wherever they detect it,” he told the Daily Telegraph.

“Russia today indisputably represents a far greater threat to our national security than Islamic extremist threats such as al-Qaida and Isil,” he said, using another name for Isis. Carleton-Smith, who graduated from Sandhurst in the final years of the Cold War, took over as chief of the general staff in June. He led the hunt for Osama bin Laden after the 9/11 terror attacks and later spearheaded Britain’s role in the campaign to defeat Isis. Now, with the threat from Islamist groups in the Middle East reduced by years of concerted international military action, the focus needs to shift to Russia, he said. “We cannot be complacent about the threat Russia poses or leave it uncontested,” Carleton-Smith warned.

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The European arms industry holds the entire continent hostage.

European Security Held Hostage By Washington’s Geopolitical Games – Lavrov (RT)

The blindness of the EU bureaucrats allows the US to instigate dangerous military activity near Russian borders, jeopardizing the security of the whole European continent, Sergey Lavrov, Russia’s Foreign Minister, said. The Ukrainian crisis, which was used as a justification for sanctions against Moscow, is “a result of geopolitical games, played by the US and their allies in several countries, as well as the blindness of the bureaucrats in Brussels,” Lavrov, who was visiting Portugal on Saturday, said in an interview with local Publico paper. The EU leadership “not only sacrificed its principles and values by turning a blind eye to the armed coup in Kiev, in which a democratically elected president was deposed, but followed Washington’s lead and joined the anti-Russian sanctions,” he added.

In February 2014, Ukrainian President, Viktor Yanukovich, was removed from power as a result of a violent uprising, in which a key role was played by the radical nationalist groups. A few months later, the new government in Kiev launched the so-called “anti-terrorist operation” in the south-east of the country after the local population refused to recognize the results of the coup. The conflict in Donbas, which has claimed more than 10,000 lives, is still ongoing as the Ukrainian authorities don’t seem willing to commit to the truce earlier reached with the Republics of Donetsk and Lugansk.

“And what have we now?” Lavrov wondered. “The architecture of dialogue between Russia and the EU is seriously damaged; the European producers suffer multi-billion losses [due to sanctions and countermeasures by Moscow]; there’s a new conflict in Europe.” Meanwhile, the Americans, who are directly responsible for the “unhealthy situation” in Europe, “suffer no losses,” he said.

Read more …

Good explanation by Frances Coppola of why the Irish border is such a hot iron in the Brexit talks.

Why Theresa May’s Brexit Deal Is Terrible For The UK (Coppola)

After Brexit, the border between Northern Ireland and the Republic of Ireland will become an international border, rather than an intra-EU border as at present. In the absence of a trade agreement, both the EU and the U.K. would be obliged to apply the WTO’s “Most Favored Nation” (MFN) rules on that border. This would mean tariffs and regulatory checks on a border which is politically highly sensitive, because of its long history of conflict, and economically extremely important to the economies of Northern Ireland and its southern neighbour. Neither the U.K. nor the EU wants there to be a hard border between Northern Ireland and Ireland after Brexit. But preventing one is proving difficult.

The U.K. Government proposed technological solutions that it said would eliminate the need for actual checks at the border, but the EU doesn’t believe that the technology exists. The EU proposed a temporary arrangement which would keep Northern Ireland in the Customs Union and Single Market until a free trade agreement could be negotiated, but the U.K. objected on the grounds that customs checks on goods in transit between Northern Ireland and the rest of the U.K. would undermine the U.K.’s own internal market.

The Withdrawal Agreement breaks this deadlock by providing for the U.K. to remain in the EU’s Customs Union, and Northern Ireland in the Single Market, not merely until the end of the transitional period scheduled to end in December 2020, but until a replacement trade agreement can be negotiated, or (potentially) indefinitely if none can be agreed. This is by any measure unsatisfactory. Everyone hates “frozen Brexit.” But the backstop is not the only problem with this deal. Buried in the accompanying Political Declaration, which establishes the framework for future trade negotiations, is this conundrum:

“The future relationship will be based on a balance of rights and obligations, taking into account the principles of each Party. This balance must ensure the autonomy of the Union’s decision making and be consistent with the Union’s principles, in particular with respect to the integrity of the Single Market and the Customs Union and the indivisibility of the four freedoms. It must also ensure the sovereignty of the United Kingdom and the protection of its internal market, while respecting the result of the 2016 referendum including with regard to the development of its independent trade policy and the ending of free movement of people between the Union and the United Kingdom.” When combined with the backstop, this conundrum makes Mrs. May’s deal terrible for the U.K.

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Hostile environment. Signed, Theresa May.

UK Food Banks Fear Winter Crisis (G.)

Food banks in some of the poorest areas are preparing for a big rise in demand when universal credit is rolled out by calling for more donations and volunteers, and stockpiling essential supplies. Volunteers have told the Observer they are concerned about how their communities will cope this winter. In areas where the new benefit has been in place for months, the pressure on food banks has increased. Under the new system, people are made to wait for over a month to receive the benefit. When universal credit is paid out, it is often given as a lump sum, which many find difficult to budget. The Trussell Trust, which operates 428 food banks, reported in April that its facilities were four times busier in areas where the new credit had been in place for 12 months or more compared with those where it had been introduced more recently.

Blackpool, the Isle of Anglesey, Milton Keynes and parts of Liverpool and Glasgow will become some of the last places to introduce universal credit in the coming weeks. Roy Fyles, who supervises the Anglesey food bank, said he was not looking forward to its arrival on 5 December. “Even if there are only a few new claimants between now and Christmas, they will not get any money, unless they request an advance, until the new year,” he said. “We’re talking five weeks.” In nearby Flintshire, the credit piled a lot of pressure on food banks when it was brought in 20 months ago. “We are hoping that, because we’re only a small island, we’ll have fewer problems,” Fyles said. Already, the number of packages his food bank delivers has gone up by a third in the past few months. “We’re preparing by trying to get more volunteers and collecting food for Christmas hampers.”

Read more …

Nice twist.

UK Parliament Seizes Cache Of Facebook Internal Papers (O.)

Parliament has used its legal powers to seize internal Facebook documents in an extraordinary attempt to hold the US social media giant to account after chief executive Mark Zuckerberg repeatedly refused to answer MPs’ questions. The cache of documents is alleged to contain significant revelations about Facebook decisions on data and privacy controls that led to the Cambridge Analytica scandal. It is claimed they include confidential emails between senior executives, and correspondence with Zuckerberg. Damian Collins, the chair of the culture, media and sport select committee, invoked a rare parliamentary mechanism to compel the founder of a US software company, Six4Three, to hand over the documents during a business trip to London.

In another exceptional move, parliament sent a serjeant at arms to his hotel with a final warning and a two-hour deadline to comply with its order. When the software firm founder failed to do so, it’s understood he was escorted to parliament. He was told he risked fines and even imprisonment if he didn’t hand over the documents. “We are in uncharted territory,” said Collins, who also chairs an inquiry into fake news. “This is an unprecedented move but it’s an unprecedented situation. We’ve failed to get answers from Facebook and we believe the documents contain information of very high public interest.” [..] MPs leading the inquiry into fake news have repeatedly tried to summon Zuckerberg to explain the company’s actions. He has repeatedly refused.

Collins said this reluctance to testify, plus misleading testimony from an executive at a hearing in February, had forced MPs to explore other options for gathering information about Facebook operations. [..] The documents seized were obtained during a legal discovery process by Six4Three. It took action against the social media giant after investing $250,000 in an app. Six4Three alleges the cache shows Facebook was not only aware of the implications of its privacy policy, but actively exploited them, intentionally creating andeffectively flagging up the loophole that Cambridge Analytica used to collect data. That raised the interest of Collins and his committee.

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Negotiating.

Trump Says Asylum Seekers To Wait In Mexico, Incoming Government Denies (R.)

U.S. President Donald Trump tweeted on Saturday that migrants at the U.S.-Mexico border would stay in Mexico until their asylum claims were individually approved in U.S. courts, but Mexico’s incoming government denied they had struck any deal. Mexico’s incoming interior minister said there was “no agreement of any type between the future government of Mexico and the United States.” Olga Sanchez Cordero, also the top domestic policy official for president-elect Andres Manuel Lopez Obrador who takes office on Dec. 1, told Reuters that the incoming government was in talks with the United States but emphasized that they could not make any agreement since they were not yet in government.

Sanchez ruled out that Mexico would be declared a “safe third country” for asylum claimants, following a Washington Post report of a deal with the Trump administration known as “Remain in Mexico,” which quoted her calling it a “short-term solution.” The plan, according to the newspaper, foresees migrants staying in Mexico while their asylum claims in the United States are being processed, potentially ending a system Trump decries as “catch and release” that has until now often allowed those seeking refuge to wait on safer U.S. soil.

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At what point will we call it a monopoly? Apparently not at 50%. How about 75%?

Amazon To Contribute Over Half Of Q4 Earnings Growth For S&P 500 Retail (MW)

Amazon.com’s fourth quarter earnings are expected to account for more than half of earnings growth among S&P 500 retailers, according to a report from FactSet. FactSet expects Amazon to report earnings per share of $5.51, more than double the $2.16 the e-commerce giant reported last year. Amazon beat FactSet earnings expectations the last five quarters. “Amazon.com is expected to report the highest earnings growth and is expected to be the largest contributor to earnings growth for the Retailing Industry Group and Food & Staples Retailing Industry Group combined,” wrote John Butters at FactSet. “If Amazon were excluded, the estimated earnings growth for Q4 for these two retail industry groups would fall to 6.8% from 15%.”

Ten of the 13 retail sub-industries, including internet and direct marketing retail (projected for 69.4% growth), automotive retail (expected to be up 22.4%) and home improvement retail (forecast for 20.1% growth) are expected to report higher fourth-quarter earnings. Other categories projected for double-digit growth include general merchandise stores (up 12.3%) and food distributors (up 11.1%). Drug retail, department stores and specialty stores are forecast to grow 6.9%, 6.8% and 6.4% respectively. “Amazon alone accounts for more than half of the projected earnings growth for all S&P 500 retailers for the fourth quarter,” Butters wrote.

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As supply skyrockets, central banks stop buying. A recipe for fun, we’re sure.

JPMorgan Spots The Next Big Problem: A Plunge In Global Bond Demand (ZH)

[..] with traders – across all asset classes, including equity, credit and rates, all focusing on what happens to US Treasury yields next, the JPMorgan strategist revisits his previous analysis on global bond demand and supply, incorporating updated supply forecasts both for the balance of 2018 as well as for 2019. “Given this year has seen the largest increase in excess supply of bonds since 2010, which as we noted last week has together with continued Fed hikes contributed to a tightening in financial conditions that has been reverberating across markets, there has been considerable interest in how next year is shaping up.”

Attention on 2019 is especially acute as the Fed’s balance sheet normalization process is set to accelerate given that it is only in 4Q18 that the monthly cap for the quantity of maturing bonds that are allowed to roll off has reached its steady state of $50Bn/month, which unlike 2018 when QT was just starting, will induce a further increase in net supply that needs to be absorbed by the market of more than $100bn. It’s not just the Fed: with the ECB set to end its QE purchases in December this year and we see the BoJ continuing its gradual slowdown in bond purchases to ¥30tr in 2019 compared to around ¥40tr this year, JPMorgan notes that this collective shrinkage of the G-4 balance sheet means that the market needs to absorb a further decrease in price-insensitive QE demand of more than $400bn next year.

Here’s the bad news: adding together both the supply and demand side impact, the G4 central bank flow looks set to decline a further $550bn next year. Which begs the question: will there be an incremental increase in demand to offset this dramatic net increase in supply in the coming year? JPMorgan’s answer is hardly what bond bulls are looking for…

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Entertainment.

Bear Necessities: The Charts That Predict Market Downturns (MW)

Is a bear market on the horizon? WSJ markets reporter Riva Gold analyzes the trends that came before the dot-com bubble burst and the financial crisis hit.

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Yes, that’s right, lignite. But that’s not what bothers the EU.

EU Unhappy With China Penetrating Greek Energy Market (K.)

Brussels is raising obstacles to Chinese plans to enter Greece’s energy market, reversing the situation in the tender for the privatization of Public Private Corporation’s lignite-fired plants where CHN Energy had appeared to be the favorite. Days before bid submissions for the four plants at Meliti and Megalopoli, the European Commission’s Directorate-General for Energy sent a letter to Greece’s Regulatory Authority for Energy, seen by Kathimerini, raising the issue of European law violation and asking for the review of ADMIE’s certification after China State Grid purchased 24 percent of the grid operator.

Read more …

People may feel vindicated in some way because of this, especially because of Trump. But really, expressing environmental damage in dollars is a road to nowhere at all. If economic growth is your main worry, you’re not too smart.

