Aug 172018
 
 August 17, 2018  Posted by at 9:37 am Finance Tagged with: , , , , , , , , , , ,  


Pablo Picasso Brick factory at Tortosa 1909

 

Emerging Markets and US Treasuries (Albert Edwards)
Asia the Next Source of Downside Systemic Risk for Financial Markets (WS)
Trump Says US ‘Will Pay Nothing’ To Turkey For Release Of Detained Pastor (R.)
Lira Rallies As Turkey Pledges Spending Cuts To Avoid IMF Bailout (G.)
Turkish Tremors Will Cause Shocks In Britain (Times)
$125,000: The Pension Debt Each Chicago Household Is On The Hook For (WP)
Russian Oil Industry Would Weather US ‘Bill From Hell’ (R.)
NATO Repeats the Great Mistake of the Warsaw Pact (SCF)
Italy’s NATO Racket… A Bridge Too Far (SCF)
Google Staff Tell Bosses China Censorship Is “Moral And Ethical” Crisis (IC)
Jury in Paul Manafort’s Case Asks Judge to Redefine ‘Reasonable Doubt’ (BBG)

 

 

From an email sent to Mish.

Emerging Markets and US Treasuries (Albert Edwards)

Turkey has discovered that high and rising foreign-denominated debt never sits well with a huge current account deficit and a reluctance to raise interest rates. The problem though is that this is not about Turkey or even EM. It is as always, about the Fed. When the most important person in the free world starts lobbing macro hand-grenades in an effort to drain the swamp, the financial markets will always eventually react badly. No, I am not talking about President Trump with his tweets about imposing tariffs on Turkey. I am actually talking about Fed Chair Jerome Powell draining the global liquidity swamp.

Make no mistake, whatever the macro-idiosyncrasies of Turkey, the key to the current turmoil that is spreading into EM generally, is Fed tightening and the strong dollar. As we have repeated ad infinitum, since 1950 there have been 13 Fed tightening cycles, 10 of them ended in recession and the others usually saw the EM blow up – such as the 1994 collapse in the Mexican peso. The Fed always tightens until something breaks. It is usually its own economy, but sometimes it is the EM’s. And when the liquidity tide goes out we always find out who is swimming naked. If it hadn’t been Turkey it would eventually have been someone else.

To be sure the unfolding EM crisis has been building for many years. And just as investors ignored the naysayers in the run-up to the Global Financial Crisis (GFC), they have ignored the IMF and BIS, who have been cautioning for some years about the explosive build-up in EM debt and especially dollar-denominated debt. According to the BIS, total dollar-denominated debt outside the U.S. reached $10.7 trillion in the first quarter of 2017, and about a third of this debt is owed by the EM nonfinancial sector. EM specialists, the Institute of International Finance (IIF), have also warned about this build-up in EM foreign-denominated debt. They too note that the EM corporate sector has been leading the explosion of debt, with Turkey standing out for the increase in its exposure since the GFC. Turkey has never managed to escape membership of ‘The Fragile Five’ EM country club.

 

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Dollar shortages.

Asia the Next Source of Downside Systemic Risk for Financial Markets (WS)

“Except for an expected short-term reprieve, we expect these tighter USD conditions to remain in place for the rest of the year,” the strategists write. “That is unless policy makers react soon to stimulate financial markets with liquidity.” “Southeast Asia stands out again as in 1997/8, with a large amount of USD denominated debt outstanding,” the write. “The only difference is then Asia had fixed exchange rates and now they are floating! We believe Asia will be the next source of downside systemic risk for financial markets.” The chart below shows dollar-denominated debt in the EMs, in trillion dollars. This does not include euro-denominated debt which plays a large role in Turkey. The fat gray area represents Asia without China:

Asia’s dollar-denominated debt, relative to its foreign exchange reserves and exports, has risen significantly since 2009, they note. The chart below shows the ratio between dollar-denominated debt and foreign exchange reserves in Asia, with China (green line) and without China (black dotted line). Values over 50% mean that there is more dollar-debt than foreign exchange reserves:

“This leaves these nations susceptible to a shortage in USDs,” they write: “Notably, the Asian nations that have amassed record amounts of USD debt are also home to the largest technology companies i.e. Tencent (China), Alibaba (China), TSNC (Taiwan), Samsung (South Korea). The tech sector is now 28% of the MSCI EM index. The rally in the US Dollar, dented global growth prospects, credit growth in China slowing down and escalating political tensions from the US leaves these nations very exposed to a shortage in USDs.”

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More sanctions. Yesterday’s relief is gone.

Trump Says US ‘Will Pay Nothing’ To Turkey For Release Of Detained Pastor (R.)

U.S. President Donald Trump said on Thursday the United States “will pay nothing” to Turkey for the release of detained American pastor Andrew Brunson, who he called “a great patriot hostage.” “We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!” Trump said on Twitter. The U.S. warned Turkey on Thursday to expect more economic sanctions unless it hands over Brunson, as relations between the two countries took a further turn for the worse. U.S. Treasury Secretary Steven Mnuchin assured Trump at a Cabinet meeting that sanctions were ready to be put in place if Brunson was not freed. “We have more that we are planning to do if they don’t release him quickly,” Mnuchin said during the meeting.

The United States and Turkey have exchanged tit-for-tat tariffs in an escalating attempt by Trump to induce Turkish President Tayyip Erdogan into giving up Brunson, who denies charges that he was involved in a coup attempt against Erdogan two years ago. “They have not proven to be a good friend,” Trump said of Turkey during the Cabinet meeting. “They have a great Christian pastor there. He’s an innocent man.” Trump’s national security adviser, John Bolton, had issued a blunt warning to Turkish ambassador Serdar Kilic when he met him on Monday at the White House, an administration official said on Thursday. When Kilic sought to tie conditions to Brunson’s release, Bolton waved them aside and said there would be no negotiations.

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But that was yesterday. Today, the lira’s lost 4% already.

Lira Rallies As Turkey Pledges Spending Cuts To Avoid IMF Bailout (G.)

Turkey’s finance minister sparked a recovery in the lira after he addressed thousands of international investors, pledging to protect beleaguered local banks and cut public spending to prevent the country defaulting on its loans. Berat Albayrak, who has faced criticism for failing to tackle the country’s growing financial crisis, spoke to around 6,000 investors on a conference call to rebuff concerns that a funding squeeze on Turkey’s banks and a damaging trade war with the US would force him to seek a rescue bailout from the IMF. Albayrak, who was appointed as finance minister last month by his father-in-law, president Recep Tayyip Erdogan, said Turkey will not hesitate to provide support to the banking sector, which was capable of accessing funds itself during the current turmoil in financial markets.

He added that deposit withdrawals by panicked investors remained low and manageable. “We are experiencing unfavourable conditions but we will overcome,” he said. The Turkish lira was up 4% against the US dollar following the conference call and after reassuring words from the French president, Emmanuel Macron, and Germany’s chancellor, Angela Merkel, that Turkey’s stability was important. However, Albayrak’s attempt to shore up confidence in the lira was quickly undermined by the US Treasury secretary, Steve Mnuchin, who reportedly told president Donald Trump in a cabinet meeting that he was preparing further sanctions against Ankara. The lira slipped back to settle at just 1% up on the previous day.

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It’s not Spain or Italy. It’s Britain.

Turkish Tremors Will Cause Shocks In Britain (Times)

There are many strange things about Recep Tayyip Erdogan, but one of the oddest is his pet theory about interest rates. The Turkish president believes that high borrowing costs produce high inflation. “The interest rate is the cause and inflation is the result,” he said a few months ago. “The lower the interest rate is, the lower inflation will be.” No, you didn’t misread that. In defiance of economic orthodoxy (not to mention centuries of experience) which says that high interest rates tend to reduce inflation, President Erdogan believes the opposite. As one economist put it, this is a little like believing that umbrellas cause rain.

The Turkish president’s eccentric attitude towards monetary policy is not the only reason his country is now facing an economic crisis, but it is at least part of the explanation. Over the past decade or so, Turkey became one of the great bubbles of the modern era. Housing bubble? Check. Debt binge? Check. Yawning current account deficit? Check. Runaway inflation? Check. These traits alone qualified the Turkish economy for crisis candidacy some time ago. But as always, saying a country is due a crunch is far simpler than predicting when and how. And Turkey may well have muddled through a little longer were it not for four critical ingredients.

[..] Who is most exposed to this looming crisis? Conventional wisdom says Spain and Italy, whose banks have Turkish subsidiaries. However, this slightly misses the point, since much of that lending is in lira. Those banks should be able to survive even the loss of their stakes. The real question is: who has been lending Turkish companies all this foreign exchange debt? That brings us to the sting in the tail. For when you dig through Turkish treasury data, as the Deutsche Bank economist Oliver Harvey has, you discover that the country that lent most to Turkey, both short and long term, was the UK. That’s right: Britain, or more specifically the City of London, is by far the most exposed to a collapse in the Turkish economy.

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Creative accounting 101.

$125,000: The Pension Debt Each Chicago Household Is On The Hook For (WP)

Chicagoans have no idea how much pension debt Illinois politicians have saddled them with. Officially, Windy City residents are on the hook for $70 billion in total pension shortfalls from the city and its sister governments plus a share of Cook County and state pensions. But listen to Moody’s Investors Service, the rating agency that’s been most critical of Chicago’s finances, and you’ll get a different picture. Moody’s pegs the total pension debt burden for Chicagoans at $130 billion, nearly double the official numbers. (Yes, by chance the number is eerily similar to the official shortfall of $129 billion facing the five state-run pension funds. But don’t confuse the two.)

That’s scary news for Windy City residents. Barring real reforms, concessions from the unions or bankruptcy, Chicagoans can expect to be hit with whatever series of tax hikes politicians will try to enact to reduce that debt. That $130 billion is the total Moody’s calculates when adding up the direct pension debt owed by the city government, Chicago Public Schools, the park district and Chicago’s share of various Cook County governments and the five state pension funds. Moody’s takes a more realistic approach to investment assumptions than the city and county governments take.

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Russia’s had time to prepare.

Russian Oil Industry Would Weather US ‘Bill From Hell’ (R.)

Stiff new U.S. sanctions against Russia would only have a limited impact on its oil industry because it has drastically reduced its reliance on Western funding and foreign partnerships and is lessening its dependence on imported technology. Western sanctions imposed in 2014 over Russia’s annexation of Crimea have already made it extremely hard for many state oil firms such as Rosneft to borrow abroad or use Western technology to develop shale, offshore and Arctic deposits. While those measures have slowed down a number of challenging oil projects, they have done little to halt the Russian industry’s growth with production near a record high of 11.2 million barrels per day in July – and set to climb further.

Since 2014, the Russian oil industry has effectively halted borrowing from Western institutions, instead relying on its own cash flow and lending from state-owned banks while developing technology to replace services once supplied by Western firms. Analysts say this is partly why Russian oil stocks have been relatively unscathed since U.S. senators introduced legislation to impose new sanctions on Russia over its interference in U.S. elections and its activities in Syria and Ukraine. The measures introduced on Aug. 2, dubbed by the senators as the “bill from hell”, include potential curbs on the operations of state-owned Russian banks, restrictions on holding Russian sovereign debt as well as measures against Western involvement in Russian oil and gas projects.

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Too expensive.

NATO Repeats the Great Mistake of the Warsaw Pact (SCF)

Through the 1990s, during the terms of US President Bill Clinton, NATO relentlessly and inexorably expanded through Central Europe. Today, the expansion of that alliance eastward – encircling Russia with fiercely Russo-phobic regimes in one tiny country after another and in Ukraine, which is not tiny at all – continues. This NATO expansion – which the legendary George Kennan presciently warned against in vain – continues to drive the world the closer towards the threat of thermonuclear war. Far from bringing the United States and the Western NATO allies increased security, it strips them of the certainty of the peace and security they would enjoy if they instead sought a sincere, constructive and above all stable relationship with Russia.

It is argued that the addition of the old Warsaw Pact member states of Central Europe to NATO has dramatically strengthened NATO and gravely weakened Russia. This has been a universally-accepted assumption in the United States and throughout the West for the past quarter century. Yet it simply is not true. In reality, the United States and its Western European allies are now discovering the hard way the same lesson that drained and exhausted the Soviet Union from the creation of the Warsaw Pact in 1955 to its dissolution 36 years later. The tier of Central European nations has always lacked the coherence, the industrial base and the combined economic infrastructure to generate significant industrial, financial or most of all strategic and military power.

[..] When nations such as France, Germany, the Soviet Union or the United States are seen as rising powers in the world, the small countries of Central Europe always hasten to ally themselves accordingly. They therefore adopt and discard Ottoman Islamic imperialism. Austrian Christian imperialism, democracy, Nazism, Communism and again democracy as easily as putting on or off different costumes at a fancy dress ball in Vienna or Budapest. As Russia rises once again in global standing and national power, supported by its genuinely powerful allies China, India and Pakistan in the Shanghai Cooperation Organization, the nations of Central Europe can be anticipated to reorient their own loyalties accordingly once again.

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Case in point: the cost of NATO and Russiagate.

Italy’s NATO Racket… A Bridge Too Far (SCF)

What should be a matter of urgent public demand is why Italy is increasing its national spending on military upgrades and procurements instead of civilian amenities. As with all European members of the NATO alliance, Italy is being pressured by the United States to ramp up its military expenditure. US President Donald Trump has made the NATO budget a priority, haranguing European states to increase their military spending to a level of 2 per cent of GDP. Trump has even since doubled that figure to 4 per cent. Washington’s demand on European allies predates Trump. At a NATO summit in 2015, when Barack Obama was president, all members of the military alliance then acceded to US pressure for greater allocation of budgets to hit the 2 per cent target.

The alleged threat of Russian aggression has been cited over and over as the main reason for boosting NATO. Figures show that Italy, as with other European countries, has sharply increased its annual military spending every year since the 2015 summit. The upward trend reverses a decade-long decline. Currently, Italy spends about $28 billion annually on military. That equates to only about 1.15 per cent of GDP, way below the US-demanded target of 2 per cent of GDP. But the disturbing thing is that Italy’s defense minister Elisabetta Trenta reportedly gave assurances to Trump’s national security advisor John Bolton that her government was committed to hitting its NATO target in the coming years. On current figures that translates roughly into a doubling of Italy’s annual military budget. Meanwhile, the Italian public have had to endure years of economic austerity from cutbacks in social spending and civilian infrastructure.

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But the company’s become a secret service.

Google Staff Tell Bosses China Censorship Is “Moral And Ethical” Crisis (IC)

Google employees are demanding answers from the company’s leadership amid growing internal protests over plans to launch a censored search engine in China. Staff inside the internet giant’s offices have agreed that the censorship project raises “urgent moral and ethical issues” and have circulated a letter saying so, calling on bosses to disclose more about the company’s work in China, which they say is shrouded in too much secrecy, according to three sources with knowledge of the matter. The internal furor began after The Intercept earlier this month revealed details about the censored search engine, which would remove content that China’s authoritarian government views as sensitive, such as information about political dissidents, free speech, democracy, human rights, and peaceful protest.

It would “blacklist sensitive queries” so that “no results will be shown” at all when people enter certain words or phrases, leaked Google documents disclosed. The search platform is to be launched via an Android app, pending approval from Chinese officials. The censorship plan – code-named Dragonfly – was not widely known within Google. Prior to its public exposure, only a few hundred of Google’s 88,000 employees had been briefed about the project – around 0.35 percent of the total workforce. When the news spread through the company’s offices across the world, many employees expressed anger and confusion. Now, a letter has been circulated among staff calling for Google’s leadership to recognize that there is a “code yellow” situation – a kind of internal alert that signifies a crisis is unfolding.

The letter suggests that the Dragonfly initiative violates an internal Google artificial intelligence ethical code, which says that the company will not build or deploy technologies “whose purpose contravenes widely accepted principles of international law and human rights.” The letter says: “Currently we do not have the information required to make ethically-informed decisions about our work, our projects, and our employment. That the decision to build Dragonfly was made in secret, and progressed with the [artificial intelligence] Principles in place, makes clear that the Principles alone are not enough. We urgently need more transparency, a seat at the table, and a commitment to clear and open processes: Google employees need to know what we’re building.”

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Don’t be surprised if he’s aquitted.

Jury in Paul Manafort’s Case Asks Judge to Redefine ‘Reasonable Doubt’ (BBG)

A Virginia jury deliberating the fraud charges against President Donald Trump’s former campaign manager Paul Manafort sent a note with four questions to the judge in the case. Near the end of the first day of deliberations on Thursday, the jury asked whether a report of foreign bank and financial accounts, known as an FBAR, needed to be filed by a person with less than a 50 percent ownership. Manafort is charged with four counts of failing to file FBARs for offshore companies. The jury also asked about the definition of a shelf company.

U.S. District Judge T.S. Ellis III replied that the jurors should rely on their collective memory. The jury also requested that the judge redefine “reasonable doubt.” Ellis replied that the government wasn’t required to prove its case beyond “all doubt,” just to the extent that a person would consider reasonable. Finally, the jury asked if the exhibit list could be amended to include the indictment. The jury was excused for the day and is to return Friday to continue deliberations.

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Aug 022018
 
 August 2, 2018  Posted by at 7:42 am Finance Tagged with: , , , , , , , , , ,  


Henri Matisse Music 1910

 

People Spend Most Of Their Waking Hours Staring At Screens (MW)
Fifth of Britons Feel Stressed If They Can’t Access Internet (G.)
Jeff Bezos’s $150 Billion Fortune Is a Policy Failure (Atlantic)
Assange May Finally Leave Ecuadorian Embassy In London As Health Worsens (RT)
Trump Threatens To Raise Tariffs On Chinese Goods To 25%, Up From 10% (AFP)
German Sources Deny Brexit Deal Offer Amid Panic In Remain Campaign (G.)
German Parliament Approves Last Loan Installment To Greece (K.)
Brussels Defends Greek Debt Relief (K.)
Should The Bank Of England Raise Interest Rates? (Coppola)
Nomi Prins Exposes The Power Grab Of Central Bankers (Salon)
On The Beach (Kunstler)
Google ‘Working On Censored Search Engine’ For China (G.)
European Commission Boosts Migration Aid To Greece (K.)
95% Of World’s Lemur Population Facing Extinction (AFP)

 

 

We don’t want to know how harmful this is. Because it’s so popular. We have no answer because it’s going so fast. And our governments don’t want the answer because it’s the mightiest spy tool ever.

People Spend Most Of Their Waking Hours Staring At Screens (MW)

Swipe. Click. Binge. Repeat. Americans spend more time than ever watching videos, browsing social media and swiping their lives away on their tablets and smartphones. American adults spend more than 11 hours per day watching, reading, listening to or simply interacting with media, according to a new study by market-research group Nielsen. That’s up from nine hours, 32 minutes just four years ago. In the first quarter of the year, U.S. adults spent three hours and 48 minutes a day on computers, tablets and smartphones. This is a 13-minute increase from the previous quarter, and 62% of that time is attributed to app/web browsing on smartphones. Television still accounts for most media usage, with four hours and 46 minutes spent watching TV every day in the first quarter of this year.

[..] Media use is reaching new levels of intensity. Parents with children aged eight to 18 years of age spend over nine hours with screen media each day, according to a 2016 survey of 1,700 such parents by Common Sense Media, a San Francisco-based organization that examines the impact of technology and media on families. That compares to the more than 4.5 hours tweens spend on screen media on average every day and 6.5 hours spent by teenagers every day, according to a separate 2015 survey of more than 2,650 children by the same organization. Based on Nielsen’s latest report, however, the time people spend online has increased significantly, even over the last four years.

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I see so many people doing so many weird things with their phones. Walking the street, getting out of transport, cycling, all glued to these things. And it’s all just to check Facebook etc. At some point, this will turn into a full-blown crisis.

Fifth of Britons Feel Stressed If They Can’t Access Internet (G.)

The average Briton now checks a mobile phone every 12 minutes and is online for 24 hours a week, finds an Ofcom study revealing the extent to which people now rely on the internet. Ofcom also found that, for the first time, the time spent making phone calls from mobile phones fell, as users instead used messaging services such as WhatsApp and Facebook Messenger. The media regulator’s annual Communications Market Report found that a fifth of British adults felt stressed if they could not access the internet, while for the first time ever women were spending more time online than men. The report also showed the rapid growth of addiction to technology. According to Ofcom, just 12% of British adults said they never used the internet.

The total amount of time spent online by Britons has also doubled over the last 10 years, with a quarter of adults saying they spent more than 40 hours a week on the internet – a move driven by the uptake of smartphones. The internet has seeped into many aspects of our lives; two in five British adults – rising to 65% of those aged under 35 – said they looked at their phone within five minutes of waking up35. A third of adults checked their phones up until the moment they went to sleep, a figure which rose to 60% for the under-35s. The prevalence of mobile phones has also meant that attitudes to their use in public had changed. While 83% of Britons aged over 55 said they thought it unacceptable to check a phone during a meal, this figure almost halved among people aged 18-34 who were more comfortable with looking at notifications while eating with other people.

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Or is it a mentality crisis? We never shook off Greed is Good, did we?

Jeff Bezos’s $150 Billion Fortune Is a Policy Failure (Atlantic)

Last month, Bloomberg reported that Jeff Bezos, the founder of Amazon and owner of the Washington Post, has accumulated a fortune worth $150 billion. That is the biggest nominal amount in modern history, and extraordinary any way you slice it. Bezos is the world’s lone hectobillionaire. He is worth what the average American family is, nearly two million times over. He has about 50 percent more money than Bill Gates, twice as much as Mark Zuckerberg, 50 times as much as Oprah, and perhaps 100 times as much as President Trump. (Who knows!) He has gotten $50 billion richer in less than a year. He needs to spend roughly $28 million a day just to keep from accumulating more wealth. This is a credit to Bezos’s ingenuity and his business acumen.

