Mar 172017
 
 March 17, 2017  Posted by at 8:54 am Finance Tagged with: , , , , , , , ,  1 Response »
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DPC Wall Street and Trinity Church, New York 1903

 

California Judge Seeks To Prevent Immigration Arrests Inside State Courts (R.)
Collapsing Pensions Will Fuel America’s Next Financial Crisis (MW)
Statoil CEO Warns of Globalization ‘In Reverse’ (BBG)
Treasury’s Mnuchin Says Trump Does Not Want Trade Wars (R.)
Would Trump Budget Cut Meals On Wheels Funding? (BI)
Dutch Election Puts Question Mark Over Eurogroup Chief Dijsselbloem (R.)
Congressman Huizenga Introduces Bill to Oppose IMF’s Third Greek Bailout (YV)
Senators Demand State Department Probe Into Soros Organizations (ZH)
Mounting Costs, Not PBOC, Could Slow China’s Bank Debt Binge (BBG)
Will Chrystia Freeland Finally Ruin Canadian-Russian Relations? (SCF)
The Energy Market Explained (Clarke and Dawe)
Greek Public Health System On Brink, Doctors Warn (K.)
First-Time Asylum Applicants In Greece Up 339% In 2016 (Amna)
Refugees In Greece Suffering After EU Deal With Turkey, Say NGOs (G.)
Child Refugees In Greece Self-Harming And Attempting Suicide (Ind.)
Ai Weiwei Slams ‘Shameful’ Politicians Ignoring Refugees (AFP)

 

 

One very big step over the decency line.

California Judge Seeks To Prevent Immigration Arrests Inside State Courts (R.)

Chief Justice Tani Cantil-Sakauye said she was gravely troubled by recent reports that federal agents were “stalking undocumented immigrants in our courthouses to make arrests,” in a letter addressed to U.S. Attorney General Jeff Sessions and Secretary of Homeland Security John Kelly. “Courthouses should not be used as bait in the necessary enforcement of our country’s immigration law,” Cantil-Sakauye wrote. Trump has vowed to increase deportations and has widened the net of illegal immigrants prioritized for detention and removal. “We will review the letter and have no further comment at this time,” Peter Carr, a spokesman for the U.S. Department of Justice, said in an email.

Immigrant rights groups say federal agents have entered courthouses with increased frequency this year, including in California, Massachusetts, Maryland and Texas, said National Immigration Law Center staff attorney Melissa Keaney. “It’s definitely an issue we’re seeing a tremendous increase in under the new administration,” Keaney said by phone on Thursday. Cantil-Sakauye stopped short of questioning the legal right of federal agents to enter courthouses to locate and detain unauthorized immigrants. Her letter said the presence of immigration agents in California courthouses could undermine “public trust and confidence in our state court system,” which serves “millions of the most vulnerable Californians.”

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I don’t think pensions are in line to be the next crisis, but they will certainly cause one.

Collapsing Pensions Will Fuel America’s Next Financial Crisis (MW)

Washington has a knack for ignoring long-term financial shortfalls and painting overly rosy scenarios about the future to make their numbers work in the here and now. Case in point: Donald Trump’s unrealistic projection that the U.S. economy will grow at 3% this year, when the latest GDP forecasts have actually been reduced to 1.8% by a number of economists. Then there is Social Security. Many politicians are just too intimidated, uninformed or complacent to tackle the unsustainability of Social Security — which by the latest tally will see its trust fund go to zero just 17 years from now, in 2034. But while fudging GDP numbers is dangerous for America’s economic outlook and the demise of Social Security in two decades is a serious long-term concern, America faces a mathematical problem that dwarfs both of these items: A pending pension crisis that could leave millions of Americans high and dry in the very near future.

Sure, it would be difficult for many if the U.S. economy stumbles under misguided Trump policies. And yes, the idea of even modest cuts to Social Security in the coming decades could serious affect millions of seniors. But take a look South Carolina’s government pension plan, which covers roughly 550,000 people – one out of nine state residents – but is a staggering $24.1 billion in the red. This is not a distant concern, but a system already in crisis. Younger workers are being asked to do much more to support the pensions of retirees. An analysis by the The Post and Courier of Charleston noted recently that “Government workers and their employers have seen five hikes in their pension plan contributions since 2012, and there’s no end in sight.” (Most now contribute 8.66% of their pay, vs. 6.5% before the changes.) At the same time, the pension fund has been chasing more stocks and alternative investments instead of relying on stable investments like bonds that may be much less volatile but generate only meager returns.

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Of course Big Oil CEOs like globalization. But it’s still quite something to hear an oil exec claim: “Cross-border cooperation is also essential to solve climate change..”

Statoil CEO Warns of Globalization ‘In Reverse’ (BBG)

After the surprise election of Donald Trump, the head of Norway’s biggest oil company headed to Washington D.C. this month looking for reassurance. He came away as worried as ever. “I was looking for clarity, also some guidance, good advice, and also some people to talk to – new relationships within the administration,” Statoil CEO Eldar Saetre told a conference in Oslo on Thursday. “I have to be honest with you – I didn’t get much of any of it.” Saetre, whose company has stakes in three U.S. onshore areas and in the Gulf of Mexico, was concerned about the protectionist bent of the new president’s rhetoric. Combined with last year’s Brexit vote and looming elections in Europe where nationalists are gaining influence, he sees Trump’s victory as a threat to global free trade.

“From Brexit to Trump, we see warning signs that globalization could be going in reverse,” Saetre said at the annual Swedbank Energy Summit. “For our industry, I believe that would be very negative.” Trump’s energy policies could benefit oil producers in the U.S. by loosening regulations and freeing up more areas for drilling. However, his protectionist agenda could affect economic growth and trading relations with countries from neighboring Mexico to Asia. “Global collaboration and integrated markets have been and will remain key to make our industry prosper,” Saetre said. “Fair, open access to markets are keys to enable investments, value creation and jobs in our industry.” Cross-border cooperation is also essential to solve climate change, making it “more important than ever,” Saetre said.

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Schäuble and Mnuchin. Lovely pair.

Treasury’s Mnuchin Says Trump Does Not Want Trade Wars (R.)

U.S. Treasury Secretary Steven Mnuchin said on Thursday that the Trump administration has no desire to get into trade wars, but certain trade relationships need to be re-examined to make them fairer for U.S. workers. At a news conference with German Finance Minister Wolfgang Schaeuble, Mnuchin said that President Donald Trump views trade as important for economic growth. But when asked whether the Group of 20 finance ministers should explicitly reaffirm their past vow to resist protectionism, Mnuchin repeated his view that some U.S. trade relationships need to be re-examined to make them fairer and more reciprocal. “It is not our desire to get into trade wars,” Mnuchin said. “The president does believe in free trade but he wants free and fair trade.” Differences over trade could become a sticking point for G20 finance officials at a meeting in the spa town of Baden-Baden, Germany this weekend.

Schaeuble told Reuters in an interview that it was unclear whether the anti-protectionism language would remain in the G20 statement to be issued at the meeting’s close on Saturday. Given that Trump’s “America First” agenda, trade issues could be set aside for G20 leaders to tackle at a summit in July, Schaeuble said. But both Schaeuble and Mnuchin both said they had a constructive discussion ahead of the G20 meeting and pledged to work together through differences to promote growth. “It was a good start,” Schaeuble said of the meeting, adding that it was a positive sign for international cooperation and the G20 process. “We have found a good basis to talk openly about issues where we don’t have the same stance from the outset,” Schaeuble said. Mnuchin said the ministers agreed that they should fight currency manipulation.

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This viral story looks sensationalized. Meals on Wheels gets just part of its funding from the Community Development Block Grant program. I included the article anyway because we’re getting into Bizarro World territory here: “You’re only focusing on recipients of the money,” Mulvaney said. “We’re trying to focus on both the recipients of the money and the folks who give us the money in the first place. I think it’s fairly compassionate to go to them and say, ‘Look, we’re not going to ask you for your hard-earned money anymore.'”

Would Trump Budget Cut Meals On Wheels Funding? (BI)

President Donald Trump’s proposed budget, unveiled on Thursday, would cut federal funding for Meals on Wheels, a program that provides daily meals to millions of low-income seniors across the country. White House Office of Management and Budget Director Mick Mulvaney told reporters at a press conference Thursday that Meals on Wheels “sounds great.” But he said that along with other anti-poverty programs, it is “not showing any results.” “We can’t spend money on programs just because they sound good,” Mulvaney told reporters. “We’re not going to spend money on programs that cannot show that they actually deliver the promises that we’ve made to people.”

Trump’s budget would strip $3 billion from the Community Development Block Grant program, which supports a variety of community-development and anti-poverty programs. Those include Meals on Wheels, which provided 219 million meals to 2.4 million seniors in 2016. CNN reporter Jim Acosta asked Mulvaney if the funding cuts were “hard-hearted.” Mulvaney responded that reducing government spending on ineffective programs is “probably one of the most compassionate things we can do.” “You’re only focusing on half of the equation, right? You’re only focusing on recipients of the money,” Mulvaney said. “We’re trying to focus on both the recipients of the money and the folks who give us the money in the first place. I think it’s fairly compassionate to go to them and say, ‘Look, we’re not going to ask you for your hard-earned money anymore.'”

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Get rid of him already. Right now. Then again, Kazimir is probably next in line, and he’s just as bad. Cooler heads should demand a more reasonable, not neo-liberal choice. Fat chance.

Dutch Election Puts Question Mark Over Eurogroup Chief Dijsselbloem (R.)

Jeroen Dijsselbloem may have to stand down as president of the Eurogroup which coordinates policy in the eurozone if he cannot retain his role as Dutch finance minister in a new coalition after his party was routed in Wednesday’s election. The Labor Party crashed from second to seventh place in preliminary results, losing more than three-quarters of its seats and making it hard for victorious liberal Prime Minister Mark Rutte to retain Dijsselbloem in such a senior cabinet post, even though he has made clear his appreciation of his work. Neither man commented on the matter directly Thursday. Dijsselbloem is due to represent the Eurogroup at a G20 meeting in Germany Friday and to chair the monthly meeting of the 19 eurozone finance ministers in Brussels on Monday.

While other eurozone finance ministers may seek his role, there is a lack of obvious contenders, particularly given that many governments will resist appointing a politician from the right because conservatives hold most other top EU jobs. It is just possible Dijsselbloem might retain his Dutch portfolio. There has also been speculation that the Eurogroup could keep him on as chairman even if he loses his national job – although some senior officials say that is most unlikely. Dijsselbloem, whose second 30-month term ends in January, has been popular with fellow ministers, balancing a background on the left with support from conservative Wolfgang Schaeuble, who wields Germany’s power on the Eurogroup and insists on strict terms for Greece and other states awarded bailout loans.

The Dutchman will remain in office for weeks, and possibly months, as Rutte struggles to put together a new coalition after Wednesday’s election. Rutte’s own party lost seats and the anti-immigration party of Geert Wilders finished in second place. Eurogroup rules do not stipulate that its president must be a serving finance minister. But senior eurozone officials have said lately that they do not believe fellow ministers would keep Dijsselbloem on if he lost his main job in The Hague. In the longer term, there has been talk of making the position a full-time one, with its own staff. But that is not yet agreed.

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Dijsselbloem’s ‘friend’ Varoufakis found this.

Congressman Huizenga Introduces Bill to Oppose IMF’s Third Greek Bailout (YV)

Anyone who doubted that the IMF is in deep trouble over its inane involvement in the toxic Greek bailout, and Berlin’s policy of extending Greece’s insolvency ad infinitum while the country’s social economy shrinks, should now have no more doubts. Congressman Bill Huizenga (R-MI), a senior member of the House Financial Services Committee, yesterday introduced the IMF Reform and Integrity Act, which would require the U.S. to oppose the International Monetary Fund’s (IMF) co-financing of a third Greek bailout with the European Stability Mechanism. If such co-financing were to go forward, the bill would prohibit the U.S. from supporting an IMF quota increase until funds are repaid in full.

“The IMF is supposed to be a lender of last resort, not a fig leaf of first resort for Eurozone members,” said Congressman Huizenga. “The IMF isn’t a fund to rescue political parties in creditor nations, nor should it be a junior partner to outside organizations that lack the commitment to do their work. For seven years now, the IMF has been used to shield Eurozone officials from their voters, which has tarnished the Fund’s reputation, prolonged Greece’s misery, and put off hard choices about Europe’s future that must be made regardless. As the IMF’s largest shareholder, the U.S. should ensure that the Fund remains independent and free from politicization that could put taxpayer dollars at risk. This bill will help make that a reality.”

In addition, the IMF Reform and Integrity Act cancels supplementary IMF funds that have already been deactivated, rescinding them and sending those resources back to the U.S. Treasury. The bill also clarifies existing law to require the U.S. Executive Director of the Fund to oppose any loan to a country whose debt is unsustainable.

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Why Putin threw out Soros, and America should too.

Senators Demand State Department Probe Into Soros Organizations (ZH)

Senator Mike Lee (R-UT) and a group of his colleagues are calling on the newly appointed Secretary of State Rex Tillerson to immediately investigate how US taxpayer funds are being used by the State Department and the United States Agency for International Development (USAID) to support Soros-backed, leftist political groups in several Eastern European countries including Macedonia and Albania. According to the letter, potentially millions of taxpayer dollars are being funneled through USAID to Soros’ Open Society Foundations with the explicit goal of pushing his progressive agenda. “Unfortunately, we have received a credible report that, over the past few years, the U.S. Mission there has actively intervened in the party politics of Macedonia, as well as in the shaping of its media environment and civil society, often favoring left-leaning political group over others. We find these reports discoraging and, if true, highly problematic.”

“Much of the concerning activity in Macedonia has been perpetuated through USAID funds awarded to implementing entities such as George Soros’ Open Society Foundations. As the recipient of multiple grant awards and serving as a USAID contractor implementing projects in this small nation of 2.1 million people, our taxpayer funded foreign aid goes far, allowing Foundation Open Society – Macedonia (FOSM) to push a progressive agenda and invigorate the political left. Our foreign aid should only be used to promote a political agenda if it is in the security or economic interests of our country to do so, and even at that, we must be cautious and respectful in such an endeavor. We should be especially wary of promoting policies that remain controversial even in our own country and that have the potential to harm our relationship with the citizens of recipient countries.”

As Fox News pointed out, USAID gave nearly $15 million to Soros’ Foundation Open Society – Macedonia, and other Soros-linked organizations in the region, in the last 4 years of Obama’s presidency alone. “The USAID website shows that between 2012 and 2016, USAID gave almost $5 million in taxpayer cash to FOSM for “The Civil Society Project,” which “aims to empower Macedonian citizens to hold government accountable.” USAID’s website links to www.soros.org.mk, and says the project trained hundreds of young Macedonians “in youth activism and the use of new media instruments.” The State Department told lawmakers that in addition to that project, USAID has recently funded a new Civic Engagement Project which partners with four organizations, including FOSM. The cost is believed to be around $9.5 million. A citizen’s initiative called “Stop Operation Soros” has also published a white paper alleging U.S. money has been funding violent riots in the streets [..]

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Can the shadow sector step in once again?

Mounting Costs, Not PBOC, Could Slow China’s Bank Debt Binge (BBG)

China may avoid having to pull out the big stick when it comes to reining in a record short-term borrowing spree by its smaller banks. The increased cost to lenders of issuing so-called negotiable certificates of deposit will naturally deflate a market that jumped by 90% in February from a year earlier, according to Ping An Securities. Demand is also waning for the securities, used by Chinese banks as a way of leveraging up investments and expanding their balance sheets, with mutual funds cutting their holdings to the lowest level in at least a year in January. “It’s unsustainable for commercial banks to take such high costs,” said Shi Lei at Ping An, a unit of China’s second-largest insurer. “NCDs are now even more expensive than short-term commercial paper. It will be corrected as lenders complete their adjustments in the term structure of the debt.”

Introduced by the People’s Bank of China in 2013 as a fresh source of money for smaller lenders which have difficulty competing for savings against big state banks, NCDs have morphed into a way for them to fund purchases of each other’s wealth-management products. That boosts refinancing risks in a banking system that will see a record 3.65 trillion yuan ($529 billion) of the notes maturing this quarter. This hasn’t escaped the attention of the authorities, with the PBOC looking at classifying NCDs as interbank liabilities, Caixin.com reported in January, a move that would quell growth in the market given limits on how much in interbank debt Chinese lenders are allowed to hold relative to their overall liabilities. The central bank has been ramping up its campaign to contain leverage since August, tightening money-market rates as a way of discouraging borrowing. The PBOC boosted borrowing costs for lenders Thursday, just hours after the Federal Reserve lifted benchmark interest rates.

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It’s remarkable that she still has her job. What a blemish on Canada she is.

Will Chrystia Freeland Finally Ruin Canadian-Russian Relations? (SCF)

On 10 January 2017 Canadian PM Justin Trudeau fired his minister of external affairs, Stéphane Dion, and replaced him with Chrystia Freeland, who was then minister of international trade. This cabinet shuffle might not have gotten much public notice except that Dion is a distinguished parliamentarian, former leader of the party and leader of the opposition, and a former key minister in the Liberal government of Jean Chrétien. Freeland, on the other hand, is a well-known Ukrainian ultra-nationalist and self-declared Russophobe and hater of Russian President Vladimir Putin. The sacking of Dion was also noteworthy because Trudeau had run on an electoral platform in 2015 promising, inter alia, to improve Canadian relations with Russia, spoilt by the Conservative government of Stephen Harper. When Dion became minister of external affairs, he confirmed the Liberal commitment to re-establish more constructive Canadian-Russian relations.

[..] Why should Canadians care one way or another whether their government supports the Ukraine and sends arms and advisors there to strengthen Ukrainian military forces? Well, the most important reason is that the present government in Kiev is illegitimate in spite of democratic appearances. It is the spawn of a violent coup d’état in February 2014, brokered and supported by the United States and the European Union, which overthrew the democratically elected president Viktor Yanukovich. The vanguard of the Kiev coup d’état are neo-Nazi, fascist or ultra nationalist political and paramilitary organisations, notably the political party Svoboda, the paramilitary Pravyi sektor and various other paramilitary forces such as the so-called Azov and Aidar battalions. These paramilitary units were and are used to crush opposition in those parts of the Ukraine controlled by Kiev.

Neo-Nazi violence and intimidation worked in many places, but not in others. In the Crimea, the population united almost to the last man and woman, to toss out the putschist authorities and to vote for reunification with Russia. In the east, in the Donbass, the anti-fascist resistance repulsed Kiev punitive forces with heavy losses. These remarkable feats of arms, redolent of so many others in Russian history, were wasted by Moscow, which disregarded a first principle of war that one never lets an enemy withdraw to fight another day. «He who spares the aggressor», Stalin once remarked, «wants another war.» It may shock some people to hear Stalin quoted, but Plutarch, Sun Tzu, or Clausewitz might have said the same thing. Moscow supported the so-called Minsk peace accords which were never respected by the Kiev authorities. Ultra-nationalists even boasted that they had agreed to Minsk solely in order to rest and refit their beaten forces. It was only a ruse de guerre.

These are the forces which the Canadian government now supports with the enthusiastic backing of Minister Freeland. For her, it must be a lifelong dream-come-true. There has been much press comment during the last week or so about Freeland’s Ukrainian grandfather, Mykhailo Chomiak, a Nazi collaborator during World War II. Freeland claimed that he was only a refugee from Stalinist violence. He might have been, but he also collaborated with Nazi Germany. In many places in Europe, France and Italy, for example, collaborators were summarily shot or imprisoned after the war. In France, more than 5,000 were executed including Pierre Laval, a prominent French politician, who sided with Nazi Germany and vaunted collaboration to oppose the USSR. Another 38,000 French collaborators were jailed. Chomiak was lucky he was not hanged and that he ended up in northern Alberta, to die a well-to-do farmer.

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More brilliance. “We don’t have en energy system. We have an energy market.”

The Energy Market Explained (Clarke and Dawe)

“Wal Socket. Energy Consultant”

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A European crime. One of many perpetrated on Greece.

Greek Public Health System On Brink, Doctors Warn (K.)

The National Health System (ESY) is on the the brink of collapse, according to the Panhellenic Medical Association (PIS), which cited chronic shortages in staff and equipment at public hospitals around the country due to limited finances, and disruptions in the primary healthcare system. The association added that the only reason the health system is still running is due to the efforts of existing staff, whose endurance levels, however, are being put to the test. “The average age of ESY doctors is 60. And these people will be leaving in a few years,” said PIS president Michail Vlastarakos, adding that public hospitals need 6,500 additional permanent medical staff.

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And the EU still hasn’t supplied the promised help for dealing with the applications.

First-Time Asylum Applicants In Greece Up 339% In 2016 (Amna)

There was a 339% increase of in the number of first-time asylum applicants in Greece in 2016, which rose to 49,875 in 2016 from 11,370 in 2015, according to figures released by Eurostat on Thursday. On the basis of these figures, Greece ranks second among EU countries for the total number of asylum applications filed in relation to its population. Germany is first with 8,789 applications per million population, followed by Greece with 4,525 applications per million population. Third is Austria with 4,587, followed by Malta (3,989), Luxembourg (3,582) and Cyprus (3,350). The number of new asylum applicants on an EU level dropped to 1.204 million in 2016, for a percentage change of -4%, but were more than double the number of applicants in 2014. Most asylum applicants in EU member-states were Syrians (28%), Afghans (15%) and Iraqis (11%). In Greece, Syrians accounted for more than half of asylum applicants (53%), Iraqis for 10% and Pakistanis 9%.

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The NGOs themselves are part of the problem too.

Refugees In Greece Suffering After EU Deal With Turkey, Say NGOs (G.)