Climate Change Will Wreck Economic Growth – US Government Report (MW)

Climate change is a threat to Americans’ health and the country’s economic well-being, a major report issued Friday by 13 federal agencies said. “Without substantial and sustained global mitigation and regional adaptation efforts, climate change is expected to cause growing losses to American infrastructure and property and impede the rate of economic growth over this century,” wrote the authors of the Fourth National Climate Assessment Volume II. The report, authored by more than 300 experts, spells out a litany of impacts linked to climate change, including problems with human health, water quality, agriculture, tourism, and infrastructure.

Flooding will decrease crop yields, warming oceans will slow the shellfish industry, and heat stress will cause a drop in dairy production, the authors wrote, describing just a few of the economic effects. If people don’t take action to lessen its effects, climate change is expected to affect import and export prices and U.S. businesses with overseas operations and supply chains, the report notes. “With continued growth in emissions at historic rates, annual losses in some economic sectors are projected to reach hundreds of billions of dollars by the end of the century — more than the current GDP of many U.S. states,” the authors wrote.

Read more …

Aug 032018
 
 August 3, 2018  Posted by at 7:36 am Finance Tagged with: , , , , , , , , , ,  


Ivan Aivazovsky The Galata tower by moonlight 1845

 

The Trump Administration Is Headed For A Gigantic Debt Headache (CNBC)
The First Company To Reach $1 Trillion In Market Value Was In China (CNBC)
Apple Becomes World’s First Trillion-Dollar Company (G.)
Ban Share Buybacks (Week)
Where Are the 17,000 Model 3 Cars Tesla “Produced” But Didn’t “Deliver”? (WS)
Middle-Class Americans Still Haven’t Recovered From Housing Bust (MW)
China Loses Spot As World’s No. 2 Stock Market to Japan (AFP)
Judge Rejects Suit Against Fox News Brought By Parents Of Seth Rich (NBC)
Saudi Arabia Planned To Invade Qatar Last Summer. Tillerson Intervened (IC)
Food Banks Appeal For Donations To Feed Children During School Holidays (G.)
Britain Heading Back To Pre-Victorian Days (G.)

 

 

Nobody seems to care much.

The Trump Administration Is Headed For A Gigantic Debt Headache (CNBC)

Swelling government debt levels are shaping up to be the biggest economic challenge for President Donald Trump, a problem that could spill into the stock market. This week’s Treasury Department announcement that it would have to increase the amount of bond auctions over the next three months was a low-key reminder that the government IOU is only getting bigger and will start influencing interest rates sooner rather than later. As more product comes to market, investors could be expected to demand higher yields to snap up all the supply. And those higher yields mean higher costs at a time when taxpayers already have shelled out nearly half a trillion dollars this year in debt service.

Put it all together and it raises questions about how long the spurt in economic growth will continue, what will happen the next time the economy falls into recession and what impact it all will have on financial markets. “We’re applauding strong growth — yet have no choice but to borrow the largest amount of money since the financial crisis a decade ago,” Bernard Baumohl, chief global economist at The Economic Outlook Group, said in a note. “And that’s just the start, the US will [be] running trillion dollar deficits as far as the eye can see.” The total U.S. debt just passed the $21.3 trillion mark, of which $15.6 trillion is owed by the public.

The Treasury announced Wednesday that it will be adding $1 billion each to auctions of 2-, 3- and 5-year debt over the next three months, and $1 billion each for 7- and 10-year note and 30-year bond auctions in August. In addition, the department is issuing a new two-month note to help assure liquidity in the fixed income market. The changes will add $30 billion to the debt issuance for the quarter. On the overall, the Treasury said it expects to borrow $769 billion in the second half of the year, a projected 63% increase from 2017.

Read more …

So much for Apple then.

The First Company To Reach $1 Trillion In Market Value Was In China (CNBC)

Before Apple hit $1 trillion in market value Thursday, there was Chinese oil giant PetroChina, which reached the milestone more than a decade ago. It did not fare too well after that. PetroChina’s market cap hit $1 trillion in 2007 following a successful debut on the Shanghai Stock Exchange on Nov. 5 of that year. The company’s Shanghai-listed shares nearly tripled at the open that day, with its Hong Kong-listed shares following them higher. (It had debuted on the Hong Kong exchange years earlier.) The rise gave the company a market cap of $1.1 trillion on both the Shanghai and Hong Kong exchanges.

According to Reuters, PetroChina’s opening price in Shanghai valued the company at 60 times analysts’ forecasts for its 2007 earnings per share, above the global average of 18 times for oil companys at the time. It was all downhill from there, however. PetroChina’s market value plummeted to less than $260 billion by the end of 2008, representing the largest destruction of shareholder wealth in world history, according to Bloomberg. Blame the financial crisis and a collapse in oil prices. When PetroChina made its debut in 2007 brent crude prices were at one point, above $140 a barrel. Today they are about half that.

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This piece cites PetroChina, but says not enough shares were outstanding. But Apple’s outstanding shares shrank a lot as well, because of buybacks.

Apple Becomes World’s First Trillion-Dollar Company (G.)

Apple became the world’s first trillion-dollar public company on Thursday, as a rise in its share price pushed it past the landmark valuation. The iMac to iPhone company, co-founded to sell personal computers by the late Steve Jobs in 1976, reached the historic milestone as its shares hit $207.05, the day after it posted strong financial results. Apple’s share price has grown 2,000% since Tim Cook replaced Jobs as chief executive in 2011. The company hit a $1tn market capitalisation 42 years after Apple was founded and 117 years after US Steel became the first company to be valued at $1bn in 1901. It means Apple’s stock market value is more than a third the size of the UK economy and larger than the economies of Turkey and Switzerland.

While energy company PetroChina was cited as the world’s first trillion-dollar company after its 2007 flotation, the valuation is considered unreliable because only 2% of the company was released for public trading. Saudi Arabia’s national oil company Saudi Aramco could be worth up to $2tn upon its planned stock market float but the value is yet to be tested. This week’s rise in Apple’s share price was powered by quarterly financial results released on Tuesday that were better than Wall Street had expected. The tech giant racked up profits of $11.5bn in three months on the back of record sales that hit $53.3bn, pushing shares of the iPhone giant higher and easing the value of the company up from $935bn towards $1tn (£770bn).

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Ryan Cooper focuses on lower wages as a result of buybacks. I would go for the death of price discovery. Apple may be ‘worth’ one trillion, but it has a $100 billion buybacks war chest. That’s 10%. So what is it really worth.

Ban Share Buybacks (Week)

American corporations are simply raking in profits. Some are so bloated and cash-rich they literally can’t figure out what to do with it all. Apple, for instance, is sitting on nearly a quarter of a trillion dollars — and that’s down a bit from earlier this year. Microsoft and Google, meanwhile, were sitting on “only” $132 billion and $63 billion respectively (as of March this year). However, American corporations in general are taking those profits and kicking them out to shareholders, mainly in the form of share buybacks. These are when a corporation uses profits, cash, or borrowed money to buy its own stock, thus increasing its price and the wealth of its shareholders. (Big Tech is doing this as well, just not fast enough to draw down their dragon hoards.)

As a new joint report from the Roosevelt Institute and the National Employment Law Project by Katy Milani and Irene Tung shows, from 2015 to 2017 corporations spent nearly 60% of their net profits on buybacks. This practice should be banned immediately, as it was before the Reagan administration. The most immediately objectionable consequence of share buybacks is they come at the expense of wages. Milani and Tung calculate that if buybacks spending had been funneled into wage increases, McDonald’s employees could get a raise of $4,000; those at Starbucks could get $8,000; and those at Lowes, Home Depot, and CVS could get an eye-popping $18,000.

Some economists are skeptical of this reasoning, arguing that wages are set according to labor market conditions. But if you set aside free market dogmatism, it is beyond obvious that this sort of behavior is coming at workers’ expense. Wall Street bloodsuckers are not at all subtle about it, screaming bloody murder and tanking stocks every time a public company proposes paying workers instead of shareholders. Indeed, it provides a highly convincing explanation for something that has been puzzling analysts for months: the situation of wages continuing to stagnate or decline while unemployment is at 4%. The answer is that wages are low in large part because the American corporate structure has been rigged in favor of shareholders and executives.

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And Tesla was up 16% yesterday?!

Where Are the 17,000 Model 3 Cars Tesla “Produced” But Didn’t “Deliver”? (WS)

Tesla never ceases to astound with its hype and promises and with its results that are just mindboggling, including today when it reported its Q2 “earnings” – meaning a net loss of $718 million, its largest net loss ever in its loss-drenched history spanning over a decade. It was more than double its record loss a year ago: The small solitary green bump in Q3 2016 wasn’t actually some kind of operational genius that suddenly set in for a brief period. No, Tesla sold $139 million in taxpayer-funded pollution credits to other companies, which allowed it to show a profit of $22 million. Tesla adheres strictly to a business model that is much appreciated by the stock market: The more it sells, the more money it loses.

Total revenues – automotive and energy combined – rose 43% year-over-year to $4.0 billion in Q2. This increase in revenues was bought with a 113% surge in net losses. When losses surge over twice as fast as revenues, it’s not the light at the end of the tunnel you’re seeing. In between the lines of its earnings report, Tesla also confirmed the veracity of the many videos and pictures circulating on the internet that show huge parking lots filled with thousands of brand-new, Model 3 vehicles, unsold, undelivered, perhaps unfinished, waiting for some sort of miracle, perhaps needing more work, more parts, or additional testing before they can be sold, if they can be sold.

But these thousands of vehicles were nevertheless “factory gated,” as Tesla said, to hit the 5,000 a week production goal. And so they’re unfinished and cannot be delivered but are outside the factory gate, and Tesla didn’t totally lie about its “production” numbers. Now it put a number on these “produced” but undelivered vehicles: 12,571 in Q2 on top of the 4,497 in Q1, for a total of 17,000 vehicles sitting in parking lots.

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Wealth transfer.

Middle-Class Americans Still Haven’t Recovered From Housing Bust (MW)

A new study by the Opportunity and Growth Institute at the Minneapolis Fed found that the housing boom and bust made middle-class Americans poorer but boosted wealth for the richest 10%, widening the income and wealth gap substantially. Authors of the paper examined the relationship between incomes and asset prices over the past 70 years, concluding that rising and falling housing and stock markets have been the main drivers of wealth inequality. In the simplest model, the authors wrote, how fast wealth accumulates should be a function of how fast incomes rise. But incomes played only a minor role in wealth distributions in postwar America. Instead, wealth accumulation for most Americans was driven by booming home prices over the past several decade until 2007.

[..] ..real incomes of middle-class Americans rose by a third between 1970 and 2007, or less than 1% a year, while incomes of the bottom half have been largely stagnant since about 1970. Incomes for the top 10%, meanwhile, have doubled over the same period. Incomes for the bottom 90% have stagnant over the past 10 years. On the wealth distribution side, however, the poor became poorer, while the rich became richer after the financial crisis. Up until 2007, middle class Americans saw their wealth increase at the same rate as their wealthy counterparts, rising 140% over 40 years. Incomes for households in the bottom half doubled from 1971 until 2007—all thanks to booming house prices.

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Perspective: “Chinese stocks were worth $6.09 trillion, compared with $6.17 trillion in Japan. The US market is worth $31 trillion.”

China Loses Spot As World’s No. 2 Stock Market to Japan (AFP)

China’s stock market has been overtaken as the world’s second-biggest by Japan’s, having been swiped this year by the threat of a trade war with the United States and slowing economic growth. Data from Bloomberg News in intra-day trade on Friday showed the value of equities on the mainland had slipped behind those in their neighbouring country for the first time since taking the number-two spot in 2014. The figures showed Chinese stocks were worth $6.09 trillion, compared with $6.17 trillion in Japan. The US market is worth $31 trillion. While global markets have been broadly hit by fears of a trade war between the world’s top two economies, Chinese equities are among the worst performers this year, with the benchmark Shanghai Composite Index slumping more than 16% since the start of January.

The pressure was ratcheted up this week when the White House said it was considering more than doubling threatened tariffs on a range of Chinese imports worth $200 billion. Washington has already imposed tariffs on $34 billion worth of goods and is considering hitting another $16 billion in the coming weeks. “Losing the ranking to Japan is the damage caused by the trade war,” Banny Lam, head of research at CEB International Investment in Hong Kong, told Bloomberg News. “The Japan equity gauge is relatively more stable around the current level but China’s market cap has slumped from its peak this year.”

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But what really happened? Julian Assange knows. Kim Dotcom knows.

Judge Rejects Suit Against Fox News Brought By Parents Of Seth Rich (NBC)

A New York judge has rejected a lawsuit brought against Fox News by the parents of a Democratic National Committee employee killed in 2016. In a ruling Thursday, U.S. District Judge George Daniels said he understood Joel and Mary Rich might feel that the tragic death of their son was exploited for political purposes, but that the lawsuit lacked specific instances of wrongdoing necessary to proceed to trial. In the March lawsuit, the parents said that Fox News turned the death of their son, Seth Rich, into a “political football” by claiming he had leaked DNC emails to Wikileaks during the presidential campaign. The 27-year-old Rich was killed in what Washington police believe was a random robbery attempt. The judge also dismissed a related suit by a private investigator.