Amazon is a marvel that has changed everything from how we read, to how we shop, to how we structure our neighborhoods, to how our postal system works. But his fortune is also a policy failure, an indictment of a tax and transfer system and a business and regulatory environment designed to supercharging the earnings of and encouraging wealth accumulation among the few. Bezos did not just make his $150 billion. In some ways, we gave it to him, perhaps to the detriment of all of us. Bezos and Amazon are in many ways ideal exemplars of the triumph of capital over labor, like the Waltons and Walmart and Rockefeller and Standard Oil before them. That the gap between executives at top companies and employees around the country is so large is in and of itself shocking.

Bezos has argued that there is not enough philanthropic need on earth for him to spend his billions on. (The Amazon founder, unlike Gates or Zuckerberg, has given away only a tiny fraction of his fortune.) “The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel,” he said this spring. “I am going to use my financial lottery winnings from Amazon to fund that.” In contrast, half of Amazon’s domestic employees make less than $28,446 a year, per the company’s legal filings. Some workers have complained of getting timed six-minute bathroom breaks. Warehouse workers need to pick goods and pack boxes at closely monitored speeds, handling up to 1,000 items and walking as many as 15 miles per shift.

Contractors have repeatedly complained of wage-and-hour violations and argued that the company retaliates against whistleblowers. An Amazon temp died on the floor just a few years ago. The impoverishment of the latter and the wealth of the former are linked by policy. Take taxes. The idea of America’s progressive income-tax system is that rich workers should pay higher tax rates than poor workers, with the top rate of 37% hitting earnings over $500,000. (The top marginal tax rate was 92% as recently as 1953.) But Bezos takes a paltry salary, in relative terms, given the number of shares he owns. That means his gains are subject to capital-gains taxes, which top out at just 20%; like Warren Buffett, it is possible he pays effective tax rates lower than his secretary does.

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His health may be worse than we know. They’d love for him to ‘voluntarily’ leave.

Assange May Finally Leave Ecuadorian Embassy In London As Health Worsens (RT)

Julian Assange, who has spent more than 2,230 days in the Ecuadorian embassy in London, is expected to leave the building soon with his health deteriorating, sources say. This latest information about the WikiLeaks founder, who was already expected to leave the embassy “in the coming weeks,” was broken Wednesday by Bloomberg which cited “two people with knowledge of the matter.” The news agency reported that the whistleblower’s health “has declined recently.” The news comes days after Ecuadorian President Lenin Moreno announced that Assange must “eventually” leave the embassy. “Yes, indeed yes, but his departure should come about through dialogue,” the Ecuadorian president said in answer to a reporter’s question on whether he will eventually have to leave.

“For a person to stay confined like that for so long is tantamount to a human rights violation,” Moreno said, stressing that Ecuador wants to make sure that nothing “poses a danger” to the whistleblower’s life. The whistleblower’s health is deteriorating, according to the Courage Foundation, a group that fundraises for the legal defense of whistleblowers. Assange is in “a small space” and has “no access to sunlight,” the group says, adding that this has a serious impact “on his physical and mental health.” [..] Washington simply “wants revenge” for the “embarrassment” WikiLeaks caused it, and wants it to serve “as a deterrent to others,” human rights activist Peter Tatchell told RT earlier in July. “Someone who’s published that information in the same way that the New York Times or the Guardian publish information, I don’t think they should face risk 30 or 40 years in jail in the United States,” Tatchell added.

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25% is a lot in one go.

Trump Threatens To Raise Tariffs On Chinese Goods To 25%, Up From 10% (AFP)

The United States may jack up the tariff rate on the next $200 billion in Chinese imports it plans to target as it pressures Beijing to reform its trade practices, US officials said Wednesday. President Donald Trump asked the US Trade Representative to consider increasing the proposed tariffs to 25 percent from the planned 10 percent, USTR Robert Lighthizer said. “We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behavior, China has illegally retaliated against US workers, farmers, ranchers and businesses,” Lighthizer said in a statement.

Officials however downplayed suggestions the move was intended to compensate for the recent decline in the value of the Chinese currency, which has threatened to take much of the sting out of Trump’s tariffs by making imports cheaper. The US dollar has been strengthening since April as the central bank has been raising lending rates, which draws investors looking for higher returns. “It’s important that countries refrain from devaluing currencies for competitive purposes,” a senior administration official told reporters. “But I wouldn’t draw the conclusion that the announcement we’re making today is directly linked to any one practice.”

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Brussels thinks they’ll be dealing with Boris Johnson soon. Their strategy is geared toward that,

German Sources Deny Brexit Deal Offer Amid Panic In Remain Campaign (G.)

Reports that Germany is willing to offer Theresa May a vague Brexit deal so as to prevent the UK crashing out of the EU with no deal have set alarm bells ringing in the Remain campaign in the UK and prompted denials from German sources. The Remain campaign, now called People’s Vote, is focused on calling for a second referendum on leaving the EU. It warned against what it described as a “blind Brexit”, and in a rare criticism of the European commission said the EU should not offer May a face-saving deal in which many of the major issues were deferred for negotiation during the transition after the UK has legally left the bloc.

There are concerns amongst some Remain backers that the chief EU Brexit negotiator, Michel Barnier, is prepared to make the offer if it has the endorsement of Germany and France, on the basis that the majority of EU leaders fear the possibility of no-deal scenario. There is also a concern that details of the future relationship cannot be negotiated in the short time available. Until now it had been assumed that France and Germany would insist that any political declaration on future relations would include details of the planned future trading relationship after Brexit. A relatively brief declaration on future ties will not be a formal treaty, unlike the withdrawal agreement, which will give details of future UK payments, the Irish border and citizens’ rights. A vague deal on future relations is more likely to be acceptable to May’s MPs, and harder for the Labour party to oppose.

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Taxed to death. People close their businesses because taxes are higher than income. That leads to less tax revenue, so taxes must be raised again. Greece cannot recover.

German Parliament Approves Last Loan Installment To Greece (K.)

The German Parliament’s budget committee rubber-stamped on Wednesday the disbursement of the last loan installment of Greece’s adjustment program, totalling 15 billion euros. Germany had blocked the release of the last tranche in July, after the Greek government announced it would postpone the increase of value-added tax on five islands of the Aegean hit by the influx of migrants, a measure that had been agreed on with the country’s creditors. The European Stability Mechanism (ESM) had approved the disbursement in principle, while it awaited German lawmakers to sign-off the deal. The revenue losses from the lower VAT amount to 28 million euros, which the Greek government will compensate by savings in the defense budget, the German Parliament’s press release said. After Wednesday’s vote, Germany can consent to the payment of the last instalment by the ESM.

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They’ll re-examine the issue in 2032. That’s minimum 14 more years of strangulation. IMF/EU is classic good cop bad cop.

Brussels Defends Greek Debt Relief (K.)

The European Commission on Wednesday defended the Greek debt relief measures that the Eurogroup decided in June, in a manner of response to the IMF, which had deemed the debt easing inadequate to render the debt sustainable in the long term. In a regular press update, Commission spokeswoman Mina Andreeva stressed that the IMF forecasts on Greece are permanently pessimistic and that the Fund has in the past been forced to revise them. “The European Commission, the European Stability Mechanism and the ECB have made their own assessment and we, as Europeans, are funding the program and our conclusion is that the debt relief is sufficient,” the Bulgarian official stated.

She went on to highlight the eurozone’s commitment to re-examine the Greek debt in the future should further easing measures be required: “We have also said we will examine the issue again in 2032,” Andreeva said. The IMF said in its Debt Sustainability Analysis on Tuesday that the eurozone’s optimistic scenarios on the Greek growth and primary surpluses make the debt’s long-term sustainability uncertain, particularly after 2038.

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Yeah, define ‘normal’.

Should The Bank Of England Raise Interest Rates? (Coppola)

It’s a momentous week for the Bank of England. On Thursday, August 2, 2018, the Monetary Policy Committee (MPC) could decide to raise interest rates by a quarter percent. This would mark the end of the post-Lehman crisis era in the UK and the start of the return to “normal.” But ten years on from Lehman, what is “normal”? The British central bank, like the Fed, is not at all sure what a “normal” level of interest rates would look like, nor how big a “normal” balance sheet should be. The consensus appears to be that the long-term neutral rate of interest is lower than pre-crisis estimates, perhaps somewhere between 2-3%, and that the Bank’s balance sheet will need to remain permanently larger than it was before the crisis.

Given that, one has to ask what the imperative is to start raising rates right now, when the U.K. is careering headlong towards a potentially disastrous no-deal Brexit. The rational reason why the MPC might start raising rates now starts with inflation. Currently, CPI inflation is running at 2.3%, slightly above the Bank’s target of 2%. It has been above 2% for over a year now – indeed in the fall of 2017 it was approaching 3%. In November, the Bank raised interest rates by 0.25%, which removed the additional rate cut imposed after the Brexit vote in 2016. But apart from that, it has so far preferred not to act to dampen inflation. Will it do so this time?

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A tiny circle of close friends.

Nomi Prins Exposes The Power Grab Of Central Bankers (Salon)

Three of the last four books that I’ve written, including this new one “Collusion,” all examine the juxtaposing of power and money. In all of them, I explore how elected leaders or those in positions of great unelected economic or political influence, use both of them to create or enforce policy. There is a time component as well, “It Takes a Pillage” examined the financial crisis and causes within the framework of a relatively tight temporal lens and I had a very short time to write it as well. “All the Presidents’ Bankers” was a much more expansive book from a historical sense, going back over a century to examine the relationships of key bankers and presidents, and the institutions with which they collaborated to fashion domestic and foreign policy.

“Collusion” is really a book about the future, though it spans the decade since the financial crisis from multiple geographical locations (traveling to which I amassed lots of air miles, and exploring which, I worked with a crack team of internal researchers). It delves into the global connectivity of a body of central banks that provide varying amounts of money to their respective local systems and by extension to the world, and examines how not all central banks are created equal.

In “Collusion,” neither the Fed, nor the U.S. has its own chapter like the other countries or regions. This is by design. The Fed acts as the global influencer, directly and indirectly, as does the U.S. through all of what I call the “pivot regions” in the book that unfold in each chapter. I wanted to show how deeply co-dependent the entire world is on the US monetary policy decisions made since the financial crisis, in various ways, that we are still finding out about. All of my books though, are ultimately, about the people behind their roles of power, and the decisions they make out of ideology, necessity, ego or fear.

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“It’s a little hard to picture old horse-face popping a third beer at the clambake..”

On The Beach (Kunstler)

If one word defines the preoccupying affairs of the USA these days it’s tiresome. The entire population seems to be enacting the old myth of Sisyphus, every, man, woman, child, swamp-creature, and non-binary child-of-God in the land, legal and undocumented, pushing that boulder uphill to the tippy top, only to have it roll back down to the bottom… repeat ad infinitum. Take Mr. Robert Mueller, for example, the sphinx-like figure looming over the political landscape with his lawyer’s attaché case full of radioactive secrets. He has already done yeoman’s service in his mission by indicting two dozen Russian Facebook trolls and Internet hackers — who will never be extradited or set foot in a US courtroom, sparing taxpayers the expense of trying them (and testing the theory of “collusion” with the current POTUS).

It’s a little hard to picture old horse-face popping a third beer at the clambake, let alone the stories he might tell around the fire (with necessary redactions). When he awakes hung over in the sand the next morning to the shrieking gulls, next to someone not-his-wife, will he be overwhelmed with regret for a year spent chasing gremlins from the Kremlin? The public appears to be good and goddamn sick of him. Even The New York Times has stopped squealing about Russia. Standing by for September histrionics….

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Good and evil. And profits.

Google ‘Working On Censored Search Engine’ For China (G.)

Google is working on a mobile search app that would block certain search terms and allow it to reenter China after exiting eight years ago due to censorship and hacking, according to US media reports. The California-based internet company has engineers designing search software that would leave out content blacklisted by the Chinese government, according to a New York Times report citing two unnamed people familiar with the effort. News website The Intercept first reported the story, saying the Chinese search app was being tailored for Google-backed Android operating system for mobile devices. The service was said to have been shown to Chinese officials. [..] The state-owned China Securities Daily, citing information from “relevant departments”, denied the report.

There was no guarantee the project would result in Google search returning to China. However, the Chinese human rights community said Google acquiescing to China’s censorship would be a “dark day for internet freedom”. “It is impossible to see how such a move is compatible with Google’s ‘Do the right thing’ motto, and we are calling on the company to change course,” said Patrick Poon, China Researcher at Amnesty International. “For the world’s biggest search engine to adopt such extreme measures would be a gross attack on freedom of information and internet freedom. In putting profits before human rights, Google would be setting a chilling precedent and handing the Chinese government a victory.”

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Always too little, always too late. By design. Brussels keeps saying: look at all the money we gave! While conditions in the camps remain abysmal.

European Commission Boosts Migration Aid To Greece (K.)

The European Commission said Wednesday that an additional 37.5 million euros in emergency assistance would be disbursed to improve reception conditions for migrants in Greece as arrivals from Turkey continue by both sea and land. In a statement, the EU’s executive branch said Greek authorities will receive 31.1 million euros to support the “provisional services” offered to migrants, including healthcare, interpretation and food, as well as to improve the infrastructure of the Fylakio reception center in Evros, northern Greece, which has seen an increase in arrivals from Turkey in recent months.

The extra funding will also go toward the creation of additional accommodation within facilities on the Greek mainland, the Commission said. It said a further 6.4 million euros has been awarded to the International Organization for Migration (IOM) to improve conditions at reception conditions on the Aegean islands and mainland. Commenting on the decision, European Migration Commissioner Dimitris Avramopoulos said the Commission was “doing everything in its power to support all member-states facing migratory pressures.” “Migration is a European challenge and we need a European solution, where no member-state is left alone,” he said.

“Greece has been on the frontline since 2015 and while the situation has greatly improved since the EU-Turkey statement, we continue to assist the country with the challenges it is still facing,” he added, noting that the EC’s “political, operational and financial support for Greece remains tangible and uninterrupted.”

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For Christ’s sake.

95% Of World’s Lemur Population Facing Extinction (AFP)

Ninety-five percent of the world’s lemur population is “on the brink of extinction,” making them the most endangered primates on Earth, a leading conservation group said Wednesday. The arboreal primates with pointed snouts and typically long tails are found only in Madagascar, where rainforest destruction, unregulated agriculture, logging and mining have been ruinous for lemurs, the International Union for the Conservation of Nature (IUCN) said. “This is, without a doubt, the highest percentage of threat for any large group of mammals and for any large group of vertebrates,” Russ Mittermeier of IUCN’s species survival commission said in a statement.

Out of a total of 111 lemur species and subspecies, 105 are under threat, IUCN said, as it released its first update on the lemur population since 2012. Among the most concerning trends is an “increase in the level of hunting of lemurs taking place, including larger-scale commercial hunting,” Christoph Schwitzer, director of conservation at the Bristol Zoological Society, said in the statement. He described the hunting as “unlike anything we have seen before in Madagascar.” One of the species identified as “critically endangered” is the northern sportive lemur, of which there are thought to be only 50 individuals left, IUCN said. “Lemurs are to Madagascar what giant pandas are to China — they are the goose that laid the golden egg, attracting tourists and nature lovers,” said Jonah Ratsimbazafy of the domestic primate research group GERP.

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Jul 202018
 
 July 20, 2018  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , ,  


Edward Hopper Western Motel 1957

 

Possible Hand-Over Of Julian Assange To The UK May Be Imminent (Vos)
Spanish Court Drops International Warrant For Carles Puigdemont (G.)
Trump Lays Into The Fed, Says ‘Not Thrilled’ About Interest Rate Hikes (CNBC)
Trump Plans To Formally Invite Putin To US Later This Year (G.)
American Cold War Experts: “The Real Threat Is Russophobia” (ZH)
No-Deal Brexit Would Harm EU Countries As Well As UK, Warns IMF (G.)
Theresa May: I Will Never Accept EU’s Ideas On Irish Brexit Border (G.)
Android Antitrust Fine Will Demolish Google Profit (MW)
IMF Raps Greece Over Its Bid To Reintroduce Labor Negotiations (K.)

 

 

Darkness and shame.

Possible Hand-Over Of Julian Assange To The UK May Be Imminent (Vos)

What happens in a world without Julian Assange? It seems we may be in the unthinkable position of facing such a reality, after WikiLeaks Tweeted regarding the recent statement of Margarita Simonyan, RT’s Editor-in-chief. Her message read (In English): “My sources tell me that Julian Assange will be handed over to the UK in the next weeks or days. Like never before I wish that my sources are wrong’.’ An exceptionally brief article published by Russian Insider documented Simonyan’s foreboding Tweet, indicating that her statement seemed especially serious in light of the quality of her sources.

Russian media is hardly the first source of dire warnings regarding Assange’s safety in recent weeks. Just days ago, the World Socialist Website related: “The London Times reported July 15 on secret talks between the British and Ecuadorian governments. They are apparently intending to expel WikiLeaks editor Julian Assange from the Ecuadorian embassy in London, where he has enjoyed political asylum for six years. The article said the talks were “an attempt to remove Assange from the embassy,” and they were being run at the highest levels of government. The Secretary of State for Foreign Affairs, Sir Alan Duncan, is personally involved.” These reports also follow a chilling article penned by award-winning journalist Chris Hedges, who wrote:

“The failure on the part of establishment media to defend Julian Assange, who has been trapped in the Ecuadorean Embassy in London since 2012, has been denied communication with the outside world since March and appears to be facing imminent expulsion and arrest, is astonishing. The extradition of the publisher—the maniacal goal of the U.S. government—would set a legal precedent that would criminalize any journalistic oversight or investigation of the corporate state. It would turn leaks and whistleblowing into treason. It would shroud in total secrecy the actions of the ruling global elites.”

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What should happen for Julian too.

Spanish Court Drops International Warrant For Carles Puigdemont (G.)

A Spanish judge has dropped the international arrest warrants issued for the former Catalan president Carles Puigdemont and five other pro-sovereignty politicians over their roles in last year’s illegal referendum and subsequent unilateral declaration of independence. The supreme court judge Pablo Llarena announced the decision a week after a German court said it would extradite Puigdemont only over alleged misuse of public funds rather than the more serious charge of rebellion. The dropping of the international warrant means Puigdemont and his former colleagues – currently in Belgium, Scotland and Switzerland – no longer face extradition proceedings.

But domestic warrants remain in force, meaning the six will be arrested should they return to Spain. In his ruling, published on Thursday, Llarena hit out at the court in Schleswig-Holstein, accusing it of “a lack of commitment” over acts that could have “broken Spain’s constitutional order”. The German court’s refusal to extradite Puigdemont on the rebellion charge – which prosecutors had argued could be equated to “high treason” in the German penal code – meant the deposed president could not be tried for the offence if sent back to Spain.

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More crazy reactions. Comparing Trump to Erdogan?!

Trump Lays Into The Fed, Says ‘Not Thrilled’ About Interest Rate Hikes (CNBC)

In a stinging and historically rare criticism, President Donald Trump expressed frustration with the Federal Reserve and said the central bank could disrupt the economic recovery. Presidents rarely intercede when it comes to the Fed, which sets the benchmark interest rate that flows through to many types of consumer debt. Fed officials, including Chairman Jerome Powell, have raised interest rates twice this year and have pointed to two more before the end of 2018. Trump, in an interview with CNBC, said he does not approve, even though he said he “put a very good man in” at the Fed in Powell.

“I’m not thrilled,” he told CNBC’s Joe Kernen in an interview to air in full Friday at 6 a.m. ET on “Squawk Box.” “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.” “But I don’t like all of this work that goes into doing what we’re doing.” Markets reacted to Trump’s comments, with stocks, the dollar and Treasury yields all falling.

Fed officials did not comment on the president’s remarks. The White House, in a statement after the interview excerpt aired on CNBC, emphasized that Trump did not mean to influence the Fed’s decision-making process. “Of course the President respects the independence of the Fed. As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions ” the statement said. “The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments.”

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Keep talking.

Trump Plans To Formally Invite Putin To US Later This Year (G.)

Donald Trump has asked his administration to formally invite Russian president Vladimir Putin to visit Washington later this year, the White House announced on Thursday. Sarah Sanders, the White House press secretary, said Trump asked his national security adviser John Bolton to extend the invitation to Putin for a “working level” dialogue between the two leaders. The invitation comes as the White House has faced a tumultuous week in the aftermath of Trump’s controversial summit with Putin in Helsinki. Trump was roundly criticized from Democrats and Republicans in Washington for siding with the Kremlin over the judgments of US intelligence on whether Russia interfered in the 2016 presidential election.

It took the president several attempts to walk back his comments, amplifying the fallout from his joint appearance with Putin. Trump was nonetheless unfazed by the backlash, deeming the summit a “great success” in a tweet earlier on Thursday while saying he looked forward to a second meeting with Putin. “The Summit with Russia was a great success, except with the real enemy of the people, the Fake News Media,” Trump wrote. “I look forward to our second meeting so that we can start implementing some of the many things discussed, including stopping terrorism, security for Israel, nuclear … proliferation, cyber attacks, trade, Ukraine, Middle East peace, North Korea and more. There are many answers, some easy and some hard, to these problems…but they can ALL be solved!”

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“Russophobia is running amok in this country.”

American Cold War Experts: “The Real Threat Is Russophobia” (ZH)

And now for expert analysis that runs refreshingly contrary to the week’s Trump-Putin mass hysteria over the Helsinki summit, we find ourselves surprised to feature an unusually honest Vice segment on HBO: These American scholars say the real threat to the U.S. is Russophobia. “If he [President Trump] means what he said he was right. It would be great to cooperate with Russia — I would go farther, it’s imperative… We are eyeball to eyeball in a new Cold War with Russia,” begins Stephen F. Cohen, considered among the world’s foremost Russian academic experts, while sitting beside John Mearsheimer in this latest Vice interview, who nods his head in approval.

