Nov 212017
 
 November 21, 2017  Posted by at 9:51 am Finance Tagged with: , , , , , , , , , ,  6 Responses »
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Notting Hill Gate Station, London 1860s

 

China’s $15 Trillion Problem: Investors Don’t Believe in Losses (BBG)
Household Debt, Size Of Home Loans A Worry – Australia Regulator (ND)
Fiscal Sundown In America, Part 1 (Stockman)
The Approaching Silicon Valley Meltdown (St. Cyr)
Merkel Prefers Fresh Elections To Minority Government As Talks Fail (G.)
Italy To Go Beyond GDP, Measure La Dolce Vita (BBG)
Your Retirement Cash May Be In The Caymans. Can You Get It Back? (IBT)
Room Rates At Trump’s Hotels Have Fallen By Up To 63% (Tel.)
Why Are We Helping Saudi Arabia Destroy Yemen? (Ron Paul)
Spain ‘Ready To Discuss’ Greater Fiscal Autonomy For Catalonia (G.)
37.5% of Greece’s Children Are At Risk Of Poverty (KTG)
Greek Online Foreclosures To Start With Big Debtors’ Assets (K.)
EU Orders Greece To Recover Up To €55 Million In State Aid (R.)
As Oceans Warm, the World’s Kelp Forests Begin to Disappear (Yale)

 

 

They wouldn’t let that happen…

China’s $15 Trillion Problem: Investors Don’t Believe in Losses (BBG)

When China unveiled plans on Friday to end the implicit guarantees underpinning asset-management products worth trillions of dollars, it should have been a bombshell for the nation’s savers. But for Yolanda Yuan and other individual investors who’ve piled into AMPs issued by banks, insurers and securities firms, the government’s announcement was largely a non-event. The reason: they didn’t believe it. “I don’t think any big banks will dare to take the risk of allowing defaults on AMPs, as that will lead to a flood of fund redemptions,” said Yuan, a 29-year-old sales manager at a state-run financial company in Shanghai. She has about 100,000 yuan ($15,069) of personal savings in products covered by the new regulations.

Over the past 13 years, assets in Chinese AMPs have swelled from almost nothing to $15 trillion in large part due to one key assumption: that investors would be made whole no matter what happened to the products’ underlying assets. Authorities are now moving to quash that belief amid concern that rampant moral hazard is distorting market prices and making the financial system vulnerable to crises. Yuan’s enduring faith in implicit guarantees suggests the government’s task won’t be easy. It may ultimately require an AMP blowup for Chinese regulators to convince investors that they’re serious about the new rules, which are set to take effect in mid-2019. But a major product failure is risky: In a worst-case scenario, it could spark a destabilizing stampede out of AMPs, which have become a key source of funding for banks and other financial institutions.

It’s not clear that’s a chance Beijing is willing to take, despite last week’s rhetoric. “It’s very hard,” said David Loevinger, a former China specialist at the U.S. Treasury Department who now works at TCW Group in Los Angeles. “You have to show people that there are no longer guarantees. The only way to show it is to force investors to take losses. They have to see it to believe it.”

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Not at all late.

Household Debt, Size Of Home Loans A Worry – Australia Regulator (ND)

The banking regulator is concerned about the size of mortgages being taken on by homeowners, issuing a warning to both lenders and borrowers. Australian Prudential Regulation Authority chairman Wayne Byres on Tuesday said Australia’s household debt was high and would continue to rise, and that too many loans were still being approved above people’s ability to pay. “Household indebtedness is high. Perhaps more importantly, the trajectory is clearly for it to rise further,” Mr Byres told the Australian Securitisation Forum in Sydney. “Lenders need to be vigilant to ensure their policies and practices are both prudent and responsible. “In short, heightened risk requires heightened prudence by APRA but also – and preferably – by lenders and borrowers themselves.”

Mr Byres said APRA’s moves to limit investor and interest-only mortgages had worked, bringing growth in lending to property investors back into line with owner-occupier lending. APRA decreed in March that big banks should limit interest-only loans to 30% of new residential mortgages, on top of a 10% cap on investor lending growth. But Mr Byres said the size of loans being issued by the big banks was still an issue, with consumers vulnerable if historically low interest rates are lifted by the Reserve Bank of Australia. Mr Byres said there had been only a slight drop in the proportion of borrowers being granted loans six times the amount of their income – a level at which they would spend about half their net income on repayments if interest rates returned to their long-term average of about 7%.

Such leverage was far higher in Australia than in comparable markets such as the UK and Ireland, he said. That left considerable potential for banks to further tighten lending practices, Mr Byres said. “Aided by file reviews conducted by external auditors, we have confirmed there is more to do in this area to improve serviceability measures, particularly in relation to the assessment of living expenses and the identification of a borrower’s existing debts.” APRA’s move to limit investor lending has borne fruit, with interest-only lending accounting for about 23% of new lending in the three months to September 30, well below its 30% limit.

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Dave’s still an angry young man.

Fiscal Sundown In America, Part 1 (Stockman)

[..] at least the Democrats did attempt to finance the trillions in new tax credits and Medicaid costs generated by ObamaCare with some revenue raisers such as the medical device and insurance company taxes and the added levies on upper income earners and investment returns. Back in the day, in fact, this kind of “tax and spend” welfare statism is exactly what the Democrats stood for. And it was also the party’s political Achilles Heel because it enabled the GOP to periodically arouse the electorate on the dangers of “big government” and thereby obtain a resurgence in Washington’s corridors of political power. But after the break from the old-time fiscal religion of balanced budgets during the so-called Reagan Revolution in 1981, the GOP has slowly morphed into the “borrow and spend” party.

Indeed, as the historically ordained party of fiscal rectitude, the GOP’s apostasy has enabled two-party complicity in a mindless regime of fiscal kick-the-can since the turn of the century. That lapse, in turn, acutely aggravated an already perilous fiscal equation owing to the baby boom retirement wave and the Fed induced slowdown in the trend rate of economic growth (see below). In this context, it should be noted that the Senate bill is a farce insofar as it claims to be a middle class tax cut and growth stimulant – since it actually accomplishes neither. On a honestly reckoned basis (counting debt service and eliminating budget gimmicks), however, it would add $2.2 trillion of new debt over the next decade on top of the $12 trillion already built-in under current policy.

Accordingly, the Senate version of Trumpite “tax reform” would accelerate the public debt toward $35 trillion by 2027 or 140% of GDP. Yet all of this added red ink would be “wasted” on cuts for 150 million individual taxpayers that are written in disappearing ink (i.e. they lapse after 2025) and on misbegotten corporate rate cuts that will do virtually nothing for economic growth. Indeed, contrary to the old Washington saw about “wasting a good crisis” the Senate bill involves something more like creating a good crisis and wasting it, too.

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“The Valley” (and its entire ancillary complex aka “the disruptor class”) is on the verge of receiving a wake up call..”

The Approaching Silicon Valley Meltdown (St. Cyr)

[..] there has been one outlier, for the most part, which seemed to skirt around all the current chaos, relatively unscathed. That would be Silicon Valley and all its ancillary provinces aka “Disruptive Tech.” So far the coveted group known collectively as “FAANG” (e.g., Facebook™, Apple™, Amazon™, Netflix™, Google™) seems to have held the “barbarians at the gates” known as investors relatively at bay, or “stable” in their positions, if you will. What has been, anything but, is their cohort of IPO brethren that were supposed to have joined them. “The Valley” seems to fit nicely as a moniker for a now self-recognized nation-state, after-all, if you include the market cap of these and a few others (e.g., Tesla™ and more) their combined valuations rival those of sovereign nations.

For all intents and purposes one could say they’re already developing and embracing their own newly formed currency, aka “Bitcoin™.” All that’s needed would seem is proposing a charter, and recognition. And that’s why it’s all about to burst, in my opinion. All of it. Why? Just as there are always clues, it’s in the consistency of further developments, along with weighing any prior, coupling them with the current, then trying to extrapolate whether or not they still stand, or are valid. This is the work most people (especially those paraded across the sycophantic mainstream business/financial media) won’t do. And not doing so for many – as of today – will have ramifications, maybe for a lifetime. So what’s the “Why?” Of course, it’s only my opinion, but I stand behind it more fervently than ever before. And it is this…

“The Valley” (and its entire ancillary complex aka “the disruptor class”) is on the verge of receiving a wake up call, the likes, that may make the dot-com era look relatively “stable” in hindsight. To use the political as an analogy, let’s just say, I believe the newly formed “nation-state” of FAANG will have much more in common with the turmoil in Brazil, Spain, Venezuela, and a few others in the coming months as it continues to desperately cling to the mythical Utopia of magical creatures known as unicorns, and cash out riches known as IPO’s. That “Utopia” has already been found to be a Potemkin Village made of spreadsheet papier-mâché analysis and valuation metrics, not worth the digital paper they’re written on.

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All of a sudden, both Merkel’s career and Germany’s role in Europe are under fire.

Merkel Prefers Fresh Elections To Minority Government As Talks Fail (G.)

Angela Merkel has indicated that she would rather have fresh elections than try to rule in a minority government as the collapse of German coalition talks posed the most serious threat to her power since she became chancellor more than a decade ago. Merkel, who has headed three coalitions since 2005, said she was “very sceptical” about ruling in a minority government and suggested she would stand again as a candidate if elections were called in the new year, telling public broadcaster ARD she was “a woman who has responsibility and is prepared to take responsibility in the future”. Exploratory talks to form the next German government collapsed on Sunday night after the pro-business Free Democratic Party (FDP) walked out of marathon negotiations with Merkel’s Christian Democrats, its Bavarian sister party, the Christian Social Union (CSU), and the Green party.

Germany’s president had earlier urged political parties to resume efforts to a build a governing coalition following a meeting with Merkel. “I expect the parties to make the formation of a new government possible in the foreseeable future,” Frank-Walter Steinmeier said, adding that the parties had a responsibility that “cannot be simply given back to the voters.” Elections in September saw Merkel’s bloc poll first place but with a reduced share of the vote and with the FDP and Greens as its only plausible coalition partners. The collapse in the talks and possibility of fresh elections brings further uncertainty for the British government over Brexit, which had hoped that a strong German coalition, including the FDP, might help smooth the next phase of negotiations.

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“There may be cases when a government is willing to press ahead with a policy even if it reduces short-term growth because it produces benefits in terms of broader welfare.”

Italy To Go Beyond GDP, Measure La Dolce Vita (BBG)

Italy has long prided itself for its quality of life – and with good reason. Italy may be only just recovering from a long economic crisis, but its citizens are healthier and live longer than those of most other countries in the world. It is perhaps no coincidence then that the Italian government is pioneering the use of welfare indicators in its budget process. As of this year, the finance ministry will produce official forecasts for 12 indicators, ranging from income inequality to CO2 emissions to obesity – the first country to do so in the EU and the G7. Measuring “la dolce vita” is a complex task, but one other countries should consider too. Growth will remain the main indicator to judge a country’s economic success because of its conciseness.

But, to the extent they can, it is hard to see why governments should not monitor the broader impact their policies have on the well-being of citizens. The push to go beyond GDP as a measure of welfare dates back at least to former U.S. presidential candidate Robert Kennedy. “The gross national product does not allow for the health of our children, the quality of their education or the joy of their play,” said Kennedy in a speech in 1968. Since then, economists have produced a long list of reports on well-being – the most famous of which was probably one by the Stiglitz-Sen-Fitoussi Commission set up by the French Government in 2008. Yet, so far this paperwork has produced little action: Governments still base their economic policy-making primarily on the basis of GDP.

There are very good reasons for continuing to do so. The choice of other welfare indicators is arbitrary and may be imprecise. In Italy, one of the biggest drivers of inequality is the gap between the young, whose incomes have fallen the most during the crisis, and the elderly and yet this is not included in the range of selected measures. There is also an issue of weighting: How will the Italian government decide which of the 12 indicators it has chosen is the most important? Finally, forecasting some variables such as “predatory crime” is bound to pose some serious headaches. Yet, this does not mean the principle is wrong. There may be cases when a government is willing to press ahead with a policy even if it reduces short-term growth because it produces benefits in terms of broader welfare.

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Chasing yield. What ultra low rates do.

Your Retirement Cash May Be In The Caymans. Can You Get It Back? (IBT)

The release of the so-called “Paradise Papers” touched off new scrutiny of how moguls, celebrities and politicians stash their cash in offshore tax havens. The practice, though, is hardly limited to the global elite. In fact, government documents show that local government officials have sent hundreds of billions of dollars of public sector workers’ retirement savings to a tiny archipelago most famous for white-sand beaches — and laws that shield investors from taxes. Operating outside the U.S. legal system, the offshore accounts in the Cayman Islands give Wall Street firms leeway to make complex international investments and to earn big fees off investors’ capital. But with offshore accounts featuring prominently in high-profile Ponzi schemes, some critics warn that the use of tax havens can endanger the retirement savings of millions of teachers, firefighters, cops and other public workers — a situation that could put taxpayers on the hook for losses if the investments go bust, or the money goes missing.

The tidal wave of cash has flowed from public pension systems into so-called “alternative investments”: private equity, hedge funds, venture capital firms and real estate. While many alternative investment firms operate in Lower Manhattan, more than a third of all the cash in those private funds flows through vehicles domiciled in the Caymans, according to Securities and Exchange Commission records reviewed by International Business Times. Those same records show that public pension plans, university endowments and other nonprofits have funneled a massive $1.8 trillion into alternative investments.

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From the Telegraph’s travel section. Is it Airbnb?

Room Rates At Trump’s Hotels Have Fallen By Up To 63% (Tel.)

There is further evidence that Donald Trump’s occupation of the Oval Office has had a negative impact on his business empire, with new research showing that average room rates have fallen by as much as 63%at all but one of his 13 hotels. Hardest hit was Trump Las Vegas. The average cost of a two-night stay in a standard double room during January 2017, just before his inauguration, was priced at £637, according to analysis by FairFX, the currency provider. But a two-night break in January 2018, one year on, can be secured for just £237.

At Trump Turnberry, his Ayrshire golf hotel, the average cost of a two-night stay has fallen by 57%, from £498 to £215, while steep drops have also been found for stays at Trump Doral in Miami (down 53%), Trump Washington DC (down 52%), Trump Vancouver (down 48%), and Trump New York (down 32%). Only the president’s Irish hotel, Trump Doonbeg, has seen a rise in rates, from £334 to £357. “One year after Trump’s inauguration, prices for a weekend in one of his hotels have for the most part decreased,” said Ian Strafford-Taylor, FairFX CEO. “While big events, like the inauguration in Washington, will usually cause prices to rise in that city for a particular weekend, the decreases in other places suggest that it doesn’t necessarily pay to be president.”

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“Does holding hands with Saudi Arabia as it slaughters Yemeni children really reflect American values?”

