Aug 152019
 


Henri Matisse The terrace, St. Tropez 1904

 

US Yield Curve Inversion Highlights Recession Fears, Fed Dilemma (R.)
China: Paper Tiger (Jim Rickards)
Trade Wars and the Over-Valued Dollar (Hill)
Trump Ties China Trade Deal To ‘Humane’ Hong Kong Resolution (R.)
Autopsy Finds Jeffrey Epstein Had Several Broken Neck Bones (NYPost)
Jeffrey Epstein’s Body Claimed By Unidentified ‘Associate’ (NBC)
CEO Scott Borgerson Denies He’s Dating Epstein Pal Ghislaine Maxwell (NYPost)
UK Labour Vows To Bring Down PM Johnson And Delay Brexit (R.)
No Chance Of US-UK Deal If Northern Ireland Peace At Risk – Pelosi (G.)
Half of UK Farms Could Fail After No-Deal Brexit – Report (G.)
Gibraltar To Release Iranian Oil Tanker On Thursday (R.)
Scientists Find Micro Plastics Deep in Arctic Ice (R.)

 

 

It takes on average 18 months from a US yield-curve inversion to a recession.

US Yield Curve Inversion Highlights Recession Fears, Fed Dilemma (R.)

When the U.S. Federal Reserve cut interest rates last month for the first time in more than a decade, it signaled that further reductions in borrowing costs might not be needed. Bond markets vehemently disagree. Sliding bond yields and the inversion of a key part of the U.S. yield curve on Wednesday for the first time in 12 years show that bond investors have a far gloomier outlook for the U.S. and global economies than the U.S. central bank. “The rates market rarely lies and globally it looks like it’s expecting a day of reckoning,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York.

Fears are also rising the Fed may not only be behind the curve in cutting rates, but that central banks may be running out of ammunition to stimulate growth as countries offset each other’s attempts to boost growth with looser fiscal policy. Worsening economic data, weak inflationary pressures, the escalating U.S.-China trade war and intensifying tensions between protesters in Hong Kong and the Chinese government have boosted demand for safe-haven debt, sending many European government bond yields deeper into negative territory while the longest-dated U.S. Treasury yields have fallen to record lows. The inversion of key parts of the Treasury yield curve, in which investors in short-term holdings get paid more than those in long-term ones, has historically been a reliable indicator of a coming recession.

On Wednesday, the yield on the U.S. 10-year Treasury note tipped 2.1 basis points below 2-year Treasury yields, the first time this spread has been negative since 2007, according to Refinitiv data. The inversion rattled investors already worried that a U.S.-China trade war might trigger a global recession and kill off a decade-long bull market on Wall Street. Major U.S. stock indexes were down about 2%.

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“The new “Cold War” is here. Get used to it.”

China: Paper Tiger (Jim Rickards)

[..] at $11,000 per capita GDP, China is stuck squarely in the “middle income trap” as defined by development economists. The path from low income (about $5,000 per capita) to middle-income (about $10,000 per capita) is fairly straightforward and mostly involves reduced corruption, direct foreign investment and migration from the countryside to cities to purse assembly-style jobs. The path from middle-income to high-income (about $20,000 per capita) is much more difficult and involves creation and deployment of high-technology and manufacture of high-value-added goods. Among developing economies (excluding oil producers), only Taiwan, Hong Kong, Singapore and South Korea have successfully made this transition since World War II.


All other developing economies in Latin America, Africa, South Asia and the Middle East including giants such as Brazil and Turkey remain stuck in the middle-income ranks. China remains reliant on assembly-style jobs and has shown no promise of breaking into the high-income ranks. In short, and despite enormous annual growth in the past twenty years, China remains fundamentally a poor country with limited ability to improve the well-being of its citizens much beyond what has already been achieved. [..] Trade wars with the U.S. are escalating, not diminishing as I warned from the start in early 2018.

Trump’s recent imposition of 10% tariffs on the remaining $300 billion of Chinese imports not currently tariffed (in addition to existing tariffs on $200 billion of Chinese imports) will slow the Chinese economy even further. China retaliated with a shock devaluation of the yuan below 7.00 to one dollar, a level that had previously been defended by the People’s Bank of China. Resorting to a currency war weapon to fight a trade war shows just how badly China is losing the trade war. But, this currency war counterattack will not be successful because it will incite more capital outflows from China.


The Chinese lost $1 trillion of hard currency reserves during the last round of capital flight (2014-2016) and will lose more now, despite tighter capital controls. The spike of bitcoin to $11,000 following the China devaluation is a symptom of Chinese people using bitcoin to avoid capital controls and get their money out of China. [..] lurking behind all of this is the coming debt crisis in China. About 25% of China’s reported growth the past ten years has come from wasted infrastructure investment (think “ghost cities”) funded with unpayable debt. China’s economy is a Ponzi scheme like the Madoff Plan and that debt pyramid is set to collapse.

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From last week, but a good reminder that different rules apply to the reserve currency.

Trade Wars and the Over-Valued Dollar (Hill)

President Trump and China are at it again—and both just upped the ante. Currency manipulation and an overvalued U.S. dollar have taken center stage in the news, thanks to Beijing devaluing its currency [last] Monday. Trump’s Treasury Department has countered by naming China a “currency manipulator.” But boiling the problem down to currency manipulation means the administration is fighting a previous war. And that highlights why the president lacks the strategic vision needed to keep up with newer global challenges. America’s trade problems have grown far more broad in recent years. Chronic global trade imbalances threaten the stability of the world economy. And that holds true whether these disruptions are caused by currency manipulation, trade barriers or global capital flows.

Designating China as a “currency manipulator” is long overdue. But it’s hardly a cure-all. It merely initiates consultations with the IMF. And it doesn’t necessarily provide leverage to solve core trade issues. What’s needed is an approach that addresses the fundamental causes of current trade imbalances. The problem does start with China, however, since Beijing just weakened its currency, the yuan, to its lowest level since 2008. This will likely neutralize the impact of new tariffs that the president announced in a tweet last week. China allowed its currency to fall by 2 percent in a mere 24 hours. That’s a significant drop, following an overall 11.4 percent decline since March of 2018.

Weakening the value of the yuan lowers the cost of Chinese goods in the U.S. market. And so, even though the president is attempting to raise the cost of imports through his new tariffs, their sticker price could still shrink. In the wider picture, Trump’s condo-selling mindset – in which he simply imposes more tariffs until Beijing agrees to a “deal” – is a poor means to address global trade imbalances. It’s not China’s intransigence that is overwhelming U.S. manufacturers; it’s an overvalued U.S dollar. There’s no doubt that China has long used predatory trade practices, such as dumping and illegal subsidies, to undercut U.S. manufacturers.

And Beijing has repeatedly intervened in currency markets to suppress the value of its currency—all to continue its job-killing trade surpluses with the United States. But China isn’t the only country that has played the currency game. Over the past two decades, Japan, South Korea and nearly 20 other countries in Asia and Europe have also bid up the price of the U.S. dollar to subsidize their own exports. And that has made U.S. goods increasingly uncompetitive in global markets—with the United States shedding five million manufacturing jobs and nearly 90,000 domestic factories in that time.

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Can the US sit still in case China invades Hong Kong? And what would such an invasion mean for the city’s status as a trade hub?

Trump Ties China Trade Deal To ‘Humane’ Hong Kong Resolution (R.)

President Donald Trump on Wednesday tied a U.S. trade deal with China to humane resolution of the weeks of protests wracking Hong Kong, hours after the State Department said it was “deeply concerned” about reports of movement of Chinese paramilitary forces along the Hong Kong border. The State Department warned that continued erosion of the territory’s autonomy put at risk the preferential status it enjoys under U.S. law. Trump, in his remarks on Twitter, appeared to suggest a personal meeting with Chinese President Xi Jinping to help resolve the crisis. “Of course China wants to make a deal. Let them work humanely with Hong Kong first!” Trump said on Twitter. “I have ZERO doubt that if President Xi wants to quickly and humanely solve the Hong Kong problem, he can do it. Personal meeting?”


Trump, who has been seeking a major deal to correct trade imbalances with China ahead of his 2020 reelection bid, has faced mounting criticism from Congress and elsewhere for not taking a stronger public line on Hong Kong and for his characterization of the protests earlier this month as “riots” that were a matter for China to deal with. In his tweets on Wednesday, Trump also said that his delay in 10% tariffs on more than $150 billion in Chinese imports to Dec. 15 from Sept. 1 “will be reciprocated” by China and the “much good will come from the short deferral to December.” His comment appeared to contradict senior officials in his administration, who said earlier that no concessions were made by Beijing in response to the delay announced on Tuesday.

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“..more common in strangulation murders than suicidal hangings..”

Autopsy Finds Jeffrey Epstein Had Several Broken Neck Bones (NYPost)

Jeffrey Epstein’s autopsy determined the convicted pedophile suffered multiple broken neck bones, according to a report. One of Epstein’s breaks was to the hyoid bone, an injury that experts told the Washington Post is more common in homicide victims. The discoveries were disclosed to the paper by two people familiar with the findings of the autopsy, which was completed on Sunday, but warranted more information by the Medical Examiner’s Office before they make a final cause of death ruling. “Today, a medical examiner performed the autopsy of Jeffrey Epstein,” said Chief Medical Examiner Dr. Barbara Sampson in a statement Sunday night.

“The ME’s determination is pending further information at this time. At the request of those representing the decedent, and with the awareness of the federal prosecutor, I allowed a private pathologist (Dr. Michael Baden) to observe the autopsy examination. This is routine practice.” Epstein was found dead of an apparent suicide in his cell at the Manhattan Correctional Center early Saturday. He was being held there without bail since his July arrest on sex trafficking charges. The Washington Post spoke to Jonathan Arden, president of the National Association of Medical Examiners, who said a broken hyoid bone — which is near the Adam’s apple — is more common in strangulation murders than suicidal hangings.

“If, hypothetically, the hyoid bone is broken, that would generally raise questions about strangulation, but it is not definitive and does not exclude suicidal hanging,” said Arden, who is not involved with the Epstein autopsy. Numerous studies were also cited by the paper that found hyoid bone breaks were found in the minority of suicidal hangings. One such study conducted from 2010 to 2013 that looked at suicidal hangings in India found that hyoid damage was present in just 16 of 264 cases.

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Bill Barr better get a grip on this. It’s turning into an absurdity.

Jeffrey Epstein’s Body Claimed By Unidentified ‘Associate’ (NBC)

Jeffrey Epstein’s body has been claimed from the New York City medical examiner’s office, a source close to the investigation told NBC News on Wednesday. Epstein, 66, was found dead by apparent suicide Saturday morning in his cell at the Metropolitan Correctional Center in Manhattan. The center’s warden has been temporarily reassigned, and the two guards assigned to watch Epstein have been placed on leave. Epstein wasn’t on suicide watch at the time of his death, multiple people familiar with the investigation have told NBC News. Attorney General William Barr has said that he was “appalled” by the development and that he has consulted with the Justice Department’s inspector general, who is also investigating. The person who claimed Epstein’s body was described only as an “Epstein associate.”

After Epstein was arrested last month on charges of sex trafficking of minors and conspiracy to engage in sex trafficking of minors, his attorneys asked U.S. District Judge Richard Berman to allow Epstein to post bond secured by a mortgage on his home in Manhattan. According to court documents, they said the bond would have been co-secured by his brother, Mark Epstein, and a friend identified as David Mitchell. Berman denied bond on July 18. About a week later, Epstein was found injured and in a fetal position in his cell, raising questions at the time of whether he had tried to kill himself. On Monday, Berman complained in a letter to the warden, Lamine N’Diaye, that the federal Bureau of Prisons still hasn’t explained what he called the July “incident.”

In a response later Monday, N’Diaye said that an internal investigation was completed on July 23 but that she couldn’t reveal any information because of the investigations into Epstein’s death on Saturday. On Tuesday, Justice Department officials confirmed that N’Diaye had been reassigned.