Both have long been a thorn in the side of the McCarthyite commentariat which alleges Russian collusion behind every decision of the Trump administration. Mearsheimer, a longtime International Security Policy program director at the University of Chicago, questions the now largely cemented narrative created by those who have least understanding of the history of US-Russia relations: “Why won’t people engage in a legitimate debate with people like Steve and me? And I believe the reason they won’t is they would lose the debate – I’m fully confident of that.”

As the American public has from the time of Trump’s election endured endless obtrusive and cacophonous media noise with no real smoking gun (as Former Director of National Intelligence James Clapper famously admitted a year ago) to back the charges of collusion — what CNN’s Van Jones early on admitted was “just a big nothing burger” — the voices of a small cadre of real Russian experts rarely breaks through to a mass audience. “There is an unwillingness to engage in debate on this issue, like I have never seen before,” Mearsheimer tells Vice. And Cohen adds: “We’ve demonized Putin and we’ve Putinized Russia so we demonize Russia. Russophobia is running amok in this country. I’ve seen these things from the inside. I’ve re-thought and re-thought how we got to the edge of war with Russia, where we haven’t been since Cuba in 1962. And I have concluded, and I would be happy to debate my opponents… It is 95 percent our own doing.”

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Getting bored of this yet?

No-Deal Brexit Would Harm EU Countries As Well As UK, Warns IMF (G.)

Britain crashing out of the EU without a deal would inflict significant economic pain across Europe, leaving the region without any winners, the International Monetary Fund has warned. As the new Brexit secretary, Dominic Raab warned Europe to prepare for a no-deal exit, the IMF said such an outcome would hurt the UK most but would also have damaging economic consequences for Ireland and other EU nations. In its annual health check for the euro area, the Washington-based fund said economic growth across the 27 remaining EU states would fall by as much as 1.5% by 2030, if Britain falls back on WTO rules for its trading relationship with the EU after leaving next year.

While economic output for the UK would drop by more than twice that amount – wiping out almost 4% of GDP – Ireland would suffer by almost as much as a result of its strong ties to Britain and shared border. The Netherlands, Denmark and Belgium, with similar close proximity and trading links, would also lose around 1% of GDP. Smaller nations with deep financial links to the City of London, such as Malta, Cyprus and Luxembourg, would also be negatively affected by a hard Brexit, the fund warned. The IMF said the long-run impact from a hard Brexit would be spread across the EU as a result of the economic and financial ties spanning the region, which have grown closer by about 40% over the past quarter century. The UK ranks among the EU’s three largest trading partners, accounting for 13% of trade in goods and services. There are also complex supply chain links between companies across the bloc.

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So no Brexit then?

Theresa May: I Will Never Accept EU’s Ideas On Irish Brexit Border (G.)

Theresa May is to tell the European Union it is time to drop what she feels is their inflexible view on an Irish border solution and “evolve” their position to break the impasse in Brexit talks. In a speech in Belfast on Friday she is expected to brand the bloc’s calls for regulatory alignment north and south of the border as a “backstop” solution in the event of no deal as “unworkable”, and repeat her assertion that a border down the Irish Sea is unacceptable to any British prime minister. “The economic and constitutional dislocation of a formal ‘third country’ customs border within our own country is something I will never accept, and I believe no British prime minister could ever accept,” she will say.

May will tell an audience of business leaders and politicians that the EU proposal is in breach of the Belfast Agreement because it would create a barrier between Northern Ireland and Great Britain and leave the people of Northern Ireland “without their own voice” in trade negotiations. “It is not something the House of Commons will accept,” she is due to say. The EU’s other 27 states will have a chance to examine and respond to the white paper when its General Council of ministers meets in Brussels on Friday morning. They will also receive an update on negotiations from the European Commission’s chief negotiator, Michel Barnier.

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They’ll force people to pay for the software now.

Android Antitrust Fine Will Demolish Google Profit (MW)

When Alphabet Inc. reports earnings Monday, the European Union’s $5.07 billion Android antitrust fine will ruin the company’s profit. Alphabet stock was relatively flat Wednesday, when the fine formally was announced, and Google has said it plans to appeal the fine. However, the company disclosed in an SEC filing that it will account for the fine in its second-quarter report, due Monday after the bell. In terms of what it will cost the company in cash, the fine is not tax-deductible and worth roughly 75% of the company’s expected second-quarter net income of $6.72 billion, which will drastically lower per-share earnings as well.

Since analyst estimates largely do not include the fine as of yet, Alphabet’s earnings are likely to miss published expectations on the bottom line by a significant amount. The question that remains beyond the fine itself is how Google, in the long-term, will respond to the ruling, which prevents the search giant from effectively forcing mobile phone makers and telecom companies to pre-install its search engine and Chrome web browser, among other Google mobile apps, in exchange for use of the Android OS. The ruling is set to go into effect in 90 days, though an appeal would delay implementation.

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How to spell sovereignty. When were countries growing fastest? When they had strong unions.

IMF Raps Greece Over Its Bid To Reintroduce Labor Negotiations (K.)

The International Monetary Fund on Thursday issued a clear warning to the Greek government against its plans to reintroduce collective labor negotiations, saying that such a move would put the competitiveness of the Greek economy at risk. The IMF’s observation, included in its Article IV report that is not only about the Greek economy but concerns eurozone financial policies in general, comes almost a month before the party the government intends to stage for the end of the bailout program. The IMF intervention is particularly important for two additional reasons: first because it concerns a key dimension of the post-bailout government narrative, and second because the IMF is not an independent observer, as its technical experts will be conducting a considerable number of visits to Greece in the context of the post-program surveillance, and will prepare two assessment reports on the Greek economy every year.

There is also a third and possibly more important factor that adds to the significance of the IMF recommendation: It may be just a taste of the attitude the Fund will adopt toward Greece should the government implement its plans to increase the minimum salary. This may actually be an intervention with a preventative character. The government has already legislated the return from August – after the program ends – of two main principles in collective labor negotiations: the provision for the extension of collective contracts and the principle of the more favorable regulation.

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Jul 192018
 
 July 19, 2018  Posted by at 8:16 am Finance Tagged with: , , , , , , , , ,  


Félix Vallotton The balloon 1899

 

Is Goldman Sachs Really a Bank? Really? (Whalen)
Everyone Is Smart Except Trump (Fischer)
Russiagate Is Like 9/11, Except It’s Made Of Pure Narrative (CJ)
Kudlow: US Expecting Significant Trade Offer From EU Soon (CNBC)
Mega Tech’s Trillions Of Market Value In Eye-Popping Perspective (MW)
Amazon Now Accounts For 49% Of US Online Retail (ZH)
EU Commissioner On $5 Billion Fine: Google Has To ‘Stop This Behavior’ (CNBC)
How Can We Reverse Brexit When Europe Doesn’t Want Us Back? (Münchau)
Police ‘Identify’ Skripal Suspects (PA)
Cali High Court Orders Proposal To Split Up State Removed From Ballot (R.)
The Cashless Society Is A Con – And Big Finance Is Behind It (G.)
The Most Unbelievable Tax Break Ever (F.)

 

 

No, it’s not.

Is Goldman Sachs Really a Bank? Really? (Whalen)

Most of the largest US banks that reported earnings this week saw interest expense rise by mid-double digits even as interest earnings rose by single digits. Goldman Sachs, for example, saw its funding expenses increase 61% year-over-year (YOY) in Q2’18 while interest income rose just 50%. Citigroup (C), on the other hand, being already positioned in the world of institutional funding, saw interest expense rise only 28%. But the Q2’18 earnings seem to confirm a rising trend in funding costs that could see NIM flatten out and decline by 2019. When Solomon’s ascension to the top spot was announced at Goldman Sachs, our friend Bill Cohan commented on CNBC that this amounted to a takeover of GS by alumni of Bear, Stearns & Co. God does have a sense of humor.

He also reminded Andrew Sorkin et al on Squawk Box that the freewheeling Goldman of old is long gone and that GS is now run and regulated as “a bank.” Well, no, not really. Goldman Sachs is basically a broker-dealer with a small bank in tow. When you compare the net interest margin of GS with its peers, for example, the other members of Peer Group 1 defined by the FFIEC reported NIM of 3.28% vs 0.41% for GS in Q1’18. Because the bank unit of GS is so small, the overall NIM for the group is 1/10th of its peers compared with total assets. Goldman makes less than 2% on earning assets vs almost 4% for its asset peers. So to paraphrase the wisdom of Josh Brown, GS does not make money on interest rates, up or down, but rather earns fees from trading and investment banking. GS profits from the spread, both in terms of price and volume.

The basic problem confronting David Solomon and his colleagues is that GS really is not a bank. It is regulated like a bank and therefore constrained in terms of business activities, but it does not earn the carry on assets that most banks take for granted when they turn on the lights each morning. Talk of expanding the banking side of the business (aka “Marcus”) is fine, but progress in this regard is very slow indeed. Of the $9.4 billion in net revenues reported in Q2’18, just $1 billion represented net interest earnings.

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My Twitter account risks becoming unreadable because of this. I like diverse points of view, but there’s just too much nastiness. People retweeting factoids dozens of times a day.

Everyone Is Smart Except Trump (Fischer)

It really is quite simple. Everyone is smart except Donald J. Trump. That’s why they all are billionaires and all got elected President. Only Trump does not know what he is doing. Only Trump does not know how to negotiate with Vladimir Putin. Anderson Cooper knows how to stand up to Putin. The whole crowd at MSNBC does. All the journalists do. They could not stand up to Matt Lauer at NBC. They could not stand up to Charlie Rose at CBS. They could not stand up to Mark Halperin at NBC. Nor up to Leon Wieseltier at the New Republic, nor Jann Wenner at Rolling Stone, nor Michael Oreskes at NPR, at the New York Times, or at the Associated Press. But — oh, wow! — can they ever stand up to Putin! Only Trump is incapable of negotiating with the Russian tyrant.

Remember the four years when Anderson Cooper was President of the United States? And before that — when the entire Washington Post editorial staff jointly were elected to be President? Remember? Neither do I. The Seedier Media never have negotiated life and death, not corporate life and death, and not human life and death. They think they know how to negotiate, but they do not know how. They go to a college, are told by peers that they are smart, get some good grades, proceed to a graduate degree in journalism, and get hired as analysts. Now they are experts, ready to take on Putin and the Iranian Ayatollahs at age 30. That is not the road to expertise in tough dealing. The alternate road is that, along the way, maybe you get forced into some street fights.

Sometimes the other guy wins, and sometimes you beat the intestines out of him. Then you deal with grown-ups as you mature, and you learn that people can be nasty, often after they smile and speak softly. You get cheated a few times, played. And you learn. Maybe you become an attorney litigating multi-million-dollar case matters. Say what you will about attorneys, but those years — not the years in law school, not the years drafting legal memoranda, but the years of meeting face-to-face and confronting opposing counsel — those years can teach a great deal. They can teach how to transition from sweet, gentle, diplomatic negotiating to tough negotiating. At some point, with enough tough-nosed experience, you figure out Trump’s “The Art of the Deal” yourself.

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Well, it sells. Bigtime.

Russiagate Is Like 9/11, Except It’s Made Of Pure Narrative (CJ)

[..] the current administration has actually been far more aggressive against Russia than the previous administration was, and has worked against Russian interests to a far greater extent. If they wanted to, the international alliance of plutocrats and intelligence/defense agencies could just as easily use their near-total control of the narrative to advance the story that Trump is a dangerous Russia hawk who is imperiling the entire world by inflicting insane escalations against a nuclear superpower. They could elicit the exact same panicked emotional response that they are eliciting right now using the exact same media and the exact same factual situation. They wouldn’t have to change a single thing except where they place their emphasis in telling the story.

The known facts would all remain exactly as they are; all that would have to change is the narrative. Public support for Russiagate depends on the fact that most people don’t recognize how pervasively their day-to-day experience is dominated by narrative. If you are intellectually honest with yourself, you will acknowledge that you think about Russia a lot more now than you did in 2015. Russia hasn’t changed any since 2015; all that has changed is the narrative that is being told about it. And yet now the mass media and a huge chunk of rank-and-file America now view it as a major threat and think about it constantly. All they had to do was talk about Russia constantly in a fearful and urgent way, and now US liberals are convinced that Vladimir Putin is an omnipotent world-dominating supervillain who has infiltrated the highest levels of the US government.

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Juncker to visit Trump next week.

Kudlow: US Expecting Significant Trade Offer From EU Soon (CNBC)

Top White House economic adviser Larry Kudlow said the administration expects a significant trade offer to come from the European Union soon. In an interview at CNBC’s Delivering Alpha conference in New York on Wednesday, Kudlow said a lot of discussions are being held with individual countries. EU President Jean-Claude Juncker is coming to Washington next week, Kudlow said. “We will be in discussions,” he said. “I am told he’s bringing a very important free trade offer.” Kudlow added he couldn’t confirm that.

President Donald Trump has opened trade discussions on numerous fronts, using tariffs on products like steel and aluminum imports and the threat of tariffs on automobiles to get people to the negotiating table. The tariffs have rankled long-time allies in Europe and elsewhere, and tensions elevated after Trump’s visit to the NATO summit last week. That hasn’t deterred progress, however. “I am told through sources, including our ambassadors, that [German Chancellor Angela] Merkel has been working on that, shaking up the EU,” Kudlow said. “The president has put things on the table. The Europeans are looking at them, okay? And we may be pleasantly surprised.”

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“Value”.

Mega Tech’s Trillions Of Market Value In Eye-Popping Perspective (MW)

A picture is worth a thousand words but a pie chart may be more eloquent, especially when it comes to sizing up the giants of the tech industry. Michael Batnick, director of research at Ritholtz Wealth Management, on Wednesday tweeted out a chart that underscored how absolutely dominant tech companies have become in a world where size seems to increasingly matter. Batnick, in his tweet, noted that the top five S&P 500 companies — Apple, Amazon.com, Alphabet Inc., Microsoft and Facebook — combined are worth $4.095 trillion versus $4.092 trillion for the bottom 282 companies.

As mind-boggling as that may be, Batnick told MarketWatch that this sort of concentration is normal, pointing out that AT&T and General Motors represented 14.5% of the S&P 500 during their heyday in 1965. What is different today, however, is that all the big players are uniformly tech names. “The gains have been extraordinary over the past five years, with Facebook, Apple, Amazon, Microsoft and Google growing from $1.2 trillion to near $4 trillion,” wrote Batnick in a recent blog entry.

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At what point do we call it a monopoly?

Amazon Now Accounts For 49% Of US Online Retail (ZH)

Amazon will account for 49.1% of all online retail sales, up from 43% the year before, if they clear an expected $258 billion in sales this year. The stunning figure provided by research firm eMarketer is tempered by the fact that Amazon’s near-majority share of online sales accounts for just 5% of all retail sales. Amazon is set to rake in $258.22 billion in US retail sales in 2018, while annual growth has jumped 29.2% year-over-year, reports Tech Crunch. Fueling Amazon’s rise is a robust network of third-party sellers and a rapidly expanding range of goods from groceries to fashion – made all the more attractive for subscribers of their Prime services.

Now, it is fast approaching a tipping point where more people will be spending money online with Amazon, than with all other retailers — combined. Amazon’s next-closest competitor, eBay, a very, very distant second at 6.6 percent, and Apple in third at 3.9 percent. Walmart, the world’s biggest retailer when counting physical stores, has yet to really hit the right note in e-commerce and comes in behind Apple with 3.7 percent of online sales in the US. -TC

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And more fines coming. But who pays in the end?

EU Commissioner On $5 Billion Fine: Google Has To ‘Stop This Behavior’ (CNBC)

The EU’s commissioner for competition, Margrethe Vestager, said Google has to “stop this behavior” in an interview with CNBC on Wednesday, after a record antitrust fine against the company. “The thing that Google has to do now is of course to stop,” Vestager told “Squawk on the Street.” “This of course will free up the market to allow mobile manufacturers to use other Android systems.” Regulators hit the Alphabet unit with a $5 billion fine for abusing the dominance of its Android mobile operating system – by far the most popular smartphone OS in the world. The EU says Google pushed device makers to bundle Google apps like the Chrome web browser and Gmail, which harms competition. The European Commission, the EU’s executive body, threatened additional fines if Google didn’t put an end to illegal conduct within 90 days.

“They have products that we all like and like to use,” Vestager said. “The only thing we don’t like is when they get to misuse their success and put in place illegal restrictions.” Wednesday’s fine is the largest ever issued to Google, dwarfing even the $2.7 billion penalty from the EU last year for favoring its shopping service over competitors. The company plans to appeal the ruling, according to a statement. The commission is still investigating a third antitrust case against Google’s search advertising service, AdSense. “This is not about Apple, this is not about Android, this is about Google behavior — a behavior that’s illegal for a dominant company because it’s locking down competition and disabling innovation and choice that we would all like to enjoy,” Vestager said.

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Good question. But first more mayhem at home.

How Can We Reverse Brexit When Europe Doesn’t Want Us Back? (Münchau)

What strikes me most about the Brexit discussions in the UK is not the usual Eurosceptic xenophobia, but the lack of understanding of the EU’s position by those who campaign in favour of a Brexit reversal. The leaders of the EU are officially disappointed that Britain is headed for the door; secretly they will be relieved when it goes. In truth, the EU does not really want Brexit to be reversed. Why? Britain has a reputation as an obstreperous “partner” in the institutions, and in the past has sometimes made it harder for Europe to move forward—most notoriously in 2011, when David Cameron used the euro–crisis to try and extract concessions on other things. In the event of a reversal, the Europeans would rightly assume that the ghost of Brexit would never go away.

Ukip would be back in the European Parliament, adding strength to the Salvini and Le Pen factions. Brussels, Berlin and Paris could all do without that. Let’s imagine—and it’s more of a leap than many Remainers acknowledge—that all the legal questions could be swept out of the way. I suppose the EU would ultimately accept a reversal, but without enthusiasm—and with conditions. If a UK prime minister wrote a letter to Donald Tusk, president of the European Council, asking for Brexit to be reversed, he would immediately invoke a special EU summit, in which the other leaders would make at least three demands: the first is an end to the British budget rebate for the next budget period, and perhaps also an end to certain other instances of special treatment, such as on the Charter of Fundamental Rights.

Secondly, the EU would insist that the UK could not block decisions they have taken since the UK announced its intention to leave. The third ask would be for a political commitment by the big political parties not to trigger Brexit again after the next elections. Just let that sink in for a minute. And in any second referendum, the Brexiteers could reasonably argue that the UK was not simply remaining, but doing so on much less advantageous terms. Britain, in other words, would inject a whole new wave of political instability and unpleasantness into its own politics, and those of the continent, if—after all the turmoil—it tried to remain. It would become harder, not easier, for Europe to grapple with the really big challenges it faces with the UK back on board.

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No they haven’t. An unnnamed cources alleges the police say it’s the Russians. And that is presented as news. Because waiting for proof is so last century.

Police ‘Identify’ Skripal Suspects (PA)

Police are believed to have identified the suspected perpetrators of the Novichok attack on Russian former spy Sergei Skripal. Officers think several Russians were involved in the attempted murder of the former double agent and daughter Yulia in Salisbury and are looking for more than one suspect. A source with knowledge of the investigation told the Press Association: “Investigators believe they have identified the suspected perpetrators of the Novichok attack through CCTV and have cross-checked this with records of people who entered the country around that time. They (the investigators) are sure they (the suspects) are Russian.”

The news comes as an inquest is due to open on Thursday for Dawn Sturgess, 44, who died earlier this month, eight days after apparently coming into contact with Novichok from the same batch used in the attempted murder of the Skripals in March. Her partner Charlie Rowley, 45, was left fighting for his life after also being contaminated by the chemical weapon. It is understood Sturgess was exposed to at least 10 times the amount of nerve agent the Skripals came into contact with. Investigators are working to the theory that the substance was in a discarded perfume bottle found by the couple in a park or somewhere in Salisbury city centre and Sturgess sprayed Novichok straight on to her skin, the source said.

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Some rich guy’s hobby.

Cali High Court Orders Proposal To Split Up State Removed From Ballot (R.)

The California Supreme Court on Wednesday ordered the November ballot purged of an initiative that seeks to split California into three states, citing significant questions raised about the proposal’s validity. State election officials certified last month that supporters of the so-called Cal3 measure, also known as Proposition 9, had collected enough signatures to qualify it for the ballot in the country’s most populous state. An environmental group, the Planning and Conservation League, challenged the measure in court, arguing it posed a “revision” of the state constitution – as opposed to an amendment – that is too sweeping to be legally subjected to the direct consent of the voters.

Siding with opponents for the time being, the court directed state election officials to keep the measure off the upcoming November ballot to allow the justices sufficient time to review and decide the merits of the case. The court left open the possibility of allowing the initiative to be put before voters in the future, saying the “potential harm in permitting the measure to remain on the ballot outweighs” the harm of its delay. The initiative was launched by billionaire Silicon Valley venture capitalist Tim Draper, who has argued that California’s size makes it ungovernable. He failed in two previous bids to qualify a six-way split of California for the ballot.

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Nudging.

The Cashless Society Is A Con – And Big Finance Is Behind It (G.)

All over the western world banks are shutting down cash machines and branches. They are trying to push you into using their digital payments and digital banking infrastructure. Just like Google wants everyone to access and navigate the broader internet via its privately controlled search portal, so financial institutions want everyone to access and navigate the broader economy through their systems. Another aim is to cut costs in order to boost profits. Branches require staff. Replacing them with standardised self-service apps allows the senior managers of financial institutions to directly control and monitor interactions with customers. Banks, of course, tell us a different story about why they do this.