Why Are We Helping Saudi Arabia Destroy Yemen? (Ron Paul)

It’s remarkable that whenever you read an article about Yemen in the mainstream media, the central role of Saudi Arabia and the United States in the tragedy is glossed over or completely ignored. A recent Washington Post article purporting to tell us “how things got so bad” explains to us that, “it’s a complicated story” involving “warring regional superpowers, terrorism, oil, and an impending climate catastrophe.” No, Washington Post, it’s simpler than that. The tragedy in Yemen is the result of foreign military intervention in the internal affairs of that country. It started with the “Arab Spring” which had all the fingerprints of State Department meddling, and it escalated with 2015’s unprovoked Saudi attack on the country to re-install Riyadh’s preferred leader.

Thousands of innocent civilians have been killed and millions more are at risk as starvation and cholera rage. We are told that US foreign policy should reflect American values. So how can Washington support Saudi Arabia – a tyrannical state with one of the worst human rights record on earth – as it commits by what any measure is a genocide against the Yemeni people? The UN undersecretary-general for humanitarian affairs warned just last week that Yemen faces “the largest famine the world has seen for many decades with millions of victims.” The Red Cross has just estimated that a million people are vulnerable in the cholera epidemic that rages through Yemen. And why is there a cholera epidemic? Because the Saudi government – with US support – has blocked every port of entry to prevent critical medicine from reaching suffering Yemenis.

This is not a war. It is cruel murder. The United States is backing Saudi aggression against Yemen by cooperating in every way with the Saudi military. Targeting, intelligence, weapons sales, and more. The US is a partner in Saudi Arabia’s Yemen crimes. Does holding hands with Saudi Arabia as it slaughters Yemeni children really reflect American values? Is anyone even paying attention?

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What they refused to do 5 years ago. Now withdraw the warrants for Catalan elected officials.

Spain ‘Ready To Discuss’ Greater Fiscal Autonomy For Catalonia (G.)

Madrid is paving the way for Catalonia to be given the power to collect and manage its own taxes, similar to the system enjoyed by the autonomous Basque country, in an attempt to defuse the crisis over an illegal referendum on independence for the region. Senior sources in the Spanish government have told the Guardian that although there remains intense opposition within the ruling People’s party (PP) to any future referendum on self-determination, there is a renewed willingness to open discussions on a new fiscal pact under which Catalonia would have greater control of its finances. “If the Catalans ask for a fiscal pact, we are ready to discuss this,” one senior source said.

“The Basque country [in northern Spain] and Navarre collect their own taxes. They have their own system and there is a meeting between the Basque country and the central government and they decide how much they contribute to foreign policy and defence. It‘s a negotiation. Every five years. “We are open to discuss this, taking into account that the constitution of Spain also establishes solidarity [among the Spanish regions].” A fiscal pact was proposed in 2012 by Catalonia’s then president, Artur Mas, but the Spanish government blocked the move over concerns that it would be destabilising at a time when Spain appeared to be in dire economic peril. A cross-party commission on potential constitutional reform opened discussions last week on a new settlement between the Catalans and the Spanish government, with the support of the prime minister, Mariano Rajoy.

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Child poverty is high all over the EU. In Greece, it’s criminal.

37.5% of Greece’s Children Are At Risk Of Poverty (KTG)

Year in, year out since 2010, the number of children at risk of poverty is continuously increasing in Greece. With 37.5%, Greece is tops among members of the eurozone and third after Romania and Bulgaria within the European union. Four in 10 children aged up to 17 years old in Greece are at risk of poverty or social exclusion, Europe’s statistical agency Eurostat has found, putting the crisis-hit country at the top of the eurozone child poverty scale. In its report published on Monday and using 2016 data, Eurostat reported that with 37.5% of children facing the threat of poverty, Greece has the highest rate of at-risk children in the eurozone and the third highest in the European Union, behind Romania (49.2%) and Bulgaria (45.6%). At the opposite end of the scale, the lowest shares of children at risk of poverty or social exclusion were recorded in Denmark (13.8%), Finland (14.7%) and Slovenia (14.9%), ahead of the Czech Republic (17.4%) and the Netherlands (17.6%).

Greece also saw the highest rise in the number of at-risk children in the period between 2010 and 2016, growing 8.8% from a pre-crisis level of 28.7%. Cyprus also saw a spike of 7.8%, followed by Sweden (5.4%) and Italy (1.1%). In total in 2016, 24.8 million children in the EU, or 26.4% of the population aged up to 17 years old, were at risk of poverty or social exclusion. This means that the children were living in households with at least one of the following three conditions: at-risk-of-poverty after social transfers (income poverty), severely materially deprived or with very low work intensity. The proportion of children at risk of poverty or social exclusion in the EU has slightly decreased over the years, from 27.5% in 2010 to 26.4% in 2016, Eurostat reported.

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Prediction: a big mess.

Greek Online Foreclosures To Start With Big Debtors’ Assets (K.)

The first online foreclosures, set to start on November 29, will concern the assets of individuals or enterprises with debts of €500,000 or more (in some cases over €2 million). Villas, large buildings, historic buildings with one owner, plots of land, professional facilities and even parking spaces are among the assets slated to go under the electronic hammer as of end-November, when the online process finally begins. The amount of debts banks are seeking from these foreclosures comes to tens of millions of euros and concerns loans issued between 2005 and the outbreak of the crisis, when credit flowed handsomely.

Such is the case of one property with a single owner that will be auctioned for that individual’s debts of over €1.5 million to two systemic banks. The amount banks hope to claim is just €100,000, as it is common practice that the starting price is far smaller than the actual debt. The banks have vowed not to auction the homes of vulnerable groups or families without any other assets, but bank sources cannot rule out any exceptions made either intentionally or not, as 98% of debtors have failed to update their property details.

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The EU shouldn’t get to order Greece to do anything.

EU Orders Greece To Recover Up To €55 Million In State Aid (R.)

The European Commission ordered Greece on Monday to recover up to €55 million in state aid from Hellenic Defense Systems (HDS), a largely state-owned company that makes defense-related products. Greece granted a number of support measures between 2004 and 2011 including a direct grant of €10 million, a capital increase of €158 million and state guarantees for loans of up to €942 million. The Commission said in a statement that its investigation had concluded that the vast majority of Greek measures fell outside the scope of EU state aid control because they served Greek security interests. However, some measures worth up to €55 million did amount to illegal state aid because they supported the HDS’s civil activities, which include small pistols, explosives for construction and fireworks.

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Global.

As Oceans Warm, the World’s Kelp Forests Begin to Disappear (Yale)

A steady increase in ocean temperatures — nearly 3 degrees Fahrenheit in recent decades — was all it took to doom the once-luxuriant giant kelp forests of eastern Australia and Tasmania: Thick canopies that once covered much of the region’s coastal sea surface have wilted in intolerably warm and nutrient-poor water. Then, a warm-water sea urchin species moved in. Voracious grazers, the invaders have mowed down much of the remaining vegetation and, over vast areas, have formed what scientists call urchin barrens, bleak marine environments largely devoid of life. Today, more than 95 percent of eastern Tasmania’s kelp forests — luxuriant marine environments that provide food and shelter for species at all levels of the food web — are gone.

With the water still warming rapidly and the long-spine urchin spreading southward in the favorable conditions, researchers see little hope of saving the vanishing ecosystem. “Our giant kelp forests are now a tiny fraction of their former glory,” says Craig Johnson, a researcher at the University of Tasmania’s Institute for Marine and Antarctic Studies. “This ecosystem used to be a major iconic feature of eastern Tasmania, and it no longer is.” The Tasmanian saga is just one of many examples of how climate change and other environmental shifts are driving worldwide losses of giant kelp, a brown algae whose strands can grow to 100 feet.

In western Australia, increases in ocean temperatures, accentuated by an extreme spike in 2011, have killed vast beds of an important native kelp, Ecklonia radiata. In southern Norway, ocean temperatures have exceeded the threshold for sugar kelp — Saccharina latissima — which has died en masse since the late 1990s and largely been replaced by thick mats of turf algae, which stifles kelp recovery. In western Europe, the warming Atlantic Ocean poses a serious threat to coastal beds of Laminaria digitata kelp, and researchers have predicted “extirpation of the species as early as the first half of the 21st century” in parts of France, Denmark, and southern England.

Read more …

Nov 172017
 
 November 17, 2017  Posted by at 9:50 am Finance Tagged with: , , , , , , , , , ,  5 Responses »
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Arthur Rothstein Night view, downtown section. Dallas, Texas 1942

 

America’s Racial Wealth Gap Is Staggering – And Government-Created (BI)
Australia’s Private Debt Juggernaut Rolls On (LFE)
John Malone says Amazon is a ‘Death Star’ (CNBC)
Einhorn Says Issues That Caused the Crisis Are Not Solved (BBG)
Corporate Zombies Are Threatening The Eurozone Economy (ZH)
Wall St. Bankers Secretly Used Chat Rooms To Rig Treasury Bond Trades (NYP)
Electricity Consumed To Mine Bitcoin Rose 43% Since October (BBG)
Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash (ZH)
Fed Insiders Seek Radical Policy Review as Powell Era Dawns (BBG)
200,000 Gallons of Oil Spill From Keystone Pipeline (Atl.)
Greek Taxpayers Have Paid Dearly For €720 Million ‘Social Dividend’ (K.)
EU Handling Of Greek Bailouts “Generally Weak”, Say Its Own Auditors (R.)
James Hansen Calls For Wave Of Climate Lawsuits (G.)

 

 

Don’t think a lot of people were aware of this.

America’s Racial Wealth Gap Is Staggering – And Government-Created (BI)

The term “public housing” is generally associated with poor, disaffected US minorities — but it turns out its origins were very much white and middle-class. Explicitly racist housing policies at the federal, state and local levels, first during the Great Depression and then after World War II, helped deepen and exacerbate a wealth gap between the races that has accelerated over the decades. Those policies also led to a sharp rise in racial segregation across many US cities, according to Richard Rothstein, a research associate of the Economic Policy Institute and author of “The Color of Law: A Forgotten History of How our Government Segregated America.”

“There was a systematic pattern that we’ve forgotten by which every metropolitan area in this country has been segregated not by the accident of personal choices or economic differences but by very explicit federal, state and local policy designed to create a segregated landscape everywhere we look,” Rothstein said during his keynote speech at a recent conference sponsored by the Federal Reserve Bank of Minneapolis. The Fed is putting increasing efforts into community development as the unemployment rate falls to historically low levels, forcing policymakers to face more intractable social issues that are not always directly amenable to monetary or even fiscal policy. America’s racial wealth gap today is almost hard to fathom:

Black families on average hold a paltry 10% of the wealth owned by the average white family, a level of inequality that eclipses anything seen in other rich nations. Rothstein argues that a big part of that gap comes from discriminatory housing policies that allowed whites to build gains from homeownership while blacks were forced to rent. Here’s what the data look like, according to the Urban Institute:

Rothstein argued that the roots of inequality in housing wealth were very much racial and completely intentional, not the result of self-segregation by choice. “Housing was built on a segregated basis, very often creating segregation in communities that hadn’t known it before or at least where it wasn’t nearly as intense as it later became,” he said. President Harry Truman proposed a massive expansion of the public housing program in 1949 in order to house returning veterans, Rothstein said. The 1949 Housing Act was passed “as a segregated program, and the government used that act to continue to segregate all its housing programs for the next ten years.”

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This is about Australia, but take a look at debt service ratio’s in countries like Denmark and the Netherlands. And then just for fun compare them to the US, Italy.

Australia’s Private Debt Juggernaut Rolls On (LFE)

In the post-GFC era, more attention has been given to private credit (debt) whereas previously, almost all commentary focused upon public debt. The ruptures caused by the global financial crisis (GFC) is strongly responsible for this shift in perspective, including the research by heterodox economists. Fortunately, the mass media in Australia have done a fairly good job at bringing attention to private debt even though they are, ironically, staunch cheerleaders of inflated land prices. As is now commonly recognised, Australia’s household sector is heavily indebted. The household debt to GDP ratio is the second-highest globally at 122%, has the second-equal highest household sector debt service ratio (DSR), and the fifth-highest debt to income ratio. In absolute terms, household debt amounts to $2.1 trillion dollars; the vast majority consists of mortgage debt with a small remainder of personal debt.

The household debt to income ratio is 172%, which is below the commonly-cited RBA ratio which registers at 190%. This is due to the different measure of debt used (the numerator). The Bank of International Settlements (BIS) only considers debt instruments in line with the UN SNA (System of National Accounts), whereas the RBA uses all household liabilities from the ABS Financial National Accounts. This is neither correct nor incorrect, just different. In compiling its debt database, the BIS must adhere to international standards.

The debt service ratio is an estimate of both aggregate principal and interest payments, using household income, debt and the average interest rate (FISIM-adjusted) variables as inputs. The BIS notes the DSR demonstrates a strongly negative correlation between household consumption and debt, for obvious reasons.

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“Amazon is a ‘Death Star’ moving in ‘striking range of every industry on the planet'”.

John Malone says Amazon is a ‘Death Star’ (CNBC)

Liberty Media Chairman John Malone believes Amazon will dominate the future and is the only company that has a chance to beat Netflix. Netflix CEO Reed Hastings “has been successful in throwing hail Mary passes and then growing into them. And I think he is going to continue doing that. He’s got a great service. He’s disintermediating the studio industry by going directly to the talent,” Malone said in an exclusive interview with CNBC’s David Faber Thursday at the Liberty Media annual investor meeting. “The only outfit right now that has a chance of overtaking them would be Amazon.” The investor noted the cable industry missed its opportunity to compete with Netflix in the past and said “it’s way too late” now. He added that in today’s media world Netflix has the lead position due to its size and subscriber base.

The internet “makes scale even more important in the media business, where scale always was important. It’s all about scale,” he said. Netflix was “the first wave. And I think Jeff [Bezos] is gonna be the most disruptive. As [his] Death Star moves into striking range of every industry on the planet.” He explained that Amazon’s business dominance is growing stronger. Malone said any company that sells products to consumers is at risk of being crushed by the e-commerce giant. “If you’re in the B2C business, if you’re selling anything to any consumer anywhere on the planet, you gotta believe that Amazon is gonna have a look at that opportunity to commoditize you to use scale to serve the public,” he said. Bezos is “reducing cost to the consumer and providing great convenience … You just got to take your hat off and envy what he has built.”

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And that should raise a lot more fear than it does at present.

Einhorn Says Issues That Caused the Crisis Are Not Solved (BBG)

Hedge-fund manager David Einhorn said the problems that caused the global financial crisis a decade ago still haven’t been resolved. “Have we learned our lesson? It depends what the lesson was,” Einhorn, the co-founder of New York-based Greenlight Capital, said at the Oxford Union in England on Wednesday. Einhorn said he identified several issues at the time of the crisis, including the fact that institutions that could have gone under were deemed too big to fail. The scarcity of major credit-rating agencies was and remains a factor, Einhorn said, while problems in the derivatives market “could have been dealt with differently.” And in the “so-called structured-credit market, risk was transferred, but not really being transferred, and not properly valued.”