Greece is being used as a testing ground for degrading asylum policies that fall short of the democratic values Europe would normally uphold, say refugee groups marking the first anniversary of a deal designed to slow arrivals to the continent. The accord struck last year between Turkey and the EU has been praised in some quarters for having slowed arrivals into Europe and reduced deaths in the Aegean sea. But basic human rights were lost in the process, the organisations claim. “Greece has become a testing ground for policies that are eroding international protection standards,” said the Norwegian Refugee Council, International Rescue Committee and Oxfam, in a joint report based on extensive fieldwork on Aegean islands where more than 14,000 men, women and children are trapped in abysmal conditions.

“Over the course of the year, there have been deaths, suicide attempts, people engaging in self harm, and children, women and men exposed to abuse and sexual violence.” The withering assessment, coming almost 12 months to the day since the agreement was reached between Ankara and Brussels, is in stark contrast to the official view of an accord hailed by the EU, at the time, as a breakthrough in the migration crisis. Agreed in exchange for €6bn in refugee aid to Ankara, it was seen as a vital step in resolving a crisis that at its height threatened to tear the bloc apart. Since its implementation, the number of refugees and migrants going to Europe via Turkey has dropped dramatically.

Islands such as Lesbos, which is near Turkey, are reporting 100 arrivals or fewer a day, while in 2015, when more than 1 million people streamed into Europe, it received 10,000 men, women and children over one weekend. But NGOs say the reality on the ground is that the deal has prolonged and exacerbated human suffering. The report found that, incarcerated on Greek islands, asylum seekers had been made to live in substandard and overcrowded conditions for months on end. With limited access to fair and effective asylum procedures they were subject to “a convoluted and constantly changing process” that lacked oversights and checks and balances. Often legal experts were unable to keep track of a system that was impossible for people to navigate alone.

A separate report by Save the Children and Médecins Sans Frontières warned that there were worrying levels of mental health problems among migrants and refugees in the Greek camps. It said people including children as young as nine were cutting themselves, attempting suicide and using drugs to cope with the “endless misery”. Mental health was “rapidly deteriorating due to the conditions created as a result of this deal”, Save the Children said. [..] The report expressed the NGOs’ fears that the deal would become a blueprint for crises elsewhere. “Beyond the deeply concerning situation in Greece, the EU is looking to replicate this model elsewhere, and, in so doing, risks setting a dangerous precedent for the rest of the world,” said the report.

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Creating child zombies.

Child Refugees In Greece Self-Harming And Attempting Suicide (Ind.)

Desperate refugees trapped in Greece are self-harming and attempting suicide as a result of “disastrous” EU policies, aid agencies have warned. More refugees are dying than ever before while attempting to reach Europe, almost a year after a controversial deal was struck with Turkey in an effort to prevent boat crossings across the Aegean Sea. The agreement has stranded thousands of asylum seekers in Greece, where aid agencies say children are among rising numbers of migrants trying to kill themselves after months trapped in squalid camps. Research by Save the Children found more than 5,000 minors are living in “appalling conditions” that are driving a mounting mental health crisis. It has recorded children as young as nine self-harming and 12-year-olds attempting suicide, sometimes filming themselves in the act, as well as a spike in drug and alcohol abuse by teenagers who are exploited by dealers in camps.

Violent protests and deaths are traumatising the youngest and most vulnerable refugees, whose families say they are too scared to let their children play out of sight in case they are hurt or abused. Save the Children staff report that some unaccompanied children live in “24-hour survival mode” and sleep in shifts to try to stay safe, while others disappear or pay smugglers to leave the Greek islands. “The EU-Turkey deal was meant to end the flow of ‘irregular migrants’ to Greece, but at what cost?” said Andreas Ring, Save the Children’s humanitarian representative. “Many of these children have escaped war and conflict only to end up in camps many of them call ‘hell’ and where they say they are made to feel more like animals than humans.” Since 20 March 2016, all migrants arriving on Greek islands have been held, under threat of deportation to Turkey, while their asylum applications are processed, but legal blocks have slowed transfers and left refugees in overcrowded tent camps for up to a year.

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“..you cannot be so short-sighted, you cannot have no vision, you cannot sacrifice human dignity and human rights for political gain..”

Ai Weiwei Slams ‘Shameful’ Politicians Ignoring Refugees (AFP)

Chinese dissident artist Ai Weiwei on Thursday slammed “shameful” politicians who ignore refugees as he launched a giant art installation centered on their fate at the National Gallery in Prague. Called “Law of the Journey”, the show features a 70-metre-long (230-foot-long) inflatable boat with 258 oversize refugee figures. A tribute to the thousands who have drowned crossing the Mediterranean, the piece is Ai’s biggest-ever installation. It will be on display until the end of the year. “My message is very clear: being a politician or a political group, you cannot be so short-sighted, you cannot have no vision, you cannot sacrifice human dignity and human rights for political gain,” Ai told AFP. “I think this is very, very shameful behaviour,” he added.

The Czech Republic and the other post-Communist central European members have rejected EU plans to allow Muslim refugees on their territories throughout the migrant crisis. Immigration from Muslim countries has become a hot political topic in these states, although most refugees have opted for wealthier western countries like Germany or Sweden. “If we see somebody who has been victimised by war or desperately trying to find a peaceful place, if we don’t accept those people, the real challenge and the real crisis is not of all the people who feel the pain but rather for the people who ignore to recognise it or pretend that it doesn’t exist,” said Ai. “That is both a tragedy and a crime,” said the 59-year-old painter, sculptor and photographer. Ai spent the last year visiting such migrant and refugee hotspots as the US-Mexican border badlands to the Turkish-Syrian frontier and crowded holding camps on Greek islands.

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Dec 072016
 
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Arthur Gerlach Children point towards Christmas toys at The Fair Department Store, Chicago 1940

 

The world is facing the “first lost decade since the 1860s”, said Bank of England governor Mark Carney this week. Arguably good for soundbite of the day, but the buck stops there. The only way that buck could have kept rolling would have been for Carney to take a critical look at himself and his employer(s), but there was none of that.

The Canadian import governor has no doubts about anything he’s done, or if he does he shows none. Instead he puts the blame for all that’s gone awry, on some -minor- elements of what he think globalization means, not with the phenomenon itself, or his enduring support for, and belief in, it. The problem with that is it’s indeed belief only; he can’t prove an inch of what he says.

Globalization is an act of faith inside a politico-economic belief system, and all it needs according to Carney and many others in his ‘church’ is a little tweaking. That globalization itself could be the driving force behind Brexit, Trump and the defeat of Italian PM Renzi does not enter into the faith’s ‘thought’ system.

Neither does the possibility that globalization is what it is, in and of itself, a process that in the end cannot be tweaked. That globalization is simply yet another form of centralization that follows the same rules and laws all other forms do, where power and wealth always, of necessity, wind up in the hands of a few, through pretty basic centrifugal forces.

Carney Lays Out Vision to Revive Benefits of Globalization

Mark Carney launched a defense of globalization and set out a manifesto for central bankers and governments to boost growth and make the world economy more equal. The Bank of England Governor said they must acknowledge that gains from trade and technology haven’t been felt by all, improve the balance of monetary and fiscal policy, and move to a more inclusive model where “everyone has a stake in globalization.” Carney’s speech in Liverpool, England, comes amid rising disquiet about the state of the world economy and political status quo that helped propel Donald Trump to victory in the U.S. presidential election and boost support for the U.K.’s exit from the European Union.

Trump isn’t right to favor more protectionist policies in response to globalization , Carney said in a television interview broadcast after his speech. The answer is to “redistribute some of the benefits of trade” and ensure that workers are able to acquire new skills. “Weak income growth has focused growing attention on its distribution,” Carney said in the speech.

“Inequalities which might have been tolerated during generalized prosperity are felt more acutely when economies stagnate.” Describing the world as facing the “first lost decade since the 1860s,” the BOE governor said public support for open markets is under threat and rejecting them would be a “tragedy, but is a possibility.”

Carney also defended the central bank’s current policy stance. The BOE has faced criticism from politicians after officials took measures including cutting interest rates and expanding asset purchases in August to support the economy after Britain’s June vote to leave the EU. “Low rates are not the caprice of central bankers, but rather the consequence of powerful global forces, including debt, demographics and distribution,” he said, adding that they helped to prevent a deeper economic downturn.

People like Carney will insist that globalization spurs growth, right up to the moment where they’re either voted out or fired. And they’ll probably keep on insisting until their dying days. But why are we in that “first lost decade since the 1860s” then? Is that really only because ‘we’ failed to “redistribute some of the benefits of trade”, something that can allegedly be easily rectified by enabling workers to ‘acquire new skills’?

Where is the proof for that? And why have economies stagnated in the middle of the entire process of globalization? Is that solely because ‘some of’ the benefits were not distributed well enough? If that is so, and wealth distribution is the only problem with globalization, at what point do we redistribute ourselves into the realm of communism? Where’s the dividing line? It all feels mighty vague and unsatisfactory, and not a little goal-seeked.

 

Like a large part of the Brexit voters in Britain, millions of Italians have been on the losing side of globalism’s ‘benefits distribution’. And this weekend they found an outlet for their frustration about it. Like Brexiteers voted against Cameron and Osborne much more than they voted for anything in specific, and Trump won because Americans are fed up with the Obama/Clinton/GOP model, Italians voted against PM Renzi and his idea to take power away from parliament and give it to him.

Judging from poll numbers, they also seem to have gained confidence in Beppe Grillo’s, and the Five Star Movement’s, ability to do something real in politics. It has taken a while, and that makes sense because the movement doesn’t fit the model of politics as they’ve known it all their lives.

 


Wikipedia

 

Also, there are many Italians who have largely agreed with much of what Grillo has been saying all along, but were deterred by the way he delivered it. Ask an Italian and they’re likely to say “too angry, too rude” when it comes to Grillo. And it’s true, his style doesn’t seem to fit in with the rest. But then that’s also exactly his forte. Because there comes a point when everything that does fit in, becomes suspect.

The old guard, from Renzi to Berlusconi to the socialists, will double their efforts to keep Grillo out of the center of power now. President Mattarella is in on it: he asked Renzi to stay on as PM until after the budget has been pushed through, and is then likely to install another technocrat government, tasked with changing laws with the express intent of making it harder for Grillo to get into power.

And Renzi, of course, is on the same wavelength as Carney, and the entire EU -and global- cabal: globalize, reform, re-distribute ‘some benefits’, execute more austerity, rinse and repeat.

What’s particular about Italy in this sense is what it has been able to preserve, unlike most other nations. That is, Italy has a lot of small enterprises, often family owned, with highly skilled workers. That doesn’t fit today’s globalization model, since it’s deemed not competitive enough when you’re forced to fight for market share.

But if globalization, and the entire growth model, is over anyway, as I’ve often asserted, it’s a whole different story. If that is true, the country had better save what’s left of its business model, because it’s ideal for a post-centralized world. ‘Workers’ wouldn’t have to ‘acquire new skills, and leave old and proven skills to be forgotten and gather dust.

 

The world is changing rapidly and that will become even a lot more evident in 2017. The incumbent economic and political systems, as well as their proponents and cheerleaders, are on the way out. They have all failed miserably. What comes next will be profoundly chaotic for quite a while, and that will be perilous. There is not one single (belief) system to replace them, there will be many and they will often clash.

In some places, the political right will prevail, in others the left. In most, from the look of things, neither will, if only because at the end of the day both left and right are still part of incumbent systems. Europe has a number of elections coming up and in at least some of these, parties from outside the incumbent systems will come out on top.

Whether they can then go on to form governments is perhaps another story; the system will not give up easily. But it is done. Carney’s recipe of ‘some’ redistribution of wealth and acquiring new skills is widely shared in power circles, and that will be the system’s undoing. All it has to offer is more talk about more growth and more globalization, and while people protest only the latter, neither is on offer.

One of the tools the media use to discredit anything that comes from outside the system is to label it all ‘populist’. It’s a miracle it hasn’t become a honor label yet. In Europe, all new rightwing parties (a label in itself) get called populist, Le Pen, Wilders, Frauke Petry in Germany, the Lega Nord in Italy. But so does someone like Beppe Grillo, who politically has nothing in common with these people.

Moreover, many of their ideas are not to the right of existing parties at all. Despite some of his views, new French Republican candidate François Fillon is not called a populist, ostensibly because he’s from a large incumbent party, but so are Trump and Sanders in the US, and they do get called populist.

 

Empty labels, fake news and oceans of debt keep the systems -somewhat- going for now. But the genie’s long left the bottle. The ‘incumbents’ have failed their people for far too long, most of all economically. And they keep on claiming that everything will be alright, everyone will be better off if only we execute more globalization, and give them all a few pennies more.

It really is too silly to be true that that is what existing systems and their servants are still trying to make everyone believe. While it is so obvious that so many have long stopped believing. You would think they’d change their messages to reflect that change in society. But they don’t know how. And it’s that very inability that feeds those pesky ‘populists’.

The same François Fillon could be a contender in France against anti-EU Le Pen because he’s expressed doubts on Brussels. Dutch PM Rutte has cautiously critiqued the union too. But those shifts in words if not real opinions come far too late. Britain has said No and there’s zero chance that more nations will not do the same. Just give them the option, give them a vote.

The only way to keep Europe from descending into chaos is to abandon the EU, lock the doors and throw away the keys. The same is true on a global scale, with all the globalist trade agreements that most people have long lost faith in. We will either see a peaceful transition to a system not based on centralization, or we will not see peace, period.

And to think economic meltdown hasn’t even truly started yet, has been kept hidden behind a wall of debt, and so many people are already so fed up with the whole shebang.

Nov 212016
 
 November 21, 2016  Posted by at 4:45 pm Finance Tagged with: , , , , , , , , , ,  7 Responses »
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Theodor Horydczak “Dome of US Capitol through trees at night” 1943

 

For the second time in a few weeks (see ‘End of Growth’ Sparks Wide Discontent), former British diplomat Alastair Crooke quotes me extensively, and I gladly return the favor. Crooke here attempts to list -some of- the difficulties Donald Trump will face in executing the -economic- measures he promised to take in his campaign. Crooke argues that, as I’ve indicated repeatedly, for instance in America is The Poisoned Chalice, the financial crisis that never ended may be one of his biggest problems.

Here, again, is Alastair Crooke:

 

 

We are plainly at a pivotal moment. President-Elect Trump wants to make dramatic changes in his nation’s course. His battle cry of wanting to make “America Great Again” evokes – and almost certainly is intended to evoke – the epic American economic expansions of the Nineteenth and Twentieth centuries.

Trump wants to reverse the off-shoring of American jobs; he wants to revive America’s manufacturing base; he wants to recast the terms of international trade; he wants growth; and he wants jobs in the U.S. – and he wants to turn America’s foreign policy around 180 degrees.

The run-down PIX Theatre sign reads "Vote Trump" on Main Street in Sleepy Eye, Minnesota. July 15, 2016. (Photo by Tony Webster Flickr)

The run-down PIX Theatre sign reads “Vote Trump” on Main Street in Sleepy Eye, Minnesota. July 15, 2016. (Photo by Tony Webster Flickr)

It is an agenda that is, as it were, quite laudable. Many Americans want just this, and the transition in which we are presently in – dictated by the global elusiveness and search for growth (whatever is meant now by this term “growth”), clearly requires a different economic approach from that followed in recent decades.

As Raúl Ilargi Meijer has perceptively posited, greater self-reliance “is the future of the world, ‘post-growth’, and post-globalization. Every country, and every society, needs to focus on self-reliance, not as some idealistic luxury choice, but as a necessity. And that is not as bad or terrible as people would have you believe, and it’s not the end of the world … It is not an idealistic transition towards self-sufficiency, it’s simply and inevitably what’s left, once unfettered growth hits the skids. …

“Our entire world views and ‘philosophies’ are based on ever more and ever bigger and then some, and our entire economies are built upon it. That has already made us ignore the decline of our real markets for many years now. We focus on data about stock markets and the like, and ignore the demise of our respective heartlands, and flyover countries …

“Donald Trump looks very much like the ideal fit for this transition … What matters [here] is that he promises to bring back jobs to America, and that’s what the country needs … Not so they can then export their products, but to consume them at home, and sell them in the domestic market …There’s nothing wrong or negative with an American buying products made in America instead of in China.

“There’s nothing economically – let alone morally – wrong with people producing what they and their families and close neighbours themselves want, and need, without hauling it halfway around the world for a meagre profit. At least not for the man in the street. It’s not a threat to our ‘open societies’, as many claim. That openness does not depend on having things shipped to your stores over 1000s of miles, that you could have made yourselves, at a potentially huge benefit to your local economy. An ‘open society’ is a state of mind, be it collective or personal. It’s not something that’s for sale.”

A Great Wish

That’s Trump’s ostensible great wish, (it seems). It is not an unworthy one, but things have changed: America is no longer what it was in the Nineteenth or Twentieth centuries, neither in terms of untapped natural resources, nor societally. And nor is the rest of the world the same either.

Mr. Trump rather unfortunately may find that his chief task will not be the management of this Great Re-orientation, but more prosaically, fending off the headwinds which he will face as he hauls on the tiller of the economy.

In short, there is a real prospect that his ambitious economic “remake” may well be prematurely punctured by financial crisis.

These headwinds will not be of his making, and for the main part, they lie beyond human agency per se. They are structural, and they are multiple. They represent the accumulation of an earlier monetary doctrine which will fetter the President-elect into a small corner from which any chosen exit will carry adverse implications.

Ditto for anyone else trying to steer any ship of state in this contemporary global economy. Paradoxically – in an era moving toward greater self-sufficiency – what success Trump may have, however, will likely depend not on self-reliance so much as he would like.

For his foreign policy about turn, he will depend on finding common interest with Russian President Vladimir Putin (that should not be too hard) – and for the economic “about turn” – on Trump’s ability not to confront China, but to come to some modus vivendi with President Xi (less easy).

“Things are not what they were.” Complexity “theory” tells us that trying to repeat what worked earlier – in very different conditions – will likely not work if repeated later. In the Clinton era, for example, 85 percent of the U.S. population growth derived from the working-age population. The headwind that Trump will face is that, over the next eight years, 80 percent of the population growth will comprise 65+ year olds. And 65+ year olds are not a good engine of economic growth. This is not an uniquely American problem; it is a global trend too.

“The peak growth” (according to Econimica blog), “in the annual combined working age population (15-64 year/olds) among all the 35 wealthy OECD nations, China, Brazil, and Russia has collapsed since its 1981 peak. The annual growth in the working age population among these nations has fallen from +29 million a year to just +1 million in 2016 … but from here on, the working age population will be declining every year … These nations make up almost three quarters of all global demand for oil and exports in general. But their combined working age populations will shrink every year, from here on (surely for decades and perhaps far longer). Global demand for nearly everything is set to suffer.

(FFR stands for Federal Funds Rate: i.e. the US key interest rate) Source: http://econimica.blogspot.it/2016/11/trump-lies-no-different-than-obama-or.html

(FFR stands for Federal Funds Rate: i.e. the US key interest rate) Source: http://econimica.blogspot.it/2016/11/trump-lies-no-different-than-obama-or.html

And then there is China: It too is passing through a difficult “transition” from the old economy to an “innovative” one. It too, has an aging population and a debt problem (with a debt-to-gross domestic ratio reaching 247 percent). Trump argues that China deliberately holds down the value of its currency to gain unfair trade advantage, and he further suggests that he intends to confront the Chinese government on this key issue.

Again, Trump does have a point (many nations are managing their exchange rates precisely in order to try to “steal” a little bit extra growth from the diminished global pot). But as noted at Zerohedge, citing the analysis of One River Asset Management executive Eric Peters:

“What’s good for the US in this case [the rising dollar and interest rates in anticipation of ‘Trumponomics’], is not good for emerging markets (EMs). Emerging markets benefit from a weaker dollar, and you’re not going to get that. Emerging markets benefit from global capital flows moving in their direction and that’s not happening either. Back in February, emerging markets were in sharp decline, driven by (1) a strong dollar, (2) rising US interest rates, and (3) slowing Chinese growth. Then China spurred a massive credit stimulus, the Fed became wildly dovish, and the dollar declined sharply.

“Interest rates collapsed throughout the year. As the growing pool of dollar, euro and yen liquidity searched for a decent return, it headed to emerging markets. Trump has reignited the dollar rally, and his fiscal stimulus will force interest rates higher. This reversed everything. [the dollars are heading home]

“And to be sure, the Beijing boys don’t want to see material weakness ahead of next autumn’s Party Congress. But we’re currently near peak impulse from China’s Q1 stimulus.”

In short, Peters is saying that, with the appreciating dollar and rising interest rate environment, growth from emerging markets as a whole will falter, since emerging markets have effectively leveraged their economies to Chinese growth. It used to be the case that they were closely tied to U.S. growth, but it is now China which dominates the EMs’ trade flows [i.e. without China growth, the EMs languish]. The question is, can America reboot its growth whilst China and the EMs languish? It is another structural shift, whereas heretofore, it was vice versa: without U.S. growth, the EMs and China languished. Now it is the converse.

Hollowed-Out Economies

There are other structural changes of course which will make it harder for the industrially hollowed-out economies of the West to recuperate jobs off-shored earlier. Firstly, there has been a systemic shift of innovation and technology eastwards (often to a more skilled and better-educated workforce). This represents not only an economic event, but a redistribution of power too. In any case, technology in this new era is being more job destructive than creative.

In one sense, Trump’s economic plan to “get America working again” through massive debt-financed, infrastructure projects, harks back to the Reagan era, which was also a period in which the dollar was strong. But yet again, “things today are not what they were then.” Inflation then was at 13 percent, Interest rates were around 20 percent, and crucially, the U.S. debt to GDP ratio was a mere 35 percent (compared to today’s estimate of 71.8 percent or 104.5 percent with external debt included).

Then, as Jim Rickards has suggested, the strong dollar was deflationary (deliberately so), and interest rates had nowhere to go, but down. It was the beginning of the three decades’ bond boom, which finally seems to have come to an end, coincident with Trump’s election. Today, inflation has nowhere to go but up – as have interest rates – and the bond market, nowhere to go, but (perilously) down.

Growth and Jobs?