I recently got a letter from my bank telling me that they are shutting down local branches because “customers are turning to digital”, and they are thus “responding to changing customer preferences”. I am one of the customers they are referring to, but I never asked them to shut down the branches. There is a feedback loop going on here. In closing down their branches, or withdrawing their cash machines, they make it harder for me to use those services. I am much more likely to “choose” a digital option if the banks deliberately make it harder for me to choose a non-digital option. In behavioural economics this is referred to as “nudging”. If a powerful institution wants to make people choose a certain thing, the best strategy is to make it difficult to choose the alternative.

We can illustrate this with the example of self-checkout tills at supermarkets. The underlying agenda is to replace checkout staff with self-service machines to cut costs. But supermarkets have to convince their customers. They thus initially present self-checkout as a convenient alternative. When some people then use that alternative, the supermarket can cite that as evidence of a change in customer behaviour, which they then use to justify a reduction in checkout employees. This in turn makes it more inconvenient to use the checkout staff, which in turn makes customers more likely to use the machines. They slowly wean you off staff, and “nudge” you towards self-service.

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Looks like a good story. But is it?

The Most Unbelievable Tax Break Ever (F.)

Success Street in North Charleston, South Carolina, might be the most misnamed place in America, a path through a weedy, desolate neighborhood with 20% unemployment and a 40% poverty rate. Its biggest claim to fame strolls past the gritty brick apartment buildings and tumbledown bungalows on a muggy morning in late June: Timothy Scott, a local product who grew up to become the first black Republican U.S. senator in more than three decades. Joining Scott is another success story: the frenetic, peripatetic tech billionaire Sean Parker, who flew in by private jet from Los Angeles’ ritzy Holmby Hills for a personal tour of the senator’s hometown.

“I remember so many kids with amazing potential who died on the vine,” Scott says as he surveys the shuttered Chicora Elementary School, where weeds climb the walls and graying plywood shields shattered windows. “The frustration, irritation and low expectations were so pervasive here that I always wanted to make a difference.” He now may get his chance. Today’s visit is less a grim walk down memory lane than a legislative victory lap for Scott and Parker. The unlikely pair are core members of an even more unlikely group of conservatives and liberals, capitalists and philanthropists, U.S. lawmakers and small-town mayors who have successfully created one of the greatest tax-avoidance opportunities in American history, in the service of underperforming American cities and neighborhoods.

For all the focus on drastic tax-rate cuts, the fate of the state and local tax deduction and the exploding federal deficits, it’s the least-known part of last year’s tax-cut law that could be the most consequential. Officially called the Investing in Opportunity Act, it promises to pump a massive amount of cash into America’s most impoverished communities by offering wealthy investors and corporations a chance to erase their tax obligations. [..] The heart of this new law: Opportunity Zones, or “O-zones,” low-income areas designated by each state. Investors will soon be able to plow recently realized capital gains into projects or companies based there, slowly erase the tax obligations on a portion of those gains and, more significantly, have those proceeds grow tax-free. There are almost no limits.

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May 152018
 
 May 15, 2018  Posted by at 8:51 am Finance Tagged with: , , , , , , , , , ,  


Henri Matisse Odalisque couchée aux magnolias 1923

 

Making Money In The Stock Market Just Got A Lot More Difficult (MW)
America’s Worst Long-Term Challenges: #1- Debt. (Black)
Fifteen Thoughts About Israel (Caitlin Johnstone)
Australia Probes Claim Google Harvests Data, Makes Consumers Pay (R.)
Warning Sounded Over China’s ‘Debtbook Diplomacy’ (G.)
China Really Is To Blame For Millions Of Lost US Manufacturing Jobs (MW)
No Progress Made On Any Key Area Of Brexit For Months – EU (Ind.)
Russian Company Charged In Mueller Probe Seeks Grand Jury Materials (R.)
Bridge From Mainland Russia To Crimea Hours Away From Opening (RT)
Industrial Trans Fats Must Be Removed From Food Supply –
Bank of England Should Print Money To Prevent Climate Change (Ind.)
Wildlife Poachers In Kenya ‘To Face Death Penalty’ (Ind.)

 

 

Bonds yield more than stocks.

Making Money In The Stock Market Just Got A Lot More Difficult (MW)

For almost a decade, it’s been extremely difficult to lose money in the U.S. stock market. Over the next decade, it could be hard to do anything but, according to analysts at Morgan Stanley. The outlook for market returns has precipitously worsened in recent months, with analysts and investors growing increasingly confident that the lengthy bull market that began in the wake of the financial crisis could be, if not coming to a close, petering out. More market participants view the economy as being in the late stage of its cycle, and a recession is widely expected in the next few years. All of that could result in an equity-market environment that’s a mirror image of recent years, where gains were pretty much uninterrupted, and volatility was subdued.

“2018 is seeing multiple tailwinds of the last nine years abate,” Morgan Stanley analysts wrote in a report to clients that was entitled “The End of Easy,” in reference to the investing environment. “Decelerating growth, rising inflation and tightening policy leave us with below-consensus 12-month return forecasts for most risk assets. After nine years of markets outperforming the real economy, we think the opposite now applies as policy tightens.” As part of its call, Morgan Stanley reduced its view on global equities to equal weight, saying they were “in a range-trading regime with limited 12-month upside.” It raised its exposure to cash, following Goldman Sachs, which last week upgraded its view on the asset class on a short-term basis.

U.S. GDP grew at an annualized 2.3% in the first quarter, below the 3% average of the previous three quarters, as consumer spending hit its weakest level in five years. While slowing growth isn’t the same as a contraction, the data added to concerns that a period of synchronized global growth was coming to a close. According to a BofA Merrill Lynch Global survey of fund managers in April, just 5% of respondents expect faster global growth over the coming 12 months, compared with the roughly 40% that did at the start of the year.

[..] Howard Wang, the co-founder of Convoy Investments, called the Fed’s ballooning balance sheet “the fundamental driver of asset prices over the last decade.” He provided the chart below, which compares the growth in the U.S. money supply against the long-term return of all assets, including global equities, bond categories, real estate, and gold. “I believe the trend of shrinking money supply in the system will continue for some time to come,” Wang wrote. “This adjustment is a painful but necessary process for healthier markets and economies.”

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$52,000 per second.

America’s Worst Long-Term Challenges: #1- Debt. (Black)

On October 22, 1981, the national debt in the United States crossed the $1 trillion threshold for the first time in history. It took nearly two centuries to reach that unfortunate milestone. And over that time the country had been through a revolution, civil war, two world wars, the Great Depression, the nuclear arms race… plus dozens of other wars, financial panics, and economic crises. Today, the national debt stands at more than $21 trillion– a milestone hit roughly two months ago. This means that the government added $20 trillion to the national debt in the 37 years between October 22, 1981 and March 15, 2018.

That’s an average of nearly $1.5 BILLION added to the national debt every single day… $62 million per hour… $1 million per minute… and more than $17,000 per SECOND. But the problem for the US government is that this trend has grown worse over the years. It took only 214 days for the government to go from $20 trillion in debt to $21 trillion in debt– less than eight months to add a trillion dollars to the national debt. That’s an average of almost $52,000 per second. Think about that: on average, the US national debt increases by more in a split second than the typical American worker earns in an entire year. And there is no end in sight.

At 105% of GDP, America’s national debt is already larger than the size of the entire US economy. (By comparison the national debt was just 31% of GDP in 1981.) Plus, the government’s own projections show a steep increase to the debt in the coming years and decades. The Treasury Department has already estimated that it will borrow $1 trillion this fiscal year, $1 trillion next year, and another trillion dollars the year after that. They’re also forecasting the national debt to exceed $30 trillion by 2025.

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I’ll let Caitlin do the talking. The damage done to America yesterday will be felt for a long time.

Fifteen Thoughts About Israel (Caitlin Johnstone)

1. I hate writing about Israel. The accusations of anti-semitism which necessarily go along with literally any criticism of that nation are gross enough, but even worse are the assholes who take my criticisms of the Israeli government as an invitation to actually be anti-semitic. They really do hate Jews, they really do think that every problem in the world is because of Jews and they post Jewish caricature memes and calls for genocide in the comments section on social media and it’s incredibly gross and I hate it. It feels exactly as intrusive, jarring and violating as receiving an unsolicited dick pic. But the Israeli government keeps committing war provocations and massacring Palestinians, so it’s something I’ve got to talk about.

2. Anti-semitism (or whatever word you prefer to use for the pernicious mind virus which makes people think it’s okay to promote hatred against Jewish people) is a very real thing that does exist, and I denounce it to the furthest possible extent. Anti-semitism is also a label that is used to bully the world into accepting war crimes, apartheid, oppression, and mass murder. Both of those things are true.

3. There were dozens of Palestinians killed and well above a thousand injured in the Gaza protests over the US moving its embassy to Jerusalem yesterday. I haven’t found any report of so much as a single Israeli injury. The only way to spin this as the fault of the Palestinians is to dehumanize them, to attribute behaviors and motives to them that we all know are contrary to human nature. To paint them as subhuman orc-like creatures who are so crazy and evil that they will keep throwing themselves at a hail of bullets risking life and limb just to have some extremely remote chance of harming a Jewish person for no reason. This is clearly absurd. A little clear thinking and empathy goes a long way.

6. Any position on Israel that is determined by words made up by dead men thousands of years ago is intrinsically invalid. Saying the Jewish people are more entitled to Israel than those who were living there seven decades ago because of some superstitious voodoo written in obsolete religious texts is not an argument. Religious freedom is important, and it’s important to be able to believe whatever you like, but your beliefs do not legitimize your actions upon other people. If you murder someone in the name of Allah, you have murdered someone. If you kill 58 people because you feel some ancient scripture entitles you to a particular section of dirt, you have killed 58 people. Your internal beliefs do not give you a free pass for your egregious actions upon others.

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Betcha it’s true. Making people pay to be spied upon.

Australia Probes Claim Google Harvests Data, Makes Consumers Pay For It (R.)

Google is under investigation in Australia following claims that it collects data from millions of Android smartphones users, who unwittingly pay their telecom service providers for gigabytes consumed during the harvesting, regulators said on Tuesday. Responding to the latest privacy concerns surrounding Google, a spokesman for the U.S. based search engine operator said the company has users’ permission to collect data. The Australian investigations stem from allegations made by Oracle Corp in a report provided as part of an Australian review into the impact that Google, owned by Alphabet Inc, and Facebook have on the advertising market. Both the Australian Competition and Consumer Commission (ACCC) and the country’s Privacy Commissioner said they were reviewing the report’s findings.

“The ACCC met with Oracle and is considering information it has provided about Google services,” said Geesche Jacobsen, a spokeswoman for the competition regulator. “We are exploring how much consumers know about the use of location data and are working closely with the Privacy Commissioner.” Oracle, according to The Australian newspaper, said Alphabet receives detailed information about people’s internet searches and user locations if they have a phone that carries Android – the mobile operating system developed by Google. Transferring that information to Google means using up gigabytes of data that consumers have paid for under data packages purchased from local telecom service providers, according to the Oracle report.

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As I’ve said for a long time, this is the Belt and Road scheme.

Warning Sounded Over China’s ‘Debtbook Diplomacy’ (G.)

China’s “debtbook diplomacy” uses strategic debts to gain political leverage with economically vulnerable countries across the Asia-Pacific region, the US state department has been warned in an independent report. The academic report, from graduate students of the Harvard Kennedy school of policy analysis, was independently prepared for the state department to view and assessed the impact of China’s strategy on the influence of the US in the region. The paper identifies 16 “targets” of China’s tactic of extending hundreds of billions of dollars in loans to countries that can’t afford to pay them, and then strategically leveraging the debt.

It said while Chinese infrastructure investment in developing countries wasn’t “inherently” against US or global interests, it became problematic when China’s use of its leverage ran counter to US interests, or if the US had strategic interests in a country which had its domestic stability undermined by unsustainable debt. The academics identified the most concerning countries, naming Pakistan and Sri Lanka as states where the process was “advanced”, with deepening debt and where the government had already ceded a key port or military base, as well places including Papua New Guinea and Thailand, where China had not yet used its amassed debt leverage.

Papua New Guinea, which “has historically been in Australia’s orbit”, was also accepting unaffordable Chinese loans. While this wasn’t a significant concern yet, the report said, the country offered a “strategic location” for China, as well as large resource deposits. While there was a lack of “individual diplomatic clout” in Cambodia, Laos and the Philippines, Chinese debt could give China a “proxy veto” in Asean, the academics said.

[..] China’s methods were “remarkably consistent”, the report said, beginning with infrastructure investments under its $1tn belt and road initiative, and offering longer term loans with extended grace periods, which was appealing to countries with weaker economies and governance. Construction projects, which the report said had a reputation for running over budget and yielding underwhelming returns, make debt repayments for the host nations more difficult. “The final phase is debt collection,” it said. “When countries prove unable to pay back their debts, China has already and is likely to continue to offer debt-forgiveness in exchange for both political influence and strategic equities.”

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That’s been obvious for many years.

China Really Is To Blame For Millions Of Lost US Manufacturing Jobs (MW)

Millions of Americans who lost manufacturing jobs during the 2000s have long ”known” China was to blame, not robots. And many helped elect Donald Trump as president because of his insistence that China was at fault. Evidently many academics who’ve studied the issue are finally drawing the same conclusion. For years economists have viewed the increased role of automation in the computer age as the chief culprit for some 6 million lost jobs from 1999 to 2010 — one-third of all U.S. manufacturing employment. Firms adopted new technologies to boost production, the thinking goes, and put workers out of the job in the process. Plants could make more stuff with fewer people.

In the past several years fresh thinking by economists such as David Autor of MIT has challenged that view. The latest research to poke holes in the theory of automation-is-to-blame is from Susan Houseman of the Upjohn Institute. Academic research tends to be dry and complicated, but Houseman’s findings boil down to this: The government for decades has vastly overestimated the growth of productivity in the American manufacturing sector. It’s been growing no faster, really, than the rest of the economy. What that means is, the adoption of technology is not the chief reason why millions of working-class Americans lost their jobs in a vast region stretching from the mouth of the Mississippi river to the shores of the Great Lakes. Nor was it inevitable.

Autor and now Houseman contend the introduction of China into the global trading system is root cause of the job losses. Put another way, President Bill Clinton and political leaders who succeeded him accepted the risk that the U.S. would suffer short-term economic harm from opening the U.S. to Chinese exports in hopes of long-run gains of a more stable China. No longer needing to worry about U.S. tariffs, the Chinese took full advantage. Low Chinese wages and a cheap Chinese currency — at a time when the dollar was strong — gave China several huge advantages. Companies shuttered operations in the U.S., moved to China and eventually set up research hubs overseas in another blow to the America’s economic leadership. The cost to the U.S. is still being tallied up.

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Gee, what a surprise.

No Progress Made On Any Key Area Of Brexit For Months – EU (Ind.)

EU27 ministers met on Monday with the bloc’s chief negotiator Michel Barnier in Brussels to discuss the state of talks so far. “Mr Barnier informed us that since 23 March no significant progress has been made on the three pillars that we work on: withdrawal, future framework, and Ireland,” Ekaterina Zakharieva, the Bulgarian foreign minister chairing the council, told journalists at an official press conference following the meeting. The renewed deadlock in Brussels comes as Theresa May’s cabinet repeatedly fails to agree with itself on what customs arrangement it wants with the EU after Brexit, despite publishing two options in August of last year. Both those options were dismissed as “magical thinking” by the EU at the time.

Speaking at a separate event in Brussels on Monday evening, Mr Barnier himself said that full talks on the future relationship had not even started in earnest despite getting the green light at a summit in March. “There is still a lot of uncertainty. Negotiations on the future with the UK have not started yet. We have had first exploratory discussions,” he said. Ms Zakharieva said the EU27 countries wanted more “intensive engagement by the UK government in the coming weeks”, warning that the October deadline was “only five months from now”. Ms May will next meet EU leaders in Brussels at the end of June for a meeting of the European Council.

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If you can’t see the material used to accuse you, what rights do you have?

Russian Company Charged In Mueller Probe Seeks Grand Jury Materials (R.)

A Russian company accused by Special Counsel Robert Mueller of funding a propaganda operation to interfere in the 2016 U.S. presidential election is asking a federal judge for access to secret information reviewed by a grand jury before it indicted the firm. In a court filing on Monday, lawyers for Concord Management and Consulting LLC said Mueller had wrongfully accused the company of a “make-believe crime,” in a political effort by the special counsel to “justify his own existence” by indicting “a Russian-any Russian.” They asked the judge for approval to review the instructions provided to the grand jury, saying they believed the case was deficient because Mueller lacked requisite evidence to show the company knowingly and “willfully” violated American laws.

Concord is one of three entities and 13 Russian individuals charged earlier this year by Mueller’s office, in an alleged criminal and espionage conspiracy to meddle in the U.S. race, boost then-presidential candidate Donald Trump and disparage his Democratic opponent Hillary Clinton. The indictment said Concord was controlled by Russian businessman Evgeny Prigozhin, who U.S. officials have said has extensive ties to Russia’s military and political establishment. Prigozhin, also personally charged by Mueller, has been dubbed “Putin’s cook” by Russian media because his catering business has organized banquets for Russian President Vladimir Putin and other senior political figures. He has been hit with sanctions by the U.S. government. Concord is facing charges of conspiring to defraud the United States, and is accused of controlling funding, recommending personnel and overseeing the activities of the propaganda campaign.

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“..more than half a year ahead of schedule..” Try that at home.

Bridge From Mainland Russia To Crimea Hours Away From Opening (RT)

The bridge across the Kerch Strait, which will connect the Crimean Peninsula and Krasnodar Region is set to open on Tuesday. Construction of the bridge, the longest in Russia with a span of 19 kilometers, has been carried out since February 2016, and it is opening for cars more than half a year ahead of schedule. The bridge capacity is 40,000 cars and 47 pairs of trains per day, 14 million passengers and 13 million tons of cargo per year. The railway section is scheduled to open in early 2019, the bridge will be opened for trucks starting from October of this year.

The link became vital after Crimea voted to rejoin Russia in 2014, as the peninsula’s only land border is with Ukraine. Before the opening, regular passenger and cargo deliveries were organized by direct flights and ferries from ports in southern Russia. Each pillar of the bridge needs about 400 tons of metal structures, which means that all pillars need as much iron as 32 Eiffel towers. The bridge’s piles are installed at least 90 meters under water.

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It’s very easy to just ban the stuff. That your governments haven’t simply done that says a lot.

Industrial Trans Fats Must Be Removed From Food Supply – WHO (G.)

Trans fats used in snack foods, baked foods and fried foods are responsible for half a million deaths worldwide each year and must be eliminated from the global food supply, the World Health Organization says today. Most of western Europe has already acted to reduce industrially made trans fats from factory-made foods. Denmark, like New York, which followed its lead, has an outright ban. Big food companies elsewhere have been under intense pressure to use substitutes. In the UK, the latest national diet and nutrition survey shows average intake of trans fats is well below the recommended upper limit of 2% of food energy, at 0.5-0.7%. Although companies manufacturing processed food in the UK do not use trans fats any more, the fats are in some cheap foods imported from other countries.

The WHO is calling on all governments to take action, including passing laws or regulations to rid their food supply of industrial trans fats. Director general Dr Tedros Adhanom Ghebreyesus said eliminating trans fats would “represent a major victory in the global fight against cardiovascular disease”. The WHO is targeting industrially made trans fats, but trans fats are also contained in milk, butter and cheese derived from ruminants, mainly cows and sheep. Dr Francesco Branca, director of the Department of Nutrition for Health and Development at the WHO, said the amounts we eat in dairy products are unlikely to breach the health guidelines. “We are saying that trans fats contained in those products have the same effect as industrial trans fats – we are not able to tell the difference,” he said. “But the amount contained in dairy products is much less.”

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How about money NOT to build roads?

Bank of England Should Print Money To Prevent Climate Change (Ind.)

The Bank of England should print money for the government to invest in the low-carbon economy to combat climate change, according to a new report. The BoE must also offload fossil fuel assets and use its existing powers more effectively to promote green projects, the campaign and research group Positive Money says. The report argues that the bank’s mandate to secure financial stability “looks incoherent over time unless it considers the long-term viability of the economy”. That viability will be undermined unless the threat of climate change is tackled soon, the researchers say. “The nature of climate change is such that either physical damage from weather or radical changes in technology and policy will occur in some combination, so action is needed now,” the report says.

It challenges the bank’s record on climate change and says its programme of, in effect, printing billions of pounds to prop up the economy has disproportionately helped carbon-intensive companies that are choking the planet. Under quantitative easing (QE), the bank has bought billions of pounds of debt from companies and the government. This is supposed to increase demand for debt, which in turn lowers interest rates. Cheaper borrowing means more borrowing which is supposed to be used to fund economic activity. But the researchers argue that QE has been actively harmful to efforts to combat climate change because the bank’s own criteria have been skewed towards buying debt from high-carbon sectors like manufacturing and utilities.

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The only solution left.

Wildlife Poachers In Kenya ‘To Face Death Penalty’ (Ind.)

Wildlife poachers in Kenya will face the death penalty, the country’s tourism and wildlife minister has reportedly announced. Najib Balala warned the tough new measure would be fast-tracked into law. Existing deterrents against killing wild animals in the east African nation are insufficient, Mr Balala said, according to China’s Xinhua news agency. So in an effort to conserve Kenya’s wildlife populations, poachers will reportedly face capital punishment once the new law is passed. Kenya is home to a wide variety of treasured species in national parks and reserves, including lions, black rhinos, ostriches, hippos, buffalos, giraffe and zebra.