“If you took all of the obvious problems from the financial crisis, we kind of solved none of them,” Einhorn said to a packed room at Oxford University’s 194-year-old debating society. Instead, the world “went the bailout route.” “We sweep as much under the rug as we can and move on as quickly as we can,” he said. [..] Briefly touching the rise of computer-driven strategies in the financial industry, the billionaire said machines were usually good at spotting short-term trading patterns, something Greenlight isn’t focused on. “Our goal here is to find things that are widely misunderstood by a large margin. So we are not really competing with that kind of technology, because I don’t think we would beat them.”

Read more …

Central bankers who create zombies, and then warn about the danger of .. zombies. In other words, nothing out of the ordinary.

Corporate Zombies Are Threatening The Eurozone Economy (ZH)

The recovery in Eurozone growth has become part of the synchronised global growth narrative that most investors are relying on to deliver further gains in equities as we head into 2018. However, the “Zombification” of a chunk of the Eurozone’s corporate sector is not only a major unaddressed structural problem, but it’s getting worse, especially in…you guessed it…Italy and Spain. According to the WSJ.

The Bank for International Settlements, the Basel-based central bank for central banks, defines a zombie as any firm which is at least 10 years old, publicly traded and has interest expenses that exceed the company’s earnings before interest and taxes. Other organizations use different criteria. About 10% of the companies in six eurozone countries, including France, Germany, Italy and Spain are zombies, according to the central bank’s latest data. The percentage is up sharply from 5.5% in 2007. In Italy and Spain, the percentage of zombie companies has tripled since 2007, the OECD estimated in January. Italy’s zombies employed about 10% of all workers and gobbled up nearly 20% of all the capital invested in 2013, the latest year for which figures are available.

The WSJ explains how the ECB’s negative interest rate policy and corporate bond buying are keeping a chunk of the corporate sector, especially in southern Europe on life support. In some cases, even the life support of low rates and debt restructuring is not preventing further deterioration in their metrics. These are the true “Zombie” companies who will probably never come back from being “undead”, i.e. technically dead but still animate. Belatedly, there is some realisation of the risks.

Economists and central bankers say zombies undercut prices charged by healthier competitors, create artificial barriers to entry and prevent the flushing out of weak companies and bad loans that typically happens after downturns. Now that the European economy is in growth mode, those zombies and their related debt problems could become a drag on the entire continent. “The zombification of the corporate sector and banks (is) a risk for future living standards,” Klaas Knot, a European Central Bank governor and the head of the Dutch central bank, said in an interview. In some ways, zombie firms are an unintended side effect of years of easy money from the ECB, which rolled out aggressive stimulus policies, including negative interest rates, to support lending and growth. Those policies have been sharply criticized in some richer eurozone countries for making it easier for banks to keep struggling corporate borrowers alive.

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Jail time.

Wall St. Bankers Secretly Used Chat Rooms To Rig Treasury Bond Trades (NYP)

Wall Street banks secretly shared client information in online chat rooms in order to rig auctions for the $14 trillion US Treasurys market, according to an explosive lawsuit filed in Manhattan federal court on Wednesday. The move wrongly fattened the banks’ profits and picked profits from clients, the suit claims. The new accusations, leveled by several pension funds and wealthy individual investors, are contained in an expanded class-action suit originally filed in July 2015 — and include an unusual twist: Some of the evidence came from confidential informants and one of the banks sued in the earlier action. That bank is now cooperating with the plaintiffs in the massive civil action, and is providing an in-depth look into how Wall Street allegedly conspired to rig Treasury bond trades.

The revised lawsuit expands on details on how the banks conspired to set Treasury bond prices — like moves to manipulate the price of the bonds higher on days when there was a lot of demand, and vice versa, court papers claim. The banks worked their scam for years until The Post first reported in June 2015 of the existence of a government investigation into the alleged actions, the updated lawsuit claims. The funds, representing retirees and public workers, also claim the banks conspired to rig the secondary Treasury markets beginning in the 1990s through tightly controlled electronic platforms that inhibited more competitive trading — a new allegation that wasn’t in the original suit but mirrors similar complaints filed against banks in other markets, like stock loans.

The amended suit tightens its focus on a select number of banks, naming Goldman Sachs, Morgan Stanley, the Royal Bank of Scotland, BNP Paribas, and UBS, among others, as the firms behind the rigging, which they allege occurred from Jan. 1, 2007 to mid-2015. Last year, the judge presiding over the class-action suit had questioned whether the claims were strong enough to proceed. The funds continue to allege the banks mined their own customers’ bids for Treasury bonds to get a bigger share of the auction, and sell the bonds for more profit. Probes on the auction practices are being conducted by the Justice Department, the Securities and Exchange Commission and other federal, state and overseas regulators, sources said. No regulator has accused any bank of wrongdoing.

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It will keep rising. No hydro project will stop that.

Electricity Consumed To Mine Bitcoin Rose 43% Since October (BBG)

A green-energy startup says it can solve bitcoin’s surging electricity consumption without boosting pollution, an issue threatening to halt the meteoric rise of the virtual currency. Austria’s HydroMiner GmbH raised $2.8 million after closing its first initial coin offering on Wednesday, according to its website. The cash will be used to install high-powered computers at hydropower plants, where the company says it can mine new digital currencies at a cheaper cost and with lower environmental impacts. “A lot of people are worried about the high energy consumption of cryptocurrencies,” said Nadine Damblon, the co-founder and chief executive officer of HydroMiner in Vienna. “It’s a huge factor.”

The electricity needed by the global network of computers running the blockchain technology behind bitcoin has risen more than two-fifths since the beginning of October, to about 28 terawatt-hours a year, according to the Digiconomist website. That’s more power than all of Nigeria’s 186 million people consume each year. Much of the electricity feeding bitcoin projects is coming from generators fed by fossil fuels. Even as bitcoin approaches $8,000, the price required for mining to be marginally profitable may reach a jaw-dropping $300,000 to $1.5 million by 2022, according to Christopher Chapman at Citigroup. He based his estimate on current growth rates for mining and the electricity consumed by computers doing the work. At that pace, the power consumption implied by bitcoin’s growth may eventually match what Japan uses.

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My piece from November 8: How Broke is the House of Saud? Sounds like an extremely volatile situation. Taking all those billions away from the rich will not be appreciated. MBS is playing with fire.

Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash (ZH)

Saudi Arabia just introduced a 70% wealth tax. It did so in a most original way… As we noted shortly after the Crown Prince’s purge of potential rivals within Saudi Arabia’s sprawling ruling family, while the dozens of arrests were made under the pretext of an “anti-corruption crackdown”, Mohammed bin Salman’s ulterior motive was something else entirely: Replenishing the Kingdom’s depleted foreign reserves, which have been hammered for the past three years by low oil prices, with some estimating that the current purge could potentially bring in up to $800 billion in proceeds. Furthermore, the geopolitical turmoil unleashed by the unprecedented crackdown helped push oil prices higher, creating an ancillary benefit for both the kingdom’s rulers and the upcoming IPO of Aramco.

And, in the latest confirmation that the crackdown was all about cash, the Financial Times reports today that the Saudi government has offered the new occupants of the Riyadh Ritz-Carlton a way out…. and it’s going to cost them: In some cases, as much as 70% of their net worth. “Saudi authorities are negotiating settlements with princes and businessmen held over allegations of corruption, offering deals for the detainees to pay for their freedom, people briefed on the discussions say. In some cases the government is seeking to appropriate as much as 70% of suspects’ wealth, two of the people said, in a bid to channel hundreds of billions of dollars into depleted state coffers. The arrangements, which have already seen some assets and funds handed over to the state, provide an insight into the strategy behind Crown Prince Mohammed bin Salman’s dramatic corruption purge.”

[..] Some of the suspects, most of whom have been rounded up at the Ritz-Carlton hotel in Riyadh since last week, are keen to secure their release by signing over cash and corporate assets, the FT’s sources say. “They are making settlements with most of those in the Ritz,” said one adviser. “Cough up the cash and you will go home.” One multi-billionaire businessman held at the Ritz-Carlton has been told to hand over 70% of his wealth to the state as a punishment for decades of involvement in allegedly corrupt business transactions. He wants to pay, but has yet to work out the details of transferring those assets to the Saudi state.”

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Just look at the nonsense spouted: “The move formalized a policy they’d been following in practice for several years, and it was backed by careful logic: 2% is high enough to ensure that workers continue to get raises and to give the Fed some cushion against deflation.” It did none of that.

Fed Insiders Seek Radical Policy Review as Powell Era Dawns (BBG)

Federal Reserve officials are pushing for a potentially radical revamp of the playbook for guiding U.S. monetary policy, hoping to seize a moment of economic calm and leadership change to prepare for the next storm. While the country is enjoying its third-longest expansion on record, inflation and interest rates are still low, meaning the central bank has little room to ease policy in a downturn before hitting zero again. With Jerome Powell nominated to take over as Fed chairman in February, influential officials including San Francisco Fed chief John Williams and the Chicago Fed’s Charles Evans have taken the lead in calling for reconsidering policy maker’s 2% inflation target. “It’s a good time given the shift in leadership,” Atlanta Fed President Raphael Bostic told reporters on Tuesday in Montgomery, Alabama.

“The new guy comes in and they are able to really think about, how should this work, how do I think this should work, and is it compatible with where we’ve been and where we are trying to get to?” The Fed in 2012 officially settled on 2% inflation as an explicit target for the price stability half of its dual mandate from Congress. The other goal is maximum sustainable employment. The move formalized a policy they’d been following in practice for several years, and it was backed by careful logic: 2% is high enough to ensure that workers continue to get raises and to give the Fed some cushion against deflation. Other advanced economies aim for a similar level. Yet Fed officials have been urging the policy-setting Federal Open Market Committee to revisit that approach.

“I do think that’s a very important thing that we should all be starting to think about, to prepare ourselves and evaluating,” Cleveland Fed President Loretta Mester told a monetary policy conference at the Cato Institute Thursday in Washington. “The Bank of Canada rethinks its framework every five years. It seems to me that’s not a bad thing.”

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This is not Keystone XL, but it’s terribly scary.

200,000 Gallons of Oil Spill From Keystone Pipeline (Atl.)

The Keystone pipeline was temporarily shut down on Thursday, after leaking about 210,000 gallons of oil into Marshall County, South Dakota*, during an early-morning spill. TransCanada, the company which operates the pipeline, said it noticed a loss of pressure in Keystone at about 5:45 a.m. According to a company statement, workers had “completely isolated” the section and “activated emergency procedures” within 15 minutes. Brian Walsh, a state environmental scientist, told the local station KSFY that TransCanada informed the South Dakota Department of Environment and Natural Resources about the spill by 10:30 a.m. TransCanada estimates that the pipeline leaked about 5,000 barrels of oil at the site, Walsh said. A barrel holds 42 U.S. gallons of crude oil.

The Keystone pipeline is nearly 3,000 miles long and links oil fields in Alberta, Canada, to the large crude-trading hubs in Patoka, Illinois, and Cushing, Oklahoma. It was completed in 2010. The entirety of its northern span—which travels through North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Missouri, and Illinois—would stay closed until the leak was fixed, the company said. TransCanada said it was still operating the pipeline’s southern span, which connects Oklahoma to export terminals along the Gulf Coast. The pipeline’s better-known sister project—the Keystone XL pipeline—was proposed in 2008 as a shortcut and enlargement of the Keystone pipeline.

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A country being crushed by creative accounting.

Greek Taxpayers Have Paid Dearly For €720 Million ‘Social Dividend’ (K.)

It took 2.7 billion euros in new taxes and pension cuts for the government to beat the primary surplus target by 1.9 billion euros this year. In total, 6.2 million taxpayers were forced to pay an average of 410 euros each for the government to distribute an average handout of 180 euros branded the “social dividend” to fewer taxpayers (almost 4 million). The relevant bill that was tabled in Parliament on Tuesday does not specify how the handout will be distributed. Cripplingly high taxes and social security contributions, combined with a freeze on investments, gave the prime minister the chance to issue a nominal social dividend of 1.4 billion euros, which actually amounts to 720 million for low-income people – as the rest goes toward covering government obligations.

For this surplus primary surplus to be attained, the government did the following:
– Hiked solidarity levy rates, mainly for annual incomes in excess of 30,000 euros.
– Lowered the tax-free limit for pensioners and salary workers.
– Raised taxation on oil, gasoline, coffee and tobacco. The latest data show that increasing the special consumption taxes on beer and on coffee has fetched 140 million and 40 million euros respectively.
– Hiked value-added tax rates to the effect that 62.4% of goods and services are now in the top VAT bracket (24%), compared to 33.6% up until last year.
– Slashed the heating oil allowance by about 50%.
– Cut pensions and almost abolished the allowance for low-pension retirees (EKAS).
– Raised the retirement age and social security contributions.

Also the erroneous estimate of Single Social Security Entity (EFKA) revenues turned its deficit of 1 billion euros into a 200-million-euro surplus.

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“Creditors initially estimated that Greece would return to growth in 2012”

But so what? They just raise the burden on Greeks a bit more each time they screw up.

EU Handling Of Greek Bailouts “Generally Weak”, Say Its Own Auditors (R.)

The European Union’s handling of three bailout programs for Greece during the eurozone’s financial crisis had several weaknesses and was only partly successful, European auditors said on Thursday. EU and international creditors have channeled over €350 billion ($412.1 billion) of financial aid to Greece since 2010 to prevent the country’s default and reduce contagion to the rest of the eurozone. To get the funds, Athens had to embark on sweeping structural reforms and unpopular belt-tightening measures. The programs “promoted reform and avoided default by Greece, but the country’s ability to finance itself fully on the financial markets remains a challenge,” the European Court of Auditors (ECA) said in a report on the Greek bailouts. The ECA is responsible for assessing EU finances.

Last year, it said the Commission’s management of the bailouts for Ireland, Portugal, Hungary, Latvia and Romania was “generally weak.” The third Greek program is still ongoing as Athens completes agreed reforms. The €86 billion bailout ends in August, and Greece is by then expected to have fully regained access to market funding. The ECA report, which focused on the work of the European Commission, said the programs “only helped Greece to recover to a limited extent.” The ECB, which together with eurozone states and the IMF contributed to the programs, was not assessed because it declined to provide data, questioning the auditors’ mandate to ask for it, ECA said. The auditors found “weaknesses” in the design of the Greek programs. “Some key measures were not sufficiently justified,” the report said. The ECA stressed that a large chunk of the €45 billion pumped into the banking system may never be recovered.

“For other (measures), the Commission did not comprehensively consider Greece’s implementation capacity in the design process and thus did not adapt the scope and timing accordingly,” it said. In a written reply included in the ECA report, the Commission said that “the design and implementation of crucial reforms took place in the wider context of the prevailing difficult economic situation as well as severe instability in the financial markets.” The Greek bailouts were carried out during the worst financial and economic crisis since the World War II. The Commission also stressed that the application of the programs was complicated by the political crisis that struck Greece during the bailouts, causing the collapse of governments. The Commission concluded that, despite the complex circumstances, the key objectives of the programs were achieved by averting Greece’s default and ensuring financial stability in the eurozone.

