May 172020
 


Dorothea Lange Plantation overseer and his field hands, Mississippi Delta 1936

 

A Third Of COVID19 Hospital Patients Develop Dangerous Blood Clots (BBC)
China Adds Long-Term Organ Damage To List Of Effects Of COVID19 (SCMP)
May 16 Update: US COVID-19 Test Results (CR)
Llamas Could Be Our Secret Weapon Against Coronavirus (G.)
Lack Of Immunity Makes China Vulnerable To Another Wave Of Coronavirus (CNN)
Battle Looms At WHO Amid Pressure On China Over Coronavirus Inquiry (SCMP)
Trump Hints He May Reverse Course And Restore WHO Funding (F.)
Q2 US GDP Forecasts: Probably Around 30% Annual Rate Decline (CR)
Difficulties Abound On NYC’s Road To Reopen (Xinhua)
Brennan Claims Release Of Names Is ‘Abominable Abuse Of Authority’ (Fox)
Had Enough? (Jim Kunstler)
Economic Growth: Who Needs It? (Ms.)

 

 

• Over the past 24 hours US had +23,117 new cases (total 88,851) and +1,277 new deaths.
Note: both numbers are still well below White House predictions for the summer of 30,000 and 3,000, respectively

• Reported global new cases yesterday reached 100,184, new high.

• Russia reports 9,709 new coronavirus infections (yesterday: 9,200)

 

 

 

 

 

 

 

Note: new global cases yesterday 100,184

Cases 4,743,181 (+ 97,795 from yesterday’s 4,645,386)

Deaths 313,703 (+ 4,723 from yesterday’s 308,980)

 

 

 

From Worldometer yesterday evening -before their day’s close-

 

 

From Worldometer

 

 

From SCMP:

 

 

From COVID19Info.live:

 

 

 

 

This by now is obvious. But I have my doubts over the following: “..This change in the blood is the result of severe inflammation in the lungs..”, because I haven’t seen any proof that it’s the immune system which makes the blood clot. Far as I can see, the stickiness could occur (e.g if virus impacts hemoglobin) before the blood reaches the lungs, and maybe even worsen the inflammation.

A Third Of COVID19 Hospital Patients Develop Dangerous Blood Clots (BBC)

Up to 30% of patients who are seriously ill with coronavirus are developing dangerous blood clots, according to medical experts. They say the clots, also known as thrombosis, could be contributing to the number of people dying. Severe inflammation in the lungs – a natural response of the body to the virus – is behind their formation. Patients worldwide are being affected by many medical complications of the virus, some of which can be fatal. Back in March, as coronavirus was spreading across the globe, doctors started seeing far higher rates of clots in patients admitted to hospital than they would normally expect. And there have been other surprises, including the discovery of hundreds of micro-clots in the lungs of some patients.

The virus has also increased cases of deep vein thrombosis – blood clots usually found in the leg – which can be life-threatening when fragments break off and move up the body into the lungs, blocking blood vessels. [..] “With a huge outpouring of data over the past few weeks I think it has become apparent that thrombosis is a major problem,” says Roopen Arya, professor of thrombosis and haemostasis at King’s College Hospital, London. “Particularly in severely affected Covid patients in critical care, where some of the more recent studies show that nearly half the patients have pulmonary embolism or blood clot on the lungs.” He believes the number of critically ill coronavirus patients developing blood clots could be significantly higher than the published data in Europe of up to 30%.

The professor’s blood sciences team in the hospital has been analysing samples from patients showing how coronavirus is changing their blood making it much more sticky. And sticky blood can lead to blood clots. This change in the blood is the result of severe inflammation in the lungs, a natural response of the body to the virus. “In severely affected patients we are seeing an outpouring of chemicals in the blood and this has a knock-on effect of activating the blood clotting,” says Prof Arya. And all this ultimately causes a patient’s condition to deteriorate. According to thrombosis expert Prof Beverley Hunt, sticky blood is having wider repercussions than just blood clots – it’s also leading to higher rates of strokes and heart attacks. “And yes sticky blood is contributing to high mortality rates,” she says.

Read more …

Which may all occur because of the impact on hemoglobin.

China Adds Long-Term Organ Damage To List Of Effects Of COVID19 (SCMP)

Understanding is growing of the effects of Sars-CoV-2, the official name of the coronavirus that causes Covid-19, on the organs of patients – even after they apparently recover. While most patients, especially those with mild and moderate symptoms, can recover without long-term consequences to their health, studies indicate that those with severe symptoms can have organ damage and require a much longer time for rehabilitation. The commission said some Covid-19 patients might also develop heart problems such as angina and arrhythmia – conditions that could result directly from the virus or arise after a patient has been bedridden for a long time. The guidelines also list potential mental health problems resulting from Covid-19, including depression, insomnia, eating disorders and various changes in cognitive functions.


Other problems identified in the guidelines include muscle and limb-function loss. But kidney damage was not among the conditions named, despite a number of studies citing it as a potential long-term consequence. According to a study published in the journal Kidney International on Wednesday, one-third of 5,449 Covid-19 patients surveyed by researchers at Northwell Health, the biggest health provider in New York state, developed acute kidney failure. Lead researcher Kenar Jhaveri, associate chief of nephrology at Hofstra/Northwell in Great Neck, New York, told Reuters that 14.3 per cent of those with kidney failure required dialysis. There have also been reports of the coronavirus attacking the skin, the central nervous system and blood vessels, resulting in clogging and strokes.

Read more …

The myth that 1 million tests per day would be enough is persistent. A myth because it would take a full year to test everyone.

May 16 Update: US COVID-19 Test Results (CR)

The US might be able to test 400,000 to 600,000 people per day sometime in May according to Dr. Fauci – and that might be enough for test and trace. However, the US might need more than 900,000 tests per day according to Dr. Jha of Harvard’s Global Health Institute. There were 356,994 test results reported over the last 24 hours. This data is from the COVID Tracking Project. The percent positive over the last 24 hours was 7.0% (red line). The US probably needs enough tests to keep the percentage positive well below 5%. (probably much lower based on testing in New Zealand). NOTE: A few states are apparently including antibody tests with virus tests. The Covid tracking project is working to straighten that out.

Read more …

Just let them spit in your face and you’re fine.“In addition to larger antibodies like ours, llamas have small ones that can sneak into spaces on viral proteins that are too tiny for human antibodies..”

Llamas Could Be Our Secret Weapon Against Coronavirus (G.)

The solution to the coronavirus may have been staring us in the face this whole time, lazily chewing on a carrot. All we need, it seems, is llamas. A study published last week in the journal Cell found that antibodies in llamas’ blood could offer a defense against the coronavirus. In addition to larger antibodies like ours, llamas have small ones that can sneak into spaces on viral proteins that are too tiny for human antibodies, helping them to fend off the threat. The hope is that the llama antibodies could help protect humans who have not been infected. International researchers owe their findings to a llama named Winter, a four-year-old resident of Belgium.

Her antibodies had already proven themselves able to fight Sars and Mers, leading researchers to speculate that they could work against the virus behind Covid-19 – and indeed, in cell cultures at least, they were effective against it. Researchers are now working towards clinical trials. “If it works, llama Winter deserves a statue,” Dr Xavier Saelens, a Ghent University virologist and study author, told the New York Times. To any llama aficionado, this news should come as no surprise. The animals have developed a reputation for healing. Llama antibodies have been a fixture in the fight against disease for years, with researchers investigating their potency against HIV and other viruses.

And their soothing powers go beyond the microscopic. Llamas have become exam-season fixtures at a number of top US colleges. George Caldwell, who raises llamas in Sonora, California, brings his trusted associates to the University of California, Berkeley, UC Davis, Stanford, and other northern California universities and high schools, where their tranquility is contagious, helping students overcome end-of-term anxiety. “When you’re around a llama, you become very calm and at peace,” one Berkeley senior said at a campus event last year.

Read more …

CNN has an article on Dr. Zhong Nanshan, the Chinese government’s senior medical adviser, who, as featured prominently at the Automatic Earth at the time, infamously claimed in late January that the epidemic would be over in 10 days, so early February.

Lack Of Immunity Makes China Vulnerable To Another Wave Of Coronavirus (CNN)

China still faces the “big challenge” of a potential second wave of Covid-19 infections, the country’s top respiratory authority has warned, with the lack of immunity among the community a serious concern as the race to develop a vaccine continues. Dr. Zhong Nanshan, the Chinese government’s senior medical adviser and the public face of the country’s fight against Covid-19, also confirmed in an exclusive interview with CNN on Saturday that local authorities in Wuhan, the city where the novel coronavirus was first reported in December, had suppressed key details about the magnitude of the initial outbreak.

China has reported more than 82,000 coronavirus cases, with at least 4,633 deaths, according to data from the country’s National Health Commission (NHC). The number of new infections surged quickly in late January, prompting city lockdowns and nationwide travel bans. By early February, China was reporting as many as 3,887 fresh cases a day. A month later, however, daily cases had dropped into the double digits — while in the US, the number of daily infections skyrocketed, from 47 new cases on March 6 to 22,562 by the end of the month. Having now largely contained the virus, life in China is slowly returning to normal. Lockdowns have eased and some schools and factories have reopened across the country.

But Zhong said Chinese authorities should not be complacent, with the danger of a second wave of infections looming large. Fresh clusters of coronavirus cases have emerged across China in recent weeks, in Wuhan as well as the northeastern provinces of Heilongjiang and Jilin. “The majority of … Chinese at the moment are still susceptible of the Covid-19 infection, because (of) a lack of immunity,” Zhong said. “We are facing (a) big challenge, it’s not better than the foreign countries I think at the moment.”

[..] Three US companies are already testing their vaccines on humans, according to the World Health Organization. They’re still in phase 1 or phase 2 trials, which typically involve giving the vaccine to dozens or hundreds of study subjects. Zhong said three Chinese vaccines are under clinical trials in the country — however a “perfect” solution was likely to be “years” away. “We have to test again and again and again … by using different kinds of vaccines. It’s too early to draw any conclusion which kind of vaccine is available for this kind of coronavirus … that’s why I suggest that the final approval of vaccine (will) take much longer,” he said.

Read more …

China’s going to stall.

Battle Looms At WHO Amid Pressure On China Over Coronavirus Inquiry (SCMP)

The World Health Organisation has been on the front line coordinating the fight against the Covid-19 pandemic. When its decision-making body gathers, virtually, for its annual meeting on Monday, it will have another battle on its hands, as tensions escalate between China, the United States and other countries over Beijing’s response to the outbreak. The coronavirus will be the focus for the World Health Assembly meeting, to be attended by all 194 WHO member states plus observers, and where policies and budgets are reviewed and approved. But all eyes will be on how countries – including the US, Australia, Canada, France and Germany – pursue an investigation into China’s handling of the pandemic within the framework of the global health body.

That could include taking the Chinese government to the international court. Leaders of these countries have already made clear that they want an inquiry, including investigating the origin of the virus, whether it was initially covered up by China, and if Beijing was slow to tell the world that the virus was being transmitted between humans. The WHO has itself been under fire, attacked for praising China’s pandemic response as “transparent” despite Beijing’s suppression of whistle-blowers and information at the start of the outbreak. Under the WHO constitution, the global health agency can refer unresolved disputes to the International Court of Justice in The Hague, the main legal organ of the United Nations. But health and legal experts said that was unlikely – and even if it did happen, the ICJ would not be able to enforce a decision.

“The WHO has never taken another state to the ICJ, and I do not anticipate that,” said Steven Hoffman, professor of global health, law and political science at York University’s Global Strategy Lab in Toronto. “If it happens it will be unprecedented.” Atul Alexander, assistant professor of law at West Bengal National University of Juridical Sciences, said it would be impossible to enforce a decision by the ICJ as it would need to be enacted by the UN Security Council, where China has veto power as one of five permanent members. “China would have to consent to the jurisdiction of the ICJ, which is never going to happen,” Alexander said.

Read more …

Only, that’s not what he said: “Have not made [a] final decision. All funds are frozen.”

Trump Hints He May Reverse Course And Restore WHO Funding (F.)

President Donald Trump said his administration was considering restoring partial funding to the World Health Organization Saturday morning after suspending U.S. support a month ago in a row over how the group has handled the coronavirus pandemic. On Friday evening, reports began to surface that Trump was prepared to restore about 10% of previous U.S. payments to WHO, reported to roughly match China’s share. Trump hit back at those reports Saturday morning, saying in a tweet that “this is just one of numerous concepts being considered… Have not made [a] final decision. All funds are frozen.”


He announced he would withhold U.S. funding from the WHO on April 14, and accused the group of “severely mismanaging and covering up” the coronavirus pandemic, and said he wouldn’t consider funding until a “60-to-90-day” investigation was completed. WHO officials and China have denied Trump’s claims. The U.S. was the group’s biggest financial supporter, and reportedly provided about $400 million to $500 million of the WHO’s $4.8 billion budget, or about 15%. According to NPR, the U.S. was already nearly $200 million behind on payments to the WHO when Trump announced he would halt future contributions.

Read more …

We’re going to have to look at how sick the economy was beforehand, or we’ll never get any wiser.

Q2 US GDP Forecasts: Probably Around 30% Annual Rate Decline (CR)

Important: GDP is reported at a seasonally adjusted annual rate (SAAR). So a 30% Q2 decline is around 7% decline from Q1 (SA).
• From Merrill Lynch: “We are tracking -5.2% qoq saar for 1Q GDP and expect a -30% qoq saar plunge in 2Q. [SAAR May 15 estimate]”.

• From the NY Fed Nowcasting Report “The New York Fed Staff Nowcast stands at -31.1% for 2020:Q2. [May 15 estimate]”.

• And from the Altanta Fed: GDPNow “The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -42.8 percent on May 15, down from -34.9 percent on May 8. [May 15 estimate]”

Read more …

Chinese trolling. Still, reopening New York is a major gamble.

Difficulties Abound On NYC’s Road To Reopen (Xinhua)

Life came to a grinding halt for about 8.3 million residents in New York City when a statewide “PAUSE” order went into effect to curb the spread of COVID-19 nearly two months ago. So far, schools, businesses, and Broadway theaters have been shuttered, with health care workers fighting tirelessly to save lives in overwhelmed hospitals. On Friday, five regions in the central and northern parts of New York state reopened following a phased strategy. Those regions, largely remote and account for less than one-fifth of the state’s population, have not been hit hard by the pandemic. New York City still has to wait, as it has not met the requirements for reopening in new hospitalization, share of total hospital beds and ICU beds available — three of the seven benchmarks set by the state government.


Mayor Bill de Blasio said this month that the city would not see eased restrictions before June, and a true reopening will be “a few months away at minimum.” Despite a flattened curve, the data in New York City remain staggering. By Saturday afternoon, the city’s health department has reported 189,031 cases, more than those of countries including France and Germany. A death toll of 20,576 accounts for nearly a quarter of the national total. “While the (daily new) case count appears to be decreasing, there is still a need for it to go lower, and to have the ability to detect and trace the contacts of cases to prevent a major resurgence in the virus,” Jeff Schlegelmilch, deputy director for the National Center for Disaster Preparedness at Columbia University’s Earth Institute, told Xinhua.

“In a densely populated place like New York City, none of these things are simple, and all of this needs to be done at a large scale with quick reaction to changes in conditions,” he noted. Experts and officials underlined the significance of testing at the beginning of the crisis in early March. Both the mayor and New York Governor Andrew Cuomo have repeatedly vowed to expand testing capacity, especially in lower-income and minority communities. After more than two months’ efforts, however, the supply still falls short of the demand. “Lack of widespread testing was our Achilles’ heel from day one,” said de Blasio on Thursday. “We’re still playing catch-up.”


Also on Thursday, the mayor announced that any person with COVID-19 symptoms as well as anyone who has been in close contact with a confirmed case is now eligible to receive a test in New York City, which means these basic containment measures have never been fully conducted in the epicenter of the pandemic. Notably, the importance of contact tracing was largely ignored or deemed a mission impossible by local officials. During a press briefing on April 3, New York City’s Health Department Commissioner Oxiris Barbot said contact tracing was “not a good use of our resources” and the city has gone “past the point of contact tracing.” It was not until late April that both Cuomo and de Blasio announced their plans to hire thousands of people to get trained to be contact tracers. The tardy response at the local level reflects the whole picture of the nation. “The United States in general is behind the curve, literally and figuratively, in terms of testing and contact tracing,” said Schlegelmilch.

Read more …

Is this just desperation? He’s one of the names, after all. He wanted to unmask Flynn, but doesn’t want to be unmasked himself.

Also, I’m so tired of hearing how the Russians are going to try again. It shows you how an absolutely dead meme can live on as a zombie in partisan media.

Brennan Claims Release Of Names Is ‘Abominable Abuse Of Authority’ (Fox)

Former CIA director John Brennan, one of the officials who sought to “unmask” Michael Flynn during the presidential transition period, claimed Thursday the release of Obama-era names was an “abominable abuse of authority.” He called the recent actions by the Department of Justice to drop the case against Flynn combined with the release of names “blatant political corruption at the highest levels of U.S. government.” “When you have the administration– the White House, the attorney general, the acting head of the intelligence community all acting in concert to try to advance the personal interests of Mr. Trump… I think this is very, very serious,” Brennan told MSNBC’s Nicolle Wallace.

“I’m just hoping that individuals like Chris Wray who is a remarkable public servant, will continue to stay strong in the face of this type of abominable abuse of authority,” he said. Brennan, however, was not pressed by MSNBC’s Wallace and Brian Williams on why he sought the name of Flynn in the intercepted phone conversations of Russian ambassador Sergey Kislyak. Rather, he lashed out over the disclosure of the names of the Obama administration officials who purportedly requested to “unmask” Flynn’s identity. Brennan also said he feared Trump officials were not going to stop Russian interference in the presidential election.

“As we have talked about the upcoming November election, how the Russians and others are going to seek to try to once again interfere and influence the outcome, I just am very concerned that some of those at the very top are not going to fulfill the duties that are entrusted to them by the American people,” Brennan remarked.

Read more …

How desperate is Obama’s renewed attack on Trump? What’s with the timing?

Had Enough? (Jim Kunstler)

Last weekend, in a well-leaked conference call, it appears, Judge Sullivan took marching orders from former President Obama who suggested snaring General Flynn on a perjury rap for withdrawing his guilty plea, and whaddaya know, the stratagem laid itself out this past week like a fully-crafted macramé, all the little tufts and knots neatly in place – thanks to the busy little fingers of Lawfare attorneys burning the midnight oil all week to get the thing hoisted up on the wall. The tortured logic of the scheme was really something to behold: by withdrawing a guilty plea Flynn had entered under oath, he would be guilty of lying to the court about being guilty in the first place, and therefore had perjured himself. Imagine the interior of the legal minds responsible for that: dank chambers of rot crawling with centipedes and mealybugs of subterfuge.


The judge’s transparently perfidious moves revealed the desperation of Mr. Obama and scores of former and current officials allied with him, who are themselves liable for prosecution in the unraveling tapestry of RussiaGate. There is a sentiment welling up in this land that enough is enough with these devious pranks of crooked lawyers, and today, being Friday, would be an excellent moment for the DC District US Court of Appeals to issue a writ of mandamus for Judge Sullivan to cut the shit and get on with his bound duty to put the Flynn case to rest. A nice added touch, if necessary, would be to kick Judge Sullivan’s seditious ass off the case and replace him with a judge who understands established law and precedent.

Read more …

Always a relevant question, but perhaps not most appropriate when the walls are caving in.

Economic Growth: Who Needs It? (Ms.)

Ardern hasn’t claimed to be post-growth, but her government’s aim of well-being provided a simpler, faster response to the pandemic than U.S. officials worried by GDP. In early March, with only eight reported cases of COVID-19 in a population of 4.8 million people, New Zealand anticipated the impact on an economy dominated by tourism. They quickly created a twelve billion Kiwi (NZ$) stimulus package (about $7.3 billion in US$), equal to about four percent of their nation’s GDP. Ninety percent of those Kiwi’s went directly to people for income support, wage subsidies, and tax relief for small businesses. Only a fraction went to their airline industry.

By comparison, in late March, the US reported 136,880 cases of COVID-19 in a population of 327 million. Our $2 trillion CARES (Coronavirus Aid, Relief & Economic Security) stimulus equaled 9.8 percent of GDP, yet only thirty percent, or about $604 billion, was slotted for direct payments and expanded unemployment benefits. Some mortgage and student loan payments were suspended, but not forgiven. Fully a quarter of CARES money went to big corporate loans, mostly for airlines to the tune of about $58 billion. A set aside for “national security” is widely believed to be for Boeing—remember them?

The Small Business Administration (SBA) got $350 billion, nearly 20 percent, but almost entirely for loans, and to businesses not as small as most women-owned micro-businesses. Another quarter of the CARES Act increases health and education funding through state block grants, municipal funding and increases for SNAP and WIC food programs. All bring with them a world of bureaucratic complications for the majority women in this crisis.

Read more …

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Mar 162020
 


DPC Manhattan landmark Flatiron Building under construction 1902

 

UK Corona Crisis ‘To Last Until Spring 2021, 7.9m To Be Hospitalised’ (G.)
NYC & LA Mayors Order Bars, Nightlife, Gyms, & Restaurants To Shut (ZH)
Americans Urged To Scrap Gatherings Of 50 Or More People (G.)
Anger In Germany At Report Trump Seeking Exclusive Coronavirus Vaccine Deal (G.)
More Coronavirus Cases Outside Of Mainland China Than Inside (CNN)
Scientists Worry About Coronavirus Spread In Africa (ScienceMag)
The American Mask of Death (Lauria)
Goldman Sachs Predicts A 5% Contraction In The US Economy In Q2 (CNBC)
Fed Cuts Rates To Zero, Launches Massive $700 Billion QE (CNBC)
The End of the Central Bank [Put]? (Jim Bianco)
Fed Disaster: S&P Futures Crash, Halted Limit Down; Gold, Treasuries Soar (ZH)
America’s Biggest Banks Suspend Buybacks In Effort To Support Economy (F.)
China’s Industrial Output, Retail Sales Plummet (MW)
World’s Most Powerful Supercomputer Tasked With Finding COVID19 Cure (ZH)

 

 

We’re setting regrettable records, and there’s very little reason to think the upward trend in cases and deaths will halt any time soon. Most of Europe is under some form of quarantine, only supermarkets and pharmacies remain open, and the UK and US have no choice but to follow suit -preferably very- soon. A -very- different world.

The central banks are so off in their approaches it’s getting harder to see how they will survive in their present shapes. This is not a time to bail out banks, it’s a time to help people. But they refuse that.

 

Cases 170,852 (+ 13,375 from yesterday’s 157,477)

Deaths 6,526 (+ 681 from yesterday’s 5,845)

 

These numbers are fit to silence a body. Just look at all the new cases.

From Worldometer yesterday evening (before their day’s close)

 

 

While everyone is discussing whether the case mortality rate is 0.1%, 1% or 2%, the rate for known cases just crept back up to 8%. That is much scarier than I see anyone admit.

From Worldometer (NOTE: mortality rate is back up to 8%!)

 

 

From SCMP: (Note: the SCMP graph was useful when China was the focal point; they are falling behind now)

 

 

COVID2019.app graph is not avaliable, the site is closed. But this is even better:

 

 

Note: what this graph does not sufficiently reflect is that Switzerland has 10 million people, and China 1,400 million. The graph starts at the 10th death.

 

 

The UK cannot hospitalize 7.9 million people, not even spread over a year. Does that cover all of your questions?

UK Corona Crisis ‘To Last Until Spring 2021, 7.9m To Be Hospitalised’ (G.)

The coronavirus epidemic in the UK will last until next spring and could lead to 7.9 million people being hospitalised, a secret Public Health England (PHE) briefing for senior NHS officials reveals. The document, seen by the Guardian, is the first time health chiefs tackling the virus have admitted that they expect it to circulate for another 12 months and lead to huge extra strain on an already overstretched NHS. It also suggests that health chiefs are braced for as many as 80% of Britons becoming infected with the coronavirus over that time. Prof Chris Whitty, the government’s chief medical adviser, has previously described that figure as the worst-case scenario and suggested that the real number would turn out to be less than that.

However, the briefing makes clear that four in five of the population “are expected” to contract the virus. The document says that: “As many as 80% of the population are expected to be infected with Covid-19 in the next 12 months, and up to 15% (7.9 million people) may require hospitalisation.” [..] “For the public to hear that it could last for 12 months, people are going to be really upset about that and pretty worried about that”, said Paul Hunter, a professor of medicine at the University of East Anglia. “A year is entirely plausible. But that figure isn’t well appreciated or understood,” added Hunter, an expert in epidemiology. “I think it will dip in the summer, towards the end of June, and come back in November, in the way that usual seasonal flu does. I think it will be around forever, but become less severe over time, as immunity builds up,” he added.

[..] The document also discloses that an estimated 500,000 of the 5 million people deemed vital because they work “in essential services and critical infrastructure” will be off sick at any one time during a month-long peak of the epidemic. The 5 million include 1m NHS staff and 1.5 million in social care. However, the briefing raises questions about how Britain would continue to function normally, warning that: “It is estimated that at least 10% of people in the UK will have a cough at any one time during the months of peak Covid-19 activity.”

[..] A senior NHS figure involved in preparing for the growing “surge” in patients whose lives are being put at risk by Covid-19 said an 80% infection rate could lead to more than half a million people dying. If the mortality rate turns out to be the 1% many experts are using as their working assumption then that would mean 531,100 deaths. But if Whitty’s insistence that the rate will be closer to 0.6% proves accurate, then that would involve 318,660 people dying.