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Nice twist.

Saudi Arabia Planned To Invade Qatar Last Summer. Tillerson Intervened (IC)

Thirteen hours before Secretary of State Rex Tillerson learned from the presidential Twitter feed that he was being fired, he did something that President Donald Trump had been unwilling to do. Following a phone call with his British counterpart, Tillerson condemned a deadly nerve agent attack in the U.K., saying that he had “full confidence in the U.K.’s investigation and its assessment that Russia was likely responsible.” White House Press Secretary Sarah Sanders had called the attack “reckless, indiscriminate, and irresponsible,” but stopped short of blaming Russia, leading numerous media outlets to speculate that Tillerson was fired for criticizing Russia.

But in the months that followed his departure, press reports strongly suggested that the countries lobbying hardest for Tillerson’s removal were Saudi Arabia and the United Arab Emirates, both of which were frustrated by Tillerson’s attempts to mediate and end their blockade of Qatar. One report in the New York Times even suggested that the UAE ambassador to Washington knew that Tillerson would be forced out three months before he was fired in March. The Intercept has learned of a previously unreported episode that stoked the UAE and Saudi Arabia’s anger at Tillerson and that may have played a key role in his removal. In the summer of 2017, several months before the Gulf allies started pushing for his ouster, Tillerson intervened to stop a secret Saudi-led, UAE-backed plan to invade and essentially conquer Qatar, according to one current member of the U.S. intelligence community and two former State Department officials, all of whom declined to be named, citing the sensitivity of the matter.

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A nation that refuses to feed its children.

Food Banks Appeal For Donations To Feed Children During School Holidays (G.)

Calls have been made for the public to donate to their local food bank during the summer holidays owing to increasing demand from families who rely on free school meals during term time. The Trussell Trust, an anti-poverty charity, said an increase in food bank use over the summer was driven by a rise in demand by children, as it released figures from its network of more than 420 food banks across the country. While the number of adults seeking supplies from food banks during the summer months decreased in 2017, the number of children needing support shot up. During July and August 2017, food banks provided more than 204,525 three-day emergency supplies, 74,011 of which went to children. In the preceding two months, 70,510 supplies went to children. The number of adults seeking help from food banks fell from 131,521 in May and June to 130,514 in July and August.

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“..a billionaire’s flat in Knightsbridge costs just £1,421 a year, while a shop on the floor below can pay £244,000 in business rates.”

Britain Heading Back To Pre-Victorian Days (G.)

Is Northamptonshire Britain’s first banana republic? This once lovely county, much of it now a waste of wind turbines and warehouses, is close to bankruptcy. It must sack staff, freeze pay, close two-thirds of its libraries and stop all bus subsidies. It faces default on its statutory duty to public health, children in care and the elderly. While much of this is due to mismanagement, the National Audit Office says that 15 other counties, believed to include Somerset and Surrey, are in similar straits. Years of austerity are coming home to roost – and where least expected, among the rich shires. What is going on? Local councils cannot do what central government can do, which is tax and borrow to meet need.

Each year Whitehall spends more. It can tip money into the NHS and triple-lock pensions – good causes both – as well as vanity projects such as aircraft carriers, high-speed trains and nuclear power stations. Councils have no such discretion. Since 2010 their spending has shrunk by over a third, with central government grants slashed by as much as NHS spending has risen. 95% of British taxation is controlled by the centre, against 60% in France and 50% in the US. Yet local spending must pick up the casualties of the welfare state – vulnerable children, elderly and infirm people. It must fund the day centres, youth clubs, care homes and visits to problem families. To do so, services that most modern communities expect from government must now be butchered, such as parks, libraries and museums.

Local, not national, austerity is sending Britain back to pre-Victorian days. The solution is swift and easy. The government should uncap local taxes, free local spending, and allow local people to pay for what they want. It was how local government ran, perfectly well, up to the early 1980s. In most other countries it is still regarded as a normal feature of democracy. At present Britain’s meagre local revenue derives from a regressive household tax fixed on 1991 property valuations, which no government (except in Wales) has had the guts to revalue. Thus a billionaire’s flat in Knightsbridge costs just £1,421 a year, while a shop on the floor below can pay £244,000 in business rates. It is no surprise that the former goes to the council, and much of the latter is paid to central government.

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Jun 072018
 
 June 7, 2018  Posted by at 8:17 am Finance Tagged with: , , , , , , , , , , ,  


Ivan Aivazovsky Stormy Night at Sea 1850

 

Is Draghi Risking Everything To Teach Rome A Lesson? (ZH)
The Next Economic Crisis Begins in the European Union (Bruno)
David Stockman: Stocks Will Plunge 50% In This ‘Daredevil Market’ (CNBC)
Euro Recovers On Rising Bets ECB May Unwind Stimulus (R.)
Indonesia Joins India In Begging Fed To Stop Shrinking Its Balance Sheet (ZH)
Fed Clambers Back To Positive Real Rates, Now Debate Is When To Stop (R.)
Social Security To Tap Into Trust Fund For First Time In 36 Years (MW)
Opioids Are Responsible For 20% Of US Millennial Deaths (ZH)
The ‘Doomsday Brexit Plan’ Document Should Frighten Us All (TP)
Nearly 4 Million UK Adults Forced To Use Food Banks (Ind.)
How We Created The Anthropocene (BBC)

 

 

“..watch as the EUR and bond yields tumble, and the dollar resumes its relentless push higher.”

Is Draghi Risking Everything To Teach Rome A Lesson? (ZH)

[..] as Bloomberg’s Lisa Abramowicz said in a podcast today, it was the ECB “basically just giving the finger to Italy.” Confirming as much, Anne Mathias, Global Rates and FX strategist for Vanguard, responded that “part of the vocal nature of the ‘talking about the talking about’ [the end of QE] probably has something to do with Italy, especially as they’ve been paring their purchases of Italian debt. What the ECB is trying to say is hey, “this is our party, and you’re welcome to it, but if you’re going to leave it’s not going to be easy for you.” The ECB is trying to show Italy a future without the ECB as backstop.”

A spot-on follow up question from Pimm Fox asked if this is “a situation in which the ECB is cutting off its nose to spite its face, because you can stick to rules for the sake of sticking to rules, but when you have a potential crisis, why wait for it to be a real crisis such as Italy, which the new government has pledged to spend a lot of money, to lower taxes, while they still have a huge government deficit. Why would the ECB do this.” The brief answer is that yes, it is, because sending the Euro and yields higher on ECB debt monetization concerns, only tends to destabilize the market, and sends a message to investors that the happy days are ending, in the process slamming confidence in asset returns, a process which usually translates into a sharp economic slowdown and eventually recession, or even depression if the adverse stimulus is large enough.

As for the punchline, it came from Abramowicz, who doubled down on Pimm Fox’ question and asked if the “European economy can withstand the shock” of the ECB’s QE reversal, which would send trillions in debt from negative to positive yields. While the answer is clearly no, what is curious is that the ECB is actually tempting fate with the current “tightening” scare, which may send the Euro and bond yields far higher over the next few days, perhaps even to a point where Italy finds itself in dire need of a bailout… from the ECB. Then again, don’t be surprised if during next Thursday’s ECB press conference, Mario Draghi says that after discussing the end of QE, no decision has been made or will be made for a long time. At that moment, watch as the EUR and bond yields tumble, and the dollar resumes its relentless push higher.

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Downsize Germany or else.

The Next Economic Crisis Begins in the European Union (Bruno)

Mercantilism is a practice of conducting economic affairs that Europe practiced especially during the period between the 16th and 17th centuries. It’s the progenitor of colonialism and favors the idea that a state’s—or nation’s—power increases in direct proportion to its ability to export. The more a nation exports, producing a trade surplus, the stronger it becomes. The current “imperfection” of the euro stems from this concept. Germany has become a mercantilist power within a union of nation states (the EU) that had agreed to pursue common as well as national interests. The result has not only been an imbalance of trade; rather, it’s been a complete political and economic disparity.

Some EU countries, of which Germany represents the best example, have also used their surplus to lower their inflation rate below the eurozone-accepted two-percent standard. Indeed, Germany’s trade surplus formula was predicated on a minimal increase in salaries—and reduced government spending on infrastructure and other public services. The result has been the accumulation of significant competitive advantages. Ironically, whenever the euro drops in value, Germany gains with respect to the PIGS. The products that make up the core of its surplus become even more competitive within and beyond the EU.

That explains President Donald Trump’s ever more vociferous suggestions to ban the import of German cars in the United States. It’s no accident that Trump launched a literal trade war, focusing on Germany and China, just days before the start of the G7 Summit in Canada. Germany’s accumulated gains from the low inflation and the more competitive conditions allow it to literally “colonize” (financially speaking) the so-called less virtuous or “deficit” nations. Germany can buy up their best businesses and services. In the meantime, Germany has also acquired a political dominance to match its surplus within the EU itself.

It can control the rules of the EU economy and influence their evolution. That’s why there are few options for the PIGS. And that’s why society and political discourse have deteriorated. The rise of the so-called populist—I prefer the term “protest”—parties, Left or Right, in countries like Italy is a trend destined to expand throughout the EU and cause irreparable fissures. If the EU does not change (and by change, I mean a downsizing of Germany’s stature), the fissures will be irreparable, and one or more states will leave, breaking the union.

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“It’s all risk and very little reward in the path ahead..”

David Stockman: Stocks Will Plunge 50% In This ‘Daredevil Market’ (CNBC)

David Stockman is intensifying his bear case. President Ronald Reagan’s Office of Management and Budget director blames a bull market that’s getting longer in the tooth — paired with headwinds ranging from President Donald Trump’s leadership to fiscal policy decisions to questionable earnings. “I call this a daredevil market. It’s all risk and very little reward in the path ahead,” Stockman said Tuesday on CNBC’s “Futures Now.” “This market is just way, way over-priced for reality.” His thoughts came as the Nasdaq was reaching all-time highs again, while S&P 500 rose slightly but the Dow failed to extend its win streak to three days in a row.

“The S&P 500 could easily drop to 1,600 because earnings could drop to $75 a share the next time we have a recession,” Stockman warned. “We’re about eight or nine years into this expansion. Everything is crazily priced. I mean the S&P 500 at 24 times at the end, tippy top of a business cycle.” One of his biggest gripes with the bulls is the notion that President Donald Trump’s tax cuts are providing a fundamental lift to stocks. “These tax cuts are going to add to the deficit in the 10th year of an expansion. It’s just irresponsible crazy,” he said. “It’s all going to stock buybacks and M&A deals anyway. That doesn’t cause the economy to grow. It’s just a short-term boost to the stock market that doesn’t last.”

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All it takes is some hollow words.

Euro Recovers On Rising Bets ECB May Unwind Stimulus (R.)

The euro stayed near two-week highs against many of its rivals on Thursday, on rising bets the ECB may soon announce it will start winding down its massive bond purchase program. Jens Weidmann, the head of Germany’s central bank, said expectations the ECB would taper its bond-buying program by the end of this year were plausible while his Dutch counterpart, Klaas Knot, said there was no reason to continue a quantitative easing program. The trio of comments drove the euro to a two-week high of $1.1800 sharp. The common currency last traded at $1.1781, extending its gains so far this week to 1.15%.

“In the near term, we are likely to see event-driven trading on the euro. We should expect the euro to jump 100 pips (one cent) quite easily on comments from key officials,” said Kyosuke Suzuki, director of forex at Societe Generale. The ECB has been debating whether to end the unprecedented 2.55 trillion euro ($2.99 trillion) bond purchase program this year as the threat of deflation has passed. Still many market players were surprised by the flurry of comments as they had thought uncertainty caused by a political crisis in Italy could make policymakers cautious about indicating an end to stimulus at its policy meeting on June 14.

Indeed, the yield spread of Italian debt to German Bunds widened on Wednesday as Italian bonds are seen as the biggest beneficiary of the ECB’s buying. “This euro buying is essentially short-term trade. People don’t know when Italian debt problems will be solved but they do know when the ECB might announce an exit from stimulus,” said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities.

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But then Europe and Japan signal they’ll do the same.

Indonesia Joins India In Begging Fed To Stop Shrinking Its Balance Sheet (ZH)

On the same day that the governor of Malaysia’s central bank quit, and just days after Urjit Patel, governor of the Reserve Bank of India, took the unprecedented step of writing an oped to the Federal Reserve, begging the US central bank to step tightening monetary conditions, and shrinking its balance sheet, thereby creating a global dollar shortage which has slammed emerging markets (and forced India into an unexpected rate hike overnight), Indonesia’s new central bank chief joined his Indian counterpart in calling on the Federal Reserve to be “more mindful” of the global repercussions of policy tightening amid the ongoing rout in emerging markets.

As Bloomberg reports, in his first interview with international media since he took office two weeks ago, Bank Indonesia Governor Perry Warjiyo echoed what Patel said just days earlier, namely that the pace of the Fed’s balance sheet reduction was a key issue for central bankers across emerging markets. As a reminder, the RBI Governor made exactly the same comments earlier this week, arguing that slowing the pace of stimulus withdrawal at a time when the US Treasury is doubling down on debt issuance, would support global growth, as the alternative would be an emerging markets crisis that would spill over into developed markets.