Can Trump then achieve growth and jobs through infrastructure expenditure? Well, “growth” is an ambiguous, shape-shifting term. The first chart shows both sides of the equation … the annual GDP growth and the annual federal debt incurred, spent, and (thus counted as part of the growth) to achieve the purported growth.

Source: http://econimica.blogspot.it/2016/11/trump-lies-no-different-than-obama-or.html

Source: http://econimica.blogspot.it/2016/11/trump-lies-no-different-than-obama-or.html

The second chart shows the annual GDP minus the annual growth in federal debt to achieve that “GDP growth.” In other words, unlike in the earlier Reagan times, more recently, the debt is producing no growth – but … well … just more debt, mostly.

In fact, what the second chart is reflecting is the dilution – through money “printing” – of purchasing power: away from one entity (the American consumer), through the intermediation of the financial sector, to other entities (mostly financial entities, and to corporations buying back their own shares). This is debt deflation: the American consumer ends having less and less purchasing power (in the sense of residual discretionary income).

The point here is that “growth” is becoming rarer everywhere. Russia and China, like everyone else, are in search for new sources for growth.

As Rickards has said, debt is the “devil” that can undo Trump’s whole schema: a “$1 trillion infrastructure refurbishment plan, along with his proposal to rebuild the military, will — at least in the short-term — significantly increase annual deficits. In fact, deficits are already soaring; the fiscal 2016 budget hole jumped to $587 billion, up from $438 in the prior year, for a huge 34% increase…in addition to this, Trump’s protectionist trade policies would implement either a 35% tariff on certain imports or would require these goods to be produced inside the United States, at much higher prices. For example, the increase in labor costs from goods made in China would be 190% when compared to the federally mandated minimum wage earner in the United States. Hence, inflation is on the way.”

In sum, self-sufficiency implies higher domestic costs and price rises for consumers.

Debt will rise. And there is seemingly already a buyers’ strike against U.S. government debt underway: well over a third of a $1 trillion worth of Treasuries were disposed of, and sold in the year to Aug. 31 by foreign Central Banks. And who is buying it? (Below, the chart shows what this purchasing looks like, as a percentage of total debt issued by the Treasury). Well, foreign central banks have disappeared. (The Chinese have not bought a U.S. Treasury bond since 2011.)

(Above: who purchased the marketable debt as a percentage, by period) Source: http://econimica.blogspot.it/2016/11/trump-lies-no-different-than-obama-or.html

(Above: who purchased the marketable debt as a percentage, by period)
Source.

 

It is the American public who are buying. Will they be willing to take on Trump’s $1 trillion infrastructure spree? Or, will it be “printed” in yet another dilution of the American consumer’s purchasing power? The question of whether the infrastructure splurge does give growth hangs very much in the balance to such answers. (Equity shares in construction firms will do okay, of course).

The bottom line: (Michael Pento, Pento Report): “If interest rates continue to rise it won’t just be bond prices that will collapse. It will be every asset that has been priced off that so called ‘risk free rate of return’ offered by sovereign debt. The painful lesson will then be learned that having a virtual zero interest rate policy for the past 90 months wasn’t at all risk free. All of the asset prices negative interest rates have so massively distorted including; corporate debt, municipal bonds, REITs, CLOs, equities, commodities, luxury cars, art, all fixed income assets and their proxies, and everything in between, will fall concurrently along with the global economy.

“For the record, a normalization of bond yields would be very healthy for the economy in the long-run, as it is necessary to reconcile the massive economic imbalances now in existence. However, President Trump will want no part of the depression that would run concurrently with collapsing real estate, equity and bond prices.”

A Pending Financial Crisis

Trump, to be fair, has said consistently throughout the election campaign that whoever won the Presidential campaign to take office in January would face a financial crisis. Perhaps he will not face the “violent unwind” of the QE and bond bubble as some experts have predicted, but many more – according to Bank of America’s survey of 177 fund managers over the last six days, and controlling just under half a trillion of assets – expect a “stagflationary bond crash.”

This has major political implications. Trump is setting out to do no less than transform the economy and foreign policy of the U.S. He is doing this against a backdrop of many of the followers of the liberal élite, so angered at the election outcome, that they reject completely his electoral legitimacy (and, with the élites themselves staying mum at this rejection of the U.S. democratic process). Movements are being organized to wreck his Presidency (see here for example). If Trump does indeed experience a severe financial “unwind” at a time of such domestic anger and agitation, matters could turn quite ugly.

 

 

Alastair Crooke is a former British diplomat who was a senior figure in British intelligence and in European Union diplomacy. He is the founder and director of the Conflicts Forum, which advocates for engagement between political Islam and the West.

Nov 182016
 
 November 18, 2016  Posted by at 10:14 am Finance Tagged with: , , , , , , , , , ,  5 Responses »
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Unknown Army of the James, James River, Virginia. 1865

The End of Globalization? (Spiegel)
Global Trade Is Slowing (BBG)
US Recovery Is Heading Towards Its Death: Albert Edwards (CNBC)
US Retail Sales, Ignorance & Return Reality (Roberts)
How “Dynamic Scoring” Could Justify A Debt Driven Keynesian Stimulus (BBG)
How US Federal Revenues Have Been Used To Steer The Economy In The Past (BBG)
Yellen: I’m Not Stepping Down Until My Term Is Done (CNBC)
Europe At Risk Of Collapse; France, Germany Must Lead – French PM (R.)
Renzi Renews Pledge To Resign If He Loses Referendum (Local.it)
Italy Is The Next Country To Fall To Trumpism (David McWilliams)
EU Reinforces 2017 Budget On Migration And Jobs (EUO)
Kremlin Ramps Up Efforts To Crack Down On US Tech Companies (BBG)
Why the World Needs WikiLeaks (Sarah Harrison)
Another 100 Migrants Feared Drowned in Mediterranean (AFP)
The North Pole Is An Insane 36º Warmer Than Normal As Winter Descends (WaPo)

 

 

They all find it terribly hard to acknowledge that globalization is gone because growth is too. Wonder how long it will take them. A long five-part article.

The End of Globalization? (Spiegel)

Who could have imagined in 2006 that such an outlandish billionaire like Donald Trump could become president of the United States? Who would have believed that the British would leave the European Union? Who would have thought it possible that a right-wing populist party in Germany would win over 10% support in several state elections? Nobody. Ten years ago, the world was a vastly different place. In 2006, Germany lived through its “Summer Fairytale” of hosting the football World Cup – still untainted by accusations of corruption – and presented itself as a cosmopolitan host. Russia was still part of the G-8 and welcomed world leaders to the summit in St. Petersburg. Pope Benedict XVI visited Turkey and prayed in the Blue Mosque. In Berlin, the first Islam conference took place, promoting better integration for the religion.

A Romano Prodi-led alliance defeated the populist Silvio Berlusconi in Italian parliamentary elections. And international trade grew by 9% while the Chinese economy spiked by almost 13%. Between then and now lie years of crisis. Banks and entire countries had to be bailed out, debt grew and faith in the economy and politics evaporated. Central banks chopped their interest rates again and again to stimulate the economy – with modest success and significant side-effects: Debt continued climbing around the world while in industrialized countries, savers suffered and middle-class retirement funds in particular took a hit. Now, in 2016, many people in Western, industrialized countries are worried about losing their jobs, their prosperity and that of their children. They see themselves as the losers of a development that has only helped the elite.

[..] It is a fact that globalization and free trade have increased global prosperity, but they have also increased inequality in the world’s wealthiest nations. They have made the biggest companies more powerful, because business operates globally while politics tends to be a local or regional affair, and made the world more vulnerable to crises, because everything is networked and the debts of American homeowners could lead the entire world to the brink of collapse. In short, globalization is responsible for a host of problems that would otherwise not exist. And it is therefore in the process of gambling away the trust of people around the world. Already today, global trade growth has slowed and state interference is on the rise. The world finds itself at a turning point. It must try to eliminate the drawbacks of globalization without destroying its advantages. If, on the other hand, protectionism and populism gain the upper hand, there is a danger that global prosperity could shrink. The age of globalization would be at an end.

Read more …

“The days of frenzied trade growth may be over.” No kidding.

Global Trade Is Slowing (BBG)

Until he takes office in January, Donald Trump won’t be able to follow through on his pledges to scrap TPP, renegotiate NAFTA, or penalize Chinese imports. Even without him, protectionism is rising, and world trade is slowing. Responding to an outcry from local steelmakers, the EU this year has punished Chinese competitors for allegedly selling steel below cost. The EU has announced antidumping duties as high as 81.1% on Chinese steel. “Free trade must be fair, and only fair trade can be free,” EC VP Jyrki Katainen said in a statement on Nov. 9, adding that some 30 million European jobs depend on free trade. Around the world, many companies that binged on easy credit after the global financial crisis have excess capacity and are struggling to find buyers, since economic growth in the U.S., Europe, and Japan is relatively weak, and China’s economy is cooling.

“The pie is growing more slowly, and that makes domestic producers more defensive about their share of it and more willing to fight when threatened,” says Tim Condon, chief Asia economist in Singapore with ING. Bloomberg Intelligence chief Asia economist Tom Orlik points out that over the past two decades, consumers and businesses have spent heavily on laptops, tablets, and smartphones, but despite efforts by Apple and others to popularize smart watches, there’s no new must-have device to boost global trade. Stagnant income growth in the West also forces politicians to show they understand voters’ worries. “The pressure grows for governments to appease those voices by giving them the things they want,” says Orlik, “and the things they want are trade restrictions.”

[..] In the five months leading up to mid-October, members of the world’s 20 major economies, the Group of 20, implemented an average of 17 trade constraints a month, the World Trade Organization reported on Nov. 10. “The continued introduction of trade-restrictive measures is a real and persistent concern,” WTO Director-General Roberto Azevêdo said in a statement. The curbs come while global commerce is sputtering. World trade volume has grown a little more than 3% a year since 2012, the IMF reported last month, less than half the average expansion rate over the prior three decades. Said the IMF, “Between 1985 and 2007, real world trade grew on average twice as fast as global GDP, whereas over the past four years, it has barely kept pace. Such prolonged sluggish growth in trade volumes relative to economic activity has few precedents during the past five decades.”

Read more …

As always, I’m uncomfortable with the definition of inflation used here, it obscures the argument.

US Recovery Is Heading Towards Its Death: Albert Edwards (CNBC)

Societe Generale’s resident uber-bear, Albert Edwards, says the very long economic recovery underway in the U.S. is gearing up to suffer a “very traditional death” as consumption will likely crumble under rapidly stepped-up inflation and tighter monetary conditions next year. In Edwards’ own words, “Even if the Fed refuses to tighten, monetary conditions will tighten dramatically anyway as bond yields and the dollar surge, exacerbating the profits recession.” “The surge in headline inflation from zero to 2.5%-3% in Q1 next year is likely to crush consumption,” he continued, adding, “The expected expansion of the fiscal deficit under Trump will not prevent this happening in 2017 as it will come too late – in 2018/19.”

Edwards breaks down the recent spike in nominal bond yields by pointing out it has been driven by spiraling inflation expectations with real yields staying relatively steady. An anomaly in the current situation, he says, is that this has occurred without an accompanying surge in oil prices. However, what has risen more quickly than acknowledged by the U.S. Federal Reserve or the broader market, in his view, is real wage inflation, partially disguised by the weakness of nominal wage inflation given subdued consumer price index (CPI) inflation. But as we move into an era of higher CPI inflation, Edwards warns that it is such real wage inflation that will slip to zero before long. According to Edwards, “We might quibble about how much nominal wage inflation might accelerate in a weak economic and corporate profits environment, but accelerate it will.”

Why this is so important, he notes, is that it is likely to propel the Fed into action. Speaking about the U.S. central bank, he says “to those who retort that the increasingly weak economy in H1 2017 means they should not tighten, I would probably agree. But that doesn’t mean the Fed won’t be forced into it by surging wage inflation.” The knock-on effect for bonds will come through in the form of a continued rise in yields over the next six months with the trend upwards now having become a momentum trade with investors “looking for a narrative to support the direction of travel”.

Read more …

“81% of American’s are now worse off than they were in 2005..”

US Retail Sales, Ignorance & Return Reality (Roberts)

There was an awful lot of cheering about the recent retail sales report which showed an uptick of 0.8% which beat the analyst’s estimates of 0.6%. Despite the fact the improvement was driven by a surge in gasoline prices (which is important as consumers did not consume MORE of the product, but just paid more for it) important discretionary areas like restaurants and furniture declined. However, if we dig deeper behind the headlines more troubling trends emerge for the consumer which begins to erode the narrative of the “economy is doing great” and “there is no recession” in sight. [..] Despite ongoing prognostications of a “recession nowhere in sight,” it should be remembered that consumption drives roughly 2/3rds of the economy. Of that, retail sales comprise about 40%. Therefore, the ongoing deterioration in retail sales should not be readily dismissed. More troubling is the rise in consumer credit relative to the decline in retail sales as shown below.

What this suggests is that consumers are struggling just to maintain their current living standard and have resorted to credit to make ends meet. Since the amount of credit extended to any one individual is finite, it should not surprise anyone that such a surge in credit as retail sales decline has been a precursor to previous recessions. Further, the weakness of consumption can be seen in the levels of retailers inventory relative to their actual sales. We can also view this problem with retail sales by looking at the National Federation of Independent Business Small Business Survey. The survey asks respondents about last quarter’s actual sales versus next quarter’s expectations.

[..] it really isn’t just the Millennial age group that are struggling to save money but the entirety of the population in the bottom 80% of income earners. According to a recent McKinsey & Company study, 81% of American’s are now worse off than they were in 2005: “Based on market income from wages and capital, the study shows 81% of US citizens are worse off now than a decade ago. In France the figure is 63%, Italy 97%, and Sweden 20%.”

Read more …

If you don’t like the models, well, we have other ones.

How “Dynamic Scoring” Could Justify A Debt Driven Keynesian Stimulus (BBG)

Republicans have long argued that economic growth from tax cuts should be fed back into the model, year by year. They call this approach “dynamic scoring” or “macroeconomic analysis.” For the first time, macroeconomic analysis will likely prevail in next year’s official scores for major revenue bills from the JCT. Some Democrats, who’ve been suspicious of an approach that makes tax cuts look cheaper, are slowly warming to the same idea for appropriations bills. It could make infrastructure spending look cheaper, too. Into this fussing over details strides Donald Trump. During the campaign, he proposed a tax cut that would cost, according to his own preferred estimate, $4.4 trillion. And to pay for it, his campaign proposed a new kind of analysis, an economic model radically more complex than what either academics or policymakers have tried in the past.

All aspects of Trump’s plan, including trade and regulatory rollbacks, would be part of the analysis. Together, the campaign argued, they would create enough growth, and therefore enough tax revenue, to offset all but about $200 billion of those tax cuts. The real challenge of budgeting is to offer something, but at a discount. In 2017 dynamic scoring will let the Republican majority offer tax cuts without having to offset them entirely with spending cuts. It may even offer infrastructure spending—without having to renege on the promise of tax cuts. If the models are right, they’re right. If they’re wrong, the tax cuts will be a debt-driven Keynesian stimulus. Dynamic scoring arrived on the Republican wave of 1994. In January 1995, as one of its first acts, the new GOP majority in Congress invited Alan Greenspan, among others, to a rare joint hearing of the budget committees.

The representatives wanted to talk about macroeconomic models of budget changes. Greenspan, then the chairman of the Federal Reserve and thus in charge of the world’s best-known macroeconomic modeler, was skeptical. Then as now, the CBO every year produces a 10-year projection of economic growth. This is the “baseline,” the fixed point from which everything else is calculated. Under “static analysis,” modelers in Washington make assumptions about human behavior. But as they project out into the future, they can’t change the CBO’s baseline gross domestic product. Under “dynamic analysis,” they can. Next year’s projected growth changes the baseline for the year after, and so on. If static analysis is arithmetic, dynamic analysis is calculus.

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The comparisons only hold up to a point, as Trump will find out. There’s nowhere to grow to anymore. But focusing on domestic production and consumption can still solidify the economy somewhat.

How US Federal Revenues Have Been Used To Steer The Economy In The Past (BBG)

Donald Trump plans massive fiscal stimulus to combat lackluster growth just as the budget deficit begins rising again, making this a good time to look at how federal revenues have been used to steer the economy in the past. After the six recessions prior to the 2007-2009 downturn, lawmakers let the deficit’s share of GDP rise for an average of 15 months to make sure the economy was back on track. Following the last downturn, the most severe since World War II, Barack Obama’s stimulus gave way to Republican-backed spending cuts to shrink the deficit within just eight months – and the weakest recovery in decades.

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She won’t be able to stop the first rate hike, and after that things will be very different anyway.

Yellen: I’m Not Stepping Down Until My Term Is Done (CNBC)

Forget all that talk about Janet Yellen stepping down if Donald Trump becomes president: The Fed chair told Congress on Thursday she’s not leaving. Trump has been critical of the central bank leader and has suggested that he would replace her at some point. He once told CNBC that Yellen should be “ashamed” of her actions, saying her policies were political positions to help President Barack Obama. Amid expectations that the president-elect would step up political pressure on the Fed after he takes office in January, there was chatter that Yellen might just step aside. “No I cannot,” she said when asked by Rep. Carolyn Maloney if there were circumstances under which she might leave before her term expires. “I was confirmed by the Senate to a four-year term, which ends at the end of January of 2018, and it is fully my intention to serve out that term.” If Trump removes her from the chair, she could still stay on as a governor until her 14-year term expires in 2024.

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Yeah, lead the collapse!

Europe At Risk Of Collapse; France, Germany Must Lead – French PM (R.)

The EU is in danger of breaking apart unless France and Germany, in particular, work harder to stimulate growth and employment and heed citizens’ concerns, French PM Manuel Valls said in the German capital on Thursday. Valls said the two countries, for decades the axis around which the EU revolved, had to help refocus the bloc to tackle an immigration crisis, a lack of solidarity between member states, Britain’s looming exit, and terrorism. “Europe is in danger of falling apart,” Valls said at an event organized by the Sueddeutsche Zeitung. “So Germany and France have a huge responsibility.” He said France must continue to open up its economy, not least by cutting corporate taxation, while Germany and the EU as a whole must increase investment that would stimulate growth and job creation, as well as boosting defense.

As Britain seeks to negotiate its post-Brexit relationship with the EU, hoping to restrict immigration from the EU while maintaining as much access as possible to the EU single market, Valls said it must be prevented from cherry-picking. “If they are able to have all the advantages of Europe without the inconveniences, then we are opening a window for others to leave the EU,” Valls said. Immigration was one of the main drivers of Britons’ vote to leave the EU, and Valls said the bloc, which more than a million migrants entered last year, had to regain control of its borders. He said the Brexit vote and Donald Trump’s election victory showed how important it was to listen to angry citizens, and that politicians scared of making decisions were opening the door to populists and demagogues.

In France, opinion polls suggest that the far-right, anti-EU, anti-immigration National Front leader Marine Le Pen will win the first round of the presidential election next April, before losing the runoff.

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He has no choice.

Renzi Renews Pledge To Resign If He Loses Referendum (Local.it)

Italian Prime Minister Matteo Renzi said on Wednesday that he would have no interest in a government role if he loses Italy’s upcoming constitutional referendum. In an interview on Italian radio, the premier said: “I’m here to change things. If that doesn’t happen, there is no role for me to play.” If the ‘No’ vote wins on December 4th and Renzi’s proposed changes to the constitution are rejected, it is likely that a temporary or technical government will be formed to change the electoral law before general elections can be held. The PM said he would not be willing to seek a deal with other parties to form a coalition if this happens, adding that he didn’t want to take part in “old-style political games”. Renzi vowed to “fight like a lion” to win the vote and said he believed the “silent majority” of voters would back him in the referendum.

He is currently touring the south of the country, where the ‘No’ camp’s lead is strongest. However, he also emphasized that he didn’t envisage a ‘No’ victory causing immediate problems in the country. “The 5th of December won’t be Armageddon,” said Renzi. “If ‘No’ wins, everything will stay as it is. Italians shouldn’t be fooled by politicians who are fighting to keep the privileges they have always had.” The reforms would see the number of senators and their legislative power drastically reduced, which Renzi claims will cut down on bureaucracy, making government more stable and efficient. But his opponents argue that there are inconsistencies in his proposed changes, and that they would put too much power in the hands of the prime minister.

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I like McWilliams, but Trumpism is a nonsensical term, and Italy’s resistance against the EU and globalization was way earlier than Trump became an issue. Correlation and causation.

Italy Is The Next Country To Fall To Trumpism (David McWilliams)

The Bangladeshi selfie-stick hawkers are doing a brisk trade outside the Colosseum. Local chain-smoking lads dressed as gladiators prey on vulnerable tourists, while portly priests on their annual visit to Catholicism’s corporate HQ take time out from soul-searching. Even the heavily armed soldiers, there to protect against a potential Italian Bataclan, are smiling in the Mediterranean sunshine. And as it is midday in Italy, everyone is checking out everyone else. All looks quite normal, chilled out and as it should be. But it is not. Italy is a country going through what could be described as a nervous breakdown. After a decade of almost no economic growth, in two weeks Italians will vote in a referendum which will determine what direction this huge country of nearly 60 million people will take. The result will profoundly affect the EU.

Although the referendum is technically about the way Italy is governed, the country is split down the middle in a plebiscite that has come to symbolise something much bigger. Once again, like the Brexit vote and the Trump election, this referendum is about insiders against outsiders. It is about those who are the victims of inequality and globalisation and those who uphold the status quo. On one side, you have the Italian political elite — the insiders embodied by Matteo Renzi, the youthful prime minister. He represents the people and institutions that have ruled Italy for decades. On the other side, you have an unusual anti-EU coalition, the Left and the Right — the ‘Outsiders’ — who are united by a common belief that, after 10 years of economic stagnation, there must be another way.