Last year in the country 69 elephants – out of a population of 34,000 – and nine rhinos – from a population of under 1,000 – were killed. “We have in place the Wildlife Conservation Act that was enacted in 2013 and which fetches offenders a life sentence or a fine of US$200,000,” Mr Balala reportedly said. “However, this has not been deterrence enough to curb poaching, hence the proposed stiffer sentence.”

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Apr 232018
 
 April 23, 2018  Posted by at 9:49 am Finance Tagged with: , , , , , , , , , ,  


Russell Lee Highway tavern. Crystal City, Texas 1939

 

A Google Breakup Would Fit the EU’s Logic (BBG)
Customs Union U-Turn By May Could Inspire Brexiter Cabinet Revolt (G.)
The Windrush Story Was Not A Rosy One Even Before The Ship Arrived (G.)
Britain, Headquarters Of Fraud (G.)
China Q1 Imports From North Korea Fall 87% Year-On-Year (R.)
How China Is Buying Its Way Into Europe (BBG)
China Factory Crackdown Masks Sweeping Takeover By The State (BBG)
Canadians Just Set A New Record For Borrowing Against Their Homes (BD)
MSM Is Frantically Attacking Dissenting Syria Narratives (CJ)
WikiLeaks To Countersue Democrats; “Discovery Is Going To Be Amazing Fun” (ZH)
One In Eight Bird Species Is Threatened With Extinction (G.)

 

 

Does Google think it can win this?

A Google Breakup Would Fit the EU’s Logic (BBG)

On Thursday, the European Parliament backed the idea of breaking up Google. It doesn’t have the power to do it, but the legislators’ decision is a notable part of a backlash against the remedial action Google took after the European Commission fined it 2.4 billion euros ($2.95 billion) for abusing its dominant position in shopping search. That backlash can lead to dire consequences for the search giant. The commission found last June that by giving its own product comparison service, Google Shopping, prime “real estate” at the top search result pages, Google was hampering competition for independent shopping comparison websites. The company’s remedy is to hold auctions for spaces in the special box in which comparison results appear if a user searches for a product to buy.

Google Shopping bids in these auctions on the same terms as its rivals, and Google has promised to keep the service profitable so it can’t outbid the competition every time with the company’s vastly superior resources. Yet, months after the remedy was applied, it’s next to impossible to run into a non-Google offer in that box. The original complainants, notably the U.K. firm Foundem, have been campaigning to have Google declared non-compliant. Foundem’s argument is laid out in an interactive presentation released on April 18. The British company argues that even though Google claims to run Google Shopping at arm’s length, it’s merely an obfuscation, a meaningless accounting arrangement. In reality, Google as a whole still harvests 100% of the profit from the ads in runs after winning auctions – plus 80% of the profits from competing services’ ads in the form of their winning bids.

“While Google’s promise to run Google Shopping at a notional ‘profit’ may allow rival services to bid their way into ‘the box,’ it does nothing to address the seismic inequality between bids that cost you nothing and bids that cost you most of your incentive and ability to innovate and grow,” Foundem wrote in the presentation. The annual report on competition policy from the European Parliament’s Committee on Economic and Monetary Affairs, which the legislature approved on Thursday, shows that at least some in the “Brussels bubble” that rules the EU are receptive to Foundem’s argument. “Without a full-blown structural separation between the company’s general and specialised search services, an auction-based approach might not deliver equal treatment,” the report says.

[..] If Google is declared non-compliant, its parent company, Alphabet Inc., can be forced to pay up to 5 percent of its daily turnover for every day that it has violated the commission’s ruling, meaning, theoretically, since last September. Taking Alphabet’s average daily revenue in the fourth quarter of 2017 as a base, that’s about $17.6 million a day for seven months and counting. This could end up being worse than the original fine, which Google is appealing. Even a breakup could be preferable to paying this sort of penalty for a protracted period.

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The mess spreads.

Customs Union U-Turn By May Could Inspire Brexiter Cabinet Revolt (G.)

Theresa May could face a cabinet revolt on a customs union as peers prepare to inflict more defeats on the government over the EU withdrawal bill in a key week for the future of the UK’s relations with Europe. Amid Brexiter threats of a leadership challenge, the former cabinet minister Nicky Morgan, who chairs the Treasury committee, said party rebels should be careful what they wished for. “This sabre-rattling is not coming from the section of the party that I represent. It is coming from the pro-Brexit section of the party and is deeply unhelpful,” she said. Government hopes of avoiding a hard border in Ireland either through technological innovation or regulatory alignment have been set back after they were rejected during preliminary negotiations in Brussels.

That has led to speculation that May is preparing to concede on a customs union, which has been a red line since the prime minister’s conference speech in October 2016. Reports over the weekend suggested a “wargaming” exercise into the consequences of a concession showed that not even leading Brexiters such as Michael Gove, the environment secretary, or Boris Johnson, the foreign secretary, would resign. But a source close to Gove reiterated his opposition: “Michael believes respecting the referendum result means taking back control of trade policy. He fully supports the prime minister’s position that this means leaving the customs union.” Although the loss of other pledges in negotiations have been reluctantly accepted, such as the promise to reclaim control over fishing quotas from March 2019, accepting continued membership of a customs union would be of a different and much larger scale.

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Superiority complex writ large

The Windrush Story Was Not A Rosy One Even Before The Ship Arrived (G.)

This is a year so overflowing with anniversaries that it was perhaps always going to draw our attention to the histories of race and migration in Britain. June marks the 70th anniversary of the arrival of the Empire Windrush at Tilbury Docks, carrying 492 West Indians who were looking to rewrite their fortunes in a Britain desperate for labour. The Windrush is now so much part of British history that almost instantly it became the shorthand used to describe the generation of black Britons whose plight has so shocked the country.

Friday 20 April was an anniversary of a darker kind, 50 years since Enoch Powell delivered his “rivers of blood” speech. That toxic diatribe, with its unsubtle references to “piccaninnies” and the “whip hand”, remains politically radioactive half a century later, as Radio 4 discovered last weekend when it broadcast the speech in an anniversary documentary. Today is the sombre anniversary of the murder of Stephen Lawrence, 25 years ago.

But there is another 2018 anniversary that, until last week, might well had passed by quietly, hardly noticed. This year marks 70 years since the passing of the 1948 British Nationality Act, which was being debated while the Windrush was crossing the Atlantic; gaining royal ascent in July 1948, as the Windrush pioneers were settling into their new jobs. Although now obscure, it was a law that Powell once referred to as “that most evil statute”. Much of what has happened over the past week can be traced back to that forgotten but critical piece of legislation. The act was intended to reaffirm what many in the late 1940s regarded as a “time-honoured principle”, the doctrine that all British subjects should have the automatic right to travel to and settle in the United Kingdom.

[..] Even before the Windrush had left Jamaica, the prime minister, Clement Attlee, had examined the possibility of preventing its embarkation or diverting the ship and the migrants on board to East Africa. After the vessel had arrived at Tilbury, the colonial secretary, Arthur Creech Jones, is said to have reassured his cabinet colleagues that, although “these people have British passports and must be allowed to land there’s nothing to worry about because they won’t last one winter in England” (detailed in Randall Hansen’s book Citizenship and Immigration in Post-War Britain). When that prediction was proved false, ministers began to consider how they might revoke the commitments enshrined in the 1948 act.

What followed was a two decade-long political struggle to change Britain’s immigration law and reduce the flow of immigrants from the so-called New Commonwealth. This is the other side of the Windrush story. In 1971, a new immigration act finally achieved that aim and stemmed the flow of migrants from the New Commonwealth. The same law granted those who had already arrived indefinite leave to remain. That would have been the end of the story, had not, in 2013, those thousands been pushed into Theresa May’s “hostile environment”. The current crisis is a relic left by the political struggle to row back from the commitments made in the 1948 act.

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Competition for the title is stiff.

Britain, Headquarters Of Fraud (G.)

Officials get fed up with accusations that Britain is a cesspool of dirty money; that they do too little to check the wealth hidden behind shell corporations. They grouse among themselves that their critics overlook the work they’re doing to expose the money flows and to drive out the corrupt. When they do get a win, therefore, they trumpet it. Last month, Companies House successfully prosecuted someone who had lied in setting up a company, the kind of white-collar crime committed by the sophisticated fraudsters who fleece ordinary Brits every day, and the government went large. “This prosecution – the first of its kind in the UK – shows the government will come down hard on people who knowingly break the law and file false information on the company register,” crowed business minister, Andrew Griffiths, in a press release.

A Warwickshire businessman called Kevin Brewer had pleaded guilty, paid a fine and the government’s costs: a total of more than £12,000. His crime had been to falsely claim that two companies he created belonged, in one case, to the MP Vince Cable, and, in the other, to the MP James Cleverly, Lady Neville-Rolfe and an imaginary Israeli. At first, the public response to the news was everything the press release’s authors could have hoped for. The Times splashed with the details of the crime – the government was tough on fraud, tough on the causes of fraud. But the victory was short-lived.

Within a month of the triumphant press release, Tory MP John Penrose, the government’s anti-corruption champion, was slamming the prosecution as “a bone-headed exercise in shooting the messenger”. Brewer may have been, by his own admission, naive, but he was trying to expose a flaw in British regulations that enables frauds totalling hundreds of billions of pounds. His reward was years of being ignored and, finally, a criminal record. “That has to be wrong,” said Penrose.

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Can we check this?

China Q1 Imports From North Korea Fall 87% Year-On-Year (R.)

China’s imports from North Korea fell 87% in the first quarter from a year earlier to 448.8 million yuan ($71.31 million), customs data showed on Monday, while exports to North Korea were down 46.1% to 2.68 billion yuan. For March, China’s exports to North Korea were 907.54 million yuan while imports from North Korea were 78.5 million yuan. China’s March total trade with North Korea was 986.07 million yuan, customs data showed.

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Cue protectionism.

How China Is Buying Its Way Into Europe (BBG)

For more than a decade, Chinese political and corporate leaders have been scouring the globe with seemingly bottomless wallets in hand. From Asia to Africa, the U.S. and Latin America, the results are hard to ignore as China has asserted itself as an emerging world power. Less well known is China’s diffuse but expanding footprint in Europe. Bloomberg has crunched the numbers to compile the most comprehensive audit to date of China’s presence in Europe. It shows that China has bought or invested in assets amounting to at least $318 billion over the past 10 years. The continent saw roughly 45% more China-related activity than the U.S. during this period, in dollar terms, according to available data.

The volume and nature of some of these investments, from critical infrastructure in eastern and southern Europe to high-tech companies in the west, have raised a red flag at the EU level. Leaders that include Angela Merkel and Emmanuel Macron are pressing for a common strategy to handle China’s relentless advance into Europe, with some opposition from the EU’s periphery. We analyzed data for 678 completed or pending deals in 30 countries since 2008 for which financial terms were released, and found that Chinese state-backed and private companies have been involved in deals worth at least $255 billion across the European continent. Approximately 360 companies have been taken over, from Italian tire maker Pirelli to Irish aircraft leasing company Avolon, while Chinese entities also partially or wholly own at least four airports, six seaports, wind farms in at least nine countries and 13 professional soccer teams.

Importantly, the available figures underestimate the true size and scope of China’s ambitions in Europe. They notably exclude 355 mergers, investments and joint ventures—the primary types of deals examined here—for which terms were not disclosed. Bloomberg estimates or reporting on a dozen of the higher-profile deals among this group suggest an additional total value of $13.3 billion. Also not included: greenfield developments or stock-market operations totaling at least $40 billion, as compiled by researchers at the American Enterprise Institute and the European Council on Foreign Relations, plus a $9 billion stake in Mercedes-Benz parent company Daimler AG by Zhejiang Geely chairman Li Shufu reported by Bloomberg.

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Anbang was just the start.

China Factory Crackdown Masks Sweeping Takeover By The State (BBG)

President Xi Jinping’s big push to curb pollution and excess capacity in steel and other industries is also consolidating his government’s control over them. Just last year, the state’s share of steel capacity increased to 67% from 60% while aluminum smelting saw about an equal increase, J Capital Research estimates. In coal, which began consolidating years earlier, the government now controls 80% of capacity compared with about 45% in 2010, according to the Hong Kong-based firm. Xi’s campaign has boosted corporate profits, ended years of deflation, and stabilized debt growth to help underpin the first full-year economic acceleration last year since 2010.

But his aim for a “bigger, better and stronger” state role also means those bloated companies risk stifling private ones, as the Communist Party strengthens its grip on the economy. Call it “de facto nationalization,” says Jude Blanchette, China practice lead at Crumpton Group in Arlington, Virginia, and a former Conference Board researcher in Beijing. “We’re clearly seeing the re-strengthening of state-owned enterprises, oftentimes at the zero-sum expense of private players. Private folks are exiting the market either because they’re pushed out or they can’t survive.” State gains in heavy industry follow a broad SOE comeback since Xi took power in 2013. Their share of fixed-asset investment stopped falling in 2014 and rebounded over the next three years, says Andrew Batson at Gavekal Dragonomics.

The state is also extending control over the private sector away from heavy industry as it cracks down on debt. Once-acquisitive insurer Anbang Insurance was seized by the government, and regulators have curtailed the activities of conglomerates including Dalian Wanda and HNA. Such consolidation may spur blowback from the U.S. and other countries. President Donald Trump already brands China a strategic rival, slapping tariffs on its goods and criticizing industrial policy for subsidizing state enterprises in a push to dominate tech sectors.

“The idea, promoted during the Zhu Rongji era, that state enterprises should be independent, profit-seeking companies that just happen to be owned by the state has essentially been abandoned,” said Batson, referring to the former premier. “The government thinks that SOEs are there to serve its overall strategic goals.”

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Words fail.

Canadians Just Set A New Record For Borrowing Against Their Homes (BD)

Canadian real estate related debt tapering? That would be ridiculous! Filings obtained from the Office of the Superintendent of Financial Institutions (OSFI) show, after a brief decline in January, the balance of loans secured by residential real estate hit a new high in February. More interesting is the segment of loans being used for personal consumption, is growing at the fastest pace in years. Loans secured by residential real estate are exactly what they sound like. They’re loans that you pledge your home equity in order to secure. The most common example would be a Home Equity Line of Credit (HELOC). You know, the same type of loan the Canadian government is discretely paying to teach you how to borrow. There’s also more productive uses, like when you start a new business and need to use your home as security – just in case you aren’t able to pay your loan shark bank back.

Either way, debt is debt. The big difference to note is a loan secured for personal reasons, is considered non-productive. The borrower isn’t expected to take a calculated risk, in order to earn more money. A business loan is considered productive, since it might generate more money. This isn’t just our opinion, banks actually classify these loans separately in their filings. Today we’ll go through the aggregate of these numbers, then break them down segment by segment. Loans secured by real estate hit a new all-time high in February. The total balance of loans secured with real estate racked up to $283.65 billion, up 0.77% from the month before. This represents a 7.79% increase compared to the same month last year. It almost looked like Canadians were reeling that debt in January, with a tiny decline. Instead it made a monster move, more than making up the ground lost the month before.

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A media war.

MSM Is Frantically Attacking Dissenting Syria Narratives (CJ)

It’s getting too blatantly obvious, like a stranger coming up to you and talking about climate change while openly masturbating; what he is doing would eclipse interest in whatever he is saying. The frenetic publication of hit pieces against anyone who fails to fall in line with the establishment Syria narrative is fast becoming the real story here. Many of these recent hit pieces are coming out of the UK, which is interesting given the way a BBC reporter recently admonished her interviewee for questioning the official story about the alleged Douma chemical attacks because his words could hurt the “information war” effort against Russia.

If this view is widespread among British journalists (and recent headlines by the Times, the Independent and the Telegraph suggest that it may be), this means we’re looking at an environment wherein reporters aren’t even pretending it’s their job to be truthful, tell all sides of a story and hold power to account, but rather to manufacture support for escalations against Russia and undermine anyone who resists. Today yet another mainstream smear piece has been published about Vanessa Beeley, an investigative journalist who has done extensive work on the ground in Syria, which the UK’s Huffington Post branch hilariously titled “How An Obscure British Blogger Became Russia’s Key Witness Against The White Helmets”.

Its author, senior Huffpo editor Chris York, doesn’t explain how we’re meant to see an investigative journalist practicing the definition of investigative journalism on the ground in a war-torn nation as “an obscure blogger”, but he has said that he has two more such articles on the way. Who do these people think they’re kidding? Are we truly meant to believe that people expressing skepticism about the authenticity of a “civil defense group” in a distant Middle Eastern country is suddenly the most dangerous thing in the world?

Are we really meant to think it’s normal for all these mass media corporations to suddenly start ferociously attacking anyone who expresses skepticism about the military agendas of western forces that have an extensive and well-documented history of using lies, propaganda and false flags to manufacture support for military agendas? Are we really meant to believe that Syria, a nation for which the US and UK have been plotting regime change for many years, is just now in sore need of humanitarian regime change? And that anyone who says otherwise just loves Bashar al-Assad, Vladimir Putin and dead babies?

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I asked before: did the DNC think this through?

WikiLeaks To Countersue Democrats; “Discovery Is Going To Be Amazing Fun” (ZH)

WikiLeaks has hit back against a multimillion-dollar lawsuit filed by the Democratic National Committee (DNC), announcing over Twitter that they are seeking donations for a counter-suit, noting “We’ve never lost a publishing case and discovery is going to be amazing fun,” along with a link which people can use to donate to the organization. Discovery is a pre-trial process by which one party can obtain evidence from the opposing party relevant to the case. The Trump campaign, which is also named in the DNC filing, says the lawsuit will provide an opportunity to “explore the DNC’s now-secret records.”

Hours after the Washington Post broke the news of the lawsuit, President Trump tweeted “Just heard the Campaign was sued by the Obstructionist Democrats. This can be good news in that we will now counter for the DNC server that they refused to give to the FBI,” referring to the DNC email breach. Trump also mentioned “the Debbie Wasserman Schultz Servers and Documents held by the Pakistani mystery man and Clinton Emails.” In a statement which goes into the various items they’ll be pursuing in court, the Trump campaign said the following: “While this lawsuit is frivolous and will be dismissed, if the case goes forward, the DNC has created an opportunity for us to take aggressive discovery into their claims of ‘damages’ and uncover their acts of corruption for the American people..”

If this lawsuit proceeds, the Trump Campaign will be prepared to leverage the discovery process and explore the DNC’s now-secret records about the actual corruption they perpetrated to influence the outcome of the 2016 presidential election. Everything will be on the table, including: • How the DNC contributed to the fake dossier, using Fusion GPS along with the Clinton Campaign as the basis for the launch of a phony investigation. • Why the FBI was never allowed access to the DNC servers in the course of their investigation into the Clinton e-mail scandal. • How the DNC conspired to hand Hillary Clinton the nomination over Bernie Sanders. • How officials at the highest levels of the DNC colluded with the news media to influence the outcome of the DNC nomination. • Management decisions by Debbie Wasserman Schultz, Donna Brazile, Tom Perez, and John Podesta; their e-mails, personnel decisions, budgets, opposition research, and more.

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It’s much worse than the title suggests.

One In Eight Bird Species Is Threatened With Extinction (G.)

One in eight bird species is threatened with global extinction, and once widespread creatures such as the puffin, snowy owl and turtle dove are plummeting towards oblivion, according to the definitive study of global bird populations. The State of the World’s Birds, a five-year compendium of population data from the best-studied group of animals on the planet, reveals a biodiversity crisis driven by the expansion and intensification of agriculture. In all, 74% of 1,469 globally threatened birds are affected primarily by farming. Logging, invasive species and hunting are the other main threats.

“Each time we undertake this assessment we see slightly more species at risk of extinction – the situation is deteriorating and the trends are intensifying,” said Tris Allinson, senior global science officer for BirdLife International, which produced the report. “The species at risk of extinction were once on mountaintops or remote islands, such as the pink pigeon in Mauritius. Now we’re seeing once widespread and familiar species – European turtle doves, Atlantic puffins and kittiwakes – under threat of global extinction.” According to the report, at least 40% of bird species worldwide are in decline, with researchers blaming human activity for the losses.

After farming, logging is a key factor in declines of 50% of the most globally endangered species, followed by invasive species (39%), hunting and trapping (35%), climate change (33%) and residential and commercial development (28%). The illegal killing of birds – usually because of traditional hunting – results in an estimated 12 to 38 million individual birds dying or being taken each year in the Mediterranean region alone

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Apr 132018
 
 April 13, 2018  Posted by at 8:38 am Finance Tagged with: , , , , , , , , , , ,  


Ezra Stoller Parking garage, New Haven, Connecticut 1963

 

Zombies In Our Midst (Felder)
After 10 Fat Years For Stock Investors A Lean Decade Is Looming (MW)
China Records Rare Trade Deficit In March As Exports Fall 2.7% (R.)
London House Prices Falling At Fastest Rate In Nine Years (G.)
Google Saves Manhattan Office Market. Chinese Buyers Vanish (WS)
The Deep State Closes In On The Donald: Mueller’s War, Part 2 (Stockman)
Bitcoin Surges 15%, Pushing Crypto Market Cap Above $300 Billion (MW)
The US Fading into Irrelevance – A Good Thing for the World (Pieraccini)
Interest Rate Hikes Are On The Way, But When And How Fast? (AFR)
Why Trade Wars Will Unleash Central Banks (Nomi Prins)
Global Warming Is a Central Bank Issue (BBG)
Decline In Bees Puts Supply Of Raw Materials For Global Business At Risk (Ind.)
No Plan To Protect Queensland’s Green-Haired Turtle From Extinction (G.)
Gulf Stream Slowdown ‘About A Century Ahead Of Schedule’ (TP)

 

 

Ponzi’s and zombies. Not Jesse Felder’s original title, but this one by DiMartino Booth is better.