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Get the hell out. Take their powers away.

Fed Clambers Back To Positive Real Rates, Now Debate Is When To Stop (R.)

The Federal Reserve will likely raise its target interest rate to above the rate of inflation for the first time in a decade next week, igniting a new debate: when to stop. The Fed has been gradually hiking rates since late 2015 with little sign of tighter conditions hampering economic recovery. The expected June increase will raise the stakes as the Fed seeks to sustain the second-longest U.S. expansion on record while continuing to edge rates higher. With inflation still tame, policymakers are aiming for a “neutral” rate that neither slows nor speeds economic growth. But estimates of neutral are imprecise, and as interest rates top inflation and enter positive “real” territory, analysts feel the Fed is at higher risk of going too far and actually crimping the recovery.

The Fed is “gradually entering a new world when rates are at 2 percent,” nearing zero on a real basis and approaching where they are no longer felt to be stimulating economic activity, said Thomas Costerg, senior U.S. economist at Pictet Wealth Management. The last time rates moved into positive real territory on a sustained basis was the spring of 2005 when the Fed began tightening rapidly after a period of arguably too-lax monetary policy, ending just months before the start of the 2007-2009 financial crisis. The debate over the current cycle’s end point “came earlier than I expected,” Costerg said, with the Fed facing imminent calls on where the neutral rate of interest lies.

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Opaque topic, but this is obviously not good.

Social Security To Tap Into Trust Fund For First Time In 36 Years (MW)

Medicare’s finances were downgraded in a new report from the program’s trustees Tuesday, while the projection for Social Security’s stayed the same as last year. Medicare’s hospital insurance fund will be depleted in 2026, said the trustees who oversee the benefit program in an annual report. That is three years earlier than projected last year. This year, like last year, Social Security’s trustees said the program’s two trust funds would be depleted in 2034. For the first time since 1982, Social Security has to dip into the trust fund to pay for the program this year. It should be stressed that the reports don’t indicate that benefits disappear in those years.

After 2034, Social Security’s trustees said tax income would be sufficient to pay about three-quarters of retirees’ benefits. Congress could at any time choose to pay for the benefits through the general fund. Medicare beneficiaries also wouldn’t face an immediate cut after the trust fund is depleted in 2026. The trustees said the share of benefits that can be paid from revenues will decline to 78% in 2039. That share rises again to 85% in 2092. The hospital fund is financed mainly through payroll taxes. Social Security trustees said that reserves for the fund that pays disability benefits would be exhausted in 2032. Combined with the fund that pays benefits to retirees, all Social Security reserves would be exhausted by 2034, they said.

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Better start acting.

Opioids Are Responsible For 20% Of US Millennial Deaths (ZH)

The opioid crisis has become a significant public health emergency for many Americans, especially for millennials, so much so that one out of every five deaths among young adults is related to opioids, suggested a new report. The study is called “The Burden of Opioid-Related Mortality in the United States,” published Friday in JAMA. Researchers from St. Michael’s Hospital in Toronto, Ontario, found that all opiate deaths — which accounts for natural opiates, semi-synthetic/ humanmade opioids, and fully synthetic/ humanmade opioids — have increased a mindboggling 292% from 2001 through 2016, with one in every 65 deaths related to opioids by 2016. Men represented 70% of all opioid-related deaths by 2016, and the number was astronomically higher for millennials (24 and 35 years of age).

According to the study, one out of every five deaths among millennials in the United States is related to opioids. In contrast, opioid-related deaths for the same cohort accounted for 4% of all deaths in 2001. Moreover, it gets worse; the second most impacted group was 15 to 24-year-olds, which suggests, the opioid epidemic is now ripping through Generation Z (born after 1995). In 2016, nearly 12.4% of all deaths in this age group were attributed to opioids. “Despite the amount of attention that has been placed on this public health issue, we are increasingly seeing the devastating impact that early loss of life from opioids is having across the United States,” said Dr. Tara Gomes, a scientist in the Li Ka Shing Knowledge Institute of St. Michael’s.

“In the absence of a multidisciplinary approach to this issue that combines access to treatment, harm reduction and education, this crisis will impact the U.S. for generations,” she added. Over the 15-year period, more than 335,000 opioid-related deaths were recorded in the United States that met the study’s criteria. Researchers said this number is an increase of 345% from 9,489 in 2001 (33.3 deaths per million population) to 42, 245 in 2016 (130.7 deaths per million population).

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“At what stage of their hapless fiddling, constant arguing and pitiful attempts to administer the kiss of life to the corpse that Brexit has turned out to be, does a politician officially earn the title of – stupid idiot?”

The ‘Doomsday Brexit Plan’ Document Should Frighten Us All (TP)

This is the first paragraph of The Times article (paywall) regarding Britain’s now famous Doomsday Brexit plan. “Britain would be hit with shortages of medicine, fuel and food within a fortnight if the UK tries to leave the European Union without a deal, according to a Doomsday Brexit scenario drawn up by senior civil servants for David Davis.” The Times confirms that the port of Dover will collapse “on day one” if Britain crashes out of the EU, leading to critical shortages of supplies. This was the middle of three scenarios put forward by senior advisors. A type of best guestimate if you like. You simply do not want to know the outcome of the worst of those three scenarios. Indeed, we have been spared from such details.

The article states that the RAF would have to be deployed to ferry supplies around Britain. And yes, we’re still on the middle scenario here. “You would have to medevac medicine into Britain, and at the end of week two we would be running out of petrol as well,” a contributing source said. The report continues to describe matters such as cross-channel disruption for heavy goods vehicles, which would also be catastrophic. Massive carparks will be required. A senior official said in the ‘Doomsday’ Brexit plan: “We are entirely dependent on Europe reciprocating our posture that we will do nothing to impede the flow of goods into the UK. If for whatever reason, Europe decides to slow that supply down, then we’re screwed.”

Let’s not worry about the fact that French borders are often left in chaos due to the all too familiar strikes that appear almost monthly during holiday season for one reason or another. Home secretary Sajid Javid makes an unconvincing comment stating he’s ‘confident’ a deal will be done. That’s hardly the type of assurance we need is it? UK officials emphasised that the June EU summit due on the 28th was heading for a “car crash” because “no progress has been made since March” to devise plans for a long-term deal. If your confidence in Brexit is starting to wane, don’t worry, half the nation are not just anxious but downright fearful – mainly because, neither in or out has given any concreate evidence of likely outcomes. This is probably because Brexit hasn’t been done before – and was designed that way. Deliberately.

At what stage of their hapless fiddling, constant arguing and pitiful attempts to administer the kiss of life to the corpse that Brexit has turned out to be, does a politician officially earn the title of – stupid idiot? “Just bloody get on with it” shout the Brexiteers, except both they and the UK government still can’t decide what ‘it’ is.

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I’ve asked it before: where will Britain be 10 years from now?

Nearly 4 Million UK Adults Forced To Use Food Banks (Ind.)

Nearly 4 million adults in the UK have been forced to use food banks due to ”shocking” levels of deprivation, figures have revealed for the first time. An exclusive poll commissioned by The Independent reveals one in 14 Britons has had to use a food bank, with similar numbers also forced to skip meals and borrow money as austerity measures leave them “penniless with nowhere to turn”. The findings come as a major report by the Joseph Rowntree Foundation (JRF) shows more than 1.5 million people were destitute in the UK last year alone, a figure higher than the populations of Liverpool and Birmingham combined. This includes 365,000 children, with experts warning that social security policy changes under the Tory government were leading to “destitution by design”.

Destitution is defined as people lacking two “essential needs”, such as food or housing. The polling on food poverty, from a representative sample of 1,050 UK adults carried out for The Independent by D-CYFOR, suggests that 7 per cent of the adult population – or 3.7 million people – have used a food bank to receive a meal. A million people have decreased the portion size of their child’s meal due to financial constraints, the survey says. The results come after it emerged in April that the number of emergency meals handed out at food banks had risen at a higher rate than ever, soaring by 13 per cent in a year, with more than 1.3 million three-day emergency food supplies given to people in crisis in the 12 months to March.

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I haven’t read the book -and it’s not out yet- but this seems, let’s say, naive. If you figure that a constant increase in energy use is the culprit, how can you say renewable nergy is the solution, and not call for using less energy?

How We Created The Anthropocene (BBC)

Factories and farming remove as much nitrogen from the atmosphere as all of Earth’s natural processes, and the climate is changing fast because of carbon dioxide emissions from fossil fuel use. Beyond these grim statistics, the critical question is: will today’s interconnected mega-civilisation that allows 7.5 billion people to lead physically healthier and longer lives than at any time in our history continue from strength to strength? Or will we keep using more and more resources until human civilisation collapses? To answer this, we re-interpret human history using the tools of modern science, to provide a clearer view of the future.

Tracing the ever-greater environmental impacts of different human societies since our march out of Africa, we found that there are just five broad types that have spread worldwide. Our original hunter-gatherer societies were followed by the agricultural revolution and new types of society beginning some 10,500 years ago. The next shift resulted from the formation of the first global economy, after Europeans arrived in the Americas in 1492, which was followed in the late 1700s by the new societies following the Industrial Revolution. The final type is today’s high-production consumer capitalist mode of living that emerged after WWII.

A careful analysis shows that each successive mode of living is reliant on greater energy use, greater information and knowledge availability, and an increase in the human population, which together increase our collective agency. These insights help us think about avoiding the coming crash as our massive global economy doubles in size every 25 years, and on to the possibilities of a new and more sustainable sixth mode of living to replace consumer capitalism. Seen in this way, renewable energy for all takes on an importance beyond stopping climate breakdown; likewise free education and the internet for all has a significance beyond access to social media – as they empower women, which helps stabilise the population.

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Apr 242018
 
 April 24, 2018  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , , ,  


John French Sloan A Woman’s Work 1912

 

Japan Can Begin Reducing Stimulus In Five Years – Kuroda (CNBC)
ECB Mulls Shelving Rules Tackling Euro Zone’s Bad Loans Pile (R.)
The Return Of Honest Bond Yields (Stockman)
Stop and Assess (Jim Kunstler)
The Chinese Car Invasion Is Coming (BBG)
Greek Primary Surplus Comes At The Expense Of Growth (K.)
Tensions Grow On Greek Islands (K.)
The UK Has Turned The Right To Education Into A Charitable Cause (G.)
UK Food Bank Use Reaches Highest Rate On Record (Ind.)
Finland To End Basic Income Trial After Two Years (G.)

 

 

Abenomics is a miserable failure. Which is why Abe’s popularity is scraping the gutter. But we keep on pretending. Five years? Why not make it ten, or fifty? Kuroda is stuck….

Japan Can Begin Reducing Stimulus In Five Years – Kuroda (CNBC)

The Bank of Japan will be able to begin winding down its extraordinary monetary stimulus within the next five years, the head of the central bank said. “Sometime within the next five years, we will reach [our] 2% inflation target,” Governor Haruhiko Kuroda told CNBC’s Sara Eisen over the weekend. Once that level is reached, we will start “discussing how to gradually normalize the monetary condition.” Kuroda began his second five-year term this year. He has implemented a massive stimulus policy by cutting the central bank’s benchmark interest rate to negative, keeping the 10-year Japanese government bond yield near 0% in an effort to control the yield curve and stepping up the Bank of Japan’s asset purchases.

However, inflation remains low. Japan reported its consumer price index, excluding fresh food and energy, rose 0.5% in the 12 months through March. “In order to reach [our] 2% inflation target, I think the Bank of Japan must continue very strong accommodative monetary policy for some time,” Kuroda added in his interview with CNBC. Japan’s efforts to boost the sluggish national economy come amid steady growth around the world. The IMF predicts the global economy will increase 3.9% this year and next. Kuroda agreed with the positive outlook. “The world economy will continue to grow at a relatively high pace,” he said. For this year and next, “we don’t see any sign of a turning point.” But protectionism, unexpected rapid tightening of monetary policy in some countries, and geopolitical tensions in North Korea and the Middle East pose potential risks, Kuroda said.

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… and Draghi is stuck too. My article yesterday was timely. The outgoing Bundesbank director in charge of banking supervision says the ECB’s credibility is at stake. A dangerous thing to say.

ECB Mulls Shelving Rules Tackling Euro Zone’s Bad Loans Pile (R.)

The European Central Bank, after suffering a political backlash, is considering shelving planned rules that would have forced banks to set aside more money against their stock of unpaid loans. The guidelines, which were expected by March, had been presented as a main plank of the ECB’s plan to bring down a 759 billion euro ($930 billion) pile of soured credit weighing on euro zone banks, particularly in Greece, Portugal and Italy. The ECB was now considering whether further policies on legacy non-performing loans (NPLs) were necessary “depending on the progress made by individual banks”, an ECB spokeswoman said.