We have the same picture we saw in the UK in June and in the US last week, where an elite is desperately trying to connect with the people and large swathes of the population are saying they have had enough. In terms of the big picture, the Italian election can be seen as yet another domino in a year of falling dominos. First we had Brexit, then Trump, and the next big one for Europe after Italy is the potential rise of Le Pen in France. Italy is the triplet in a quartet that will culminate in France, and, in my opinion, if the Italian elite loses on December 4th, Marine Le Pen will win in France.

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The amounts are mind-boggling. Money in, waste out.

EU Reinforces 2017 Budget On Migration And Jobs (EUO)

EU member states and European Parliament have reached an agreement on a budget for next year that focuses on tackling the migration crisis and creating jobs. After 20 hours of discussions, a deal was reached early on Thursday (17 November) to set the total commitments for 2017 at €157.88 billion and payments at €134.49 billion. “The 2017 EU budget will thus help buffer against shocks, providing a boost to our economy and helping to deal with issues like the refugee crisis,” budget commissioner Kristalina Georgieva said. The budget commits €5.91 billion to tackling the migration crisis and reinforcing security, an 11.3% increase on 2016’s figure, according to a statement from the EU Council, which represents member states.

The money will help EU countries resettle refugees, create reception centres, and return those who have no right to stay. Extra spending will also go to help enhance border protection, crime prevention, counter terrorism activities and protect critical infrastructure. A total of €21.3 billion was put aside to boost economic growth and create new jobs, which is an increase of around 12% compared with this year, the council said. The Erasmus+ scheme, a cross-border student programme, will see an increase of its budget of 19%. The 2017 budget also includes €500 million for youth unemployment, and a €42.6 billion support for farmers.

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The Russians are highly aware of what Facebook and Alphabet are doing: “Not replacing foreign IT would be equivalent to dismissing the army.”

Kremlin Ramps Up Efforts To Crack Down On US Tech Companies (BBG)

In a Nov. 14 phone call with President-elect Donald Trump, Russian President Vladimir Putin held out the prospect of better relations between their two countries. But U.S. tech companies shouldn’t expect warmer ties to ease a Kremlin effort to freeze out their products. Seeking to cut dependence on companies such as Google, Microsoft, and LinkedIn, Putin in recent years has urged the creation of domestic versions of everything from operating systems and e-mail to microchips and payment processing. Putin’s government says Russia needs protection from U.S. sanctions, bugs, and any backdoors built into hardware or software. “It’s a matter of national security,” says Andrey Chernogorov, executive secretary of the State Duma’s commission on strategic information systems. “Not replacing foreign IT would be equivalent to dismissing the army.”

Since last year, Russia has required foreign internet companies to store Russian clients’ data on servers in the country. In January the Kremlin ordered government agencies to use programs for office applications, database management, and cloud storage from an approved list of Russian suppliers or explain why they can’t—a blow to Microsoft, IBM, and Oracle. Google last year was ordered to allow Android phone makers to offer a Russian search engine. And a state-backed group called the Institute of Internet Development is holding a public contest for a messenger service to compete with text and voice apps like WhatsApp and Viber. Russia’s Security Council has criticized the use of those services by state employees over concerns that U.S. spies could monitor the encrypted communications while Russian agencies can’t. Trump’s election hasn’t changed those policies, according to Putin spokesman Dmitry Peskov. “This doesn’t depend on external factors,” he says. “It’s a consistent strategy.”

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Do try and wrap your head around the irony of this being published by the NYT, on of the main media companies whose disfunctionality makes Wikileaks so necessary.

Why the World Needs WikiLeaks (Sarah Harrison)

My organization, WikiLeaks, took a lot of heat during the run-up to the recent presidential election. We have been accused of abetting the candidacy of Donald J. Trump by publishing cryptographically authenticated information about Hillary Clinton’s campaign and its influence over the Democratic National Committee, the implication being that a news organization should have withheld accurate, newsworthy information from the public. The Obama Justice Department continues to pursue its six-year criminal investigation of WikiLeaks, the largest known of its kind, into the publishing of classified documents and articles about the wars in Iraq and Afghanistan, Guantánamo Bay and Mrs. Clinton’s first year as secretary of state. According to the trial testimony of one F.B.I. agent, the investigation includes several of WikiLeaks founders, owners and managers.

And last month our editor, Julian Assange, who has asylum at Ecuador’s London embassy, had his internet connection severed. I can understand the frustration, however misplaced, from Clinton supporters. But the WikiLeaks staff is committed to the mandate set by Mr. Assange, and we are not going to go away, no matter how much he is abused. That’s something that Democrats, along with everyone who believes in the accountability of governments, should be happy about. Despite the mounting legal and political pressure coming from Washington, we continue to publish valuable material, and submissions keep pouring in. There is a desperate need for our work: The world is connected by largely unaccountable networks of power that span industries and countries, political parties, corporations and institutions; WikiLeaks shines a light on these by revealing not just individual incidents, but information about entire structures of power.

While a single document might give a picture of a particular event, the best way to shed light on a whole system is to fully uncover the mechanisms around it – the hierarchy, ideology, habits and economic forces that sustain it. It is the trends and details visible in the large archives we are committed to publishing that reveal the details that tell us about the nature of these structures. It is the constellations, not stars alone, that allow us to read the night sky. [..] WikiLeaks will continue publishing, enforcing transparency where secrecy is the norm. While threats against our editor are mounting, Mr. Assange is not alone, and his ideas continue to inspire us and people around the world.

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Just another day.

Another 100 Migrants Feared Drowned in Mediterranean (AFP)

The toll of missing and dead rose Thursday in a grim week of Mediterranean crossings as African survivors described being robbed of life jackets and boat engines and abandoned to a watery grave. A group of 27 survivors, all men, were plucked to safety on Wednesday, but roughly 100 other passengers who set off with them from Libya were missing and feared drowned, Doctors Without Borders (MSF) said. Along with two other shipwrecks this week, the latest incident pushed the toll to 18 confirmed dead and 340 missing, in what was already the most lethal year ever recorded for migrant deaths at sea. The survivors rescued Wednesday by a British Navy ship, described being stripped of their sole means of survival by the men they had paid for safe passage.

They had set off before dawn on Monday from a beach close to Tripoli. After several hours the traffickers, travelling aboard a separate boat, ordered them at gunpoint to hand over life jackets they had paid for, as well as the boat engine, and left them without a satellite phone to call for help. “At that point I thought we were going to die”, said Abdoullae Diallo, 18, according to MSF. “Without a motor, we couldn’t go far. A trafficker told us we would be rescued but I felt like we were going to die.” The overcrowded dinghy began rapidly taking on water and deflated. Tossed for two days and nights on rough seas, some passengers fell overboard, while others succumbed to exhaustion. By the time the British Royal Navy’s HMS Enterprise – engaged in the anti-trafficking Sofia operation – found them, just 27 people were left alive, clinging to what was left of the dinghy.

[..] The first group of survivors were brought to Catania, in Sicily, while the second group were expected to arrive on Italy’s mainland in the port of Reggio Calabria Some were children. “One young boy has been weeping, asking for his mother,” Mathilde Auvillain, a spokeswoman for SOS Mediterranee told AFP. “Another has written a list of names of the people travelling with him and re-reads it over and over. He wants to know if his friends are on the boat or in the sea,” she said.

Read more …

Watching in bewilderment.

The North Pole Is An Insane 36º Warmer Than Normal As Winter Descends (WaPo)

Political people in the United States are watching the chaos in Washington in the moment. But some people in the science community are watching the chaos somewhere else — the Arctic. It’s polar night there now — the sun isn’t rising in much of the Arctic. That’s when the Arctic is supposed to get super-cold, when the sea ice that covers the vast Arctic Ocean is supposed to grow and thicken. But in the fall of 2016 — which has been a zany year for the region, with multiple records set for low levels of monthly sea ice — something is totally off. The Arctic is super-hot, even as a vast area of cold polar air has been displaced over Siberia. At the same time, one of the key indicators of the state of the Arctic — the extent of sea ice covering the polar ocean — is at a record low. The ice is freezing up again, as it always does this time of year after reaching its September low, but it isn’t doing so as rapidly as usual.

Read more …

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 November 13, 2016  Posted by at 5:57 pm Finance Tagged with: , , , , , , , , ,  16 Responses »
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Esther Bubley Waiting for Greyhound bus trip from Memphis to Louisville, KY 1943

 

Been scribbling several some post-election notes over the past few days, it seemed a good idea to not publish things too soon after the upset, even if I at least had the advantage that it wasn’t that much of a surprise or upset. But I’ve read far too many people too eager to write about how they haven’t moved an inch, and too many others who have -mostly reluctantly- moved but don’t know how or where to. It’s okay to think about such matters first, guys and dolls. Make that: it’s better. There’s too much nonsense out there as is. Why bother adding to the pile? Here’s a few thoughts in no particular order:

 

 

The transition we find ourselves in, into an era as profoundly different as it will be from the one that preceded it, can only possibly be chaotic. Smooth is not an option. Because it takes much time for people to recognize let alone accept that there is such a transition to begin with, and not everyone acknowledges or accepts it at the same time. Many never will at all, they will be left behind in their own realities tied down by the chains of what once was.

This transition is the one away from economic growth and globalization -centralization in general- and towards smaller, less centered and grandiose, politics and markets. It is not an idealistic transition towards self-sufficiency, it’s simply and inevitably what’s left once unfettered growth hits the skids. It doesn’t have to be anywhere near as bad as people would have you believe, or at least not necessarily so. What could make it real bad, though, is the widespread resistance and denial which seem certain to meet it.

Our entire worldviews and ‘philosophies’ are based on ever more and ever bigger and then some, and our entire economies are built upon it. That has already made us ignore the decline of our real markets for many years now. We focus on data about stock markets and the like, and ignore the demise of our respective heartlands and flyover countries, even as we experience Brexit and Trump and similar movements set to come to many more countries.

Donald Trump looks very much like the ideal fit for this transition – but nor because he understands the issue itself, or its implications. What matters is he promises to bring back jobs to America, and that’s what the country needs. Not so they can then export their products, but to consume them at home, and sell them in the domestic market.

That is the future of the world post-growth, and post-globalization. Every country and every society needs to focus on self-reliance, not as some idealistic luxury choice, but as a necessity. And that is not as bad or terrible as people would have you believe, and it’s not the end of the world. What would be terrible is if all we do is try and restart growth and globalization, because that would be a hideous waste of time and resources.

You’ll be flooded in the years to come, even more than today if you can imagine, with terms like protectionism and isolationism and even populism, but ignore all that. There’s nothing economically -let alone morally- wrong with people producing what they and their families and close neighbors themselves want and need without hauling it halfway around the world for a meagre profit, handing over control of their societies to strangers in the process.

There’s nothing wrong or negative with an American buying products made in America instead of in China. At least not for the man in the street. It’s not a threat to our ‘open societies’, as many claim. That openness does not depend on having things shipped to your stores over 1000s of miles, that you could have made yourselves at a potentially huge benefit to your local economy. An ‘open society’ is a state of mind, be it collective or personal. It’s not something that’s for sale.

 

 

Earlier this week I read what looks to be an apt observation: ‘Every white person in New York who didn’t vote for Trump is now out in the streets protesting against him’. But the people who protest now are miles off target and months too late: they should have stood up for Bernie when it became clear that the Hillary camp and the DNC conspired to oust him. Indeed, Bernie himself should have stood up back then, not for himself but for his supporters; they would have stood up with him.

Whether they all like it or not, being asleep and/or silent when big things happen that count, does carry a price. If you drop the ball, you can’t just pick it back up again and pretend it didn’t fall. Shouting ‘not my president’ in the wake of an election is a sign of weakness, no matter how well-intentioned. The protests should have taken place before the election, not after.

Moreover, to a large extent people are up in protest against the image the Hillary campaign and the media have painted of Trump, not the man himself. A difference they cannot see. Would these same people have been protesting if Hillary had won? No, they wouldn’t. But why?

Many voices expressed the wish that Americans would vote for Hillary, a story about a woman and a glass ceiling, instead of for the male and allegedly sexist and misogynist Donald Trump. Simply because she’s a woman, and it’s time for a female president.

These voices have been consistently and for a long time been blind to the fact that Hillary’s campaign and Foundation, in legal, shady and downright illegal ways, have long been financed to a substantial degree by uber-rich men in charge of Middle East oil extracting nations who have far more misogynist views and attitudes towards women than Trump will ever have.

These men carry things like misogyny, racism, xenophobia and homophobia high and proudly in their banners. Also, they’re well on their way towards obliterating not just an entire country in Yemen, but indeed an entire people, all with the enthusiastic support of Obama, Hillary and their friends and donors in the arms industry. And lest we forget, they sponsor ISIS too. Is that the future Americans want?

 

 

The bright side is the chances of a war with Russia have gone down substantially. While the odds have gone up dramatically of much fewer US servicemen and -women being sent abroad to engage in endless and countless battles and wars that never seemed to have much to do with the US, going back all the way to Korea and Vietnam.

How can either of these things can be perceived as negative? The continuation and expansion of -often proxy- hostilities versus Moscow would have been cast in stone had Hillary been elected, it was a milestone of her entire campaign. And a major part of this would have been fought at some desert location in the Middle East.

Where America has needlessly squandered the lives of many of its young and finest, to and in a mad scramble over control of oil resources which has resulted in nothing but a shapeless chaos that has equally needlessly killed millions of people, sent millions of others fleeing their homes and razed entire ancient civilizations, accomplishments that will follow America around the world for many years to come. Is that the future Americans want? Double down?

There’s -undeniably- still a risk that Donald Trump will succumb to the mighty hand of the military industrial complex. But at the same time, he may well be the country’s -and the world’s- best if not only chance at making that hand that much less mighty. There may be many things wrong with Trump -there are- but being in the pockets of arms manufacturers and other doctors of death is so far not among them, to our best knowledge.

 

 

Hillary and her crowd ran the entire election process from inside a cocoon, built largely on hubris and a lack of contact with the world outside. They had the media so much on their side that TV and newspapers became part of the Hillary cocoon, and reporters got locked into a groupthink mode that then in its turn infected the campaign itself.

What I mean is you can’t stop at saying Trump is a disaster, so let’s pick the other side, it was always very much a choice between two disasters. And at the same time, as I wrote at the Automatic Earth the day of the election, the US presidency is a poisoned chalice. There’s nothing simple about this.

Trump means a big clean-up for the GOP, and the Hillary loss means the chance for the Democrats to do the same. You bet those folks realize achingly well they could have won with Bernie. Hopefully that wing can take over substantially from the lying conniving machinery the DNC has turned out to be.

Someone summed it up as: Trump swept aside the Republicans, the Democrats, the Bush dynasty and the Clinton dynasty, all in one fell swoop, and we should perhaps be thankful to him for that.

 

 

Trump has run his campaign catering to the anger that exists among Americans. And people experience and label that as ‘terrible’ and ‘awful’. His Republican friends and opponents find it terrible, because it scares the bejeezus out of them, and they’re too scared to go anywhere near that anger. Trump embraced the anger. Because he knew from the start, instinctively, that it was the only way he could win.

And you can think like the majority of your peers do, that all that commingling with the anger, with racists and bigots and what have you, is inexcusable. But what you miss out on if you take that approach and hold on to it, is that in that case the anger does not get addressed at all. It’s instead left free to just wander over the land and fester and grow on society, out of reach of politics, media, everything.

A certain by now very vilified cartoonist explained that what Trump does is to ‘feel’ what the angry crowd wants, and then play into it by making over the top statements targeted at the anger. That way this crowd will follow him, gather around him. This has worked like a charm. But no, that doesn’t make him look like a certain German dictator.

Because it does not mean that Trump is going to literally do everything he said in the over the top statements he made. It’s all just a basic sales trick. Trump makes the angry people feel like he knows, and cares about, their grievances. Just like a car salesman makes you think he knows just what you want and need in a car, and praises the assets of that car in such a way that it touches that part of you which makes you want the car.

But that doesn’t mean at the end of the day he’ll drive the same car home that you just bought off of him. He makes you think he is like you, and knows what you want, so he can sell you that car. That’s all. He’s judged you to be the right ‘target’ for that vehicle.

That is how Trump has reeled in America’s hidden anger, how he has gathered its lost hidden mob. And before you say anything else, it’s perhaps a good idea to wonder where that anger would go without Trump. Because it’s not going to go away by itself. It’s been growing and festering for a long time, and it’s well-armed, lest you forget.

The question then becomes: would America be a better, or a safer, place if the entire angry part of its population had again, and still, been ignored by everyone? Or is it better to have them gathered under the umbrella of Donald Trump? Take your pick. Don’t be shy.

Another way to phrase the issue is this: without the exact same sales tactics that Trump used to ‘gather the anger’ around him, the TV ads (most ads in general) you see on a daily basis would look completely different. Whatever products these ads sell, from detergents to cars, they do it by referring to your unconscious, not your rational abilities.

The ads, like Trump, sell feelings, not facts (if you don’t get that, you’re lost).

Yet nobody would think of taking the companies whose products are advertized this way to court -nobody even gets really angry with them- because the happy smily people and unending open roads bathed in sunshine from the ads do not magically appear once you purchase the product. We would even find that crazy, that anyone might take the images shown in the ads, literally.

We should interpret Trump’s campaign words along those same lines, the same way we ‘undergo’ the ads that play to our subconscious. The problem is, how do you do that? How do you interpret what you are largely unaware of on a rational level?

The president-elect will now need the same skills in order to ‘come down that mountain’ without antagonizing each and every side of the discussion, of the nation. He’ll have to convince the liberal camp that he didn’t mean everything he said in a literal sense, while at the same time keeping his ‘angry mob’ satisfied that he will do enough of what he promised them.

That will take a lot of persuading. But at the same time that happens to be the one thing he’s really good at. He’ll have to convince his voters that he’s not breaking his promises, just adjusting them in ways that will, if at all possible, be even more beneficial to them than the original ones.

Difficult, but if he can convince them that there are signs, delivered relatively fast, that their living conditions are improving, he may succeed. They just vent their anger at people that are visibly not themselves, but that’s not where the anger stems from.

 

 

There are all sorts of nasty things going on, racists and supremacist etc. But you can’t say that Trump caused that to happen. The most you could say is that he gives the people involved in that stuff the idea that because someone finally hears them, they can, are allowed to, make themselves heard.

But just because a few loose cannons let loose, doesn’t mean America has 60 million loose cannons who all voted for Trump and should all be condemned including Trump himself for good measure because there’s a few incidents. Not only is that a misinterpretation of what goes on, it prevents you from understanding what lies behind.

Those incidents at least have a lot to do with the fact that so many ignored Americans live in what Washington has long considered flyover country. It would be a lot more positive and productive at this point in time if everyone looks at what they themselves have gotten wrong over the past years -not just this election campaign- before pointing fingers at everyone but themselves.

But seeing the dug-in heels in Britain almost five months after the Brexit vote, it’s hard to get your hopes up about people coming together, or even doing some genuine introspection. It’s easier to just remain stuck in your comfy little rut.

Thing is, the world is rapidly changing -it already has-, America is changing, Britain is, and many more countries will, it just takes an election to show how much. We’re transitioning to a next phase, and trying to deny we are with all our might, good luck and good night.

Or in a more poetic fashion – we can do that too-:

 

the blizzard of the world
has crossed the threshold
and it has overturned
the order of the soul

 

 

 

 

Nov 132016
 
 November 13, 2016  Posted by at 9:56 am Finance Tagged with: , , , , , , , , , , ,  3 Responses »
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Andy Thomas: Grand Ol’ Gang

Stupid Americans Elect An Absurd and Dangerous President (Spiegel)
Trump Adviser Scaramucci Takes Aim at Conservatives’ Budgetary Restraint (BBG)
Trump’s Truthful Heresy On Globalization And Free Trade (Steve Keen)
Clinton Blames FBI’s Comey For Her Defeat In Call With Donors (R.)
Sidney Blumenthal: Right-Wing FBI Agents Took Down Hillary In Coup D’État (ZH)
NY Times Publisher Vows To ‘Rededicate’ Paper To Reporting Honestly (Fox)
President Trump: How & Why… (Jonathan Pie)
Putin Aide: Trump Could Build Confidence With NATO Pullback (AP)
S&P Predicts Hard Brexit And Fresh Downgrade For UK (G.)
Obama: Greeks ‘Need Hope’ (Kath.)
Erdogan: If 3 Million Refugees March To Europe, EU Won’t Know What To Do (TM)
US To Accept Refugees That Australia Refuses To Resettle (BBC)

 

 

Just trying to make friends.

Stupid Americans Elect An Absurd and Dangerous President (Spiegel)

Although Trump will become the democratically elected 45th president of the United States on January 20, he remains a dangerous man. He is dangerously indifferent, unbalanced and inexperienced — and he is dangerously racist. Trump believes in the superiority of the white race, and if he implements the worst of his campaign promises, he will not be the first elected leader to do so. In other words, 60 million Americans acted stupidly. They cast their votes for xenophobia, racism and nationalism, the end of equal rights and social conscience, for the end of climate treaties and health insurance. Sixty million people followed a demagogue who will do little for them. And yet… this election goes deeper than that.

It says more than that, and all of us, including the media, politicians and civil societies, and unfortunately the entire West, which is now threatened, would be wise to pay far closer attention. Those who have lived in New York or experienced dinner conversations in Georgetown and debates at Harvard University’s Kennedy School of Government, know how brilliantly intelligent and worldly Americans can be. But these are closed circles – ones that are unfortunately nowhere near as open as they like to claim, inaccessible as they are to the vast majority of Americans who could never afford access. Once you get outside such circles, such cosmopolitan thinking isn’t nearly as widespread.

Those who have traveled recently from the East Coast to the West Coast, and witnessed the neglect and deterioration of entire towns and cities in states like Georgia, Alabama and Louisiana, have seen with their own eyes that connections have been severed in American society. Those who have seen what the disappearance of the steel industry has done and what the computer chip has wrought is familiar with the widespread frustration among the white working class, a group that has been left behind. Harvard University and Akron, Ohio, or Wall Street and Birmingham, Alabama, no longer have anything in common when 0.1% of society possesses 90% of the wealth. This is when the American dream is dead and when hate thrives – hate for immigrants, women, the media, and hate for anything that seems elitist or is simply different.