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“The judiciary is the branch of government in the US and other countries that is relatively free of bribery. And bribery is exactly what is going on..”

James Hansen Calls For Wave Of Climate Lawsuits (G.)

One of the fathers of climate science is calling for a wave of lawsuits against governments and fossil fuel companies that are delaying action on what he describes as the growing, mortal threat of global warming. Former Nasa scientist James Hansen says the litigate-to-mitigate campaign is needed alongside political mobilisation because judges are less likely than politicians to be in the pocket of oil, coal and gas companies. “The judiciary is the branch of government in the US and other countries that is relatively free of bribery. And bribery is exactly what is going on,” he told the Guardian on the sidelines of the UN climate talks in Bonn. Without Hansen and his fellow Nasa researchers who raised the alarm about the effect of carbon emissions on global temperatures in the 1980s, it is possible that none of the thousands of delegates from almost 200 countries would be here.

But after three decades, he has been largely pushed to the fringes. Organisers have declined his request to speak directly to the delegates about what he sees as a threat that is still massively underestimated. Instead he spreads his message through press conferences and interviews, where he cuts a distinctive figure as an old testament-style prophet in an Indiana Jones hat. He does not mince his words. The international process of the Paris accord, he says, is “eyewash” because it fails to put a higher price on carbon. National legislation, he feels, is almost certainly doomed to fail because governments are too beholden to powerful lobbyists. Even supposedly pioneering states like California, which have a carbon cap-and-trade system, are making things worse, he said, because “half-arsed, half-baked plans only delay a solution.”

For Hansen, the key is to make the 100 big “carbon majors” – corporations like ExxonMobil, BP and Shell that are, by one account, responsible for more than 70% of emissions – pay for the transition to cleaner energy and greater forests. Until governments make them do so by introducing carbon fees or taxes, he says, the best way to hold them to account and generate funds is to sue them for the damage they are doing to the climate, those affected and future generations. Hansen is putting his words into action. He is involved in a 2015 lawsuit against the US federal government, brought by his granddaughter and 20 others under the age of 21. They argue the government’s failure to curb CO2 emissions has violated the youngest generation’s constitutional rights to life, liberty, and property.

[..] Hansen believes Donald Trump’s actions to reverse environmental protections and withdraw from the Paris accord may be a blessing in disguise because the government will now find it harder to persuade judges that it is acting in the public interest. “Trump’s policy may backfire on him,” he said. “In the greater scheme of things, it might just make it easier to win our lawsuit.”

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Nov 162017
 
 November 16, 2017  Posted by at 9:47 am Finance Tagged with: , , , , , , , , ,  8 Responses »
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Leonardo da Vinci Salvator Mundi 1513

 

Landmark Study Links Tory Austerity To 120,000 Deaths (Ind.)
Jeremy Corbyn Will Inevitably Become UK Prime Minister – Varoufakis (BI)
Why Care More About Benefit Scroungers Than Billions Lost To The Rich? (G.)
No Evidence Of Russian Interference In Brexit, PM May Admits In Parliament (RT)
China’s Outbound Investment Plunged 41% On Year In January To October (BBG)
Senior China Minister Says Some Officials Practice Sorcery (R.)
Corruption in China Could Lead To Soviet-Style Collapse – Graft Buster (ToI)
The Complete Idiot’s Guide To The Biggest Risks In China (ZH)
Why the Anti-Corruption Drive in Saudi Arabia is Doomed to Fail (CP)
Saudi Walks Back Escalation As Dramatic Moves Backfire (AP)
Friendly Reminder That Jeff Bezos Is Trying To Take Over The Universe (CJ)
Why Japan Knocks Down Its Houses After 30 Years (G.)
Kyle Bass: Investors to Pour Billions into Greece after Political Change (GR)
Lesvos Reaches Breaking Point, Mayor Declares General Strike (G.)
Monsanto, US Farm Groups Sue California Over Glyphosate Cancer Warnings (R.)
Plastics Found In Stomachs Of Deepest Sea Creatures (G.)

 

 

It doesn’t get much more damning than this. Nothing Monty Python about it.

Landmark Study Links Tory Austerity To 120,000 Deaths (Ind.)

The Conservatives have been accused of “economic murder” for austerity policies which a new study suggests have caused 120,000 deaths. The paper found that there were 45,000 more deaths in the first four years of Tory-led efficiencies than would have been expected if funding had stayed at pre-election levels. On this trajectory that could rise to nearly 200,000 excess deaths by the end of 2020, even with the extra funding that has been earmarked for public sector services this year. Real terms funding for health and social care fell under the Conservative-led Coalition Government in 2010, and the researchers conclude this “may have produced” the substantial increase in deaths.

The paper identified that mortality rates in the UK had declined steadily from 2001 to 2010, but this reversed sharply with the death rate growing again after austerity came in. From this reversal the authors identified that 45,368 extra deaths occurred between 2010 and 2014, than would have been expected, although it stops short of calling them “avoidable”. Based on those trends it predicted the next five years – from 2015 to 2020 – would account for 152,141 deaths – 100 a day – findings which one of the authors likened to “economic murder”. The Government began relaxing austerity measures this year announcing the end of its cap on public sector pay rises and announcing an extra £1.3bn for social care in the Spring Budget. Over three years the additional funding for social care is expected to reach £2bn, which Labour leader Jeremy Corbyn said was “patching up a small part of the damage” wrought by £4.6bn cuts.

[..] The papers’ senior author and a researcher at UCL, Dr Ben Maruthappu, said that while the paper “can’t prove cause and effect” it shows an association. And he added this trend is seen elsewhere. “When you look at Portugal and other countries that have gone through austerity measures, they have found that health care provision gets worse and health care outcomes get worse,” he told The Independent. One of his co-author’s, Professor Lawrence King of the Applied Health Research Unit at Cambridge University, said it showed the damage caused by austerity “It is now very clear that austerity does not promote growth or reduce deficits – it is bad economics, but good class politics,” he said. “This study shows it is also a public health disaster. It is not an exaggeration to call it economic murder.”

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After a report like that, yes. The Tories have taken things too far.

Jeremy Corbyn Will Inevitably Become UK Prime Minister – Varoufakis (BI)

Yanis Varoufakis, former finance minister of Greece and author of “Adults in the Room: My Battle with the European and American Deep Establishment,” explains that Jeremy Corbyn as Prime Minister may be a likely scenario and that this would be beneficial for the UK economy. The following is a transcript of the video. Isn’t it astonishing that after Jeremy Corbyn was being described as “the longest suicide note by the Labour Party” about a year ago, today there is an air of inevitability in a Corbyn-led government. I think it’s a delicious irony and I’m very excited by this transition from impossibility to inevitability. In the interests of full disclosure, I’m a friend of Jeremy Corbyn, a supporter, I’ve worked with his team and will continue to do so.

I believe that the re-orientation of British politics under Corbyn and in particular of the Labour Party is highly beneficial, not only to the large strata within British society that have been discarded in the last 20 to 30 years, but interestingly also for British business that produces real stuff as opposed to the City of London and various other service sectors that produce precarious jobs and nothing much of substance. British manufacturing has been left in the margins for far too long and the dearth of investment in fixed capital is something that this Conservative government has absolutely no interest in, or no concept of. A Labour, Corbyn-led government, might be what is necessary in order to create better circumstances both for labour and manufacturing capital in the United Kingdom.

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“Quite simply, people get hurt when the rich don’t pay their taxes.”

Why Care More About Benefit Scroungers Than Billions Lost To The Rich? (G.)

Will the Paradise Papers shift the public’s focus? The leaks alone are seemingly not enough. The 2016 British Social Attitudes survey was conducted just four months after the release of the Panama Papers. Even then, the British public remained more concerned about benefit claimants than tax avoiders. Fundamentally, the Paradise Papers are about numbers – vast sums of money disappearing offshore that could be spent on public services here in the UK. However, as the former chair of the UK Statistics Authority, Andrew Dilnot, has often pointed out, people are bad at dealing with numbers on this scale. Unless you are an economist or a statistician, numbers in the millions and billions are just not particularly meaningful.

The key is to link these numbers to their consequences. The money we lose because people like Lewis Hamilton don’t pay some VAT on their private jet means thousands more visits to food banks. The budget cuts leading to rising homelessness might not have been necessary if Apple had paid more tax. Fewer people might have killed themselves after a work-capability assessment if companies like Alphabet (Google) had not registered their offices in Bermuda, and the downward pressure on benefits payments was not so intense. The causal chains connecting these events are complex and often opaque, but that does not make their consequences any less real, especially for those who have felt the hard edge of austerity.

The Paradise Papers have dragged the murky world of offshore finance into the spotlight. However, calls for change may founder against the British public’s persistent focus on the perceived crimes of the poor. That is, unless we – as academics, politicians, journalists and others – can articulate how the decisions of the very rich contribute to the expulsion of the vulnerable from the protection of state-funded public services. Quite simply, people get hurt when the rich don’t pay their taxes.

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Oh, cut it out.

No Evidence Of Russian Interference In Brexit, PM May Admits In Parliament (RT)

Theresa May has rejected allegations that Russia interfered in the Brexit referendum. Speaking during Prime Minister’s Questions, she stated: “If they care to look at the speech on Monday, they will see that the examples I gave were not in the UK.” During a speech May gave at the Lord Mayor’s banquet, the British leader accused Russia of meddling in European elections, hacking attacks on western government institutions, and spreading fake news. During the customarily confrontational Prime Minister’s Questions, May said that, in her speech, she had indeed cited “Russian interference” occurring “in a number of countries in Europe.” However, she denied that this applied in any way to her own country.

Following the session, a spokesperson for Labour leader Jeremy Corbyn said that “I think we need to see more evidence about what’s being talked about. “In relation to Russia and tensions between NATO and Russia and western powers and Russia more generally, Jeremy has made clear on a number of occasions that we need to see an attempt through dialogue to ratchet down tensions with Russia.” May was responding to a question from Labour MP Mary Creagh, who referred to an assertion by Foreign Secretary Boris Johnson that he had seen no evidence of Russia interfering in the Brexit referendum. Johnson made the comment during an appearance before a Commons committee hearing on November 1. Upon prompting by a senior civil servant, Johnson replied “nyet,” and added in English that there was “not a sausage” of evidence.

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Once again: China needs its foreign reserves.

China’s Outbound Investment Plunged 41% On Year In January To October (BBG)

China’s non-financial outbound investment slumped to $86.3 billion in January to October, plunging 41% from a year earlier, as projects in some industries dried up. There were no new real estate, sports or entertainment deals for the period, the Commerce Ministry said in a statement Thursday. Most outbound investment was in leasing and business services, manufacturing, wholesale and retail sales and information technology services. “Irrational” outbound investment has been curbed further, the ministry said, repeating the language it has used this year as authorities push to halt capital outflows.

That’s reversing an unbroken streak of acceleration since at least 2010: Outbound investment soared 44.1% last year to $170.1 billion, about four times the 2009 level, Mofcom data show. “The combination of hardened capital controls and a crackdown on outbound M&A has dented China’s overseas investment,” said Tom Orlik, chief Asia economist at Bloomberg Economics in Beijing. “A short-term downturn was necessitated by the pressing need to stabilize the yuan. Sustained for too long, falling overseas investment would be tough to square with ambitions for greater international influence through the Belt and Road program.”

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In which sorcery is somehow the opposite of socialism.

Senior China Minister Says Some Officials Practice Sorcery (R.)

Some top Chinese officials are guilty of practicing sorcery and would rather believe in gurus and Western concepts of democracy than the Communist Party, a senior minister wrote on Thursday, warning of the danger they presented to its survival. China guarantees freedom of religion for major belief systems such as Buddhism, Christianity and Islam, but party members are meant to be atheists and are barred from what it calls superstitious practices, such as visits to soothsayers. Recent years have seen several cases of officials jailed as part of President Xi Jinping’s crackdown on corruption being accused of superstition, part of the party’s efforts to blacken their names.

Some senior officials in leadership positions had “fallen morally”, their beliefs straying from the correct path, wrote Chen Xi, the recently appointed head of the party’s powerful Organisation Department that oversees personnel decisions. “Some don’t believe in Marx and Lenin but believe in ghosts and gods; they don’t believe in ideals but believe in sorcery; they don’t respect the people but do respect masters,” he wrote in the official People’s Daily, referring to spiritual leaders or gurus. People in China, especially its leaders, have a long tradition of turning to soothsaying and geomancy to find answers to their problems in times of doubt, need and chaos. The practice has grown more risky amid Xi’s war on graft, in which dozens of senior officials have been imprisoned.

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Large scale arrests in the future?

Corruption in China Could Lead To Soviet-Style Collapse – Graft Buster (ToI)

China must step up its battle against corruption in order to safeguard against a Soviet-style collapse, the country’s second most senior graft buster said in an editorial on Wednesday. Yang Xiaodu, the deputy secretary of the Central Commission for Discipline Inspection, who was promoted to the ruling Communist Party’s 25-strong Politburo last month, said failure would risk the “red country changing colour”. In unusually direct and strongly worded criticism of previous administrations, Yang said “in a previous period”, corruption had been allowed to fester to such an extent that the party’s leadership had weakened, with supervision soft, and ideology apathetic. “It had developed to the point where if not rectified, the country could change colour,” Yang wrote in the official People’s Daily.

“The future fate of the party and the country’s people could follow the same old road to ruin as the Soviet Union and the Eastern Bloc.” President Xi Jinping, like many officials before him, is steeped in the party’s long-held belief that loosening control too quickly or even at all could lead to chaos and the break up of the country. The party regularly implores cadres to study the collapse of the Soviet Union in the early 1990s. Yang’s editorial is the latest salvo signalling that the intensity of Xi’s signature war on corruption would not wane despite the departure of Xi’s right-hand man, Wang Qishan, who was widely seen as China’s second most powerful politician before being replaced as anti-corruption chief in a leadership reshuffle last month. Wang’s replacement, Zhao Leji, wrote a similarly strongly worded editorial in the People’s Daily on Saturday.

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Not doing well. At all.

The Complete Idiot’s Guide To The Biggest Risks In China (ZH)

With both commodities and Chinese stocks suffering sharp overnight drops, it is hardly surprising that today trading desks have quietly been sending out boxes full of xanax their best under-25 clients (those veterans who have seen one, maybe even two 1% market crashes), along with reports explaining just what China is and why it matters to the new generation of, well, traders. One such analysis, clearly geared to the Ritalin generation complete with 3 second attention spans, comes from Deutsche Bank which in a few hundred words seeks to explain the key risks threatening the world’s most complex centrally-planned economy, and ground zero of the next financial crash. Which, one day after our summary take on why the Chinese commodity, economic and financial crash is only just starting (as those who traded overnight may have noticed), is probably a good place to reiterate some of the more salient points.