No decision had been made yet and the next steps were still being evaluated, she said. Central Bank sources told Reuters that if the rules were scrapped, supervisors would look to continue putting pressure on problem banks using existing powers. An alternative would be to hold off until the results of pan-European stress tests are published in November but this would be close to the end of Daniele Nouy’s mandate as the head of the ECB’s Single Supervisory Mechanism at the end of the year. A clean-up of banks’ balance sheets from toxic assets inherited from the financial crisis is a precondition for getting countries like Germany to agree on a common euro zone insurance on bank deposits.

And Andreas Dombret, the outgoing Bundesbank director in charge of banking supervision, said in an interview published on Monday that the ECB’s credibility was at stake. “One cannot say that NPLs are one of the biggest risk for the European banking sector and a top priority and then fail to act,” he told Boersen-Zeitung. “It’s about the credibility of the SSM,” he said, calling for a “timely proposal”.

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And as the central bankers find themselves trapped, the bond vigilantes roam free.

The Return Of Honest Bond Yields (Stockman)

In the wee hours this AM, the yield on the 10-year treasury note hit 2.993%. That’s close enough for gubermint work to say that the big 3.00% inflection point has now been tripped. And it means, in turn, that the end days of the Bubble Finance era have well and truly commenced. In a word, honest bond yields will knock the stuffings out of the mainstream fairy tale that passes for economic and financial reality. And in a 2-3% inflation world, by honest bond yields we mean 3% + on the front-end and 4-5% on the back-end of the yield curve. Needless to say, that means big trouble for the myth of MAGA. As we demonstrated in part 2, since the Donald’s inauguration there has been no acceleration in the main street economy—just the rigor mortis spasms of a stock market that has been endlessly juiced with cheap debt.

But the Trump boomlet in the stock averages has now hit its sell-by date. That’s because today’s egregiously inflated equity prices are in large part a product of debt-fueled corporate financial engineering—stock buybacks, unearned dividends and massive M&A dealing. Thus, since the pre-crisis peak in Q3 2007 nonfinancial corporate sector value added is up by 34%, but corporate debt securities outstanding have risen by 85%; and the overwhelming share of that massive debt increase was used to fund financial engineering, not productive assets and future earnings growth. In a world of honest interest rates, of course, this explosion of non-productive debt would have chewed into earnings good and hard because the borrowed cash went to Wall Street, not into the wherewithal of earnings growth.

In fact, during the past 10 years, net value added generated by US nonfinancial corporations rose by just $2 trillion (from $6.1 trillion to $8.1 trillion per annum), whereas corporate debt rose by nearly $3 trillion (from $3.3 trillion to $6.1 trillion). So it should have been a losing battle—with interest expense rising far faster than operating profits. But owing to the Fed’s misguided theory that it can make the main street economy bigger and stronger by falsifying interest rates and other financial asset prices, the C-suite financial engineers got a free hall pass. That is, they pleasured Wall Street by pumping massive amounts of borrowed cash back into the casino, but got no black mark on their P&Ls.

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“That’s what happens when money is just a representation of debt that can’t be paid back.”

Stop and Assess (Jim Kunstler)

Let’s pause today and make an assessment of where things stand in this country as Winter finally coils into Spring. As you might expect, a nation overrun with lawyers has litigated itself into a cul-de-sac of charges, arrests, suits, countersuits, and allegations that will rack up billable hours until the Rockies tumble. The best outcome may be that half the lawyers in this land will put the other half in jail, and then, finally, there will be space for the rest of us to re-connect with reality.

What does that reality consist of? Troublingly, an economy that can’t go on as we would like it to: a machine that spews out ever more stuff for ever more people. We really have reached limits for an industrial economy based on cheap, potent energy supplies. The energy, oil especially, isn’t cheap anymore. The fantasy that we can easily replace it with wind turbines, solar panels, and as-yet-unseen science projects is going to leave a lot of people not just disappointed but bereft, floundering, and probably dead, unless we make some pretty severe readjustments in daily life.

We’ve been papering this problem over by borrowing so much money from the future to cover costs today that eventually it will lose its meaning as money — that is, faith that it is worth anything. That’s what happens when money is just a representation of debt that can’t be paid back. This habit of heedless borrowing has enabled the country to pretend that it is functioning effectively. Lately, this game of pretend has sent the financial corps into a rapture of jubilation. The market speed bumps of February are behind us and the road ahead looks like the highway to Vegas at dawn on a summer’s day.

Tesla is the perfect metaphor for where the US economy is at: a company stuffed with debt plus government subsidies, unable to deliver the wished-for miracle product — affordable electric cars — whirling around the drain into bankruptcy. Tesla has been feeding one of the chief fantasies of the day: that we can banish climate problems caused by excessive CO2, while giving a new lease on life to the (actually) futureless suburban living arrangement that we foolishly invested so much of our earlier capital building. In other words, pounding sand down a rat hole.

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Yeah, we need more cars…

The Chinese Car Invasion Is Coming (BBG)

On a bright spring day in Amsterdam, car buffs stepped inside a blacked-out warehouse to nibble on lamb skewers and sip rhubarb cocktails courtesy of Lynk & Co., which was showing off its new hybrid SUV. What seemed like just another launch of a new vehicle was actually something more: the coming-out party for China’s globally ambitious auto industry. For the first time, a Chinese-branded car will be made in Western Europe for sale there, with the ultimate goal of landing in U.S. showrooms.

That’s the master plan of billionaire Li Shufu, who has catapulted from founding Geely Group as a refrigerator maker in the 1980s to owning Volvo Cars, British sports carmaker Lotus, London Black Cabs and the largest stake in Daimler —the inventor of the automobile. Li is spearheading China’s aspirations to wedge itself among the big three of the global car industry—the U.S., Germany and Japan—so they become the Big Four. “I want the whole world to hear the cacophony generated by Geely and other made-in-China cars,” Li told Bloomberg News. “Geely’s dream is to become a globalized company. To do that, we must get out of the country.”

[..] Chinese companies have announced at least $31 billion in overseas deals during the past five years, buying stakes in carmakers and parts producers, according to data compiled by Bloomberg. The most prolific buyer is Li, who spent almost $13 billion on stakes in Daimler and truckmaker Volvo. Tencent Holdings Ltd., Asia’s biggest internet company, paid about $1.8 billion for 5% of Tesla. As software and electronics become just as critical to a car as the engine, China is ensuring it doesn’t lag behind in that market, either. Baidu, owner of the nation’s biggest search engine, announced a $1.5 billion Apollo Fund to invest in 100 autonomous-driving projects during the next three years.

“We have secured a chance to compete in the U.S. market of self-driving cars through those partnerships,” Li Zhengyu, a vice president overseeing Baidu’s intelligent-driving unit, told Bloomberg News. “Everyone has a good chance to win if it has good development plans.”

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The Troika demands that Greece kills its society even more. 4.2% of GDP disappears from the economy. Where it’s so badly needed.

Greek Primary Surplus Comes At The Expense Of Growth (K.)

The 2017 budget has officially registered a record primary surplus of 4.2% of GDP, against a target for 1.75%, but this came at a particularly heavy price for the economy, which grew just 1.4% against a budget target for 2.7%. It is obvious that securing primary surpluses of more than twice the target, depriving the economy of precious resources, is directly associated with the stagnation of growth compared to original projections. It is no coincidence that consumption edged up just 0.1% last year, which analysts have attributed to taxpayers’ exhaustion due to overtaxation. The surplus was mainly a result of drastic cuts to the Public Investments Program (by about 800 million euros) and social benefits, due to the delay in the application of the Social Solidarity Income.

The government was quick to express its satisfaction upon the release of the fiscal results by the Hellenic Statistical Authority on Monday, although it was just two years ago that Prime Minister Alexis Tsipras accused the previous administration of setting excessive targets for the primary surpluses of 2016, 2017 and 2018 at 4.5% of GDP. Eventually he reached that target with his own government, although the creditors had lowered the bar, to 1.75% for 2017 and 3.5% this year. The Finance Ministry spoke yesterday of proof of “the credibility of the fiscal management,” adding that “those data show that not only is the target of 3.5% feasible for this and the coming years, but there will also be some fiscal space for targeted tax easing and social expenditure in the post-program period.”

That reference concerns the so-called “countermeasures” the government has planned in case it exceeds the 3.5% target in the 2019 and 2020 primary surpluses, but for now they are at the discretion of the IMF, which will decide next month whether they can be introduced. Obviously Athens hopes the 2017 figures will positively affect the Fund’s view. There was also a positive response from Brussels on Monday, with European Commissioner for Economic Affairs Pierre Moscovici and Commission spokesman Margaritis Schinas stating that the efforts and sacrifices of the Greek people are now paying dividend.

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The new head of the Greek Asylum Service flatly ignores the Council of State. Greek justice system overpowered by Brussels and Berlin.

Tensions Grow On Greek Islands (K.)

Concerns have peaked over tensions on the Aegean islands following clashes between residents of Lesvos and migrants in Mytilene port which led to several injuries. Riot police were forced to intervene early Monday morning after dozens of local residents started protesting the presence of migrants in the main square of Mytilene. The migrants, who had been camping in the square since last Tuesday demanding to be allowed to leave the island, were put onto buses and taken back to overcrowded state facilities. According to local reports, the protesters threw flares, firecrackers and stones at the migrants, who formed a circle around women and children to protect them.

Some protesters chanted “Burn them alive,” according to reports which suggested that members of far-right groups were involved. Police detained 122 people – all but two of whom were Afghan migrants – while 28 people were transferred to the hospital for first-aid treatment, 22 of whom were migrants. Political parties issued statements blaming the attack on far-right groups. The mayor of Lesvos, Spyros Galinos, did not rule out the presence of extremists on the island but pointed to broader frustration among locals. “Society is reacting as a whole,” said Galinos, who had appealed to the government last week to reduce overcrowding on the islands.

[..] meanwhile, the new head of the Greek Asylum Service, Markos Karavias, signed an agreement effectively restricting migrants arriving on the Aegean islands from traveling on to the mainland. A Council of State ruling last week overturned previous asylum service restrictions on migrants leaving the islands. The government’s proposed changes to asylum laws – aimed at speeding up the slow pace at which applications are processed – are to be discussed in Parliament on Tuesday.

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How poor Britain is becoming.

The UK Has Turned The Right To Education Into A Charitable Cause (G.)

My nine-year-old son looks at me anxiously. “Mum, you definitely, definitely have my sponsor money plus an extra pound, which I need for the fundraising games. We have to bring it in today.” I search through my wallet for a quid each for him and his brother. I’ve got no cash on me. “We have to,” he repeats, his voice going wobbly. I stick an IOU in his piggy bank and the day is saved. Yet again. And yet again I feel infuriated and indignant at being put in this position. Then I feel even more cross that I now feel mean. Cake sale, plant sale, ticket for a pamper evening, music quiz, another cake sale, school disco (with associated plastic tat and penny sweets on sale), pay to see Santa, raffle for the chocolate hamper (that you’ve already sent in the goddamn chocolate for), dress up for World Book Day (that’s a quid), go pink for breast cancer research (that’s two quid) and why not run a sponsored mile for Sport Relief while you’re at it.

Then … ping! Oh joy, a text from school – another (another?!) cake sale. How much sugar is going down in that playground? The texts keep flooding in. Ransack your wardrobe for Bag 2 School; send in dosh so your child can buy you a Mother’s Day present; scrabble through your (now denuded) wardrobe for next week’s clothes swap and pretty please, the PTA would appreciate donations of booze for this year’s summer fete. If enough of you don’t stump up by Friday, you’ll be harangued daily until you do. Welcome to summer term, peak time for school fundraising – and what feels like a constant assault. Let’s put aside my irritation at being “chugged” via leaflets in book-bags and my mobile phone, in principle it’s a good thing for kids to think about the needs of people other than themselves, so I’ll swallow official charity fundraisers on that basis, even if those charities might not be my personal choice.

What is outrageous, though, is the assumption in some schools that parents can easily afford to donate on a virtually weekly basis, and the idea that we should expect to be paying on top of our taxes for our children’s state education. Schools, suffering the terrible results of the government’s austerity policies, have cut to the chase and are now pumping parents for regular direct debits to cover essentials. But is asking parents to pay doing pupils’ education any good?

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No surprise.

UK Food Bank Use Reaches Highest Rate On Record (Ind.)

Food bank use has soared at a higher rate than ever in the past year as welfare benefits fail to cover basic living costs, the UK’s national food bank provider has warned. Figures from the Trussel Trust show that in the year to March 2018, 1,332,952 three-day emergency food supplies were delivered to people in crisis across the UK – a 13% increase on last year. This marks a considerably higher increase than the previous financial year, when it rose by 6%. Low income is the biggest single – and fastest growing – reason for referral to food banks, accounting for 28% of referrals compared to 26% in the previous year. Analysis of trends over time demonstrates it has significantly increased since April 2016.