This doesn’t justify the hate – it simply explains it. The tragedy here is that Clinton offered ideas to fight the roots of this hatred, ideas like a higher minimum wage and investments in infrastructure and education. It is tragic because it was too late for credible plans. Trump had no ideas, but he sensed that the left-behinds yearn for strength. After Barack Obama’s victories, the pundits said that demographic change meant that no US election could be won again without the Latino vote. But Trump gave the Latinos a big fuck you, insinuating that the left-behinds are superior. His words were as crude as those spoken in Germany 80 years ago.

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“Business people like Mr. Trump understand you can grow yourself out of excessive debt.”

Trump Adviser Scaramucci Takes Aim at Conservatives’ Budgetary Restraint (BBG)

Don’t expect President-elect Donald Trump to adhere consistently to traditional Republican economic policy, or even to positions Trump staked out during his election campaign. That’s the message in an opinion piece written in the Financial Times by Trump economic adviser Anthony Scaramucci that took a swipe at the budgetary discipline promoted for years by fiscal conservatives in the U.S. and Europe. It may point to a coming rift between the new executive branch and the Republican-controlled Congress. “Mr. Trump is a different type of leader not burdened by rigid ideology,” Scaramucci said. “He is not dogmatic about policy positions. Rather, he has set bold targets from which to begin negotiations.”

Scaramucci ran though some of Trump’s previously-announced plans, including a proposal for a 10-percent one-off repatriation fee for companies. Trump would “ideally” like to see corporate tax rates cut to 15% from 35%, he said, adding that even a reduction to equal the U.K. rate of 20% would add nearly $600 billion to U.S. GDP. Founder of the investment firm SkyBridge Capital, Scaramucci, 52, was named on Friday to the executive committee of Trump’s transition team. The 16-person list also includes Dune Capital CEO Steve Mnuchin, who was finance chairman of Trump’s campaign; Reince Priebus, chairman of the Republican National Committee; and three of the president-elect’s children.

Scaramucci said global economies are still battling deflation largely because of a movement toward fiscal austerity that followed the 2008-2009 global economic crisis. “While easy-money monetary policies have exacerbated the income divide, central bankers handcuffed by political dysfunction have had little choice but to provide extraordinary accommodation,” he said. “Business people like Mr. Trump understand you can grow yourself out of excessive debt.”

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Steve illustrates his view with an excellent critique of David Ricardo, but I have no space for that here. Read the article.

Trump’s Truthful Heresy On Globalization And Free Trade (Steve Keen)

Dear President Trump, Nothing shuts a loud party down faster than the neighbours bashing the door in. You have just done that to the Washington Party, which—regardless of whether the President has been a Republican or a Democrat—has been the party of Globalisation and Free Trade ever since the 1970s. You declared that this party might have been good for the Washington and Wall Street elites, but it’s been bad for their neighbours, “the forgotten people” of America who once made up its manufacturing workers. So forget it folks, the party’s over. Go home. You’re right. Plenty of people will try to convince you that globalization and free trade could benefit everyone, if only the gains were more fairly shared.

The only problem with the party, they’ll say, is that the neighbours weren’t invited. We’ll share the benefits more equally now, we promise. Let’s keep the party going. Globalization and Free Trade are good. This belief is shared by almost all politicians in both parties, and it’s an article of faith for the economics profession. You are right to reject it. It’s a fallacy based on a fantasy.. [..] the gains from trade for everyone and for every country that could supposedly be shared more fairly simply aren’t there in the first place. Specialization is a con job—but one that the Washington elite fell for (to its benefit, of course). Rather than making a country better off, specialization makes it worse off, with scrapped machinery that’s no longer useful for anything, and with less ways to invent new industries from which growth actually comes.

Excellent real-world research by Harvard University’s “Atlas of Economic Complexity” has found diversity, not specialization, is the “magic ingredient” that actually generates growth. Successful countries have a diversified set of industries, and they grow more rapidly than more specialized economies because they can invent new industries by melding existing ones. My favourite example here is sailboards. To invent them in the first place, it helps to have local industries producing both surfboards and sails. Of course, specialization, and the trade it necessitates, generates plenty of financial services and insurance fees, and plenty of international junkets to negotiate trade deals. The wealthy elite that hangs out in the Washington party benefits, but the country as a whole loses, especially its working class. Forget it folks, the party’s over. Go home.

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It couldn’t have been her own fault, could it?

Clinton Blames FBI’s Comey For Her Defeat In Call With Donors (R.)

Hillary Clinton blamed FBI director James Comey for her stunning defeat in Tuesday’s presidential election in a conference call with her top campaign funders on Saturday, according to two participants who were on the call. Clinton was projected by nearly every national public opinion poll as the heavy favorite going into Tuesday’s race. Instead, Republican Donald Trump won the election, shocking many throughout the nation and prompting widespread protests. Clinton has kept a low profile since her defeat after delivering her concession speech on Wednesday morning. Clinton told her supporters on Saturday that her team had drafted a memo that looked at the changing opinion polls leading up to the election and that the letter from Comey proved to be a turning point.

She said Comey’s decision to go public with the renewed examination of her email server had caused an erosion of support in the upper Midwest, according to three people familiar with the call. Clinton lost in Wisconsin, the first time since 1984 that the state favored the Republican candidate in a presidential election. Although the final result in Michigan has still not been tallied, it is leaning Republican, in a state that last favored the Republican nominee in 1988. Comey sent a letter to Congress only days before the election announcing that he was reinstating an investigation into whether Clinton mishandled classified information when she used a private email server while secretary of state from 2009 to 2012.

Comey announced a week later that he had reviewed emails and continued to believe she should not be prosecuted, but the political damage was already done. Clinton told donors that Trump was able to seize on both of Comey’s announcements and use them to attack her, according to two participants on the call.

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Blumenthal’s the Clinton ally that Obama told her to stop conferring with. He’s rumored to be the main reason she set up her private server, in order to keep talking to me regardless, and keep it all secret.

Sidney Blumenthal: Right-Wing FBI Agents Took Down Hillary In Coup D’État (ZH)

After weeks/months of the Hillary campaign bashing Trump for “irresponsibly” questioning the legitimacy of the election process, Clinton-insider, Sid Blumenthal, is apparently making the media rounds in Europe attributing her loss to a “coup d’etat” organized by “a cabal of right-wing agents of the FBI in the New York office attached to Rudy Giuliani.” “It was the result of a cabal of right-wing agents of the FBI in the New York office attached to Rudy Giuliani, who was a member of Trump’s campaign.”I think it’s not unfair to call it a coup. Yeah, a coup d’etat.” Of course, Blumenthal is well known within Clinton world for his wild conspiracy theories as John Podesta pointed out he is “lost in his own web of conspiracies.” “Sid is lost in his own web of conspiracies. I pay zero attention to what he says.” It would probably be pointless to highlight for Sydney that there would never have been an FBI investigation had Hillary not blatantly violated multiple federal laws for her “convenience”…details.

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If the NYT had actually “reported on both candidates fairly”, the change wouldn’t have been necessary. Then again, the Dems are blaming the press for having been biased AGAINST HER! Anything goes.

NY Times Publisher Vows To ‘Rededicate’ Paper To Reporting Honestly (Fox)

The publisher of The New York Times penned a letter to readers Friday promising that the paper would “reflect” on its coverage of this year’s election while rededicating itself to reporting on “America and the world” honestly. Arthur O. Sulzberger Jr., the paper’s embattled publisher, appealed to Times readers for their continued support. “We cannot deliver the independent, original journalism for which we are known without the loyalty of our subscribers,” the letter states. New York Post columnist and former Times reporter Michael Goodwin wrote, “because it (The Times) demonized Trump from start to finish, it failed to realize he was onto something. And because the paper decided that Trump’s supporters were a rabble of racist rednecks and homophobes, it didn’t have a clue about what was happening in the lives of the Americans who elected the new president.

Sulzbergers letter was released after the paper’s public editor, Liz Spayd, took the paper to task for its election coverage. She pointed out how its polling feature Upshot gave Hillary Clinton an 84% chance as voters went to the polls. She compared stories that the paper ran about President-elect Donald Trump and Clinton, where the paper made Clinton look functional and organized and the Trump discombobulated. Spayd wrote, “Readers are sending letters of complaint at a rapid rate. Here’s one that summed up the feelings succinctly, from Kathleen Casey of Houston: “Now, that the world has been upended and you are all, to a person, in a state of surprise and shock, you may want to consider whether you should change your focus from telling the reader what and how to think, and instead devote yourselves to finding out what the reader (and nonreaders) actually think.”

She wrote about another reader who asked that the paper should focus on the electorate instead of “pushing the limited agenda of your editors.” “Please come down from your New York City skyscraper and join the rest of us.” Sulzberger—who insisted that the paper covered both candidates fairly- also sent a note to staffers on Friday reminding the newsroom to “give the news impartially, without fear or favor.” “But we also approach the incoming Trump administration without bias,” he said.

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Jonathan Pie is a spoof news reporter played by actor Tom Walker. Not a bad rant. h/t Nicole

President Trump: How & Why… (Jonathan Pie)

In case you missed it, I shot my bolt early this week & went viral in the process.

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Stop blaming Russia for NATO making up a reason to continue to exist.

Putin Aide: Trump Could Build Confidence With NATO Pullback (AP)

Vladimir Putin’s spokesman says one way Donald Trump could help build confidence with Russia after he becomes president would be to persuade NATO to slow down its expansion or withdraw its forces from Russia’s borders. Dmitry Peskov said in an interview with AP that this “would lead to a kind of detente in Europe.” But unfortunately, he said, Russia now sees “NATO’s muscles … getting bigger and bigger and closer and closer to Russian borders.” At a NATO summit in July, the Western alliance said it is building up positions in Poland, Estonia, Latvia and Lithuania in response to what it sees as escalating tensions with Russia. The United States is sending 1,000 troops to Poland next year. Trump has praised Putin as a strong leader and suggested that the U.S. could abandon its NATO commitments, which include mutual defense in case of attack.

The president-elect says NATO was created to confront a threat — the Soviet Union — that no longer exists and has called the alliance “obsolete” and a bad deal for America. He argues that the U.S. gets too little out of decades-old security partnerships like NATO, which is anchored in Europe but traditionally led by the United States. Peskov, who is considered one of Putin’s closest aides, called NATO “an instrument of confrontation.” When its forces are being enlarged and deploying closer and closer to Russia’s borders, he said, “we do not feel ourselves safe.” “Of course, we have to take measures to counter,” Peskov said. As “confidence-building measures” to reduce U.S.-Russia tensions in a Trump presidency “let’s say slow down or withdrawal of NATO’s military potential from our borders potentially would ease this situation,” he said.

It’s highly unusual for Peskov to travel abroad separately from Putin, but he is chairman of the board of the Russian Chess Federation and came to New York to attend Friday’s opening of the world championship match between Russia’s Sergei Karyakin and Norway’s Magnus Carlsen. The organizers invited Trump to attend but he did not show up. On other global issues, Peskov said in an interview Thursday at the venue for the championship that there is no possibility of “a breakthrough” to end the more than five-year Syria conflict unless the so-called moderate opposition is separated from “terrorist groups” including the Nusra Front and Islamic State extremists. The U.S. was supposed to do this under a Russia-U.S.-brokered cease-fire, but Peskov said Washington, unfortunately, was unable to do so. The cease-fire collapsed in September as the Syrian army launched an offensive on rebel-held eastern Aleppo under the cover of Russian warplanes.

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Within a year lots of Britons will realize that being out of the EU is a blessing.

S&P Predicts Hard Brexit And Fresh Downgrade For UK (G.)

Britain is in store for a hard Brexit that will hit the UK economy and lay bare the deep divisions in British society, a leading ratings agency has warned. In a bleak assessment of the UK’s prospects following the EU referendum, Standard & Poor’s said Britain was a diminishing global economic power on the verge of losing the ability to freely export goods and services to the EU. S&P said the UK was at risk of a further downgrade, following its unusual decision to slash the rating by two notches from the top AAA rating to AA, following the 23 June referendum. Moritz Kraemer, S&P global ratings chief sovereign credit officer, described that downgrade as “an extraordinary rating action, underlining the unprecedented step that is Brexit”.

He added: “Far from healing festering wounds, as was then PM David Cameron’s intention, the referendum has deepened and laid bare the schisms in British society. “Most of the economic impact will hit Britain itself. The second-round effect on the world economy is likely to be more limited, as the UK economy accounts for a small and shrinking share of global GDP.” The agency cited data from the International Monetary Fund, which suggested the UK’s share of the world economy will shrink from about 5% in 1980 to just over 3% in 2020. Kraemer said: “It is hard to fathom how a rather hard Brexit can be avoided unless both sides become much more flexible than they appear today. Nothing today suggests that a common quest for compromise will overcome the gulf that now looks as wide as the English Channel.”

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He could do much more, or have done at least, and all there is is words.

Obama: Greeks ‘Need Hope’ (Kath.)

You have played an important role in making sure that Greece remains in the eurozone and have repeatedly stated that it should get serious debt relief. Why did you do this and what should the way forward be in terms of promoting reforms, dealing with the debt issue and the strengthening of European institutions? How can the US help Greece in this, in practical terms? Is this going to be a priority during your visit to Berlin? Greece is a democracy, and the future of Greece will be decided by the Greek people. I have strongly supported efforts to keep Greece in the eurozone because I share the view of the vast majority of Greeks that this outcome is in Greece’s best interest. I believe that European integration is one of the greatest political and economic achievements of modern times, with benefits for EU members, the United States and the entire world.

Europe is our largest economic partner and we have a profound economic interest in a Europe that is stable and growing. Without question, Greece had to take steps to reform its economy, and I want to commend the Greek government, including Prime Minister Tsipras, and the Greek people for the very difficult and painful steps they’ve taken to show that Greece is working to help itself. The Greek budget is now in surplus and Parliament has passed tough reforms that will help make the Greek economy more competitive.

But there’s still clearly more to be done. My visit will therefore be an opportunity to reaffirm US support for reforms that improve the business climate, ensure that the imbalances that caused the crisis don’t re-emerge, and lay the foundation for a stronger economic recovery that helps improve the daily lives of the Greek people. I am a strong believer that to make reforms sustainable, people need hope. The IMF has said that debt relief is crucial to put Greece’s economy on a sustainable path and set the stage for a return to prosperity. This is why I will continue to urge Greece’s creditors to take the steps needed to ensure the country is well placed to return to robust economic growth, including by providing meaningful debt relief. Getting that done would not only fuel the Greek economic recovery, it would also show that Europe can make its economy work for everyone.

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How many times have I said the refugee deal would backfire on the EU?

Erdogan: If 3 Million Refugees March To Europe, EU Won’t Know What To Do (TM)

In yet another veiled threat to the European Union, President Recep Tayyip Erdogan said that Turkey currently hosts 3 million refugees and that if they were to march to Europe, the EU would not know what to do with them. In an interview with the Qatar-based Al Jazeera TV, Erdogan said the 3 million refugees in Turkey could march to Europe, without explaining how they might do that. In a progress report released earlier this week, the EU severely criticized Turkey for backsliding in democracy but praised its efforts to contain refugees inside the country. Criticizing Europe for not accepting even 100 or 500 refugees, Erdogan brought to mind the EU’s promise to give Turkey 3 billion euros in June in addition to another 3 billion.

“As far as I can remember, until now the EU has only given Turkey 250-300 million euros”, Erdogan said. The EU has been criticized for not taking any concrete action against Turkey despite growing despotism in the country for the sake of a refugee deal that was agreed earlier this year. Following a further crackdown on media and the opposition last week, several EU politicians called for a suspension of accession talks with Turkey until the rule of law is restored. Erdogan’s veiled threat to Europe came amid increasing criticism from the continent. Meanwhile, Galip Ozturk, the owner of one of the largest passenger bus fleets in Turkey, wrote on Twitter on Friday that he is ready to transport migrants to the EU border upon Erdogan’s orders.

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Aussies are good at cattle trade?!

US To Accept Refugees That Australia Refuses To Resettle (BBC)

Australia and the US have reached a resettlement deal for asylum seekers held in offshore detention centres in Papua New Guinea and Nauru. Under the agreement, the migrants there will be assessed and the most vulnerable will be resettled in the US. About 1,200 people are being held in the asylum centres on Manus Island in Papua New Guinea and on Nauru island. Australia’s policy of sending migrants who arrive by boat to offshore facilities has been criticised. Announcing the deal with the US on Sunday, Prime Minister Malcolm Turnbull said the resettlement process would be gradual. “US authorities will conduct their own assessment of refugees and decide which people are resettled in the US,” he said.

He did not say how many refugees would be relocated, but said that women, children and families would be prioritised. The agreement, to be administered with the United Nations refugee agency UNHCR, is available only to those currently in the processing centres. “It is a one-off agreement. It will not be repeated,” Mr Turnbull said. US Secretary of State John Kerry confirmed the arrangement, adding that his country was “very engaged” with the UNHCR and helping refugees “there and in other parts of the world”. Refugees who are eligible for asylum in the US but reject it would be offered a 20-year Nauru visa instead.

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Oct 272016
 
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Marion Post Wolcott. Unemployed coal miner’s mother in law and child. Marine, West Virginia 1938

With 70% Of Wildlife Gone, We Face Mass Extinction On Scale Of Dinosaurs (YP)
Mass Consumption Is Causing Mass Extinction. Can We Stop Ourselves? (TP)
Our Landfill Economy (CH Smith)
Mike Maloney: DEFLATION FIRST! (Max Keiser)
Globalization Goes Into Reverse (BBG)
The Next 10 Years Will Be Ugly for Your 401(k) (BBG)
Deutsche Bank Probes “Misstated” Derivative Valuations, Finds “Divergences” (ZH)
Goldman Sachs Does Mass Layoffs Piece by Piece (BBG)
US Election: Nothing to Lose (Steen Jakobsen)
Hacked Memo Offers Angry Glimpse Into Conflicted ‘Bill Clinton Inc.’ (Pol.)
Clinton Adviser Proposes Attacking Iran to Aid the Saudis in Yemen (NYMag)
Putin Tried to Warn Us About Syria Three Years Ago (TAM)
UK Deploys Hundreds Of Troops And Aircraft To Eastern Europe (G.)
Merkel Accuses Facebook, Google Of “Distorting Perception” (ZH)
Nuclear Power Is Over In The US Without More Government Subsidies (BBG)

 

 

To be correct, we don’t so much face it as live it.

70% Of Wildlife Gone: World Faces Mass Extinction On Scale Of Dinosaurs (YP)

Global wildlife populations will have fallen by more than two thirds on 1970 levels by the end of the decade, conservationists warn today. An assessment of more than 3,700 species of mammals, birds, fish, amphibians and reptiles reveals a fall of 58% between 1970 and 2012, with no sign of a slowdown in the annual two per cent reduction in numbers. By 2020, populations of vertebrate species could have fallen by 67pc over half a century, unless action is taken to reverse the damaging impacts of human activity, the Living Planet report from WWF and the Zoological Society of London said. The figures prompted experts to warn that nature was facing a global “mass extinction” for the first time since the demise of the dinosaurs.

African elephants in Tanzania have seen numbers decimated by persistent poaching, while maned wolves in Brazil are threatened by grasslands being turned into farmland. Leatherback turtles in the Atlantic have seen populations reduced by up to 95pc, and European eels are also in decline. Wildlife faces further threats from over-exploitation, climate change and pollution, the report warns. Among the species most at risk are tigers, with only 3,900 left in the wild, and Amur leopards, whose numbers have fallen to just 70 in the face of hunting and the destruction of their habitat. Giant pandas have a population of just 1,864 in the wild in China, and although numbers are increasing, the species is still threatened by climate change and impacts of human activity.

Humans themselves are also victims of the deterioration of nature, the report warns, since they depend on breathable air, water and nutritious food. [..] Mike Barrett, director of science and policy at WWF-UK, said: “For the first time since the demise of the dinosaurs 65 million years ago, we face a global mass extinction of wildlife. “We ignore the decline of other species at our peril, for they are the barometer that reveals our impact on the world that sustains us. “Humanity’s misuse of natural resources is threatening habitats, pushing irreplaceable species to the brink and threatening the stability of our climate.”


This elephant is thought to have died after eating crops sprayed with pesticides in Assam, India REUTERS

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No we can’t. But we will be stopped.

Mass Consumption Is Causing Mass Extinction. Can We Stop Ourselves? (TP)

Populations of wild animals have plummeted 58% in the past four decades as humans have pushed them into ever-smaller habitats or killed them for food and financial gain, according to a new report from a leading environmental group. World Wildlife Fund researchers said the losses could be reversed over the 21st century by systematically factoring the value of nature into how we produce and consume goods and services, as well as adopting farming methods that work with ecosystems rather than against or in spite of them. WWF compiled data on more than 14,000 populations of 3,706 vertebrate species for the latest edition of its biennial Living Planet Report and found that global populations of amphibians, birds, fishes, mammals, and reptiles sank by an average of 58% between 1970 and 2012.

These populations could drop another 9% by 2020 based on current trends, the report stated. Freshwater wildlife populations dropped a dramatic 81%—meaning that for every 10 pond frogs that existed during Richard Nixon’s first term in the White House, there were fewer than two at the beginning of Barack Obama’s second. Terrestrial and marine species populations dropped by 38% and 36%, respectively, over the same period. The leading driver of wildlife population losses has been food production—overfishing and natural habitats converted to crop and grazing land—followed by pollution, invasive species, and climate change.

All five threats are symptoms of overconsumption of natural resources, the report stated, which has far outstripped the capacity of ecosystems to restore the fertile soil and clean water that support wildlife as well as human health and welfare. “Humanity currently needs the regenerative capacity of 1.6 Earths to provide the goods and services we use each year,” the report noted, and the short-term goals of most economic systems offer no incentive to change.