As Deutsche Bank’s Zhiwei Zhang writes in “Risks to watch in the next six months”, the key thing to keep in mind about China now that the 19th Party Congress is in the rear-view mirror, is that the government is likely to tolerate slower growth in 2018. Han Wenxiu, the deputy head of the Research Office of the State Council, said that GDP growth at 6.3% in 2018-2020 would be sufficient to achieve the Party’s 2020 growth target. And while this is a positive message for the long term, it indicates growth will likely slow in 2018. And, as DB warns, recent economic data suggest the economic cycle has indeed cooled down. For all those seeking key Chinese inflection points, here are the three big red flags involving China’s economy:

For the first time since Q4 2004, fixed asset investment (FAI) growth turned negative in real terms in Q3 this year.

Growth of property sales for the nation turned negative as well in October, the first time since 2015.

The property market boom in Tier 3 cities is also losing momentum.

We hope not to have lost by now all the Millennial traders who started reading this post. To those who persevered, here – in addition to the risks facing the economy – are the other two main risks facing China’s investors: (rising) inflation and (rising) interest rates.

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The most corrupt are the most powerful. Cue China.

Why the Anti-Corruption Drive in Saudi Arabia is Doomed to Fail (CP)

The problem in resource-rich states is that corruption is not marginal to political power, but central to acquiring it and keeping it. Corruption at the top is a form of patronage manipulated by those in charge, to create and reward a network of self-interested loyalists. It is the ruling family and its friends and allies who cherrypick what is profitable: this is as true of Saudi Arabia as it was true of Libya under Gaddafi, Iraq under Saddam Hussein and his successors, or Iraqi Kurdistan that was supposedly different from the rest of the country. Corruption is a nebulous concept when it comes to states with arbitrary rulers, who can decide – unrestrained by law or democratic process – what is legal and what is illegal. What typifies the politics of oil states is that everybody is trying to plug into the oil revenues in order to get their share of the cake.

This is true at the top, but the same is the case of the rest of the population, or at least a large and favoured section of it. The Iraqi government pays $4bn a month to about seven million state employees and pensioners. These may or may not do productive work, but it would be politically risky to fire them because they are the base support of the regime in power. Anti-corruption drives don’t work, because if they are at all serious, they soon begin to cut into the very roots of political power by touching the “untouchables”. At this point principled anti-corruption campaigners will find themselves in serious trouble and may have to flee the country, while the less-principled ones will become a feared weapon to be used against anybody whom the government wants to target.

A further consequence of the traditional anti-corruption drive is that it can paralyse government activities in general. This is because all officials, corrupt and incorrupt alike, know that they are vulnerable to investigation. “The safest course for them is to take no decision and sign no document which might be used or misused against them,” a frustrated American businessman told me in Baghdad some years ago. He added that it was only those so politically powerful that they did not have to fear legal sanctions who would take decisions – and such people were often the most corrupt of all.

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Wishful thinking?

Saudi Walks Back Escalation As Dramatic Moves Backfire (AP)

Saudi Arabia’s dramatic moves to counter Iran in the region appear to have backfired, significantly ratcheting up regional tensions and setting off a spiral of reactions and anger that seem to have caught the kingdom off guard. Now it’s trying to walk back its escalations in Lebanon and Yemen. On Monday, the kingdom announced that the Saudi-led coalition fighting Shiite rebels in Yemen would begin reopening airports and seaports in the Arab world’s poorest country, days after closing them over a rebel ballistic missile attack on Riyadh. The move came just hours after Lebanese Prime Minister Saad Hariri, who shocked the nation by announcing his resignation from the Saudi capital on Nov. 4, gave an interview in which he backed off his strident condemnation of the Lebanese militant Hezbollah, saying he would return to the country within days to seek a settlement with the Shiite militants, his rivals in his coalition government.

The two developments suggest that Saudi Arabia’s bullish young crown prince, Mohammed bin Salman, may be trying to pedal back from the abyss of a severe regional escalation. “This represents de-escalation by the Saudis,” said Yezid Sayigh, a senior fellow at the Carnegie Middle East Center in Beirut. “The general trend is that the Saudis are going to back off and this is largely because of the unexpected extent of international pressure, and not least of all U.S. pressure.” Mohammed bin Salman, widely known by his initials, MBS, has garnered a reputation for being decisive, as well as impulsive. At just 32 years old and with little experience in government, he has risen to power in just three years to oversee all major aspects of politics, security and the economy in Saudi Arabia. As defense minister, he is in charge of the Saudi-led war in Yemen.

He also appears to have the support of President Donald Trump and his son-in-law, senior adviser Jared Kushner, who visited the Saudi capital earlier this month. Saudi partners in the Gulf and the Trump administration rushed to defend the kingdom publicly after a rebel Houthi missile was fired at the Saudi capital, Riyadh, from Yemen last week. A top U.S. military official also backed Saudi claims that the missile was manufactured by Iran. However, Saudi Arabia’s move to tighten an already devastating blockade on Yemen in response to the missile was roundly criticized by aid groups, humanitarian workers and the United Nations, which warned that the blockade could bring millions of people closer to “starvation and death.” Saudi Arabia’s decision to ease the blockade after just a week suggests it bowed to the international criticism, and did not want the bad publicity of even more images of emaciated Yemeni children and elderly people circulating online and in the media.

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“WaPo ran sixteen smear pieces on Bernie Sanders in the span of sixteen hours at the hottest point in the Democratic presidential primary battle.”

Friendly Reminder That Jeff Bezos Is Trying To Take Over The Universe (CJ)

Jeff Bezos, currently the wealthiest human being on planet Earth, did not purchase the Washington Post in 2013 because he was expecting newspapers to make a lucrative resurgence. This self-evident fact doesn’t receive enough attention. I will say it again for emphasis: Jeff Bezos, who has used his business prowess to become the wealthiest person in the world, did not purchase the Washington Post in 2013 because he was expecting newspapers to make a profitable comeback. That did not happen. What did happen is the world’s richest plutocrat realizing that he needed a mouthpiece to manufacture public support for the neoliberal corporatist establishment that he is building his empire upon. This is why WaPo ran sixteen smear pieces on Bernie Sanders in the span of sixteen hours at the hottest point in the Democratic presidential primary battle.

[..] Last year Silicon Valley venture capitalist Chamath Palihapitiya said that Amazon is “a multi-trillion-dollar monopoly hiding in plain sight.” In June Stacy Mitchell, co-director of the Institute for Local Self-Reliance, wrote that Amazon is trying to “control the underlying infrastructure of the economy.”\ Bezos continues to get cozier and cozier with the US power establishment as his empire metastasizes across human civilization. He kicked WikiLeaks off Amazon servers in 2010, he scored a 600 million dollar contract with the CIA in 2013, he joined a Pentagon advisory board in 2016, he hung out with Defense Secretary James Mattis in August, and he’s spent nearly ten million dollars this year lobbying the federal government, which is likely what led to an NDAA amendment gifting Amazon a $54 billion market it’s expected to dominate as a supplier to the Pentagon. Billion. With a ‘b’.

[..] I gave this story a jokey headline, but seriously, watch Jeff Bezos very closely. Your future is increasingly more likely to be imperiled by new money tech plutocrats like him than by old money plutocrats like Soros and the Rothschilds.

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Interesting. Earthquakes are no. 1 incentive.

Why Japan Knocks Down Its Houses After 30 Years (G.)

In the suburban neighbourhood of Midorigaoka, about an hour by train outside Kobe, Japan, all the houses were built by the same company in the same factory. Steel frames fitted out with panel walls and ceilings, these homes were clustered by the hundreds into what was once a brand new commuter town. But they weren’t built to last. Daiwa House, one of the biggest prefabricated housing manufacturers in Japan, built this town in the 60s during a postwar housing boom. It’s not unlike the suburban subdivisions of the western world, with porches, balconies and rooflines that shift and repeat up and down blocks of gently curving roads. Most of those houses built in the 60s are no longer standing, having long since been replaced by newer models, finished with fake brick ceramic siding in beiges, pinks and browns.

In the end, most of these prefabricated houses – and indeed most houses in Japan – have a lifespan of only about 30 years. Unlike in other countries, Japanese homes gradually depreciate over time, becoming completely valueless within 20 or 30 years. When someone moves out of a home or dies, the house, unlike the land it sits on, has no resale value and is typically demolished. This scrap-and-build approach is a quirk of the Japanese housing market that can be explained variously by low-quality construction to quickly meet demand after the second world war, repeated building code revisions to improve earthquake resilience and a cycle of poor maintenance due to the lack of any incentive to make homes marketable for resale. In Midorigaoka, even the newer homes built in the 80s and 90s are nearing the end of their expected lifespan.

Under normal circumstances, their days might be numbered. But down at the end of one block, there’s a sign things are changing. Scaffolding surrounds a vacant house on a corner and workers from Daiwa House are clanging away inside. They’re not demolishing the house but refurbishing it – reorganising the floor plan, knocking down walls, opening up the kitchen and enhancing the insulation. Rather than tear down the house so the next buyer can build something new, they’re rebuilding it from the inside and putting it back on the market. It’s a relatively rare commodity, but something that is increasingly common across Japan: a secondhand home.

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I’ve long predicted that Greece will be much less peaceful once Syriza loses power. But yeah, the whole country’s put up for sale, so foreigners are certain to take over.

Kyle Bass: Investors to Pour Billions into Greece after Political Change (GR)

Hedge fund manager, Kyle Bass, believes that Greece will come out of the crisis and investors will pour billions into its economy once the government changes, according to a CNBC report. The founder and chief investment officer of Hayman Capital Management; which manages an estimated $815 million in assets, is closely following the course of the Greek economy and political situation, and has invested in Greek bank stocks. Bass says that foreign investors are waiting on the sidelines for a political shift to take place in 2018. “My best guess is a snap election for prime minister will be called between April and September of next year and Prime Minister Alexis Tsipras will lose power. When that happens, there will be a massive move into the Greek stock market. Big money will flow in as investors feel more confident with a more moderate administration,” Bass said.

“It’s going to take Kyriakos Mitsotakis; president of New Democracy, the Greek conservative party, to be voted in as prime minister to reform the culture and rekindle investor confidence,” the investor said. “I have no doubt 15 billion euros in bank deposits will come back to Greek banks if he’s elected. The stock and bond markets will also jump following the election.” Bass says that global investors are waiting for the political change in order to invest in real estate, energy and tourism. So far, the hedge fund manager noted, Greece has proceeded with privatizations of its main port; regional airports; its railway system; the largest insurance company, and there are more important ones to be completed within the next two years. “There is so much potential in Greece,” Bass said, noting that investors are waiting for the right moment to enter, the CNBC report concludes.

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Europe just lets it get worse.

Lesvos Reaches Breaking Point, Mayor Declares General Strike (G.)

With reception centers on Lesvos bursting at the seams and dozens more migrants arriving daily, the island’s mayor, Spyros Galinos, on Tuesday declared a general strike for Monday in protest. Currently, some 1,500 people – including hundreds of small children – are stranded on the island living in tents, and fears are growing that winter may bring a new humanitarian crisis. In total, there are more than 8,000 migrants and refugees on Lesvos, a favored destination of traffickers bringing people over from neighboring Turkey. “Lesvos has a population of 32,000 residents and there are at the moment 8,300 migrants and refugees,” Galinos told Kathimerini. Moreover, local police union members held a protest over deteriorating working conditions.

“The situation on Lesvos has fueled insecurity among citizens. The police force is dealing exclusively with the migrant issue,” the union chief Dimitris Alexiou said. “We are not expendables,” he added. And with flows to the eastern Aegean islands from Turkey showing no signs of letting up, locals and migrants have reached the end of their tether. Since the beginning of November, 1,603 people have arrived on the islands. In September, 6,000 people arrived from Turkey, the same number as in October. On Monday, another 101 migrants landed on eastern Aegean islands, while more than 400 arrived over the weekend. The situation in the Moria camp on Lesvos is a case in point.

“Conditions at Moria have reached breaking point as the facility is three times over capacity,” said Michael Bakas, coordinator of the northern Aegean branch of the Ecologist Greens, who escorted visiting Group of the Greens MEP and vice chairwoman of the European Parliament’s Subcommittee on Human Rights Barbara Lochbihler. Bakas said about 1,000 children are currently stranded at the camp. The issue will be discussed at the EU assembly on Wednesday.

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Monsanto must now have as many lawyers as scientists on its payroll. Time to say enough is enough.

Monsanto, US Farm Groups Sue California Over Glyphosate Cancer Warnings (R.)

Monsanto and U.S. farm groups sued California on Wednesday to stop the state from requiring cancer warnings on products containing the widely used weed killer glyphosate, which the company sells to farmers to apply to its genetically engineered crops. The government of the most populous U.S. state added glyphosate, the main ingredient in Monsanto’s herbicide Roundup, to its list of cancer-causing chemicals in July and will require that products containing glyphosate carry warnings by July 2018. California acted after the World Health Organization’s International Agency for Research on Cancer (IARC) concluded in 2015 that glyphosate was “probably carcinogenic”. For more than 40 years, farmers have applied glyphosate to crops, most recently as they have cultivated genetically modified corn and soybeans.

Roundup and Monsanto’s glyphosate-resistant seeds would be less attractive to customers if California requires warnings on products containing the chemical. In the lawsuit, filed in federal court in California, Monsanto and groups representing corn, soy and wheat farmers reject that glyphosate causes cancer. They say the state’s requirement for warnings would force sellers of products containing the chemical to spread false information.“Such warnings would equate to compelled false speech, directly violate the First Amendment, and generate unwarranted public concern and confusion,” Scott Partridge, Monsanto’s vice president of global strategy, said in a statement.

The controversy is an additional headache for Monsanto as it faces a crisis around a new version of an herbicide based on another chemical known as dicamba that was linked to widespread U.S. crop damage this summer. The company, which is being acquired by Bayer AG for $63.5 billion, developed the product as a replacement for glyphosate following an increase of weeds resistant to the chemical. Monsanto has already suffered damage to its investment of hundreds of millions of dollars in glyphosate products since California added the chemical to its list of products known to cause cancer, according to the lawsuit.

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Weep.

Plastics Found In Stomachs Of Deepest Sea Creatures (G.)

Animals from the deepest places on Earth have been found with plastic in their stomachs, confirming fears that manmade fibres have contaminated the most remote places on the planet. The study, led by academics at Newcastle University, found animals from trenches across the Pacific Ocean were contaminated with fibres that probably originated from plastic bottles, packaging and synthetic clothes. Dr Alan Jamieson, who led the study, said the findings were startling and proved that nowhere on the planet was free from plastics pollution. “There is now no doubt that plastics pollution is so pervasive that nowhere – no matter how remote – is immune,” he said. Evidence of the scale of plastic pollution has been growing in recent months. Earlier this year scientists found plastic in 83% of global tapwater samples, while other studies have found plastic in rock salt and fish.

Humans have produced an estimated 8.3bn tonnes of plastic since the 1950s and scientists said it risked near permanent contamination of the planet. Jamieson said underlined the need for swift and meaningful action. “These observations are the deepest possible record of microplastic occurrence and ingestion, indicating it is highly likely there are no marine ecosystems left that are not impacted by anthropogenic debris.” He said it was “a very worrying find.” “Isolating plastic fibres from inside animals from nearly 11 kilometres deep (seven miles) just shows the extent of the problem. Also, the number of areas we found this in, and the thousands of kilometre distances involved shows it is not just an isolated case, this is global.”