Being in debt also accounted for an increasing percentage of referrals – at 9% of referrals up from 8% in the past year. The cost of housing and utility bills are increasingly driving food bank referrals for this reason, with the proportion of referrals due to housing debt and utility bill debt increasing significantly since April 2016. The other main primary referral reasons in the past year were benefit delays (24%) and benefit changes (18%). “Reduction in benefit value” have the fastest growth rate of all referrals made due to a benefit change, while those due to “moving to a different benefit” have also grown significantly.

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It’s dangerous when people trial basic income schemes who don’t understand them. Others will say: it failed in Finland! No it didn’t. It has to be universal, and this is not.

Finland To End Basic Income Trial After Two Years (G.)

Europe’s first national government-backed experiment in giving citizens free cash will end next year after Finland decided not to extend its widely publicised basic income trial and to explore alternative welfare schemes instead. Since January 2017, a random sample of 2,000 unemployed people aged 25 to 58 have been paid a monthly €560 (£475) , with no requirement to seek or accept employment. Any recipients who took a job continued to receive the same amount. The government has turned down a request for extra funding from Kela, the Finnish social security agency, to expand the two-year pilot to a group of employees this year, and said payments to current participants will end next January.

It has also introduced legislation making some benefits for unemployed people contingent on taking training or working at least 18 hours in three months. “The government is making changes taking the system away from basic income,” Kela’s Miska Simanainen told the Swedish newspaper Svenska Dagbladet. The scheme – aimed primarily at seeing whether a guaranteed income might incentivise people to take up paid work by smoothing out gaps in the welfare system – is strictly speaking not a universal basic income (UBI) trial, because the payments are made to a restricted group and are not enough to live on.

But it was hoped it would shed light on policy issues such as whether an unconditional payment might reduce anxiety among recipients and allow the government to simplify a complex social security system that is struggling to cope with a fast-moving and insecure labour market. Olli Kangas, an expert involved in the trial, told the Finnish public broadcaster YLE: “Two years is too short a period to be able to draw extensive conclusions from such a big experiment. We should have had extra time and more money to achieve reliable results.”

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Oct 212015
 
 October 21, 2015  Posted by at 9:51 am Finance Tagged with: , , , , , , , , ,  


Christopher Helin Federal truck, City Ice Delivery Co. 1934

China: A Debt Balloon With Nowhere to Go But Down (Bloomberg)
China Stocks Down Over 4% In Choppy Trade (CNBC)
China’s Overheated Bond Market Showing Strain for Local Bankers (Bloomberg)
China Bond Defaults Seen Rising After Sinosteel Misses Payment (Bloomberg)
Just How Bad Was the 2009 Global Recession? Really, Really Bad (Bloomberg)
Why Miners May Want To Rethink Record High Output (CNBC)
Barclays Plots Bombshell Ring-Fencing Plan (Sky)
Credit Suisse to Launch $6.3 Billion Capital Increase (WSJ)
Irish Biggest Losers From Financial Crash: ECB (Reuters)
Why There’s No Easy Way Out Of Spain’s Insurmountable Economic Mess (Telegraph)
From European Union to Just a Common Market (Roberto Savio)
Lessons for Draghi From a Land of Sub-Zero Interest Rates (Bloomberg)
Developers in Australia Roll Out Red Carpet for Wealthy Chinese (WSJ)
Britain Addicted To Bombing With The Weary Rationale Of A Junkie (Frankie Boyle)
Number Of London’s ‘Working Poor’ Surges 70% In 10 Years (Guardian)
Food Banks Have Become A Lifeline For Many, But Where Is The Way Out? (Guardian)
Buying Begets Buying: Stuff Has Consumed The Average American’s Life (Guardian)
Slovenia Deploys Troops to Border as Migrant Exodus Swells (AP)
Resettling Migrants From Middle East Camps Could Ease Crisis: Greece (Reuters)
Refugee Boats Wash Up At UK Military Base In Cyprus (Guardian)

“..the real problem will come in U.S. dollar China corporates.”

China: A Debt Balloon With Nowhere to Go But Down (Bloomberg)

Chinese skyscrapers apparently aren’t scaring bond investors, but they probably should. Debt buyers have brushed off concerns about China’s overvalued real estate and slowing growth this year. They have been snapping up speculative-grade bonds of Chinese companies, even those sold in the U.S., where the appetite for risk is waning in general. Consider, for example, a $41.5 billion pool of dollar-denominated bonds sold in large part by deeply indebted Chinese property companies. The debt has gained 9.2% this year, which is equal to $3.8 billion of market gains, according to Bank of America Merrill Lynch index data. These hefty returns are pretty amazing when juxtaposed with losses on U.S. high-yield bonds, which have suffered amid plunging commodity prices and waning economic momentum, especially in China.

Frederic Neumann, HSBC’s co-head of Asian economics research, put it more bluntly. “In many ways, the market is divorced from reality,” he said Monday at a conference in New York. While local-currency Chinese debt may hold its value, “the real problem will come in U.S. dollar China corporates.” Chinese debt markets have benefited from tumult in the nation’s equities, which has pushed local investors into the safety of bonds. A lot of this money is sticky, with institutions wanting to keep their money close to home. But some of these investors have made their way to the U.S., where they’re buying up bonds of Chinese companies. That’s propping up this slice of the dollar-denominated market at an unlikely time.

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Shanghai closed own 3% -after a late surge-, Shenzhen dropped almost 6%.

China Stocks Down Over 4% In Choppy Trade (CNBC)

Asian stocks mostly advanced on Wednesday, but share markets in China were hit by a sudden bout of selling in the afternoon session. Major U.S. averages slipped overnight, with the Dow Jones Industrial Average snapping a three-day winning streak, amid a decline in healthcare and biotech names. The blue-chip Dow and S&P 500 shed 0.1% each, while the Nasdaq Composite closed down 0.5%. Volatility returned to China’s share markets on Wednesday, with the Shanghai Composite index skidding over 4% after weaving in and out of positive territory since the market open. Earlier in the session, the key index touched 3,444 points – its highest level in two months.

“For the Shanghai Composite, the 3,500 level remains the key barrier to break. I expect stiff resistance above this handle as those who bought when the market was above this level, expecting state buying to prop up prices, will be keen to get rid of their stock holdings,” IG’s market strategist Bernard Aw wrote in a note. Shares of Huaneng Power leaped 2% after the listed unit of China’s biggest power generator delivering a 11.2% rise in third-quarter net profit on Tuesday, marking its weakest pace in three quarters amid slowing growth in the mainland. Among other indexes, the CSI300 erased early gains to slide 2.3%. Small-caps underperformed; the Shenzhen Composite tumbled 4% and the start-up ChiNext board plummeted 4.4%, a day after jumping 2%. Hong Kong markets are closed for the Chung Yeung Festival.

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“Repurchase transactions allowing investors to use existing note holdings as collateral to borrow money for one day doubled in the past year..”

China’s Overheated Bond Market Showing Strain for Local Bankers (Bloomberg)

Chinese bankers say a debt-driven bond market rally is starting to show the same signs of overheating that preceded a collapse in equities. Repurchase transactions allowing investors to use existing note holdings as collateral to borrow money for one day doubled in the past year to a record 2.1 trillion yuan ($331 billion) on Tuesday. The cost of such funding in the interbank market has risen to 1.87% from a five-year low of 1% in May and has swung violently before, reaching 11.74% in June 2013. A similar contract on the Shanghai stock exchange climbed to 2.21% as equities rallied. Credit spreads near the narrowest in six years are being questioned after a state-owned steel trader missed a bond payment. “There are signs of an overheating market, and certainly the rally can’t last for long,” said Wei Taiyuan at China Merchants Bank in Shanghai.

“Leverage in the bond market is much higher than at any time in history. If equities continue to perform well, or initial public offerings resume, the liquidity-fueled rally may come to an end.” Among possible triggers for a correction is Sinosteel Co.’s failure to pay interest due Tuesday on 2 billion yuan of bonds maturing in 2017, a default that’s fanned concern about the government’s willingness to meet the obligations of state-owned companies. Competition for funds is increasing as the best weekly rally in stocks since June has led to the biggest growth in margin debt for buying equities in half a year, which risks diverting money away from money markets. The yield premium of five-year AAA rated corporate bonds over similar-maturity Chinese government debt fell to 84 basis points on Sept. 7, the least since 2009. The spread widened to 100 basis points on Tuesday, compared with an average of 144 over the past five years.

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Think UK steel is bad?

China Bond Defaults Seen Rising After Sinosteel Misses Payment (Bloomberg)

China bond defaults are forecast to climb after a state-owned steelmaker missed an interest payment, raising questions about the government’s commitment to stand behind such firms. Sinosteel failed to pay interest due Tuesday on 2 billion yuan ($315 million) of 5.3% notes maturing in 2017 after saying it will extend the deadline as it plans to add a unit’s stock as collateral. That came after the National Development and Reform Commission planned to meet noteholders and ask them not to exercise a redemption option on Tuesday to force full repayment, people familiar with the matter said last week. Chinese authorities are weeding out weak state firms that Premier Li Keqiang called zombies. Australia & New Zealand Bank. warned that rising debt in the sector may drag economic growth down to as low as 3%.

Two state-owned companies, Baoding Tianwei and China National Erzhong reneged on obligations earlier this year, according to China International Capital and China Bond Rating Co. “Sinosteel’s default means we will see more and more real bond defaults, in which investors may not get full repayment, in China,” said Ivan Chung at Moody’s in Hong Kong. “The government may want to reduce its intervention in default cases and let market forces play a bigger role.” Sinosteel’s failure to pay interest on time constitutes a default, according to Industrial Securities, Haitong Securities and China Merchants Securities.

China Bond Rating Co. said in a report Wednesday if Sinosteel bond investors had agreed to the delay of interest payment, it didn’t constitute a default, whereas if they hadn’t, it did. Sinosteel hasn’t said in its statements whether it got permission from investors, and two calls to the company Wednesday went unanswered. Flagging authorities’ balancing act as they try to liberalize markets while preventing turbulence, Li said last week the government will prevent systemic risks and banks should not cut or withdraw lending to companies which are in “temporary” difficulties.

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“How do you define a global recession? For individual countries, the rule of thumb is two consecutive quarters of falling output. That convention is difficult to apply to the world economy, which rarely contracts.”

Just How Bad Was the 2009 Global Recession? Really, Really Bad (Bloomberg)

The global recession that followed the financial crisis was the most severe in half a century, an unusually synchronized shock that paralyzed trade and left 23 million more people out of work. Yet the response by policy makers hasn’t been up to the task, with central banks bearing too much of the burden. And the world may be on the edge of another recession, even though it hasn’t recovered from the last one. Those are the conclusions of a new book on business cycles released Tuesday by the IMF. “The 2009 episode was the most severe of the four global recessions of the past half century and the only one during which world output contracted outright – truly deserving of the ‘Great Recession’ label,” write Ayhan Kose, director of the World Bank’s Development Prospects Group, and Marco Terrones, deputy division chief at the IMF’s research department.

“The possibility of another global recession lingers in light of the persistently weak recovery, even though damage from the previous one has yet to be fully repaired.” The 272-page book, “Collapse and Revival: Understanding Global Recessions and Recoveries,” underscores the challenges policy makers face as they try to jumpstart a sputtering recovery more than six years after the global financial crisis. A slowdown in emerging markets driven by weak commodity prices forced the IMF this month to cut its outlook for global growth in 2015 to 3.1%, which would be the weakest rate since 2009, from a July forecast of 3.3%. Kose and Terrones try to answer a question that has become more pressing as nations become more integrated: How do you define a global recession? For individual countries, the rule of thumb is two consecutive quarters of falling output. That convention is difficult to apply to the world economy, which rarely contracts.

In predicting a global recession next year, Citigroup Chief Economist Willem Buiter recently forecast that world growth would slow to “well below” 2% in 2016. Kose and Terrones define a recession as a contraction in inflation-adjusted output per capita accompanied by a broad, synchronized decline in various measures, such as industrial production, unemployment, trade and capital flows, and energy consumption. By that standard, there have been four world recessions since 1960, starting in 1975, 1982, 1991 and 2009. In only the last case did the global economy shrink. The 2009 downturn was “by far” the deepest, Kose and Terrones found. It was also the broadest, with almost all advanced economies and a large number of emerging and developing countries contracting. About 65% of countries fell into recession, the highest among the four slumps.

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Iron ore is like oil: everyone produces full-tard just to stay alive for another day.

Why Miners May Want To Rethink Record High Output (CNBC)

The world’s top three iron-ore producers continue to consistently churn out record volumes of output, worsening an already dire supply glut, but investors are now wondering just how long that strategy can last. On Wednesday, BHP Billiton—the world’s largest miner by market capitalization—reported a 7% annual rise in September quarter output to 61 million tons, adding to a 6% gain in the June quarter, and maintaining its full-year guidance of 247 million tons. Report cards over the past week confirms other miners are also in high-output mode. Rio Tinto reported a 12% annual rise in third-quarter production to 86 million tons, building on a 9% gain in the previous quarter.