Painting said to be hanging in Epstein townhouse

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“..a property manager of an adjacent parcel of land said that Maxwell was living at Borgerson’s residence as recently as two weeks ago…”

CEO Scott Borgerson Denies He’s Dating Epstein Pal Ghislaine Maxwell (NYPost)

The man rumored to be dating Jeffrey Epstein’s former lover and alleged madam Ghislaine Maxwell has completely denied any romance between the pair. Maxwell has been reportedly living with tech CEO Scott Borgerson at his Manchester, Massachusetts home, according to the Daily Mail. But Borgerson called The Post Wednesday to insist he had been busy working abroad – and nobody has been at his home. He arrived back in the US late Wednesday, only to be met by a police escort, and said: “It’s pretty crazy, all of this just exploded. People keep asking me, but I am not dating Ghislaine, I’m home alone with my cat.” When asked about the status of his friendship with Maxwell now, Borgerson replied: “I don’t want to comment on that – would you want to talk about your friends?”


“I landed after a long flight and my phone went crazy, the first thing I did was call the local police to check my house.” Asked if he knew where Maxwell now is, Borgerson, a divorced dad, replied: “She’s not here, I have no idea where she is. “Nobody wants to be close to this radioactive situation.[..] The Post has been told that friends of Maxwell last saw her over the past month walking down a London street, but she has gone to ground. Borgerson refused to say whether Maxwell had ever stayed at his home. Despite this, NBC News reported on Wednesday that a property manager of an adjacent parcel of land said that Maxwell was living at Borgerson’s residence as recently as two weeks ago.

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Corbyn wants to be PM. But not a lot of MPs like him.

UK Labour Vows To Bring Down PM Johnson And Delay Brexit (R.)

The Labour Party has urged rebel MPs in the ruling Conservatives to help block a no-deal Brexit by bringing down Prime Minister Boris Johnson’s administration and allowing its leader Jeremy Corbyn to form a caretaker government. Johnson has promised to take Britain out of the European Union by Oct. 31, with or without a deal, setting the scene for a showdown in parliament where MPs are opposed to a divorce without a transition agreement. In a letter to opposition party leaders and several senior Conservatives opposed to a disorderly exit, Corbyn said his “strictly time-limited temporary government” would delay Brexit and hold a general election.


He said Labour would campaign in the election to hold a second referendum on the Brexit terms, including an option as to whether the country should remain in the bloc three years after it voted to leave. “This government has no mandate for No Deal, and the 2016 EU referendum provided no mandate for No Deal,” Corbyn said. “I therefore intend to table a vote of no confidence at the earliest opportunity when we can be confident of success.” A spokeswoman for Johnson’s Downing Street office said the choice was clear: “This government believes the people are the masters and votes should be respected, Jeremy Corbyn believes that the people are the servants and politicians can cancel public votes they don’t like.”

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Why is it Bolton who’s talking trade deals?

No Chance Of US-UK Deal If Northern Ireland Peace At Risk – Pelosi (G.)

There is no chance of Congress approving a US-UK trade agreement if Brexit undermines the Good Friday peace agreement in Northern Ireland, the speaker of the House of Representatives, Nancy Pelosi, has said. Pelosi was restating the entrenched position of congressional Democrats and many Republicans in the wake of remarks made by Donald Trump’s national security adviser, John Bolton, during a visit to London this week. Bolton had said that Britain and the US could sign interim, partial free trade deals, one sector at a time, which would go through the a fast track legislative process, to help the UK cope economically if there is a no-deal Brexit on 31 October.

In a statement on Wednesday, the House speaker, who commands a Democratic majority, warned that the Trump administration would not be able to sidestep congressional approval. “Whatever form it takes, Brexit cannot be allowed to imperil the Good Friday agreement, including the seamless border between the Irish Republic and Northern Ireland, especially now, as the first generation born into the hope of Good Friday 21 years ago comes into adulthood.” Pelosi said. “We cannot go back.” Bolton said the sectoral deals, focusing on industries such as car manufacturing, could be negotiated quickly, and insisted they would receive overwhelming bipartisan support in Congress.

“The ultimate end result is a comprehensive trade agreement covering all trading goods and services,” he said after meeting Boris Johnson and senior British officials on Monday. “But to get to that you could do it sector by sector, and you can do it in a modular fashion. In other words, you can carve out some areas where it might be possible to reach a bilateral agreement very quickly, very straightforwardly.”

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Most heavily subsidized.

Half of UK Farms Could Fail After No-Deal Brexit – Report (G.)

Campaigners for a second referendum are herding a flock of sheep down Whitehall to protest against the impact a no-deal Brexit could have on the farming community. According to a new report commissioned by the supporters of second poll, more than half of UK farms could go out of business if Britain crashes out of the EU on 31 October. Backed by the People’s Vote campaign and written by Dr Séan Rickard, former chief economist of the National Farmers’ Union, the report warns that 50% of farms could go under as the government would prioritise keeping down food prices for consumers ahead of protecting agricultural producers. To coincide with the report and launch of the Farmers for a People’s Vote group, campaigners are taking a small flock of sheep past the Cabinet Office where no-deal planning is taking place.

The report says the EU and all the countries with whom it has free-trade agreements would immediately apply tariffs and non-tariff barriers on food imports from the UK in the event of a no-deal Brexit. At the same time, UK tariffs on imports would be slashed or reduced to nothing. It argues: “The combination of the removal of support payments – only a proportion will be made up by enhanced environmental payments – and an adverse trading environment will render the majority of farm businesses unviable. By the mid-2020s a large proportion of farm businesses – 50% or more is not an unreasonable estimate – recognising that they face an unprofitable future will decide to cease trading.”

[..] In the event of a no deal Brexit, Rickard argued that many industries would suffer but agriculture would feel the most serious economic shock. “It is impossible to project the exact number of farmers who will go out of business”, he said. “What we do know is that over 40% of them will have no net income if the basic payment is removed. If at the same time the government removes all tariffs and so depresses prices, these two factors combined will render over 50% of farms in this country unviable. “The possibility of any compensation from the government going anywhere near offsetting this is remote because so many promises have been made to so many other sectors and not all can be fulfilled.”

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Bolton gone wrong.

Gibraltar To Release Iranian Oil Tanker On Thursday (R.)

The British territory of Gibraltar will on Thursday release an Iranian oil tanker seized by Royal Marines in the Mediterranean in July, the Sun newspaper reported, citing sources close to Gibraltar Chief Minister Fabian Picardo. Picardo would not apply to renew an order to detain Grace 1, the report said, adding that he is now satisfied that the oil tanker is no longer heading to Syria. Britain had said the vessel was violating European sanctions by taking oil to Syria, a charge Iran denies. “There is no reason to keep Grace 1 in Gibraltar a moment longer if we no longer believe it is in breach of sanctions against the Syrian regime,” the newspaper quoted a source close to Picardo as saying.

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Everywhere. Literally. If it’s deep in Arctic ice, it’s deep inside you too.

Scientists Find Micro Plastics Deep In Arctic Ice (R.)

Tiny pieces of plastic have been found in ice cores drilled in the Arctic by a U.S.-led team of scientists, underscoring the threat the growing form of pollution poses to marine life in even the remotest waters on the planet. The researchers used a helicopter to land on ice floes and retrieve the samples during an 18-day icebreaker expedition through the Northwest Passage, the hazardous route linking the Pacific and Atlantic oceans. “We had spent weeks looking out at what looks so much like pristine white sea ice floating out on the ocean,” said Jacob Strock, a graduate student researcher at the University of Rhode Island, who conducted an initial onboard analysis of the cores.


Microplastic found in ice core samples taken from the Northwest Passage. Northwest Passage Project/Camera: Duncan Clark via REUTERS

“When we look at it up close and we see that it’s all very, very visibly contaminated when you look at it with the right tools — it felt a little bit like a punch in the gut,” Strock told Reuters by telephone on Wednesday. Strock and his colleagues found the material trapped in ice taken from Lancaster Sound, an isolated stretch of water in the Canadian Arctic, which they had assumed might be relatively sheltered from drifting plastic pollution. The team drew 18 ice cores of up to 2 meters (6.5 feet) long from four locations and saw visible plastic beads and filaments of various shapes and sizes. “The plastic just jumped out in both its abundance and its scale,” said Brice Loose, an oceanographer at the University of Rhode Island and chief scientist of the expedition, known as the Northwest Passage Project.

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Aug 022019
 


Pablo Picasso Bathers with a toy boat 1937

 

The Giant Sucking Sound of Financial Repression (WS)
Dutch Bank ING Warns Against Further ECB Money Printing (R.)
Trump’s $300 Billion China Tariff Threat Sends Markets Into Tailspin (G.)
Rate Cut Odds Surge After Tariff Announcement (ZH)
US Tariffs Risk Reviving Chinese Zombies (R.)
The EU Has New People In Charge. It’s Not Good News For US Tech Firms (CNBC)
EU Governments Seek Name For IMF Head (R.)
Boris Johnson’s Commons Working Majority Cut To One (BBC)
Expecting Ireland To Be Servile Is Part Of A Long British Tradition (G.)
Irish Peace Is Too Precious To Be Squandered By The Brexit Ultras (G.)
Boeing To Change 737 MAX Flight-Control Software To Address Flaw (R.)
Rachel Maddow Ratings Tank After Collusion Narrative Implodes (Ryan)

 

 

The war on savings and pensions continues unabated. Central banks are in so deep there’s no way out anymore. But what happens when you want to, or have to, retire?

The Giant Sucking Sound of Financial Repression (WS)

It’s called interest-rate repression. Or more poetically, financial repression. It’s where central banks manipulate interest rates down to where investments with little credit risk, such as Treasury securities, FDIC-insured savings accounts and CDs, pay little or no interest, or pay less interest than the rate of inflation. People such as savers and retirees, and institutions such as pension funds, that depend on this cash flow have lost their income stream. In addition, the purchasing power of their principal is getting gradually wiped out by inflation. How much money are we talking about? In the US alone, this interest rate repression impacts nearly $40 trillion. This includes savings products, Treasury securities, municipal bonds, and high-grade corporate debt.

$40 Trillion with a T. A 2% reduction across the board cuts this income by $800 billion a year. And this has had an impact. Central banks have accomplished this interest-rate repression by pushing short-term rates to zero or below zero, and by buying bonds and other assets to push long-term rates down too. These were emergency measures during the Financial Crisis that have become the “new normal,” as it has been called. This new normal has been going on for over a decade now. Other central banks, including the ECB and the Bank of Japan, pushed their policy rates below zero. This, in addition to vast asset buying binges by those central banks, produced $13 trillion in negative yielding bonds. But that’s a different universe of idiocy that we’re not going to get into today. We’re going to stick to US conditions.

To the Fed’s credit, it is the only major central bank that has raised its policy-rate target a bit, from near-zero to a range between 2.25% and 2.5%, which are still historically low rates. But it is under immense pressure by Wall Street and by the White House to cut rates again. So now we have this situation where short-term Treasury yields are low, and long-dated Treasury yields are even lower. How much money are we talking about here? Let’s see. There are $22 trillion in Treasury securities. They’re held by individuals and institutions, including insurance companies, pension funds, and the Social Security Trust Fund. Then there is high-grade corporate debt. The category of triple-A to single-A-rated debt is about $3.3 trillion. These yields have been pushed down too.

Then there are $3.8 trillion in municipal bonds outstanding. Many of them trade below US Treasury yields. For example, the GO bonds of California, which is not exactly a paragon of fiscal rectitude. During trading last Thursday, the California 10-year yield was 1.76%. This was about one-third of a percentage point below the US Treasury 10-year yield of 2.08% on the same day. Then there are $9.4 trillion in savings products, mostly savings accounts and CDs at banks. There are also about $3 trillion in checking accounts, payroll accounts, etc., but they’re not included here. These are just savings products. So let’s add these categories up: They amount to $39 trillion.