Read more …

Time to make it a national policy. And as I said yesterday, cut down on domestic flights, close down highways, the works. There’s no escaping anyway, and delaying it will kill lots of people.

NYC & LA Mayors Order Bars, Nightlife, Gyms, & Restaurants To Shut (ZH)

Update (1130ET): Shortly after New York’s mayor de Blasio pulled the plug, Los Angeles mayor Eric Garcetti has ordered the closing of all bars, nightclubs, gyms and entertainment venues from midnight March 16 until March 31. Restaurants will be limited to take-out and delivery. Grocery stores will remain open. “There is no food shortage and grocery stores will remain open. We’re taking these steps to help protect Angelenos, limit the spread of the novel coronavirus, and avoid putting a dangerous strain on our health care system. This will be a tough time, but it is not forever. Angelenos have always risen to meet difficult moments, and we will get through this together.”


Update (1030ET): After announcing earlier that restaurants and venues would be enforced to ensure no more than 50% occupancy, Mayor Bill de Blasio just tweeted that he is ordering all “nightclubs, movie theaters, small theater houses, and concert venues to close”. That leaves restaurants still open, but with max 50% occupancy, as the city encourages residents to order our and stay in instead of venturing anywhere outdoors.

Update (1630ET): Germany joined the list of European nations reporting new coronavirus figures on Sunday, and like France and Italy, it reported its largest daily spike in new cases, confirming another 1,228 new cases for a new total of 5,813, a roughly 20% increase. It also reported 4 new deaths, bringing its national total to 12. Update (1555ET): France just reported 901 new cases diagnosed on Saturday, bringing the country’s total confirmed cases to ~5,400. The death toll climbed by 29 cases to 120.

Read more …

Yeah, yeah, let’s pretend Fauci contradicts Trump. Scores well with 50% of the people. Problem is, they have two very different tasks in this. And Trump’s is not to worry Americans. It’s to reassure them, while working to solve issues. If you want to blame Trump for saying things are not so bad, you need a crash course in politics. If you want to blame him for policy failures, you’re right, but you will have to do the same with just about every other world leader as well. They all make such mistakes. How about Italy PM Conte to begin with? A lot more of his people died so far.

Americans Urged To Scrap Gatherings Of 50 Or More People (G.)

The US Centers for Disease Control (CDC) has recommended that gatherings of 50 people or more be cancelled or postponed for the next eight weeks because of the coronavirus pandemic, as officials across the country continued to curtail freedoms to fight the coronavirus outbreak. The CDC guidance was soon followed by an announcement on Sunday night that several Las Vegas hotels and casinos would suspend operations, and New York City would limit restaurants, bars and cafes to only offer take-out and delivery starting on Tuesday, and nightclubs, movie theaters and other entertainment venues would close.

“These places are part of the heart and soul of our city. They are part of what it means to be a New Yorker,” Mayor Bill de Blasio said in a statement on Sunday night. “But our city is facing an unprecedented threat, and we must respond with a wartime mentality.” Moments later, the Washington state governor, Jay Inslee, took a similar step, announcing restaurants and bars would be limited to take-out only until the end of March, and entertainment and recreational facilities such as gyms would also close. Illinois, Ohio, Massachusetts had already taken similar steps. MGM Resorts International, which operates several vast Las Vegas hotels and casinos including Bellagio and Luxor, said it would begin to suspend operations in the city from Monday.

[..] The new advice came as the nation sank deeper into chaos over the crisis. Hours earlier, Donald Trump urged Americans to refrain from panic buying basic supplies, as the administration announced plans to expand testing for the virus and health officials were preparing to release “advanced guidelines” on how to mitigate its spread. During a press briefing at the White House on Sunday evening, Trump again appeared to downplay the threat of the virus. “Relax, we’re doing great,” he said, during short, meandering comments that focused mostly on celebrating a decision by the Federal Reserve to lower interest rates. “It all will pass.”

But the president’s remarks stood in marked contrast to his lead infectious diseases expert, Dr Anthony Fauci, who used the same conference to warn: “The worst is ahead for us”, describing the crisis as reaching a “very, very critical point now”. Earlier in the day, Dr Fauci had declined to rule out a national lockdown of bars and restaurants as he urged more aggressive measures, similar to those in Europe and elsewhere, to contain the virus. “I think Americans should be prepared that they are going to have to hunker down significantly more than we as a country are doing,” said Fauci, a member of the White House task force on combating the spread of coronavirus. He heads the National Institute of Allergy and Infectious Diseases at the National Institutes of Health.

Read more …

Don’t worry, I know exactly what half the (US) population will say about what I say here. It doesn’t matter. If Trump wants to buy a German medical company that makes a vaccine (and that’s two really big ifs), how can that be portrayed negatively? Well, we’ll say he wants to keep it all to himself. But doesn’t he perhaps want it for the 330 million Americans, those his job description tells him to look after? Cue: this is an anonymous source quoted by a German yellow paper.

“The German government is trying to fight off what it sees as an aggressive takeover bid by the US, the broadsheet Die Welt reports, citing German government circles. The US president had offered the Tübingen-based biopharmaceutical company CureVac “large sums of money” to gain exclusive access to their work, wrote Die Welt. According to an anonymous source quoted in the newspaper, Trump was doing everything to secure a vaccine against the coronavirus for the US, “but for the US only”.”

Along the same line, I see a lot of people combining Trump’s “We have no shortages” with pictures of empty shelves, insinuating he is lying. But those can exist together, and in fact do in many European countries as well as the US. The cause is panic buying. Would these folk like to blame those empty EU shelves on Trump as well? Or are they caused by these countries’ own politicians, many of whom claim to despise Trump? Your call.

Look, Trump makes a lot of mistakes. But saying that things are not that bad is not one of them (literally: “Relax, we’re doing great; It all will pass”). Would you rather he said things are terrible, thereby inviting more panic buying and empty shelves, that you could then blame on him as well? That way you could blame him for two completely opposite things.

Anger In Germany At Report Trump Seeking Exclusive Coronavirus Vaccine Deal (G.)

German ministers have reacted angrily following reports US president Donald Trump offered a German medical company “large sums of money” for exclusive rights to a Covid-19 vaccine. “Germany is not for sale,” economy minister Peter Altmaier told broadcaster ARD, reacting to a front page report in Welt am Sonntag newspaper headlined “Trump vs Berlin”. The newspaper reported Trump offered $1bn to Tübingen-based biopharmaceutical company CureVac to secure the vaccine “only for the United States”. The German government was reportedly offering its own financial incentives for the vaccine to stay in the country.

The report prompted fury in Berlin. “International co-operation is important now, not national self-interest,” said Erwin Rueddel, a conservative lawmaker on the German parliament’s health committee. Christian Lindner, leader of the liberal FDP party, accused Trump of electioneering, saying: “Obviously Trump will use any means available in an election campaign.” The German health minister, Jens Spahn, said a takeover of CureVac by the Trump administration was “off the table”. CureVac would only develop vaccine “for the whole world”, Spahn said, “not for individual countries”.

[..] At a news conference on Sunday, interior minister Horst Seehofer was asked to confirm the attempts to court the German company. “I can only say that I have heard several times today from government officials today that this is the case, and we will be discussing it in the crisis committee tomorrow,” he said. A US official told AFP on Sunday that the report was “wildly overplayed”. “The US government has spoken with many [more than 25] companies that claim they can help with a vaccine. Most of these companies already received seed funding from US investors.” The official also denied the US was seeking to keep any potential vaccine for itself. “We will continue to talk to any company that claims to be able to help. And any solution found would be shared with the world,” the official said.

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That still took a long time.

More Coronavirus Cases Outside Of Mainland China Than Inside (CNN)

There have now been more cases of the novel coronavirus outside of mainland China than inside, according to numbers from the World Health Organization and from public health agencies tracked by CNN. While China, the early epicenter of the outbreak, has still had more confirmed cases than any other country – more than 80,000 – a number of other countries have surged in recent days, including Italy with more than 24,000 cases, Iran with almost 14,000 and Spain with more than 7,000. On February 26, the World Health Organization reported for the first time that the majority of new cases per day had come from outside of China. This trend has continued as newly confirmed cases in China have dwindled in recent days, while other countries have discovered thousands of new infections – including the United States, which has now reported more than 3,000 cases.

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It’s starting. 100 million frail forms at Europe’s door soon?

Scientists Worry About Coronavirus Spread In Africa (ScienceMag)

Late on Sunday evening, South African President Cyril Ramaphosa, in a televised address to the nation, declared that COVID-19, the respiratory disease spreading globally, had become a “national disaster.” [..] “Never before in the history of our democracy have we been confronted by such a severe situation,” Ramaphosa said before announcing a raft of measures to curb the virus’ spread, including school closures, travel restrictions, and bans on large gatherings. So far, the official numbers seemed to suggest that sub-Saharan Africa, home to more than 1 billion people, had been lucky. The interactive map of reported COVID-19 cases run by Johns Hopkins University shows big red blobs almost everywhere—except sub-Saharan Africa.


But now the numbers are rising quickly. South Africa, which had its first case 10 days ago, now has 61. According to Ramaphosa, the virus has begun spreading inside the country. And just yesterday, Rwanda, Equatorial Guinea, and Namibia all reported their first cases, bringing the number of affected countries to 23. Some scientists believe COVID-19 is circulating silently in other countries as well. “My concern is that we have this ticking time bomb,” says Bruce Bassett, a data scientist at the University of Cape Town who has been tracking COVID-19 data since January. And while Africa’s handling of the pandemic has received scant global attention so far, experts worry the virus may ravage countries with weak health systems and a population disproportionately affected by HIV, tuberculosis (TB) and other infectious diseases. “Social distancing” will be hard to do in the continent’s overcrowded cities and slums.

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“And Darkness and Decay and the Red Death held illimitable dominion over all..”

The American Mask of Death (Lauria)

The U.S. is unlike the rest of the industrialized world, which, since the end of the Second World War, has had some kind of nationalized health insurance covering all citizens, regardless of their ability to pay. Many of the partisans who helped defeat the Nazis were socialists who demanded something in return from their governments after the war. Many British soldiers were Labour voters. They threw out war leader Winston Churchill in the 1945 election and the National Health Service was begun in 1948. Though Harry Truman around the same time floated the idea of socialized medicine in the U.S., and the 1965 Medicare Act was to eventually cover all Americans, the greed of medical business interests has always won. It leaves millions of potentially infected Americans unable to be tested or treated. And that endangers even those in their high towers who “might bid defiance to contagion.”


The Mask of the Red Death by FlamiatheDemon (Deviant Art- flamiathedemon.deviantart.com)

“And now was acknowledged the presence of the Red Death. He had come like a thief in the night. And one by one dropped the revellers in the blood-bedewed halls of their revel, and died each in the despairing posture of his fall. And the life of the ebony clock went out with that of the last of the gay. And the flames of the tripods expired. And Darkness and Decay and the Red Death held illimitable dominion over all.”


When the oligarchs’ economic system crashed in 2008 from over-speculation, the U.S. government did the unimaginable. It nationalized industries to save them. It used socialism to rescue capitalism. But it was temporary. Once the economy had sufficiently recovered, the U.S. returned to its market fundamentalism. If the coronavirus crisis approaches the numbers recent studies point to—as many as 240 million Americans infected and one million dead—expect serious consideration to a single-payer system sweeping through Congress and signed into law. But once the virus is contained expect your premiums to rise again. Just like the nationalizations in the 2008 financial crisis, a temporary national health insurance would only be enacted to save the oligarchs from the Red Death.

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Can the US fall 5% without breaking?

Goldman Sachs Predicts A 5% Contraction In The US Economy In Q2 (CNBC)

Goldman Sachs on Sunday downgraded its outlook for the economy in the first two quarters of 2020 as the coronavirus zaps all growth from the U.S. Jan Hatzius, Goldman’s chief economist, lowered his first-quarter GDP growth forecast to zero from 0.7%. The economist also sees a 5% contraction in the second quarter, followed by a sharp snapback for the remainder of the year. “We expect US economic activity to contract sharply in the remainder of March and throughout April as virus fears lead consumers and businesses to continue to cut back on spending such as travel, entertainment, and restaurant meals,” Hatzius said in a note to clients Sunday. [..] The rapid spread of the virus has sent stocks tumbling into a bear market, with both the Dow Jones and S&P 500 now trading more than 20% below their record highs set just last month.


“Even with monetary and fiscal policy turning sharply further toward stimulus … these shutdowns and rising public anxiety about the virus are likely to lead to a sharp deterioration in economic activity in the rest of March and throughout April,” Hatzius said. In addition to the consumer spending hit, Goldman also noted the growing likelihood of “significant supply chain disruptions” as the outbreak sends business activity to a standstill. Hatzius believes that U.S. economic growth should pick up in the second half of 2020. He expects GDP growth of 3% in the third quarter and a 4% expansion in the final three months of the year. Factoring in his new estimates, for 2020 he sees the economy growing 0.4%, compared with a prior growth estimate of 1.2%.

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Save people not banks. Didn’t we say that 10 years ago as well?

Fed Cuts Rates To Zero, Launches Massive $700 Billion QE (CNBC)

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus. The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0% to 0.25% down from a previous target range of 1% to 1.25%. Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 basis points to 0.25%, and lengthened the term of loans to 90 days.

Despite the aggressive move, the market’s initial response was negative. Dow futures pointed to a decline of some 1,000 points at the Wall Street open Monday morning. The discount window “plays an important role in supporting the liquidity and stability of the banking system and the effective implementation of monetary policy … [and] supports the smooth flow of credit to households and businesses,” a separate Fed note said. The discount window is part of the Fed’s function as the “lender of last resort” to the banking industry. Institutions can use the window for liquidity needs, though some are reluctant to do as it can indicate they are experiencing financial issues and thus sends a bad message.

The Fed also cut reserve requirements for thousands of banks to zero. In addition, in a global coordinated move by centrals banks, the Fed said the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank took action to enhance dollar liquidity around the world through existing dollar swap arrangements.

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The Fed is choking on its own policies.

The End of the Central Bank [Put]? (Jim Bianco)

The past week has seen unprecedented market movements and action taken by central banks. We have also seen unprecedented action by governments. Given the events that took place in 2008, this is saying a lot.

We’ll save detailing what happened for another time. Instead, we’ll focus on what it means and what to focus on next. Two titanic forces are at play. First, the economy is at a real risk of collapsing. This is not hyperbole. Goldman Sachs has already revised its Q2 GDP forecast to -5%.

We fear this might look optimistic in a few weeks. Yes, this virus-driven economic collapse is temporary, one or two quarters, but the risk is very real that long-lasting damage is being done that will hamper the economy for years. The other titanic force is world central banks and governments going “all in” to keep markets from falling further. They have effectively done everything they can. This better work. This better stimulate risk markets to hold last week’s low. If risk markets continue to fall, effectively there is nothing left that central banks can do. They can always invent more programs, but they already fired their most potent weapons.

Many will argue that the Fed should buy corporate bonds and/or equities, but this requires Congress amending the Federal Reserve Act. Considering Congress has still not passed virus relief, this will not happen fast enough and is not advisable as it could make things worse. Simply put, if this does not work, the central bank “put” no longer works. So stop devising new ways to exercise it and move on to other actions. So that leaves one tool left should risk markets continue to fall through last week’s low – close financial markets before they collapse.

The S&P 500 has already declined more than 25% in just 16 days. We have never seen this big a decline this fast. Should stock prices fall to new lows and corporate bond prices decline accordingly, it risks chaos in financial markets. Margin calls will force involuntary liquidation. The inability to properly price illiquid securities like high yield bonds and emerging market securities may prompt funds to halt redemptions. People’s money may be trapped. Covenants will be triggered, forcing unwanted restructurings or change of control. Pension fund minimum funding requirements are at risk of being violated.

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Not done yet.

Fed Disaster: S&P Futures Crash, Halted Limit Down; Gold, Treasuries Soar (ZH)

The Fed may have a very big problem on its hands. After firing the biggest emergency “shock and awe” bazooka in Fed history, one which was meant to restore not just partial but full normalcy to asset and funding markets, Emini futures are not only not higher, but tumbling by the -5% limit down at the start of futures trading on Sunday evening… … with Dow futures down over 1,000, and also limit down… … the VIX surging 14%…. … perhaps because the Fed has not only tipped its hand that something is very wrong by failing to wait just an additional three days until the March 18 FOMC, but that it can do nothing more to fix the underlying problem, while gold is surging over 3% following today’s dollar devastation (if only until risk parity funds resume their wholesale liquidation at some point this evening when we expect gold to tumble again)…


… as US Treasury futures soar (which will also likely be puked shortly once macro funds are hit again on their basis trades), as it now appears that the Fed’s emergency rate cut to 0% coupled with a $700BN QE is seen as not enough by a market which is now openly freaking out that the Fed is out of ammo and has not done enough. In short, with the ES plunging limit down, this has been an absolutely catastrophic response to the Fed’s bazooka; expect negative interest rates across the curve momentarily… oh and Trump demanding Powell’s resignation in the next 48 hours.

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Jamie Dimon loves you long time. Nationalize the suckers. Divvy up the spoils and start anew.

America’s Biggest Banks Suspend Buybacks In Effort To Support Economy (F.)

America’s largest and most important lenders are temporarily suspending their stock buybacks so they can help pump money into an economy battered by the coronavirus pandemic. The move means that Wall Street is prioritizing supporting the U.S. economy with its cash, instead of using it to engineer stock prices higher after a sharp market drop. Eight of the biggest banks in America said on Sunday evening they will be suspending their stock buybacks for the remainder of the first quarter, ending on March 30, and the second quarter, so as to use the spare cash to lend to individuals and businesses in need of credit. Banks suspending their buybacks are JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon and State Street.


The coordinated move, among firms who’ve recently bought back a collective tens of billions of dollars in stock annually, underscores Wall Street’s vital role in helping to pull the American economy though what economists increasingly forecast will be a deep recession. “The COVID-19 pandemic is an unprecedented challenge for the world and the global economy and the largest U.S. banks have an unquestioned ability and commitment to supporting our customers, clients and the nation,” said the Financial Services Forum, an advocacy group for banks, on behalf of the eight lenders. “The decision on buybacks is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services,” it added

Read more …

CHINA BREAKING NEWS:
• Jan-Feb Fixed Investment: -25.5% vs -2% estimate
• Jan-Feb Retail Sales: -20.5% vs -4%
• Jan-Feb Industrial Production: -13.5% vs -3% estimate

“#China is able to achieve 6% GDP growth in 2020 despite #COVID19, as the impact is temporary and China has uniquely high savings to help cushion shocks by black swan events”
Liang Hong, chief economist of China International Capital Corp

China’s Industrial Output, Retail Sales Plummet (MW)

China’s economic activity contracted sharply across the board in the first two months of the year amid Beijing’s aggressive measures to contain the coronavirus epidemic. Industrial output declined 13.5% in the January-February period from a year earlier, compared with December’s 6.9% increase, the National Bureau of Statistics said Monday. The result was worse than the 3.0% drop expected by economists polled by The Wall Street Journal. China typically combines economic data for the first two months to reduce distortions from the Lunar New Year holiday.

Fixed-asset investment, a gauge of construction activity, slid 24.5% during the period, reversing growth of 5.4% in 2019. Economists expected fixed-asset investment to fall 1.0%. Retail sales tumbled 20.5% in the first two months of the year–typically a boom season for consumption–compared with growth of 8.0% in December. Economists expected retail sales to fall 5%. Meanwhile, China’s urban unemployment rate rose to 5.7% in February from 5.2% in December, official data showed. To contain the spread of the coronavirus, Beijing in January locked down cities hit most by the epidemic, ordered an extended shutdown of factories and businesses and advised residents to stay home.

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Somehow I could see this succeed. In 2021.

World’s Most Powerful Supercomputer Tasked With Finding COVID19 Cure (ZH)

Researchers at the Department of Energy’s Oak Ridge National Laboratory have used the world’s most powerful supercomputer to identify 77 drug compounds that could lead to scientific breakthroughs to combat Covid-19. The supercomputer, dubbed Summit, has been tasked to run complex computation across existing databases of drug compounds to see which combinations could thwart Covid-19 from infecting cells. Summit has been able to “simulate 8,000 compounds in a matter of days to model which could impact that infection process by binding to the virus’s spike, and have identified 77 small-molecule compounds, such as medications and natural compounds, that have shown the potential to impair COVID-19’s ability to dock with and infect host cells,” read an IBM press release, whose technology is present in Summit.

“Summit was needed to rapidly get the simulation results we needed. It took us a day or two whereas it would have taken months on a normal computer,” said Jeremy Smith, Governor’s Chair at the University of Tennessee, director of the UT/ORNL Center for Molecular Biophysics, and principal researcher in the study. “Our results don’t mean that we have found a cure or treatment for COVID-19. We are very hopeful, though, that our computational findings will both inform future studies and provide a framework that experimentalists will use to further investigate these compounds. Only then will we know whether any of them exhibit the characteristics needed to mitigate this virus.” Smith’s team is expected to pass on the findings to others in the scientific community, who will then begin to experiment on Summit’s 77 compounds to see which one is the most effective against Covid-19.

Read more …

 

Things to do while staying home: feed a mini donkey, watch the remarkably enticing marble racing.

 

https://twitter.com/i/status/1239196410857340933

 

 

If you read us, please support us. Help the Automatic Earth survive.

 

Feb 172020
 


Jack Delano Discarded oil cans at truck service station on U.S. 1, New York Avenue, Washington, DC 1940

 

Japan Braces For Hundreds More Cases Onboard Cruise Ship (G.)
Taiwan Confirms First Coronavirus Death On Island, Cases At 20 (R.)
Pay Attention To Shanghai, Beijing, Japan Infection Rates (F.)
Japan’s Economy Shrinks At Fastest Rate Since 2014 (BBC)
Coronavirus Cases Rise Again In China, Recession Looms In Japan, Singapore (R.)
Americans Disembark From Virus-Hit Cruise; China Says New Cases Slow (R.)
Scramble To Track Cambodia Cruise Ship Passengers After Virus Case Found (R.)
‘Animals Live For Man’: China’s Appetite For Wildlife To Survive Virus (R.)
Armed Robbers Steal Hundreds Of Toilet Rolls In Hong Kong (BBC)
Devin Nunes Says Trump ‘Has To Tweet’ To Combat ‘Hard Left’ Media (Fox)
1,100 Former DOJ Employees Call On Barr To Resign (NPR)
German Court Halts Work On New Tesla ‘Gigafactory’ (BBC)
Australia Broadcaster Loses Newsroom Raid Case (BBC)
Breakdown or Breakthrough? Degrowth and the Great Transition (NC)
US Peach Grower Awarded $265 Million From Bayer, BASF In Weedkiller Suit (R.)

 

 

Well, we do have some numbers:

 

• Cases 71,330, up 2,076 from yesterday

• Deaths 1,775, up 106 from yesterday

• 760 million Chinese under quarantine

 

We also have plenty confusion. For instance, Reuters has two headlines that say Coronavirus Cases Rise Again In China and China Says New Cases Slow. That clears things up.

But the most dramatic event over the weekend must be the repatration of various nationalities to their homelands. About 400 Americans were evacuated from the Diamond Princess, with Australian Canadian, Italian, South Korean and Hong Kong passengers set to follow soon. 44 of these Americans are infected with the virus, and they won’t be going home. The rest will, though.

This is happening while “Japan is bracing for the possibility of hundreds of additional cases of the coronavirus onboard the stricken Princess Diamond”, says the Guardian. So the Americans that are flown home go into quarantine, right? Well… Some Diamond Princess passengers face another two weeks in isolation if they have shared a cabin with someone who tests positive.”

Remember, as of the start of the evacuation, there were 3,711 people on board. 1,219 had been tested of which 355 have been confirmed positive for the virus (among them the 44 Americans). Ergo, 2,492 people were not tested, among them the remaining 356 Americans. Who will only go into isolation if they shared a cabin with a positive case. The rest can do what they want.

We see the issue here, don’t we? How many of those 356 Americans may be infected? How many of the other nationalities which will fly home? There have been suggestions that the onboard air circulation system on the ship may have played a role in spreading the virus. If so, it could be everywhere. And yes, there could be “hundreds of additional cases”.

Then there’s the Werkendam cruise ship, from which hundreds were allowed to spread all over the world, taking off from Cambodia and/or Malaysia, before a positive case was found. Now it’s a “Scramble To Track Cambodia Cruise Ship Passengers”. Sort of like a modern version of the biblical “Go Forth and Multiply”. Where were these decisions made? Anyone ask the WHO, or China?

 

Meanwhile, China keeps trying. In Hubei province, Xiaogan city – with a population of nearly 5 million people, 3,279 confirmed cases of Covid-19, the second highest number in China, and 70 deaths, “all vehicles including motorcycles, electric bikes, bicycles and tricycles are prohibited from driving on the road”. Try that in NYC, LA, Paris, Moscow, name a major city.

And the economic effects get increased attention as well. “Barclays analysts estimate that real [Japan] GDP contracted 3.2% on a quarterly basis, a little better than market consensus of -3.8%. This is all pre-coronavirus…] Take it from there. At this point hearing from economists, bankers, investors is pretty useless, because they have little idea what goes on, and, like politicians, they won’t consider really bad scenarios until it’s too late.

But it’ll come trickling through. Served in a sauce of “we’ll be fine”.