[..] The team examined 90 individual animals and found ingestion of plastic ranged from 50% in the New Hebrides Trench to 100% at the bottom of the Mariana Trench. The fragments identified include semi-synthetic cellulosic fibres, such as Rayon, Lyocell and Ramie, which are all microfibres used in products such as textiles, to plastic fibres that are likely to come from plastic bottles, fishing equipment or everyday packaging. Jamieson said deep-sea organisms are dependent on food “raining down from the surface which in turn brings any adverse components, such as plastic and pollutants with it.” “The deep sea is not only the ultimate sink for any material that descends from the surface, but it is also inhabited by organisms well adapted to a low food environment and these will often eat just about anything.”


This microscopic arrow worm has eaten a blue plastic fibre that is blocking the passage of food along its gut. Photograph: Richard Kirby/Courtesy of Orb Media

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Nov 102017
 
 November 10, 2017  Posted by at 9:52 am Finance Tagged with: , , , , , , , , , ,  11 Responses »
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Edward S. Curtis A smoky day at the Sugar Bowl—Hupa c. 1923

 

Stock-Market Investors Are Starting To Freak Out About Junk Bonds (MW)
China’s New Way To Hide Debt: Call It Equity (ZH)
China To Remove Foreign Ownership Limit In Chinese Banks, Brokers (BBG)
Why Have We Built A Paradise For Offshore Billionaires? (Thomas Frank)
We Should Tax Them On Transactions – Steve Keen (RT)
Kleptocrat-Owned Media Pick Out ‘Incrimination’ To Target Russia – Keiser (RT)
‘$300 Million In Cryptocurrency’ Accidentally Lost Forever Due To Bug (G.)
Monsanto Sued By Brazilian Soybean Farmers Over GMO Seed (RT)
Monsanto In Court Again: New Herbicide Kills 3.6 Million Acres Of Crops (ZH)
Lebanon PM’s Resignation Is Not All It Seems (Fisk)
Saudi Arabia Is Blocking Aid To The World’s Worst Humanitarian Crisis
Antarctica Is Being Rapidly Melted From Below (Ind.)
Next Round Of Greek Pension Cuts To Reach Up To 18% In 2019 (K.)
EU Parliamentarians Warn Refugees May Die on Greek Islands (GR)
Facebook: God Only Knows What It’s Doing To Our Children’s Brains (Axios)

 

 

is this where it’ll all blow up?

Stock-Market Investors Are Starting To Freak Out About Junk Bonds (MW)

Wall Street bears are sounding alarms about a recent drop in non-investment-grade bonds, popularly referred to as junk bonds. The SPDR Bloomberg Barclays High Yield Bond ETF, an exchange-traded fund that tracks junk bonds, is on track to finished at its lowest level since March 24. Another well known junk-bond ETF, the iShares iBoxx $ High Yield Corporate Bond ETF also carved out late-March nadir, according to FactSet data. Both ETFs fell below their 200-day moving averages early this month, signaling that momentum in fixed-income products is bearish. Technical analysts tend to follow short- and long-term averages in an asset to help determine bullish and bearish trends. The moves for JNK and HYG, referencing their widely used tickers, come as the S&P 500 index and the Dow Jones Industrial Average have been testing fresh highs.

Normally, junk bonds and stocks are positively correlated, or move in the same direction, because junk bonds are considered a proxy for risk appetite in the market. Junk bonds had been drawing interest, particularly in an environment of ultralow bonds, with the 10-year Treasury and the 30-year Treasury bond offering yields below their historic averages, even as the Federal Reserve embarks upon efforts to lift interest rates from crisis-era levels. Bonds with the highest yields tend to be the riskiest and therefore offer a commensurate compensation in exchange for that perceived risk. Bond prices and yields move in opposition. However, a recent divergence between junk bonds and stocks, taking hold in late October, has raised eyebrows among Wall Street investors.

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This cannot end well.

China’s New Way To Hide Debt: Call It Equity (ZH)

The legacy of the soon-to-retire PBoC governor, Zhou Xiochuan, will be that in sharp contrast to his western brethren, he warned that China’s credit bubble would burst before the fact. Two weeks ago, Zhou warned during the Party Congress that China’s financial system could be heading for a “Minsky moment” due to high levels of corporate debt and rapidly rising household debt. “If we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we call a ‘Minsky moment’. That’s what we should particularly defend against.” Perhaps sensing that nobody in the Middle Kingdom was paying attention, we noted two days ago his lengthy essay published on the PBoC website. It contained another warning that latent risks are accumulating in the Chinese system, including some that are “hidden, complex, contagious and hazardous.”

He also highlighted “debt finance disguised as equity” as a concern. Talking of which, there’s a new growth market in the gargantuan Chinese corporate debt market – we are referring to perpetual notes. Are you ready for the clever part about perpetual notes – they are debt but it’s permissible under Chinese accounting regulations to classify them as “equity” – et voila, corporate gearing has fallen. Under pressure to trim borrowings, China’s companies have found a way to reduce their lofty debt burdens – even if some of the risk remains. Sales of perpetual notes – long-dated securities that can be listed as equity rather than debt on balance sheets given that in theory they could never mature – have soared to a record this year as Beijing zeros in on leverage and the threat it poses to the financial system.

The bonds are so popular that issuance by non-bank firms has jumped to the equivalent of 433 billion yuan ($65 billion), more than seven times sales by companies in the U.S. “Chinese issuers love perpetual bonds because they are under great pressure to deleverage,” said Wang Ying, a senior director at Fitch Ratings in Shanghai. “Sophisticated investors should do their homework and shouldn’t be misled by the numbers in accounting books.

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China signals it needs money, badly.

China To Remove Foreign Ownership Limit In Chinese Banks, Brokers (BBG)

China took a major step toward the long-awaited opening of its financial system, removing foreign ownership limits on its banks and asset-management companies, and allowing overseas firms to take majority stakes in local securities ventures and insurers. Regulators are drafting detailed rules, which will be released soon, Vice Finance Minister Zhu Guangyao said at a briefing in Beijing on Friday. Foreign firms will be allowed to own up to 51% in securities ventures and life-insurance companies, caps that will be removed gradually over time, he said. China’s steps look poised to end years of frustration for foreign banks, who have long been marginal players in Asia’s largest economy. The announcement could be seen as a major win for U.S. President Donald Trump, whose first official visit to China was followed by a string of Sino-U.S. deals.

“This is a milestone in China’s progress of opening up its economy,” said Larry Hu at Macquarie in Hong Kong. Announcing this during Trump’s visit shows the world that “China and the U.S. are in a business and trade cooperation rather than confrontation,” Hu said. On Thursday, China’s Foreign Ministry foreshadowed the latest moves, with a statement saying that entry barriers to sectors such as banking, insurance, securities and funds will be “substantially” eased. Those comments came following a meeting between Trump and his counterpart Xi Jinping. The moves would be encouraging to foreign banks, asset managers and insurers, who have long been kept on the margins in China, the world’s second-largest economy, by various barriers. Global banks are currently limited to owning 49% of local securities joint ventures, frustrating their attempts to compete effectively with Chinese rivals.

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“This is their democracy today. We just happen to live in it.”

Why Have We Built A Paradise For Offshore Billionaires? (Thomas Frank)

It’s not enough to say, in response to the Paradise Papers revelations, that we already knew that rich people parked their money in offshore tax havens, where their piles accumulate far from the scrutiny of our government. Nor is it enough to say that we were already aware that we live in a time of “inequality.” What we have learned this week is the clinical definition of the word. What we have learned is how much the rich and the virtuous have been hiding away and where they’re hiding it. Yes, there are sinister-looking Russian capitalists involved. But there’s also our favorite actors and singers. Our beloved alma mater, supposedly a charitable institution. Everyone with money seems to be in on it. We’re also learning that maybe we’ve had it backwards all along.

Tax havens on some tropical island aren’t some sideshow to western capitalism; they are a central reality. Those hidden billions are like an unseen planet whose gravity is pulling our politics and our economy always in a certain direction. And this week we finally began to understand what that uncharted planet looks like; we started to grasp its mass and its power. Think about it like this. For decades Americans have been erupting in anger at what they can see happening to their beloved middle-class world. We think we know what the culprit is; we can see it vaguely through a darkened glass. It’s “elitism.” It’s a “rigged system.” It’s people who think they’re better than us. And for decades we have lashed out. At the immigrant next door. At Jews. At Muslims. At school teachers. At public workers who are still paid a decent wage. Our fury, unrelenting, grows and grows.

We revolt, but it turns out we have chosen the wrong political leader. We revolt again: this time, the leader is even worse. This week we are coming face to face with a big part of the right answer: it’s that the celebrities and business leaders we have raised up above ourselves would like to have nothing to do with us. Yes, they are grateful for the protection of our laws. Yes, they like having the police and the Marine Corps on hand to defend their property. Yes, they eat our food and breathe our air and expect us to keep these pure and healthy; they demand that we get educated before we may come and work for them, and for that purpose they expect us to pay for a vast system of public schools. They also expect us to watch their movies, to buy their products, to use their software. They expect our (slowly declining) middle class to be their loyal customers.

[..] Our leaders raised up a tiny class of otherworldly individuals and built a paradise for them, made their lives supremely delicious. Today they hold unimaginable and unaccountable power. We endure potholes and live in fear of collapsing highway bridges because our leaders wanted these very special people to have an even larger second yacht. Our kids sit in overcrowded classrooms in underfunded schools so that a handful of exalted individuals can relax on their own private beach. Today it is these same golden figures with their offshore billions who host the fundraisers, hire the lobbyists, bankroll the think tanks and subsidize the artists and intellectuals. This is their democracy today. We just happen to live in it.

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“So the only way we can really stop it – is by forgetting about taxing them with income. Income tax works for workers – it doesn’t work for a corporation; it doesn’t work for the wealthy.”

We Should Tax Them On Transactions – Steve Keen (RT)

Steve Keen, Professor of Economics at Kingston University says the findings of the so-called Paradise Papers haven’t been surprising as “Tax evasion by the wealthy has been going on for decades, and we’ll never stop it. “We simply have to find a way to bring tax revenue back into the government that they can’t evade. And it will always manage to evade income tax,” he told RT. Keen adds though that it won’t be easy to stop this thing from happening. Partly that’s “because we don’t understand how taxation actually works.” “We think taxation is necessary to finance government spending. In fact, the government can spend regardless of taxation – the taxation simply takes large amounts of the money out of the system that government has spent into it because if we didn’t tax, we would have a risk of inflation.”

“Once you look at it that way, what the rich are actually doing – are siphoning off money that has been created by the government, accumulating it in offshore accounts and hanging onto the wealth, which should be recycled back into the economy. So the only way we can really stop it – is by forgetting about taxing them with income. Income tax works for workers – it doesn’t work for a corporation; it doesn’t work for the wealthy. We should tax them on transactions, and then they can’t evade unless they stop having transactions. If they stop having transactions, they will stop being wealthy,” he said. RT: What are the chances of that happening? SK: It just takes politicians to understand how money is created. So I think it is almost virtually impossible. They continue spreading this myth that they have got to tax us to be able to spend, running austerity, which is unnecessary. All this fits in to actually loading the pockets of the rich. Maybe there is a connection…

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Part 2 of the article above.

Kleptocrat-Owned Media Pick Out ‘Incrimination’ To Target Russia – Keiser (RT)

Let’s talk about some numbers there. To put this into a broader context, the Tax Justice Network did a study a couple of years ago. They determined that between $21 and $31 trillion is held offshore. This means that hundreds of billions of dollars of taxes go uncollected. It means those who are paying tax are paying for the entire tax burden for various countries infrastructures, military, etc. You end up with what I would call apartheid, where you have got approximately 200,000 people in the world, who pay no tax and are able to invest without paying any tax. So they are compounding money at 20-22% a year without paying tax. So the billionaire class is escalating, we know this.

Meanwhile, the poverty levels are continuing to rise because people are being ripped off by these corrupt countries in cahoots with these billionaires, who are placing the entire cost of running a society on those who can least afford it. And into the mix comes the social uprising – more violence, because naturally, if you have everything stolen from you, you have nothing to lose, so you become violent. Now, to specifically answer your question about Russia being targeted by selectively picking out … here’s an elegant phrase – you’re trying to pick a fly poop from the pepper. So they look at this big scattershot of information, and with little tweezers, they try to pick out what they perceive to be incriminating data points.

Then they build a scenario, and then the corporations that are owned by the same people that are hiding the wealth… There are only approximately six major media companies in America. Those are owned by the same kleptocrats that are hiding all these billions of dollars. They then put that story out there to deflect and confuse the average mainstream media watcher that “oh my Gosh, Russia is involved in this scandal! Russia is involved in Black Lives Matter! Russia is involved with Hillary losing the election because she is completely inept. Russia, Russia, Russia…”

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Confidence.

‘$300 Million In Cryptocurrency’ Accidentally Lost Forever Due To Bug (G.)

More than $300m of cryptocurrency has been lost after a series of bugs in a popular digital wallet service led one curious developer to accidentally take control of and then lock up the funds, according to reports. Unlike most cryptocurrency hacks, however, the money wasn’t deliberately taken: it was effectively destroyed by accident. The lost money was in the form of Ether, the tradable currency that fuels the Ethereum distributed app platform, and was kept in digital multi-signature wallets built by a developer called Parity. These wallets require more than one user to enter their key before funds can be transferred. On Tuesday Parity revealed that, while fixing a bug that let hackers steal $32m out of few multi-signature wallets, it had inadvertently left a second flaw in its systems that allowed one user to become the sole owner of every single multi-signature wallet.

The user, “devops199”, triggered the flaw apparently by accident. When they realised what they had done, they attempted to undo the damage by deleting the code which had transferred ownership of the funds. Rather than returning the money, however, that simply locked all the funds in those multisignature wallets permanently, with no way to access them. “This means that currently no funds can be moved out of the multi-sig wallets,” Parity says in a security advisory. Effectively, a user accidentally stole hundreds of wallets simultaneously, and then set them on fire in a panic while trying to give them back. Some are pushing for a “hard fork” of Ethereum, which would undo the damage by effectively asking 51% of the currency’s users to agree to pretend that it had never happened in the first place.

That would require a change to the code that controls ethereum, and then that change to be adopted by the majority of the user base. The risk is that some of the community refuses to accept the change, resulting in a split into two parallel groups. Such an act isn’t unheard of: another hack, two years ago, of an Ethereum app called the DAO resulted in $150m being stolen. The hard fork was successful then, but the money stolen represented a much larger portion of the entire Ethereum market than the $300m lost to Parity. The lost $300m follows the discovery of bug in July that led to the theft of $32m in ether from just three multisignature wallets. A marathon coding and hacking effort was required to secure another $208m against theft. Patching that bug led to the flaw in Parity’s system that devops199 triggered by accident.