Zombies In Our Midst (Felder)

To begin to understand the current situation in Minsky terms we must first understand the hypothesis: “The first theorem of the financial instability hypothesis is that the economy has financing regimes under which it is stable, and financing regimes in which it is unstable. The second theorem of the financial instability hypothesis is that over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system. In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance.”

Next we need to understand what these financing units are: “Hedge financing units are those which can fulfill all oftheir contractual payment obligations by their cash flows… Speculative finance units are units that can meet their payment commitments on “income account” on their liabilities, even as they cannot repay the principle out of income cash flows… For Ponzi units, the cash flows from operations are not sufficient to fulfill either the repayment of principle or the interest due on outstanding debts by their cash flows from operations.”

And this is what reminded me of Minsky when I read the recent article in Grant’s with the accompanying chart below. It shows the percent of companies in the S&P 500 that would fall into Minsky’s “Ponzi unit” category. Specifically, Bianco Research defines these “zombies” as companies whose interest expense is greater than their 3-year average EBIT (earnings before interest and taxes). Currently, we face the greatest percentage of “Ponzi units” in at least 20 years.

This should be worrisome to investors and even more so to those managing monetary policy because it suggests that financial instability within the economy may be greater than any other time over the past couple of decades. Minsky again: “It can be shown that if hedge financing dominates, then the economy may well be an equilibrium seeking and containing system. In contrast, the greater the weight of speculative and Ponzi finance, the greater the likelihood that the economy is a deviation amplifying system.” Those last three words are critical. “A deviation amplifying system,” simply means an economy built on a virtuous cycle that risks evolving into a vicious one.

So long as interest rates remain low and investor risk appetites remain strong zombies will thrive and the economy will, as well, relatively speaking of course. However, should interest rates rise and risk appetites reverse course the risk of a self-reinforcing downturn grows. Minsky explains: “In particular… if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values.”

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It won’t be like any of those previous decades.

After 10 Fat Years For Stock Investors A Lean Decade Is Looming (MW)

It’s a phrase that comes standard on Wall Street, but which may be taking on ominous undertones in the current market: Past performance is no guarantee of future returns. It should come as no surprise that U.S. equity-market investors have been handsomely rewarded thus far this decade, a period of time that roughly corresponds with the recovery from the financial crisis (the bottom came in March 2009, roughly 10 months before the start of the 2010s). The S&P 500 is up nearly 140% since the start of the decade, and more than 180% on a total-return basis. The Dow Jones Industrial Average is up more than 130% over the same period. Those are obviously strong gains, but even the biggest bulls on Wall Street may not appreciate just how strong this period has been relative to other decades.

“The 2010s have so far been one of the highest-returning and lowest-risk decades for U.S. stocks in the last 100 years,” wrote Howard Wang, co-founder of Convoy Investments. According to Convoy’s data, stocks averaged a total annualized return of 13.2% thus far this decade, comfortably above the long-term average of 9.6%. While this was below four other decades — the best decade was the 1950s, when the average was 18.8%, followed by the 18.6% gain in the 1990s — equities fared better in terms of their excess return above interest rates. By the excess-return measure, the 2010s have seen an average annual return of 12.7%, significantly above the 5.8% long-term average (going back to the 1920s).

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“Separately, China’s dollar-denominated trade surplus with the United States rose 19.4% in the first quarter…”

China Records Rare Trade Deficit In March As Exports Fall 2.7% (R.)

China’s March exports unexpected fell 2.7% from a year earlier, the first drop since February last year, while imports grew 14.4%, more than expected, customs data showed on Friday. That left the country with a rare trade deficit of $4.98 billion for the month, also the first since last February. Analysts polled by Reuters had expected March shipments from the world’s largest exporter to have risen 10.0%, slowing sharply from a 44.5% spike in the previous month which was believed to be heavily distorted by seasonal factors. Import growth had been expected to pick up to 10.0%, after slowing sharply to 6.3% in February.

Analysts expected China would record a trade surplus of $27.21 billion for last month, from February’s surplus of $33.75 billion. For the first quarter, exports rose 14.1%, and imports rose 18.9% on-year. China’s trade performance has got off to a strong start this year, following through on a solid rebound in 2017, thanks to sustained demand at home and abroad. But the export outlook is being clouded by an escalating trade dispute with the United States, which could disrupt China’s shipments and its supply chains, while a cooling property market may curb China’s demand for imported raw materials such as iron ore. Separately, China’s dollar-denominated trade surplus with the United States rose 19.4% in the first quarter.

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Ain’t seen nothing yet.

London House Prices Falling At Fastest Rate In Nine Years (G.)

House prices in London are falling at the fastest rate in nine years, according to Halifax, Britain’s biggest mortgage lender. Prices in the capital were down 3.2% between January and March compared with the previous quarter, the sharpest decline since the depths of the financial crisis, according to regional data collated by IHS Markit and published by Halifax, part of Lloyds Banking Group. London also recorded the sharpest fall in annual house prices since the start of 2011. Property values fell 3.8% in the first quarter from a year ago, following a 0.7% annual drop in the fourth quarter. London prices have been falling on a quarterly and annual basis since the third quarter of 2017.

There was a small annual increase of 0.3% in prices in the south-east of England at the start of the year, and a rise of 1.9% in the south-west. Prices grew strongly elsewhere in the country. The east Midlands and East Anglia recorded the fastest rates of annual price inflation, at 7.3% and 7.2% respectively, followed by Scotland at 6.7% and Yorkshire and the Humber at 6.1%. The standardised price of a home in London was £430,749 in the first quarter, the lowest since the end of 2015. Figures are standardised in order to track the price of a “typical house” by giving values to certain attributes of the properties and using them to calculate the price.

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The only game in town.

Google Saves Manhattan Office Market. Chinese Buyers Vanish (WS)

Chinese entities – such as the conglomerates – were once the dominant buyer in US trophy office markets, such as Manhattan. It ended with a big bang in the second quarter of 2017 when Chinese entities accounted for half of the commercial real estate volume in Manhattan, including its sixth largest transaction ever, the $2.2 billion purchase of 245 Park Avenue by the conglomerate HNA Group. It paid $1,282 per square foot, as it was called, “among the highest price per pound for this type of asset.” It was the last big Chinese property purchase in Manhattan.

But Google blew that deal out of the water, with its $2.4 billion acquisition of the iconic eight-story Chelsea Market at 75 Ninth Ave in Q1 this year. This was the second largest deal ever to close in Manhattan. And Google paid a breath-taking $2,181 per square foot. We will never again laugh about the inflated prices Chinese buyers were paying. [..] And here is what that Google deal did to the Manhattan office market: It more than doubled the total volume of sales! Without the Google deal, total transaction volume would have been $2.12 billion. With the Google deal, it jumped to $4.52 billion! [..] the dizzying price of $2,181 per square foot that Google forked over pushed the average price per square foot to a record $1,266, up 70% from Q1 last year:

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David is a great ranter.

The Deep State Closes In On The Donald: Mueller’s War, Part 2 (Stockman)

What is going on in the eastern Mediterranean and over the skies and on the ground in Syria is absolutely nuts; it’s also scary dangerous and utterly unnecessary, too. After all, the imminent Russian/American military clash is over the skeleton of an artificial backwater nation confected in 1916 by two swells in the British and French foreign offices. At length, what was never a nation anyway has finally been reduced to rubble, misery and sectarian fragments. So there is nothing to contest now, and, in fact, there never was. The sovereign government of Syria long ago invited the Russians in and Washington out. Period. Why, then, are commercial aircraft being warned to stay out of Syrian airspace, while the Russian fleet at Tartus scrambles into defensive redeployments?

Likewise, why is the Syrian air force being forced to hide its planes and helicopters in its own country, while Washington steams an armada of warships toward the Mediterranean that is larger and more lethal than the entire Navy of almost every other country in the world? The answer is simple and terrible: Washington has become the War Capital of the planet and now teems with a whole generation of war-obsessed bureaucrats, think-tankers, consultants, lobbyists, militarists, imperialists, neocon belligerents and the legions of military/industrial/spy complex racketeers who feed off a hideously bloated national security budget.

Of course, you also have thousands of politicians—both those now in office and those who hang-around afterwards and get prosperous by hanging-out a shingle to ply the business of operating Washington’s global empire. Among them are the brainwashed, the stupid, the larcenous, the sanctimonious, the venal, the flag-wavers, the sunshine patriots and the ideologues of American exceptionalism, responsibility-to-protect (R2P), democracy propagation and plain old imperial hegemony.

Read more …

Casino. Not for the faint of heart.

Bitcoin Surges 15%, Pushing Crypto Market Cap Above $300 Billion (MW)

After a period of low volatility, cryptocurrencies have broken out of their recent ranges, surging to multiweek highs on Thursday. The No. 1 digital currency, bitcoin rose to a two-week peak, trading above $8,000 to an intraday high of $8,055.20, adding as much as 16%. A single coin last changed hands at $7,705.21, up 11%. The intraday move is the largest since Feb. 6 when bitcoin traded down to $5,947.40 before closing at $7,700.39, a 29.4% move. The move comes after bitcoin spent the best part of two weeks in the $6,500 to $7,500 range. The tight sideways action created a so-called wedge formation, which can often presage significant swings in either direction once breached, according to market technicians “We have seen consolidation in a very small range,” said Naeem Aslam, chief market analyst with ThinkMarkets. “When the consolidation is in such a tight range the probability is that a move to the upside can be two to three times the size of the consolidation range.”

Read more …

Multipolar is the future.

The US Fading into Irrelevance – A Good Thing for the World (Pieraccini)

As demonstrated by the recent meeting between the defense ministers of Russia and China, the multipolar strategy is now wide-ranging, relegating Washington, Tel Aviv and Riyadh to further digging themselves into the hole they have already dug themselves into (see recent events in Syria with Israel launching 8 missiles and Trump beating the drums of war). As General Wei Fenghe stated, “We came to Moscow to let the Americans know about the close military ties between the armed forces of China and Russia.” When these two military and economic powers unite their efforts, involving regional powers and mediating over various conflicts, it becomes clear that the challenge to Washington’s hegemony is progressively leading away from an international reality consisting of one superpower to one consisting of three to four powers that maintain an international balance via diplomatic, economic and military means.

The phase in which we currently live is turbulent and is essentially caused by a single factor that has two very strong thrusts. The acceleration of the dwindling of the unipolar phase is directly connected with the strategic and tactical errors of the American deep state and its main sponsors, like Israel and Saudi Arabia. At the same time, the opposing push comes from the multipolar environment, which tends to consolidate its sphere of influence via diplomatic and military means. The goal for Moscow and Beijing is to present to the American and European elites a viable alternative that is shared among several actors. For the time being, the Euro-Atlantic establishment continues to consider itself capable of changing the course of events and preventing the drift towards multipolarity.

Whether the Western oligarchy is a victim to its own propaganda or whether it simply wishes to avoid facing reality and is using every means available to postpone an epochal change, is difficult to determine; and this makes the future uncertain, and is therefore highly dangerous.

Read more …

“The economy may only be operating on a single cylinder, but each time it’s an impressive one.”

Interest Rate Hikes Are On The Way, But When And How Fast? (AFR)

The Australian economy may not be booming, but it looks to have performed “the miracle pivot”. This is what Ardea Investment Management portfolio manager Tamar Hamlyn calls the economy’s remarkably smooth transition away from a once-in-a-generation mining investment boom without falling into recession. A massive uplift in residential construction activity has carried us through. The “next dance” is infrastructure investment, Hamlyn says. Now we await what feels like another miracle: an RBA rate hike. The economy may only be operating on a single cylinder, but each time it’s an impressive one. We don’t have a solid pick-up in consumption and “we are never going to have that really solid GDP growth until we get that,” Hamlyn says.

But what we are is far from the recessionary fears that were the original rationale for rates at such low levels. It makes sense, then, to think that in the absence of a nasty shock, it seems perfectly reasonable to bet, as RBA governor Philip Lowe flagged again this week, that the next move in rates will be up and not down. But when will that first hike be? And how far will they eventually go? And how quickly will they get there? Accepting that borrowing costs are more likely to get more rather than less expensive is one thing. But anybody trying to assess the potential risks and rewards of taking on a large and long-dated loan obligation, whether it be a mortgage or a business loan, needs to think beyond the next hike. Let’s start with when the RBA will act. Unfortunately, the experts and the market are telling a different story.

Read more …

Central banks are still supposed to save us. Sure.

Why Trade Wars Will Unleash Central Banks (Nomi Prins)

You can bet that deep within the halls of the Fed they are developing a game plan to keep the markets from crashing if trade wars escalate. This is another reason to believe that trade wars will be met with cheap money policy. You can look at this as a financial see-saw of sorts. Trade wars, or even media soundbites about them, will spark negative markets reactions. That is why the Fed and other central banks will combat this with cheap words and even cheaper money policies. If the U.S. does jump into a hot trade war it could find itself needing to make up for the costs. The logical place to turn is to the beacon of more money creation from the Fed or to issue more debt.

The Fed would be directly involved in order to keep the cost of debt from rising, again — which is why my analysis forecasts a return to Fed policies that keep rates low. Similarly, other major economies would also unleash their central bank money when needed. This type of tit-for-tat response is already playing out. Beijing has used its new wealth to attract friends, deter enemies, modernize its military, and aggressively assert its central bank into nearly any sector it believes requires assistance. This type of brinksmanship shows that it is only a matter of time before a trade war with China morphs into massive military build-up and competition.

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Oh yeah, sure, central bankers will save the planet.

Global Warming Is a Central Bank Issue (BBG)

Central bankers have been dubbed “masters of the universe” for the tools and powers they have acquired since the financial crisis. Some of them now want to play a more active role in the fight against climate change. Monetary authorities are right to be mindful of the way in which climate risk affects their mandate to ensure price stability and guard financial stability. But that is different from seeking to promote the shift to a “greener” economy, which is the role of government. Last week, central bank governors from the U.K., France and the Netherlands met in Amsterdam to discuss how to adapt regulation to the risks posed by climate change.

Together with five other institutions (from China, Germany, Mexico, Singapore and Sweden), these central banks have formed the “Network for Greening the Financial System” (NGFS). This group has two objectives: sharing and identifying best practices in the supervision of climate-related risks, and enhancing the role of the financial sector in mobilizing “green” financing. The first is entirely reasonable and consistent with the central banks’ traditional role. As Francois Villeroy de Galhau, governor of the Bank of France, said in a speech at the conference, “Climate stability is one of the determinants of financial stability.” It is only right that financial supervisors take an interest in what is going on.

The clearest example concerns the regulation of insurers: Climate change has made extreme weather events such as hurricanes more frequent. Regulators must ensure that the industry updates its models and sets aside enough capital to deal with these growing climate-related risks. To do so, central bankers may need to extend the supervisory horizon beyond their usual time span. Climate change may only pose a threat for the balance sheet some years down the road, but these risks should be assessed now. Villeroy de Galhau argued in his speech that the financial sector should move towards “a compulsory transparency requirement,” so that companies are forced to provide a snapshot of their climate-related risks. It’s an idea supervisors around the world should embrace.

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As long as we keep putting species extinction in terms of trade and profit, we are doomed.

Decline In Bees Puts Supply Of Raw Materials For Global Business At Risk (Ind.)

Businesses face a shortage of raw materials and a drop in the quality of crop as the number of bees decline worldwide, a new report warns. Approximately three quarters of crops around the world depend on pollination, all of which could soon be threatened as more than a third of wild bee and butterfly species face extinction, according to a joint study by the UN, the University of East Anglia and Cambridge University. Major businesses, including Asda, the Body Shop, Mars and Pepsico, say they are unable to take action largely because of uncertainty around which crops and regions are vulnerable to the decline in pollinators such as bees.

“The role pollinators play – be it tiny midges for cocoa or squirrels for coconut – is not well understood and can be taken for granted,” says Jos van Oostrum, director of sustainable solutions at chocolate and confectionary maker Mars. Cocoa, a vital ingredient in the production of chocolate, is at particular risk from a declining number of bees and other species that help spread pollen. The risks of a shortfall in raw materials not only prove a challenge for food production, but also the sourcing of ingredients for beauty products. “The importance of pollination for natural raw materials is increasingly a priority for us,” said the Body Shop’s sustainable sourcing manager Francesca Brkic.

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Everytime I make a new friend I find out they’re about to die. It’s making me terribly sad.

No Plan To Protect Queensland’s Green-Haired Turtle From Extinction (G.)

The Australian government does not have a plan to save an endangered Australian turtle species that received global attention on Thursday for its green mohawk and its ability to breathe through its genitals. The Mary river turtle, found only in that one river in Queensland, attracted worldwide headlines as one of the standout species on a new list of the most vulnerable reptile species compiled by the Zoological Society of London (ZSL). But despite this listing it does not have a national recovery plan to protect it from extinction and it is unclear whether any federal government funds have been specifically allocated for its protection. The turtle is 29th on ZSL’s Evolutionary Distinct and Globally Endangered (Edge) list for reptiles, which highlights the conservation needs of some of the world’s unique reptiles.

The turtle is not the only reptile species found in Australia to appear on the list, with eight species making the top 100, and seven of those appearing in the top 40. Among them are the critically endangered western swamp tortoise, which is number seven on the Edge list, the pig-nosed turtle, number 19 on the list, and the Gulbaru Gecko, a critically endangered Queensland species that was only discovered in 2001 and appears at 40 on the list. Conservationists say the list highlights the lack of conservation attention many Australian reptiles receive compared to more charismatic and iconic mammal and bird species. The federal government’s threatened species strategy specifically targets 20 mammals, 20 birds and 30 plants, but no reptiles.

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The climate on both sides of the Atlantic would change too much to imagine.

Gulf Stream Slowdown ‘About A Century Ahead Of Schedule’ (TP)

New research provides strong evidence that one of the long-predicted worst-case impacts of climate change — a severe slow-down of the Gulf Stream system — has already started. The system, also known as the Atlantic Meridional Overturning Circulation (AMOC), brings warmer water northward while pumping cooler water southward. “I think we’re close to a tipping point,” climatologist Michael Mann told ThinkProgress in an email. The AMOC slow down “is without precedent” in more than a millennium he said, adding, “It’s happening about a century ahead of schedule relative to what the models predict.”

The impacts of such a slowdown include much faster sea level rise — and much warmer sea surface temperatures — for much of the U.S. East Coast. Both of those effects are already being observed and together they make devastating storm surges of the kind we saw with Superstorm Sandy far more likely. The findings come in two new studies published this week. One study published in the journal Nature, titled “Observed fingerprint of a weakening Atlantic Ocean overturning circulation,” was led by the Potsdam Institute for Climate Impact Research. It finds that the AMOC has weakened “around 15 per cent” since the mid-twentieth century, bringing it to “a new record low.”

Read more …

Apr 052018
 
 April 5, 2018  Posted by at 12:11 pm Finance Tagged with: , , , , , , , , , , , , ,  


Herbert Ponting Scott’s Terra Nova Expedition, Antarctica 1911

 

Something must be terribly wrong with the world. A few days ago Elizabeth Warren agreed with Trump on China, now Bernie Sanders agrees with him about Amazon. What’s happening?

 

Bernie Sanders Agrees With Trump: Amazon Has Too Much Power

Independent Vermont senator and 2016 presidential hopeful Bernie Sanders echoed President Donald Trump in expressing concern about retail giant Amazon. Sanders said that he felt Amazon had gotten too big on CNN’s “State of the Union” Sunday, and added that Amazon’s place in society should be examined.

“And I think this is, look, this is an issue that has got to be looked at. What we are seeing all over this country is the decline in retail. We’re seeing this incredibly large company getting involved in almost every area of commerce. And I think it is important to take a look at the power and influence that Amazon has,” said Sanders.

A backlash against Facebook, a backlash against Amazon. Are these things connected? Actually, yes, they are connected. But not in a way that either Trump or Sanders has clued in to. Someone who has, a for now lone voice, is David Stockman. Here’s what he wrote last week.

 

The Donald’s Blind Squirrel Nails An Acorn

It is said that even a blind squirrel occasionally finds an acorn, and so it goes with the Donald. Banging on his Twitter keyboard in the morning darkness, he drilled Jeff Bezos a new one – or at least that’s what most people would call having their net worth lightened by about $2 billion:

“I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!” You can’t get more accurate than that. Amazon is a monstrous predator enabled by the state, but Amazon’s outrageous postal subsidy – a $1.46 gift card from the USPS stabled on each box – isn’t the half of it.

The real crime here is that Amazon has been exempted from making a profit, and the culprit is the Federal Reserve’s malignant regime of Bubble Finance. The latter has destroyed financial discipline entirely and turned the stock market into the greatest den of speculation in human history. That’s why Bezos can kill established businesses with impunity.

The casino allows him to run a pernicious business model based on “price to destroy”, rather than price for profit and a return on capital. Needless to say, under a regime of sound money and honest capital markets Amazon would be a far more benign economic creature. That’s because no real investors would value AMZN’s money-loosing e-Commerce business at $540 billion – nor even a small fraction of that after 25-years of profitless growth.

The bubble economy, the everything bubble, that we have been forced into, with QE, ultra-low rates, central banks buying trillions in what at least used to be assets, and massive buybacks that allow companies to raise their ‘value’ into the stratosphere, has enabled a company like Amazon to kill off its competition, which consists of many thousands of retailers, that do have to run a profit.

It’s a money scheme that allows many of the most ‘valuable’ tech companies to elbow their way into our lives, in ways that may seem beneficial to us at first, but in reality will only leave us behind with much less choice, far less competition, and many, many fewer jobs. Once it’s done someone will mention ‘scorched earth’. But for now they are everybody’s darlings; they are, don’t you know, the tech giants, the brainchildren of the best that the best among us have to offer.

They don’t all work the exact same way, which may make it harder to recognize what they have in common. For some it’s easier to see than for others. It’s also difficult to list them all. Here’s a few: Apple, Amazon, Facebook, Google (Alphabet), Tesla, Uber, Airbnb, Monsanto. Let’s go through the list.