UPDATE: 99 additional people tested positive aboard the Diamond Princess. 14 American evacuees who tested positive made the flight anyway, in a separate compartment

 

 

 

 

“Xiaogan, 70km from the city of Wuhan, has 3,279 confirmed cases of Covid-19, and has recorded 70 deaths.”

Japan Braces For Hundreds More Cases Onboard Cruise Ship (G.)

Japan is bracing for the possibility of hundreds of additional cases of the coronavirus onboard the stricken Princess Diamond, as experts warned the country was still in the “early stages” of the outbreak. The passengers evacuated from the ship face further uncertainty too, with the US and Australian citizens set for a further two weeks of quarantine after arriving homeHundreds of American passengers have flown back to the US and Australia said it would follow suit on Wednesday. Onboard the Diamond Princess, 355 people have been diagnosed with Covid-19 out of an original total of about 3,600 passengers and crew, and after testing 1,219. Forty American passengers who were diagnosed with the virus have been transferred to hospitals in Japan.

Some Diamond Princess passengers face another two weeks in isolation if they have shared a cabin with someone who tests positive. The total number of people infected around the world climbed to more than 71,000 on Monday, including a further 2,048 confirmed cases in China, where the total number of deaths stands at 1,770. Five people have died outside China. Of the 105 deaths reported in China on Monday, 100 were in Hubei province, the centre of the outbreak. Cities in Hubei have stepped up measures to stop the virus’s spread.


Xiaogan city – which has a population of nearly 5 million people and the second highest number of confirmed cases in China – ordered residents to stay in their homes or face detention of up to 10 days. State media reported that “all vehicles including motorcycles, electric bikes, bicycles and tricycles are prohibited from driving on the road”. Xiaogan, 70km from the city of Wuhan, has 3,279 confirmed cases of Covid-19, and has recorded 70 deaths.

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Fifth location outside China.

Taiwan Confirms First Coronavirus Death On Island, Cases At 20 (R.)

A taxi driver has died from the coronavirus in Taiwan, marking the first such death on the island and the fifth fatality outside mainland China from an epidemic that has curbed travel and disrupted global supply chains. Health Minister Chen Shih-chung said during a news conference on Sunday that the deceased person was a 61-year-old man who had diabetes and hepatitis B. Taiwan has to date accumulated 20 confirmed cases. The deceased person had not traveled abroad recently and was a taxi driver whose clients were mainly from Hong Kong, Macau and mainland China, the minister said. One of his family members was also confirmed to have the virus.

The pair constituted Taiwan’s first local transmission cases, the minister said, adding that authorities were trying to find out as soon as possible the source of contraction. “So far, we are not able to gather his contact history, so we are actively making investigations, hoping to find out the source of the contraction,” Chen said. The island will on Monday start testing all patients who show symptoms associated with coronavirus and had traveled abroad recently, the health ministry said.


The coronavirus, thought to have emerged at a wildlife market in the central Chinese province of Hubei, has killed 1,665 people in China with latest figures showing 68,500 cases of the illness. Taiwan has banned entry to Chinese visitors and foreigners with a recent history of travel to China and suspended most flights to its giant neighbor. Many schools have also extended their Lunar New Year holiday to late February to curb the spread of the virus. In a response to panic buying of masks on the island, the government scrambled to build several mask production lines and Premier Su Tseng-chang has vowed to more than double its daily mask production to 10 million by early March.

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Economic consequences. Japan was doing awful under Abenomics already.

Pay Attention To Shanghai, Beijing, Japan Infection Rates (F.)

Beijing and Shanghai have under 1,000 reported cases and only four deaths, based on data compiled by Johns Hopkins University. Their data is sourced from the World Health Organization, the U.S. Center for Disease Control, the European Center for Disease Control and two China health agencies. China is the main source of the numbers. There are many people outside of China who doubt Beijing and Shanghai’s low case load. Watch for those numbers to rise in the weeks ahead. [..]

Covid-19 remains a mystery pathogen. It can be deadly. It’s like a bad pneumonia. Scientists believe it came from a species of bat. There is also concern that it escaped a virology research lab in Wuhan. There is no vaccine for Covid-19 yet, so those who have it are being treated with a variety of anti-viral medications and have to wait for the virus to work its way out of the body. Markets are repricing everything China related. Barclays Capital analysts released a 20-page report on the coronavirus on Friday where they said they were pushing out the recovery period, and think Japan heads into a technical recession because of it. Japan will release its fourth quarter GDP numbers on Monday.

Barclays analysts led by Tetsufumi Yamakawa in Tokyo estimate that real GDP contracted 3.2% on a quarterly basis, a little better than market consensus of -3.8%. This is all pre-coronavirus and mostly due to domestic tax matters. Yamakawa does see an increasing risk in first quarter weakness due to the Covid-19 impacts, and if that leads to negative growth, and it could, Japan hits a technical recession with back to back contraction. Weaker China tourism and a decrease in trade with China is a huge headwind for Japan. For Barclays, the probability of a recession there has surged to 69%.


Barclays’ China view is basically Wall Street consensus: so long as the virus stays concentrated in Hubei, they are going to trust China keeps it that way. [..] Xi Jinping last week called for even tighter restrictions on Hubei, and put two new Party bosses in charge to make sure the clampdown is enforced. “We think these efforts showed the urgency and determination of the government to stabilize the epicenter as soon as possible,” says Eric Zhu, an economist with Barclays in Hong Kong. “We expect incremental improvements,” he says.

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How is Abe still the PM there?

Japan’s Economy Shrinks At Fastest Rate Since 2014 (BBC)

Japan’s economy shrank at the fastest rate in five years at the end of 2019 as it was hit by a sales tax rise, a major typhoon and weak global demand. Annualised GDP fell by a much steeper than expected 6.3% in October-December. There are also concerns the coronavirus outbreak will mean the slump continues this quarter. That has raised fears that the world’s third-biggest economy may fall into recession. During the period Japanese consumer spending fell 2.9% after the country’s sales tax was raised in October to 10% from 8%. In the same month Typhoon Hagibis hit large parts of the country.


Last quarter, capital spending dropped by 3.7% and exports slipped 0.1% amid the ongoing US-China trade war. Investors are now watching to see whether the economy will rebound after the coronavirus forced China to shut down factories and led to a big drop in Chinese tourists visiting Japan. In response to today’s data economy minister Yasutoshi Nishimura said the Japanese government was ready to take all necessary steps to deal with the impact of the coronavirus outbreak on the economy and tourism.

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Recession looms everywhere by now. We just don’t want to know it.

Coronavirus Cases Rise Again In China, Recession Looms In Japan, Singapore (R.)

Japan and Singapore appeared to be on the brink of recession on Monday as the coronavirus epidemic disrupted tourism and supply chains around the world, and as China imposed tougher restrictions to try and stop the virus spreading further. The number of reported new cases of coronavirus in China’s Hubei province, the epicenter of the epidemic, rose on Monday by more than 1,933, after two days of falls, and there were 100 deaths reported since Sunday. Across mainland China, officials said the total number of cases rose by 2,048 to 70,548, with 1,770 deaths. Nearly 90% of new cases were in Wuhan, a city of 11 million people where the virus is believed to have originated at a market illegally trading wildlife late last year.

The virus, which is believed to have a 14-day incubation period, has forced thousands of people to be quarantined around the world. In Cambodia, authorities were scrambling to track down hundreds of passengers who disembarked from the Holland America Line cruise ship Westerdam after an American woman left the ship and was tested positive for coronavirus in Malaysia. More than 100 have already left the country, while some 300 are reportedly still in Cambodia. “I believe there’s 300 Americans here at this hotel plus a few hundred from other countries. We will all be tested for the coronavirus today and tomorrow by the Cambodian Ministry of Health,” said passenger Holley Rauen, a public health nurse and midwife from Fort Myers, Florida.


“We have no idea when we get to get home…” American passengers were taken off another cruise liner on Sunday to fly home after being quarantined for two weeks off Japan. Seventy new coronavirus cases were confirmed on board the Carnival Corp. Diamond Princess in Yokohama. The 3,700 passengers and crew have been held since Feb. 3. Some 355 people on board have tested positive for the disease, by far the largest cluster of cases outside China. Those with the disease have been taken to hospital in Japan and no one from the ship has died. Around half of the guests onboard are from Japan.

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It’s just a matter of waiting for new clusters to pop up now.

Americans Disembark From Virus-Hit Cruise; China Says New Cases Slow (R.)

American passengers were taken off a cruise liner on Sunday to fly home after being quarantined for two weeks off Japan, while China said the rate of new coronavirus cases had slowed, calling that proof its steps to fight the outbreak were working. An announcement aboard the Diamond Princess, where 3,700 passengers and crew have been held since Feb. 3, told Americans to get ready to disembark on Sunday evening for charter flights home. Passengers wearing masks could later be seen waving through the windows of buses parked near the ship. Of the roughly 400 Americans on the cruise, more than 40 are infected with the virus and will stay in Japan for treatment, said Dr. Anthony Fauci, director of the U.S. National Institute on Allergy and Infectious Diseases (NIAID).

“They are not going to go anywhere. They’re going to be in hospitals in Japan,” Fauci told the CBS News program “Face the Nation.” “People who have symptoms will not be able to get on the evacuation plane. Others are going to be evacuated starting imminently to air force bases in the United States.” Kyodo News Agency said the flights carrying U.S. passengers left Haneda Airport at around 1700 ET (2200 GMT). Canadian, Italian, South Korean and Hong Kong passengers were expected to follow soon, after their governments also announced plans to repatriate passengers. “Leaving in a few hours. No details. Might be going to Texas or Nebraska,” U.S. passenger Gay Courter told Reuters.


Seventy new coronavirus cases were confirmed on board, bringing the total on the ship to 355, by far the largest cluster of cases outside China. Fauci told the Washington Post there were 44 infected Americans. Within China, authorities reported 2,009 new cases on Sunday, noting that this was down from more than 2,600 the previous day. They said this showed their efforts to halt the spread of the virus were bearing fruit.

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Is anyone criminally responsible?

Scramble To Track Cambodia Cruise Ship Passengers After Virus Case Found (R.)

Holland America Line said it is working with governments and health experts to track passengers who disembarked from its Westerdam cruise ship docked in Cambodia after an American woman tested positive for coronavirus in Malaysia. The cruise line, which is owned by cruise giant Carnival Corp, said none of the other 1,454 passengers and 802 crew have reported any symptoms. “Guests who have already returned home will be contacted by their local health department and be provided further information,” a statement from the company said. Passengers had been cleared to travel by Cambodian authorities after health checks when the cruise ship docked on Thursday. It had spent two weeks at sea after being turned away by Japan, Taiwan, Guam, the Philippines and Thailand.


But on Saturday, Malaysia said an American woman who arrived in Kuala Lumpur on Friday on a chartered flight had tested positive for the new coronavirus that has killed more than 1,700 people, the vast majority in China. The woman’s husband tested negative for the coronavirus. About 137 of the 145 passengers on the chartered flight had already left for other countries as of Sunday after showing no signs of illness, Malaysian authorities said. Dozens more of the Westerdam passengers had flown through Thailand and onward to other countries, Thai officials said. At least 236 passengers and 747 crew remain aboard the vessel off the Cambodian port city of Sihanoukville, Holland America said. Others were in hotels in Phnom Penh, the capital.

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Did you know the Chinese see the world the same way Christian religions do? G-d appointed man the master of the world! Must be the dumbest facet of religion: man declares himself G-d.

‘Animals Live For Man’: China’s Appetite For Wildlife To Survive Virus (R.)

For the past two weeks China’s police have been raiding houses, restaurants and makeshift markets across the country, arresting nearly 700 people for breaking the temporary ban on catching, selling or eating wild animals. The scale of the crackdown, which has netted almost 40,000 animals including squirrels, weasels and boars, suggests that China’s taste for eating wildlife and using animal parts for medicinal purposes is not likely to disappear overnight, despite potential links to the new coronavirus. Traders legally selling donkey, dog, deer, crocodile and other meat told Reuters they plan to get back to business as soon as the markets reopen. “I’d like to sell once the ban is lifted,” said Gong Jian, who runs a wildlife store online and operates shops in China’s autonomous Inner Mongolia region.

“People like buying wildlife. They buy for themselves to eat or give as presents because it is very presentable and gives you face.” Gong said he was storing crocodile and deer meat in large freezers but would have to kill all the quails he had been breeding as supermarkets were no longer buying his eggs and they cannot be eaten after freezing. Scientists suspect, but have not proven, that the new coronavirus passed to humans from bats via pangolins, a small ant-eating mammal whose scales are highly prized in traditional Chinese medicine. [..] “In many people’s eyes, animals are living for man, not sharing the earth with man,” said Wang Song, a retired researcher of Zoology at the Chinese Academy of Sciences.


[..] Much of the farming and sale of wildlife takes place in rural or poorer regions under the blessing of local authorities who see trading as a boost for the local economy. State-backed television programs regularly show people farming animals, including rats, for commercial sale and their own consumption. However, activists pushing for a ban describe the licensed farms as a cover for illegal wildlife trafficking, where animals are specifically bred to be consumed as food or medicine rather than released into the wild.

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Brace for much more of this.

Armed Robbers Steal Hundreds Of Toilet Rolls In Hong Kong (BBC)

Armed robbers in Hong Kong made off with hundreds of toilet rolls worth more than HKD1,000 ($130). Toilet rolls are currently in short supply in Hong Kong due to shortages caused by panic-buying during the coronavirus outbreak. Knife wielding men robbed a delivery man outside a supermarket in the Mong Kok district, police said. Police have arrested two men and recovered some of the stolen loo rolls, local media reports said. The armed robbery took place in Mong Kok, a district of Hong Kong with a history of “triad” crime gangs, early on Monday.


According to local reports, the robbers had threatened a delivery worker who had unloaded rolls of toilet paper outside Wellcome Supermarket. An Apple Daily report said that 600 toilet paper rolls, valued at around HKD1,695 ($218), had been stolen. Stores across the city have seen supplies massively depleted with long queues when new stock arrives. Despite government assurances that supplies remain unaffected by the virus outbreak, residents have been stocking up on toilet paper. Other household products have also seen panic-buying including rice, pasta and cleaning items.

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“What’s happening here with Barr, I think people need to understand that he’s cleaning up the mess from not only the Obama administration, but also the mess that was left with the whole Russia-gate fiasco…”

Devin Nunes Says Trump ‘Has To Tweet’ To Combat ‘Hard Left’ Media (Fox)

House Intelligence Committee Ranking Member Devin Nunes, R-Calif., fired back at Democrats who criticized Attorney General William Barr for his role in former Trump associate Roger Stone’s sentencing and defended the president’s use of Twitter after he used the platform to comment about the ongoing criminal case. “What’s happening here with Barr, I think people need to understand that he’s cleaning up the mess from not only the Obama administration, but also the mess that was left with the whole Russia-gate fiasco,” Nunes told “Fox & Friends Weekend,” saying taxpayers paid tens of millions of dollars to fund then-Special Counsel Robert Mueller’s team “that went chasing and trying to put us into a status of a permanent coup against the president of the United States.”

Nunes’ comments came days after Barr himself publicly swiped at Trump, declaring Thursday that the president’s tweets about Justice Department prosecutors and open cases “make it impossible for me to do my job.” [..] “I think what the attorney general said was very clear, that the president should be careful making comments about criminal investigations. One should not see that as anything other than but what it is,” Nunez said, adding that Barr “didn’t say to stop tweeting, because the fact of the matter is, with 90 percent of the media being hard left and really just working for the Democratic Party, the president has to be able to tweet.”


Earlier in the week, Trump applauded Barr on Twitter for the decision to reverse the sentencing recommendation, writing: “Congratulations to Attorney General Bill Barr for taking charge of a case that was totally out of control and perhaps should not have even been brought.” “He’s built a powerful tool reaching millions of Americans, millions of people around the globe,” Nunes added, “so the president has to tweet. At the same time, the attorney general has to be able to do his job.” He also said, “It’s understandable that the president can be frustrated,” and called Stone’s dramatic early-morning arrest by federal agents in January 2019 “ridiculous.”

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It’s ilke the interagency debate in the House testimonies. The civil servants think they have the right to set policy. And don’t you dare question that. But wasn’t it perhaps high time someone did?

1,100 Former DOJ Employees Call On Barr To Resign (NPR)

More than 1,100 former Department of Justice officials are calling on Attorney General William Barr to resign after his department lowered the prison sentence recommendation for Roger Stone, a longtime ally of President Trump, in a move that’s led to accusations of political interference. In a letter released Sunday, the former DOJ officials, who have worked across Republican and Democratic administrations, wrote that Barr’s intervention in the Stone case has tarnished the department’s reputation. “Such behavior is a grave threat to the fair administration of justice,” the former officials wrote.

“In this nation, we are all equal before the law. A person should not be given special treatment in a criminal prosecution because they are a close political ally of the President. Governments that use the enormous power of law enforcement to punish their enemies and reward their allies are not constitutional republics; they are autocracies.” On Monday, the U.S. Attorney’s Office in Washington had recommended a prison sentence of up to nine years for Stone’s 2019 conviction on charges including making false statements to Congress and witness tampering. On Twitter, Trump said the sentencing recommendation amounted to “a horrible and very unfair situation.” But then on Tuesday, the Justice Department intervened, ordering a new sentencing memo and calling for lighter punishment. A senior DOJ official told NPR that officials were “shocked” at the original recommendation.


[..] To Julie Zebrak, who’s among the former DOJ officials who signed the letter, Barr’s behavior shatters a cardinal norm that has been in place for decades: that the Justice Department’s prosecutorial decisions should not be influenced by the White House. Zebrak told NPR that Barr’s move “sent shockwaves through the former DOJ alumni.” She added: “We are all watching in a really rapid and terrifying way the undermining of the department and the diminishment of the rule of law. We have to sort of speak up and speak out when we can.”

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“Clean cars” require cutting forests. This is where the environmental movement meets its Armageddon; there’s just not enough knowledge, they’ll believe anything that sounds good.

German Court Halts Work On New Tesla ‘Gigafactory’ (BBC)

Tesla has been ordered to temporarily halt preparations for a car factory in Germany after environmentalists won a court injunction on Sunday. The electric carmaker had been clearing forest land near the capital, Berlin, ahead of building its first European car and battery plant. The court emphasised the injunction was temporary and subject to further hearings, probably this week. Protesters say the factory is a threat to local wildlife and water supplies. To much fanfare, Tesla’s boss Elon Musk announced plans last November to build a European facility known as a “gigafactory” in Grünheide, in the eastern state of Brandenburg.


But the factory has become a flashpoint between environmentalists and Germany’s pro-business Christian Democrat and Free Democrat parties, who fear the issue could damage the country’s image as a place to do business. The dispute highlights the risks for the US carmaker, which has not been officially granted permission to build the factory. Tesla was, however, granted permission by Germany’s environment ministry to begin site preparations “at its own risk”. This has involved clearing about 91 hectares (225 acres) of forest and the felling of thousands of trees – something that outraged an alliance of environmentalists called the Green League. In a statement on Sunday, the court representing the Berlin and Brandenburg region cautioned: “It should not be assumed that the motion seeking legal protection brought by the Green League lacks any chance of succeeding.”

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If the goverment can let its journalists rot in Belmarsh, this shouldn’t be a surprise. How loud has ABC been in its defense of Assannge?

Australia Broadcaster Loses Newsroom Raid Case (BBC)

Australia’s national broadcaster has lost its legal challenge to controversial police raids on its Sydney newsroom last year. In June, police searched the Australian Broadcasting Corporation (ABC) and the home of a newspaper journalist over articles which relied on leaks from government whistleblowers. The raids sparked public outrage and protests across the nation’s media. However, the Federal Court of Australia has ruled the searches were legal. ABC’s managing director David Anderson said the decision was “disappointing”. He said the raids had been a high-profile “attempt to intimidate journalists for doing their job”. Australian Federal Police alleged the stories and reporters at the centre of its searches had breached national security laws.


In the raid last year, they seized thousands of documents over a 2017 ABC investigation which alleged Australian armed forces had committed war crimes in Afghanistan. Police also raided the home of News Corp reporter Annika Smethurst. In 2018, she had reported an alleged attempt by a government agency to spy on Australian citizens. Australia’s conservative government tightened its security laws in 2018 to make it a criminal offence for journalists to receive classified information from military or intelligence sources. Canberra has previously said it backs press freedom but that “no one was above the law”.

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Never voluntarily.

Breakdown or Breakthrough? Degrowth and the Great Transition (NC)

When mainstream approaches to sustainability fail to challenge economic growth they provide limited, sometimes even false solutions to today’s crises. Technological and political interventions that reduce environmental impacts and enhance overall efficiency – though contributing to sustainability in a narrow sense – end up adding to global inequality and ecological overshoot, insofar as they accelerate growth. Growth is one of the chief drivers of social inequality and environmental degradation; it is also what sustains the global capitalist economy. Sustainability solutions that promote growth under the banner of “green growth” are the easiest to accept and implement, but they are the least able to address the roots of today’s crises.

Proponents of green growth believe that growth can be decoupled from environmental impacts, yet there is no empirical evidence that this is possible. Meanwhile, acting on such an unproven assumption obscures the real harm being done by sustaining extractive and exploitative capitalism. We have already surpassed the known limits to growth, so degrowth is our only option. Sustainability is an outcome of healthy metabolic relationships between an organism and its environment. When consumption depletes resources faster than their rate of regeneration – which is what we are currently doing – it is by definition unsustainable.

Although essential, today’s most progressive reforms, including the Green New Deal and the circular economy, will only be effective when combined with a more equitable distribution of resources and decreasing per capita consumption in advanced economies. For sustainability efforts to be effective, they must be part of a comprehensive degrowth agenda focused on systems change. Contrary to common misunderstandings, degrowth does not mean negative growth or imply sacrifices to one’s quality of life. Rather, it is focused on reducing a society’s material and energy throughput while actually enhancing quality of life. [..]


The next 30 years constitute what systems theorists call a ‘decision window.’ How societies decide to respond to mounting social and ecological pressures will determine whether the system evolves or collapses. Once the decision window ends and the global system passes the chaos point, the system irreversibly changes, and there are only two futures left – breakthrough or breakdown. There is no chance that a wildly optimistic techno-future can sustain growth beyond social and planetary boundaries. Civilization will either collapse or it will follow a path of managed descent and sustainable reorganization. The only breakthroughs remaining follow paths of degrowth.

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They’ll appeal. Check back in a decade.

US Peach Grower Awarded $265 Million From Bayer, BASF In Weedkiller Suit (R.)

A Missouri jury’s $265 million award to peach grower Bill Bader in his lawsuit against herbicide providers Bayer and BASF has raised the stakes for the two companies as at least 140 similar cases head to U.S. courts later this year. A jury in U.S. District Court in Cape Girardeau, Missouri, handed Bader, the state’s largest peach farmer, $15 million in actual and $250 million in punitive damages. He sued the companies saying his 1,000-acre orchard was irreparably harmed by herbicide that they produce, which drifted onto its trees from nearby farms. The three-week trial was the first case in the United States to rule on the use of dicamba-based herbicides alleged to have damaged tens of thousands of acres of U.S. cropland.

The herbicide can become a vapor and drift for miles when used in certain weather, farmers have claimed. Bayer said it was “disappointed with the jury’s verdict,” and plans to appeal. BASF also said it was “surprised and disappointed” by the decision and plans to appeal. Both companies said their dicamba-based herbicides are safe when used as directed. Bayer faces separate multi-billion-dollar litigation over the Roundup weedkiller made by Monsanto, the U.S. firm it took over for $63 billion in 2018. Monsanto made Roundup and dicamba, and Bayer is being sued over both products.


[..] Bayer and BASF face other dicamba lawsuits that could begin late his year before the same judge in Missouri, said attorney Billy Randles, whose firm represented Bader and also represents dozens of others with similar claims. “These are all the same” allegations, said Randles. “They claim negligent design, failure to warn and all allege a joint venture” between Bayer and BASF. The jury found the two equally liable for the damages.

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Apr 272019
 


Vincent van Gogh Pietà (after Delacroix) 1889

 

The Big Mystery In The GDP Report – Where Did The Inventories Come From? (MW)
China Finds Dollar Hegemony Is A Tough Nut To Crack (WS)
Nearly 102 Million Americans Do Not Have A Job Right Now (Snyder)
Trump Makes Post-Mueller Vow To Release “Devastating” FISA Docs (ZH)
Blowback Is a Harsh Mistress (Kunstler)
Marina Butina Sentenced To 18 Months In Prison (ZH)
Labour Party In ‘Complete Meltdown’ Over Final Say (Ind.)
London Extinction Rebellion Mural is a Banksy (G.)
Greeks The Most Stressed People Worldwide – Gallup (K.)
Brazil Governed By ‘Lunatics’ And US ‘Lackeys’ – Lula (G.)

 

 

Industrial production and imports are both down. But inventories rise.

The Big Mystery In The GDP Report – Where Did The Inventories Come From? (MW)

It is a case that would make Sherlock Holmes proud. Growth in the first quarter smashed expectations, fueled in part by strong inventory building. According to the government, $32 billion of goods were added to inventories this quarter, or $128 billion annualized. This stockpiling of goods boosted first-quarter GDP growth by about 70 basis points and helped propel growth to a 3.2% annual rate, well above forecasts. The problem is that it is not at all obvious where these inventories came from. Goods have to come from somewhere, either produced by domestic firms or imported from abroad. The mystery is that both production and imports fell in the first three months of the year, according to government data.