The world’s second largest miner also announced it was on track to meet a full-year target of 340 million tons. Meanwhile, Brazilian giant Vale logged a record performance, with output up 2.9% on year to 88.2 million tons and more increases to come. A low cost of production has been the secret to miners’ profitability despite iron ore prices crashing to $52 a ton from nearly $200 four years ago. Rio Tinto’s unit cash production cost at its Pilbara operation fell to $16.20 a ton during the first half of this year, from $20.40 per ton during the same period last year, while Vale plans to reduce its current unit cost from $15.80 per ton to less than $13 by 2018, according to the companies.

But if miners continue ramping up production at high levels, it could become counterproductive. “So far, miners have been able to withstand commodity price declines but if they keep pushing prices down, and testing the low cost producer-price relationship, margins and cash flow will eventually decline and they’ll get to a point where they can’t escape by cutting costs further,” explained David Lennox, resources analyst at market research firm Fat Prophets.

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Consumer deposits to be owned by investment bankers…

Barclays Plots Bombshell Ring-Fencing Plan (Sky)

Barclays is heading for a showdown with the Bank of England over a secret plan to place its high street operations under the temporary ownership of its investment banking arm. Sky News can reveal that Barclays is preparing to warn regulators that the credit rating of its investment bank could be slashed unless it is allowed to restructure its operations in this way. The development threatens to drop a bombshell into the heart of the debate about banking reform just days after City regulators outlined new measures designed to protect taxpayers in the event of a future banking crisis. John McFarlane, Barclays’ executive chairman, is understood to have briefed more than 100 of the bank’s top executives on the plans at a meeting at a west London hotel this month.

Mr McFarlane, who will revert to a non-executive role after a new chief executive is in place, is said to have acknowledged to colleagues the likely difficulty of securing regulators’ approval for the proposals. But an insider familiar with the meeting said he expressed a belief that the idea was consistent with the blueprint drawn up by the Independent Commission on Banking in 2011 for separating banks’ high street and investment banking operations. One source speculated that a rejection of Barclays’ proposals by the PRA could oblige it to sell large parts of its investment bank or seek to raise many billions of pounds in new capital from investors. Like other lenders – although to a greater degree owing to the size of its investment bank – Barclays’ credit rating derives a diversification benefit from its current structure.

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All big banks are in deep.

Credit Suisse to Launch $6.3 Billion Capital Increase (WSJ)

ZURICH— Credit Suisse nnounced plans on Wednesday to raise roughly 6 billion francs ($6.3 billion) in fresh capital and slash costs, as the Swiss bank delivered a disappointing set of quarterly results. Incoming Credit Suisse Chief Executive Tidjane Thiam took over the top job in July, and has been widely expected to raise capital and reduce what has been a relatively expensive, and relatively high-risk investment banking unit. On Wednesday, Credit Suisse said it would restructure its investment bank and significantly cut the amount of capital allocated to the business. That will be coupled by a proposed rights offering of about 4.7 billion francs to raise capital, and a private placing of roughly 1.35 billion francs, Credit Suisse said.

In addition, Credit Suisse said it plans a partial initial public offering for its Swiss bank unit. Its plans also include cutting 3.5 billion francs in costs by the end of 2018. [..] Credit Suisse has long operated a larger investment bank than that of its Swiss peer, UBS. That has provided Credit Suisse with needed profit during good quarters, but also with a relatively expensive set of businesses that are increasingly impractical due to stricter capital rules. Regulators in Switzerland are expected to unveil new rules for the big banks later this year, including a requirement to maintain a bigger cushion of capital relative to the loans and investments being made.

On Wednesday, Credit Suisse said it would reduce the amount of risk-weighted assets allocated to its investment banking businesses such as foreign exchange and rates by 72%, while the allocation to its so-called “prime” business providing services for hedge funds will be cut by half. On Wednesday, Credit Suisse reported a pretax loss of 125 million francs for its investment bank in the third quarter, compared with a profit of 516 million francs in the period last year. The bank cited challenging market conditions and “reduced client activity.” Overall, Credit Suisse posted a 24% decline in net profit for the third quarter, and an 8% decline in net revenues.

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Germany, Holland came out big winners from the crash. if that doesn’t tell you the EU is a failure, what does?

Irish Biggest Losers From Financial Crash: ECB (Reuters)

The Irish lost more of their personal wealth than any other euro zone country in the aftermath of the financial crash while Germany and the Netherlands gained the most, fresh data from the ECB shows. In an analysis of the years between 2009 and 2013, ECB experts discovered that Ireland lost more than €18,000 per person, while Spaniards saw wealth dwindle by almost €13,000 as property in both nations plummeted. Greeks saw their notional wealth decline by almost €17,000 for the same reason. In the Netherlands and Germany, by contrast, the wealth per capita grew by roughly €33,000 and €19,000 respectively, due in part to a boost to financial investments over that time. The data, which takes a snapshot before the recent economic upswing in Spain and Ireland, illustrates the stark differences between countries in the 19-country euro zone that extends from cities such as Helsinki in the north to Athens in the south.

By presenting the data in this manner, the ECB acknowledges the divergence, although there is little the central bank can do to remedy it. Its money-printing scheme known as quantitative easing is spread out according to euro zone member countries’ relative size and not determined by their economic needs. To fix imbalances between strong industrial nations such as Germany and countries such as Spain, experts have long pushed for a system of financial transfers or payments from rich to poor states. Germany, which fears that this would lumber it with unmanageable costs and believes that handouts would discourage spendthrift countries from reforming, has flatly rejected the suggestion.

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A pumped-up success story.

Why There’s No Easy Way Out Of Spain’s Insurmountable Economic Mess (Telegraph)

Spain is the current superstar economy of the eurozone. The former bail-out country, which became embroiled in one of the worst banking and house price collapses in the euro just four years ago, is now proudly held up as the European Union’s model economic pupil. Spain is set to be the fastest growing economy of the “Big Four” euro economies – Germany, France, Italy and Spain – over the next two years, expanding by 3.2pc and 2.5pc respectively, according to the IMF. This compares to just 1.5pc and 1.6pc in Germany, and a paltry 1.2pc and 1.5pc in France. Madrid’s growth rate will also surpass the eurozone average of 2pc and 2.2pc over 2015-16, as it races ahead of the rest. The secret of this success lies in the implementation of belt-tightening measures and structural reforms, as demanded by Brussels, so the story goes.

But the economic turnaround has attracted high-profile critics. The recently-departed chief economist of the IMF has rubbished any talk of a growth “miracle” in Spain. In a new report, Simon Tilford at the Centre for European Reform also pours cold water over the dominant narrative of the Spanish recovery. “There is no evidence that [growth numbers] are the result of austerity, and not much evidence that they are the product of structural reforms,” writes Mr Tilford. Instead, he paints a picture of a fragile economy that has benefited from a number of headwinds, but remains acutely vulnerable to another global downturn. Here are some of the insurmountable challenges that are set to condemn Spain to more economic pain.

Spain’s export performance has been held up as the backbone of its stellar growth performance since 2013. Bouyed by a cheap euro, exports have boomed over the past two years. Key to this growth has been Spain’s “remarkable cost adjustment process” – where it has managed to slash wage costs – helping to “transform the export sector into a lean and mean machine, able to compete at a high level”, notes Angel Talavera at Oxford Economics. But buoyant exports have also been accompanied by falling imports, as suffering Spaniards have endured lower living standards and high unemployment, notes Mr Tilford. The composition of the exports is also a cause for concern. More than half of the growth has come from “low-value” goods such as food and fuel.

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That’s all that’ll be left. Best case.

From European Union to Just a Common Market (Roberto Savio)

Seventy years ago Europe came out from a terrible war, exhausted and destroyed. That produced a generation of statesman, who went about creating a European integration, in order to avoid the repetition of the internal conflicts that had created the two world wars. Today a war between France and Germany is unthinkable, and Europe is an island of peace for the first time in its history. This is the mantra we hear all the time. What is forgotten is that in fact a good part of Europe did not want integration. In 1960, the United Kingdom led the creation of an alternative institution, dedicated only to commercial exchange: the European Free Trade Association (EFTA), formed by the United Kingdom, Austria, Denmark, Norway, Portugal, Sweden, Switzerland, then later Finland and Iceland.

It was only in 1972 that, bowing to the success of European integration, the UK and Denmark asked to join the EU. Later, Portugal and Austria left EFTA to join the European Union. The UK was never interested in the European project and always felt committed to “a special relation” with United States. Union would mean also solidarity and integration, as the various EU treaties kept declaring. The UK was only interested in the market side of the process. Since 1972, the gloss of European integration has lost much of its shine. Younger generations have no memory of the last war. The EU is perceived far from its citizens, run by unelected officials who make decisions without a participatory process, and unable to respond to challenges. Where is the external policy of the EU? When does it take decisions that are not an echo of Washington?

Since the financial crisis of 1999, xenophobic, nationalistic and right wing parties have sprouted all over Europe. In Hungary, one of them is in power and openly claims that democracy is not the most efficient system. The Greek crisis has made clear that there is a north-south divide, while Germany and the others do not consider solidarity a criterion for financial issues. And the refugee crisis is now the last division in European integration. The UK has openly declared that it will take only a token number of 10,000 refugees, while a new west-east divide has become evident, with the strong opposition of Eastern Europe to take any refugee. The idea of solidarity is again out of the equation.

Germany moved because of its demographic reality. It had 800,000 vacant jobs, and it needs at least 500,000 immigrants per year to remain competitive and keep its pension system alive. But that mentality is even more clear with the East European countries, which experience increasing demographic decline. At the end of communism in 1989, Bulgaria had a population of 9 million. Now it is at 7.2 million. It is estimated that it will lose an additional 7% by 2030, and 28.5% by 2050. Romania will lose 22% by 2050, followed by Ukraine (20%), Moldova (20%), Bosnia and Herzegovina (19.5%), Latvia (19%), Lithuania (17.5%), Serbia (17%), Croatia (16%), and Hungary (16%). Yet, all Eastern Europe countries have followed the British rebellion, and take a strong stance on refusing to accept refugees.

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Fear.

Lessons for Draghi From a Land of Sub-Zero Interest Rates (Bloomberg)

Until not so long ago, the idea of sub-zero interest rates was about as far-fetched as the prospect of a brash real estate tycoon running for U.S. president. These days, the discussion is whether a deposit rate below minus 0.20% is a good trump card to play when dealing with Europe’s sclerotic economy. The ECB meets on Thursday for yet another discussion on how to stimulate growth. Rate cuts are improbable – ECB board member Benoit Coeure recently described the current level as “the effective lower bound.” Should ECB President Mario Draghi and his colleagues nevertheless opt to discuss the matter, they might consider taking this lesson from Denmark: negative rates don’t provide a quick fix. The Danish central bank, whose sole mandate is to guard the krone’s peg to the euro, first cut rates below zero in mid-2012, when investors were looking for havens at the height of Europe’s debt crisis.

The key deposit rate, now minus 0.75%, has been mostly negative since then. Economists recently surveyed by Bloomberg see negative rates continuing into 2017. That’s not necessarily because they expect rates to rise after that, but because their models just don’t go any further. One of the key lessons from Denmark is that banks are reluctant to charge customers for holding their money. While some have raised fees, “real rates for real people were actually never negative,” says Jesper Rangvid, a professor of finance at the Copenhagen Business School. For that reason, Danes haven’t been hoarding cash. According to Rangvid, rates would have to drop as low as minus 10% before people start “building their own vaults.” Experiences in Switzerland and Sweden tell a similar story. Economic theory says interest rates are inversely related to investment.

People are also supposed to spend less when rates are high and spend more when they’re low. Because interest rates determine the value of cash today, they have been described as “a tax on holding money” and “the price of impatience.” And yet, Danes have actually been squirreling away. According to central bank data, Danish households’ have added 28 billion kroner ($4.3 billion) to bank deposits since rates shrank to their record low on Feb. 5. Danish businesses, meanwhile, have barely increased their investments, adding less than 6% in the 12 quarters since Denmark’s policy rate turned negative for the first time. At a growth rate of 5% over the period, private consumption has been similarly muted. Why is that? Simply put, a weak economy makes interest rates a less powerful tool than central bankers would like.

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“People underestimate how much residential construction has been propping up the economy..”

Developers in Australia Roll Out Red Carpet for Wealthy Chinese (WSJ)

Cranes dominate skylines above Sydney and Melbourne, which are popular with Asian migrants. Current rules generally only allow foreign investors to buy real estate before construction, typically in apartment developments. Cracks are emerging in the market, however. On Friday, the country’s central bank warned that risks to residential property developers had risen over the past six months, with inner-city Melbourne and Brisbane particularly exposed to a supply glut of apartments. The central bank has previously warned that any sudden collapse in home prices risks destabilizing the nation’s banks and the economy, which grew by just 0.2% in the second quarter from the first, the slowest pace in four years.