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Lawsuit after lawsuit after lawsuit. At what point will we say it’s enough?

Monsanto Sued By Brazilian Soybean Farmers Over GMO Seed (RT)

Growers in Brazil’s largest soybean producing state Mato Grosso have asked a court to cancel Monsanto’s Intacta GMO seed patent. They claim irregularities, including the company’s alleged failure to prove it brings de facto technological innovation. The Mato Grosso branch of Aprosoja, the association representing the growers, has filed a lawsuit in a federal court in Brasilia. The growers claim Monsanto’s Intacta RR2 PRO patent “does not fully reveal the invention so as to allow, at the end of the exclusivity period, for any person to freely have access to it.” That requirement “avoids that a company controls a technology for an undetermined period of time,” Aprosoja said, adding Intacta’s patent protection extends through October 2022. It cited data from consultancy Agroconsult, saying that about 53% of Brazil’s soy area was planted with Intacta technology in the 2016/17 crop cycle.

Around 40% of the crop is grown with Monsanto’s Roundup Ready seed technology (Intacta’s predecessor), and only seven% is non-GM. Brazilian farmers have been continually urging the replacement of genetically modified soybeans with non-GM seeds. Recently they asked Monsanto and other producers of pest-resistant corn seeds to reimburse them for money spent on additional pesticides when the bugs killed the crops instead of dying. Several years ago five million Brazilian soybean farmers sued Monsanto, claiming the genetic-engineering company was collecting royalties on crops it unfairly claims as its own. In 2012, the Brazilian court ruled in favor of the Brazilian farmers, saying Monsanto owes them at least $2 billion since 2004. After the legal disputes, Monsanto stopped collecting royalties linked to its first-generation Roundup Ready technology, and some farmers agreed to get a discount rate to use Intacta seeds.

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How is Monsanto not a criminal enterprise?

Monsanto In Court Again: New Herbicide Kills 3.6 Million Acres Of Crops (ZH)

[..] as the Wall Street Journal points out today, after allegedly wiping out millions of acres of farm ground across the Midwest, Monsanto once again finds itself in a familiar spot: the courtroom. Monsanto’s new version of the herbicide called dicamba is part of a more than $1 billion investment that pairs it with new genetically engineered seeds that are resistant to the spray. But some farmers say their nonresistant crops suffered after neighbors’ dicamba drifted onto their land. The agricultural giant in October sued the Arkansas State Plant Board following the board’s decision to bar Monsanto’s new herbicide and propose tougher restrictions on similar weed killers ahead of the 2018 growing season. Monsanto claims its herbicide is being held to an unfair standard.

Arkansas has been a flashpoint in the dispute: About 900,000 acres of crops were reported damaged there, more than in any other state. About 300 farmers, crop scientists and other attendees gathered in Little Rock on Wednesday for a hearing on Arkansas’s proposed stiffer dicamba controls, which Monsanto and some farmers are fighting. The proposed restrictions are subject to the approval of a subcommittee of state legislators.

As we pointed out previously, the EPA has reported that farmers in 25 states submitted more than 2,700 claims to state agricultural agencies that neighbors’ dicamba spraying shriveled 3.6 million acres of soybeans. The herbicide is also blamed for damaging other crops, such as cantaloupe and pumpkins. The massive crop damage prompted Arkansas’s Plant Board to propose the idea of prohibiting dicamba use from mid-April through the end of October to safeguard growing plants. The state has also refused to approve Monsanto’s dicamba product for use in Arkansas, saying it needs further analysis by University of Arkansas researchers.

Of course, delays didn’t sit well with Monsanto which stands to make some $350 million a year in dicamba and related seed sales according to Jonas Oxgaard, an analyst with Bernstein who described the products as “their big moneymaker.” Meanwhile, farmers are exploring their own legal options with some joining a class-action lawsuit against Monsanto and BASF, seeking compensation for damaged crops.

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Follow the money: ..the kingdom owes Hariri’s “Oger” company as much as $9bn..

Lebanon PM’s Resignation Is Not All It Seems (Fisk)

When Saad Hariri’s jet touched down at Riyadh on the evening of 3 November, the first thing he saw was a group of Saudi policemen surrounding the plane. When they came aboard, they confiscated his mobile phone and those of his bodyguards. Thus was Lebanon’s prime minister silenced. It was a dramatic moment in tune with the soap-box drama played out across Saudi Arabia this past week: the house arrest of 11 princes – including the immensely wealthy Alwaleed bin Talal – and four ministers and scores of other former government lackeys, not to mention the freezing of up to 1,700 bank accounts. Crown Prince Mohamed bin Salman’s “Night of the Long Knives” did indeed begin at night, only hours after Hariri’s arrival in Riyadh. So what on earth is the crown prince up to?

Put bluntly, he is clawing down all his rivals and – so the Lebanese fear – trying to destroy the government in Beirut, force the Shia Hezbollah out of the cabinet and restart a civil war in Lebanon. It won’t work, for the Lebanese – while not as rich – are a lot smarter than the Saudis. Every political group in the country, including Hezbollah, are demanding one thing only: Hariri must come back. As for Saudi Arabia, those who said that the Arab revolution will one day reach Riyadh – not with a minority Shia rising, but with a war inside the Sunni Wahhabi royal family – are watching the events of the past week with both shock and awe. But back to Hariri. On Friday 3 November, he was in a cabinet meeting in Beirut. Then he received a call, asking him to see King Salman of Saudi Arabia.

Hariri, who like his assassinated father Rafiq, holds Saudi as well as Lebanese citizenship, set off at once. You do not turn down a king, even if you saw him a few days’ earlier, as Hariri had. And especially when the kingdom owes Hariri’s “Oger” company as much as $9bn, for such is the commonly rumoured state of affairs in what we now call “cash-strapped Saudi Arabia”. But more extraordinary matters were to come. Out of the blue and to the total shock of Lebanese ministers, Hariri, reading from a written text, announced on Saturday on the Arabia television channel – readers can guess which Gulf kingdom owns it – that he was resigning as prime minister of Lebanon. There were threats against his life, he said – though this was news to the security services in Beirut – and Hezbollah should be disarmed and wherever Iran interfered in the Middle East, there was chaos.

[..] Of course, the real story is just what is going on in Saudi Arabia itself, for the crown prince has broken forever the great compromise that exists in the kingdom: between the royal family and the clergy, and between the tribes. This was always the bedrock upon which the country stood or fell. And Mohamed bin Salman has now broken this apart. He is liquidating his enemies – the arrests, needless to say, are supposedly part of an “anti-corruption drive”, a device which Arab dictators have always used when destroying their political opponents.

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Our friends.

Saudi Arabia Is Blocking Aid To The World’s Worst Humanitarian Crisis

Saudi Arabia is stopping food and aid from getting into Yemen, in a move that the United Nations said will be “catastrophic” for a country already facing world’s worst humanitarian crisis. Saudi Arabia shut down all access points to Yemen by air, land, and sea over the weekend, in what they say is an attempt to to curb arms trafficking from Iran to Houthi rebels after an intercepted missile landed on the outskirts Riyadh. “The Coalition Forces Command decided to temporarily close all Yemeni air, sea and land ports,” the coalition said in a statement on the Saudi state news outlet SPA. The Kingdom’s lock down means critical humanitarian aid like medical supplies, food, and water, are not getting into the country. Aid workers decried the decision, warning of “dire” consequences for a country where millions of people rely on humanitarian aid to stay alive.

“Humanitarian supply lines to Yemen must remain open,” urged Robert Mardini, the International Committee of the Red Cross’s regional director for the Near and Middle East. “Food, medicine and other essential supplies are critical for the survival of 27 million Yemenis already weakened by a conflict now in its third year.” Mardini said that shipments of chlorine tablets, used to tackle the spread of cholera, were stopped at the country’s northern border. “That lifeline has to be kept open and it is absolutely essential that the operation of the United Nations Humanitarian Air Service (UNHAS) be allowed to continue unhindered,”Jens Laerke, a spokesperson for the UN Office for the Coordination of Humanitarian Affairs (OCHA) told reporters Tuesday.

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It’s a wonder there’s any ice left.

Antarctica Is Being Rapidly Melted From Below (Ind.)

There is something mysterious and hot lurking beneath the surface of the Antarctic ice. Now Nasa says that it might have found the source of that strange heating – a “mantle plume” – or upwelling of abnormally hot rock, that lies deep beneath the surface. The heat is causing the surface of the ice to melt and crack, resulting in rivers and other disruption to Antarctica. Around 30 years ago, a scientist at the University of Colorado Denver said that there might be a mantle plume under a region of the continent known as Marie Byrd Land. That hypothesis helped explain some strange features seen on the ice, like volcanic activity and a dome. Mantle plumes are narrow streams through which hot rock rises up from the Earth’s mantle, and then spreads out under the crust. Because the material itself is hot and buoyant, it makes the crust bulge upwards.

They explain how some places – like Hawaii and Yellowstone – have huge amounts of geothermal activity despite being far from the edge of a tectonic plate. But it was also an idea that was hard to believe, since the ice above the plume is still there. “I thought it was crazy,” said Helene Seroussi of Nasa’s Jet Propulsion Laboratory, who helped the lead work. “I didn’t see how we could have that amount of heat and still have ice on top of it.” Now scientists have used the latest techniques to support the idea. The team developed a mantle plume numerical model to look at how much geothermal heat would be needed to explain what is seen at Marie Byrd Land, including the dome and the giant subsurface rivers and lakes present on Antarctica’s bedrock.

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Further guaranteeing the further demise of the country.

Next Round Of Greek Pension Cuts To Reach Up To 18% In 2019 (K.)

The recalculation of pensions paid out to people who have already retired will likely lead to major cuts for pensioners of the former Traders’ Fund (TEBE/OAEE) and the civil servants’ fund, as well as those who used to work at banks and state firms. According to data presented to the country’s creditors by the Labor Ministry, three-quarters of the recalculations have been completed, while the process is expected to finish by year-end. The cuts will be implemented from January 1, 2019, but the country’s 2.6 million pensioners should learn by how much their income will suffer by the middle of next year, as Athens has told the creditors it will inform all pensioners by June 2018.

Legally, the cuts cannot exceed 18%, even if the pensioner’s so-called personal difference – i.e. the margin between the pension they secured in the past and the amount a new pensioner would receive – is greater. The law also provides for the abolition of allowances for spouses and children, which a large share of pensioners receive. Kathimerini understands the recalculation results will lead to major cuts mainly for pensioners who had high salaries but few years of service, as well as widows.

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is there anyone is the EU left with a conscience?

EU Parliamentarians Warn Refugees May Die on Greek Islands (GR)

The EU Council and the European Commission must work urgently with Greece to prevent a humanitarian crisis this winter, according to the he Progressive Alliance of Socialists and Democrats (S&D) Group in the European Parliament. The group called for a debate in the parliament’s plenary session next week in Strasbourg. “Thousands of people seeking asylum on the Greek islands still do not have adequate protection for the coming cold months,” said S&D Group President Gianni Pittella.

“Many are still sleeping in light tents designed for summer weather, without sleeping bags, on thin mats or even on the ground. EU governments need to immediately stop sending back refugees to Greece under the Dublin mechanism; which is creating further strain on the Greek asylum system. If we do not act and refugees die from the cold, as they did last year, then their blood will be on our hands.” Pittella was also quick to stress that all EU member states must fulfill their obligations to relocate refugees from Greece. “A legal decision has been taken by the EU, and this must be fully respected. Relocation is the only way of taking these people out of limbo and allowing them to get on with rebuilding their lives.”

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‘We’ll get you eventually.”

Facebook: God Only Knows What It’s Doing To Our Children’s Brains (Axios)

Sean Parker, the founding president of Facebook, gave me a candid insider’s look at how social networks purposely hook and potentially hurt our brains. Be smart: Parker’s I-was-there account provides priceless perspective in the rising debate about the power and effects of the social networks, which now have scale and reach unknown in human history. He’s worried enough that he’s sounding the alarm. Parker, 38, now founder and chair of the Parker Institute for Cancer Immunotherapy, spoke yesterday at an Axios event at the National Constitution Center in Philadelphia, about accelerating cancer innovation. In the green room, Parker mentioned that he has become “something of a conscientious objector” on social media. By the time he left the stage, he jokingly said Mark Zuckerberg will probably block his account after reading this:

“When Facebook was getting going, I had these people who would come up to me and they would say, ‘I’m not on social media.’ And I would say, ‘OK. You know, you will be.’ And then they would say, ‘No, no, no. I value my real-life interactions. I value the moment. I value presence. I value intimacy.’ And I would say, … ‘We’ll get you eventually.'”

“I don’t know if I really understood the consequences of what I was saying, because [of] the unintended consequences of a network when it grows to a billion or 2 billion people and … it literally changes your relationship with society, with each other … It probably interferes with productivity in weird ways. God only knows what it’s doing to our children’s brains.”

“The thought process that went into building these applications, Facebook being the first of them, … was all about: ‘How do we consume as much of your time and conscious attention as possible?'” “And that means that we need to sort of give you a little dopamine hit every once in a while, because someone liked or commented on a photo or a post or whatever. And that’s going to get you to contribute more content, and that’s going to get you … more likes and comments.”

“It’s a social-validation feedback loop … exactly the kind of thing that a hacker like myself would come up with, because you’re exploiting a vulnerability in human psychology.”

“The inventors, creators — it’s me, it’s Mark [Zuckerberg], it’s Kevin Systrom on Instagram, it’s all of these people — understood this consciously. And we did it anyway.”

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Nov 092017
 
 November 9, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , ,  6 Responses »
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Henri Cartier Bresson Madrid 1933

 

How I Sold Out To The Putin-Soros-Murdoch Conspiracy (Steve Keen)
Bill Gates, Jeff Bezos and Warren Buffett Richer Than Poorest Half Of US (G.)
The Middle East Is On The Verge Of New War (SF)
With Saudi Princes Dead, Arrested, King Fahd’s Grandson Flees To… Iran (IT)
Prince Alwaleed Sold His Shares In 21st Century Fox (Abc.au)
It Begins: Pension Bailout Bill To Be Introduced This Week (ZH)
How The Netherlands Became A Tax Haven (SüdD)
FEMA Offers To Airlift Puerto Ricans To Mainland US (CBS)
Catalan Parliament Speaker, 5 MPs Appear In Court On Sedition Charge (G.)
EU Gives Greece Foreclosure Ultimatum (K.)
The Plot Against Greece (K)
UK Will Back Total Ban On Bee-Harming Pesticides (G.)

 

 

“How I sold out to the Putin-Soros-Murdoch conspiracy to destroy Western civilization”

Steve has a sense of humor alright. But the serious note here is that RT is the only place where he can get a chance to discuss the issues he sees as real. The BBC, for one, is not interested.