“You can’t stockpile what you do not import or do not produce,” said Robert Brusca, chief economist at FAO Economics. The Fed reported last week that industrial output slipped at a 0.3% annual rate in the first quarter. And the government’s GDP report estimates that imports fell 3.7% in the first three months of the year. The one other explanation — that consumption fell sharply enough to leave businesses with unexpected unsold goods — also doesn’t fit the evidence, Brusca said. Consumption did not fall faster than industrial production or imports to generate any surplus, he said. To be sure, spending on consumer durable goods fell 5.3%, the biggest drop in 10 years. Business spending on equipment was also weak. “Any way you slice it, this GDP report…is an apparent mess,” he said.

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Nobody will want the yuan as long as Beijing decides what it’s worth.

China Finds Dollar Hegemony Is A Tough Nut To Crack (WS)

In terms of global reserve currency, the renminbi (RMB) has a share of only 1.9%, in fifth place, and barely ahead of the Canadian dollar, but miles behind the US dollar (61.7%) and the euro (20.7%). Over the past two years, the RMB has made only microscopic headway as a reserve currency. And as an international payments currency, the RMB has failed similarly to crack the co-hegemony of the dollar and the euro. “With more than 1,900 financial institutions now using the RMB for payments with China and Hong Kong, the internationalization of RMB carries great strategic significance” for banks and financial institutions, gushes SWIFT (Society for Worldwide Interbank Financial Telecommunication), which tracks the progress of the RMB as payment currency.


But in March 2019, the RMB had a minuscule share of merely 1.22% for international cross-border payments by value (cross-border payments from one Eurozone country to another Eurozone country are excluded). This minuscule share put the RMB in 8th position, just behind the Swiss franc:

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Civilian labor force participation rate lingers around 63%.

Nearly 102 Million Americans Do Not Have A Job Right Now (Snyder)

At this moment, we are told that only 6.2 million Americans are officially “unemployed”, and that sounds really, really good. But that is only half the story. What the mainstream media rarely mentions is the fact that the number of Americans categorized as “not in the labor force” has absolutely exploded since the last recession. Right now, that number is sitting at 95.577 million. When you add 6.2 million “officially unemployed” Americans to 95.577 million Americans that are categorized as “not in the labor force”, you get a grand total of almost 102 million Americans that do not have a job right now. If that sounds terrible to you, that is because it is terrible.

Yes, the U.S. population has been growing over the last decade, and that is part of the reason why the number of Americans “not in the labor force” has been growing. But overall, the truth is that the level of unemployment in this country is not that much different than it was during the last recession. John Williams of shadowstats.com tracks what the real employment figure would be if honest numbers were being used, and according to him the real rate of unemployment in the United States at the moment is 21.2 percent.

Just before the last recession, the civilian labor force participation rate was sitting at about 66 percent, and that was pretty good. But then the recession hit, and the civilian labor force participation rate fell below 63 percent, and it stayed between 62 percent and 63 percent for an extended period of time. So where are we today? At this moment, we are sitting at just 63.0 percent. Does that look like a recovery to you? Of course not.

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“I’m glad I waited because i thought that maybe they would obstruct if I did it early..”

Trump Makes Post-Mueller Vow To Release “Devastating” FISA Docs (ZH)

President Trump on Thursday renewed his vow to declassify a wide swath of “devastating” documents related to the Russia probe “and much more” – adding that he’s glad he waited until the Mueller investigation was complete. In a Thursday night phone interview on Fox News, host Sean Hannity asked “will you declassify the FISA applications, gang of 8 material, those 302s – what we call on this program ‘the bucket of five’?” To which Trump replied: “Yes, everything is going to be declassified – and more, much more than what you just mentioned. It will all be declassified, and I’m glad I waited because i thought that maybe they would obstruct if I did it early – and I think I was right. So I’m glad I waited, and now the Attorney General can take a look – a very strong look at whatever it is, but it will be declassified and more than what you just mentioned.”

Last September 17th, Trump vowed to release all text messages related to the Russia investigation with no redactions, as well as specific pages from the FBI’s FISA surveillance warrant application on former Trump campaign aide Carter Page, and interviews with the DOJ’s Bruce Ohr. nFour days later, however, Trump said over Twitter that the Justice Department – then headed by Attorney General Jeff Sessions (while the Russia investigation was headed up by Deputy AG Rod Rosenstein) – told him that it might have a negative impact on the Russia probe, and that key US allies had asked him not to release the documents.

“I met with the DOJ concerning the declassification of various UNREDACTED documents,” Trump tweeted. “They agreed to release them but stated that so doing may have a perceived negative impact on the Russia probe. Also, key Allies’ called to ask not to release. Therefore, the Inspector General has been asked to review these documents on an expedited basis. I believe he will move quickly on this (and hopefully other things which he is looking at). In the end I can always declassify if it proves necessary. Speed is very important to me – and everyone!”


That key ally turns out to have been the UK, according to the New York Times., which reported last September that their concern was over material which “includes direct references to conversations between American law enforcement officials and Christopher Steele,” the former MI6 agent who compiled the infamous “Steele Dossier.” We now know, of course, that Steele had extensive contact with Bruce and Nellie Ohr in 2016, while Bruce was the #4 official at the Obama DOJ, and Nellie was working for Fusion GPS – the opposition research firm hired by Hillary Clinton and the DNC to produce the infamous Steele Dossier.

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“Mr. Mueller himself may well be subject to prosecution for destroying evidence and, yes, obstruction of justice…”

Blowback Is a Harsh Mistress (Kunstler)

The Thinking Class behind the bad faith Resistance is about to be beaten within an inch of its place in history with an ugly-stick of reality as The Narrative finally comes to be fairly adjudicated. The Mueller Report was much more than just disappointing; it was a comically inept performance insofar as it managed to overlook the only incidence of collusion that actually took place: namely, the disinfo operation sponsored by the Hillary Clinton campaign in concert with the highest officials of the FBI, the Department of Justice, State Department personnel, the various Intel agencies, and the Obama White house for the purpose of interfering in the 2016 election.


It will turn out that the Mueller Investigation was just an extension of that felonious op, and Mr. Mueller himself may well be subject to prosecution for destroying evidence and, yes, obstruction of justice. John F. Kennedy once observed that “life is unfair.” It is unfair, perhaps, that a TV Reality Show huckster, clown, and rank outsider beat a highly credentialed veteran of the political establishment and that he flaunts his lack of decorum in the Oval Office. But it happens that he was on the side of the truth in the RussiaGate farrago and that happens to place him in a position of advantage going forward.

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The empire destroying lives to uphold a narrative. It no longer matters what these crazies say, and they know it. The public swallows anything thrown at them. Collusion, Assange, Butina, these are all fictional stories, but today they dictate the headlines and dominate the airwaves. Butina is accused of “Ambitious conspiracy”. When she was 22.

Marina Butina Sentenced To 18 Months In Prison (ZH)

Accused Russian spy Marina Butina has been sentenced to 18 months in prison on Friday after pleading guilty to acting as an unregistered agent of a foreign government, the Hill reports. Butina, who was arrested in 2018, pled guilty to the charges in late. 2018. She will only serve nine months, as the judge knocked nine months off her sentence for time served. Prosecutors had recommended that she serve an additional 18 months, while her lawyers had asked for no prison time and her immediate deportation. Butina wasn’t mentioned in the Mueller report. Before her sentencing hearing on Friday, Butina pleaded with the judge for leniency, RT reports.


“My parents discovered my arrest on the morning news they watch in their rural house in a Siberian village,” she told the court. “I love them dearly, but I harmed them morally and financially. They are suffering from all of that. I destroyed my own life as well. I came to the United States not under any orders, but with hope, and now nothing remains but penitence.” Butina arrived in the US on a student visa in 2016 and became active in pro-gun circles. During the investigation into Russian interference that followed Trump’s electoral triumph, she was accused of working with the Russian government to infiltrate the Republican Party and National Rifle Association. Moscow and President Putin have denied any connection with her.

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Corbyn still clings to his dreams of an independent left-wing Britain. But matters haven’t stood still for the past 3 years.

Labour Party In ‘Complete Meltdown’ Over Final Say (Ind.)

Jeremy Corbyn is under growing pressure over his party’s position on a second Brexit referendum after a leaked draft of a campaign leaflet included no mention of a Final Say vote. The Labour leader faced an angry backlash over the flyer, with MPs saying it had triggered “complete meltdown” in the party and left pro-EU MPs “utterly furious”. As the row deepened, 75 MPs and 14 MEPs wrote to Labour’s governing body to demand that “a clear commitment” to another referendum be included in the party’s manifesto for next month’s European parliament elections. Mr Corbyn’s top team is split on whether Labour should support a second referendum. Several senior shadow cabinet ministers want the party to support a public vote on any Brexit deal passed by parliament, but Mr Corbyn’s inner circle say he only supports a referendum on the government’s deal or to avoid a no-deal outcome.


Other shadow ministers oppose another public poll entirely. In their letter to the National Executive Committee (NEC), the MPs and MEPs said Labour had “a clear opportunity to win these elections” if it fully supports a Final Say vote. They wrote: “These elections are about the kind of Europe we want to live in, and we can’t make a convincing case in them without being clear about Brexit. Labour has already, rightly, backed a confirmatory public vote. The overwhelming majority of our members and voters support this, and it is the democratically established policy of the party. “Our members need to feel supported on doorsteps by a clear manifesto that marks us out as the only viable alternative to Nigel Farage’s Brexit Party.

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First, you just have a wall. The next day, you have a wall worth a million dollars.

London Extinction Rebellion Mural is a Banksy (G.)

A Banksy collector and expert believes a mural that appeared at Extinction Rebellion’s Marble Arch base overnight is an authentic piece by the Bristolian street artist. John Brandler, who owns a dozen pieces by Banksy is convinced the artwork – which features the slogan “From this moment despair ends and tactics begin” next to a young girl sitting on the ground holding an Extinction Rebellion logo – is an original because of its execution and theme. The art dealer and gallerist said: “I’m convinced about the one in London for two reasons: it’s a topic that he would support, and it’s a continuation of the Port Talbot piece that appeared in December 2018.

“The name in the corner is not important, the signature is the work. And this is a Banksy. It’s a wonderful statement and a beautiful piece.” The work appeared at the site which had been occupied by climate activists since protests began in the capital almost two weeks ago. A spokesperson for Westminster council confirmed the work was being investigated but had not been authenticated yet. “We’re aware of the possible Banksy which appeared in Marble Arch overnight. Our officers are looking into this,” he said. Banksy has not confirmed whether the painting is legitimate, and his press team did not respond to a request for comment.

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Gallup does really bad surveys.

Greeks The Most Stressed People Worldwide – Gallup (K.)

Greeks are the most stressed people in the world, according to the results of the Gallup 2019 Global Emotions report conducted on a sample of 150,000 people in 140 countries. According to the poll, which was conducted last year, 59 percent of Greeks said they “experienced a lot of stress yesterday,” putting Greece at the top of the chart for the third consecutive year. After Greece on the list are the Philippines, Tanzania and Albania. The same poll asked respondents about their negative experiences and participants from Chad, Nigeria, Sierra Leone, Iraq and Iran polled the highest. The survey also polled anger levels with Armenians topping the chart, followd by Iraqis, Iranians and Palestinians. The five countries recording the most positive experiences are Paraguay, Panama, Guatemala, Mexico and El Salvador.

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“Does anyone really think the US is going to favour Brazil?” Lula asked. “Americans think of themselves first, second, third, fourth, fifth – and if there’s any time left over they think about Americans.”

Brazil Governed By ‘Lunatics’ And US ‘Lackeys’ – Lula (G.)

Brazil is being governed by “a bunch of lunatics” and United States “lackeys” who have shattered its international reputation, former president Luiz Inácio Lula da Silva has claimed in his first interview since being jailed one year ago. Lula, Brazil’s president from 2003 and 2011, surrendered himself to police last April after being convicted on corruption charges he disputes. The 73-year-old leftist had been forbidden from giving face-to-face interviews until Friday, when two Brazilian journalists were allowed to visit him at his prison in southern Brazil following a lengthy legal battle.

Lula told them Brazil needed to undergo period of “self-reflection” after what he described as the “crazy” fake news and hate-filled election of far-right populist Jair Bolsonaro last year. “What we can’t have is this country being run governed by a bunch of lunatics. The country doesn’t deserve this and above all the people do not deserve this.” “Brazil is adrift – so far he doesn’t know what to do,” he added of Bolsonaro, who took office in January and has suffered a turbulent opening act in power. Lula said he profoundly regretted “the disaster that is taking place in this country” and criticised Brazil’s dramatic tack towards Washington under Bolsonaro.


“I’ve never seen a [Brazilian] president salute the American flag. I’ve never seen a president go around saying, ‘I love the United States, I love it!’” Lula said of Bolsonaro, who paints himself as a “tropical Trump” and last month travelled to the United States to tout his close relations with the US president. “You should love your mother, you should love your country. What’s all this about loving the United States? “Does anyone really think the US is going to favour Brazil?” Lula asked. “Americans think of themselves first, second, third, fourth, fifth – and if there’s any time left over they think about Americans. And these Brazilian lackeys go around thinking the Americans will do anything for us.”

Read more …

 

 

Jan 092019
 
 January 9, 2019  Posted by at 7:27 pm Finance, Primers Tagged with: , , , , , , , , , , , , ,  9 Responses »


Pablo Picasso Massacre in Korea 1951

 

In the New Year, after a close to the old one that was sort of terrible for our zombie markets, do prepare for a whole lot of stories about China (on top of Brexit and Yellow Vests and many more windmills fighting the Donald). And don’t count on too many positive ones that don’t originate in the country itself. Beijing will especially be full of feel-good tales about a month from now, around Chinese New Year 2019, which is February 5.

And we won’t get an easy and coherent true story, it’ll be bits and pieces stitched together. What will remain is that China did the same we did, just on steroids. It took us 100 years to build our manufacturing capacity, they did it in under 20 (and made ours obsolete). It took us 100 years to borrow enough to get a debt-to-GDP ratio of 300%, they did it in 10.

In the process they also accumulated 10 times more non-productive assets than us, idle factories, bridges to nowhere and empty cities, but they thought that would be alright, that demand would catch up with supply. And if you look at how much unproductive stuff we ourselves have gathered around us, who can blame them for thinking that? Perhaps their biggest mistake has been misreading our actual wealth situation; they didn’t see how poorly off we really are.

 

Xiang Songzuo, “a relatively obscure economics professor at Renmin University in Beijing”, expressed some dire warnings about the Chinese economy in a December 15 speech. He didn’t get much attention, not even in the West. Not overly surprising, since both Beijing and Wall Street have a vested interest in the continuing China growth story.

But with the arrival of 2019, that attention started slowly seeping through. Former associate professor of business and economics at the Peking University HSBC Business School in Shenzhen, Christopher Balding, left China 6 months ago after losing his job. At the time, he wrote: “China has reached a point where I do not feel safe being a professor and discussing even the economy, business and financial markets..”. And, noting a change that very much seems related to what is coming down the road:

”One of my biggest fears living in China has always been that I would be detained. Though I happily pointed out the absurdity of the rapidly encroaching authoritarianism, a fact which continues to elude so many experts not living in China, I tried to make sure I knew where the line was and did not cross it. There is a profound sense of relief to be leaving safely knowing others, Chinese or foreigners, who have had significantly greater difficulties than myself. There are many cases which resulted in significantly more problems for them. I know I am blessed to make it out.”

A few days ago, Balding wrote this on Twitter:

“Most experts dismissed the speech by Xiang Songzuo (claiming Chinese GDP growth could be as low as 1.67%) as implausible…”. No, we didn’t. The GS PE guy and the PKU dean have every reason to deny it. Car and mobile phone shipment down 2% and 16% are not a 6.5% growth economy.”

That certainly sets the tone of the discussion. GDP growth of 1.67% vs the official 6.5%; smartphone shipments down 16%, car sales slumping. Not the kind of numbers you’ll hear from Beijing. And Balding does know China, whether they like it or not. On Monday, Bloomberg, where he was/is a regular contributor, published this from his hand:

 

China Has a Dangerous Dollar Debt Addiction

Officially, China lists its outstanding external debt at $1.9 trillion . For a $13 trillion economy, that’s not a major amount. But focusing on the headline number significantly understates the underlying risks. Short-term debt accounted for 62% of the total as of September, according to official data, meaning that $1.2 trillion will have to be rolled over this year .

Just as worrying is the speed of increase: Total external debt has increased 14% in the past year and 35% since the beginning of 2017 . External debt is no longer a trivial slice of China’s foreign-exchange reserves, which stood at just over $3 trillion at the end of November, little changed from two years earlier. Short-term foreign debt increased to 39% of reserves in September, from 26% in March 2016.

 

The true picture may be more precarious. China’s external debt was estimated at between $3 trillion and $3.5 trillion by Daiwa Capital Markets in an August report. In other words, total foreign liabilities could be understated by as much as $1.5 trillion after accounting for borrowing in financial centers such as Hong Kong, New York and the Caribbean islands that isn’t included in the official tally. Circumstances aren’t moving in China’s favor.

The nation’s companies rushed to borrow in dollars when there was a 3% to 5% spread between Chinese and U.S. interest rates and the yuan was expected to strengthen. Borrowing offshore was cheaper and offered the additional bonus of likely currency gains. Now, the spread in official short-term yields has shrunk to near zero and the yuan has been depreciating for most of the past year. Refinancing debt in dollars has become harder, and more risky.

 

Beijing’s policies have exacerbated the buildup of foreign debt. To promote Xi Jinping’s Belt and Road Initiative, the president’s landmark foreign policy endeavor, China has been borrowing dollars on international markets and lending around the world for everything from Kenyan railways to Pakistani business parks. With this year and 2020 being the peak years for repayments, China faces dollar funding pressure.

To repay their dollar debts, Chinese firms will either have to draw from the central bank’s foreign-exchange reserves (a prospect Beijing is unlikely to allow) or buy dollars on international markets. This creates a new set of problems. There are only 617 billion yuan ($90 billion) of offshore renminbi deposits in Hong Kong available to buy dollars . If China was to push firms to bring debt back onshore, this would necessitate significant outflows that would push down the yuan’s value against the dollar.

 

The Xiang Songzuo speech was also noted by the Financial Times this week. Their conclusions are not much rosier. Recent US imports from China look good only because both buyers and sellers try to stay ahead of tariffs. And whole some truce or another there may smoothen things a little, China must launch a massive stimulus against the background of twice as much investment being needed for a unit of GDP growth.

 

Nervous Markets: How Vulnerable Is China’s Economy?

A relatively obscure economics professor at Renmin University in Beijing sparked a minor furore last month when he claimed a secret government research group had estimated China’s growth in GDP could be as low as 1.67% in 2018 — far below the officially published rate of 6.7% for the year up to September. 

Most experts dismissed the speech by Xiang Songzuo as implausible, despite longstanding doubts about the reliability of China’s official GDP data. Yet although discussion of his claims was quickly scrubbed from the Chinese internet, the presentation has been viewed more than 1.2m times on YouTube — an indication of the raw nerve Mr Xiang touched with his doom-laden warnings.

[..] the question that is hanging over global markets is just how vulnerable is China to a much sharper slowdown? Ominously, the recent downturn has occurred even though the expected hit to Chinese exports from the trade war has not yet materialised. In fact, analysts say exports probably received a one-off boost in recent months as traders front-loaded shipments to beat the expected tariff rise from 10% to 25% that US president Donald Trump threatened would take effect in January. That rise is now on hold due to the 90-day truce that Mr Trump agreed with Chinese president Xi Jinping at the G20 meeting in Argentina last month.

[..] The amount of new capital investment required to generate a given unit of GDP growth has more than doubled since 2007 , according to Moody’s Analytics. In other words, investment stimulus produces little bang for Beijing’s buck, even as it adds to the debt levels.

[..] “They [Beijing] will soon have no choice but to launch massive stimulus,” says Alicia Garcia Herrero, chief Asia Pacific economist at Natixis in Hong Kong. “They do not want to give away their credibility because they said they wouldn’t do it, but there is no time to be cautious any more. Not having growth is ultimately the worst outcome of all.”

 

Christopher Whalen picks up on Xiang Songzuo’s speech as well, and quotes him saying that “Chinese stock market conditions resemble those during the 1929 Wall Street Crash”. Whereas the China Beige Book states that sales volumes, output, domestic and export orders, investment, and hiring fell on a year-over-year and quarter-over-quarter basis. Which leads to the conclusion that deflation is, or should be, Beijing’s main worry.

Oh, and Chinese consumer demand has weakened, something we’ve seen more off recently. Reuters headlines “China To Introduce Policies To Strengthen Domestic Consumption” today, but that headline could have come from any of the past 5 years or so. Domestic consumption is precisely China’s problem, and they can’t achieve nearly enough growth there.

 

China’s Stability Is at Risk

Foreign investors have convinced themselves that the Chinese Communist Party (CCP) is superior in terms of economic management, this despite ample evidence to the contrary, thus accepting the official view is easy but also increasingly risky. In a December 15 speech , Renmin University’s Xiang Songzuo warned that Chinese stock market conditions resemble those during the 1929 Wall Street Crash. He also suggested that the Chinese economy is actually shrinking.

China growth, Tesla profitability, or the mystical blockchain all require more credulity than ever before. For example, in the first half of 2016 global capital markets stopped due to fear of a Chinese recession. Credit spreads soared and deal flows disappeared. But was this really a surprise? In fact, the Chinese government had accelerated official stimulus in 2015 and 2016 to counter a possible slowdown and, particularly, ensure a quiet domestic scene as paramount leader Xi Jinping was enshrined into the Chinese constitution.

Today western audiences are again said to be concerned about China’s economy and this concern is justified, but perhaps not for the reasons touted in the financial media. The China Beige Book (CBB) fourth-quarter preview, released December 27, reports that sales volumes, output, domestic and export orders, investment, and hiring fell on a year-over-year and quarter-over-quarter basis. CBB is a research service that surveys thousands of companies and bankers on the ground in China every quarter.

Contrary to the positive foreign narrative about “growth” in China, CBB contends that deflation is the bigger threat compared to inflation. “Because of China’s structural problems, deflation has very clearly emerged as the bigger threat in a slowing economy than inflation. Consumer demand has weakened, and you see that reflected in retail and services prices,” CBB Managing Director Shehzad Qazi said in an interview.

 

So, China phone shipments are down 16%, as per Balding. But Tim Cook says Apple’s never done better. Still, if that 16% number is correct, either Apple or its Chinese suppliers are doing worse, not better. And 16% is a lot.

 

Despite Recent Battering, Tim Cook Says Apple’s ‘Ecosystem Has Never Been Stronger’

Apple Inc. stock has taken a beating in recent months, but Chief Executive Tim Cook defended his company Tuesday, and expressed optimism that trade tensions with China would soon ease. Apple shares have fallen by more than one-third since their peak on Oct. 3, and tumbled further last week after the tech giant warned of disappointing iPhone sales in its holiday quarter. But in an interview Tuesday with CNBC’s Jim Cramer, Cook said the company was still going strong, and its naysayers were full of “bologna.” “Here’s the truth, what the facts are,” Cook said about reports of slow iPhone XR sales, according to a CNBC transcript.

“Since we began shipping the iPhone XR, it has been the most popular iPhone every day, every single day, from when we started shipping, until now. . . . I mean, do I want to sell more? Of course I do. Of course I’d like to sell more. And we’re working on that.” Slower sales in China also contributed to Apple’s lowered forecast, and Cook said Tuesday he believes that situation to be “temporary.”

“We believe, based on what we saw and the timing of it, that the tension, the trade-war tension with the U.S. created this more-sharp downturn,” he said. Cook said he’s “very optimistic” a trade deal between the U.S. and China will be reached . “I think a deal is very possible. And I’ve heard some very encouraging words,” he said.

 

16% fewer phones, that gets you the second production cut at Apple and its ‘magnificent ecosystem’ in short order. Now sure, Cook can try and blame the tariffs. but Samsung’s Q4 2018 sales fell 11%, and its operating profit fell by 29%. It’s a bigger and wider issue, and China is at the heart of it.

 

Apple Cuts Q1 Production Plan For New iPhones By 10%

Apple, which slashed its quarterly sales forecast last week, has reduced planned production for its three new iPhone models by about 10% for the January-March quarter, the Nikkei Asian Review reported on Wednesday. That rare forecast cut exposed weakening iPhone demand in China, the world’s biggest smartphone market, where a slowing economy has also been buffeted by a trade war with the United States.

Many analysts and consumers have said the new iPhones are overpriced. Apple asked its suppliers late last month to produce fewer-than-planned units of its XS, XS Max and XR models, the Nikkei reported, citing sources with knowledge of the request. The request was made before Apple announced its forecast cut, the Nikkei said.

 

And very much not least there was this graph of Chinese investments in Africa. What are the conditions? At what point will they call back the loans? And when countries can’t pay back, what’s the penalty? How much of this has been provided by Beijing in US dollars it doesn’t have nearly enough of?

 

 

It’s like the much heralded Belt and Road project, or Silk Road 2.0, isn’t it, where the first batch of participating nations have started sounding the alarm over loan conditions. Yes, it sounds great, I admit, but I have long said that in reality Belt&Road is China’s ingenious scheme to export its industrial overcapacity and force other countries to pay for it. It’s like the model Rome had, and the US still do, just all in one single project. And this one has a name, and it can be expanded to Africa.

But no, I don’t see it. I think China’s debt, combined with the vast distance it still has from owning a global reserve currency, will call the shots, not Xi Jinping.

China won’t be taking over. At least, not anytime soon.