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“There is no shortage of money in the market.”

Dutch Bank ING Warns Against Further ECB Money Printing (R.)

Ralph Hamers made his plea as central banks redouble efforts to keep the cost of borrowing at historic lows to buoy the economy, a policy that weighs on bank profits and makes it costly to hold deposits. “I don’t think QE is a recipe to support an uncertain environment,” Hamers told journalists, referring to so-called quantitative easing to print fresh money. “There is no shortage of money in the market.” Although bankers have previously made similar complaints, Hamers’ blunt comments carry weight because his bank is one of Europe’s largest, with 38 million customers. ING, the largest Dutch bank, cautioned on Thursday that rock-bottom interest rates would pressure future earnings, as it announced a 1.4 billion euro net profit in the second quarter of the year.


“Looking ahead, we expect that persistently low interest rates will put pressure on net interest income,” Hamers said, referring to the bank’s chief earnings pillar from activities such as lending. European Central Bank President Mario Draghi has all but pledged to loosen monetary policy further amid a continued economic deterioration of Europe’s euro currency bloc, still grappling with the aftermath of a debt crisis. Officials recently told Reuters that an interest rate cut in September appeared certain, while government bond buys were also likely. Draghi recently said the outlook looked bleak as a global trade war hit Europe’s manufacturers.

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Did he do it to push Powell?

Trump’s $300 Billion China Tariff Threat Sends Markets Into Tailspin (G.)

Donald Trump’s surprise decision to escalate the trade war with tariffs on another $300bn of Chinese goods has sent global financial markets into a tailspin. After sharp falls on Wall Street in the wake of the US president’s announcement on Twitter on Thursday, Asian share prices plummeted on Friday morning as growing hopes that the world’s two economic superpowers would be able to reach a deal were dashed. In Tokyo the Nikkei was down 2.3%, with a similar fall in Hong Kong and Shanghai. The Kospi was down 0.8% in Seoul while in Sydney the benchmark ASX200, which passed its pre-global financial crisis all-time high on Tuesday, fell 0.3%. On the commodities markets the price of Brent crude oil plunged 7%, its biggest fall for four years, although it recovered 2.5% on Friday to $62.01.


Trump’s decision was also likely to increase the chances of another cut in US interest rates with the prospect of worsening trade with China forcing the Federal Reserve to loosen monetary policy again in September. It follows Wednesday’s 0.25% reduction, which was widely seen as not being enough to please the president who has been very vocal in calling for lower rates to boost the economy. As a signal of lower rates to come, the 10-year US bond yield fell almost 12 basis points on Thursday to 1.902%, hitting the lowest level since Trump won the presidential election in November 2016. The US dollar also fell and stockmarkets in Europe and the US were braced for a turbulent last day’s trading of the week. The FTSE100 is set to drop 1% at the opening and the Dow 0.3%.

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“It’s very logical to conclude that if trade tensions increase, given what Powell said, that would be something he would look at to evaluate a further cut.”

Rate Cut Odds Surge After Tariff Announcement (ZH)

Earlier today, we wrote a post titled “What Would It Take For The Fed To Not Cut Again?”, with Goldman providing a stylized answer, although in retrospect, the post should have been titled “What Would It Take For The Fed To Cut Again”, as that is what the market was far more concerned about after yesterday’s hawkish Powell press conference. In any case, Goldman hinted at the one specific catalyst that could force the Fed to cut more: “We also see risks in the other direction, especially on a significant escalation of tariffs against China.” To this, we said that “if an acceleration in the trade war with China is what the Fed will need to cut more, it’s pretty clear what that means for the chances of any trade deal between Washington and Beijing, since even Trump now understands that if he keeps escalating trade war with China, Powell will have no choice but to eventually cut to 0% (and lower).”

Just a few hours later, we were proven right in suggesting that an escalation in the trade war is inevitable and imminent when Trump tweeted that he would hike tariffs on $300BN in Chinese imports to 10% starting September 1, ending the tentative ceasefire with Beijing with a bang, and sending risk prices sharply lower. And yes, while Trump did suffer a modest drop in his favorite polling indicator – i.e., the stock market – which “cratered” as much as 1.5% below its all time high – far more importantly Trump also called Powell’s bluff, and effectively forced the Fed to prepare for more rate cuts as the trade war with China – which Powell explicitly highlighted as a condition that would result in more easing – is set to escalate further.

Late today, Bloomberg confirmed as much noting that traders “fixated on a timeline in which Powell seems to suggest cooling trade tensions reduced the need for future rate reductions — and a day later Trump revs the tensions back up”, just as we said he would. “It fits the pattern of a president bent on getting the central bank to submit, many thought”, the Bloomberg authors concluded. “Powell was very careful to say that he was looking at three things, one of which was global growth and the extent to which that is risked by trade tensions,” said Ellen Hazen, senior vice president and portfolio manager for F.L. Putnam, which has $2.2 billion under management. “It’s very logical to conclude that if trade tensions increase, given what Powell said, that would be something he would look at to evaluate a further cut.” Precisely, hence our prediction first thing this morning.

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Really? Xi is going to build more bridges to nowhere?

US Tariffs Risk Reviving Chinese Zombies (R.)

President Donald Trump is threatening new levies on $300 billion of Chinese goods entering the United States, after Shanghai talks proved inconclusive this week. That might not prod Chinese officials into striking a deal, but it is likely to raise some unwelcome zombies. Trump is among those who claim the Chinese economy is on the brink of the abyss. And it’s true that as a truce in trade negotiations gets more elusive the country’s business community is being forced to price in a new status quo. Their country has stumbled into a cold war with the world’s largest economy, a nuclear-armed military colossus that controls the world’s foremost trading currency. But a $13 trillion economy growing at 6.2% is hardly imploding, and a country where private consumption makes up roughly two-fifths of nominal GDP has padding against a downturn in trade.


Tensions exacerbate economic problems of China’s own making, though. There is a massive stack of non-performing debt incurred by government banks that mis-allocated capital after the global financial crisis. And there are still plenty of inefficient state-backed companies that compete with China’s private sector, driving down profitability across the board. If the new 10% tariffs kick in on Sept. 1 as Trump threatened on Thursday, President Xi Jinping may re-open a playbook that reformist officials have been trying to close. The central government has already pushed localities to ramp up infrastructure spending, and there may be more to come. Construction investment creates jobs immediately, and the government can order banks to lend, and order state firms to build.

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Trump won’t like this.

The EU Has New People In Charge. It’s Not Good News For US Tech Firms (CNBC)

New officials at the heart of the EU will likely keep America’s big tech firms under close scrutiny, experts have told CNBC. The European Commission — the EU’s executive arm — has fined companies such as Google for disrespecting its competition rules, it’s asked Ireland to collect unpaid taxes from Apple and is currently investigating Amazon. It has also proposed different laws that seek to limit online content and there’s little evidence that anything will change under the EU’s new leadership. Dexter Thillien, a senior industry analyst at Fitch Solutions, told CNBC via telephone Wednesday that Europe is keen to continue to be seen as the global leading force in tech regulation. Thillien explained that Europe saw a loophole in global tech regulation and felt the need to act.


“Europeans have all the negatives but none of the positives,” he said, referring to the fact that Europe has not created any large tech firms but has had to deal with the presence of Silicon Valley behemoths. “The European Commission has become more assertive making big tech companies pay their fair share of taxes. If anything, the incoming Commission looks even more determined to do so,” Florian Hense, an economist at Berenberg, told CNBC via email. Ursula von der Leyen, the president-elect of the Commission, said during a speech earlier this month that “if (tech companies) are making these profits by benefiting from our education system, our skilled workers, our infrastructure and our social security, if this is so, it is not acceptable that they make profits, but they are barely paying any taxes because they play our tax system.”

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A European under Washington’s thumb.

EU Governments Seek Name For IMF Head (R.)

European Union finance ministers are set on Friday to choose the bloc’s candidate to lead the International Monetary Fund from a list of four names, a spokeswoman for the French government said. The list includes Jeroen Dijsselbloem, the Dutch former head of euro zone finance ministers; Nadia Calvino, the Spanish economy minister; Olli Rehn, the Finnish central bank governor; and Bulgaria’s World Bank chief executive Kristalina Georgieva. Mario Centeno, the Portuguese chairman of euro zone finance ministers, said on Thursday he was pulling out of the race “in this stage of the process”, adding that he would be available if needed for a compromise solution.


Britain did not field a candidate because it could not come up with a name on time, a European official said. It had been expected to name a candidate and the deadline was extended by a few hours on Thursday to allow it to do so. France is leading the process to select a European candidate. The top job at the Washington-based global lender has historically been filled by a European. Outgoing IMF head Christine Lagarde is taking over from Mario Draghi as European Central Bank president.

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is that enough to push through a no-deal Brexit?

Boris Johnson’s Commons Working Majority Cut To One (BBC)

The Liberal Democrats have won the Brecon and Radnorshire by-election, leaving new PM Boris Johnson with a Commons working majority of just one. Jane Dodds overturned an 8,038 majority to beat incumbent Conservative Chris Davies by 1,425 votes. Mr Davies stood again after being unseated by a petition following his conviction for a false expenses claim. It was the first electoral test for Mr Johnson just eight days after becoming prime minister. It is the quickest by-election defeat for any new prime minister since World War Two.


Now, with the thinnest possible working majority, he will have to rely heavily on the support of his own MPs and his confidence-and-supply partners the DUP to get any legislation passed in key votes. It was also a bad night for Labour, whose vote share dropped by 12.4% as it was beaten into fourth place by the Brexit Party. The result means the Lib Dems now have 13 MPs. Ms Dodds, who is the Welsh Liberal Democrat leader, said: “My very first act as your new MP when I get to Westminster will be to find Mr Boris Johnson, wherever he’s hiding, and tell him to stop playing with the future of our community and rule out a no-deal Brexit.”

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“Paddy should know his place..”

Expecting Ireland To Be Servile Is Part Of A Long British Tradition (G.)

Boris Johnson’s approach to Ireland is part of an ignoble tradition in British politics. At its heart is the false assumption that superiority in resources and military prowess equates to a superiority in intellectual power and moral rectitude. In short, the idea that might is right and that, ultimately, Paddy should know his place. This assumption shaped and even, at times, dominated, policy on Ireland for centuries before independence. It runs through 19th-century British depictions of the Irish as incapable of self-government, unreliable, lazy and inferior. For Benjamin Disraeli, a British prime minister who shares some personal characteristics with the current incumbent, the Irish were “wild, reckless, indolent, uncertain and superstitious”.

Most obviously, this sense of superiority and a refined “moral” stance was clearly manifest in government policy during the Great Famine of 1845-49, which caused the deaths of more than one million people on the island of Ireland. This consistently damaging strain of thought continued into the 20th century, with British military and economic power often used crudely to address deep-rooted political conflicts in Ireland, which refused, and continue to refuse, to allow for simple solutions. Ireland, the thinking went, should be the handmaiden for glorious Britannia – and this servile position is for Ireland’s own benefit and ultimately serves Irish interests.

Of course, within this particular strain of British political thought, the history of violence and tragedy in Ireland is sometimes portrayed as a product of Irish recalcitrance – a tendency towards disorder and conflict that fails to recognise the beneficence of British policy on the island. Britain, it is often suggested, is a guarantor of Irish stability, addressing and suppressing the inherent conflicts in Irish society, rather than a highly disruptive force that has often recklessly pursued its own interests at a serious cost to its nearest neighbour.

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“Tories of influence” told him privately that Leo Varadkar, Ireland’s taoiseach “isn’t bright” and “the Irish will blink”.

Irish Peace Is Too Precious To Be Squandered By The Brexit Ultras (G.)