 

Apple ? Yes, Apple too. But they make real things! Yes, but just as Apple CEO Tim Cook seeks to distance his company from the likes of Facebook on morals and ethics, he can’t deny that Apple sells a zillion phones to a large extent because everybody uses them to look at Facebook and Alphabet apps until their faces are blue. If data ethics are the only problem Cook sees, he’s in trouble.

Silicon Valley infighting shows that the industry does have an idea what is going wrong, in ways that should have already led to many more pronounced worries and investigations.

 

Silicon Valley Rivals Take Shots At Facebook

Mr. Cook, who has long sought to differentiate Apple on privacy matters, contrasted its focus on selling devices with Facebook and Google’s ad-based businesses that are built on user data. Asked what he would do if he were Facebook CEO Mark Zuckerberg, Mr. Cook replied: “I wouldn’t be in this situation.”

[..] Days earlier, François Chollet, an artificial intelligence engineer at Google, sought to draw a line between his company and Facebook. He tweeted that Google products like search and Gmail help users “to do more, to know more.” Facebook’s newsfeed, he wrote, “manipulates your worldview and seeks to maximally waste your time.”

[..] In January, Salesforce.com CEO Marc Benioff, whose company sells business software services, said that the addictive nature of social media means it should be regulated like a health issue.“I think that you do it exactly the same way that you regulated the cigarette industry,” Mr. Benioff told CNBC when asked how Facebook should be regulated. Some of the most cutting rebukes have come from people who know Facebook well.

In November, Sean Parker, the founding president of Facebook, said that Facebook executives, including himself, were “exploiting a vulnerability in human psychology” by designing a platform built on social validation. Mr. Parker didn’t respond to a request for comment.

Facebook generally hasn’t responded to the criticism, but it did after sharp comments from its former vice president of growth, Chamath Palihapitiya. “The short-term, dopamine-driven feedback loops that we have created are destroying how society works,” Mr. Palihapitiya said at a talk at Stanford University in November.

I would expect to hear a lot more of that sort of thing. Big Tech is changing the world in more ways than one. And spying on people Facebook-style is merely one of a long list of them. So yes, Apple certainly also belongs in that list. Facebook doesn’t build the devices people use to see what their friends had for breakfast, Apple does that. Moreover, Apple profits hugely from stock buybacks, so it fits in Stockman’s bubble finance definition of Amazon, too.

The failure of politics to investigate, and act against, those dopamine-driven feedback loops which exploit a vulnerability in human psychology in order to maximally waste your time and sell you product after product that you never (knew you) wanted is downright bizarre. Politicians only started talking about Facebook when a topic connected to Trump and Russia was linked to it.

 

Amazon: Trump can’t act fast enough on the tax situation and the US Postal deal. Not that that will solve the issue. Amazon, like all the companies on my list, can only be cut down to size if and when the everything bubble is. They are, after all, its children.

The most pernicious aspect of the Amazon ‘business model’, which all these firms share, and all are able to live by thanks to the central banks and the “greatest den of speculation in human history” they have created, is the prospect of world domination in their respective fields. They all hold in front of speculators the promise that they can crush all competition, or nearly all. Scorched earth, flat earth.

 

Facebook: their place in the list is obvious. What is it, 2.5 billion users? And what they don’t have is divvied up between them and Google when they buy up apps like Instagram. Officially competitors, but they have the exact same goals. And, like me, you may think: what’s the problem, just ban them from collecting all that data. Facebook has no reason to know, at least not one that serves us, where you were last Friday, and with whom. And just in case you missed that bit, they do.

But there their connection to the intelligence world comes in. Their platforms are better than anything the NSA has ever been able to develop. So we can say we don’t want Zuckerberg and Alphabet spying on us, but our own spies do want to do just that. That makes any kind of backlash much harder to succeed. And it doesn’t matter if you delete your Facebook account, they’ll find you anyway. Friend of a friend. We all have friends who are on Facebook, rinse and repeat.

The only hope there is, with Facebook as with the other companies, is for investors and speculators to dump their holdings in massive numbers. And that will only happen when the central bank Ponzi collapses. And it will, but by then we have a whole new set of problems.

 

Google: largely the same set of issues that Facebook has. Its tentacles are everywhere. Former CEO Eric Schmidt’s connections to the Pentagon should be really all you need to know. The EU may have issued all sorts of complaints and fines on competition grounds, but that makes no difference.

The one country with an effective response to Google and Facebook is China, that has largely banned both and built its own versions of their products. Which allows Beijing to ban people from boarding planes, buying homes etc., if their ‘social credit’ is deemed too low. If you want to be scared about where Big Tech’s powers can lead, look no further.

 

Tesla: Elon Musk has built a fantasy (and maybe I should put Paypal in this list too) on what everyone thinks must be done to ‘save the planet’ (yeah, build cars…) by grossly overstating the number of cars he can build, and financing his growth on not only speculation, but also on spectacular amounts of government subsidies (politicians want to save the planet, too).

And now he needs additional financing again. He will probably get it, again, but the Amazon backlash might have people take another look. One fine day… Fits David Stockman’s complaint to a t(ee), doesn’t have to make a profit. Musk has perfected that model.

 

Uber and Airbnb: why anyone anywhere would want to send money generated in their community, by renting out cars and apartments in that same community, to a bunch of people in Silicon Valley, is beyond me. Someone should set this up as an international effort that makes it easy for a community, a city etc., to provide this kind of service and make the profits benefit their own cities.

But like Amazon, they are free to run any competition into the ground because no profits are required until they have conquered the world. And then they can go nuts. It may look like a business model, but it isn’t. It’s a soon to be orphaned bubble child..

 

Monsanto: less obvious perhaps as an entry in the Big Tech list, but very much warranting a spot. And of course it stands for the entire chemical-seeds field. From Agent Orange to your children’s dinner plate. Monsanto has more lawyers and lobbyists on its payroll than it has scientists, but then its lofty goals outdo even those of Google or Amazon.

Facebook may focus on your addiction to human contact, but Bayer, DuPont, Syngenta et al have decided to make your food so addicted to their chemicals that they will in the future profit from every bite served on your table. How they will grow that food long term without any insects, bees or birds left is unclear, but they don’t seem to care much. As for profits? Monsanto seeks to rule the world, and for now care as little about profits as they do about insects.

 

Zuckerberg may claim that he only wants to improve Facebook’s service, but when that is done through for instance the 2012 so-called Transmission of Anger experiment in which the company tried to alter their users’ emotional states -and succeeded-, by manipulating their friends’ postings, that claim becomes pure ridicule. Selling off user data to scores of developers doesn’t help either. But do you see Congress tackling him in any serious way next week? Neither do I.

Because there’s one huge catch to the scenario that David Stockman -and I- painted, of the whole tech bubble collapsing when the financial bubble does. It is the links tech companies have built to intelligence. A group of Google employees wrote a letter to their CEO Sundar Pichai to protest the company’s involvement in “weaponized AI”, in the shape of Project Maven, a military surveillance engine to-be.

These people undoubtedly mean well, but they’re far too late. They will have to leave the “don’t be evil” company to actually not be evil. Because it’s not a big step from weaponized AI to killer robots. Microsoft is also part of the project, and Amazon is. If you work there and don’t want to be evil, you know what to do.

Yeah, it’s about our safety, and security, and political and military and economic power. But it’s also about spying on people, in even worse ways than Facebook does. So even as the central bank bubble, and the tech bubble, go poof, some of these companies may be saved by their military ties.

That sound you hear is George Orwell turning in his grave.

 

 

Apr 052018
 
 April 5, 2018  Posted by at 8:47 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh Le moulin de blute fin 1886

 

The Fed Is Destroying Dollars (Napier)
What Trump Gets Right About Europe’s Trade Problem (Pol.)
“When You’re Already $500 Billion Down, You Can’t Lose!” (G.)
Kudlow Says Trump’s China Tariffs Are Just Proposals Right Now (BBG)
Up To 87 Million Facebook Users’ Data Shared With Cambridge Analytica (Ind.)
Zuckerberg Says Most Facebook Users Will Only Get Privacy ‘In Spirit’ (Ind.)
We Work For Google. Our Employer Shouldn’t Be In The Business Of War (G.)
World’s Most Wanted Bank Whistleblower Arrested for Worst Possible Reason (DQ)
Toronto’s Epic Housing Bubble Turns to Bust (WS)
Tax Trouble For -Certain- Bitcoin Traders (F.)
How Advertising Shaped the First Opioid Epidemic (Smithsonian)

 

 

Good points from Russell Napier. Also says Turkey will default, impose capital controls.

The Fed Is Destroying Dollars (Napier)

Too much debt and not enough money remain a diagnosis for deflation and not inflation. In particular, we need to discuss why fears of inflation persist in a world where the US central bank and the US commercial banking system are now both destroying money. When both these key engines of the reserve currency creation act to destroy money, there will ultimately be a contraction in broad money growth, the first since the 1930s, if nothing changes. This analyst thinks that matters, but few, if any, agree. At this stage the interesting evidence is that this dramatic tightening of monetary policy seems to matter more outside the USA than within.

From its peak in November 2017 the level of US bank credit, when we adjust for the systems acquisition of non-banks, has posted no growth. When a commercial banking system posts no growth in bank credit over four months, it creates no money over that period. It just so happens that this is the same four months during which the Federal Reserve has been contracting its balance sheet. Sticking to the Policy Normalisation Principles (PNP) and their addendum of June 2017, the Fed has been destroying money by shrinking its balance sheet. In the period from August 2017 to February 2018 there has been a shrinkage of US$105.2bn in commercial bank reserve balances: the high-powered money. Based on the PNP, a further US$20bn will have been destroyed in March 2018.

So with a commercial banking system creating no money, and a central bank destroying money, we are looking at one of the tightest monetary policies ever pursued by a central bank. To disagree with that statement is to believe that monetary policy is judged solely by the price of money, without reference to the quantity of money. Such was the belief that led to the Great Depression. At this stage the distress associated with this policy seems to be falling primarily upon non-US companies that have borrowed USD. This has huge consequences for investors.

Read more …

EU is winner takes all.

What Trump Gets Right About Europe’s Trade Problem (Pol.)

Donald Trump may prove to be the catalyst for change the eurozone has long been looking for. The protectionist U.S. president is forcing Europeans to face the unsettling problem of their massive current account surplus, which has been the best indicator of everything that’s wrong in the monetary union in the last five years. Forget Trump’s own economic analysis or lack thereof, and forget the attention-grabbing headlines on coming trade wars that may or may not happen. The U.S. president’s attacks on German exports — his Exhibit A that the Europeans aren’t playing a fair trade game — have helped throw a harsh light on the eurozone’s No. 1 problem.

Far from being a sign of economic well-being, the eurozone’s surplus — $380 billion last year or about 3% of the region’s GDP — reflects the monetary union’s deep structural flaws, worsened by the way it addressed its long crisis. [..] For a monetary union’s economy to be balanced, it has to take into account the differences between its respective nations’ different political, economic, and social systems. What happened instead when the euro crisis took everyone by surprise in 2009 was that each member country was told to become more like Germany. But for the system to work, if everyone must become like Germany, then Germany must also become a little bit less German. Surprise — this is not what happened. Countries in trouble were told to cut costs, boost competitiveness and implement austerity policies.

It worked: Imports fell and exports rose. Spain and Italy are now showing significant surpluses. In each of these countries, the balance has improved (from deficit to surplus) by roughly $100 billion since 2009 — the same as Germany’s accounts, which went from a $200 billion to $300 billion surplus. [..]According to European rules that are even less enforced than the more talked-about ones on fiscal deficits, a member country cannot run a surplus higher than 6% of its GDP. Germany’s surplus amounted to 8% of GDP last year, while the Netherlands’ was 8.5%. As long as the narrative of the eurozone crisis keeps making a surplus the moralistic sign of economic virtue, Europeans are unlikely to dare to take steps to tackle a problem that is now the world’s. Here’s hoping that the brutality of Trump’s attack on free trade will force them to spring into action.

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Something will have to happen. But nothing has so far, so why the loud voices?

“When You’re Already $500 Billion Down, You Can’t Lose!” (G.)

Fears that Donald Trump is embroiling America in a global trade war intensified on Wednesday after China imposed on the US and stock markets plunged. The Dow Jones industrial average dropped and then rallied after markets fell in Europe and Asia on worries of an intensifying trade conflict between the world’s two biggest economies – the latest example of Trump taking his appetite for disruption to the global stage. After Washington unveiled plans to impose tariffs on $50bn in Chinese imports Tuesday, China hit back with plans to tax a matching $50bn of US products, including beef, cars, planes, soybeans and whiskey.

The US president has worn stock market success as a badge of honour and proof that, despite myriad controversies, the economy is booming under his presidency. But there are concerns that his aggressive tariffs and “America first” instincts could undermine confidence and cause a slowdown. Trump claimed last month that “trade wars are good, and easy to win”. China is the biggest market for US soy. The American Soybean Association, a lobbying group representing 21,000 producers, warned that China’s proposed 25% tariff on soybeans would be “devastating” to American farmers. It estimated that farmers lost an estimated $1.72bn on Wednesday morning alone as soybean futures tumbled.

John Heisdorffer, an Iowa farmer and the president of the association, said: “That’s real money lost for farmers, and it is entirely preventable.” He called on the White House to scrap its proposed tariffs. The car makers Ford and General Motors also issued statements calling for continued dialogue to resolve the escalating trade tensions. On Wednesday, Trump moved to play down concerns over a damaging trade war. He protested on Twitter: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!” The president added: “When you’re already $500 Billion DOWN, you can’t lose!”

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Did anyone tell the soybeans?

Kudlow Says Trump’s China Tariffs Are Just Proposals Right Now (BBG)

White House economic adviser Larry Kudlow stressed U.S. tariffs announced on Chinese goods are still only proposals that might never take effect as the Trump administration sought to tamp down fears of a trade war. “None of the tariffs have been put in place yet, these are all proposals,” Kudlow said in an interview Wednesday with Bloomberg News. “We’re putting it out for comment. There’s at least two months before any actions are taken.” Administration officials throughout the day emphasized the U.S. is willing to negotiate with China, helping to ease concerns among investors about a tit-for-tat trade conflict. The Dow Jones Industrial Average, after falling more than 2% at the market’s open, finished the day up almost 1%.

Commerce Secretary Wilbur Ross said China’s response isn’t expected to disrupt the U.S. economy. In an interview on CNBC on Wednesday, he said China’s announcement of retaliatory tariffs against the U.S. “shouldn’t surprise anyone.” He said the U.S. isn’t entering “World War III” and left the door open for a negotiated solution. “Even shooting wars end with negotiations,” Ross said. Earlier Wednesday, China said it would impose an additional 25% levy on about $50 billion of U.S. imports including soybeans, automobiles, chemicals and aircraft. The move matched the scale of proposed U.S. tariffs announced the previous day. The U.S. is allowing 60 days for public feedback and hasn’t specified when the tariffs would take effect, leaving a window open for talks. Chinese Ambassador to the U.S. Cui Tiankai said Wednesday his country is ready to negotiate.

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Keep that number growing. And when will the press acknowledge this is not about Cambridge Analytica?

Up To 87 Million Facebook Users’ Data Shared With Cambridge Analytica (Ind.)

Up to 87 million people may have had their Facebook data improperly passed to a third-party political firm – and most users’ public profile information could have been collected, the social media company has revealed. Initial accounts estimated the number of people affected at around 50m. But Facebook updated that number to say information from as many as 37m additional users could been shared with Cambridge Analytica. And it warned in a blog post that a now-discarded feature meant “most people on Facebook” could have had their public data scraped by “malicious actors”.

The revelations expanded the scope of a privacy scandal besieging the company just days ahead of CEO Mark Zuckerberg’s hotly anticipated appearance before Congress. It had already been revealed that researcher harvested information encompassing a vast number of Facebook users and then passed it on to Cambridge Analytica, a company that went on to work for Donald Trump’s presidential campaign. The news has sent the company’s stock plunging and stoked a political outcry on both sides of the Atlantic. Facebook said it would inform users if their information had been funnelled to Cambridge Analytica. It said roughly 70 million of those users were in the United States.

And in seeking to reassure users that it was moving to safeguard their personal information, the company made an extraordinary disclosure: chief technology officer Mike Schroepfer said the majority of its users were vulnerable to abuse of a now-disabled feature allowing people to search for other users with phone numbers and email addresses. “Given the scale and sophistication of the activity we’ve seen, we believe most people on Facebook could have had their public profile scraped in this way”, Mr Schroepfer said in the blog post.

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Insane. Will he get some serious questions on Capitol Hill, or can he get away with this sort of thing?

Zuckerberg Says Most Facebook Users Will Only Get Privacy ‘In Spirit’ (Ind.)

Facebook CEO Mark Zuckerberg has said that new data privacy laws will only apply “in spirit” to more than three quarters of the company’s users. Europe’s General Data Protection Regulation (GDPR) will force the social network to comply with strict rules about the privacy of its European users. But Mr Zuckerberg failed to commit to rolling out the protections globally. “We’re still nailing down details on this, but it should directionally be, in spirit, the whole thing,” Mr Zuckerberg said on Tuesday. With only 17 per cent of its 2.2 billion users residing within Europe, the vast majority of Facebook’s users will not benefit from the new rules.

Facebook has faced pressure in recent weeks to better protect its users’ data following revelations that the data analytics firm Cambridge Analytica harvested personal information from more than 50 million Facebook accounts in the build up to the 2016 US elections. On Monday, New York City Comptroller Scott Stringer called for Mr Zuckerberg to resign from his role as chairman of Facebook, adding that data privacy issues represented “a risk to our democracy.” The new data protection law – set to come into effect on May 25 – will give people more control over how companies store and use their personal data.

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Are you kidding? They all are. Stop working there.

We Work For Google. Our Employer Shouldn’t Be In The Business Of War (G.)

Dear Sundar,

We believe that Google should not be in the business of war. Therefore we ask that Project Maven be cancelled and that Google draft, publicize and enforce a clear policy stating that neither Google nor its contractors will ever build warfare technology. Google is implementing Project Maven, a customized AI surveillance engine that uses “wide area motion imagery” data captured by US government drones to detect vehicles and other objects, track their motions and provide results to the Department of Defense. Recently, Googlers voiced concerns about Maven internally. Diane Greene responded, assuring them that the technology will not “operate or fly drones” and “will not be used to launch weapons”.

While this eliminates a narrow set of direct applications, the technology is being built for the military, and once it’s delivered it could easily be used to assist in these tasks. This plan will irreparably damage Google’s brand and its ability to compete for talent. Amid growing fears of biased and weaponized AI, Google is already struggling to keep the public’s trust. By entering into this contract, Google will join the ranks of companies like Palantir, Raytheon and General Dynamics. The argument that other firms, like Microsoft and Amazon, are also participating doesn’t make this any less risky for Google. Google’s unique history, its motto “don’t be evil”, and its direct reach into the lives of billions of users set it apart.

We cannot outsource the moral responsibility of our technologies to third parties. Google’s stated values make this clear: every one of our users is trusting us. Never jeopardize that. Ever. This contract puts Google’s reputation at risk and stands in direct opposition to our core values. Building this technology to assist the US government in military surveillance – and potentially lethal outcomes – is not acceptable. Recognizing Google’s moral and ethical responsibility, and the threat to Google’s reputation, we request that you: 1. Cancel this project immediately. 2. Draft, publicize and enforce a clear policy stating that neither Google nor its contractors will ever build warfare technology.

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Falciani was assisting the Spanish government, and now they sold him out to get to two Catalonia separatists.

World’s Most Wanted Bank Whistleblower Arrested for Worst Possible Reason (DQ)

Hervé Falciani, the French-Italian former HSBC employee who blew the whistle on HSBC and 130,000 global tax evaders in 2008, has been arrested in Madrid on Tuesday in response to an arrest warrant issued by Switzerland for breaking the country’s bank secrecy laws. He lives in France, which rarely extradites its own citizens. But when Spanish authorities learned that he was in town to speak at a conference ominously titled, “When Telling the Truth is Heroic,” they made their move. If he is extradited to Switzerland he could face up to five years in prison. Falciani worked as a computer technician for HSBC’s Swiss subsidiary. One day in 2008, he left the office with five computer disks containing what would eventually become one of the largest leaks of banking data in history.

According to Swiss authorities, Falciani stole and then attempted to sell a trove of confidential data. Falciani says he was a whistleblower who wanted to expose a “broken” banking system, “which encouraged tax evasion.” When much of the stolen data was leaked to the press in 2015, it revealed, among other sordid things, that HSBC’s Swiss subsidiary routinely allowed clients to withdraw “bricks of cash,” often in foreign currencies of little use in Switzerland. It also colluded with clients to conceal undeclared “black” accounts from their domestic tax authorities and provided services to international criminals, corrupt businessmen, shady dictators and murky arms dealers.

As Falciani would soon find out, snitching on one of the world’s biggest banks and 130,000 of its richest clients does not make you a popular person in a country famed for its banking secrecy. In 2014 he was indicted in absentia by the Swiss federal government for violating the country’s bank secrecy laws and for industrial espionage. A year later he was sentenced by Switzerland’s federal court to five years in prison – the “longest sentence ever demanded by the confederation’s public ministry in a case of banking data theft.”

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All these bubbles will burst.

Toronto’s Epic Housing Bubble Turns to Bust (WS)

After having ballooned for 18 years with barely a dip during the Financial Crisis, Toronto’s housing market, Canada’s largest, and among the most inflated in the world, is heading south with a vengeance, both in terms of sales volume and prices, particularly at the high end. Home sales in the Greater Toronto Area (GTA) plunged 39.5% in March compared to a year ago, to 7,228 homes, according to the Toronto Real Estate Board (TREB), the local real estate lobbying group. This was spread across all types of homes, even the formerly red-hot condo sector: • Detached houses -46.3% • Semi-detached houses -30.6% • Townhouses -34.2% • Condos -32.7%.