 

 

Jul 282018
 


Henri Matisse Window at Tangiers 1912

 

The Big Adjustments in “Real” GDP (WS)
China-US Trade War Would Wipe 20% Off The S&P 500 – UBS (CNBC)
Trump Tariffs: Turning Point In History, End Of Globalisation – Duncan (SCMP)
Julian Assange’s Fate Rests On Death Penalty Assurances -Moreno (CNN)
‘Assange’s Days In Ecuadorian Embassy In London Are Numbered’ – Correa (RT)
Twitter Share Price Drops 17% As Q2 Results Released (Ind.)
Facebook Is Sued After Stock Plunge ‘Shocked’ Market (R.)
Millions Could Be Affected By ‘No-Deal’ Brexit Medicines Shortages (PJ)
Yulia Skripal to Return to Russia When Her Father Gets Better (Sp.)
United Airlines Donates Flights To Reunite Immigrant Families (SFBT)
Greek Overtaxation Hurts Private Consumption (K.)
HRW Slams ‘Appalling’ Conditions Of Migrant Camps In Northern Greece (K.)

 

 

The last hurrah.

The Big Adjustments in “Real” GDP (WS)

What the Bureau of Economic Analysis released today as part of its GDP report was a huge pile of revisions and adjustments going back years. It included an adjustment to the tune of nearly $1 trillion in “real” GDP. And it lowered further its already low measure of inflation. Based on this revised data, second-quarter “real” GDP (adjusted for inflation) increased at a seasonally adjusted annual rate of 4.1% from the prior quarter. Annual rate means that if GDP continues to increase for four quarters in a row at the current rate, the 12-month GDP growth would be 4.1%. This was the highest growth rate since Q3 2014:

The above measure of “real” GDP – the change from prior quarter, but at an annualized rate – is the most volatile measure, producing the biggest-looking results, both up and down, as you can see in the above chart with a plunge of -8.4% in Q4 2008. Few or no other major countries use this measure for that reason. A less volatile measure and producing less big-looking results is the 12-month change in “real” GDP, which the BEA’s data set also provides. This is the inflation adjusted, seasonally adjusted annual rate of GDP growth – in other words, how GDP did over the past 12 months. For the 12 months ending in Q2, it rose 2.8%.

Read more …

And then more would follow.

China-US Trade War Would Wipe 20% Off The S&P 500 – UBS (CNBC)

Investors could see steep drops in global stock markets if tensions between China and the United States escalate into a full-blown trade war, analysts at UBS said in a note Friday. Assuming virtually all trade between U.S.-China is affected by tariffs and other protectionist policies, the Swiss bank calculated that profits for S&P firms would take a 14.6% hit, with U.S. and global growth being 245 and 108.5 basis points lower, respectively. However, the bank noted there would also be second-order effects. These “would be larger, with U.S. multinationals doing business in China also likely to be hurt by China retaliation.” Thus, in terms of company valuations, these would take an additional 9.1% hit, bringing a total downside of 21.3% for the U.S. benchmark after some further adjustments by UBS analysts.

So far this year, President Donald Trump has imposed new tariffs on Chinese solar panels, washing machines, steel and aluminum, as well as on other imported goods for intellectual property theft. China has retaliated every time. However, there are more potential tariffs on the way, with Trump threatening to impose new levies worth as much as $200 billion. David Riley, the chief investment strategist at BlueBay Asset Management, told CNBC’s “Street Signs” Friday: “If I was sitting in Beijing, I would be pretty worried.” “I think we are going to get potentially more tariffs imposed on China coming at the end of the month, or early September,” he said.

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“They may be intent on stopping China’s economic growth altogether..”

Trump Tariffs: Turning Point In History, End Of Globalisation – Duncan (SCMP)

The deepening trade dispute between the United States and China could mark a “turning point in history”, ending the system of global trade that brought low-cost goods to consumers and fuelled the rise of the Chinese mainland and other emerging markets in just a few decades, according to noted economist and author Richard Duncan. Bangkok-based Duncan believes the US$50 billion of Chinese products designated for 25% tariffs by the Trump administration – in addition to a proposed 10% tariff on an additional US$200 billion in Chinese goods – may represent the first steps in a policy shift by Washington that goes far beyond what many observers expect.

“I am becoming concerned that they really do intend to put up trade tariffs on a very large scale against China and that perhaps there’s more to this strategy than just balancing trade. They may be intent on stopping China’s economic growth altogether, now that China has become so large they are becoming not only an economic competitor, but potentially a military threat to US global dominance. If that’s the case, this could be a turning point in history,” Duncan said in a new South China Morning Post business podcast. While it is too early to say how the trade talks between the two sides will play out, one concern is that escalating tariffs, beginning with the US$34 billion of Chinese products which went into effect on July 6, are about to become the norm, rather than the exception.

[..] “Over the last 30 years the rapid economic rise of China has really transformed the world, but if the US starts putting tariffs on US$200 billion and US$500 billion of Chinese exports, then China’s economy could go into a very serious crisis,” Duncan said. [..] “I don’t view this as a conflict between the US and China. It is not that simple, it’s not team USA versus team China. There are interests in the United States that have benefited enormously from this arrangement that now exists, in particular, the large US multinationals. They have been able to drive down their labour costs by moving their factories from Detroit and other US cities into China. Their wage costs have collapsed as a result of this move. The share of profits that are split between labour and capital have shifted.”

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Beware international law, Lenin.

Julian Assange’s Fate Rests On Death Penalty Assurances -Moreno (CNN)

British and Ecuadorian authorities have held discussions over the future of Julian Assange, the Ecuadorian president said on Friday, fueling speculation that the WikiLeaks founder may soon be stripped of the country’s diplomatic protection in London. Speaking in Madrid, President Lenín Moreno suggested Ecuador was seeking guarantees that whatever Assange’s eventual fate, he would not face the death penalty. Assange took refuge in the Ecuadorian Embassy in London in 2012 when he was facing allegations of sexual assault in Sweden. The case was eventually dropped but Assange has always feared being extradited to the US, and in the past his lawyers have claimed he could face execution there.

Moreno said the previous Ecuadorian government granted Assange asylum because it agreed his life was in danger. “The death penalty does not exist in Ecuador, and we knew that possibility existed… The only thing we want is a guarantee that his life will not be in danger,” Moreno said. In a statement Friday, Moreno’s communication’s office stressed the President “hasn’t ordered, at any moment, the removal of Julian Assange from the Ecuadorian embassy in London.” Ecuador’s government has no desire that Assange remain “in asylum his whole life” and urged “a solution to a problem we inherited,” the statement said. [..] Moreno made it clear that he did not support Assange’s work. “I have never agreed with what Mr. Assange does. I have never supported the interception of private emails to be able to obtain information, regardless of how valuable it may be, to bring to light certain undesirable actions carried out by governments on people.”

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No, really, Correa and Moreno were close friends. I’m convinced the Americans got to Moreno before he became president.

‘Assange’s Days In Ecuadorian Embassy In London Are Numbered’ – Correa (RT)

The days of Julian Assange’s residence in the Ecuadorian embassy in London are numbered, the country’s former president Rafael Correa, who was still at the helm when he offered the WikiLeaks founder asylum, has told RT. Correa’s remarks came amid speculation that his successor, Lenin Moreno, may soon kick Assange out, probably to be arrested by British authorities. According to Assange himself, this would lead to the unsealing of a secret US indictment against him and his extradition to America. Moreno this week said that, sooner or later, the self-exiled anti-secrecy activist will have to leave the Ecuadorean diplomatic mission.

You can be sure that he [Moreno] is a hypocrite. He already has an agreement with the US about what will happen to Assange. And now he’s just trying to sweeten the pill by saying he’s going to have a dialogue” about conditions of the transfer, Correa told RT. “I’m afraid … that Assange’s days in our embassy are numbered.” Ecuador’s President Lenin Moreno, has made no secret that Assange’s refuge was a nuisance for his government, which he inherited from Correa. The Australian has been living at the compound since 2012 and has lately been barred by his Ecuadorean hosts from any communications.

Accusing the incumbent Ecuadorian president of “reducing [Assange] to a hacker who snooped in private emails,” Correa pointed out that Moreno cannot grasp the complexity of Assange’s role in exposing human rights abuses by the US government, or the harsh punishment the 47-year-old will face if extradited to the US. Correa, who now hosts a show on RT’s Spanish service, noted that unless Assange secures safe passage guarantees, he is likely to be prosecuted for espionage and treason “which may carry the death penalty.” While Moreno said on Friday that he is trying to negotiate Assange’s security guarantees, Correa believes that the activist’s fate has already been sealed.

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Twitter’s shadow banning scandal lurks in the background.

Twitter Share Price Drops 17% As Q2 Results Released (Ind.)

Twitter Inc shares have plunged 17% after the social media platform revealed its monthly users dropped by 1 million in the second quarter – and predicted the number will decline further. The decline in monthly users comes as Twitter contends with increasing fake spam accounts and dangerous rhetoric on the platform. Monthly active users are at 335 million in the current quarter, according to a statement released by Twitter on Friday, down from 336 million in the first quarter. Despite the decline, the number of users is up 2.8% from the past year, but Twitter expects the numbers to continue falling as the crusade against spam accounts continues.

“Our second quarter results reflect the work we’re doing to ensure more people get value from Twitter every day,” said Twitter CEO Jack Dorsey in a statement. “We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviours that distort and distract from the public conversation.” According to Dorsey, the company’s machine-learning algorithms are identifying more than 9 million potential spam or fake accounts a week.

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Any fine would be paid by…the same shareholders who sue.

Facebook Is Sued After Stock Plunge ‘Shocked’ Market (R.)

Facebook Inc and its chief executive Mark Zuckerberg were sued on Friday in what could be the first of many lawsuits over a disappointing earnings announcement by the social media company that wiped out about $120 billion of shareholder wealth. The complaint filed by shareholder James Kacouris in Manhattan federal court accused Facebook, Zuckerberg and Chief Financial Officer David Wehner of making misleading statements about or failing to disclose slowing revenue growth, falling operating margins, and declines in active users. Kacouris said the marketplace was “shocked” when “the truth” began to emerge on Wednesday from the Menlo Park, California-based company.

He said the 19% plunge in Facebook shares the next day stemmed from federal securities law violations by the defendants. The lawsuit seeks class-action status and unspecified damages. Shareholders often sue companies in the United States after unexpected stock price declines, especially if the loss of wealth is large. Facebook has faced dozens of lawsuits over its handling of user data in a scandal also concerning the U.K. firm Cambridge Analytica. Many have been consolidated in the federal court in San Francisco.

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“..we make no insulin in the UK. We import every drop of it.”

Millions Could Be Affected By ‘No-Deal’ Brexit Medicines Shortages (PJ)

Many patients — including the prime minister herself — could be “seriously disadvantaged” by disruption to the drug supply chain if the UK exits the EU without a deal, the head of the UK’s medicines regulator has said. In comments made in a “personal capacity” to The Pharmaceutical Journal, Sir Michael Rawlins, chair of the Medicines and Healthcare products Regulatory Agency (MHRA), said that the supply of medicines such as insulin could be disrupted because the UK does not manufacture it and transporting it is complicated as its storage has to be temperature-controlled. Prime minister Theresa May has type 1 diabetes and is known to use insulin to control it.

Rawlins said that the government needed to “work out how” the supply of some medicines are going to be guaranteed in the event of a ‘no-deal’ Brexit. He said: “There are problems and the Department for Exiting the EU and the Department of Health and Social Care (DHSC) needs to work out how it’s going to work. “Here’s just one example why: we make no insulin in the UK. We import every drop of it. You can’t transport insulin around ordinarily because it must be temperature-controlled. And there are 3.5 million people [with diabetes, some of whom] rely on insulin*, not least the prime minister.”

Read more …

What happened to the gag order? Oh, wait, this is Sputnik.

Yulia Skripal to Return to Russia When Her Father Gets Better (Sp.)

Yulia Skripal, who was allegedly poisoned alongside her father Sergei Skripal in the UK city of Salisbury in March, will return to Russia when the latter gets better, Yulia’s cousin Viktoria Skripal told Sputnik on Thursday. “[Yulia] said she was doing well and already had a connection to the Internet… She will return home when her father gets better,” Viktoria said. The phone conversation took place on Tuesday, when Sergei Skripal’s mother was celebrating her 90th birthday.

“She was very happy to hear that Sergei was okay,” Viktoria stressed, adding that, according to Yulia, Sergei Skripal still had a respiratory tube in his trachea. On March 4, the Skripals were found unconscious on a bench at a shopping center in Salisbury. The United Kingdom and its allies have accused Moscow of having orchestrated the attack with what UK government claims was the A234 nerve agent, albeit without presenting any proof. Russian authorities have refuted the allegations as groundless.

Read more …

United’s CEO is Hispanic.

United Airlines Donates Flights To Reunite Immigrant Families (SFBT)

Several of the nation’s airlines made headlines in June when they told Washington that they would not fly immigrant children separated from their families at the border. Now United is going one step further by donating flights to reunite children that have been separated from their immigrant families. United’s move is garnering favorable attention on social media. “We have great news to share! A growing community of support is coming together to reunite families who were separated at the border. We are so thankful and happy to announce that United Airlines is jumping in and helping,” FWD.us posted on Facebook. “Thanks to this partnership with United, we are able to provide travel to the recently reunited immigrant families to get to their next destination with dignity.”

Another supporter of United’s generosity tweeted, “Thank you @united. You’re good people.” Earlier this week, the Refugee and Immigrant Center for Education and Legal Services, the Texas nonprofit also known as RAICES, said that it planned to donate $3 million as part of a #FlightsForFamilies initiative, The Hill newspaper reported. RAICES is working with FWD.us and Families Belong Together on the effort to reunite immigrant families. RAICES made news last week by declining a $250,000 donation from San Francisco-based Salesforce.com because of the tech company’s contract with U.S. Customs and Border Protection. Chicago-based United Airlines, which operates a major hub in San Francisco, could risk some backlash from wading into the contentious immigration debate, but the carrier may expect most Americans will embrace the idea of reuniting families.

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The troika works like a boa constrictor.

Greek Overtaxation Hurts Private Consumption (K.)

Conditions of weak growth and high unemployment look set to continue in the Greek economy, as despite the increase in exports and investments, private consumption remains stagnant due to overtaxation, according to Alpha Bank’s weekly economic bulletin. “The drop in private consumption in the first quarter of 2018 coincides with households’ limited consumption capacity due to the excessive taxation imposed both through direct and indirect taxes. According to Bank of Greece estimates, private consumption is expected to show a small 0.8% increase in 2018, which will be supported by the increase in employment and the negative mean trend toward savings,” the bulletin read.

The bank’s analysts point out that, with the exception of the significant annual rise of 33% in car sales, all other indexes point to weak growth in private consumer spending: The retail sales volume index grew by just 0.6% on an annual basis in the January-April period, against an increase of 1.1% in the whole of 2017. Also takings from value-added tax slipped 0.3%, illustrating the weak demand in the market, Alpha noted.

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If the EU wanted to stop this, they could. Within days.

HRW Slams ‘Appalling’ Conditions Of Migrant Camps In Northern Greece (K.)

Human Rights Watch (HRW) has issued a scathing report on the “appalling” conditions that migrants and refugees face in northern Greece. HRW said that thousands have been subject to appalling reception and detention conditions, with at-risk groups lacking necessary protection. It added that Greece has failed to ensure minimum standards for pregnant women, new mothers and others arriving via the northeast land border with Turkey, many of whom are fleeing violence or repression in countries including Syria, Afghanistan and Iraq.

The group said that during visits by its members to three government-run centers last May they found that living conditions did not meet international standards in terms of adequate access to healthcare – including for mental health and support for at-risk people including women traveling alone, pregnant women, new mothers, and survivors of sexual violence. Several of the 49 residents at the three facilities that HRW interviewed also reported verbal abuse by police. Two said they witnessed police physically abusing others. Hillary Margolis, a women’s rights researcher at HRW, said, “People told us they were being treated so poorly in these facilities that they felt less than human.” “Greece has a responsibility to uphold basic standards of care for everyone in its custody, regardless of their immigration status,” she added.

Read more …

Mar 282018
 


Edvard Munch Spring in Johan Karl Street 1944

 

Steen Jakobsen Fears 30% Market Correction With Consumer ‘Maxed Out’ (CNBC)
China Says Kim Jong Un Agrees To Denuclearize Korean Peninsula (R.)
All The Personal Data That Facebook/Google Collect (Curran)
Mark Zuckerberg Agrees To Testify Before Congress Over Data Scandal (G.)
37 State Attorneys General Demand Answers From Zuckerberg (ZH)
Zuckerberg’s Refusal To Testify Before UK MPs ‘Absolutely Astonishing’ (G.)
Jimmy Carter: Trump Hiring Bolton ‘A Disaster For Our Country’ (USAT)
Brexit Referendum Won Through Fraud – Whistleblower (G.)
Austria Draws Scorn for Sitting Out Russian Diplomat Expulsions (BBG)
160 Countries Want To See Proof In Skripal Case – Russia’s UK Embassy (RT)
Tesla Just Months From A Total Collapse – Hedge Fund (MW)
The Missing Economic Measure: Wealth, not GDP (OWiD)

 

 

Goldilocks and Frankenstein.

Steen Jakobsen Fears 30% Market Correction With Consumer ‘Maxed Out’ (CNBC)

Stock markets could see a hefty fall in the coming months due to a slew of trends that point to a downturn in the global economy, one economist told CNBC. Steen Jakobsen, the often-bearish chief economist at Danish investment house Saxo Bank, cited several factors including growing credit loans, a widening fiscal deficit in the U.S., doubts over infrastructure spending plans and a potential trade war. “All the data we’ve seen over the last few weeks has basically been that the consumer is maxed out, we’ve seen that in credit card loans as well, so I think the consumer is done spending the money,” he told CNBC Tuesday. New data Tuesday showed that U.S. consumer confidence declined in March, falling below expectations and breaking a two month streak of gains.

“I think overall we have been pricing in for Goldilocks and we are closer to Frankenstein to be honest,” he said. He added that in a scenario of a potential sudden economic recession, he sees a possible market correction of between 25 and 30%. Jakobsen highlighted a “Goldilocks” scenario that he feels traders are mistakenly pricing in to markets, where fresh economic data are either not too hot or not too cold. Overall, the global economy is currently experiencing lower levels of unemployment and higher growth. Looking at 2018 in particular, many analysts hoped for strong global growth on the back of higher inflation and higher investment, but according to Jakobsen, these drivers “aren’t actually materializing.”

Instead, Jakobsen made a reference to the novel “Frankenstein,” arguing that the economy had been skewed by central bankers, who have injected trillions of dollars into the global economy to boost growth and investment. The first quarter of 2018 “started at more than 5% expected GDP; we are now significantly less than 2% for the (first quarter) expected, so I don’t really see things happening in the growth area,” Jacobsen added. “We’ve been at 2% exactly since the financial crisis, I don’t think we’re going to deviate from that,” he said.

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Again, he says it’s what his father and grandfather wanted. Perfect way to save face.

China Says Kim Jong Un Agrees To Denuclearize Korean Peninsula (R.)

China said on Wednesday it won a pledge from North Korean leader Kim Jong Un to denuclearize the Korean peninsula during a meeting with President Xi Jinping, who pledged in return that China would uphold its friendship with its isolated neighbor. After two days of speculation, China announced on Wednesday that Kim had visited Beijing and met Xi during what the official Xinhua news agency called an unofficial visit from Sunday to Wednesday. The trip was Kim’s first known journey abroad since he assumed power in 2011 and is believed by analysts to serve as preparation for upcoming summits with South Korea and the United States.

Beijing has traditionally been the closest ally of secretive North Korea, but ties have been frayed by North Korea’s pursuit of nuclear weapons and China’s backing of tough U.N. sanctions in response. Xinhua cited Kim as telling Xi that the situation on the Korean peninsula is starting to improve because North Korea has taken the initiative to ease tensions and put forward proposals for peace talks. “It is our consistent stand to be committed to denuclearisation on the peninsula, in accordance with the will of late President Kim Il Sung and late General Secretary Kim Jong Il,” Kim Jong Un said, according to Xinhua. North Korea is willing to talk with the United States and hold a summit between the two countries, he said.

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Zero Hedge with the entire Twitter thread by Dylan Curran. Does that wake you up?

All The Personal Data That Facebook/Google Collect (Curran)

The Cambridge Analytica scandal was never really about Cambridge Analytica. As we’ve pointed out, neither Facebook nor Cambridge Analytica have been accused of doing anything explicitly illegal (though one could be forgiven for believing they had, based on the number of lawsuits and official investigations that have been announced). Instead, the backlash to these revelations – which has been justifiably focused on Facebook – is so severe because the public has been forced to confront for the first time something that many had previously written off as an immutable certainty: That Facebook, Google and the rest of the tech behemoths store reams of personal data, essentially logging everything we do.

In response to demands for more transparency surrounding user data, Facebook and Google are offering users the option to view all of the metadata that Google and Facebook collect. And as Twitter user Dylan Curran pointed out in a comprehensive twitter thread examining his own data cache, the extent and bulk of the data collected and sorted by both companies is staggering. Google, Curran said, collected 5.5 gigabytes of data on him – equivalent to some 3 million Microsoft Word documents. Facebook, meanwhile, collected only 600 megabytes – equivalent to roughly 400,000 documents.

Another shocking revelation made by Curran: Even after deleting data like search history and revoking permissions for Google and Facebook applications, Curran still found a comprehensive log of his documents and other files stored on Google drive, his search history, chat logs and other sensitive data about his movements that he had expressly deleted. What’s worse, everything shown is the data cache of one individual. Just imagine how much data these companies hold in total.

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By now, shareholders may be his prime concern. Congress won’t hurt the CIA’s interests.

Mark Zuckerberg Agrees To Testify Before Congress Over Data Scandal (G.)

Facebook’s chief executive, Mark Zuckerberg, has agreed to testify before the United States Congress in the wake of a that has sent the company’s share price tumbling and prompted numerous investigations and lawsuits. Zuckerberg has accepted an invitation to testify before the House energy and commerce committee, according to an aide familiar with the discussions. A date has not yet been set, and the spokesperson for the House committee declined to confirm reports that the hearing was scheduled for 12 April. The Senate judiciary and commerce committees have also invited Zuckerberg to appear at hearings.

His decision to testify before the US Congress was first reported by CNN, and contrasts with his refusal to appear before members of parliament in the UK. The chair of a British committee of MPs on Tuesday said Zuckerberg’s decision to send other executives to the UK to answer questions on his behalf was “absolutely astonishing”. However, news of US congressional evidence paves the way for a major showdown for Zuckerberg, 33, who has come under increasing pressure from lawmakers and the general public to account for Facebook’s business practices since the company acknowledged last September that it had sold advertisements to Russian agents seeking to influence the US presidential election.

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Facebook took 30% of the loot. They sold their data perhaps thousands of times.

37 State Attorneys General Demand Answers From Zuckerberg (ZH)

37 “profoundly concerned” U.S. state and territory attorneys general fired off a letter to Facebook CEO Mark Zuckerberg on Monday, demanding answers over reports that personal user information from Facebook profiles was provided to third parties without the users’ knowledge or consent. “Most recently, we have learned from news reports that the business practices within the social media world have evolved to give multiple software developers access to personal information of Facebook users. These reports raise serious questions regarding consumer privacy”

The letter notes the 50 million Facebook profiles which may have been “misused and misappropriated by third-party software developers,” noting that Facebook “took as much as 30%” of payments made through applications used by Facebook users. “According to these reports, Facebook’s previous policies allowed developers to access the personal data of “friends” of people who used applications on the platform, without the knowledge or express consent of those “friends.” It has also been reported that while providing other developers access to personal Facebook user data, Facebook took as much as 30% of payments made through the developers’ applications by Facebook users.”

In other words – while a Facebook user may have agreed in the fine print to allowing the social media giant to hoover up their information – their “friends” did not. “These revelations raise many serious questions concerning Facebook’s policies and practices” reads the letter, which asks “were those terms of service clear and understandable, or buried in boilerplate where few users would even read them?”

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He’s just not that into you. Why talk to “the UK parliamentary committee investigating fake news” when he’s already agreed to speak to Congress?

Zuckerberg’s Refusal To Testify Before UK MPs ‘Absolutely Astonishing’ (G.)

Mark Zuckerberg has come under intense criticism from the UK parliamentary committee investigating fake news after the head of Facebook refused an invitation to testify in front of MPs for a third time. The chair, Damian Collins, said it had become more urgent the Facebook founder give evidence in person after oral evidence provided by the Cambridge Analytica whistleblower, Christopher Wylie. The MP said: “I think, given the extraordinary evidence we’ve heard so far today, it is absolutely astonishing that Mark Zuckerberg is not prepared to submit himself to questioning in front of a parliamentary or congressional hearing, given these are questions of fundamental importance and concern to his users, as well as to this inquiry.

“I would certainly urge him to think again if he has any care for people that use his company’s services.” Zuckerberg has been invited three times to speak to the committee, which is investigating the effects of fake news on UK democracy, but has always sent deputies to testify in his stead. MPs are likely to take a still dimmer view of his decision after he ultimately agreed to testify before Congress in the US. It was reported on Tuesday that the company is now considering strategy for his testimony. When the Commons committee travelled to Washington DC in February to obtain oral evidence from US companies, Facebook flew over its UK policy director rather than send a high-level executive to speak to the committee.