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It had been a while since I last saw that term.

Our Landfill Economy (CH Smith)

Correspondent Bart D. (Australia) captured the entire global economy in three words: The Landfill Economy. Stuff is manufactured, energy is consumed shipping it somewhere, consumers buy it and shortly thereafter it ends up as garbage in the landfill. This is of course the definition of “economic growth”: waste, inefficiency, environmental destruction–none of these matter. Only two things matter: maximize “growth” by any means necessary, and maximize profits by any means necessary. The Landfill Economy now encompasses the entire planet. The swirling gyre of plastic trash the size of Texas between Hawaii and California: it’s just one modest example of the planetary trash dump that “growth” and profit generate as byproducts/blowback.

The planet’s oceans are one giant trash dump. Everything from plastic water bottles to abandoned fishing nets to radiation to containers that fell off ships is floating around even the most distant corners of the seas. Seabirds nesting in remote islands die of starvation as their guts fill with plastic bits of “permanent growth.” Globalization has turned the planet’s land masses and rivers into trash dumps. Want to make a quick profit along a tropical sea coast? Dig some big holes near the coast, dump in baby prawns, food and chemicals to suppress algae blooms and diseases and then harvest the prawns to ship to the insatiable markets of the developed world. Once the prawn farms are poisoned wastelands, move on and despoil another coastline elsewhere.

Globalization has greased the slippery slope from factory to landfill by enabling the global distribution of defective parts. Whether they are pirated, designed to fail or just the result of slipshod quality control, the flood of defective parts guarantee that the entire assembly they are installed in–stoves, vacuum cleaners, transmissions, electronics, you name it–will soon fail and be shipped directly to the landfill, as repairing stuff is far costlier than buying a new replacement.

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Mike Maloney is one of the very few people who, like the Automatic Earth, have emphasized Deflation and The Velocity of Money as driving forces ever since we both predicted the 2008 fiasco. It’s funny, because Mike is all gold and stuff, and we have been saying all the time that there are more important things, like growing your own food etc etc. But that’s just a matter of who you’re addressing, and our audience unlike Mike’s isn’t necessarily investors, but ‘normal’ people.

Mike Maloney: DEFLATION FIRST! (Max Keiser)

Mike Maloney appears on Keiser Report to discuss how velocity of currency determines what happens next in the cycle. You’ll learn how central banks are manufacturing a crisis of epic proportions.

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You heard it here first.

Globalization Goes Into Reverse (BBG)

There’s a backlash against globalization underway in many Western countries. Although Americans still say positive things about international trade and immigration, political candidates like Donald Trump and Bernie Sanders have gotten a lot of support for opposing both to a degree that would have been unthinkable a decade ago. Meanwhile, trade deals like the relatively innocuous Trans-Pacific Partnership are suddenly in danger. Britain’s divorce from the European Union is also commonly interpreted as a rejection of globalization. But there’s a likelihood that today’s anti-globalization warriors are fighting yesterday’s war. By many measures, globalization has been in full retreat since the crisis of 2008. First, there’s trade. For many decades up until 2008, global trade volumes had been increasing at a healthy clip. But the crisis and recession stopped trade growth in its tracks, and it hasn’t recovered; 2008 was the all-time peak of world trade as a % of total output:

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And the next 10 after that.

The Next 10 Years Will Be Ugly for Your 401(k) (BBG)

It doesn’t seem like much to ask for—a 5% return. But the odds of making even that on traditional investments in the next 10 years are slim, according to a new report from investment advisory firm Research Affiliates. The company looked at the default settings of 11 retirement calculators, robo-advisers, and surveys of institutional investors. Their average annualized long-term expected return? 6.2%. After 1.6% was shaved off to allow for a decade of inflation1, the number dropped to 4.6%, which was rounded up. Voilà. So on average we all expect a 5%; the report tells us we should start getting used to disappointment. To show how a mainstream stock and bond portfolio would do under Research Affiliates’ 10-year model, the report looks at the typical balanced portfolio of 60% stocks and 40% bonds.

An example would be the $29.6 billion Vanguard Balanced Index Fund (VBINX). For the decade ended Sept. 30, VBINX had an average annual performance of 6.6%, and that’s before inflation. Over the next decade, according to the report, “the ubiquitous 60/40 U.S. portfolio has a 0% probability of achieving a 5% or greater annualized real return.” One message that John West, head of client strategies at Research Affiliates and a co-author of the report, hopes people will take away is that the high returns of the past came with a price: lower returns in the future. “If the retirement calculators say we’ll make 6% or 7%, and people saved based on that but only make 3%, they’re going to have a massive shortfall,” he said. “They’ll have to work longer or retire with a substantially different standard of living than they thought they would have.”

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Deutsche senses legal threats, ‘volunteers’ to cooperate.

Deutsche Bank Probes “Misstated” Derivative Valuations, Finds “Divergences” (ZH)

Perhaps the single biggest reason why Deutsche Bank’s stock has been drastically underperforming most of Europe’s banks, in addition to its skyhigh leverage and lack of capital buffer, is the market’s concern about what is hidden on its books, namely whether the bank’s billions in loans and its trillions in derivatives have been marked correctly. Which is why a just released report from Bloomberg that Deutsche Bank is reviewing whether it “misstated” the value of derivatives in its interest-rate trading business, will hardly spark optimism in the bank’s critical asset marking practices; the good news is that according to the report the biggest German lender is sharing its findings with U.S. authorities, according to people with knowledge of the situation.

Zero-coupon inflation swaps are derivatives that help customers bet on, or hedge against, inflation. Two parties agree to exchange a payment in the future whose size is determined by how much an inflation index rose or fell. The issue, however, is not the underlying security, but the total notional involved, which based on the DB’s latest public filings, could be in the hundreds of billions (or more), and how substantial the impact on DB’s P&L any variation from true market values will be. Specifically, DB is looking at valuations on a type of derivative known as zero-coupon inflation swaps. The reason for the probe is that, as has been a recurring case with many of its peers of the last few years, the bank found valuations that “diverged from internal models” at which point it began questioning traders.

The push to finally open its books comes after CEO John Cryan’s vow in February to try to resolve his institution’s legal challenges swiftly. As Bloomberg sarcastically adds, “he is still working on it.” The bank has been facing regulatory and enforcement pressure around the world, including a money-laundering investigation tied to its Russia operations, inquiries into mortgage-bond trading before and after the financial crisis and charges that the bank colluded to help falsify the accounts of Italy’s Banca Monte dei Paschi di Siena. More importantly perhaps is the reason why DB has decided to share its internal probe with the US, whose Justice Department asked in September for a $14 billion settlement, an amount the bank said it wouldn’t pay.

The figure was big enough to unleash a selling frenzy in the stock, sending it to all time lows, leading to repeating rumored discussions with outside sources, most recently of Saudi and Chinese origina, about raising capital. The bank last year hired Steven F. Reich as its general counsel for the Americas to help navigate its legal probes. Reich is a former official at the Justice Department and attorney for former President Bill Clinton. Perhaps it is time for Deutsche to make some donations to the Clinton Foundation?

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Spare a thought for a Goldman banker.

Goldman Sachs Does Mass Layoffs Piece by Piece (BBG)

The first “plant layoff” notice came in February: 43 people would lose their jobs. The second arrived six weeks later, increasing the cuts to 109 workers. Then a third, in April, for 146 more. And a fourth, in June: 98. Three more notices followed, including 20 dismissals announced last week. The “plant” in question – Goldman Sachs. Like all big companies in New York State, the firm is required to file a “WARN notice” with state authorities when it plans to shed large numbers of employees as part of a plant closing, or “mass layoffs” involving 250 or more. Employers also must inform the state of smaller reductions under certain circumstances, and Goldman Sachs cited a “plant layoff” in each case. Last week’s notice brings this year’s job-cut tally to 443.

With the run of notices, seven since the start of the year, the bank has signaled its intention to dismiss hundreds of employees in New York without placing a single, headline-grabbing number on the overall reduction, already its largest since 2008. The company’s approach differs from competitors, including Morgan Stanley, who have shown a preference for larger, one-time cuts. “When there’s a big number, people right away get that something is happening at that firm – it’s a negative,” said Jeanne Branthover, a partner at New York-based executive-search firm DHR International. “This is more, ‘We’re having layoffs and we don’t want to explain it.’ It’s more under the radar screen.”

It also reflects the firm’s philosophy. The company doesn’t see a reason to make announcements about job cuts since it’s part of the normal course of business and something that needs to be done if the environment calls for it, CFO Harvey Schwartz said last year. “You just have to run the business, and if the revenue environment is such that you’re in a period of decline, you just need to take those actions,” Schwartz said in November at a conference. “So, you probably won’t hear us make lots of announcements.”

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“..the US presidential campaign comes up short in many categories except one: failure is almost guaranteed.”

US Election: Nothing to Lose (Steen Jakobsen)

My present macro speech is titled “Ugly: Don’t fight with ‘ugly’ people as they have nothing to lose”. To me, this is the essence of the US presidential campaign. The ugly truth surrounding this ballot lies in the bigger picture, as whomever becomes president will go down in history as the “non-president” – the president who made us need, see, and demand something else. For all of the colourful headlines, and the almost McCarthy-esque pursuit of Trump by mainstream media, this is not going to be about “Trump, the person” or his more or less moronic views; Trump merely represents the catalyst for change. He is the anti-establishment candidate, yes, but not our vision for the future. Ultimately, Trump may still win despite (rather than because of) being… Trump.

That does not excuse mainstream media for not going after Clinton. If elected, she will be the least-liked president in US history, and I doubt any of her policies will do anything good for America. More Barack Obama-type policy is not what the world needs. Obama may have created more jobs, but the average income for American has actually fallen during his presidency. What does this mean? It means he has presided over an economy that has created more jobs but less valuable ones, and growth during his tenure has been lower than during any other president, with the largest build-up in debt. I am pretty sure that even this economist could create jobs with the amount of money Obama has spent!

Mind you I am 100% agnostic, politically-speaking. In fact, I don’t even think this election really matters! No, this is not a new trend; no, Clinton is not the answer… but what this is a generational repositioning and renegotiation of the social contract. The last time that this happened was in the 1960s, when the children of World War II went for peace, love, and a lot of drugs. Now we have the Berlin Wall generation coming of age, and this time the focus is anti-globalisation and anti establishment sentiment… and yes, again a lot of drugs. The real election issue in America, but also in Europe. is how to deal with a broken social contract.

Society has been pushed so far away from its natural equilibrium in terms of markets, social homogeneity, equality, and productivity that the move back to “normal” will bear both a political price and a penalty in terms of growth and outlook. Put differently, when we look throughout history we know that part of the process of evaluation is to smell, feel, taste, and experience what we don’t need in order to move towards what we do – a better version of society, but mainly a better one of ourselves. The next election cycle is about protest; it will be followed by crisis and then new beginnings.

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Boy what a mess. And all they can think of is blaming the Russians. And the media just copy that, no questions asked.

Hacked Memo Offers Angry Glimpse Into Conflicted ‘Bill Clinton Inc.’ (Pol.)

As a longtime Bill Clinton adviser came under fire several years ago for alleged conflicts of interest involving a private consulting firm and the Clinton Foundation, he mounted an audacious defense: Bill Clinton’s doing it, too. The unusual and brash rejoinder from veteran Clinton aide and Teneo Consulting co-founder Doug Band is scattered across the thousands of hacked emails published by WikiLeaks, but a memo released Wednesday provides the most detailed look to date at the intertwined worlds of nonprofit, for-profit, official and political activities involving Clinton and many of his top aides.

The memo at one point refers bluntly to the money-making part of Clinton’s life as “Bill Clinton Inc.” and notes that in at least one case a company – global education firm Laureate International Universities – began paying Clinton personally after first being a donor to the Clinton Foundation. The 12-page document, prepared in November 2011 by Band with input from Clinton adviser John Podesta, came as Chelsea Clinton was pressing for changes to the foundation’s governance and complaining that Band, Teneo co-founder Declan Kelly and others were profiting from their ties to her father and the foundation. In the memo, addressed to outside lawyers conducting a review of the foundation’s governance, Band insists that the relationship actually benefited the foundation financially, by bringing in new donors.

[..] A spokesman for the Clinton Foundation declined to comment on the memo or confirm the authenticity of the document, which was apparently stolen in a massive hack of Podesta’s Gmail account. Hillary Clinton’s campaign has taken a similar tack, declining to comment on the emails, while pointing to evidence that their release is part of a Russian government effort aimed at interfering in the presidential election.

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Morell’s perspective is in line with that of a new report on Middle East strategy released by the Center for American Progress and the thinking of Clinton’s top national-security aide Jake Sullivan, who recently declared, “We need to be raising the costs to Iran for its destabilizing behavior and we need to be raising the confidence of our Sunni partners.” On Tuesday, Morell put this sentiment in terms both more concise and grandiose: “We’re back and we’re going to lead again.”

Clinton Adviser Proposes Attacking Iran to Aid the Saudis in Yemen (NYMag)

Michael Morell is a former acting director of the CIA and a national security adviser to Hillary Clinton — one who is widely expected to occupy a senior post in her administration. He is also an opponent of the Iran nuclear agreement, a defender of waterboarding, and an advocate for making Russia “pay a price” in Syria by covertly killing Putin’s soldiers. On Tuesday, Morell added another title to that résumé: proponent of going to war with Iran, for the sake of securing Saudi Arabia’s influence in Yemen. “Ships leave Iran on a regular basis carrying arms to the Houthis in Yemen,” Morell said, in remarks to the Center for American Progress, the liberal think tank founded by Clinton campaign chairman John Podesta. “I would have no problem from a policy perspective of having the U.S. Navy boarding their ships, and if there are weapons on them, to turn those ships around.”

Morell did note, per Bloomberg’s Eli Lake, that this policy “raised questions of international maritime law.” Which is a bit like saying, “Breaking into someone’s home, putting a gun in their face, and demanding they hand over all their weapons raises questions about armed-robbery law.” Understatement aside, Morell’s stipulation suggests that he might be dissuaded from initiating a naval war with Iran if the legal issues prove too pesky. But the fact that a person who has Clinton’s ear on national security thinks this proposal makes sense from a “policy perspective” is alarming. Forcibly boarding another nation’s naval or civilian vessels (outside one’s own territorial waters) and confiscating their weapons can reasonably be construed as an act of war, a point that would be unmistakable if the roles here were reversed.

How many Americans (whose paychecks aren’t directly or indirectly subsidized by Gulf State monarchies) think keeping Yemen within Saudi Arabia’s sphere of influence is a cause worth entering another Middle Eastern war over? How many would think so if they knew that the Saudis had recently bombed a Yemeni funeral hall, killing 140 people and leading the Obama administration to reconsider its support for the Saudi intervention? Or that some observers of the conflict contend that the Saudis are exaggerating Iran’s role, in order to justify the kingdom’s own expansionist ambitions?

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And the west pretend they don’t know this. So we can create chaos and used it to take over resources.

Putin Tried to Warn Us About Syria Three Years Ago (TAM)

As Russia and the United States approach arguably the most dangerous crossroads in history — and as Western media continues to crucify Russia for its actions within Syria — a closer look at the rationale Putin used for intervening in the Syrian war paints a sane explanation of how we ended up at this juncture of a global conflict. Unsurprisingly, the explanation comes from the Russian president himself and was actually offered over 3 years ago. As expected, the Western corporate media and the Obama administration chose to ignore Vladimir Putin’s explanation for Russia’s stance on Syria and continued a number of policies that have completely exacerbated the conflict.

In a live interview with RT in June 2013, Putin was asked for an explanation regarding Russia’s support for Bashar al-Assad in Syria, even though this support has made some people very angry at Russia. Putin’s response was that Russia does not support the Assad government or Assad himself, but before defining Russia’s official position, he explained what Russia does not want to do within Syria or across the Middle East: “We do not want to interfere into the internal schism of Islam, between Shias and Sunnis. These are internal issues of the Islamic world. We have very good relations with much of the Arabic world, Iran for example, and others.” However, according to Putin, what worries Russia can be identified by having a look “at what is going on in the Middle East in general.”

“Egypt is not calm. Iraq is not calm – and it is not assured in its continued existence as one state. Yemen is not calm; Tunisia is not calm. Libya is witnessing inter-ethnic, inter-tribal conflict. So the entire region has been engulfed, at a minimum, into a state of conflict and undecidedness. And now Syria, down the same path.” In Putin’s eyes, these events are no accident. As he puts it, these events happened for a reason: “Some people, from the outside, think that if they can ‘comb’ the region to how they see fit – some of them call this ‘democracy’ – then the region will come into calmness and order. That’s not how it is. Without taking into account the history, the traditions, religious particularities, you must not do anything in the Middle East, especially as an outsider.”

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Don’t you guys have enough trouble at home?

UK Deploys Hundreds Of Troops And Aircraft To Eastern Europe (G.)

The UK is deploying hundreds of troops, as well as aircraft and armour to eastern Europe as part of the biggest build-up of Nato forces in the region since the cold war. The deployment is taking place during growing tensions over a series of high-profile Russian military manoeuvres. RAF Typhoon aircraft from RAF Coningsby will be sent to Romania for up to four months, while 800 personnel will be sent with armoured support to Estonia, 150 more than previously planned, the Ministry of Defence (MoD) has said. France and Denmark will also commit more troops, the British government said. The announcement was made soon after a Russian fleet, believed to be bound to take part in the fighting in Syria, passed close to the British Isles.

On Wednesday, Russia withdrew a request to refuel its boats in Spanish territory, as Nato put pressure on Madrid to deny permission. Tensions between Nato members and Russia have been heightened since Moscow annexed Crimea in 2014 and Ukraine descended into civil war as a result. The deployment of British troops to Estonia forms part of a wider Nato commitment to station four new battalions, totalling around 4,000 personnel, on the alliance’s eastern flank. David Cameron confirmed at Nato’s summit in Warsaw in July that the UK was to send 650 troops to Estonia. As well as announcing the extra 150, the MoD on Wednesday gave further details of the deployment, including the Typhoons, a detachment of drones and Challenger tanks.

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“The algorithms must be made public, so that one can inform oneself as an interested citizen on questions like: what influences my behavior on the internet and that of others?”

Merkel Accuses Facebook, Google Of “Distorting Perception” (ZH)

While Facebook and Google have been repeatedly accused of media bias and manipulating public opinion, especially during the US presidential campaign, an unexpected attack on the two media giants came today not from the US but from Germany, when Chancellor Angela Merkel launched a full-on attack at the two companies, accusing them of “narrowing perspective,” and demanding they disclose their privately-developed algorithms. Merkel previously blamed social media for anti-immigrant sentiment and the rise of the far right. “The algorithms must be made public, so that one can inform oneself as an interested citizen on questions like: what influences my behavior on the internet and that of others?” said Merkel during a media conference in Berlin on Tuesday cited by RT.

What she said next echoed similar complaints lobbed at the media giants by those considered less than mainstream: “These algorithms, when they are not transparent, can lead to a distortion of our perception, they narrow our breadth of information.” In a tech-driven world, Google uses an algorithm to decide which search results are first shown to a user (and which are not, for example when one searches about Hillary’s health), while Facebook arranges the order of the news feed, and decides to include certain posts from a user’s liked pages and friends, at the expense of others. Both sites also promote links to news articles, often based on a user’s own media interests. However, it is still a human’s job to write and calibrate these algorithms which are at the core of the intellectual property of any social media or search website, and comprise some of the most highly-protected trade secrets in the world, potentially worth billions.

No internet giant has ever revealed its inner workings. Merkel did not specifically name Facebook, Google or Twitter, but implied that the large platforms are creating “bubbles” of self-reinforcing views, and squeezing out smaller news providers. One could also call it propaganda. “The big internet platforms, via their algorithms, have become an eye of a needle which diverse media must pass through to reach users,” warned Merkel. “This is a development that we need to pay careful attention to.” In their defense, Google and Facebooks have retorted that the so-called social media bubble is largely a “myth”, and that online users have a wider access to differing views than under a pre-internet model, where most news would be acquired from just a handful of newspapers and one or two TV channels.

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It’s decomissioning that will be teh most expensive. Hey, US, what’s going on at Yucca mountain?

Nuclear Power Is Over In The US Without More Government Subsidies (BBG)

Nuclear power will come to an end in the U.S. if the industry doesn’t get more government support, according to Carlyle Group, one of the world’s largest investment firms. The nation’s nuclear reactors need more subsidies to keep running, such as a federal carbon tax that’ll reward them for their zero-emissions power, Bob Mancini, co-head of Carlyle Group’s power unit, said at a conference in New York. Carlyle, which has $176 billion in assets under management across funds, invests in natural gas- and coal-fired power plants and renewable energy projects. Its outlook comes as nuclear power generators including Exelon and Entergy make plans to shut reactors across the country.

Low power prices, fueled by an abundance of natural gas from shale drilling and weakening demand, have squeezed their profits just as their operating costs rise amid mounting regulation. “We will see the end of the nuclear industry in the next coming decades” without legislation, incentives or other support to keep reactors open or encourage new builds, Mancini said at S&P Global Platts’s Financing U.S. Power Conference on Tuesday.

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Oct 152016
 
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Notre Dame Gargoyle, Paris France, 19th century

Former British diplomat and MI6 ‘ranking figure’ Alastair Crooke quotes my September 26 article “Why There is Trump” so extensively in this article for Consortium News that I thought I might as well post the whole thing here at the Automatic Earth too. The other sources he also quotes -John Gray, Stephen Hadley among them- help to put my points in a solid perspective, which is nice to see. I can only hope that this will open more people’s eyes to the fact that in the end of growth and centralization, we are witnessing the “most important global development in decades.”

Here’s Alastair Crooke:

 

 

Raul Ilargi Meijer, the long-standing economics commentator, has written both succinctly – and provocatively: “It’s over! The entire model our societies have been based on for at least as long as we ourselves have lived, is over! That’s why there’s Trump.