While new listings of homes for sale fell 12.4% year-over-year, at 14,866, they’d surged 41% from the prior month, and added to the listings of homes already on the market. The total number of active listings – new listings plus the listings from prior months that hadn’t sold or been pulled without having sold – more than doubled year-over-year to 15,971 homes, and were up 20% from February. At the current sales rate, total listings pencil out to a supply of 2.1 months. The average days-on-the-market before the home is sold or the listing is pulled without having sold doubled year-over-year to 20 days. Both data points show that the market is cooling from its red-hot phase, that potential sellers aren’t panicking just yet, and that potential buyers are taking their time and getting more reluctant, or losing their appetite altogether, with the fear of missing out (FOMO) having evaporated.

Sales volume has been plunging for months while listings of homes for sale have also surged for months. Prices follow volume, and prices have been backing off, but in February they actually fell on a year-over-year basis, the first since the Financial Crisis, and in March, they fell more steeply. This is what the report called a “change in market conditions.” The average price for the Greater Toronto Area (GTA) plunged 14.3% year-over-year to C$784,588. In other words, the average buyer in March a year ago is now about C$130,000 in the hole.

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Better check this out if this is you.

Tax Trouble For -Certain- Bitcoin Traders (F.)

What do you do, come April 17, if you made a ton of money trading crypto last year and have since lost most of it? Panic, probably. A lot of last year’s winners are in deep porridge now. They owe tax on 2017 profits. They’re losing money now, so it’s not easy to come up with the cash to pay off the IRS. As for using today’s losses to offset last year’s gains, these tax naïfs are discovering, too late, that capital loss carryovers run forwards but not backwards. Suppose speculator Bob turned $200,000 into $1 million in last year’s feverish market, trading all the way—in and out of Bitcoin and Ethereum and Ripple and back in again. Now Bob has $800,000 in short-term capital gain to report on Schedule D. The state and federal tax bill is going to be upwards of $300,000.

The 2018 crash has shrunk Bob’s account value, let us suppose, to $300,000. If Bob sells out to pay the tax, he will have a $700,000 capital loss to claim. But he can claim the loss only against future capital gains, not past ones. Small consolation: Bob can use the $700,000 against up to $3,000 a year of ordinary income. If he throws in the towel on cryptocurrencies and goes back to his day job delivering pizzas, it will take him 234 years to catch even. Tyson Cross, an attorney in Reno, Nev. who has built up a specialty in crypto taxation, has been hearing many a sad tale recently. “Some alt coins are down to a tenth or less of their peak value,” he says. “The taxpayers are distraught. They don’t have any way to pay [the tax bill]. There’s only so much we can do.”

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There were no laws. Heroin was candy.

How Advertising Shaped the First Opioid Epidemic (Smithsonian)

When historians trace back the roots of today’s opioid epidemic, they often find themselves returning to the wave of addiction that swept the U.S. in the late 19th century. That was when physicians first got their hands on morphine: a truly effective treatment for pain, delivered first by tablet and then by the newly invented hypodermic syringe. With no criminal regulations on morphine, opium or heroin, many of these drugs became the “secret ingredient” in readily available, dubiously effective medicines. In the 19th century, after all, there was no Food and Drug Administration (FDA) to regulate the advertising claims of health products. In such a climate, a popular so-called “patent medicine” market flourished.

Manufacturers of these nostrums often made misleading claims and kept their full ingredients list and formulas proprietary, though we now know they often contained cocaine, opium, morphine, alcohol and other intoxicants or toxins. Products like heroin cough drops and cocaine-laced toothache medicine were sold openly and freely over the counter, using colorful advertisements that can be downright shocking to modern eyes. Take this 1885 print ad for Mrs. Winslow’s Soothing Syrup for Teething Children, for instance, showing a mother and her two children looking suspiciously beatific. The morphine content may have helped. Yet while it’s easy to blame patent medicines and American negligence for the start of the first opioid epidemic, the real story is more complicated.

First, it would be a mistake to assume that Victorian era Americans were just hunky dory with giving infants morphine syrup. The problem was, they just didn’t know. It took the work of muckraking journalists such as Samuel Hopkins Adams, whose exposé series, “The Great American Fraud” appeared in Colliers from 1905 to 1906, to pull back the curtain. But more than that, widespread opiate use in Victorian America didn’t start with the patent medicines. It started with doctors.

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Apr 022018
 
 April 2, 2018  Posted by at 9:58 am Finance Tagged with: , , , , , , , , , , ,  


John La Farge Girls Carrying a Canoe, Vaiala in Samoa 1891

 

China Announces New Tariffs On 128 US Products (CNBC)
The Real Bubble (ZH)
Cryptocurrencies: Nothing Goes To Heck In A Straight Line (WS)
Easter Shoppers Desert UK High Streets, Spreading Retail Gloom (G.)
Trouble For Big Tech As Consumers Sour On Amazon, Facebook And Co (G.)
Google, Facebook Too Big To Be Governed, Could Be Dismantled – Macron (Ind.)
The Middle East Is Doomed (Ehsani)
This Is How We End Up With John Bolton (CJ)
Two Degrees No Longer Seen As Global Warming Guardrail (AFP)

 

 

Feels like China’s just going through the motions.

China Announces New Tariffs On 128 US Products (CNBC)

China is implementing new tariffs on meat, fruit and other products from the U.S. as retaliation for American duties, heightening fears of a potential trade war between the world’s two largest economies. Beijing’s latest move, announced by its finance ministry in a statement dated April 1, is direct retaliation against taxes approved by President Donald Trump on imported steel and aluminum. Chinese officials had been warning over the last few weeks that their country would take action against the U.S. The tariffs begin on Monday, the finance ministry statement said. China’s Customs Tariff Commission is increasing the tariff rate on pork products and aluminum scrap by 25 percent. It’s also imposing a new 15 percent tariff on 120 other imported U.S. commodities, from almonds to apples and berries.

All told, the extra tariffs will hit 128 kinds of U.S. products, multiple outlets reported. The list of new duties matches the proposed list released by the government on March 23, according to Reuters. At that time, China said the affected U.S. goods had an import value of $3 billion in 2017 and included wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol and ginseng. The decision to target $3 billion in U.S. imports is significant, but it’s widely seen as a drop in the ocean given the size of the bilateral trading relationship. U.S. goods exported to China in 2016 totaled $115.6 billion, according to official data. China’s retaliation is “a statement of intent … but it’s not an escalation in our opinion,” Steve Brice, chief investment strategist at Standard Chartered Private Bank, told CNBC on Monday.

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One of many, really.

The Real Bubble (ZH)

After a seemingly unstoppable surge higher for years, March was a tough one for tech stocks, as the curtain was lifted exposing Oz-like machinations behind the scenes that spooked investors enough to pop the bubble of delusion so many were living in. After a magnificent 2017, Cryptocurrencies also started 2018 off poorly as yet another ‘bubble’ popped. However, there was one ‘asset’ that had a tremendous 2017, and has gone on to greater and bubblier things in 2018. Spot the real bubble in financial markets… Bitcoin has bust, FANG stocks are FUBAR, but The SNB is accelerating.

As we noted previously, The SNB made 32 times more than 85 Swiss private banks… and owns a record $100 billion-plus of American stocks… $11,589.01. – That’s the US dollar amount of American stocks the Swiss National Bank owns on behalf of every man, woman and child in Switzerland. Let that sink in. A Central Bank has taken on itself to expand its balance sheet and invest in the proceeds, not in gold, nor sovereign debt – heck not even in corporate bonds. Nope, the SNB has taken it upon itself to “invest” that money in another country’s most risky part of the capital structure – equity. And don’t think it’s a small number. It’s almost $100 billion US dollars.

In a strange twist of fate, the Swiss National Bank is not only Switzerland’s Central Bank, but also a publicly traded security. And that ‘security’ has had a great year so far – up a stunning 93%…

However, as Holger Zschaepitz notes, the market cap of the Swiss National Bank remains below CHF1bn amidst a profit of CHF54.4bn. But that didn’t stop investors piling in to The SNB in March as a ‘safe haven’ as the rest of the world collapsed… As Macro Tourist’s Kevin Muir concluded previously, I worry that right now, Central Banks are being rewarded for keeping their balance sheets as big and risky as they can stomach. It appears to be a trade with no cost, and in fact, helps out by both keeping their currency weak, and in the meantime, making some money. It encourages them to be extremely slow easing off the accelerator. The idiocy of Central Banks taking this sort of risk is beyond description, but no sense arguing about it – it is what it is.

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65%.

Cryptocurrencies: Nothing Goes To Heck In A Straight Line (WS)

I don’t think there has ever been an entire sector that skyrocketed as much and collapsed as quickly as the cryptocurrency space. The skyrocketing phase culminated at the turn of the year. Then the collapse phase set in, with different cryptos choosing different points in time. It doesn’t help that regulators around the world have caught on to these schemes called initial coin offerings (ICOs), where anyone, even the government of Venezuela, can try to sell homemade digital tokens to the gullible and take their “fiat” money from them and run away with it. There are now 1,596 cryptocurrencies and tokens out there, up from a handful a few years ago. And the gullible are getting cleaned out.

And it doesn’t help that the ways to promote these schemes are being closed off, one after the other. At the end of January, Facebook announced that, suddenly, “misleading or deceptive ads have no place on Facebook,” and it prohibited ads about ICOs and cryptos. On March 14, Google announced that it will block ads with “cryptocurrencies and related content,” including ICOs, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice. Its crackdown begins in June. On March 26, Twitter announced that it would ban ads of ICOs, cryptocurrency exchanges, and cryptocurrency wallet services, unless they are by public companies traded on major stock markets. It will roll out its policy over the next 30 days.

On March 29, MailChimp, a major email mass-distribution service, announced that it will block email promos from businesses that are “involved in any aspect of the sale, transaction, exchange, storage, marketing or production of cryptocurrencies, virtual currencies, and any digital assets related to an Initial Coin Offering.” This broadened and tightened its policy announced in February that promised to shut down any account related to promos of ICOs or blockchain activity. The overall cryptocurrency space, in terms of market capitalization, peaked on January 4, when market cap reached $707 billion, according to CoinMarketCap. Less than three months later, market cap has now plunged by 65% to $245 billion. $462 billion went up in smoke.

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It’s hard to accept that your entire country is pushing up daisies. But you got to sell your paper. So you get a real heavy headline, and then quote someone saying: “..the numbers were “generally pretty good news for retailers”..

Easter Shoppers Desert UK High Streets, Spreading Retail Gloom (G.)

The gloom on Britain’s high streets deepened over the Easter bank holiday weekend as heavy rain in many areas drove people to seek the shelter of shopping centres or simply stay at home. The number of shoppers on UK high streets on Easter Sunday morning slumped by over 12% compared with 2017, according to retail intelligence firm Springboard. That followed a disappointing Good Friday, when high street footfall fell by 9.6%. Saturday was little better, with footfall down 6.9% year-on-year. This weekend had been billed as the most anticipated weekend for retail since Christmas, but Springboard said bad weather in some parts of the country had “definitely hit high streets”, and pulled the overall result for all UK shopping destinations down into minus figures.

A week ago Springboard predicted that this Easter weekend’s UK retail footfall could end up 2.4% higher than last year’s, though it had said this assumed “normal weather”. It added that if freezing conditions similar to those caused by the “beast from the east” returned, all bets were off. In the event wet weather sent a chill through the high streets, meaning footfall across all shopping destinations was down 2.4% on Good Friday and 3% lower on Saturday. However, retail parks and shopping centres typically enjoyed better fortunes than they did last year. Diane Wehrle, Springboard’s marketing and insights director, said the rain kept many people away from their local high street shops. But “at the same time, people did go shopping” rather than staying at home and browsing the web.

She said the numbers were “generally pretty good news for retailers”, many of whom would be quite heartened by the numbers of shoppers out on Good Friday and Holy Saturday. With predictions of snow in some parts of the country for Easter Monday, many retailers will be crossing their fingers and hoping that conditions are not too challenging. Last week it emerged that high street sales had slumped at the fastest rate for early spring in at least five years, as cold and snowy weather kept people away from the shops. Wehrle said of Easter Monday: “If it starts off dry in the morning, that will shape the day. If people wake up and it’s snowing, that will be it.”

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“..for shareholders and pension plans, the tarnishing of tech could have serious consequences.”

Trouble For Big Tech As Consumers Sour On Amazon, Facebook And Co (G.)

Trump is going after Amazon; Congress is after Facebook; Google is too big, and Apple is short of new products. Is it any surprise that sentiment toward the tech industry giants is turning sour? The consequences of such a readjustment, however, may be dire. The past two weeks have been difficult for the tech sector by every measure. Tech stocks have largely driven the year’s stock market decline, the largest quarterly drop since 2015. Facebook saw more than $50bn shaved off its value after the Observer revealed that had harvested millions of people’s user data for political profiling. Now users are deleting accounts, and regulators may seek to limit how the company monetizes data, threatening Facebook’s business model.

On Monday, the Federal Trade Commission confirmed it was investigating the company’s data practices. Additionally, Facebook said it would to London to appear in front of UK lawmakers, but it would not send the chief executive, Mark Zuckerberg, who is increasingly seen as isolated and aloof. Shares of Facebook have declined more than 17% from the close on Friday 16 March to the close on Thursday before the Easter break. Amazon, meanwhile, long the target of President Trump’s ire, saw more than $30bn, or 5%, shaved off its $693bn market capitalization after it was reported that the president was “obsessed” with the company and that he “wondered aloud if there may be any way to go after Amazon with antitrust or competition law”.

Shares of Apple, and Google’s parent company Alphabet, are also down, dropping on concerns that tech firms now face tighter regulation across the board. For Apple, there’s an additional concern that following poor sales of its $1,000 iPhone X. For Google, there’s the prospect not only of tighter regulation on how it sells user date to advertisers, but also the fear of losing an important Android software patent case with Oracle. Big tech’s critics may be forgiven a moment of schadenfreude. But for shareholders and pension plans, the tarnishing of tech could have serious consequences.

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More on the article in yesterday’s Debt Rattle.

Google, Facebook Too Big To Be Governed, Could Be Dismantled – Macron (Ind.)

Emmanuel Macron, the French president, has warned that Google and Facebook are becoming too big to be governed and could face being dismantled. Internet giants could be forced to pay for the disruption they cause in society and submit to French or European privacy regulations, he suggested. In an interview with the magazine Wired, the president warned that artificial intelligence (AI) would challenge democracy and open a Pandora’s box of privacy issues. He was speaking after announcing a €1.5bn (£1.32bn) investment in artificial intelligence research to accelerate innovation and catch up with China and the US.

Mr Macron said companies such as Google and Facebook were welcome in France, brought jobs and were “part of our ecosystem”. But he warned: “They have a very classical issue in a monopoly situation; they are huge players. At a point of time – but I think it will be a US problem, not a European problem – at a point of time, your government, your people, may say, ‘Wake up. They are too big.’ “Not just too big to fail, but too big to be governed. Which is brand new. “So at this point, you may choose to dismantle. That’s what happened at the very beginning of the oil sector when you had these big giants. That’s a competition issue.”

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We don’t know nearly enough on ME economies. So this is a real good find.

The Middle East Is Doomed (Ehsani)

Authored by “Ehsani” – a Middle East expert, Syrian-American banker and financial analyst who visits the region frequently and writes for the influential geopolitical analysis blog, Syria Comment.

* * *

The Mideast is doomed. Egypt alone needs to create 700,000 jobs every single year to absorb the new job seekers out its 98 million population. A third of this population already live below the poverty line (482 Egyptian Pounds a month, which is less than $1 a day). The seeds of the vicious circle that the Mideast region finds itself in today were planted at least 5 decades ago. Excessive public spending without matching revenues were the catalyst to a faulty and dangerous incentive system that helped to balloon populations beyond control. A governance system that was ostensibly put in place to help the poor ended up being a built-in factory for poverty generation. Excessive subsidies helped misallocate resources and mask the true cost of living for households. Correlation between family size and income was lost.

Successive Mideast leaders are often referred to as evil dictators. I see them more as lousy economists and poor users of simple arithmetic and excel spreadsheets that can help demonstrate the simple, yet devastating power of compounding. Unless you are a Gulf-based monarchy enjoying the revenue stream from oil and gas that can postpone your day of reckoning, the numbers in nearly every single Arab country don’t add up. t is important to note that excessive population growth is not fundamental the issue here. Japan and many parts of Europe are suffering from too little population growth. The problem in Arab societies is lack of productivity stemming from weak private sector and overburdened bankrupt public sector. As students of Economics know, “Potential” Economic Growth of a country is derived by adding the growth rate of its labor force to the growth rate of the economy’s productivity.

High labor force growth therefore ought to be a plus for the “Potential Growth”. The Arab World’s problem is that it suffers from shockingly low levels of “productivity”. This may seem like a fancy word but the concept encapsulates everything that Arab economies and societies suffer from. Why does the Arab world have such low productivity? The answer lies in everything from excessive size of public sector, subsidies and overbearing regulatory system leading to corruption. As public sector liabilities grow, education, healthcare & infrastructure funding suffers. Why is the size of the public sector coupled with excessive subsidies the problem? Because what starts as the noble cause of helping the poor ends up masking the true costs of raising family size. Governments soon go broke. Services suffer. Anger rises. We know the drill now.

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Dead on, Caitlin.

This Is How We End Up With John Bolton (CJ)

A GoFundMe for former FBI Deputy Director Andrew McCabe, who was fired two weeks ago by Attorney General Jeff Sessions, has raised over $400,000 in less than a day. Another way to say that would be that a former officer from the US intelligence community, who is married to a successful physician and will surely receive a book deal worth millions of dollars, just had a charity drive which in less than a day raised an amount of money it would take the average American years to earn. Meanwhile, an impoverished American recently died because his GoFundMe failed to raise enough money for his insulin and an FBI whistleblower was just arrested for trying to bring transparency to the Bureau’s secret domestic surveillance practices while banks receive massive bailouts, global fossil fuel subsidies total trillions of dollars, and Amazon paid zero federal taxes last year despite earning billions.

Even leaving aside the reasons for McCabe’s firing and the shady dealings he was accused of, this is a very solid illustration of everything that is sick about the United States of America. In America you have socialism for the rich and capitalism for the poor. You have government secrecy for the powerful and surveillance for the powerless. You have charity for wealthy establishment lackeys and rugged individualism for ordinary human beings. Those at the top are uplifted even further, while those on the bottom are stomped through the floor.

Julian Assange is currently under siege in the Ecuadorian embassy, deprived of mobility, sunlight and healthcare, and now internet, phone calls and visitors, all because he dared to bring some transparency to the powerful. Meanwhile the intelligence and defense agencies who serve as the armed goon squad of the wealthy and the powerful are able to kill, destroy and pillage from behind the opaque walls of near-total government secrecy in the name of “national security”. And instead of defending the single defenseless man who speaks truth to power, mainstream media reporters around the world are spitting on him in near-unanimity because he hurts power’s feelings.

This is how we end up with John Bolton, people. This is the “kiss-up, kick-down” pathway to success that elevates bloodthirsty psychopaths like John Bolton, the worst of the worst, the ones willing to do the most killing on behalf of the powerful and the most stomping on the powerless to get to the top. This has become the unquestioned pathway in every sphere of public life. We have a situation now where the highest echelons of power are not the wisest among us, but the wiliest. The fourth estate is full of everyday people who at one point presumably believed they were there to bring truth to power, stomping on the silvery head of one who does, while sucking up to the very power that he regularly embarrasses with his leak drops.

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All the stuff we should do but don’t. Should we instead ask why we don’t? All the ‘it’s not too late’ talk certainly doesn’t help.

Two Degrees No Longer Seen As Global Warming Guardrail (AFP)

Limiting global warming to two degrees Celsius will not prevent destructive and deadly climate impacts, as once hoped, dozens of experts concluded in a score of scientific studies released Monday. A world that heats up by 2C (3.6 degrees Fahrenheit) – long regarded as the temperature ceiling for a climate-safe planet – could see mass displacement due to rising seas, a drop in per capita income, regional shortages of food and fresh water, and the loss of animal and plant species at an accelerated speed. Poor and emerging countries of Asia, Africa and Latin America will get hit hardest, according to the studies in the British Royal Society’s Philosophical Transactions A.

“We are detecting large changes in climate impacts for a 2C world, and so should take steps to avoid this,” said lead editor Dann Mitchell, an assistant professor at the University of Bristol. The 197-nation Paris climate treaty, inked in 2015, vows to halt warming at “well under” 2C compared to mid-19th century levels, and “pursue efforts” to cap the rise at 1.5C. UN Secretary-General Antonio Guterres on Thursday said climate change was “the most systemic threat to humankind”. With only one degree of warming so far, Earth has seen a crescendo of droughts, heatwaves, and storms ramped up by rising seas. Voluntary national pledges made under the Paris pact to cut CO2 emissions, if fulfilled, would yield a 3C world at best.

The treaty also requires that – by the end of the century – humanity stop adding more greenhouse gases to the atmosphere than oceans and forests can absorb, a threshold known as “net zero emissions”. “How fast we get to a 2C world” is critical, Mitchell told AFP. “If it only takes a couple of decades, we will be in trouble because we won’t have time to adapt to the climate.” [..] Researchers led by Felix Pretis, an economist at the University of Oxford, predict that two degrees of global warming will see GDP per person drop, on average, 13% by 2100, once costly climate change impacts are factored in. A 2ºC world will also “show significant negative impact on the rates of economic growth,” Pretis told AFP.

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