In response to the latest request, Facebook has suggested one of two executives could speak to parliament: Chris Cox, the company’ chief product officer, who is in charge of the Facebook news feed, or Mike Schroepfer, the chief technology officer, who heads up the developer platform. However, Theresa May declined to back Collins. Pressed by the committee chairman at the Commons liaison committee later in the day, the prime minister said “Mr Zuckerberg will decide for himself” whether to give evidence to parliament.

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The US has one sane person left. And he’s 93. Not that he’s the only one denouncing Bolton. But none of the rest do that nearly loud enough.

Jimmy Carter: Trump Hiring Bolton ‘A Disaster For Our Country’ (USAT)

Former president Jimmy Carter, one of the few U.S. officials who has traveled to North Korea and met with its leaders, expresses hope for the planned White House summit with Pyongyang but warns that President Trump may have made “one of the worst mistakes” of his tenure by naming John Bolton to the sensitive post of national security adviser. In an exclusive interview with USA TODAY, pegged to the publication of his new book titled Faith, Carter calls Bolton “a warlike figure” who backs policies the former president calls catastrophic. “Maybe one of the worst mistakes that President Trump has made since he’s been in office is his employment of John Bolton, who has been advocating a war with North Korea for a long time and even an attack on Iran, and who has been one of the leading figures on orchestrating the decision to invade Iraq,” Carter said. He called the appointment, announced last week, “a disaster for our country.”

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Perfect for Tony Blair et al. Maybe too perfect. Who cares about this guy’s views? Stick to the facts, please.

Brexit Referendum Won Through Fraud – Whistleblower (G.)

The EU referendum was won through fraud, the whistleblower Christopher Wylie has told MPs, accusing Vote Leave of improperly channelling money through a tech firm with links to Cambridge Analytica. Wylie told a select committee that the pro-Brexit campaign had a “common plan” to use the network of companies to get around election spending laws and said he thought there “could have been a different outcome had there not been, in my view, cheating”. “It makes me so angry, because a lot of people supported leave because they believe in the application of British law and British sovereignty. And to irrevocably alter the constitutional settlement of this country on fraud is a mutilation of the constitutional settlement of this country.”

Vote Leave has repeatedly denied allegations of collusion or deliberate overspending. When they , Boris Johnson, who fronted the campaign, said: “Vote Leave won fair and square – and legally. We are leaving the EU in a year and going global.” Wylie, who used to work for Cambridge Analytica, gave evidence in a nearly four-hour session before the digital, culture, media and sport select committee. He made a string of remarkable claims about Brexit and Cambridge Analytica, including that his predecessor, Dan Mursean, died mysteriously in a Kenyan hotel room in 2012 after a contract in the company turned sour. Wylie said it was striking that Vote Leave and three other pro-Brexit groups – ; Veterans for Britain, and Northern Ireland’s Democratic Unionist party – all used the services of the little-known firm Aggregate IQ (AIQ) to help target voters online.

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And Greece, Cyprus, Portugal, Bulgaria, Cyprus, Slovakia, Slovenia, Malta and Luxembourg. Belgium?!

Austria Draws Scorn for Sitting Out Russian Diplomat Expulsions (BBG)

Austria is drawing criticism from parts of the European Union for saying it couldn’t expel Russian diplomats on account of its neutrality. Chancellor Sebastian Kurz’s government, which includes nationalists that cooperate with Vladimir Putin’s party, declined to join the tough international response to a nerve-agent attack on a former Russian spy in England. Austria is a “builder of bridges between East and West” and wants to “keep channels open” to Moscow, it said. That position is “hardly compatible with EU membership” and there’s “a big difference between being part of the West and being a bridge between the West and the East,” former Swedish Foreign Minister Carl Bildt said Tuesday on Twitter.

Artis Pabriks, a former Latvian foreign minister who’s a member of the European Parliament, called Austria’s decision a “bad joke.” He asked: “Which other EU policies/decisions Kurz does not apply to Austria?” Kurz, whose People’s Party is part of the same political family as the parties of Bildt and Pabriks, said Monday that Austria backs the EU’s decision to pull its ambassador to Russia. In declining to take further measures, his government cited Austria’s neutrality, which the country adopted as a condition for ending its post-World War II occupation by the U.S., the Soviet Union, the U.K. and France in 1955.

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7 billion people do, too.

160 Countries Want To See Proof In Skripal Case – Russia’s UK Embassy (RT)

Scores of non-Western countries refuse to take the UK’s assertion that Russia was behind the incident in Salisbury at face value, demanding it present the evidence, Moscow’s embassy in London said. Some 160 states share that view. While many in the Western world, save several notable exceptions, united behind the UK as it accused Russia of poisoning the former spy with a military-grade toxic agent, many more countries have not been persuaded by the fiery rhetoric of British PM Theresa May, the spokesperson for Russia’s British embassy told Sputnik.

“Even if Mrs. May said that she was absolutely sure that Russia was responsible for the incident in Salisbury, she would have to present all evidence to Russia, the international community and the British public. This is the opinion of almost 160 countries which are not members of the Western bloc,” he said. “It is obvious that no one in the wider world would take British words for granted.” On Monday, following the lead of the UK, the US, 18 EU states and other European countries, Canada and Australia announced they would expel a number of Russian diplomats in solidarity with the UK. Washington alone ordered the expulsion of 60 diplomats, including 12 at the Russian mission to the UN, alleging they were covert intelligence operatives.

What became the largest collective expulsion of Russian diplomats in history was denounced by Moscow as an extremely unfriendly and unwarranted step. Still, there were voices in the West that refused to side with London until the evidence is laid out. Austria as well as Switzerland, both stressing their neutral country status, refused to follow suit. Cyprus, Portugal, Bulgaria, Cyprus, Slovakia, Slovenia, Malta and Luxembourg did not jump on the expulsion bandwagon either.

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Magic Muskroom.

Tesla Just Months From A Total Collapse – Hedge Fund (MW)

Unless Elon Musk “pulls a rabbit out of his hat,” Tesla will be bankrupt within four months, says John Thompson of Vilas Capital Management. “Companies eventually have to make a profit, and I don’t ever see that happening here,” he told MarketWatch. “This is one of the worst income statements I’ve ever seen and between the story and the financials, the financials will win out in this case.” Thompson manages $25 million and his Tesla short is the fund’s biggest position. To be fair, he’s been betting big against Tesla for years, which, of course, means he’s endured some brutal stretches. Last April, for instance, the stock hit a record high around the $300 mark, and Musk was right there to troll the Tesla bears.

From that point, the stock continued to break new ground, eventually topping out at $389.61. But despite Tesla’s strong performance in 2017, Thompson’s fund still managed to churn out a 65% gain for the year. Now, Tesla’s back to where it was when Musk fired off his “Shortville” tweet, and Thompson is confident his bet is about to pay off nicely. In fact, Thompson says if his prediction comes true, his fund could surge by another 50%. With that in mind, he says he’s investing $500,000 of his own money. “Tesla, without any doubt, is on the verge of bankruptcy,” he told clients in an email over the weekend.

He explained that funding will be hard to come by in the face of problems in delivering the Model 3, declining demand for the Model S and X, extreme valuation and a likely downgrade of its credit rating by Moody’s from B- to CCC. “As a reality check, Tesla is worth twice as much as Ford [estimate of the enterprise value of both companies], yet Ford made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss,” Thompson said. “Further, Ford has $12 billion in cash held for ‘a rainy day’ while Tesla will likely run out of money in the next 3 months. I’ve never seen anything so absurd in my career.”

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Flows vs stocks. GDP is attractive if you want to make money with destruction.

The Missing Economic Measure: Wealth, not GDP (OWiD)

So, what is GDP? GDP is a measure of economic activity – in terms of market-based gross output – in a given period (often a year). This is of course useful in many ways. GDP growth, when captured accurately, has the potential to tell us about the pace of change and rising levels of consumption. Equally, a cessation of GDP growth can serve as an important red flag: stalling enterprises and increases in unemployed workers tend to imply hardship and losses in welfare. However, there are important changes that GDP does not shed light on, and indeed might give us incorrect signals about. Think about climate change, a critical issue that has been increasingly under the international spotlight. An economy can increase its CO2 emissions and drive up local pollutants – both clearly harmful to the long-term wellbeing of the population – while being rewarded with rising GDP figures.

Similarly, a natural disaster might harm people, destroy infrastructure, and require expensive emergency measures – yet thanks to a rise in spending, this too would temporarily register as an increase in GDP. On the flip side, beneficial endeavors such as attempting to stall the alarming rate of biodiversity loss or deforestation not only fail to register in our headline statistic; they might slow its growth. This is where wealth accounting comes in. Rather than measuring flows, as GDP does, wealth is an indicator of an economy’s underlying capital stocks. Wealth, if measured in detail, accounts for the assets such as natural capital, produced capital, and human capital that underpin growth and consumption possibilities, and in this way shows us viable development pathways.

In the event of a natural disaster or rising pollution, for example, while GDP might grow, wealth measures would alert us to the depletion of underlying physical and natural capital stocks and the need for targeted investment. A detailed enough balance sheet would thus theoretically allow for the sustainable management of an economy’s productive capital. Therefore, while GDP has little to say about whether a nation’s assets can sustain current consumption levels into the future, wealth measures can tell us exactly this. The relationship between wealth and GDP is analogous to company accounts: the balance sheet of a company describes the stock of useful assets owned by a company (akin to wealth), while the profit and loss statement describes the flows of revenue, costs, and net income that the company has been able to generate using those assets (akin to GDP).

Read more …

Feb 102018
 


Frank Larson Times Square, New York 1950s

 

Worst Week in 2 Years for Stocks Ends on High Note (BBG)
By Betting On Calm, Did Investors Worsen The Stock Market Fall? (G.)
The Scariest Chart For The Market (ZH)
‘Bond Vigilantes’ Are Saddled Up And Ready To Push Rates Higher (CNBC)
The Worst Of The Bond Rout Is Yet To Come, Says Piper Jaffray (CNBC)
US GDP Growth Is Not As Rosy As It Seems (Lebowitz)
2018 Won’t Kill The Speculators. But It Will Teach Them A Lesson Or Two (Xie)
Minimum Wage Awkward Pillar Of Emerging Social Europe (AFP)
Relations Between Britain And The EU Sink To A New Low (Ind.)
UK Has More Than 750,000 Property Millionaires (G.)
Brexit Plan To Keep Northern Ireland In Customs Union Triggers Row (G.)
Greek PM Steps In To Police Exploding Novartis Bribery Investigation (FPh)
EU’s Moscovici Says Greece Will Be ‘Sovereign Country’ After Bailout (K.)

 

 

The one thing that really matters now is volatility, and all the outstanding bets for or against it.

Worst Week in 2 Years for Stocks Ends on High Note (BBG)

U.S. equities ended their worst week in two years on a positive note, but rate-hike fears that pushed markets into a correction remain as investors await American inflation figures on Feb. 14. The S&P 500 tumbled 5.2% in the week, its steepest slide since January 2016, jolting equity markets from an unprecedented stretch of calm. At one point, stocks fell 12% from the latest highs, before a furious rally Friday left the equity benchmark 1.5% higher on the day. Still, the selloff has wiped out gains for the year. Signs mounted that jitters spread to other assets, with measures of market unrest pushing higher in junk bonds, emerging-market equities and Treasuries. The Cboe Volatility Index ended at 29, almost three times higher than its level Jan. 26.

The VIX’s bond-market cousin reached its highest since April during the week, and a measure of currency volatility spiked to levels last seen almost a year ago. Pressure on equities came from the Treasury market, where yields spiked to a four-year high, raising concern the Federal Reserve would accelerate its rate-hike schedule. Yields ended the week at 2.85%, near where they started, as Treasuries moved higher when equity selling reached its most frantic levels. Commodities including oil, gold and industrial metals moved lower Friday. The dollar, euro and sterling all declined. “Sometimes making a bottom can take time,” Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co., said by phone. “Investors should be at least aware, cognizant, and expect a little more volatility after we go through this period of more cathartic volatility.”

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In more detail: volatility. Or in other words: how the Fed killed the market.

By Betting On Calm, Did Investors Worsen The Stock Market Fall? (G.)

Back in 2008, the non-financial world had to digest a lot of jargon in a hurry – collateralised debt obligations (CDOs), asset-backed securities (ABSs) and the rest of the alphabet soup of derivative products that contributed to the great banking crash. This week’s diet has felt similar. As the Dow Jones industrial average twice fell 1,000 points in a day, we have had to swallow tales about the VIX, the inverse VIX, the XIV, and ETPs. Did this overdose of three-letter acronyms really cause the stock markets to swoon? Have those geniuses in the back offices of investment banks really baffled themselves – and a lot of investors – with complexity again? The short answer to the second question is: yes. The chart shows one of the most spectacular blow-ups you could hope to see.

This is the XIV – it is actually the snappier name for the Credit Suisse VelocityShares Daily Inverse VIX Short Term exchange traded note – since the start of 2016. It was a beautiful investment until, suddenly, it was a disaster. What is the XIV? It was a way to bet that the S&P 500, the main US stock index, would be tranquil – in other words suffer few outbreaks of volatility. The measure of volatility is called the VIX and it is compiled and published by the Chicago Board Options Exchange by noting the prices of various option contracts in the market and then applying a mathematical formula. The VIX is more famously known as the “fear index”. In itself, the VIX is just a number – its long-term average is about 20, more than 30 is a worry, and more than 40 could herald a crisis.

For much of last year it was between 10 and 12 but on Tuesday it hit 50, before recoiling back to around 30 currently. The fun starts when products are invented to trade and speculate on how the VIX will perform. Conventional futures contracts came first. Then ETFs, or exchange-traded funds, a low-cost product that has taken the financial world by storm in the last couple of decades, followed. The XIV is slightly different (it’s a note, rather than a fund) but it comes from the same school. By trading S&P 500 options, or contracts to buy and sell the S&P at points in the future, it was structured to do the exact opposite of the VIX. If volatility in the stock market was low – as it was throughout 2016 and 2017 – owners of the XIV would do well. In the jargon, they were “short vol”. But, if volatility exploded, then the XIV would fall.

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Posted a different version of this chart (from Arbeter) yesterday, coming from Market Watch.

The Scariest Chart For The Market (ZH)

Interest-rates going up “for the right reason” is bullish, right? Each time interest rates have surged up to their long-term trendline, a ‘crisis’ has occurred…

But this time is different right? Because rates are “going up for the right reason.” Hhmm, the reaction in markets each time the yield on the 10-Year Treasury yield reaches its trendline is ominous…

So the question is – have interest rates ‘ever’ gone up for the right reason? Or is this narrative just one more bullshit line from a desperate industry of asset-gatherers and commission-takers? It does make one wonder what the relationship between US government ‘interest costs’ and global money flow really is. Does an engineered equity tumble spark safe-haven-buying and ease the pain as deficits and debt loads soar. It would certainly help as $300bn additional budget deals are passed, The Fed has left the game, and China is threatening to be a seller not a buyer…

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If everyone’s on the same side of the boat, somebody must be on the other.

‘Bond Vigilantes’ Are Saddled Up And Ready To Push Rates Higher (CNBC)

There’s reason to be concerned about bond vigilantes, who are no longer under “lock and key” and are free to push yields higher, Wall Street veteran Ed Yardeni told CNBC on Friday. Yardeni, a market historian, coined the term bond vigilantes in the 1980s to refer to investors who sell their holdings in an effort to enforce fiscal discipline. Having fewer buyers drives prices down — and drives yields up — in the fixed-income market. That, in turn, makes it more expensive for the government to borrow and spend. “They had been sort of put under lock and key by the central banks. The Fed had lowered interest rates down to zero in terms of short-term rates and that pushed bond yields down. And then they bought up a lot of these bond yields,” said Yardeni, president of Yardeni Research.

Now the Fed is slowly raising interest rates and starting to unwind its balance sheet. On top of that, new tax cuts were passed and a massive spending deal was just signed into law. “Now people are looking more at the domestic situation and saying, ‘You know what, maybe we need a higher bond yield,'” Yardeni said in an interview with “Power Lunch.” “They’ve saddled up, and they’re riding high. The posse is getting ready. They’re getting the message out.” Bond vigilantes last made their mark during the Clinton administration, when a bond market sell-off forced President Bill Clinton to tone down his spending agenda. Yardeni said while Clinton got the message back then, he doesn’t think the Trump administration has this time around.

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Sub: Rising rates slam stocks as market volatility rages on.

The Worst Of The Bond Rout Is Yet To Come, Says Piper Jaffray (CNBC)

It all started with bond yields. Spiking yields spilled over onto the stock market in the past week, first triggering a nearly 666-point drop on the Dow last Friday and then sparking two declines of more than 1,000 points within just 4 days. The bond rout will continue with yields on the 10-year possibly reaching 3% in the near term, according to Craig Johnson, senior technical strategist at Piper Jaffray. That is a level it has not reached since January 2014. “This is a 36-year reversal in rates,” Johnson told CNBC’s “Trading Nation” on Thursday. Bond yields, which move inversely to prices, have generally been in decline over the past 3 decades, indicating a long-term bull market for bond prices.

“When you reverse that downtrend from down to up you typically get a momentum response and a quick move up. That’s exactly what you’re seeing in the bond market right now,” added Johnson. “You’ve got to be careful in here right now.” The yield on 10-year Treasurys has risen at a fast clip since the U.S. election in November 2016. Bond yields held at around 1.8% prior to the election and have since moved up 100 basis points to hit a 4-year high of 2.86% this week. The uncertainty of a Trump presidency initially sent bond prices lower and yields higher at the end of 2016. Now, worries over the effect an accelerating economy and rising inflation might have on Federal Reserve policy this year have taken over. Historically, bond prices fall when interest rates rise.

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No savings and huge debt means less consumer spending. Which is what 70% of US GDP is made of.

US GDP Growth Is Not As Rosy As It Seems (Lebowitz)

Last Friday, GDP for the fourth quarter of 2017 was released. Despite being 0.3% short of expectations at 2.6% annual growth, it nonetheless produced enthusiasm as witnessed by the S&P 500 which jumped 25 points. One of the reasons for the optimism following the release was a strong showing of the consumer which notched 2.80% growth in real personal consumption. The consumer, representing about 70% of GDP, is the single most important factor driving economic growth and therefore we owe it to ourselves to better understand what drove that growth. This knowledge, in turn, allows us to better assess its durability. There are three core means which govern the ability of individuals to spend. The most obvious is income and wages earned.

To help gauge the effect of changes in income we rely on disposable income, or the amount of money left to spend after accounting for required expenses. Real disposable personal income in the fourth quarter, the same quarter for which GDP growth data was released, grew at a 1.80% year over year rate. While other indicators of wage growth are slightly higher, we must consider that payroll gains are not evenly distributed throughout the economy. In fact as shown below 80% of workers continue to see flat to declining growth in their wages. While this may have accounted for some of the growth in consumption we need to consider the two other means of spending over which consumers have control, savings and credit card debt.

Savings: Last month the savings rate in the United States registered one of the lowest levels ever recorded in the past 70 years. In fact, the only time it was lower was in a brief period occurring right before the 2008/09 recession. At a rate of 2.6%, consumers are spending 97.4% of disposable income. The graph below shows how this compares historically. [..] the savings rate is less than half of that which occurred since the 2008/09 recession and well below prior periods.

Credit Card Debt: In addition to reducing savings to meet basic needs or even splurge for extra goods, one can also use credit card debt. Confirming our suspicion about savings, a recent sharp increase in revolving credit (credit card debt) is likely another sign consumers are having trouble maintaining their standard of living. Over the last four quarters revolving credit growth has increased at just under 6% annually which is almost twice as fast as disposable income. Further, the 6% credit card growth rate is about three times faster than that of the years following the recession of 2008/09.

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The liquidity super machine is stalling.

2018 Won’t Kill The Speculators. But It Will Teach Them A Lesson Or Two (Xie)

A decade of massive, synchronised monetary and fiscal stimulus has led to the greatest asset bubble in history, to the tune of about $100 trillion, nearly 1.5 times the world’s GDP. Compared to 2-3% of GDP growth in the global economy, we should be mindful of the potential and huge cost associated with it. Even though the US stock market is more expensive than in 1929 or 2000, and China’s property valuation is higher than Japan’s a quarter-of-a-century ago, fear-driven selloffs have been rare and brief, leading to the belief that high asset prices are the new normal. Massive amounts of financial and business activities, especially in technology, are predicated on high asset prices going higher. The unusual longevity and resilience of high asset prices are largely because government actions — not herd behaviour in the market — are force-feeding the bubble.

Government actions will lose their grip only when growth expectations crash or inflation flares up. Neither is a major risk for 2018. Hence, 2018 won’t kill the speculators of the world. But 2018 will teach them a lesson or two. High-risk assets such as internet stocks and high-end properties will struggle like never before in the past decade. US interest rates will rise above inflation for the first time in a decade. And China is tightening, especially in the property sector, out of fear of a life-threatening financial crisis. China accounts for about half of global credit growth. The interaction between the US Federal Reserve’s quantitative easing and China’s credit targeting has been the liquidity super machine. It is stalling in 2018. The asset bubble demands that the excess liquidity-money supply rises faster than GDP to sustain it.

This year may see global money supply line up with GDP. The Fed is likely to raise interest rates from the current 1-1.25% and take the level to 2.5%. This is still low compared with the 4.5-5% nominal GDP growth rate. But the US stock market is more expensive than it was in 1929 or 2000. When the interest rate surpasses inflation, it will become wobbly. Policymakers are caught between a rock and a hard place. The structural problems that led to the 2008 crisis are still here. The global economy grows ever more dependent on asset bubbles. If the global asset bubble bursts, the economy will slide into recession. Hence, when a market wobbles — as it probably will in 2018 — policymakers will come out to soothe market sentiment and may even temporarily reverse the tightening.

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The EU is a feudal neo-liberal machine. There is no such thing as Soical Europe anywhere but in words. It’s about keeping the poor down, and dependent on your money.

Minimum Wage Awkward Pillar Of Emerging Social Europe (AFP)

Twenty-two out of 28 EU states have introduced a minimum wage, trumpeted as a key pillar in the construction of a social Europe. But huge disparities from one country to the next are fuelling resistance from opponents who see the policy as dragging down competitiveness, sovereignty as well as levelling down salaries. Brexit, as an expression of eurosceptic populism, has jolted the European Commission into going on the offensive as it looks to show the European Union is not just a common market but a bloc with a social dimension. A November 17 Social Summit for Fair Jobs and Growth last year set the ball rolling as all 28 EU members signed up to a Europe-wide charter on social rights, laying down 20 basic principles including statutory minimum wages as a mainstay of a policy framework to boost convergence.

“Adequate minimum wages shall be ensured, in a way that provide for the satisfaction of the needs of the worker and his/her family in the light of national economic and social conditions, whilst safeguarding access to employment and incentives to seek work,” according to the guidelines. But the non-binding declaration is, as such, merely symbolic, not least because “European treaties stipulate clearly that salaries come under the national purview,” notes Claire Dheret, head of employment and social Europe at the Brussels-based European Policy Centre (EPC). To date, the Gothenburg charter is being respected only partially, even if all but six EU states have a legal minimum wage, as witnessed by Eurostat data highlighting starkly varying levels from Bulgaria’s 460 leva (€235; $270) a month gross to €1,999 in Luxembourg, that is, nine times as much.

Even so, the discrepancy does shrink to around a factor of three when the cost of living in each state is taken into account. But the Eurostat data shows up major discrepancies between eastern and western states. Ten of the former pay a minimum of less than €500, whereas seven western EU members have set rates surpassing €1,300 euros. Five southern states pay between €650 and €850. The six without an official minimum, which have their own arrangements to cover the basic needs of low earners are Austria, Cyprus, Denmark, Finland, Italy and Sweden.

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We can repeat this every day: the mess gets messier.

Relations Between Britain And The EU Sink To A New Low (Ind.)

David Davis has been dragged into renewed war of words with Brussels over the Brexit transition period, accusing the EU of having a “fundamental contradiction” in its approach and wanting to “have it both ways” after a week of fruitless talks. Relations between Britain and the European Commission sank to a new low on Friday after Michel Barnier, the EU’s chief negotiator, casually claimed at a press conference the UK had cancelled an important meeting due to a “diary clash”. UK officials behind the scenes took offence to the claim and said the meeting had not been cancelled at all and instead took place in the afternoon. Mr Barnier sealed the state of mutual incomprehension, telling reporters in Brussels that he had “problems understanding the UK’s position” on the transition period.

In a statement issued on Friday afternoon after Mr Barnier’s press conference – a solo affair in contrast to previous joint outings – Mr Davis said the EU could not “have it both ways” on the transition period. “Given the intense work that has taken place this week it is surprising to hear that Michel Barnier is unclear on the UK’s position in relation to the implementation period,” he said. “As I set out in a speech two weeks ago, we are seeking a time-limited period that maintains access to each other’s markets on existing terms. “However for any such period to work both sides will need a way to resolve disputes in the unlikely event that they occur.

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And collapsing social services, health care etc. It’s a choice, not a flaw.

UK Has More Than 750,000 Property Millionaires (G.)

There are now more than 750,000 property millionaires in Britain, and in some towns in the south of England half of all homes cost more than £1m, according to analysis by website Zoopla. Despite a slowing property market, Zoopla estimated that the number of property millionaires has climbed to 768,553, a rise of 23% since August 2016. The figures underscore the hugely lopsided nature of the UK property market. Yorkshire and Humberside has 4,103 property millionaires, and Wales 2,223, while in London the figure is 430,720. The figures suggest that while one in 20 people in the capital are paper property millionaires, the same can be said for only one in every 1,400 people in Wales. Zoopla did not take into account the mortgage debt attaching to properties, just the number of properties valued at over £1m.