In The Ultras, the brutal, brilliant novel by Eoin McNamee set during the Troubles, the protagonist (based on the real-life undercover British intelligence officer Robert Nairac) finds himself in the company of dangerous men like himself. The Ultras plot terrible events and create dark polities while forcing everyone else to live with their consequences. “Ultra meaning beyond,” wrote McNamee. “Ultra meaning extreme.” The so-called war cabinet formed by the new British prime minister, Boris Johnson, and whose course the maverick arch-Brexiteer Dominic Cummings now charts, of course bears no resemblance to the characters in the war of the Ultras imagined by McNamee.

But the sheer velocity and ferocity of their opening salvoes about crashing out of the EU with no deal on October 31 unless the backstop – the insurance policy to avoid a hard border in Ireland – is abolished, raise the kind of alarm that we in Ireland have not felt since the dark years of the Troubles. The political fear is that this new breed of “Brexit Ultras” (Johnson’s cabinet with Nigel Farage’s Brexit party snapping at its heels) could deliberately pursue a no-deal EU exit at the expense of a volatile Irish peace. The sabre-rattling and pre-emptive blame-shifting of course is intended to shore up political support in the UK ahead of a possible general election, but also to intimidate Ireland into abandoning the backstop while shaking the unity of the EU27.

Europe, with its own demons to face, has its red lines too and will not sacrifice the single market or its external borders, or jeopardise the wider integrity of the European project. Ireland, and the fragile peace process that has been built over the past 20 years, falls between these two positions. And while it is still early days for the Johnson premiership, we have a deteriorated state of Anglo-Irish relations following his ascent to power. How real is the damaging rhetoric emanating from London and the anti-Irish tropes spewing from much of the British media? David Yelland, the former editor of the Sun, revealed that he had been shocked when “Tories of influence” told him privately that Leo Varadkar, Ireland’s taoiseach “isn’t bright” and “the Irish will blink”. “It seems, amazingly, that this is the actual policy of HMG under Johnson,” tweeted Yelland. “They are anti-Irish, arrogant, dangerous and wrong.”

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Well, actually, they’re going to change hardware: a second flight control computer and a second angle-of-attack sensor. Both of which are altready on board, but not used.

Boeing To Change 737 MAX Flight-Control Software To Address Flaw (R.)

Boeing Co plans further changes to the software architecture of the 737 MAX flight-control system to address a flaw discovered after a test in June, two people briefed on the matter said late on Thursday. The redesign, first reported by the Seattle Times, involves using and receiving input from both flight control computers rather than one. The move comes in response to an effort to address a problem discovered in June during a Federal Aviation Administration(FAA) simulator test. This is on top of earlier announced changes to take input from both angle-of-attack sensors in the MCAS anti-stall system linked to two deadly crashes that led to a global grounding of the plane.


Boeing still hopes to complete the software redesign by the end of September to submit to the FAA for approval, the sources said. For decades, 737 models have used only one of the flight control computers for each flight, with the system switching to the other computer on the following flight, according to people familiar with the plane’s design. The FAA said in June that it had identified a new risk that would need to be addressed before the plane could be ungrounded. Under a scenario where a specific fault in a microprocessor caused an uncommanded movement of the plane’s horizontal tail, it took pilots too long to recognize a loss of control known as runaway stabilizer, a Boeing official said at the time.

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Crazy bag lady.

Rachel Maddow Ratings Tank After Collusion Narrative Implodes (Ryan)

Once a shining beacon of hope for Russiagate true believers, it looks like Rachel Maddow has left her best days behind her; MSNBC’s conspiracy queen has seen her show plummet to fifth place in cable news ratings. What happened? You rise fast and fall hard in the fickle world of television. Just last April, Maddow overtook Fox News’ Sean Hannity to claim the title of most-watched host across cable news. She had become a reliable source for Russigate aficionados to get their daily dose of crazy. Sadly for Maddow, the latest data released by Nielsen shows her show in fifth place with a total audience of 2.4877 million viewers for July – behind Hannity, Tucker Carlson, Laura Ingraham and The Five (all Fox News shows).


For context, in January this year, Maddow still boasted an audience of nearly 3.3 million, which means she shed around 800,000 viewers in just six months. Maddow was also in fifth place among viewers in the 25-54 age range – the group most-favored by advertisers. Ouch. Once dubbed “the smartest person on TV” by Forbes (really), this is certainly not the big payoff Maddow was expecting, having dedicated three years of her career to breathlessly covering every twist and turn in the anticlimactic Trump-Russia “collusion” drama.

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Ship with dolphins.Wall painting from Akrotiri, Thera island (Santorini), Greece.17th century BC.

 

 

 

 

 

Jul 312019
 


Gustav Klimt Field of poppies 1907

 

Judge Dismisses DNC Suit Against Trump Campaign, Russia, WikiLeaks (Pol.)
Trump Wants To Rein In Intelligence Agencies (R.)
Trump’s Tax Returns Required Under New California Election Law (LAT)
FAA Hopes Global Regulators Simultaneously Approve Boeing 737 MAX (R.)
China Probes Small Bank Shareholdings As Risk Worries Persist (R.)
China Gathers Forces On Hong Kong Border Amid Unrest (ZH)
German Prosecutors Charge Ex-VW Boss With Fraud (AFP)
Jeremy Corbyn’s Finest Hour? (Varoufakis)
Mess With Good Friday And We’ll Block UK Trade Deal, US Politicians Warn (G.)
Dominic Cummings: Tories Do Not Care About Poor People Or NHS (G.)
Toxic History Of Monsanto In The UK (OffG)
Xenophobia About Russians Is Never Condemned In Western Media (Ryan)

 

 

Judge said DNC “claims entirely divorced from the facts”.

Judge Dismisses DNC Suit Against Trump Campaign, Russia, WikiLeaks (Pol.)

A federal judge has dismissed a lawsuit the Democratic National Committee filed against the Trump campaign, the Russian government, WikiLeaks and various Trump campaign officials over alleged involvement in the hacking of Democratic Party email accounts during the 2016 presidential race. U.S. District Judge John Koeltl rejected the central theory of the racketeering suit: that the Trump campaign, campaign aides and Trump allies abetted the theft of the emails by encouraging WikiLeaks to publish the messages and by urging they be released when they would be of maximum political benefit to then-candidate Donald Trump. Koeltl said such actions were protected by the First Amendment when taken by people not involved in the actual hacking.

“Even if the documents had been provided directly to the Campaign [and] the Campaign defendants … they could have published the documents themselves without liability because they did not participate in the theft and the documents are of public concern,” the judge wrote in an 81-page opinion. “The DNC cannot hold these defendants liable for aiding and abetting publication when they would have been entitled to publish the stolen documents themselves without liability.” The judge said the DNC’s suit did not allege that anyone beyond the Russian Federation took part in the hacking of the Democratic Party computer systems or email accounts. And he concluded that WikiLeaks could not legitimately be sued as a recipient of that information because what it released was of genuine public interest.

“The DNC’s published internal communications allowed the American electorate to look behind the curtain of one of the two major political parties in the United States during a presidential election,” Koeltl wrote. “This type of information is plainly of the type entitled to the strongest protection that the First Amendment offers.” Koeltl, a Manhattan-based appointee of President Bill Clinton, also rejected the DNC’s contention that fundraising-related records amount to trade secrets that get special protection under the law. “The DNC’s interest in keeping ‘donor lists’ and ‘fundraising strategies’ secret is dwarfed by the newsworthiness of the documents as a whole,” the judge wrote. “If WikiLeaks could be held liable for publishing documents concerning the DNC’s political financial and voter-engagement strategies simply because the DNC labels them ‘secret’ and trade secrets, then so could any newspaper or other media outlet.”

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They turned on him.

Trump Wants To Rein In Intelligence Agencies (R.)

U.S. President Donald Trump on Tuesday defended his choice for the next U.S. spy chief as someone who could “rein in” intelligence agencies that “have run amok,” fueling concerns Trump seeks assessments that support his own views. Trump’s choice of Republican Representative John Ratcliffe of Texas as the next director of national intelligence, has been greeted with scant enthusiasm by his fellow Republicans and charges by former intelligence officials and Democrats that he is unqualified and will frame intelligence to suit the president.


Ratcliffe, a member of the House Intelligence Committee for six months, would replace Dan Coats, whose judgments on Iran, North Korea and Russia’s interference in the 2016 elections clashed with Trump’s views, earning the president’s disdain. Returning to the White House from an appearance in Virginia, Trump on Tuesday said Ratcliffe “is going to do an incredible job, if he gets approved” by the Senate. “I think we need somebody like that in there,” he continued. “We need somebody strong that can rein it in. Because, as I think you’ve all learned, the intelligence agencies have run amok. They have run amok.” Trump denied he had a “conflict” with Coats, saying he was “a friend of mine” and a “terrific person.” But, he added, “Dan made statements and they were a little confused.”

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Overreach.

Trump’s Tax Returns Required Under New California Election Law (LAT)

President Trump will be ineligible for California’s primary ballot next year unless he discloses his tax returns under a state law that immediately took effect Tuesday, an unprecedented mandate that is almost certain to spark a high-profile court fight and might encourage other states to adopt their own unconventional rules for presidential candidates. The law, signed by Gov. Gavin Newsom on his final day to take action and passed on a strict party-line vote in the Legislature, requires all presidential candidates to submit five years of income tax filings. They must do so by late November in order to secure a spot on California’s presidential primary ballot in March. State elections officials will post the financial documents online, although certain private information must first be redacted.

“As one of the largest economies in the world and home to one in nine Americans eligible to vote, California has a special responsibility to require this information of presidential and gubernatorial candidates,” Newsom said in a statement that accompanied his signature on the bill approved by the Legislature earlier this month. “These are extraordinary times and states have a legal and moral duty to do everything in their power to ensure leaders seeking the highest offices meet minimal standards, and to restore public confidence. The disclosure required by this bill will shed light on conflicts of interest, self-dealing, or influence from domestic and foreign business interest.”

Trump, who is not singled out by the law but is clearly its inspiration, is likely to fight back. “The Constitution is clear on the qualifications for someone to serve as president and states cannot add additional requirements on their own,” said Tim Murtaugh, communications director for the president’s reelection campaign. “The bill also violates the 1st Amendment right of association, since California can’t tell political parties which candidates their members can or cannot vote for in a primary election.”

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That potato is darn hot.

FAA Hopes Global Regulators Simultaneously Approve Boeing 737 MAX (R.)

The U.S. Federal Aviation Administration hopes civil aviation authorities around the world will decide at about the same time to allow the Boeing 737 MAX to resume flying, the agency told Congress on Tuesday in a letter seen by Reuters. The FAA and other regulators grounded the plane in March after two fatal crashes in five months killed 346 people. Acting FAA Administrator Dan Elwell said in letters to Senators Susan Collins and Jack Reed that the agency “hopes to achieve near simultaneous approval from the major civil aviation authorities around the world” but added that every regulator will make its own determination. “We are working with our colleagues from the European Union, Canada and Brazil to address their concerns,” he wrote.


Collins will chair a Senate Appropriations subcommittee hearing Wednesday that will feature four senior FAA officials, including Ali Bahrami, who oversees aviation safety. Boeing Co Chief Executive Dennis Muilenburg told analysts last week he was confident the MAX would be back in service as early as October after a certification flight in “the September time frame.” Ryan Air Chief Executive Michael O’Leary said Monday that he had been told that flight would be delayed until October. Boeing on Tuesday reiterated Muilenburg’s recent comments. Elwell said in his letter the FAA “will lift the 737 MAX grounding order only when it is safe to do so.”

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Shareholders buy each other’s stock with borrowed money and then use it as collateral to borrow more money..

China Probes Small Bank Shareholdings As Risk Worries Persist (R.)