“People underestimate how much residential construction has been propping up the economy,” said Warren Hogan, chief economist at Australia & New Zealand Banking Group. Approvals to build new dwellings hit an all-time high in the year through August, as did the number of permits given to build high-rise apartments, which now account for 31% of the total, up from 11% six years ago, according to government data. China has become the largest source of foreign money flowing into Australian real estate, with Chinese investment in residential property up by more than 60% to A$8.7 billion in the year through June 2014, a Credit Suisse analysis of government data shows.

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“Why is war more palatable than more refugees? Why is the destruction of lives you can’t see easier to live with than someone on your bus making a phone call in a language you don’t understand?”

Britain Addicted To Bombing With The Weary Rationale Of A Junkie (Frankie Boyle)

In every addiction, a part of us is addicted to the process. Laying out the cigarette papers to build the joint; heating the spoon and flicking the syringe; dealing with our emails before our DMs; cueing up Netflix for when the kids go to sleep; methodically polishing the keys to our own prisons. Britain seems to be going through the preliminaries associated with one of its most cherished addictions: bombing. Bombing Syria has probably only been postponed by Russia’s intervention. It was, of course, amusing to see the western press suddenly preoccupied about whether bombs were hitting their intended targets. Perhaps Putin should have avoided such rigorous international scrutiny by bombing only hospitals.

The recent immolation of a Médecins Sans Frontières hospital in Afghanistan presented us with the internal contradiction of our media’s presentation of bombing: that we have technology so precise our weapons can hear their victims begging for a trial, and that we sometimes blow up stuff “accidentally”. It has been suggested that non-white people caught up in our foreign wars are “unpersons reported”. More accurately, they are treated as subpersons. A handful of Afghans dying could make the front pages, but only if they were strangled one by one by Beyoncé as the half-time entertainment at the Super Bowl. Historically, Syria has existed as a place where outsiders come to fight, a bit like Wetherspoon’s.

No one likes Assad: he has the surprised appearance of a man who has just swallowed his own chin, and a bizarre, faint, fluffy moustache, as if he pulled on a cashmere turtleneck just after eating a toffee apple. He has created a hell for his own people that British teenagers seem eager to go to and fight in, just to give you some idea of how shit Leeds is. But if their desire to go to Syria is deluded, how is our government’s any less so? A government that doesn’t believe it should have any responsibility for regulating our banks or even delivering our post thinks it needs to be a key player in, of all things, the Syrian civil war. Somehow, the plight of this strategically significant state has touched their hearts. Britain is so concerned about refugees that it will do anything – except take in refugees – to try to kill its way to a peaceful solution.

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Is that why the Chinese are coming?

Number Of London’s ‘Working Poor’ Surges 70% In 10 Years (Guardian)

More than a million Londoners who are defined as living in poverty are members of households in which at least one adult has a job, according to a new analysis. The figures include 450,000 children who live in such households, and research estimates that cuts in working tax credits to families next April could make 640,000 children worse off. The analysis is contained in the fifth London Poverty Profile, which is compiled by the New Policy Institute thinktank for the charity Trust for London. It indicates that the total number of Londoners in poverty now stands at 2.25 million. Of these, slightly more than half – 1.2 million – qualify as “in-work poor”, representing an increase of 70% in the past 10 years.

The study found that, although the numbers of unemployed adults and the proportion of people in workless households has fallen in the capital, the city’s overall poverty rate is 27%, much as it has been for the past decade. The rate for the rest of England is 20%. The report also illuminates how the poverty picture is changing in some parts of the Greater London area, with two east London boroughs, Newham and Tower Hamlets, seeing significant falls in the numbers and%ages of benefit claimants there, while Brent and Ealing in the west now stand out for their high levels of low pay and unemployment. Just over one fifth of people in London in all types of working households are in poverty, compared with 15% a decade ago.

This is despite the present number of unemployed adults, just over 300,000, being the lowest since 2008, at a time of rapid increases in the capital’s population, and with the proportion of workless households being at a 20-year low of 10%. The poverty threshold is defined as households with incomes of less than 60% of the national median after housing costs are included, consistent with standards used across the EU. The report says: “The increase in the number of people in poverty in London has been almost entirely among those in working families.” It points to low pay, limited working hours and the capital’s notoriously high housing costs as key reasons. The poverty rate among working families where an adult is self-employed, not all adults work or they work only part-time is 35% and among those where all adults work full time or one works full time and one part time is 9%.

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Britain’s only growth industry.

Food Banks Have Become A Lifeline For Many, But Where Is The Way Out? (Guardian)

In a large steel container outside St Philip’s church in north Nottingham, Nigel Webster is taking stock: not just of the thousands of neatly stacked tins of food arrayed there, but of his experience as a food bank volunteer. When we started out three years ago, he reflects, we thought we’d be gone by now. For Webster, the manager of Bestwood and Bulwell food bank, part of the Trussell Trust network, the pressing existential question is not just: “Why food banks?” but: “Food banks for how long?”. The growth of the food bank has been an astonishing achievement, but he regards its continued presence as a kind of social disgrace. It is the search for a food bank exit strategy, as much day-to-day operational problems, that keeps him awake at night.

“We will always seek to help people in need,” he says. His Christian faith means he could not do otherwise. But there must be limits, he says. Food banks cannot simply let the state withdraw from its responsibilities. It is important, he says, to keep in mind the idea that the food bank, essentially, is an “outrage”. “We do not want our food banks to exist. We look forward to a time when they disappear. We do not want to get too comfortable. We must resist the temptation to expand. I do not think having a food bank on every street corner is a way for our society to go. Foodbanks must do their best to remain ‘unusual’”.

If anything, food banks are in danger of becoming mainstream. A series of reports and studies have linked cuts in the social security system to the rise in charity food. Scores of evidence submissions to a Commons work and pensions committee inquiry, opening on 21 October, testify that thousands of vulnerable citizens are forced to rely on food banks as a result of avoidable delays to benefits being paid. Food banks are gearing up for a surge in demand for charity food parcels over the next few months, as proposed cuts to working tax credits and housing benefit, the continuing rollout of universal credit, and the shrinking of local welfare support schemes take effect.

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Slavery 21st century style.

Buying Begets Buying: Stuff Has Consumed The Average American’s Life (Guardian)

The personal storage industry rakes in $22bn each year, and it’s only getting bigger. Why? I’ll give you a hint: it’s not because vast nations of hoarders have finally decided to get their acts together and clean out the hall closet. It’s also not because we’re short on space. In 1950 the average size of a home in the US was 983 square feet. Compare that to 2011, when American houses ballooned to an average size of 2,480 square feet – almost triple the size. And finally, it’s not because of our growing families. This will no doubt come as a great relief to our helpful commenters who each week kindly suggest that for maximum environmental impact we simply stop procreating altogether: family sizes in the western world are steadily shrinking, from an average of 3.37 people in 1950 to just 2.6 today.

So, if our houses have tripled in size while the number of people living in them has shrunk, what, exactly, are we doing with all of this extra space? And why the billions of dollars tossed to an industry that was virtually nonexistent a generation or two ago? Well, friends, it’s because of our stuff. What kind of stuff? Who cares! Whatever fits! Furniture, clothing, children’s toys (for those not fans of deprivation, that is), games, kitchen gadgets and darling tchotchkes that don’t do anything but take up space and look pretty for a season or two before being replaced by other, newer things – equally pretty and equally useless. The simple truth is this: you can read all the books and buy all the cute cubbies and baskets and chalkboard labels, even master the life-changing magic of cleaning up – but if you have more stuff than you do space to easily store it, your life will be spent a slave to your possessions.

We shop because we’re bored, anxious, depressed or angry, and we make the mistake of buying material goods and thinking they are treats which will fill the hole, soothe the wound, make us feel better. The problem is, they’re not treats, they’re responsibilities and what we own very quickly begins to own us. The second you open your wallet to buy something, it costs you – and in more ways than you might think. Yes, of course there’s the price tag and the corresponding amount of time it took you to earn that amount of money, but possessions also cost you space in your home and time spent cleaning and maintaining them. And as the token environmentalist in the room, I’d be remiss if I didn’t remind you that when you buy something, you’re also taking on the task of disposing of it (responsibly or not) when you’re done with it. Our addiction to consumption is a vicious one, and it’s stressing us out.

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Weather getting worse fast. Balkans can get nasty in winter.

Slovenia Deploys Troops to Border as Migrant Exodus Swells (AP)

Led by riot police on horseback, thousands of weary migrants marched across western Balkans borderlands as far as the eye could see Tuesday as authorities cautiously lowered barriers and intensified efforts to cope with a human tide unseen in Europe since World War II. Leaders of Slovenia deployed military units to support police on their overwhelmed southern border with Croatia, which delivered more than 6,000 asylum seekers by train and bus to the frontier in bitterly disputed circumstances between the former Yugoslav rivals. With far too few buses available in Slovenia to cope, most people walked 15 kilometers on rural lanes past cornfields and pastures to reach a refugee camp, a challenge eased by sunny weather after days of torrential rain, fog and frigid winds.

On Slovenia’s frontiers with Croatia and Austria, aid workers toiled to erect enough tents and other emergency accommodation to shelter up to 14,000 travelers, more than five times the tiny nation’s previous official limit. Interior Secretary of State Bostjan Sefic told reporters in the Slovene capital, Ljubljana, that the pressure on border security with Croatia had grown “very difficult with an enormous number of people.” He said Slovenia, an Alpine land of barely 2 million, needed much more help immediately from bigger EU partners to cope or the country might have to adopt border-toughening measures. “If this continues we will have extreme problems. Slovenia is already in dire straits, an impossible situation,” Sefic said as lawmakers debated whether to increase the military’s powers to manage border security.

In Brussels, Slovenian President Borut Pahor met European Union leaders and said he expected his country to apply for emergency financial aid and border patrol reinforcements from EU partners. Hungary, long the most popular eastern gateway for people fleeing conflict and poverty in the Middle East, Asia and Africa, has padlocked its borders for migrants progressively over the past month, forcing the tide west through Croatia and Slovenia. All three nations have expressed fears of ending up stuck accommodating tens of thousands of asylum-seekers indefinitely if other EU nations farther north close their borders too.

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Save them the Aegean trip and the drowning babaies.

Resettling Migrants From Middle East Camps Could Ease Crisis: Greece (Reuters)

Greece said on Tuesday that resettling migrants from camps in the Middle Eastern countries such as Turkey, Jordan and Lebanon, where they first arrive, could ease Europe’s refugee crisis. Greece is struggling to control the influx of more than half a million migrants through its islands bordering Turkey, with arrivals spiking over the past two days in a rush to beat the onset of winter. Some 10,000 people arrived on the island of Lesvos on Sunday and Monday alone, officials said. Reuters witnesses said there had also been a rush on Tuesday of mainly Syrians and Afghans.

“We have a huge problem in not being able to control the flow of arrivals,” migration minister Yannis Mouzalas told Skai TV. The International Organisation for Migration said of an estimated 650,500 arrivals to European Union states this year, almost 508,000 went through Greece, while the United Nations put that figure at 502,000 on Tuesday. “That (resettling) would mean we, and countries like Italy and Hungary, would not be dealing with uncontrolled flows of people, save these people from smugglers and from the prospect of drowning trying to get here,” Mouzalas said.

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“Asked whether the refugees would be able to claim asylum in Britain, the MoD official said: “That’s not our understanding.”

Refugee Boats Wash Up At UK Military Base In Cyprus (Guardian)

Three overloaded boats carrying more than 100 refugees from Syria have washed up at Britain’s military base in Cyprus, potentially opening up a new front line in the migration crisis. The refugees, believed to include women and children, have been transferred to a temporary reception area at the sovereign base at Akrotiri on southern coast of the Mediterranean island. A spokesman for the Ministry of Defence confirmed that three boats had arrived at the base, which has been used to launch airstrikes against Islamic State militants in Iraq and Syria. The MoD is still gathering details about the incident, including the number of refugees involved. “I believe it is more than a hundred, but there is no confirmation of the exact number at the moment,” the spokesman said.

He said it was unclear where the refugees had travelled from but a police official told local media that refugees “appear” to have come from Syria. He added: “At the moment the first priority is to make sure everyone is safe and well before decisions are taken on what’s going to happen to them. We don’t know full numbers. It is happening as we speak so details are still coming in.” Asked whether the refugees would be able to claim asylum in Britain, the MoD official said: “That’s not our understanding.” The base is one of two sovereign territories retained by Britain on Cyprus, a colony until 1960.

Cyprus has received hundreds of refugees from Syria, but if confirmed this would be the first time any have arrived at the Akrotiri base, which is about 150 miles from the Syrian port of Tartus. The news site In-Cyprus quoted George Kiteos, the head of police at the sovereign base area, as saying: “The number of persons has been counted and recorded. The boats were carrying over 100 persons.” He added: “They have received first aid and they all appear to be in good health. We have already alerted all the other necessary services. They appear to have come from nearby Syria.” The site said two small boats had been spotted off the coast of Akrotiri at about 6.30am and were shepherded back to the shore by the Cyprus coastguard.

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