Outside London, Guildford in Surrey is the town with the most property millionaires, estimated at 5,889, followed by Cambridge and Reading. But Beaconsfield in Buckinghamshire emerges as having the greatest concentration of property wealth in just one town. Zoopla found that 49% of all the houses in the town of 12,000 people nestled below the Chiltern Hills are valued at more than £1m. Agents in the town – dubbed Mayfair in the Chilterns – are currently marketing an opulent six-bed home in Beaconsfield’s “golden triangle” for £6m, boasting a cinema, wine-tasting room and its own six-person smoke-mirrored passenger lift opening on to a galleried balcony with a “Sexy Crystals” chandelier. There is a separate annexe for staff.

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The EU plays the ultimate card: Scotland. The UK has no rebuttal. None. Nada.

Brexit Plan To Keep Northern Ireland In Customs Union Triggers Row (G.)

Officials from the UK and EU are drawing up a plan to in effect keep Northern Ireland in the customs union and the single market after Brexit in order to avoid a hard border. The opening of technical talks followed a warning from Brussels that keeping the region under EU laws was currently the only viable option for inclusion in its draft withdrawal agreement. The development, first reported by the Guardian on Friday and later confirmed by the EU’s chief negotiator, Michel Barnier, triggered an immediate row. Scotland’s first minister, Nicola Sturgeon, tweeted: “If NI stays in single market, the case for Scotland also doing so is not just an academic ‘us too’ argument – it becomes a practical necessity. Otherwise we will be at a massive relative disadvantage when it comes to attracting jobs and investment.”

Anne-Marie Trevelyan, a Tory MP and officer in the European Research Group of Brexit-supporting Conservatives, accused Barnier of “playing hardball”. “I am surprised that the media are reporting his comments as if they are the only voice and hard fact,” she said. “Perhaps Mr Barnier could remember that the UK is in negotiations, which is a two-way discussion.” “It is important to tell the truth,” Barnier said. “The UK decision to leave the single market and to leave the customs unions would make border checks unavoidable. Second, the UK has committed to proposing specific solutions to the unique circumstances of the island of Ireland. And we are waiting for such solutions. “The third option is to maintain full regulatory alignment with those rules of the single market and the customs union, current or future, that support north-south cooperation, the all-island economy and the Good Friday agreement. “It is our responsibility to include the third option in the text of the withdrawal agreement to guarantee there will be no hard border whatever the circumstances.”

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The present European commissioner for migration and home affairs is reported to have taken €40 million in bribes. He should lose his job, today.

Greek PM Steps In To Police Exploding Novartis Bribery Investigation (FPh)

Just days after 10 former ministers in Greece were implicated in bribery allegations against Novartis, the country’s prime minister is calling for a special parliamentary committee to investigate the charges, which have been pegged as slanderous by some politicians pulled into the widening scandal. Meanwhile, three former Novartis executives believed to have provided the meat of the allegations have come under fire, even as their lawyer fights to shield their identities. The investigation targeting Novartis’s Greece offices has been going on since last January, but it blew up earlier this week when news emerged that the case would be submitted to the Greek parliament, which would then decide whether to prosecute the 10 politicians. Novartis is the target of allegations that it bribed doctors and government officials to help boost sales of its drugs.

Now Prime Minister Alexis Tsipras wants the special committee to look into allegations that the 10 politicians received millions of euros in exchange for fixing drug prices and granting other favors to Novartis, according to local press reports. A spokesman for Novartis told FiercePharma that the company continues “to cooperate with requests from local and foreign authorities.” Novartis has not received an indictment related to the investigation in Greece, he added. According to press accounts of the prosecutors’ report, the allegations of bribery stemmed from testimony from three witnesses who worked for Novartis. The witnesses spoke to the FBI, which joined in the investigation in Greece. The employees reported that Greece’s health minister from 2006 to 2009 took €40 million ($49 million) in exchange for ordering “a huge amount” of Novartis products, according to The Greek Reporter.

The health minister working between 2009 and 2010 allegedly accepted €120,000 ($147,000) from the company and laundered it through a computer hardware firm, the news organization added. At least one of the politicians named in the report wants the identities of the three Novartis witnesses to be revealed. Dimitris Avramopoulos, who was the health minister from 2006 to 2009 and now serves as European commissioner for migration and home affairs, held a press conference Friday during which he said he will file a lawsuit demanding the names of the witnesses be made public, according to Politico.

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How dare he use the word sovereign in this context? Greece, like all other EU nations, was and is always sovereign. Demand his resignation.

EU’s Moscovici Says Greece Will Be ‘Sovereign Country’ After Bailout (K.)

On exiting its third international bailout in August, Greece will be an “absolutely sovereign country,” European Economic and Monetary Affairs Commissioner Pierre Moscovici told a conference on Friday organized by the Stavros Niarchos Foundation Cultural Center (SNFCC), French magazine Le Nouvel Observateur and Kathimerini in Athens. “There should be no precautionary credit line,” Moscovici said. “There should be an end to the programs.” The commissioner said that Greece “did what it had to do” but that economic and structural reforms must continue. He also drew attention to an “issue of administrative competence,” without elaborating. In addition, Moscovici expressed his confidence in Prime Minister Alexis Tsipras, who he described as “smart and flexible,” adding that their relationship was “perfect.” Tsipras and Finance Minister Euclid Tsakalotos decided to “play ball,” Moscovici said. He further said Tsakalotos’s predecessor Yanis Varoufakis wreaked major political and financial damage on Greece.

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Oct 282017
 
 October 28, 2017  Posted by at 9:15 am Finance Tagged with: , , , , , , , ,  11 Responses »


Stonehenge 1897

 

Spanish PM Dissolves Catalan Parliament And Calls Fresh Elections (G.)
Finland Prepares Parliamentary Vote To Recognize Catalonia (Exp.)
Catalonia Looks To Estonia’s E-Residency, Considers Cryptocurrency (IBT)
EU Economic Failures Are To Blame For Catalonia Mess – Steve Keen (Sp.)
Robert Mueller’s First Charges (Atlantic)
Large U.S. Cities Struggle With High Fixed Costs (BBG)
What You See Is Not What You Get in GDP (WS)
IRS Apologizes For Aggressive Scrutiny Of Conservative Groups (NPR)
J is for Junk Economics – Michael Hudson (Ren.)
New Zealand May Tighten Law That Allows Mega Wealthy To Buy Citizenship (G.)
Hopes Dashed For Giant New Antarctic Marine Sanctuary (AFP)

 

 

Vote for independence, get the opposite. A feature not a flaw in the EU.

Spanish PM Dissolves Catalan Parliament And Calls Fresh Elections (G.)

The Spanish government has taken control of Catalonia, dissolved its parliament and announced new elections after secessionist Catalan MPs voted to establish an independent republic, pushing the country’s worst political crisis in 40 years to new and dangerous heights. Speaking on Friday evening, the Spanish prime minister, Mariano Rajoy, said his cabinet had fired the regional president, Carles Puigdemont, and ordered regional elections to be held on 21 December. Rajoy said the Catalan government had been removed along with the head of the regional police force, the Mossos d’Esquadra. The Catalan government’s international “embassies” are also to be shut down. “I have decided to call free, clean and legal elections as soon as possible to restore democracy,” he told a press conference, adding that the aim of the measures was to “restore the self-government that has been eliminated by the decisions of the Catalan government.

“We never, ever wanted to get to this situation. Nor do we think that it would be good to prolong this exceptional [state of affairs]. But as we have always said, this is not about suspending autonomy but about restoring it.” The actions came hours after Spain’s national unity suffered a decisive blow when Catalan MPs in the 135-seat regional parliament voted for independence by a margin of 70 votes to 10. Dozens of opposition MPs boycotted the secret ballot, marching out of the chamber in Barcelona before it took place and leaving Spanish and Catalan flags on their empty seats in protest. Minutes later in Madrid, the Spanish senate granted Rajoy unprecedented powers to impose direct rule on Catalonia under article 155 of the constitution. The article, which has never been used, allows Rajoy to sack Puigdemont and assume control of Catalonia’s civil service, police, finances and public media.

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Finland, Argentina, perhaps Scotland, who’s next?

Finland Prepares Parliamentary Vote To Recognize Catalonia (Exp.)

Finland could be the first country to officially recognise Catalonia as a republic state, in a move that would put the Scandinavian country in direct opposition to the EU. The country’s MP for Lapland Mikko Karna has said that he intends to submit a motion to the Finnish parliament recognising the new fledgling country. Mr Karna, who is part of the ruling Centre Party, led by Prime Minister Juha Sipila, also sent his congratulations to Catalonia after the regional parliament voted earlier today on breaking away from the rest of Spain. Should Finland officially recognise the new state of Catalonia this will be yet another body blow to the the EU which has firmly backed the continuation of a unified Spain under the control of Madrid. European Commission President Jean-Claude Juncker warned today that “cracks” were appearing in the bloc due to the seismic events in Catalonia that were causing ruptures through the bloc.

Donald Tusk, the President of the European Council, said earlier today that for the EU nothing changes despite the Catalan parliament voting to breakaway from Spain. He said that the EU would continue to only speak with Spain. If Finland recognised Catalonia then this would make a mockery of the EU’s refusal to acknowledge the region’s new status. A statement from the European Union on October 2 read: “Under the Spanish Constitution, yesterday’s vote in Catalonia was not legal. [..] Argentina could also formally recognise the Republic of Catalonia and reject the intervention of the Spanish Prime Minister Mariano Rajoy who has moved to implement Article 155 which will permit Madrid to take over control of the semi-autonomous region. Socialist Left Argentine MP Juan Carlos Giordano, who represents Buenos Aires Province said that he would present a bill in parliament for the South American country to recognise Catalonia.

The Scottish Government has also sent a message of support, saying that Catalonia “must have” the ability to determine their own future. [..] “The European Union has a political and moral responsibility to support dialogue to identify how the situation can be resolved peacefully and democratically.”

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“Eva Kaili MEP, an advocate of fintech innovation who was a politician in Greece at the time of the crisis, recounts that the plan was taken seriously. “We talked about leaving the eurozone, finding another currency,” said Kaili. “There was even a ‘Plan B’, which involved essentially hacking into everyone’s accounts and replacing all their money with Bitcoin.”

Catalonia Looks To Estonia’s E-Residency, Considers Cryptocurrency (IBT)

As Spain is poised to seize control of the Catalan government and stop the region’s bid for independence, an initiative is underway to emulate Estonia’s innovative e-residency programme. Technology advocates in Catalonia, which is reputed to be ahead of the rest of Spain in areas like fintech, are also reportedly touting the possibility of a national cryptocurrency or digital token, something Estonia has also been considering. An article in Spain’s main daily newspaper El Pais reports that digital transformation experts working for the Government of Catalonia, the Generalitat de Catalunya, have visited Estonia several times to gather tips on how to implement an e-residency programme. Dani Marco, director of SmartCatalonia, who appears to be heading up the initiative, pointed out that the Estonians “started from scratch, with all the possibilities they were offered to build a model of economic development.”

The article goes on to namecheck Vitalik Buterin, inventor of the next generation public blockchain Ethereum, who was attending a technology conference in Barcelona. The takeaway was that Catalonia could follow Estonia’s proposal to issue some flavour of national blockchain tokens – a decentralised store of value in other words. Most of the time you hear about banks stating that cryptocurrencies like Bitcoin are only good for criminals, or that they are too slow, or volatile to be of any real use. However, issuing digital currency without the need for a central bank is undoubtedly a bona fide use case. Moreover, the mere mention of Estonia in this context is somewhat incendiary: the digitally advanced Baltic nation recently proposed issuing a national cryptocurrency – the so-called “Estcoin”.

This would make it the first nation to carry out an initial coin offering (ICO), a new way of funding technology projects by issuing tokens on a blockchain. A blogpost on the subject garnered so much interest and media attention that in the end ECB chief Mario Draghi publicly slapped down the proposal. “No member state can introduce its own currency; the currency of the eurozone is the euro,” he said. The other thing that Estonia has perfected across its 1.3 million e-residents is a secure and tamper-resistant e-voting system. [..] It was not widely reported, but during the years of punishing austerity that followed the banking bailouts, Greece considered a desperate measure called “Plan B”, which essentially involved switching from the euro to Bitcoin.

Eva Kaili MEP, an advocate of fintech innovation who was a politician in Greece at the time of the crisis, recounts that the plan was taken seriously. “We talked about leaving the eurozone, finding another currency,” said Kaili. “There was even a ‘Plan B’, which involved essentially hacking into everyone’s accounts and replacing all their money with Bitcoin. “Plan B was quite well drafted. Move all accounts into to Bitcoin, establish Bitcoin ATMs – it’s scary, and of course it goes against the ethos of Bitcoin and being in control of your own assets. But look what happened in Cyprus; sometimes you are not safe from your own government.”

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“..the European Union is about unifying Europe — this is a great example of it actually causing Europe to fragment.”

EU Economic Failures Are To Blame For Catalonia Mess – Steve Keen (Sp.)

Sputnik: Quite extraordinary scenes this afternoon in Catalonia. Are you surprised it’s come to this? Steve Keen: No, I am not. One thing that we tend to forget is that the last fascist dictator to die in his sleep was the last fascist ruler of Spain. So there’s a deep tendency for authoritarian reactions in that country. But in the meantime, the real story I think is the impact of the euro causing effectively depressions through southern Europe. And areas that were rich before the euro came are the ones that are leading revolts against it right now. Catalonia, of course, is the prime example!

Sputnik: People see this as a problem for Spain, but isn’t it a bit of a problem for the EU too? Steve Keen: Absolutely! The EU has completely sided with Spain, the only thing it did was acknowledge that the actual referendum was illegal. It didn’t make any mention of the heavy-handed treatment by the Spanish police and of the enforcing of that judgment. They should have been far more sensible simply ignoring it. The EU has aligned itself here with basically suppressing democratic tendencies inside its own member countries. Sputnik: Do you think that’s actually recognized by the European public? Or has it gone unnoticed?

Steve Keen: I think it’s gone unnoticed because the real reason to form the European Union was to bring about European unity. And that was, of course, a noble aim after the Second World War. But the mistake was the economic system into which it was imposed. And if you’re trying to bring about economic democracy of a continental level, when you don’t have a treasury at the same time and you don’t have a way of equalising the impact of trade imbalances, which is what removing the flexible exchange rates prior to the euro ended up causing, then you have a system which will end up causing crisis after crisis. Which is, of course, what happened with the global financial crisis leading to great-depression-levels of unemployment in Spain. And they’re still at 17% of the population. For everyone who thinks that the European Union is about unifying Europe — this is a great example of it actually causing Europe to fragment.

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It’s getting ugly. And murky.

Robert Mueller’s First Charges (Atlantic)

The special counsel overseeing the Russia investigation reportedly obtained a sealed indictment on Friday. It’s the end of the beginning for the Russia investigation. Special Counsel Robert Mueller’s team has reportedly filed the first criminal charges as part of the sprawling inquiry into Moscow’s interference in the 2016 presidential election, CNN reported Friday night. Citing “sources briefed on the matter,” the network said a federal grand jury in Washington, D.C., approved the charges, which have been sealed by a federal judge. CNN did not indicate who had been charged, how many people had been charged, or what charges had been filed by Mueller’s team. An arrest could come by Monday. Reuters subsequently confirmed CNN’s reporting.

John Q. Barrett, a St. John’s University law professor and former associate special counsel in the Iran-Contra affair, said that a sealed indictment itself is rare, as is its disclosure to the press. “It’s possible that this could come from sources in the Department of Justice or defense counsel, each of which would have been likely to know that charges were going to be sought and that a sealing order was going to be sought,” he explained. “It’s unusual and would be a serious violation,” Matthew Miller, a former Justice Department spokesman under the Obama administration, said Friday night. “No one outside of the Justice Department or the court—including grand jurors, court reporters and such—should know, with the possible exception of the defendant’s attorney, who might have been briefed to arrange surrender.”

No matter who is indicted, the move will send shockwaves throughout the Trump administration and the nation’s capital. Until now, the Russia investigation has followed President Trump’s first year in office like a shadow, darkening his political fortunes without substantially altering them. A federal indictment of anyone connected to the Trump campaign or the White House would turn that theoretical danger into hard reality.

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The problems that crawl up on you in the dark of night.

Large U.S. Cities Struggle With High Fixed Costs (BBG)

Cities across the U.S. often feel the same pinch—trying to manage the typical costs of running a city, such as picking up trash and filling potholes, on top of ballooning retirement obligations and outstanding debts. Several major cities are struggling to keep up. The culprit: As employees age and retire, cities are on the hook for funding more pensions and health-care benefits. In 2016, local governments faced a pension investment gap of $3.7 trillion, according to Moody’s Investors Service. Their predicament only worsens when cities fall behind in making those payments or their investments lag. When you measure those fixed costs against a city’s operating budget, no major city is as embattled as Jacksonville, Florida. In the city of 881,000 people, fixed costs are 31.4 percent of expenses, according to data compiled by Bloomberg.

That’s driven by pensions, which made up almost 18 percent of expenses in fiscal 2016. Twenty-six other U.S. cities with populations of more than 250,000 have fixed cost ratios above 23 percent. They include Los Angeles and Houston, which could also be on the hook to pay Hurricane Harvey recovery costs that federal funds don’t cover. Smaller cities aren’t necessarily immune. City leaders in Hartford, Connecticut, where fixed costs are 27 percent of expenses, warned last month that the city wouldn’t be able to meet its financial obligations without additional help from the state. State lawmakers passed a budget with additional aid to the capital city on Thursday. Relief may not be around the corner for other areas. City revenues are expected to stagnate in 2017, on average, while expenditures are forecast to rise 2.1 percent, according to a Sept. 12 survey of 261 U.S. city finance officers by the National League of Cities.

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Awaiting revisions.

What You See Is Not What You Get in GDP (WS)

The US economy, as measured by “real” GDP (adjusted for a version of inflation) grew 0.74% in the third quarter, compared to the prior quarter. That was a tad slower than the 0.76% growth in Q2, but up from the 0.31% growth in Q1. GDP was up 2.3% from a year ago. To confuse things further, in the US, we cling to the somewhat perplexing habit of expressing GDP as an “annualized” rate, which takes the quarterly growth rate (0.74%) and projects it over four quarters. This produced the annualized rate of 2.99%, or as we read this morning all over the media, “3.0%.” This was the “advance estimate” by the Bureau of Economic Analysis. The BEA emphasizes that the advance estimate is based on source data that are “incomplete or subject to further revision by the source agency.”

These revisions can be big, up or down, as we’ll see in a moment. The BEA will release the “second estimate” for Q3 on November 28 and the “third estimate” on December 21. More revisions are scheduled over the next few years. So 2.99% GDP growth annualized, or 0.74% GDP growth not annualized, or 2.3% growth from a year ago… is pretty good for our slow-growth, post-Financial-Crisis, experimental-monetary-policy era, but well within the range of that era, that goes from 5.2% annualized growth in Q3 2014 to a decline of 1.5% in Q1 2011. So nothing special here:

[..] In other words, we won’t really know how the economy did in the last quarter until we have a lot more hindsight. Point one: It’s devilishly hard to estimate what’s going on in the vast and complex US economy. The BEA comes up with an “advance estimate” to give economy watchers a feel, but it concedes that there will be many and substantial revisions as more data become available, and that initial “feel” may be wrong. Point two: Equally complex economies, such as China’s, are equally hard to estimate. Yet China’s National Bureau of Statistics comes up with one big-fat figure that is always very near the number the central government had mandated earlier. It publishes its GDP number less than three weeks after the end of the quarter, and a week or more before the BEA’s advance estimate.

For example, on October 18, the National Bureau of Statistics reported that GDP in Q3 grew 6.8% year-over-year. And this figure – however hastily concocted, inflated, or just plain fabricated – becomes etched in stone. No one believes it. At least in the US, after many revisions and years down the road, GDP becomes a credible number. In China, you’ll never get there. And point three: GDP is a terrible measure of the economy. It measures what money gets spent on and invested in. It’s a measurement of flow. Among other shortcomings, it doesn’t include the source of money – whether it’s earned money or borrowed money. This leads to the distortion that piling on debt is somehow good for the economy, when in reality it’s only good for GDP but will act as a drag on the economy down the road.

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WTF?

IRS Apologizes For Aggressive Scrutiny Of Conservative Groups (NPR)

In a legal settlement that still awaits a federal judge’s approval, the IRS “expresses its sincere apology” for mistreating a conservative organization called Linchpins of Liberty — along with 40 other conservative groups — in their applications for tax-exempt status. And in a second case, NorCal Tea Party Patriots and 427 other groups suing the IRS also reached a “substantial financial settlement” with the government. Attorney General Jeff Sessions announced the two settlements Thursday. The Justice Department quoted him as saying of the IRS activity: “There is no excuse for this conduct. Hundreds of organizations were affected by these actions, and they deserve an apology from the IRS. We hope that today’s settlement makes clear that this abuse of power will not be tolerated.”

It’s “a historic victory,” said Jay Sekulow of the American Center for Law and Justice, a conservative nonprofit legal group representing the Linchpins plaintiffs. Sekulow, who is also on President Trump’s personal legal-defense team, said the IRS agreed to stop “the abhorrent practices utilized against our clients.” The Linchpins case, in federal circuit court in Washington, D.C., has no monetary settlement. The two sides agreed to bear their own legal fees. The consent order says the IRS admits it wrongly used “heightened scrutiny and inordinate delays” and demanded unnecessary information as it reviewed applications for tax-exempt status. The order says, “For such treatment, the IRS expresses its sincere apology.” [..] The controversy began in 2013 when an IRS official admitted the agency had been aggressively scrutinizing groups with names such as “Tea Party” and “Patriots.”

It later emerged that liberal groups had been targeted, too, although in smaller numbers. The IRS stepped up its scrutiny around 2010, as applications for tax-exempt status surged. Tea Party groups were organizing, and court decisions had eased the rules for tax-exempt groups to participate in politics. Groups sought tax-exempt status as 501(c)(3) charities, where the organization and its donors get tax write-offs, and 501(c)(4) “social welfare” organizations, where donors’ contributions are not tax deductible. After the IRS confession in 2013, its top echelons were quickly cleaned out. Conservative groups sued. Congressional Republicans launched what became years of hearings, amid allegations the Obama White House had ordered the targeting.

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Economics is designed to distort our view of the economy.

J is for Junk Economics – Michael Hudson (Ren.)

The main goal of neoliberalism is to create an economic model for a parallel universe that seems plausible, says economist, Michael Hudson, Professor of economics at the University of Missouri in Kansas City and a researcher at the Levy Economics Institute at Bard College. “It seems that it would work very nicely, if the world where that day,” he tells host and co-founder, Ross Ashcroft. “But economics does not have a relationship to the real world. “The function of neoliberal economics is to distract attention away from how the economy really works: Why it’s polarising, why people are having to work harder despite the fact that productivity is increasing, and why the economy is polarising between the 1% and the rest of the economy.” It’s classic cognitive dissonance.

And though there have been many economists who have accurately explained the world, the economist says very little empirical research has been factored into classical economic modelling. “Everyone from Adam Smith, through even Malthus and Ricardo – had the basic concepts of value and price theory correct, for instance” said Professor Hudson. “John Stuart Mill gets even better marks, though he was a little optimistic about where capitalism was going. Then Thorstein Veblen caps-it-off. These are people Americans haven’t heard very much of: The institutionalist, Simon Patton for instance, was the first Professor of Economics at America’s first business school – the Wharton School – who became the intellectual mentor of economics turning into sociology early in the 20th century.

“There is an enormous amount of analysis, all of it based on history, on empirical analysis, on statistical analysis – and all of that is excluded from the curriculum – so there’s no way to fit economic reality into the academic curriculum of neoclassical economics.” [..] “What happens is that people who criticise financialisation – for instance, modern monetary theorists – find that they can’t get published in the major refereed journals. And without that, they can’t get promoted within academia. Universities are systematically detouring students away from economic reality.” [..] When Professor Hudson was teaching at the New School 50 years ago, he said his graduate students were dropping out of economics because they couldn’t fit reality into the curriculum.

The economist, famed for sacking Alan Greenspan back before the days he was appointed to the Chair of the US Federal Reserve, criticised him for claiming he was “shocked” by the self-interest lending of institutions to protect shareholders equity. “He knew who paid him,” said Hudson. “When I was on Wall Street in the 1960s, banks were afraid to hire him because he was known for saying whatever the client wanted to be said. He’s a public relations person. “The fact is universities are teaching the economics of public relations for the corporate sector. That’s why, underlying this theory, is a theory of how an economy would work without government, or any governmental regulation, where taxation is seen as a burden.”

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It’ll be hard to keep the rich away.

New Zealand May Tighten Law That Allows Mega Wealthy To Buy Citizenship (G.)

New Zealand’s new Labour government will reconsider legislation that allows wealthy foreigners to effectively buy citizenship, the housing minister has said. In an interview with the Guardian about the housing shortage in New Zealand, Phil Twyford said the law that allowed Trump donor and Paypal co-founder Peter Thiel to become a citizen and buy a bolt hole in the South Island would come under scrutiny. Since coming into power last week, Labour has said it will ban foreigners from buying existing homes, along with a slew of policies aimed at addressing the housing crisis, which has seen homelessness grow to more than 40,000 people. However, the ban will not apply to foreigners who gain citizenship in New Zealand – a loophole that billionaire Thiel used, after spending a total of 12 days in the country.