China is sharpening its scrutiny of small banks’ shareholders amid fears that loans from the lenders to big investors could prove a weak point in the country’s financial system, jolted by the state’s weekend rescue of one lender and recent takeover of another. While nominally small, China’s numerous small city commercial banks risk having outsized significance because of their close ties to the rest of the banking system as well as with bigger shareholders, many of whom are giant companies. Earlier this month, the China Banking and Insurance Regulatory Commission (CBIRC) asked banks and some other financial firms for details of any investor building up stakes of 5% or more without required regulatory approvals.

The regulator also asked the firms if they had disclosed all business transactions with their main owners, according to a regulatory notice seen by Reuters. Regulators have also conducted spot checks at some smaller banks in the last two months to probe possible misuse of capital linked to shareholders and transferring of ownership interests, said four people with direct knowledge of the matter. The scrutiny comes amid concerns that some debt-heavy Chinese private enterprises have amassed substantial stakes in smaller banks without regulatory approval and are using the lenders for their personal borrowings.

“There may be many shareholders using small Chinese banks as ATM machines, but I don’t think we have enough understanding of bank ownership to know,” said Andrew Collier, managing director of Hong Kong-based Orient Capital Research. “Certainly if there are under-capitalized corporates as majority shareholders of the less well-funded smaller banks you could have a bank run,” he said, adding the regulators have so far done a good job of rescuing ailing financial firms.

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Blame outsiders: “..this is the creation of the U.S.”

China Gathers Forces On Hong Kong Border Amid Unrest (ZH)

Massive anti-Beijing protests which have gripped Hong Kong over the past month, and have become increasingly violent as both an overwhelmed local police force and counter-protesters have hit back with force, are threatening to escalate on a larger geopolitical scale after the White House weighed in this week. With China fast losing patience, there are new reports of a significant build-up of Chinese security forces on Hong Kong’s border, as Bloomberg reports: “The White House is monitoring what a senior administration official called a congregation of Chinese forces on Hong Kong’s border.”

From nearly the start of the protests which began over a proposed extradition bill (which would see Hong Kong citizens under legal accusation potentially extradited to the mainland) interpreted as major Chinese overreach inside historically semi-autonomous Hong Kong, officials in Beijing have suggested an “external plot” afoot, more recently alleging the hidden hand of the United States. The latest charge made Tuesday by mainland government officials is that the still escalating Hong Kong unrest is the “creation of the US” — something which the Trump admin official speaking under anonymity to Bloomberg firmly denied.

On Monday Secretary of State Mike Pompeo said during a press interview that “protest is appropriate” and that “we hope the Chinese will do the right thing” regarding respecting Hong Kong’s historic “one country, two systems” status. This was enough to elicit a quick response alleging US meddling out of Beijing on Tuesday. It’s clear that Mr. Pompeo has put himself in the wrong position and still regards himself as the head of the CIA,” Chinese Foreign Ministry spokeswoman Hua Chunying said at a news briefing. “He might think that violent activities in Hong Kong are reasonable because after all, this is the creation of the U.S.”

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Here’s thinking fraud is a serious offence in Germany.

German Prosecutors Charge Ex-VW Boss With Fraud (AFP)

German prosecutors said Monday they had charged former Volkswagen chief executive Martin Winterkorn and four other managers over “dieselgate”, bringing the cheating scandal back into the headlines just as VW battles to move on from the affair. Prosecutors in Brunswick, near VW’s Wolfsburg HQ in northern Germany, said they had charged Winterkorn and four other managers. Among the accusations against the former chief executive were “a particularly serious case of fraud”, “infraction of the law against unfair competition” and “breach of trust”. Winterkorn was CEO during a period when VW fitted 11 million diesel-powered vehicles worldwide with so-called “defeat devices” – software that made them appear less polluting in the lab than in real driving conditions.


Such allegations have hit other German manufacturers since, with Mercedes-Benz maker Daimler confirming Sunday it was facing a regulatory probe, reportedly over 60,000 vehicles. At the helm from 2007 to 2015, Winterkorn, a trained engineer, had a reputation as a detail-obsessed executive who was familiar with “every screw” of each VW model. The group admitted to the fraud in September 2015, beginning a drawn-out process of fact-finding and legal action that has so far seen it pay out $33 billion in fines, compensation and buyback schemes, much of it in the United States.

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Wishful thinking?!

Jeremy Corbyn’s Finest Hour? (Varoufakis)

Since the 2016 referendum, a civil war-like atmosphere has made it increasingly impossible for Leavers and Remainers to hold a civilized conversation. Corbyn valiantly tried to keep Labour’s Leavers and Remainers together by seeking an honorable compromise: The UK would formally leave the EU, to respect the referendum’s outcome, while remaining in as many of the bloc’s structures as possible – including a customs union. Instead of applauding Corbyn for this tricky balancing act, his opponents within the Labour Party, together with a liberal establishment unprincipled enough to deliver all Leavers to Nigel Farage and Johnson, attacked him with extraordinary viciousness. But that was then and this is now.

With Johnson as prime minister, and his strategy crystal clear, Corbyn’s task is to expose the truth about Johnson’s no-deal Brexit – namely, that it means a Trump-deal Brexit – and put forward Labour’s plan to end the interminable Brexit ordeal immediately. Corbyn must first show voters that a Johnson government will turn the UK into a vassal state of a Trumpian US and of the multinationals eager to usurp the country’s cherished institutions (especially the National Health Service). Johnson will bind the UK to a global alliance of populist/nationalist regimes and destroy Britain’s chances to lead Europe and the world with a Green New Deal that overhauls a failed UK business model based on low taxes, low wages, low investment, zero-hour contracts, and unregulated finance.

Corbyn’s second task is to offer an alternative for ending the humiliation of the ongoing negotiations. That means committing to revoke Article 50 to allow a Labour government time to implement a green-investment, anti-austerity policy agenda in tune with the party’s progressive internationalism, while simultaneously organizing a Citizens’ Deliberative Assembly to formulate the question(s) to be put to voters in a second Brexit referendum. A general election fought over these two unequivocal alternatives, Johnson’s and Corbyn’s, would empower the UK’s people, at last, to determine their country’s future.

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Boris wants to ditch the backstop, and that automatically messes with Good Friday.

Mess With Good Friday And We’ll Block UK Trade Deal, US Politicians Warn (G.)

Any future US-UK trade deal would almost certainly be blocked by the US Congress if Brexit affects the Irish border and jeopardises peace in Northern Ireland, congressional leaders and diplomats have warned. Boris Johnson has presented a trade deal with the US as a way of offsetting the economic costs of leaving the EU, and Donald Trump promised the two countries could strike “a very substantial trade agreement” that would increase trade “four or five times”. Trump, however, would not be able to push an agreement through a hostile Congress, where there would be strong bipartisan opposition to any UK trade deal in the event of a threat to the 1998 Good Friday agreement, and to the open border between the two Irelands.


Johnson’s rise to power, and his demand for the EU to drop the backstop, which is intended to safeguard the open border after Brexit, has galvanised determination in Congress to make a stand in defence of the landmark accord, to which the US is guarantor. “The American dimension to the Good Friday agreement is indispensable,” said Richard Neal, who is co-chair of the 54-strong Friends of Ireland caucus in Congress, and also chairs the powerful House ways and means committee, with the power to hold up a trade deal indefinitely. “We oversee all trade agreements as part of our tax jurisdiction,” Neal, a Democratic congressman from Massachusetts, said in a phone interview. He pointed out that such a complex trade deal could take four or five years, even without the Northern Ireland issue.

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He said it as an observer, it’s not what he wants.

Dominic Cummings: Tories Do Not Care About Poor People Or NHS (G.)

Voters are right to think Tory MPs largely do not care about poorer people or the NHS, according to Dominic Cummings in comments that have emerged from two years ago. Boris Johnson’s new senior adviser and a key architect of Brexit gave his damning view on Conservative MPs at a conference in 2017, where he said: “People think, and by the way I think most people are right: ‘The Tory party is run by people who basically don’t care about people like me.’ “That is what most people in the country have thought about the Tory party for decades. I know a lot of Tory MPs and I am sad to say the public is basically correct. Tory MPs largely do not care about these poorer people. They don’t care about the NHS. And the public has kind of cottoned on to that.”


Cummings is now integral to Johnson’s administration, which has a majority of just two and is relying on Conservative and DUP MPs to back his Brexit strategy of taking the UK out of the EU by 31 October – unless he suspends parliament to achieve a no-deal exit. Ian Lavery, the chair of the Labour party, said it was a “staggering admission from the prime minister’s right-hand man”. “As Dominic Cummings says himself, the Conservatives don’t care about anything apart from looking after their rich friends – whether that means selling off our NHS to American corporations in pursuit of a Trump trade deal, or giving tax cuts to big businesses while cutting public services. We need a general election and a Labour government to protect our health service from the likes of Boris Johnson,” Lavery said.

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Shattering.

Toxic History Of Monsanto In The UK (OffG)

A special report in the Observer newspaper in the UK on 23 June 2019 asked the question: Why is life expectancy faltering? The piece noted that for the first time in 100 years, Britons are dying earlier. The UK now has the worst health trends in Western Europe. Aside from the figures for the elderly and the deprived, there has also been a worrying change in infant mortality rates. Since 2014, the rate has increased every year: the figure for 2017 is significantly higher than the one in 2014. To explain this increase in infant mortality, certain experts blame it on ‘austerity’, fewer midwives, an overstrained ambulance service, general deterioration of hospitals, greater poverty among pregnant women and cuts that mean there are fewer health visitors for patients in need.

While all these explanations may be valid, according to environmental campaigner Dr Rosemary Mason, there is something the mainstream narrative is avoiding. She says: “We are being poisoned by weedkiller and other pesticides in our food and weedkiller sprayed indiscriminately on our communities. The media remain silent.” Mason begins by offering a brief history of Monsanto in the UK. In 1949, that company set up a chemical factory in Newport, Wales, where it manufactured PCBs until 1977 and a number of other dangerous chemicals. Monsanto was eventually found to be dumping toxic waste in the River Severn, public waterways and sewerage. It then paid a contractor which illegally dumped thousands of tons of cancer-causing chemicals, including PCBs, dioxins and Agent Orange derivatives, at two quarries in Wales – Brofiscin (80,000 tonnes) and Maendy (42,000 tonnes) – between 1965 and 1972.

Monsanto stopped making PCBs in Anniston US in 1971 because of various scandals. However, the British government agreed to ramp up production at the Monsanto plant in Newport. In 2003, when toxic effluent from the quarry started leaking into people’s streams in Grosfaen, just outside Cardiff, the Environment Agency – a government agency concerned with flooding and pollution – was hired to clean up the site in 2005. Mason notes that the agency repeatedly failed to hold Monsanto accountable for its role in the pollution (a role that Monsanto denied from the outset) and consistently downplayed the dangers of the chemicals themselves. In a report prepared for the agency and the local authority in 2005 but never made public, the sites contain at least 67 toxic chemicals. Seven PCBs have been identified, along with vinyl chlorides and naphthalene. The unlined quarry is still leaking, the report says:

“Pollution of water has been occurring since the 1970s, the waste and groundwater has been shown to contain significant quantities of poisonous, noxious and polluting material, pollution of… waters will continue to occur.” Apart from these events in Wales, Mason outlines the overall toxic nature of Monsanto in the UK. For instance, she discusses the shockingly high levels of weedkiller in packaged cereals. Samples of four oat-based breakfast cereals marketed for children in the UK were recently sent to the Health Research Institute, Fairfield, Iowa, an accredited laboratory for glyphosate testing. Dr Fagan, the director of the centre, says of the results: “These results are consistently concerning. The levels consumed in a single daily helping of any one of these cereals, even the one with the lowest level of contamination, is sufficient to put the person’s glyphosate levels above the levels that cause fatty liver disease in rats (and likely in people).”

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“A list of 10 “ground rules” for befuddled Westerners seeking to unravel the enigma that is Russia..”