“There is no growth. There hasn’t been any real growth for years. All there is left are empty hollow sunshiny S&P stock market numbers propped up with ultra-cheap debt and buybacks, and employment figures that hide untold millions hiding from the labor force. And most of all there’s debt, public as well as private, that has served to keep an illusion of growth alive and now increasingly no longer can.

Donald Trump speaking with supporters at a campaign rally at Veterans Memorial Coliseum at the Arizona State Fairgrounds in Phoenix, Arizona. June 18, 2016. (Photo by Gage Skidmore)

Donald Trump speaking with supporters at a campaign rally at Veterans Memorial Coliseum at the Arizona State Fairgrounds in Phoenix, Arizona. June 18, 2016. (Photo by Gage Skidmore)

“These false growth numbers have one purpose only: for the public to keep the incumbent powers that be in their plush seats. But they could always ever only pull the curtain of Oz [Wizard of Oz] over people’s eyes for so long, and it’s no longer so long.

“That’s what the ascent of Trump means, and Brexit, Le Pen, and all the others. It’s over. What has driven us for all our lives has lost both its direction and its energy.”

Meijer continues: “We are smack in the middle of the most important global development in decades, in some respects arguably even in centuries, a veritable revolution, which will continue to be the most important factor to shape the world for years to come, and I don’t see anybody talking about it. That has me puzzled.

“The development in question is the end of global economic growth, which will lead inexorably to the end of centralization (including globalization). It will also mean the end of the existence of most, and especially the most powerful, international institutions.

“In the same way it will be the end of -almost- all traditional political parties, which have ruled their countries for decades and are already today at or near record low support levels (if you’re not clear on what’s going on, look there, look at Europe!)

“This is not a matter of what anyone, or any group of people, might want or prefer, it’s a matter of ‘forces’ that are beyond our control, that are bigger and more far-reaching than our mere opinions, even though they may be man-made.

“Tons of smart and less smart folks are breaking their heads over where Trump and Brexit and Le Pen and all these ‘new’ and scary things and people and parties originate, and they come up with little but shaky theories about how it’s all about older people, and poorer and racist and bigoted people, stupid people, people who never voted, you name it.

“But nobody seems to really know or understand. Which is odd, because it’s not that hard. That is, this all happens because growth is over. And if growth is over, so are expansion and centralization in all the myriad of shapes and forms they come in.”

Further, Meijer writes: “Global is gone as a main driving force, pan-European is gone, and whether the United States will stay united is far from a done deal. We are moving towards a mass movement of dozens of separate countries and states and societies looking inward. All of which are in some form of -impending- trouble or another.

“What makes the entire situation so hard to grasp for everyone is that nobody wants to acknowledge any of this. Even though tales of often bitter poverty emanate from all the exact same places that Trump and Brexit and Le Pen come from too.

“That the politico-econo-media machine churns out positive growth messages 24/7 goes some way towards explaining the lack of acknowledgement and self-reflection, but only some way. The rest is due to who we ourselves are. We think we deserve eternal growth.”

 

The End of ‘Growth’

Well, is global “growth over”? Of course Raul Ilargi is talking “aggregate” (and there will be instances of growth within any contraction). But what is clear is that debt-driven investment and low-interest-rate policies are having less and less effect – or no effect at all – in producing growth – either in terms of domestic or trade growth, as Tyler Durden at ZeroHedge writes:

President Barack Obama runs onto a stage in Rockville, Maryland, Oct. 3, 2013 (Official White House Photo by Pete Souza)

President Barack Obama runs onto a stage in Rockville, Maryland, Oct. 3, 2013 (Official White House Photo by Pete Souza)

“After almost two years of the quantitative easing program in the Euro Area, economic figures have remained very weak. As GEFIRA details, inflation is still fluctuating near zero, while GDP growth in the region has started to slow down instead of accelerating. According to the ECB data, to generate €1.0 of GDP growth, €18.5 had to be printed in the QE, … This year, the ECB printed nearly €600 billion within the frame of asset purchase programme (QE).”

Central Banks can and do create money, but that is not the same as creating wealth or purchasing power. By channelling their credit creation through the intermediary of banks granting loans to their favored clients, Central Banks grant to one set of entities purchasing power – a purchasing power that must necessarily have been transferred from another set of entities within Europe (i.e. transferred from ordinary Europeans in the case of the ECB), who, of course will have less purchasing power, less discretionary spending income.

The devaluation of purchasing power is not so obvious (no runaway inflation), because all major currencies are devaluing more or less pari passu – and because the authorities periodically steam hammer down the price of gold, so that there is no evident standard by which people can “see” for themselves the extent of their currencies’ joint downward float.

And world trade is grinding down too, as Lambert Strether of Corrente rather elegantly explains: “Back to shipping: I started following shipping … partly because it’s fun, but more because shipping is about stuff, and tracking stuff seemed like a far more attractive way of getting a handle on ‘the economy’ than economics statistics, let alone whatever books the Wall Streeters were talking on any given day. And don’t get me started on Larry Summers.

“So what I noticed was decline, and not downward blips followed by rebounds, but decline, for months and then a year. Decline in rail, even when you back out coal and grain, and decline in demand for freight cars. Decline in trucking, and decline in the demand for trucks. Air freight wobbly. No Christmas bounce at the Pacific ports. And now we have the Hanjin debacle — all that capital tied up in stranded ships, though granted only $12 billion or so — and the universal admission that somehow “we” invested w-a-a-a-a-a-y too much money in big ships and boats, implying (I suppose) that we need to ship a lot less stuff than we thought, at least across the oceans.

“Meanwhile, and in seeming contradiction not only to a slow collapse of global trade, but to the opposition to ‘trade deals,’ warehousing is one of the few real estate bright spots, and supply chain management is an exciting field. It’s disproportionately full of sociopaths, and therefore growing and dynamic!

“And the economics statistics seem to say nothing is wrong. Consumers are the engine of the economy and they are confident. But at the end of the day, people need stuff; life is lived in the material world, even if you think you live it on your device. It’s an enigma! So what I’m seeing is a contradiction: Less stuff is moving, but the numbers say ‘this is fine.’ Am I right, here? So in what follows, I’m going to assume that numbers don’t matter, but stuff does.”

 

Fake Elixir

Or, to be more faux-empirical: as Bloomberg notes in A Weaker Currency is no longer the Elixir, It Once Was: “global central banks have cut policy rates 667 times since 2008, according to Bank of America. During that period, the dollar’s 10 main peers have fallen 14%, yet Group-of-Eight economies have grown an average of just 1%. Since the late 1990s, a 10% inflation-adjusted depreciation in currencies of 23 advanced economies boosted net exports by just 0.6% of GDP, according to Goldman Sachs. That compares with 1.3% of GDP in the two decades prior. U.S. trade with all nations slipped to $3.7 trillion in 2015, from $3.9 trillion in 2014.”

Chinese President Xi Jinping greets President Barack Obama upon arrival for the G20 Summit at the Hangzhou International Expo Center in Hangzhou, China, Sept. 4, 2016. (Official White House Photo by Pete Souza)

Chinese President Xi Jinping greets President Barack Obama upon arrival for the G20 Summit at the Hangzhou International Expo Center in Hangzhou, China, Sept. 4, 2016. (Official White House Photo by Pete Souza)

With “growth over,” so too is globalization: Even the Financial Times agrees, as its commentator Martin Wolf writes in his comment, The Tide of Globalisation is Turning: “Globalisation has at best stalled. Could it even go into reverse? Yes. It requires peace among the great powers … Does globalisation’s stalling matter? Yes.”

Globalization is stalling – not because of political tensions (a useful “scapegoat”), but because growth is flaccid as a result of a veritable concatenation of factors causing its arrest – and because we have entered into debt deflation that is squeezing what’s left of discretionary, consumption-available, income. But Wolf is right. Ratcheting tensions with Russia and China will not somehow solve America’s weakening command over the global financial system – even if capital flight to the dollar might give the U.S. financial system a transient “high.”

So what might the “turning tide” of globalization actually mean? Does it mean the end of the neo-liberalist, financialized world? That is hard to say. But expect no rapid “u-turn” – and no apologies. The Great Financial Crisis of 2008 – at the time – was thought by many to mark the end to neo-liberalism. But it never happened – instead, a period of fiscal retrenchment and austerity was imposed that contributed to a deepening distrust of the status quo, and a crisis rooted in a widespread, popular sense that “their societies” were headed in the wrong direction.

Neo-liberalism is deeply entrenched – not least in Europe’s Troika and in the Eurogroup that oversees creditor interests, and which, under European Union rules, has come to dominate E.U. financial and tax policy.

It is too early to say from whence the economic challenge to prevailing orthodoxy will come, but in Russia there is a group of prominent economists gathered together as the Stolypin Club, who are evincing a renewed interest in that old adversary of Adam Smith, Friedrich List (d. 1846), who evolved a “national system of political economy.” List upheld the (differing interests) of the nation to that of the individual. He gave prominence to the national idea, and insisted on the special requirements of each nation according to its circumstances, and especially to the degree of its development. He famously doubted the sincerity of calls to free trade from developed nations, in particular those by Britain. He was, as it were, the arch anti-globalist.

 

A Post-Globalism

One can see that this might well fit the current post-globalist mood. List’s acceptance of the need for a national industrial strategy and the reassertion of the role of the state as the final guarantor of social cohesion is not some whimsy pursued by a few Russian economists. It is entering the mainstream. The May government in the U.K. precisely is breaking with the neoliberal model that has ruled British politics since the 1980s – and is breaking towards a List-ian approach.

U.S. Secretary of State John Kerry sits with British Prime Minister Theresa May in the White Room No. 10 Downing Street in London, U.K., on July 19, 2016. [State Department Photo]

U.S. Secretary of State John Kerry sits with British Prime Minister Theresa May in the White Room No. 10 Downing Street in London, U.K., on July 19, 2016. [State Department Photo]

Be that as it may (whether this approach swims more widely back into fashion), the very contemporary British professor and political philosopher, John Gray has suggested the key point is: “The resurgence of the state is one of the ways in which the present time differs from the ‘new times’ diagnosed by Martin Jacques and other commentators in the 1980s. Then, it seemed national boundaries were melting away and a global free market was coming into being. It’s a prospect I never found credible.

“A globalised economy existed before 1914, but it rested on a lack of democracy. Unchecked mobility of capital and labour may raise productivity and create wealth on an unprecedented scale, but it is also highly disruptive in its impact on the lives of working people – particularly when capitalism hits one of its periodic crises. When the global market gets into grave trouble, neoliberalism is junked in order to meet a popular demand for security. That is what is happening today.

“If the tension between global capitalism and the nation state was one of the contradictions of Thatcherism, the conflict between globalization and democracy has undone the left. From Bill Clinton and Tony Blair onwards, the center-left embraced the project of a global free market with an enthusiasm as ardent as any on the right. If globalisation was at odds with social cohesion, society had to be re-engineered to become an adjunct of the market. The result was that large sections of the population were left to moulder in stagnation or poverty, some without any prospect of finding a productive place in society.”

If Gray is correct that when globalized economics strikes trouble, people will demand that the state must pay attention to their own parochial, national economic situation (and not to the utopian concerns of the centralizing élite), it suggests that just as globalization is over – so too is centralization (in all its many manifestations).

The E.U., of course, as an icon of introverted centralization, should sit up, and pay attention. Jason Cowley, the editor of the (Leftist) New Statesman says: “In any event … however you define it, [the onset of ‘New Times’] will not lead to a social-democratic revival: it looks as if, in many Western countries, we are entering an age in which centre-left parties cannot form ruling majorities, having leaked support to nationalists, populists and more radical alternatives.”

 

The Problem of Self-Delusion

So, to return to Ilargi’s point, that “we are smack in the middle of the most important global development in decades … and I don’t see anybody talking about it. That has me puzzled” and to which he answers that ultimately, the “silence” is due to ourselves: “We think we deserve eternal growth.”

President Barack Obama answers questions at a press conference at Konstantinovsky Palace during the G20 Summit in Saint Petersburg, Russia, Sept. 6, 2013. (Official White House Photo by Pete Souza)

President Barack Obama answers questions at a press conference at Konstantinovsky Palace during the G20 Summit in Saint Petersburg, Russia, Sept. 6, 2013. (Official White House Photo by Pete Souza)

He is surely right that it somehow answers to the Christian meme of linear progress (material here, rather than spiritual); but more pragmatically, doesn’t “growth” underpin the whole Western financialized, global system: “it was about lifting the ‘others’ out of their poverty”?

Recall, Stephen Hadley, the former U.S. National Security Adviser to President George W. Bush, warning plainly that foreign-policy experts rather should pay careful attention to the growing public anger: that “globalization was a mistake” and that “the elites have sleep-walked the [U.S.] into danger.”

“This election isn’t just about Donald Trump,” Hadley argued. “It’s about the discontents of our democracy, and how we are going to address them … whoever is elected, will have to deal with these discontents.”

In short, if globalization is giving way to discontent, the lack of growth can undermine the whole financialized global project. Stiglitz tells us that this has been evident for the past 15 years — last month he noted that he had warned then of: “growing opposition in the developing world to globalizing reforms: It seemed a mystery: people in developing countries had been told that globalization would increase overall wellbeing. So why had so many people become so hostile to it? How can something that our political leaders – and many an economist – said would make everyone better off, be so reviled? One answer occasionally heard from the neoliberal economists who advocated for these policies is that people are better off. They just don’t know it. Their discontent is a matter for psychiatrists, not economists.”

This “new” discontent, Stiglitz now says, is extended into advanced economies. Perhaps this is what Hadley means when he says, “globalization was a mistake.” It is now threatening American financial hegemony, and therefore its political hegemony too.

 

Alastair Crooke is a former British diplomat who was a senior figure in British intelligence and in European Union diplomacy. He is the founder and director of the Conflicts Forum, which advocates for engagement between political Islam and the West.

Oct 092016
 
 October 9, 2016  Posted by at 8:54 am Finance Tagged with: , , , , , , ,  2 Responses »
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NPC Balloon at Shriners convention, Washington DC 1923

Less Than Half Of US 22-26-Year-Olds Pay Their Own Rent, Health Insurance (F.)
The Coming Collapse Of US Net Worth Will Wipe Out Millions Of Americans (SRSr)
World Leaders Vow To Boost Growth Despite Brexit, Anti-Globalization (CNBC)
Deutsche Bank CEO Cryan Doesn’t Reach Accord With US (BBG)
Qatari Investors Eyeing Control of Deutsche Bank (Spiegel)
Draghi Points to 2019 as Time for Inflation Mission Accomplished (BBG)
US Unemployment Rate Shows At 5% But More Realistic Rate Is Higher (CNBC)
UK MPs Demand Vote On Hard Brexit Plans (G.)
Britain ‘Ignored Plea By France’ To Aid Stranded Calais Child Refugees (G.)

 

 

Recovery in all its glory.

Less Than Half Of US 22-26-Year-Olds Pay Their Own Rent, Health Insurance (F.)

According to a new survey, people in their 20s and 30s are having trouble “adulting,” or achieving financial independence. Conducted by Bank of America and USA Today, the report says less than half of the 22-26-year-olds surveyed pay their own rent (47%), health insurance (41%), or contribute to a retirement account (27%). One thing they learned from the survey of Millennials (born in the early 1980s to mid ‘90s) and Generation Z’ers (born in the mid-1990s to early 2000s) said Andrew Plepler, the bank’s Enterprise, Social and Governance executive, was that “adulthood” defined by people in their 20s isn’t about age or milestones such as getting married or buying a home. “Instead, the majority said that adulthood really begins when you’re financially independent – when you can find a job, pay your own bills, cover your own rent and stop relying on mom and dad for financial support,” he said.

Indeed, the respondents who did report feeling like adults said it’s because they had help preparing from their parents (60%), because they have a job (60%) or they had a role model to guide the way (49%). They’re also thinking ahead about the economy in the wake of the presidential election : • 65% say economic issues are more important to them than social issues (34%) • Most would choose a candidate that’s best for the country (79%) over one who would improve just their own financial situation (21%) • Job growth/unemployment (27%), health care costs (25%) and college affordability/student debt (24%) rose to the top as young voters’ top campaign issues in this election. • Among those with student debt, nearly 25% say it will impact the way they vote “a great deal”

Read more …

Yeah, maybe net worth vs energy use is a good way to measure reality.

The Coming Collapse Of US Net Worth Will Wipe Out Millions Of Americans (SRSr)

As the Financial Circus continues today, pushing down the precious metals prices, millions of Americans are going to get wiped out when the collapse of U.S. net worth begins in earnest. Anyone with a tad bit of common sense realizes these financial markets today are totally disconnected from reality. With new stories of 40 million Russians to take part in “Nuclear Disaster” drill, the Philippine President telling President Obama “To Go To Hell”, he’s buying weapons from Russia, U.S. Suspends Diplomatic Relations With Russia on Syria, U.S. Ends Fiscal 2014 With $1.4 Trillion Debt Increase: Third Largest In History, Deutsche Bank Troubles Raise Fear of Global Shock, it’s completely hilarious that the gold and silver prices are selling off big time today.

With 90% of the U.S. media now in control by six large mega-corporations, Americans have no idea just how bad the U.S. financial system has become. News stories today that would have caused a stock market crash and a spike in the precious metals years ago… no longer are a realistic barometer of the market today. Instead, the broader Stock, Bond and Real Estate Markets where 99% of Americans are invested, continue to be propped up. How propped up? Well, let’s say by a staggering $31 trillion in the past six years. According to the wonderful folks at the Federal Reserve, U.S. net worth increased from $57.9 trillion Q2 2010, to a stunning $89 trillion Q2 2016:

I would imagine a lot of wealthy Americans believe they are living life “High On The Hog” today. However, that $31 trillion in additional wealth is a nothing more than a “Digital Mirage.” For wealth to grow, more energy must be burned and positive economic activity must be generated. This is the foundation of all economic principles. Unfortunately, Americans did not burn more energy to create this additional $31 trillion in U.S. net worth. Matter-a-fact, total U.S. energy consumption in 2016 will likely turn out to be less than it was in 2010. This chart is very simple to understand. The left axis shows U.S. net worth in trillions of dollars while the right axis indicates total U.S. energy consumption in quadrillion Btu’s (that’s one hell of a lot of energy). As we can see, total U.S. energy consumption has fluctuated a bit, but has been relatively flat for the past six years.

[..] How the U.S. GDP increased nearly 25% in six years while its energy consumption remained flat is one for the record books. Now, this wasn’t always the case. U.S. energy consumption nearly tripled from 34 quad Btu’s in 1950 to 98 quad Btu’s in 2000. Thus, U.S. GDP increased as total energy consumption increased.

Read more …

Obsolete.

World Leaders Vow To Boost Growth Despite Brexit, Anti-Globalization (CNBC)

World finance leaders pledged Saturday to use more resources to try to bolster economic gains as they confront stubbornly slow growth and a rising backlash against globalization. The policy committee for the 189-nation IMF said the world has “benefited tremendously from globalization” but that protectionism is a threat. Increasing anger over globalization dominated the annual meetings of the IMF and its sister lending agency, the World Bank. The unhappiness is evident in Britain’s vote in June to leave the EU and in the U.S. presidential campaign of Republican Donald Trump. Trump has said millions of Americans have lost jobs or seen wages stagnate because of unfair trade practices of countries such as China and Mexico. He is vowing to impose penalty tariffs if those practices are not halted.

The British vote sent shockwaves through financial markets this summer, and there were further troubles Friday when the British pound plunged by 6% against the dollar before recovering. Investors worry whether there will be more turbulence if the British exit proves to be messy and prolonged. IMF Managing Director Christine Lagarde said “growth has been too low for too long, benefiting too few,” and that’s what officials need to address. In their statement, IMF officials committed to designing and putting in place policies “to address the concerns of those who have been left behind and to ensure that everyone has the opportunity to benefit from globalization and technological change.”

Read more …

Raising more debt to pay for legal costs….

Deutsche Bank CEO Cryan Doesn’t Reach Accord With US (BBG)

Deutsche Bank CEO John Cryan failed to reach an agreement with the U.S. Justice Department to resolve a years-long investigation into its mortgage-bond dealings during a meeting in Washington Friday, Germany’s Bild newspaper reported. The meeting was meant to negotiate the multi-billion-dollar settlement the bank will have to pay to resolve alleged misconduct arising from its dealings in residential-mortgage backed securities that led to the 2008 financial crisis, according to a Bild am Sonntag report. The German lender is still considering seeking damages against Anshu Jain and Josef Ackermann, who are both former CEOs of the bank, the newspaper reported. Bild said the bank froze part of the millions in bonus payments to Jain and other former top managers.

Concerns about Deutsche Bank’s ability to pay the $14 billion opening settlement bid from the Justice Department sent the lender’s stock to a record low last month. The bank, which set aside €5.5 billion ($6.2 billion) for litigation at the end of June, may face additional penalties to wrap up other outstanding investigations, including one into a money-laundering probe tied to its Russia operations. Analysts at Barclays speculate that could cost the bank as much as €2 billion. Cryan, a Briton who speaks fluent German, has sought for the last three weeks to reassure investors that Deutsche Bank can weather the formidable obstacles to its financial health.

The bank is holding informal talks with Wall Street firms about options to deal with legal costs, including a stock sale that could raise €5 billion, people with knowledge of the matter said this week. Qatar’s royal family is also considering increasing its stake in Deutsche Bank to as much as 25%, according to people with knowledge of the matter. Cryan has said the lender may fail to be profitable this year after posting the first annual loss since 2008 last year. With plans to eliminate thousands of jobs and cut risky assets, he called 2016 a peak restructuring year.

Read more …

The state of the German economy: selling off assets.