Thiel’s fast-tracked citizenship allowed him to buy multiple properties in New Zealand, even though he told the government he had no intention of living in the country, but would be an “ambassador” for New Zealand overseas instead, and provide contacts for New Zealand entrepreneurs to Silicon Valley. “That was a discretionary decision that was made at the time [Thiel’s citizenship], and we were very critical. Our policy, banning people would apply to everybody, regardless of how much money they have or what country they come from,” Twyford said. “We haven’t announced policy on that [tightening the investment immigration criteria] but I think it is probably something that we are likely to look at.” Twyford said New Zealand’s ban on foreign buyers was modelled on similar legislation in Australia, and was designed to ensure New Zealanders can once again achieve the Kiwi dream of owning their own home.

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We are the tragedy.

Hopes Dashed For Giant New Antarctic Marine Sanctuary (AFP)

Hopes for a vast new marine sanctuary in pristine East Antarctica were dashed Saturday after a key conservation summit failed to reach agreement, with advocates urging “greater vision and ambition”. Expectations were high ahead of the annual meeting of the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) – a treaty tasked with overseeing protection and sustainable exploitation of the Southern Ocean. Last year’s summit in Hobart saw the establishment of a massive US and New Zealand-backed marine protected area (MPA) around the Ross Sea covering an area roughly the size of Britain, Germany and France combined. But an Australia and France-led push this year to create a second protected area in East Antarctica spanning another one million square kilometre zone failed.

Officials told AFP that Russia and China were key stumbling blocks, worried about compliance issues and fishing rights. Consensus is needed from all 24 CCAMLR member countries and the European Union. Greenpeace called for “greater vision and ambition” in the coming year while WWF’s Antarctic program chief Chris Johnson said it was another missed opportunity. “We let differences get in the way of responding to the needs of fragile wildlife,” he said. Australia’s chief delegate Gillian Slocum described the failure as “sad”. She also bemoaned little progress on addressing the impacts of climate change which was having a “tangible effect” on the frozen continent. “While CCAMLR was not able to adopt a Climate Change Response Work Program this year, members will continue to work together ahead of the next meeting to better incorporate climate change impacts into the commission’s decision-making process,” she said.

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Sep 142017
 
 September 14, 2017  Posted by at 9:30 am Finance Tagged with: , , , , , , , , , ,  5 Responses »


Edward Hopper Chop Suey 1929

 

Top Democrats Announce Deal With Trump To Protect ‘Dreamers’ (MW)
Fed Balance Sheet Reduction Will Reduce Funds Sent To Treasury (BI)
“You Should Take the Fed at Their Word” (WS)
“Markets Have Always Been Wrong” – Jamie Dimon (ZH)
10% of Global GDP Is Stashed In Tax Havens (BI)
Did You Know Housing Gets Counted Twice In GDP? (Murray)
The Real Earnings of Men (WS)
China’s Steel Mills Run at Full Tilt as Output Hits New Peak (BBG)
China’s Economy Cools Again (BBG)
US Senate Rejects Bid To Repeal War Authorizations (R.)
Has the NYT Gone Collectively Mad? (Robert Parry)
Crisis Brings Sea Change To Greek Housing Market (K.)
More Austerity May Be Ahead (K.)

 

 

They dine together, close a deal, and then can’t wait to tell entirely different stories to the press. But Trump has forced them into action.

Top Democrats Announce Deal With Trump To Protect ‘Dreamers’ (MW)

Top Democratic leaders said Wednesday night that they had reached a compromise agreement with President Donald Trump to enact protections for the children of undocumented immigrants in exchange for increased border security measures that do not include funding for a wall — which the White House then disputed. “We had a very productive meeting at the White House with the president,” read a joint statement from Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi. “The discussions focused on DACA. We agreed to enshrine the protections of DACA into law quickly, and to work out a package of border security, excluding the wall, that’s acceptable to both sides.” But shortly after that statement, White House press secretary Sarah Huckabee Sanders disputed that border-wall funding was off the table. “Excluding the wall was certainly not agreed to,” she said.

Schumer, of New York, and Pelosi, of California, had dinner with Trump at the White House on Wednesday night. It was apparently the second bipartisan agreement between Democrats and Trump in the past week, after last week’s surprise deal that provided funding for Hurricane Harvey relief and extended the debt ceiling for three months, much to Republicans’ chagrin. Extending protections for the Deferred Action for Childhood Arrivals program, which were rescinded by the Trump administration last week, is a top priority for Democrats and many Republican lawmakers. Without new legislation, the 690,000 children of undocumented immigrants — so-called “Dreamers” — enrolled in the program could face deportation as their status expires over the next two years. Trump had said he may “revisit” the issue of Dreamers in six months if Congress didn’t act.

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It’s like driving into a dark and wet dead end alley.

Fed Balance Sheet Reduction Will Reduce Funds Sent To Treasury (BI)

The Federal Reserve is not expected to raise interest rates again until at least December, and even that increase is now in doubt given low inflation and high political uncertainty in the United States. That doesn’t mean the central bank has no plans to tighten monetary policy, however. Officials are widely expected to announce the start of a gradual reduction of the Fed’s $4.4 trillion balance sheet, which more than quintupled in response to the Great Recession and financial crisis of 2007-2009. Policymakers are hoping the shrinkage, which they intend to accomplish by ceasing reinvestments of maturing bonds back into the central bank’s portfolio, will have minimal market impact. But a previous episode in 2013 known as the “taper tantrum,” when bond yields spiked sharply higher at the mere mention of a possible end to the Fed’s bond-buying program, offers a cautionary tale.

Regardless of immediate market impact, there will be a longer term effect on the government budget, currently the subject of heated debate, that most investors and politicians are ignoring. That’s because the Fed’s bond-buying program, in addition to lowering the government’s borrowing costs at a time when weak economic activity called for bigger budget deficits, created a stream of yearly returns of nearly $100 billion for the Federal Reserve which it then siphoned back to the Treasury. Sometimes these are referred to as the Fed’s “profits,” but that is a deceptive way of describing what is in effect an intra-government transaction. “As assets under management drop, so too will revenue on that portfolio. This will be a lost revenue source for the Treasury that will raise deficits and add to the Treasury’s financing” costs, writes Societe Generale Economist Stephen Gallagher in a research note to clients.

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Downward volatility.

“You Should Take the Fed at Their Word” (WS)

The markets have been brushing off the Fed and have done the opposite of what the Fed has set out to accomplish. The Fed wants to tighten financial conditions. It’s worried about asset prices. It’s worried that these inflated assets which are used as collateral by the banks, pose a danger to financial stability. It has mentioned several inflated asset classes by name, including commercial real estate, which backs $4 trillion in loans heavily concentrated at regional banks. And yet, markets have loosened financial conditions since the Fed started its tightening cycle in earnest last December. Markets are hiding behind “low” inflation, when the Fed is focused on asset prices. So longer-term yields have been falling even as short-term yields have moved up in line with the Fed’s target rate, and thus the yield curve has flattened.

The dollar has been falling. Equities have been soaring to new highs. And companies, if they’re big enough, are able to get funding for the riskiest projects at stunningly low rates. “I think there is maybe too much confidence that the Fed is not really going to do too much more on interest rates, that we’ll have one or two more rate hikes and that’s it,” Brian Coulton, chief economist for Fitch Ratings, told Reuters on Tuesday. Market participants are expecting “just one or two interest rate increases a year” despite the Fed’s stated expectation of seeing long-run interest rates at around 3.0%. “When the Fed says they’re going to engage in a gradual rate of interest rate increases, they mean three or four rate hikes every year and we think that’s what they’re going to do,” Coulton said. “We think that you should take them at their word and it may even be a little faster than that.”

This disconnect between market expectations and the Fed’s stated intentions could create volatility in fixed-income markets when markets finally catch up, he said. Volatility, when it’s used in this sense, always means downward volatility: a sudden downward adjustment in prices and spiking yields – a painful experience for the coddled bond market with big consequences for the stock market. “We think they’re going to be … getting more worried about some of the negative consequences of QE, the fact that it encourages risk taking and may create some issues for the banks,” he said. And he expects – this is “more of a personal view,” he said – that the Fed will continue with the rate hikes, or even accelerate them, even if consumer price inflation remains low.

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“There’s low volatility until they’re highly volatile.” Sounds like Minsky.

“Markets Have Always Been Wrong” – Jamie Dimon (ZH)

Oh, listen, markets are markets. There’s low volatility until they’re highly volatile. The stock market is high until it goes low. Markets therefore have always been wrong. And I think people are making mistakes. I can give you reasons why it might be low. We’ve had this fairly consistent, coherent, consistent growth. But forget the geopolitical noise and stuff like that. We’re chugging along, 2%. Europe is doing 2%. Russia – I mean, Japan is doing 1.5%, China’s doing their 6%. You know, earnings are doing okay. We’ve had a fairly benign economic environment. That’s a reason. I can give you another reason is that the Central Banks of the world that bought $12 trillion of securities. 12 trillion. Since they started doing QE. And that’s only just the U.S. That’s an awful lot of security purchases that might – in all things be equal, and remember things are never all equal – can reduce volatility.

And there may be other sides that are known. And once other sides happen, watch out. Then volatility goes way up. They’ll say they’re a genius, they figured out when it’s going to happened. I don’t guess on which kind of volatility. Like I said, we do a business. And we have to manage the volatility.” [..] The hurricanes are irrelevant. I wouldn’t have any policy matter as a function of hurricanes. Going to reduce GDP in the short run, they’ll probably increase it after that. I’ll let the economists figure it out. But almost a $20 trillion economy, that isn’t a reason to change monetary policy. It will create a lot of noise in the numbers, but I wouldn’t overreact to that. Advice, it’s very sympathetic. We’re doing – just so you know, we’re going to do a lot for affordable housing, get these people in these states 20,000 people in Florida, 6,000 in Houston. Most of the banks are waiving fees, delaying loan payments, offering special services for your employees and stuff like that.”

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Saw the graph before. Greece is the big one here.

10% of Global GDP Is Stashed In Tax Havens (BI)

The Panama Papers and other major leaks from offshore tax havens have helped shed light on just how much money the world’s wealthiest people are parking in untaxed obscurity, away from the authorities and, importantly, economic researchers. This new evidence has helped economists gain greater insight into just how steep disparities between the rich and the poor have become, because having actual data on offshore holdings tends to widen wealth gaps considerably. Three of these researchers have teamed up on two important papers that offer a more in-depth look at what the world’s worst tax-evading and -avoiding nations are, and they find that the existence of tax havens makes inequality much worse than it appears with standard, publicly available economic data.

“The equivalent of 10% of world GDP is held in tax havens globally, but this average masks a great deal of heterogeneity—from a few % of GDP in Scandinavia, to about 15% in Continental Europe, and 60% in Gulf countries and some Latin American economies,” Annette Alstadsæter at the Norwegian University of Life Sciences, Niels Johannesen of the University of Copenhagen, and Gabriel Zucman of the University of California at Berkeley write in the first of the two articles. Global gross domestic product is about $75.6 trillion, according to World Bank figures. They then apply these estimates to build revised series of top wealth shares in 10 countries accounting for nearly half of world GDP. “Because offshore wealth is very concentrated at the top, accounting for it increases the top 0.01% wealth share substantially in Europe, even in countries that do not use tax havens extensively,” the authors write. “It has considerable effects in Russia, where the vast majority of wealth at the top is held offshore.”

About 60% of the wealth of Russia’s richest households is held offshore, the economists estimate. “More broadly, offshore wealth is likely to have major implications for the concentration of wealth in many of the world’s developing countries, hence for the world distribution of income and wealth.” “These results highlight the importance of looking beyond tax and survey data to study wealth accumulation among the very rich in a globalized world,” they continue. They say that despite lip service to transparency, “very little has been achieved” in recent years. “With the exception of Switzerland, no major financial center publishes 18 comprehensive statistics on the amount of foreign wealth managed by its banks.”

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GDP is a lousy measure.

Did You Know Housing Gets Counted Twice In GDP? (Murray)

Your car gets counted once in GDP when it is built, not when it is driven. Your clothes, your bicycle, your furniture, all get counted once when they are manufactured, and not again when they are worn, ridden, or sat on. But homes are counted twice: Once when they are constructed, and again when they are occupied. The argument to include both housing construction (as a new capital investment good) and housing occupancy (as a consumption good) arises from a conceptual trick at the heart of national accounting. That trick is to separate out two types of ‘final’ goods when adding up the ‘value-added’ in the economy, which is what GDP does. One good is a consumption good. These are goods (and services) that households consume, like clothes, food, entertainment, and so forth. All the value added at intermediate stages in the production chain of these goods can be captured by looking only at the final retail value of the goods.

That value represents the total value-added across the economy to produce that good. The other type of good is an investment good. This is a good that lasts a long time and contributes to future production. A new rail line, for example, is classified a new investment good, and the value of its production is counted in GDP, even though households don’t get any value from it until it is used to run trains. Once the rail line is being used to run trains, the value of those travel services is also counted in GDP as a consumption good, which will include within it the value contribution of the rail line itself. Thus there is a type of double-counting when it comes to investment goods — you count them when they are made, and you count them again when they are used to make consumption goods.

This is intentional. The production of investment goods is a large share of GDP — between 20 and 40% in most countries. By ignoring this production, which is also the more volatile part of production over the business cycle, GDP loses much of its value as a measure of how economically active a country is. The construction of new homes is, therefore, an investment good, which gets counted in GDP. But then the occupancy of these same homes gets counted gain as a consumption ‘home rental’ good each period after. This applies to the 70% of households (in Australia at least) who own their own home, not just the renters. Although they don’t pay themselves rent to occupy their home, GDP is calculated as if they do by ‘imputing’ the rent that homeowners would have to pay themselves if they instead rented their home.

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” On this inflation-adjusted basis, men had earned more than that in 1972″
..

The Real Earnings of Men (WS)

For women who were working full-time year-round, median earnings (income obtained only from working) rose 0.7% on an inflation-adjusted basis from a year ago to $48,328, continuing well-deserved increases over the data series going back to 1960. The female-to-male earnings ratio hit a new record of 80.5%, after steady increases, up from the 60%-range, where it had been between 1960 and 1982. And while that may still be inadequate, and while more progress needs to be made for women in the workforce, it was nevertheless the good news.

Men in the workforce haven’t been so lucky. They have experienced the brunt of the wage repression over the past four decades, obtained in part via inflation, where wages inch up, but not quite enough to keep up with the Fed-engineered loss of purchasing power of the dollar. Median earnings for men who worked full-time year-round fell 0.4% in 2016, adjusted for inflation, to $51,640. On this inflation-adjusted basis, men had earned more than that in 1972 ($52,361). And it’s down 4.4% from the earnings peak in 1973 ($54,030). This translates into 44 years of real earnings decline:

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Just in time for the Party Congress. What a lucky coincidence!

China’s Steel Mills Run at Full Tilt as Output Hits New Peak (BBG)

Steel production in China chalked up a fresh monthly record as mills in the world’s top supplier increase output to profit from a rally in prices to six-year highs before government-ordered pollution curbs are implemented. Crude steel output climbed to 74.59 million metric tons last month, surpassing the previous peak of 74.02 million in July, and up from 68.57 million in August 2016, according to the statistics bureau Thursday. While that’s an all-time high for the month, daily output was less than the record in June. Production surged 5.6% to 566.4 million tons in the first eight months, also a record. Steel prices have been supercharged this year in the country that accounts for half of global output. A crackdown on illegal mills shuttered some supply, boosting the remaining producers, while demand has been underpinned by significant state-backed stimulus.

Investors are also eyeing signals that the government will press ahead with anti-pollution curbs over winter. “Steel mills have boosted output as profit margins are good,” said Helen Lau at Argonaut Securities in Hong Kong. “Production cuts won’t set in until September or October, so steelmakers are churning out as much as they can in the meantime.” Spot reinforcement bar in China, a benchmark product used in construction, hit 4,396 yuan a ton early this month, the highest level since October 2011. Prices have gained 30% this year. Steel output may drop in coming months as Asia’s top economy presses ahead with supply-side reforms. Hebei province, the center of China’s mammoth steel industry, has plans that’ll allow for winter output cuts of as much as 50% to reduce pollution. Citigroup Inc. has estimated daily production could shrink 8% because of the environmental crackdown.

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But wait! Same source, same day, opposite views.

China’s Economy Cools Again (BBG)

The pace of China’s economic expansion unexpectedly cooled further last month after a lackluster July, as factory output, investment and retail sales all slowed. • Industrial output rose 6.0% from a year earlier in August, versus a median projection of 6.6% and July’s 6.4%. That’s the slowest pace this year • Retail sales expanded 10.1% from a year earlier, versus a projection of 10.5% and 10.4% in July, also the slowest reading in 2017 • Fixed-asset investment in urban areas rose 7.8% in the first eight months of the year over the same period in 2016, compared with a forecast 8.2% rise. That’s the slowest since 1999.

The continued cooling of the world’s second-largest economy suggests that efforts to rein in credit expansion and reduce excess capacity are hitting home ahead of the key 19th Party Congress in October. Still, producer-price inflation and a manufacturing sentiment gauge both exceeded estimates earlier this month, signaling some resilience. The Shanghai Composite Index reversed earlier gains to fall 0.4%. “Today’s data shows that the economy clearly already peaked in the first half of this year,” said Larry Hu at Macquarie in Hong Kong. “Recently both property and exports are slowing down and that’s why the whole economy is slowing.” “Regulatory tightening in the financial sector is putting a squeeze on highly indebted firms reliant on shadow bank financing,” said Frederic Neumann at HSBC in Hong Kong.

“And officials are unlikely to take their foot off the regulatory brakes any time soon. Growth therefore looks set to weaken further into year end, as regulators step up their campaign to rein in shadow banking.” “That’s still on track to a gradual moderation,” Chang Jian, chief China economist at Barclays in Hong Kong, said in a Bloomberg Television interview. “The government has been closing capacity, especially those that don’t meet environmental standards, and enforcement this year has been much stricter in the run-up to the 19th Party Congress.”

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An empire built on war.

US Senate Rejects Bid To Repeal War Authorizations (R.)

The U.S. Senate rejected an amendment on Wednesday that would have forced the repeal of war resolutions used as the legal basis for U.S. military actions in Iraq, Afghanistan and against extremists in Syria and other countries. The Senate voted 61 to 36 to kill the measure, which six months after it became law would have put an end to authorizations for the use of military force (AUMF) passed in 2001 and 2002. The legislation was offered by Republican Senator Rand Paul as an amendment to a must-pass annual defense policy bill, which lawmakers are using as a vehicle to gain a greater say in national security policy. Paul’s measure was aimed at asserting the constitutional right of Congress to approve military action, rather than the president.

Some of the other amendments address issues such as sanctions on North Korea and President Donald Trump’s ban on transgender troops in the military. Many members of Congress are concerned the 2001 AUMF, passed days after the Sept. 11 attacks to authorize the fight against al Qaeda and affiliates, has been used too broadly as the legal basis for a wide range of military action in too many countries. The majority of support for the amendment came from Democrats, who joined Paul in arguing that it is long past time for Congress to debate a new authorization for the use of force. “We should oppose unauthorized, undeclared, unconstitutional war. At this particular time, there are no limits on war,” Paul said.

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Not really. They’re just chasing illusions.

Has the NYT Gone Collectively Mad? (Robert Parry)

For those of us who have taught journalism or worked as editors, a sign that an article is the product of sloppy or dishonest journalism is that a key point will be declared as flat fact when it is unproven or a point in serious dispute – and it then becomes the foundation for other claims, building a story like a high-rise constructed on sand. This use of speculation as fact is something to guard against particularly in the work of inexperienced or opinionated reporters. But what happens when this sort of unprofessional work tops page one of The New York Times one day as a major “investigative” article and reemerges the next day in even more strident form as a major Times editorial? Are we dealing then with an inept journalist who got carried away with his thesis or are we facing institutional corruption or even a collective madness driven by ideological fervor?

What is stunning about the lede story in last Friday’s print edition of The New York Times is that it offers no real evidence to support its provocative claim that – as the headline states – “To Sway Vote, Russia Used Army of Fake Americans” or its subhead: “Flooding Twitter and Facebook, Impostors Helped Fuel Anger in Polarized U.S.” In the old days, this wildly speculative article, which spills over three pages, would have earned an F in a J-school class or gotten a rookie reporter a stern rebuke from a senior editor. But now such unprofessionalism is highlighted by The New York Times, which boasts that it is the standard-setter of American journalism, the nation’s “newspaper of record.” In this case, it allows reporter Scott Shane to introduce his thesis by citing some Internet accounts that apparently used fake identities, but he ties none of them to the Russian government.

Acting like he has minimal familiarity with the Internet – yes, a lot of people do use fake identities – Shane builds his case on the assumption that accounts that cited references to purloined Democratic emails must be somehow from an agent or a bot connected to the Kremlin. For instance, Shane cites the fake identity of “Melvin Redick,” who suggested on June 8, 2016, that people visit DCLeaks which, a few days earlier, had posted some emails from prominent Americans, which Shane states as fact – not allegation – were “stolen … by Russian hackers.” Shane then adds, also as flat fact, that “The site’s phony promoters were in the vanguard of a cyberarmy of counterfeit Facebook and Twitter accounts, a legion of Russian-controlled impostors whose operations are still being unraveled.”

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See my article yesterday.

Crisis Brings Sea Change To Greek Housing Market (K.)

“What we are experiencing is the end of the era of home ownership in Greece as households can no longer save to buy property,” says Nikos Hatzitsolis, chief executive at real estate firm CB Richard Ellis-Axies, underscoring the fundamental changes that the crisis has triggered in the Greek property market. This change, the experts explain, is not just evident in the case of those just flying the nest who wouldn’t be in any position to own their home anyway unless it was given to them by their family, but also existing homeowners who are opting to leave their property and rent it out or sell it. “Around 70% of homeowners are becoming renters because they choose to sell their property to pay off debts such as mortgages, late taxes or credit card debt,” says Lefteris Potamianos, vice president of the Athens-Attica Estate Agents Association.

“If any money is left over from the transaction, it is not reinvested in another property, as was the case in the past, but used to rent another home. Basically, the dream of ownership that drove past generations has come to an end.” A significant%age of homeowners choosing to rent out their home and lease a different property for themselves also consists of young people who see their accommodation requirements increasing, due to the birth of a child for example, or want to live in an area with better schools or security. “We are seeing more and more such cases in the property market,” says Potamianos. “Given that sales prices are very low and it is hard to find a buyer, many owners prefer to rent out their property and then rent another for themselves, as getting bank funding for a purchase is incredibly difficult. Some even move around to see which area suits them best. Renting has this flexibility, allowing you to relocate if you’re not happy.”

For the overwhelming majority, however, renting is the only option, as buying is seen as bringing no advantages whatsoever anymore. “Even from a purely economic perspective, it’s not worth owning a home today. In contrast, people who rent avoid all the additional tax costs and are not exposed to the instability of the tax framework for real estate assets, which has become a tool of politics and results in no taxpayer knowing what tomorrow will bring,” explains Hatzitsolis. “Previous generations believed that buying houses was a form of investment. This is no longer the case, as we’re seeing a completely different mentality in younger people.”

The expert also draws attention to the cases of people who are stuck with their properties. “I know an owner who inherited a house in [the upscale Athenian suburb of] Ekali and has to pay 80,000 euros a year in property tax,” he recounts. “At best, the house could fetch 50,000 euros a year in rent, which means that this man has to cover losses of 30,000 euros every year, something that is a complete dead end.” This owner has little choice but to sell, says Hatzitsolis, adding that such cases also explain why an increasing number of people are refusing their inheritances.

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Europe won’t rest until they have created their very own Somalia.

More Austerity May Be Ahead (K.)

Greek authorities will honor their commitments as laid out in the latest loan deal with international creditors, even if this results in the need for additional austerity measures next year, a top government official indicated Wednesday. In an unusual show of honesty and realism, the same official suggested that there might not be a “clean exit” for Greece after its third bailout expires next summer but something more restrictive. There are a range of possible scenarios between that of a clean exit, which Prime Minister Alexis Tsipras has heralded, and the prospect of a credit line for Greece, the official said. On the prospect of more austerity next year, the official said he believed that there would not be a big divergence in fiscal targets next year. “If there is, we’ll see what happens, but were are committed to a target of 3.5% of GDP,” the official said, referring to the primary surplus goal set by creditors.

The official also noted that, once a primary surplus target is reached, residual revenue will go toward boosting the Social Solidarity Income program for 2017 for Greeks who have been hardest hit by austerity but also toward paying off state debts to the private sector and to growth programs. Decisions on these matters are expected to be taken following talks with the mission chiefs representing Greece’s foreign lenders, who are expected to travel to Athens next month and to assess the progress of authorities in boosting tax collection and curbing spending. Although Greek officials have underlined the importance of completing the next bailout review by the end of the year, sources suggest that the process might drag into January.

The most important thing, the official noted, is “that we are not part of the problem” when important discussions about the future of the Greek program get under way in the first quarter of next year, touching on the participation (or not) of the IMF in Greece’s third bailout and relief for the country’s debt burden. Greek authorities are concerned about the IMF’s stance opposite Athens. Apart from the Fund’s traditionally tough position on fiscal matters, there are concerns too about its demands for a further recapitalization of Greek banks. The official, however, assumed the stance of the ECB on this issue, noting that there is no need for Greek banks to receive further capital. The official said that Greece planned to tap international bond markets in the next 6-9 months following a successful return in July.

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