Xenophobia About Russians Is Never Condemned In Western Media (Ryan)

Pretending to ‘understand’ Russia has become quite the lucrative business for Western media professionals in recent years – and “leading” Russia expert extraordinaire Keir Giles is the latest to believe he has cracked the code. Generous Giles has published a list of 10 “ground rules” for befuddled Westerners seeking to unravel the enigma that is Russia – but before we delve into the finer details, let’s add some important context. This Russia whisperer is a “senior consulting fellow” at Chatham House – a British think tank receiving funding from the Foreign Commonwealth Office (FCO), the UK Ministry of Defence, the British Army and the US embassy, as well as an impressive array of arms manufacturers.


Very often, those posing as ‘experts’ on Russia pepper their analysis with outright xenophobia. Yet, this problematic and bigoted language is rarely noticed by their admiring peers because, as I have written before, “the Russians” are an exception to current cultural rules around political correctness. Xenophobia, when it is about Russians, is never condemned in Western media and ‘think tank’ circles. Rather, it has become an essential component of any celebrated ‘analysis’ of the country and its actions. Recall a recent New York Times article which claimed corruption is in the Russian “DNA” and sharing is “not the Russian way.” Before that, there was James Clapper, former US Director of National Intelligence, telling NBC that Russians are “genetically driven” to lie and cheat. Now, enter Giles.

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Jan 212019
 


Martin Luther King, Jr. following his 1963 arrest in Birmingham

 

 

Rebranding MLK (Fikre)
A Call to Reinvestigate American Assassinations of the 1960s (CN)
The Number Of Births In China Hit Its Lowest Level Since 1961 (CNBC)
China Economic Growth Lowest In 28 Years (MW)
China Real Estate Sales Growth Slows Down (R.)
Theresa May ‘Considers Amending Good Friday Agreement’ To Break Deadlock (Ind.)
May Tries To Break Brexit Deadlock By Winning More EU Concessions (R.)
No Solutions To Irish Backstop In May’s Brexit Call With Cabinet (G.)
Bizarre Turn Of Events Could Push May’s Brexit Deal Through After All (Ind.)
Clashes in Athens Over Neighbour’s Name Change (BBC)
World’s 26 Richest People Own As Much As Poorest 3.8 Billion (G.)

 

 

Martin Luther King Jr. Day. He’s been dead long enough that everyone feels safe, if not entitled to, appropriating his name and celebration. But who in America today truly lives up to his legacy and message? Not many. The screwed up scenes at a high school, and the way media and individuals react to it, make that abundantly clear. There are many voices calling for serious harm to, if not murder of, a group of schoolchildren, voices who will in their very next breath seek to take possession of Dr. King’s name.

It’s time for all Americans, and not just Americans either, to find a nice bright mirror and face the beams in their own eyes. All sides focus on promoting hate of the others, and really, that is the opposite of what Dr. King said. How could you forget? You don’t solve anything be demanding other people change, you solve things only by changing yourself. You have no more right to hate Trump and his supporters than they have of hating you, or anyone else.

MLK: “a slogan ‘Power for Poor People’ would be much more appropriate than the slogan ‘Black Power.’”

Rebranding MLK (Fikre)

Lost in the chorus of politicians, pundits and media personalities who are praising MLK is the core message that he was pushing before he was felled on the balcony of the Lorraine Motel. King evolved in his thinking; instead of seeking Civil Rights for “African-Americans”, he made the fatal decision to fight for economic justice for all. King realized that the infringements against “black” folks in America were interconnected to the injustices felt by marginalized people throughout the world. That awakening is the reason he traveled to Memphis, by standing up for striking sanitation workers, he was hoping to form a bridge between poor folks irrespective of their skin color.

The establishment love people who lead sectional movements—those who seek exclusive justice are doing the work of the status quo—what they will not abide are those who try to unify the oppressed and inspire collective actions. King paid with his life for having the courage to pursue inclusive justice. After he was murdered, institutions of power—from government, academia to mainstream media and beyond—kicked in, stealthy erased King’s legacy and replaced it with disinformation. What has taken place over the past fifty years is a systematic and coordinated effort to blacken his narrative and dilute the power of his message. What MLK fought for, and ultimately died on behalf of, was for equality and fairness for all. By narrowing the scope of his cause and containing his sacrifice to only as a struggle for “black” people, opinion leaders successfully ghettoized him in an effort to lessen his appeal to a broader constituency.

[..] “One unfortunate thing about [the slogan] Black Power is that it gives priority to race precisely at a time when the impact of automation and other forces have made the economic question fundamental for blacks and whites alike. In this context a slogan ‘Power for Poor People’ would be much more appropriate than the slogan ‘Black Power.’” This was a quote from King in August of 1967, eight months before he was executed.

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All for it. But who’s impartial and strong enough to do it?

A Call to Reinvestigate American Assassinations of the 1960s (CN)

To mark Martin Luther King Jr. Day a group of academics, journalists, lawyers, Hollywood artists, activists, researchers and intellectuals, including two of Robert F. Kennedy’s children, are calling for new investigations into four assassinations of the 1960s. On the occasion of Martin Luther King Jr. Day, a group of over 60 prominent American citizens is calling upon Congress to reopen the investigations into the assassinations of President John F. Kennedy, Malcolm X, Martin Luther King Jr., and Senator Robert F. Kennedy.

* We call upon Congress to establish continuing oversight on the release of government documents related to the presidency and assassination of President John F. Kennedy, to ensure public transparency as mandated by the JFK Records Collection Act of 1992. The House Committee on Oversight and Government Reform should hold hearings on the Trump administration’s failure to enforce the JFK Records Act.

* We call for a major public inquest on the four major assassinations of the 1960s that together had a disastrous impact on the course of American history: the murders of John F. Kennedy, Malcolm X, Martin Luther King Jr. and Robert F. Kennedy. This public tribunal, shining a light on this dark chapter of our history, will be modeled on the Truth and Reconciliation process in post-apartheid South Africa. The inquest — which will hear testimony from living witnesses, legal experts, investigative journalists, historians and family members of the victims — is intended to show the need for Congress or the Justice Department to reopen investigations into all four assassinations.

* On Martin Luther King Jr. Day, we call for a full investigation of Reverend King’s assassination. The conviction of James Earl Ray for the crime has steadily lost credibility over the years, with a 1999 civil trial brought by Reverend King’s family placing blame on government agencies and organized crime elements. Following the verdict, Coretta Scott King, the slain leader’s widow, stated: “There is abundant evidence of a major, high-level conspiracy in the assassination of my husband.” The jury in the Memphis trial determined that various federal, state and local agencies “were deeply involved in the assassination … Mr. Ray was set up to take the blame.” Reverend King’s assassination was the culmination of years of mounting surveillance and harassment directed at the human rights leader by J. Edgar Hoover’s FBI and other agencies.

* We call for a full investigation of the Robert F. Kennedy assassination case, the prosecution of which was a mockery of a trial that has been demolished by numerous eyewitnesses, investigators and experts — including former Los Angeles County Coroner Dr. Thomas Noguchi, who performed the official autopsy on Senator Kennedy. The forensic evidence alone establishes that the shots fired by Sirhan Sirhan from in front of Senator Kennedy did not kill him; the fatal shot that struck RFK in the head was fired at point–blank range from the rear. Consequently, the case should be reopened for a new comprehensive investigation while there are still living witnesses — as there are in all four assassination cases.

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I looked this one up: Chinese population in 1961 was about 670 million. Today it’s more than twice that. That would seem to say birth rates have halved.

The Number Of Births In China Hit Its Lowest Level Since 1961 (CNBC)

The number of babies born in China in 2018 was the lowest the country has seen in nearly 60 years, according to Chinese financial services firm Wind Information. China on Monday reported that there were 15.23 million births last year — the lowest since 1961 when 11.87 million births were reported, data on Wind showed. Last year’s birth figure was 11.6 percent lower than 17.23 million in 2017, according to Wind. The release of China’s latest birth data puts the country’s population at 1.395 billion in 2018, the Associated Press reported, citing data by the National Bureau of Statistics. That means the population grew 3.81 percent compared to a year earlier, according to the news wire. AP also reported that the Chinese government estimated that its population will peak in 2029 at 1.442 billion, and then start to decline in the year after that.

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And that’s just official numbers. Economics professor Xiang Songzuo put it as low as 1.67% in December.

China Economic Growth Lowest In 28 Years (MW)

China’s economic expansion languished to its slowest pace in nearly three decades last year, as a bruising trade fight with the U.S. exacerbated weakness in the world’s second-largest economy. The 6.6% growth rate for 2018 reported Monday is the slowest annual pace that China has recorded since 1990. The economic downturn, which has been sharper than Beijing expected, deepened in the final months of 2018, with fourth quarter growth rising 6.4% from a year earlier. Adding to the gloom was the trade conflict with Washington. The uncertain outlook for Chinese exporters caused companies to delay investing and hiring and in some cases even to resort to layoffs–a practice that is often discouraged by China’s stability-obsessed Communist Party rulers. The official jobless rate ticked up to 4.9% last month from 4.8% in November.

In the southern technology and export-manufacturing center of Shenzhen, for instance, many private makers of electronics, textiles and auto parts furloughed workers more than two months before the Lunar New Year holiday, which begins in February, according to business owners and local officials. The neighboring city of Guangzhou saw growth slump to 6.5% last year–well short of the 7.5% annual target set by the city government–as trade tensions hit the city’s manufacturing sector hard. Some economists and investors have said China’s economy is far more anemic than the government’s 6.6% rate of expansion for 2018. They note the government’s move on Friday, just ahead of Monday’s data release, to cut the 2017 growth rate to 6.8% from 6.9%, which they said provides a slightly lower base, giving a slight boost to the fresh 2018 data.

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Consumer spending in general is slowing in China. That’s the biggest danger for its economy.

China Real Estate Sales Growth Slows Down (R.)

Growth in property investment in China cooled to the second slowest pace in 2018 in December, adding to signs of a further slackening in the real estate market in a blow to a key driver economic growth. Real estate investment, which mainly focuses on the residential sector but includes commercial and office space, rose 8.2 percent in December from a year earlier, down from 9.3 percent in November, according to Reuters calculations based on data released by National Bureau of Statistics (NBS) on Monday. That was just ahead of the slowest pace of growth last year at 7.7 percent recorded for October. For the full year, property investment increased 9.5 percent from the year-earlier period, down from 9.7 percent in January-November.

In December, property sales by floor area, a major indicator of demand, rose a touch by 0.9 percent from a year earlier, the first gain in four months and compared with November’s 5.1 percent drop. For 2018, property sales by area rose a modest 1.3 percent from a year earlier, official data showed. Analysts say a continued downturn in sales on the back of tight government controls to curb speculation could add to the growing pressure on the world’s second-largest economy. The real estate sector is a key pillar of the economy, so any further weakness in sales could influence the pace and scope of fresh stimulus measures expected from Beijing this year.

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It took decades to negotiate the Good Friday Agreement, after 1000s of lives were lost. May should not be allowed to touch it.

Theresa May ‘Considers Amending Good Friday Agreement’ To Break Deadlock (Ind.)

Theresa May is considering an attempt to amend the Good Friday Agreement in a bid to break the Brexit deadlock and win support for a negotiated exit deal, it has been reported. Ministers believe the move could avoid the UK having to commit to a backstop as part of the prime minister’s “plan B”, The Daily Telegraph reported on Sunday. The EU has insisted on a backstop measure to ensure an open border remains between Northern Ireland and the Republic after the UK leaves the bloc. Ms May has been forced to find alternatives to her original Brexit deal after it was crushed in the Commons on Tuesday.

Under the PM’s plan, it is reported, London and Dublin would either agree a new set of principles or add words to the Good Friday Agreement in order to guarantee an open border. The 1998 peace deal effectively brought an end to the Troubles after years of failed talks, and established a power-sharing structure to accommodate unionist and nationalist politicians. It follows separate reports that Ms May planned to pitch to the Irish government a bilateral treaty that would remove the need for the backstop so hated by many Conservative MPs; the arrangement would see the UK enter into a temporary customs union with the EU, and Northern Ireland agree to abide by European rules on goods until a subsequent deal was reached.