Qatari Investors Eyeing Control of Deutsche Bank (Spiegel)

On September 15, the Justice Department in the United States ordered the company to pay a $14 billion fine to settle accusations of fraud in Deutsche Bank’s packaging and sale of mortgage-backed securities in the free-wheeling days that led to the global financial crisis. Speculators and politicians have been in a state of near panic since the announcement, with open speculation about the possibility of a government bailout for the prestigious bank. An atmosphere of frustration and depression is currently prevailing inside the bank and Cryan is trying to combat it with messages of perseverance. For a time, Deutsche Bank’s market value plummeted below €15 billion, down from €35 billion a year ago.

Large-scale investor HBJ and his cousin – the former Emir of Qatar, Sheik Hamad bin Khalifa al-Thani, who he has since brought in as an investor as well – are believed to have lost more than a billion euros – on paper, at least. This summer, the two increased their holdings to just under 10% of the company, but Deutsche Bank’s market capital has since continued to slide. And yet, it appears that the low share price is encouraging the sheikhs to invest even more now that it wouldn’t take more than a few billion for them to gain control of Deutsche Bank. Information obtained by SPIEGEL indicates that the al-Thani cousins are considering propping up the bank with a fresh capital infusion and purchasing a blocking stake of 25% together with other investors.

To do this, they could partner with sovereign wealth funds, some of which are apparently willing to invest in the company. But the information obtained by SPIEGEL also suggests that HBJ and the former emir would only be willing to take that risk if they could have a strong say in business decisions at Deutsche Bank. They are said to be deeply frustrated over the fact that the bank has been unable to maneuver itself out of its defensive position. The Qataris are said to be increasingly unhappy with Cryan’s current management team and believe the company’s present course is dangerous. The problems can’t be fixed through cost saving measures alone, they believe, particularly with eroding revenues and profits could. This displeasure manifested itself through the appointment in July of attorney Stefan Simon to the supervisory board. He represents the Qataris’ interests inside the company.

Read more …

Might as well have said 2029. Useless and hollow.

Draghi Points to 2019 as Time for Inflation Mission Accomplished (BBG)

Inflation in the euro area should return to the European Central Bank’s target by early 2019 at the latest, ECB President Mario Draghi said. “Our inflation rate will pick up during the course of 2017, and then will continue moving in 2018 toward the objective which is close but below 2%,” Draghi said on Saturday at a press conference during the annual meeting of the IMF in Washington. “This is predicated on maintaining the extraordinary support of our monetary policy.” While the ECB hasn’t met its own definition of its mandate on inflation since early 2013, an unprecedented wave of stimulus measures during Draghi’s tenure including the current asset-purchase pace of €80 billion per month has helped keep the currency bloc away from outright deflation.

Draghi’s comments imply that fresh staff forecasts due in December – which build-in the impact of current stimulus – will show a 2019 inflation rate in line with the goal. Achieving that target would mark the end of Draghi’s fight against the euro area’s stubbornly low inflation after more than six years. The ECB has deployed negative rates, asset purchases and cheap long-term loans to banks to rein in inflation. The December round of staff forecasts may serve as the basis for a decision on whether the ECB intends to continue its quantitative easing program at the current rate beyond the end date in March 2017, whether the program will be wound down gradually after that, or if it could be stopped completely.

Read more …

Update. No escape. No velocity.

US Unemployment Rate Shows At 5% But More Realistic Rate Is Higher (CNBC)

The national unemployment rate rose slightly to 5% in September, the Labor Department reported Friday. But relying on that one headline number as an indicator of the economy’s direction leaves a lot of important information below the surface. Every month on “Big Jobs Friday,” the Bureau of Labor Statistics releases a boatload of data, each point of which provides its own unique perspective on a facet of the nation’s employment situation. Economists look past the official unemployment rate — that 5% figure, which is known as the “U-3” rate — to other metrics that provide their own nuanced views of the state of jobs. One of those figures is called the U-6 rate, which has a broader definition of what unemployment means. That figure remained unchanged at 9.7% in September.

The official unemployment rate is composed of “total unemployed, as a% of the civilian labor force,” but doesn’t include a number of employment situations in which workers might find themselves. The U-6 rate is defined as all unemployed, plus “persons marginally attached to the labor force, plus total employed part time for economic reasons, as a% of the labor force.” In other words: That’s the unemployed, the underemployed and the discouraged. The U-3 rate has in the past few months returned to the prerecession levels that economists consider full employment. The U-6 rate has remained above precession levels, though it has seen significant improvement in the past few years. Economists expected 176,000 jobs to be added in September, according to a late Reuters estimate. The report showed that the market added 156,000 jobs.

Read more …

I see busy lawyers in your future…

UK MPs Demand Vote On Hard Brexit Plans (G.)

Theresa May is under massive cross-party pressure to grant MPs a vote on any decision to leave or limit UK involvement in the European single market, amid growing outrage at the prospect that parliament could be bypassed over the biggest economic decision in decades. Tory MPs joined forces with former leaders of Labour and the Liberal Democrats, the SNP and Greens to insist that parliament have a say and a vote, pointing out that, while the British people had backed leaving the EU, they had not chosen to leave the biggest trading market in the western world. Former Labour leader Ed Miliband held discussions with pro-EU Tory MPs on Saturday, and was said to be considering tabling an urgent question in the Commons, demanding that May appear before parliament to explain its future role in Brexit decisions, when MPs return on Monday.

The SNP and pro-EU Tory MPs Nicky Morgan and Anna Soubry were also considering tabling questions, while former Lib Dem leader Nick Clegg, now the party’s Brexit spokesman, said it would be appalling if detailed terms of Brexit, including the UK’s future relations with the single market, were not voted on by MPs. Miliband told the Observer: “Having claimed that the referendum was about returning sovereignty to Britain, it would be a complete outrage if May were to determine the terms of Brexit without a mandate from parliament. “There is no mandate for hard Brexit, and I don’t believe there is a majority in parliament for [it] either. Given the importance of these decisions for the UK economy … it has to be a matter for MPs.”

Clegg said: “My great worry is that while there will be a vote on repealing the 1972 European Communities Act, which is about the decision to leave the EU, it will be left to the executive alone to decide the terms of Brexit. That would not be remotely acceptable.”

Read more …

It’s becoming a lovely nation.

Britain ‘Ignored Plea By France’ To Aid Stranded Calais Child Refugees (G.)

The Home Office has refused to respond to official requests from the French authorities to accept unaccompanied child refugees stranded in Calais who are eligible to come to Britain, the British Red Cross has said. With the planned demolition of Calais’s refugee camp only weeks away, the Red Cross says the Home Office is turning down “take charge” requests by the French on often pedantic grounds. Once such a request has been accepted by the UK government it is in effect responsible for a child who is seeking asylum. In some cases British officials claim to have “misplaced” requests from the French to help children, raising questions over Britain’s approach to what humanitarian experts call an urgent child protection issue.

The camp is scheduled to be demolished this month, with no provision agreed by the British and French for most of the 1,000 unaccompanied minors there, of whom at least 400 are eligible to enter the UK. A new report damningly articulates the Home Office’s intransigence, with research by the Red Cross revealing it takes up to 11 months on average to bring a child to the UK under an EU scheme to reunite families. Lawyers say there is no reason why the process should take more than several weeks. The report also identifies “problems ranging from basic administrative errors causing severe delays to a shortage of human resources on the French side”. It accuses the Home Office of unnecessarily forcing vulnerable children to stay in the camp for months after their case is rejected because of a basic administrative error or lack of documents. “Insufficient discretion or consideration is made for the child’s vulnerability and circumstances,” says the report, No Place For Children, released on Sunday.

Read more …

Oct 072016
 
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Andre Kertesz Bumper cars at amusement park in Neuilly-sur-Seine, near Paris 1930

I read a lot, been doing it for years, about finance and affiliated topics (a wide horizon of them), which means I’ve inevitably seen a wholesale lot of nonsense fly by. But for some reason, and I think I know why, Q3 2016 has been gunning for a top -or bottom- seat in that regard, and Q4 is looking to do it one better/worse.

Apart from the fast increasingly brainless political ‘discussions’ that don’t deserve the name, in the US and UK and beyond, there are the transnational organizations, NATO, IMF, EU and all those things, all suffocating in their own hubris, things I’ve dealt with before in for instance Globalization Is Dead, But The Idea Is Not and Why There is Trump. But none of it still seems to have trickled through anywhere that I can see.

The end of growth exposes the stupidity and ignorance of all but (and even that’s a maybe) a precious few (of our) ‘leaders’. There is no other way this could have run, because an era of growth simply selects for different people to float to the top of the pond than a period of contraction does. Can we agree on that?

‘Growth leaders’ only have to seduce voters into believing that they can keep growth going, and create more of it (though in reality they have no control over it at all). Anyone can do that. So ‘anyone’ who’s sufficiently hooked on power games will apply.

‘Contraction leaders’ have a much harder time; they must convince voters that they can minimize the ‘suffering of the herd’. Which is invariably a herd that no-one wants to belong to. A tough sell.

Any end to growth will and must therefore inevitably change the structure of a democracy, any democracy, any society for that matter. It will lead to new leaders, and new parties, coming to the front. And it should not surprise anyone that some of these new leaders and parties will question the very structure of the democracy they are part of, if only because that structure is already undergoing change anyway.

The tight connection between an era of economic growth (and/or contraction) and the politicians that ‘rule’ during that era is reflected in Hazel Henderson’s“economics is nothing but politics in disguise”.

 

On the one hand you have the incumbent class seeking to hold on to their waning power, churning out false positive numbers and claiming that theirs is the only way to go (just more of it), and on the other hand you have a loose affiliation – to the extent there’s any affiliation at all- of left and right, individuals and parties, who smell change that they can use to their own benefit.

They just mostly don’t know how to use it yet. But they’ll find out, or some of them will. Blaming people and groups of people for what’s gone wrong will be a major way forward, because it’s just so easy. It’s another reason why the incumbents class, the traditional parties, will go the way of the dodo: they will be blamed, and rightly so in most cases, for the fall of the economic system.

That’ll be the number one criteria: if you’re -perceived as- part of the old guard, you’re out. Not at the flick of a switch, but nevertheless the rise of Trump and Farage and all those folks has been much faster than just about anyone would have thought possible until very recently.

They feed on discontent, but they can do so only because that discontent has been completely ignored by the ruling classes everywhere. Which has a lot to do with the rulers in all these instances we see pop up now still being well-off, while the lower rungs of societies definitely are not.

Moreover, if most people still had comfortable middle-class lives, the dislike of immigrants and refugees would have been so much less that Trump and Wilders and Le Pen and Alternative for Deutschland could never have ‘struck gold’. It’s the perception that the ‘new’ people are somehow to blame for one’s deteriorating living conditions that makes it fertile ground for whoever wants to use it.

And since the far left can’t go there, the right takes over by default. Bernie Sanders and Jeremy Corbyn have brave ideas on redistribution of wealth, but there is still too much resistance, at the moment, to that, from the incumbent class and their voters, to have much chance of getting anywhere.

Of course the traditional right wing smells the opportunity too, so Hillary (yeah, she’s right wing) and Theresa May and Sarkozy and Merkel are all orchestrating sharp turns to the right, away from their once comfortable seats in the center. They all sense that power will not be emanating from the center going forward, and it’s power, much more than principles, that they are after.

 

But enough about politicians and their parties, who can and will all be voted out of power. Much harder to get rid of will be the transnational organizations, like the EU and IMF (there are many more), though they represent the ‘doomed construction’ perhaps even more than mere local or national power-hungries. The leading principle is simple: What has all the centralization led to? To today’s contracting economies.

To that end, let’s just tear into a recent random Bloomberg piece on this week’s IMF meeting, and the ‘expert opinions’ on it:

Existential Threat To World Order Confronts Elite At IMF Meeting

Policy-making elites converge on Washington this week for meetings that epitomize a faith in globalization that’s at odds with the growing backlash against the inequities it creates. From Britain’s vote to leave the EU to Donald Trump’s championing of “America First,” pressures are mounting to roll back the economic integration that has been a hallmark of gatherings of the IMF and World Bank for more than 70 years. Fed by stagnant wages and diminishing job security, the populist uprising threatens to depress a world economy that IMF Managing Director Christine Lagarde says is already “weak and fragile.”

The calls for less integration and more trade barriers also pose risks for elevated financial markets that remain susceptible to sudden swings in investor sentiment , as underscored by recent jitters over Deutsche Bank’s financial health. “The backlash against globalization is manifesting itself in increased nationalistic sentiment, against the outside world and in favor of increasing isolation,” said Louis Kuijs at Oxford Economics in Hong Kong, a former IMF official. “If we lose consensus on what kind of a world we want to have, the world will probably be worse off.”

Oh, but we do have consensus, Louis: Ever more people don’t want what they have now. That too is consensus. And since you said that what it takes is consensus, we should be fine then, right?!

Also, I find the term ‘elevated markets’ interesting, even if I don’t know what it’s supposed to mean. I can only guess.

In its latest World Economic Outlook released Tuesday, the fund highlighted the threats from the anti-trade movement to an already subdued global expansion. After growth of 3.2% in 2015, the world economy’s expansion will slow to 3.1% this year before rebounding to 3.4% in 2017, according to the report, keeping those estimates unchanged from July projections. The forecasts for U.S. growth were cut to 1.6% this year and 2.2% in 2017.

“We’d like to see an end to the creeping protectionism in the world and more progress on moving ahead with free-trade agreements and other trade-creating measures,” Maurice Obstfeld, director of the IMF’s research department, said in a Bloomberg Television interview with Tom Keene. Lagarde said last week that policy makers attending the Oct. 7-9 annual meeting of the IMF and World Bank have two tasks. First, do no harm, which above all means resisting the temptation to throw up protectionist barriers to trade. And second, take action to boost lackluster global growth and make it more inclusive.

I can see how a vote against the likes of Hollande, Hillary or Cameron constitutes a “the backlash against globalization”. What I don’t see is how that has now become the same as the anti-trade movement. When did Trump express any feelings against trade? Against international trade deals as they exist and are further prepared, yes.

But those deals don’t define ‘trade’ to the exclusion of all other definitions. As for ‘protectionism’, that’s just a term designed to make something perfectly fine and normal look bad. Every single society on the planet should protect its basic necessities from being controlled by foreigners, either for money or for power.

Nothing good can come of relinquishing that control for any society, ever. There‘s not a thing wrong with protecting your control of your own water and food and shelter, and these are indeed things that should never be traded or negotiated in global markets.

So claiming that ‘do no harm’ equals NOT protecting your basics is nothing but a self-serving and dangerous kind of baloney coming your way courtesy of those people whose sociopathic plush seats and plusher bank accounts depend on your ongoing personal loss of control over what you need to survive.

It’s what any ‘body’ does that has reached the limits of its growth: it starts feeding on its host. Be it a cancerous tumor, the Roman Empire or our present perennial-growth driven economic models, they’re all the same same thing because they are fueled by the same -thoughtless- principle.


Ilargi: See that upward line at the end? Well, it’s an IMF growth ‘forecast’. Which are always so wrong, and always revised downward, that you must wonder if the term ‘forecast’ is even appropriate

 

Achieving even those modest objectives may prove elusive. Free trade has become polling poison in the U.S. presidential campaign, with Democratic nominee Hillary Clinton now criticizing a trade deal with Pacific nations, which isn’t yet ratified in the U.S., that she had praised when it was being negotiated. Republican challenger Trump has lashed out at Mexico and China, threatening to slap big tariffs on imports from both nations. Rattled by the U.K.’s June vote to leave the EU, European leaders know it may just be the start of a political earthquake that’s threatening the continent’s old certainties.

In case you didn’t catch it, “..the continent’s old certainties” is a goal-seeked term. Old in this case means not older than, say, 1950, if that. Look back 100 years and “the continent’s old certainties” dress in a whole other meaning.

Next year sees elections in Germany and France, the euro area’s two largest economies, and in the Netherlands. In all three countries anti-establishment forces are gaining ground. With growing resentment of the EU from Budapest to Madrid, policy makers have described the current surge in populism as the greatest threat to the bloc since its creation out of the ashes of World War II. There are also growing signs that the union and Britain are heading for a so-called “hard exit” that would sharply reduce the bloc’s trade and financial ties with the island nation. U.K. Prime Minister Theresa May said on Oct. 2 that she’ll begin her country’s withdrawal from the EU in the first quarter of next year.

I have addressed the misleading use of the term ‘populism’ before. In its core, it simple means something like: for, and by, the people. How that can be presented as somehow being a threat to democracy is a mystery to me. They should have picked another term, but settled on this one.

And in the western media consensus, it comprises anything from Trump to Beppe Grillo, via Hungary’s Orban and Nigel Farage, Spain’s Podemos, Greece’s Syriza and Germany’s AfD. All these completely different movements have one thing only in common: they protest the failed and fast deteriorating status quo, and receive a lot of support from their people for doing that.

Because it’s the people that bear the brunt of the failure, not the leadership; even Greece’s politicians still pay themselves a comparatively lush salary.

As for Britain, it’s the textbook example of utter blindness. Those who were/are well provided for, be they politically left or right, missed out on what was happening around them so much they had no idea Brexit was a real option. And in the 15 weeks since the Brexit vote, all anyone has done in the UK is seeking to blame someone, anyone but themselves for what they all failed to see coming.

Perhaps the biggest beneficiary of free trade over the past generation, China, still restricts access to many of its key industries, with economists worried about increasingly mercantilist policies. It’s also seeking a larger role in the existing global framework, with entry of the yuan into the IMF’s basket of reserve currencies on Oct. 1 the most recent example. An all-out trade war would be a disaster for China’s economy, with Trump’s threatened tariff potentially wiping off almost 5% of its GDP, according to a calculation by Daiwa Capital Markets.

John Williamson, whose Washington Consensus of open trade and deregulation was effectively the governing ethos for the IMF and World Bank for decades, said the 2008-09 financial meltdown had undercut support for economic integration. “There was agreement on globalization before the crisis and that’s one thing that’s been lost since the financial crisis,” said Williamson, a former senior fellow at Peterson Institute for International Economics who is now retired.

The growing opposition to economic integration has been fueled by a sub-par global recovery. “Perhaps the most striking macroeconomic fact about advanced economies today is how anemic demand remains in the face of zero interest rates,” former IMF chief economist Olivier Blanchard wrote last week in a policy brief for the Peterson Institute.

These ‘experts’ seem to have an idea there’s something amiss, but they don’t have the answers. Which is impossible to come and say out loud if you’re an expert. Experts must pretend to know it all, or at least know why they don’t know. “There was agreement on globalization before the crisis”, and now it’s no longer there. That they see.

That they ain’t coming back, neither the agreement on it nor globalization itself, is a step too far for them. To publicly acknowledge, at least. That Blanchard expresses surprise about ‘anemic demand’ at the same time that interest rates are equally anemic is something else.

That both are two sides of the same coin, or at least may be, is something he should at least mention. That is to say, low rates induce deflation, though they are allegedly supposed to induce the opposite. Economists are mostly very misguided people.

 

The world economy is getting some lift after rising at an annual rate just shy of 3% in the first half of this year, according to David Hensley, director of global economics for JPMorgan. But much of the boost will come from a lessening of drags rather than from a big burst of fresh growth, said Peter Hooper at Deutsche Bank Securities, a former Federal Reserve official. Recessions in Brazil and Russia are set to come to an end, while in the U.S. cutbacks in inventories and in oil and gas drilling will wane.

Please allow me to chip in here. ‘Lessening of drags’ in a nonsense term. And so is the idea that “..recessions in Brazil and Russia are set to come to an end”. That’s all goal-seeked day-dreaming. Smoke or drink something nice with it and you’ll feel good for a few hours, but that doesn’t make it real.

“I’m characterizing the global economy as something akin to a driverless car that’s stuck in the slow lane,” said David Stockton, a former Fed official and now chief economist at consultants LH Meyer. “Everybody feels like they’re being taken for a ride but they’re pretty nervous because they can’t see anybody in control.”

I really like this one, because off the bat I thought Stockton had it all wrong. What I think is the appropriate metaphor, is not “a driverless car that’s stuck in the slow lane”, but one of those cars in a carousel at a carnival, a merry-go-round, where you can sit in it forever and you always end up in the same spot. And the only one who’s in control in the boss who hollers that you need to pay another quarter if you want to keep on riding.

Or, alternatively, and to stay at the carnival, it’s a bumper car, which allows you to hit other cars and get hit, but never to leave the rink. That’s the global economy. Not getting anywhere, and running out of quarters fast.

Still, for the first time in the past few years, Stockton said he sees a real upside risk to his forecast of continued global growth of around 3% next year. And that’s coming from the possibility of looser fiscal policy in the U.S. and Europe. In the U.S., both Clinton and Trump have pledged to boost infrastructure spending on roads, bridges and the like. In Europe, rising populism provides a powerful incentive for governments to abandon austerity ahead of the elections next year – and perhaps beyond. Whether such a shift will be enough to mollify those who have been on the losing side of globalization for decades is debatable, however.

“The consensus in policy-making circles was that more trade meant better economic growth,” said Standard Chartered head of Greater China economic research Ding Shuang, who worked at the IMF from 1997 to 2010. “But the benefits weren’t shared equitably, so now we see a round of anti-globalization, anti-free trade. “Globalization will stall for the moment, until we can find a way to share those benefits,” he added.

Globalization is done. And while we can discuss whether that’s of necessity or not, and I continue to contend that the end of growth equals the end of all centralization including globalization, fact is that globalization was never designed to share anything at all, other than perhaps wealth among elites, and low wages among everyone else.

The EU and IMF have not delivered on what they promised, in the same way that traditional parties have not, from the US to UK to basically all of Europe. They promised growth, and growth is gone. They may have delivered for their pay masters, but they lost the rest of the world.

Anything else is just hot air. But that doesn’t mean they will hesitate to use their control of the military and police to hold on to what they got. In fact, that’s guaranteed. But it would only be viable in a dictatorial society, and even then.

We are transcending into an entirely different stage of our lives, our economies, our societies. Growth is gone, it went out the window long ago only to be replaced with debt. And that’s going to take a lot of getting used to. But there’s nothing that says we couldn’t see it coming.