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Parliament demanded a Plan B today. May has none. She speaks 1530 GMT.

May Tries To Break Brexit Deadlock By Winning More EU Concessions (R.)

British Prime Minister Theresa May on Monday will try to crack the deadlock over Brexit by setting out proposals in parliament that are expected to focus on winning more concessions from the European Union. With just over two months left until the United Kingdom is due to leave the European Union on March 29 there is no agreement in London on how and even whether it should leave the world’s biggest trading bloc. After her Brexit divorce deal was rejected by 402 lawmakers in the 650-seat parliament last week, May has been searching for a way to get a deal through parliament.

Attempts to forge a consensus with the opposition Labour Party failed so May is expected to focus on winning over 118 rebels in her own party and the small Northern Irish party which props up her government with concessions from the EU. In a sign of just how grave the political crisis in London has become, the Daily Telegraph reported that May was even considering amending the 1998 Good Friday Agreement which ended 30 years of violence in Northern Ireland. The Daily Telegraph said EU sources cast May’s plan a non-starter as a renegotiation of such a significant international treaty would require the consent of all the parties involved in Northern Ireland. May told British ministers she would focus on securing changes from Brussels designed to win over rebel Conservatives and the Northern Irish DUP, The Times said.

May will make a statement in parliament at about 1530 GMT and put forward a motion in parliament on her proposed next steps on Brexit, though some lawmakers are planning to wrest control of Britain’s exit from the government. After May’s motion is published, lawmakers will be able to propose amendments to it, setting out alternatives to the prime minister’s deal.

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Time to send her away. She’s a dead end.

No Solutions To Irish Backstop In May’s Brexit Call With Cabinet (G.)

Theresa May is expected to reject calls to forge a cross-party consensus on Brexit when she lays out her plan B to parliament on Monday, choosing instead to back new diplomatic efforts in Brussels to renegotiate the Irish backstop. The prime minister held a conference call with her bitterly divided cabinet from the country retreat of Chequers on Sunday evening. Cabinet sources said the consensus on the 90-minute call was to renew efforts to find acceptable changes to the backstop arrangement but that the conversation was light on specifics. One said there were “no actual solutions” proposed during the call. “It is difficult to know – as ever – what she will do,” another said. “But the broad agreement is on the need to bring DUP and Tory rebels on board.”

Despite her claim in the wake of last week’s significant defeat in parliament that she would speak to “senior parliamentarians” from all parties to seek a compromise, government sources insisted her overriding priority was to prevent a historic split in the Tory party. Several senior Conservative MPs have suggested they could form a breakaway party if May opted to support a customs union – one of Labour’s central demands, which is also backed by Tory supporters of a Norway-style soft Brexit. Whitehall sources said the prime minister’s chief of staff, Gavin Barwell, had counselled her to consider a customs union after last week’s catastrophic defeat, when her deal was rejected by an overwhelming majority of 230 votes. But when the government tables a formal statement on Monday, setting out its next steps, it is instead expected to focus on seeking changes to the Irish backstop in order to win over Jacob Rees-Mogg’s European Research Group and the DUP.

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Party before country.

Bizarre Turn Of Events Could Push May’s Brexit Deal Through After All (Ind.)

Yvette Cooper is in many ways the alternative leader of the opposition. The Labour MP who chairs the home affairs select committee will table a bill in the House of Commons on Monday, under the catchy title of the European Union (Withdrawal) (No 3) Bill, which could be decisive in breaking the Brexit deadlock. It could lead to parliament being forced to make a straight choice between Theresa May’s deal and postponing Brexit in order to hold a new referendum. If that is what happens, I think there would be a small majority for the prime minister’s deal. The importance of Cooper’s bill is that it changes the default setting in law. At the moment, if parliament fails to act, the UK will leave the EU on 29 March.

Cooper’s bill says that, if a deal has not been approved by 7 March, the government would be required to seek an extension of the Article 50 deadline. That would mean asking the EU to postpone the UK’s departure until the end of this year – and EU leaders have said they would agree to an extension if it were to hold another referendum. This would transform the situation in the House of Commons. Jacob Rees-Mogg and the rest of the cohort of Conservative MPs who want to leave without a deal would have to think again. At the moment they are happy to vote everything down, knowing that this gets them what they want. But Cooper’s bill would take what they want off the table. They would then have to choose between the prime minister’s deal and putting off Brexit for at least nine months.

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They would still get to call themselves Macedonians. Insult and injury. Tsipras should be very careful.

Clashes in Athens Over Neighbour’s Name Change (BBC)

Protesters have clashed with police in the Greek capital Athens at a big rally to oppose the government’s deal with Macedonia on changing its name. Police fired tear gas at some of those attending a protest which attracted tens of thousands to the city. The deal, which is yet to be approved, designates Greece’s northern neighbour as Republic of North Macedonia. The name Macedonia is sensitive for many Greeks who say it implies a claim on the Greek province of the same name. Years of wrangling finally brought an agreement last June between Greece’s left-wing Prime Minister Alexis Tsipras and his Macedonian counterpart. A vote on the deal, which aims to end a 28-year row between the nations, is set to take place in the Greek parliament this week.

The dispute dates back to 1991 and the break-up of Yugoslavia. Macedonia was a Yugoslav republic and adopted the name Macedonia when it became an independent nation. Greece has long argued the use of the name implied a territorial claim and cultural appropriation. At the UN the country was formally known as the Former Yugoslav Republic of Macedonia (Fyrom). [..] Greek nationalists argue that the name Macedonia can only refer to the Greek province of the same name. The dispute has led to Greece to blocking Macedonia’s hopes of joining Nato and the EU. Under the deal, the country’s language would be Macedonian and its people known as Macedonians (citizens of the Republic of North Macedonia). The move has met with sharp resistance in both countries because nationalists believe it erodes their identity.


EPA

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They’re not going to solve the issue by themselves, they can’t help it.

World’s 26 Richest People Own As Much As Poorest 3.8 Billion (G.)

The growing concentration of the world’s wealth has been highlighted by a report showing that the 26 richest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the planet’s population. In an annual wealth check released to mark the start of the World Economic Forum in Davos, the development charity Oxfam said 2018 had been a year in which the rich had grown richer and the poor poorer. It said the widening gap was hindering the fight against poverty, adding that a 1% wealth tax would raise an estimated $418bn (£325bn) a year – enough to educate every child not in school and provide healthcare that would prevent 3 million deaths. Oxfam said the wealth of more than 2,200 billionaires across the globe had increased by $900bn in 2018 – or $2.5bn a day.

The 12% increase in the wealth of the very richest contrasted with a fall of 11% in the wealth of the poorest half of the world’s population. As a result, the report concluded, the number of billionaires owning as much wealth as half the world’s population fell from 43 in 2017 to 26 last year. In 2016 the number was 61. Among the findings of the report were: • In the 10 years since the financial crisis, the number of billionaires has nearly doubled. • Between 2017 and 2018 a new billionaire was created every two days. • The world’s richest man, Jeff Bezos, the owner of Amazon, saw his fortune increase to $112bn. Just 1% of his fortune is equivalent to the whole health budget for Ethiopia, a country of 105 million people. • The poorest 10% of Britons are paying a higher effective tax rate than the richest 10% (49% compared with 34%) once taxes on consumption such as VAT are taken into account.

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Nov 042018
 
 November 4, 2018  Posted by at 10:53 am Finance Tagged with: , , , , , , , , , ,  5 Responses »


Francisco Goya The straw mannequin 1791-92

 

Where the Heck are Share Buybacks in This Rotten Market? (WS)
Corporate Buybacks Return, Supporting Market (WSJ)
US Mortgage Rates Rise Sharply to Fresh 7-Year Highs (MND)
Theresa May’s ‘Secret’ Brexit Deal (Ind.)
Brexit Puts Good Friday Agreement At Risk – Irish PM (Ind.)
UK Business Leaders Call For Second Brexit Vote (BBC)
Brexit Is Just A Sideshow For An EU Beset By Problems On All Sides (G.)
“Posh Ghost Towers”: Gloom Spreads Over London Housing Market (DQ)
33 Trillion More Reasons Why New York Times Gets Russiagate Wrong (CN)
Break-in Attempted at Assange’s Residence in Ecuador Embassy (CN)

 

 

No blackout, no market. Only deceit.

Where the Heck are Share Buybacks in This Rotten Market? (WS)

Shares fell today in part because Apple, the giant in the indices, gave iffy guidance for the holidays Thursday evening; and with product sales not going anywhere, and only price increases boosting revenues, it said it would no longer disclose unit sales. This combo worked like a charm, and shares dropped 6.6%. So where are the corporate share buybacks when you need them? This is when companies buy back their own shares in order to prop up their price and thereby the overall market. Where is this panacea that was considered securities fraud until 1982? Throughout October, Wall Street gurus promised that shares would rise as soon as companies emerged from their “blackout” period that prevents them from buying back their shares. Alas, there is no federally mandated “blackout” period.

[..] Let’s take a gander at International Business Machines [IBM], one of the biggest share buyback queens. Since 2000, it blew $146 billion on share buybacks. The chart below shows the cumulative amounts since 2013 that IBM wasted on share buybacks: $43 billion (data via YCharts):

Wall Street gurus keep hyping that share buybacks “unlock shareholder value,” or “return cash to shareholders,” or some such thing. But here’s what IBM’s share buybacks did to shareholder value, as measured by the stock price:

[..] IBM has been buying back the shares it issued its own executives as part of their stock compensation plans, and the shares it issued to buy other companies, including minuscule privately-owned startups for billions of dollars. Buybacks covered up the dilutive effects from those actions. IBM could have spent this money on research and invented something cool. But that would have been too hard. Far better to farm out much of the work to cheap countries like India, shut down US operations, waste money on share buybacks in a vain effort to manipulate up its shares, and instead watch them go to heck.

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There are no functioning markets without price discovery, so what exactly is supported here? Deceit?

Corporate Buybacks Return, Supporting Market (WSJ)

U.S. companies are ramping up share buybacks again, offering potential support to volatile markets. Share buybacks fell ahead of earnings season, when regulations bar such repurchases. As that so-called blackout period ends, there has been a resurgence, with companies making the most of last month’s selloff. That has eased analysts’ concerns that the year’s buyback boom is over. Net buybacks in the month totaled just $12 billion by Oct. 19, but jumped to $39 billion by Oct. 29, according to estimates from JPMorgan Chase & Co. That is more than the $30 billion recorded in September and just under the $48 billion recorded in August.

The bank’s estimates are based on the average drop in share count across the S&P 500, FTSE Russell1000, Datastream U.S. and MSCI U.S. indexes. Some analysts hope a resurgence in buybacks could help support share prices during a period of geopolitical and economic uncertainty. Others are skeptical that companies can continue purchasing their own shares at the current pace, particularly as the stream of repatriated cash that helped drive the year’s buybacks slows down. “It is possible that some companies saw the equity correction as an opportunity to buy back their stock” in October, said Nikolaos Panigirtzoglou, global-markets strategist at JPMorgan. “But this raises the hurdle for November.”

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Great jobs numbers equals higher rates.

US Mortgage Rates Rise Sharply to Fresh 7-Year Highs (MND)

Mortgage rates had a bad week and an especially bad day following a much stronger-than-expected jobs report. The Employment Situation (the most important piece of labor market data and arguably the most important economic report as far as interest rates are concerned) showed the highest pace of wage growth since before the recession and a surprisingly robust addition of new jobs in October. Strong jobs data is the nemesis of low interest rates and today was no exception. Mortgage rates were already operating fairly close to long-term highs, but today’s move easily took them to new highs. The average lender is now quoting conventional 30yr fixed rates of 5% for relatively ideal scenarios.

Those without a big down payment or without perfect credit/income can expect to see even higher rates. Most lenders ended up recalling the morning’s initial rate sheets and reissuing higher rates at least once today. There’s really no silver lining apart from the fact that the higher rates go, and the quicker they get there, the closer we get to the point that the economy slows down as a result. When that happens, rates will begin to fall before just about anything else. Unfortunately, the expected time frame for such things is incredibly wide (not the sort of thing you hope for if you need to buy/refi). And yes… it’s also unfortunate that our one source of solace at the moment involves an economic downturn, but if you want low interest rates, that tends to come with the territory.

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The wool over your eyes.

Theresa May’s ‘Secret’ Brexit Deal (Ind.)

Theresa May has reportedly secured concessions from Brussels to keep the whole of the UK in a customs union in the wake of Britain’s withdrawal from the European Union. The agreement reached would prevent the need for Northern Ireland to be treated differently from the rest of the UK, a main stumbling block during Brexit negotiations. The “secret” deal would avoid the need for an Irish backstop and will be written into the legally-binding deal, according to The Sunday Times. However, Downing Street has poured cold water on the report, calling it speculation. The EU has reportedly suggested a backstop post-Brexit customs arrangement covering all of the UK could give mainland Britain some scope to set trade rules.

Preparations for a final deal were far more advanced than previously disclosed, the report said, and would lead to a document of 50 pages or more being published. The agreement would include an “exit clause” designed to convince Brexit-supporting MPs that remaining in the customs union was only temporary, The Sunday Times said. Ms May’s cabinet would meet on Tuesday to discuss her plan, and she hoped there would be enough progress by Friday for the EU to announce a special summit, the newspaper reported. The prime minister’s office has described the report as speculation, but claimed the majority of a deal on Britain’s exit from the bloc in March 2019 had been agreed.

“This is all speculation,” a spokesman for Ms May said. “The prime minister has been clear that we are making good progress on the future relationship and 95 percent of the withdrawal agreement is now settled and negotiations are ongoing.”

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Peace in Ireland is the no.1 concern.

Brexit Puts Good Friday Agreement At Risk – Irish PM (Ind.)

Brexit is “fraying” the relationship between the UK and Ireland and putting peace in Northern Ireland at risk, Irish premier Leo Varadkar has said. The Taoiseach said the Good Friday Agreement was being “undermined” by fractious relations between the two countries over how the Northern Irish border should be managed once Britain leaves the EU. It comes just a day after Theresa May’s de facto deputy, David Lidington, travelled to Dublin to hold talks with his Irish counterpart, Simon Coveney, in a bid to improve relations between the two governments.

But speaking within hours of the visit, Mr Varadkar described the relationship between the two countries as “fraying”. He told Irish broadcaster RTE: “Brexit has undermined the Good Friday Agreement and is fraying the relationship between Britain and Ireland. “Anything that pulls the communities apart in Northern Ireland undermines the Good Friday Agreement, and anything that pulls Britain and Ireland apart undermines that relationship.” The warning comes despite Mr Coveney having claimed a deal between the UK and the EU was “very close”.

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Many sides will call for this.

UK Business Leaders Call For Second Brexit Vote (BBC)

More than 70 business leaders have signed a letter to the Sunday Times calling for a public vote on the UK’s Brexit deal. The chief executive of Waterstones and former Sainsbury’s boss Justin King are among those saying a “destructive hard Brexit” will damage the UK economy. A group called Business for a People’s Vote will launch on Thursday. A Downing Street source told the BBC the Prime Minister was clear that there would be no new referendum. The letter was coordinated by The People’s Vote campaign, which wants a ballot on whether to accept the terms of the UK’s departure from the EU. Richard Reed, co-founder of Innocent Drinks, Lord Myners, the former chairman of Marks and Spencer and Martha Lane Fox, the founder of Lastminute.com, also signed the letter.

It reads: “The business community was promised that, if the country voted to leave, there would continue to be frictionless trade with the EU and the certainty about future relations that we need to invest for the long term. “Despite the Prime Minister’s best efforts, the proposals being discussed by the government and the European Commission fall far short of this. “The uncertainty over the past two years has already led to a slump in investment.” The letter concludes: “We are now facing either a blindfold or a destructive hard Brexit. “Given that neither was on the ballot in 2016, we believe the ultimate choice should be handed back to the public with a People’s Vote.”

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The only true Brezit reality. Merkel’s departure is a far bigger issue for Europe.

Brexit Is Just A Sideshow For An EU Beset By Problems On All Sides (G.)

There is a weariness to the coterie of diplomats and officials based in Brussels intimately involved in the negotiations over the United Kingdom’s withdrawal from the European union. Privately they describe it as “Brexit fatigue”, the result of second-guessing a chaotic situation in Westminster for two years, and working through the summer in response to the demand from the Brexit secretary, Dominic Raab, for continuous negotiations. These officials from the 27 other EU member states were picked as the brightest and the best for the existential crisis of the time, but the hard truth for these ambitious men and women is that the crisis in question is no longer Brexit.

“You go to the capitals, you can see that, because no one talks about it any more,” said Fabian Zuleeg, chief executive of the leading EU thinktank, the European Policy Centre. Speaking to his parliament on his return to Madrid from the recent leaders’ summit in Brussels, Spain’s prime minister, Pedro Sánchez, put it succinctly: “The British spend 24 hours a day thinking about Brexit and the Europeans think about it for four minutes every trimester.” While the UK’s chaotic withdrawal has become a dreary process to be managed, the EU is being dealt hammer blows from elsewhere – from crises that really could make or break the bloc, along with many diplomatic careers.

Foremost on the list of problem zones right now is Italy. “Nothing and nobody, no big or small letter will make us backtrack,” the country’s deputy prime minister, Matteo Salvini, and leader of the far-right League, told his followers in a Facebook video made in his office in Rome on Friday. “Italy will no longer be a slave and will no longer kneel down.”

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Let’s build a few highways to nowhere too.

“Posh Ghost Towers”: Gloom Spreads Over London Housing Market (DQ)

After decades of mind-boggling growth, home prices in metropolitan London, according to official numbers, started to fall this year, if barely. Between March and September, they slid 2.3%. But it’s a lot worse in the most expensive parts of the city: Prices in central London have already dropped 15% since 2014, according to James Hyman, head of the residential agency division at Cluttons. He expects another 7% drop over the next year and a half. And the total volume of transactions has fallen by a fifth, according to Residential Analysts. In 2014, a change in the stamp duty made buying high-end homes in the UK more costly. In London, the city that hosts the highest number of super-rich individuals per capita in the world, high-end homes are the staple product.

And it’s getting harder and harder to offload them: The Guardian reported that over half of the 1,900 ultra-luxury apartments built in London last year failed to sell. This freeze at the high end is fueling concerns that the city would be left with dozens of “posh ghost towers.” The newest phantom skyscraper is London’s Centre Point Tower, a 33-story office building from the 1960s that was recently converted into multi-million-pound luxury apartments. But demand is anemic and the developer behind the project, Almacantar, has all but given up trying to sell the flats after receiving too many “detached from reality” lowball offers. Until conditions improve, half of the tower’s 82 flats will lie empty.

Yet even as demand for upscale real estate in London fades, there’s little sign of any slow down in the construction of luxury apartments, meaning there will be an even greater glut of upscale real estate in the near future. That’s likely to further exacerbate the fall in prices. It’s the latest in a long line of reality checks for London. Clearly, those at the thin upper crust of the global wealth and income scale — just about the only people left who can afford to buy residential property in London these days — either have less money to spend on over-priced high-end London real estate or are splashing it elsewhere, including in other parts of the UK.

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Russiagate is a non-story kept alive by papers and TV stations.

33 Trillion More Reasons Why New York Times Gets Russiagate Wrong (CN)

Even more damning evidence has come to light undermining The New York Times‘ assertion in September that Russia used social media to steal the 2016 election for Donald Trump. The Times‘ claim last month that Russian Facebook posts reached nearly as many Americans as actually voted in the 2016 election exaggerated the significance of those numbers by a factor of hundreds of millions, as revealed by further evidence from Facebook’s own Congressional testimony. Further research into an earlier Consortium News article shows that a relatively paltry 80,000 posts from the private Russian company Internet Research Agency (IRA) were engulfed in literally trillions of posts on Facebook over a two-year period before and after the 2016 vote.

That was supposed to have thrown the election, according to the paper of record. In its 10,000-word article on Sept. 20, the Times reported that 126 million out of 137 million American voters were exposed to social media posts on Facebook from IRA that somehow had a hand in delivering Trump the presidency. The newspaper said: “Even by the vertiginous standards of social media, the reach of their effort was impressive: 2,700 fake Facebook accounts, 80,000 posts, many of them elaborate images with catchy slogans, and an eventual audience of 126 million Americans on Facebook alone.” The paper argued that 126 million was “not far short of the 137 million people who would vote in the 2016 presidential election.”

But Consortium News, on Oct. 10, debunked that story, pointing out that reporters Scott Shane and Mark Mazzetti failed to report several significant caveats and disclaimers from Facebook officers themselves, whose statements make the Times’ claim that Russian election propaganda “reached” 126 million Americans an exercise in misinformation. [..] only an estimated 29 million FB users may have gotten at least one story in their feed in two years. The 126 million figure is based only on an assumption that they shared it with others, according to Stretch. Facebook didn’t even claim most of those 80,000 IRA posts were election–related. It offered no data on what proportion of the feeds to those 29 million people were.

In addition, Facebook’s Vice President for News Feed, Adam Moseri, acknowledged in 2016 that FB subscribers actually read only about 10 percent of the stories Facebook puts in their News Feed every day. The means that very few of the IRA stories that actually make it into a subscriber’s news feed on any given day are actually read.

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Completely insane. Next time it might be police, military, mercenaries. Julian’s supporters need to stand watch 24/7 now.

Break-in Attempted at Assange’s Residence in Ecuador Embassy (CN)

An attempted break-in at Julian Assange’s residence inside the Ecuadorian Embassy in London on Oct. 29, and the absence of a security detail, have increased fears about the safety of the WikiLeak’s publisher. Lawyers for Assange have confirmed to activist and journalist Suzie Dawson that Assange was awoken in the early morning hours by the break-in attempt. They confirmed to Dawson that the attempt was to enter a front window of the embassy. A booby-trap Assange had set up woke him, the lawyers said. Scaffolding has appeared against the embassy building in the Knightsbridge section in London which “obscures the embassy’s security cameras,” the lawyers said.


Scaffolding near balcony where Assange has appeared. (Sean O’Brien)

On the scaffolding electronic devices, presumably to conduct surveillance, can be seen, just feet from the embassy windows. Later on the day of the break-in, Sean O’Brien, a lecturer at Yale University Law School and a cyber-security expert, was able to enter the embassy through the front door, which was left open. Inside he found no security present. Someone from the embassy emerged to tell him to send an email to set up an appointment with Assange. After emailing the embassy, personnel inside refused to check whether it had been received or not. O’Brien then noticed more scaffolding being erected and observed the devices, which he photographed. Though a cyber-security expert, O’Brien said he could not identify what the devices are.


One of the apparent surveillance devices. (Sean O’Brien.)

“I’ve never seen devices quite like this, and I take photos of surveillance equipment often,” O’Brien said. “There were curious plastic tubes with yellow-orange caps, zip-tied to the front. I have no idea what these are but they seem to have equipment inside them.” The devices are pointed towards the embassy, where all the blinds were open, and not the street, he said. “The surveillance devices in the photos reveals no manufacturer branding, serial numbers or visible device information,” Dawson said. “The combination of the obscuring of the street-facing surveillance cameras and the installation of surveillance equipment pointed into instead of away from the Embassy, is alarming.”

[..] On Thursday the government suddenly barred all access to Assange visitors, including his legal team until next Monday, raising fears that no witnesses could be present should there be an attempt to abduct Assange over the weekend.

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