How I Sold Out To The Putin-Soros-Murdoch Conspiracy (Steve Keen)

I was delighted to find myself in the Top Ten (alright; top 15) of the European Values list of 2,326 “Useful Idiots” appearing regularly on RT shows, and thus legitimizing Vladimir Putin’s attempt to destroy Western civilization as we know it. Why delighted? Because it completes the set of conspiracies to which I can now be accused of belonging. They include: • The Putin Conspiracy, since I am regularly interviewed on Russia Today (and even worse, I now get paid to write for RT!); • The Soros Conspiracy, since my research, has been funded by the Institute for New Economic Thinking (INET) which he established; • The Murdoch Conspiracy, since I appear every week on Sky News Australia with Carson Scott, and I used to get paid by News Ltd to write a weekly column; and • The Alt-Right Conspiracy, since I’ve signed a book contract with Vox Day’s publishing firm Castalia House.

So not only am I a “useful idiot,” I’m a useful idiot for four contradictory conspiracies. Does that make me a double-double agent? No, it makes me someone who’s quadruple pissed off with people who attempt to understand the world from the perspective of conspiracy theories in the first place. I don’t deny the existence of conspiracies: in fact, far from it, because they’re everywhere. What I do deny is the implicit assumption that the conspirators understand the system they’re attempting to manipulate. For example, I’ve heard plenty of conspiracy theorists assert that the 2008 financial crisis was caused by the Federal Reserve/George Soros (Hi George!)/Hedge Funds/Academic-Economists-Who-Peddle-The-Efficient-Markets-Hypothesis, and “they” profited from it.

This implies “they” knew what “they” were doing. Pardon me, but I’ve met many of these protagonists—and in the case of academic economists, I’ve worked with them for 30 years. “They” don’t have a clue (except George). Even those that were actively conspiring—like many hedge funds during the subprime bubble were doing so on the basis of utterly deluded theories about how the system they were trying to game actually worked. Where apparent conspiracies did work, like Soros’s punt against the British Pound decades ago, they did so because a CSP (Clever Sinister Person) bet against the conventional wisdom of others who thought they understood the system (and did not), rather than because the CSP set up the whole thing in the first place.

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“..the “billionaire class” continues to “pull apart from the rest of us” at the fastest rate ever recorded..”

Bill Gates, Jeff Bezos and Warren Buffett Richer Than Poorest Half Of US (G.)

The three richest people in the US – Bill Gates, Jeff Bezos and Warren Buffett – own as much wealth as the bottom half of the US population, or 160 million people. Analysis of the wealth of America’s richest people found that Gates, Bezos and Buffett were sitting on a combined $248.5bn (£190bn) fortune. The Institute for Policy Studies said the growing gap between rich and poor had created a “moral crisis”. In a report, the Billionaire Bonanza, the thinktank said Donald Trump’s tax change proposals would “exacerbate existing wealth disparities” as 80% of tax benefits would end up going to the wealthiest 1% of households. “Wealth inequality is on the rise,” said Chuck Collins, an economist and co-author of the report. “Now is the time for actions that reduce inequality, not tax cuts for the very wealthy.”

The study found that the billionaires included in Forbes magazine’s list of the 400 richest people in the US were worth a combined $2.68tn – more than the GDP of the UK. “Our wealthiest 400 now have more wealth combined than the bottom 64% of the US population, an estimated 80m households or 204 million people,” the report says. “That’s more people than the population of Canada and Mexico combined.” The report says the “billionaire class” continues to “pull apart from the rest of us” at the fastest rate ever recorded. “We have not witnessed such extreme levels of concentrated wealth and power since the first gilded age a century ago.” Forbes celebrated 2017 as “another record year for the wealthiest people in America”, as “the price of admission to the country’s most exclusive club jumped nearly 18% to $2bn”.

That was a tenfold increase on the amount of money needed to enter the list when it first started in 1982. Josh Hoxie, another co-author of the thinktank report, said: “So much money concentrating in so few hands while so many people struggle is not just bad economics, it’s a moral crisis.” The report says many Americans are joining an “emerging anti-inequality movement”. “A century ago, a similar anti-inequality upsurge took on America’s vastly unequal distribution of income and wealth and, over the course of little more than a generation, fashioned a much more equal America,” it says.

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“.. the kingdom’s leadership is desperately in need of an enemy..”

The Middle East Is On The Verge Of New War (SF)

A missile gets fired on the Saudi capital. A missile, which was allegedly built in Iran and smuggled to Yemen, just to be fired at Saudi Arabia. According to initial reports, two Saudi princes died back to back in 24 hours: one in an “accidental” helicopter crash, the other during a firefight that broke out while security forces were trying to arrest him. On November 7, Saudi Arabia’s information ministry spokesman said that “Prince Abdulaziz is alive and well”. However, the prince could not be independently reached for comment by the media. Other high-ranking members of the establishment and the royal family – the two tend to be one and the same in Saudi Arabia – get arrested on charges of corruption, with their bank accounts frozen. Lebanese Prime Minister Saad Hariri unexpectedly resigns after he was summoned to Riyadh by his Saudi-backers.

Meanwhile, Saudi Arabia accused Iran of conducting acts of “direct military aggression” and accused Lebanon of “declaring war” on Riyadh by allowing Hezbollah “aggression” against the kingdom. All this happened in a span of just a few days. With ever-growing security challenges and problems at the regional level, the crisis that took hold of Saudi Arabia does not seem to be slowing down. One contributing factor to the ongoing crisis is a major split in the Saudi royal family: the power struggle that resulted in the former crown prince being deposed and replaced with a new one, a move that shook things up quite a bit inside the country. The echo of this can be seen in the current “anti-corruption” persecution, enforced by the current Crown Prince Mohammad bin Salman.

Outside the country, several key foreign policy projects failed: the effectiveness of the Yemen intervention can be judged by the fact that it resulted in a missile being fired at Riyadh. Bashar al-Assad is still in power in Syria. The attempts to scare Qatar into submission backfired, as Qatar has been getting more and more friendly with Russia, Turkey and Iran. Iran is gaining more and more influence in the region, while the Saudis seem to be losing it, hence they are trying to compensate for their losses by participating in proxy wars elsewhere. The Saudis also tried to flex their diplomatic muscle. King Salman even visited Moscow, where the two sides exchanged promises with no guarantees that these will ever be fulfilled. This also backfired, as some considered it a demonstration of weakness or an attempt to make peace by making concessions.

Add economic struggles to this series of failures, and one can see why the King’s and his Crown Prince’s position seem less and less stable by the minute. The situation apparently seemed so dire, that in order to keep everything afloat active persecution seemed the only possible way to keep the King and his successor in power. The “anti-corruption” campaign is just an excuse: the corruption has always been high in Saudi Arabia, and no one batted an eye before now. These are temporary measures. Persecution can hardly solve foreign and internal matters, and it will not lead to a solution of the problems. Right now, the kingdom’s leadership is desperately in need of an enemy to unite the population and draw their attention away from the chaotic events that unfolding in the country.

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The one that got away.

With Saudi Princes Dead, Arrested, King Fahd’s Grandson Flees To… Iran (IT)

The Saudi royal family – the House of Saud – is throwing up one intrigue after another. Hours after the reported death of Prince Abdul Aziz bin Fahd, his nephew and son of late King Fahd’s eldest surviving son, Prince Turki bin Mohamed bin Fahd has fled the country. His destination, according to speculation among those who are watching the situation closely, is, wait for it, Iran.If this is true, this may put new strain on Tehran and Riyadh, already at loggerheads for dominance in the restive Middle East region, where Saudi Arabia and Iran are fighting, what analysts term, a proxy war in Yemen. What makes Prince Turki bin Mohamed bin Fahd’s reported flight to Iran, where he is said to have sought asylum, interesting, apart from his destination, is that it comes at a time when Saudi aviation authorities are said to have been told not to let any of the oil-rich kingdom’s many royals fly out of the country.

Of course,with the outflow of information from Saudi Arabia particularly restricted right now, all reports of developments on the region must be taken with a pinch of salt. Turki bin Mohamed, is the son of Muhammad bin Fahd Al Saud, the second-oldest son of late Saudi King Fahd bin Abdulaziz Al Saud, and is also the grandnephew of the current King Salman bin Abdulaziz Al Saud This is the same King Salman whose son Crown Prince Mohammad Bin Salman (known informally as MBS) is believed to be have orchestrated what many are seeing as a coup by sideling prominent Saudi royals and taking decisions that could win over the country’s liberal quarters.

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Murdoch’s powers challenged.

Prince Alwaleed Sold His Shares In 21st Century Fox (Abc.au)

One of Rupert Murdoch’s key business allies, who was arrested in last week’s corruption crackdown in Saudi Arabia, has quietly sold off his $1.5 billion stake in 21st Century Fox. The business relationship between Mr Murdoch and Prince Alwaleed bin Talal is now under new scrutiny, with Mr Murdoch’s control over his family-controlled business empire looking more uncertain. “This is very big news,” Murdoch watcher and shareholder activist Stephen Mayne said after the company confirmed Prince Alwaleed had offloaded his shareholdings in Fox and News Corporation. “He’s been the number one backer of Murdoch family control of the public companies for the last 20 years.”

One of the world’s richest men, the Prince is one of dozens of royal family members, officials and business leaders arrested in Saudi Arabia in recent days. With his bank accounts and other assets likely to have been frozen by Saudi authorities, his detention had raised questions about who had control over his almost 40 million Fox shares. It now appears he sold those shares with little fanfare. It is unclear when the shares were sold. But a Bloomberg report on the company’s shareholders shows Prince Alwaleed’s stake fell to zero during the current financial quarter.

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Impossible to overestimate what a disaster this is going to be. We need a whole new economics to confront it.

It Begins: Pension Bailout Bill To Be Introduced This Week (ZH)

Over the past year we have provided extensive coverage of what will likely be the biggest, most politically charged, and most significant financial crisis facing the aging U.S. population: a multi-trillion pension storm, which was recently dubbed “one of the most heated battles of a lifetime” by John Mauldin. The reason, in a nutshell, why the US public pension problem has stumped so many professionals is simple: for lack of a better word, it is an unsustainable Ponzi scheme, in which satisfying accrued pension and retirement obligations requires not only a constant inflow of new money, but also fixed income returns, typically in the 6%+ range, which are virtually unfeasible in a world where global debt/GDP is in the 300%+ range. Which is why we, and many others, have long speculated that it is only a matter of time before the matter receives political attention, and ultimately, a taxpayer bailout.

That moment may be imminent. According to Pensions and Investments magazine, Democratic Senator Sherrod Brown from Ohio plans to introduce legislation that would allow struggling multiemployer pension funds to borrow from the U.S. Treasury to remain solvent. The bill, which is co-sponsored by another Democrat, Rep. Tim Ryan, also of Ohio, could be introduced as soon as this week or shortly after. It would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates. The one, and painfully amusing, restriction for borrowers is “they could not make risky investments”, which of course will be promptly circumvented in hopes of generating outsized returns and repaying the Treasury’s “bailout” loan, ultimately leading to massive losses on what is effectively a taxpayer-funded pension bailout.

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Amoral.

How The Netherlands Became A Tax Haven (SüdD)

Barack Obama had only been in office for a few weeks when he first tried to take on tax havens. The freshly inaugurated U.S. president wanted greater transparency, harsher penalties and more justice. Obama, who had helped draft anti-tax haven legislation – to date, still not passed – as an Illinois senator, called out many tax havens by name. There were the usual suspects: Bermuda, the Cayman Islands and Switzerland. But there was also, to the surprise of many, the Netherlands. A founding member of the European Union, quaint little Holland has for years been the most important tax haven for American corporations. This includes large multinationals such as the coffee chain Starbucks, the delivery company FedEx, the pharmaceuticals giant Pfizer and – as the Paradise Papers have revealed – the sporting apparel manufacturer Nike and the electric carmaker Tesla.

Every year, other countries lose out on billions of euros in taxes for the apparent reason that the Netherlands has bent to the will of influential lobbyists while neighboring EU member states have stood idly by and done nothing. Experts accuse the country of providing illegal state subsidies, and the European Commission is alarmed, but the Dutch tax loophole will nevertheless remain open for years to come. One of the most important days for the Netherlands as a tax haven was July 6, 2005. That was the day that Paragraph 4 of Article 24 – the so-called anti-abuse clause – was struck from the U.S. tax convention with the Netherlands, effectively legalizing the abuse of Dutch corporate law. The Netherlands’ tax loophole revolves around a business structure known in Dutch as a commanditaire vennootschap, or CV, the Dutch version of a limited partnership. In a CV, just like in a limited partnership, two or more people can join together for business purposes.

One of the partners, namely the limited partner, is only liable for a fixed amount, while the other, the general partner, is fully liable. In contrast to Germany, CVs are not regarded as taxable entities in the Netherlands, but solely as partnerships. In the eyes of the Dutch tax authorities, it’s not the CV itself that’s responsible for paying taxes, but the individual partners. This is where things get interesting, especially for American companies. By founding a CV in the Netherlands plus one or two Dutch subsidiaries, U.S. firms reach “the Holy Grail of tax avoidance.” That’s how Senator Carl Levin once put it while still in office, describing the complex networks of companies that allow their owners to completely avoid taxes.

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Time for a plan?!

FEMA Offers To Airlift Puerto Ricans To Mainland US (CBS)

The Federal Emergency Management Agency (FEMA) is offering to airlift victims of Hurricane Maria in Puerto Rico to the U.S. mainland to reach temporary housing – a complex operation that would be the first of its kind for the agency. Under FEMA’s Transitional Shelter Assistance (TSA) program, displaced residents and families who are still living in shelters on the island can opt to relocate to housing in Florida and New York. The agency is working with the governors in both states to work through logistical issues for families interested in participating. Mike Byrne, a federal coordinating officer for FEMA, said the program is the first time the agency has attempted what it calls an “air bridge,” or a relief operation requiring the transportation of individuals from a disaster area.

In most disasters, FEMA pays for displaced residents to stay in hotels under the TSA program. In Puerto Rico, the hotels are filled to capacity, so FEMA is turning to the mainland and working with states to find accommodations. “A thousand miles adds a whole level of complexity to this,” Byrne said. Byrne says agency teams are traveling to shelters on the island to ask longtime occupants about their housing options going forward, telling them about FEMA’s offer. He said the level of interest in the program has so far been low, with only about 30 out of 300 families interviewed on Tuesday expressing interest in participating. “People really don’t want to leave their homes,” Byrne said. “We want to give them every opportunity we can to be able to stay here, whether it’s providing financial assistance or repairing their homes. So we are going to work hard on those things so people don’t have to leave.”

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And still no-one has come forward with an answer. A third party will have to, the two sides can’t do it be themselves.

Catalan Parliament Speaker, 5 MPs Appear In Court On Sedition Charge (G.)

The speaker of the Catalan parliament and five of its members appeared before Spain’s supreme court in Madrid on Thursday to answer charges of rebellion and sedition over their roles in staging a banned referendum on Catalonia’s independence last month. The court will decide whether to remand Carme Forcadell and the five MPs in custody while the investigation continues or release them under certain conditions. Eight former members of the Catalan government and the leaders of the two main grassroots pro-independence groups are already in custody awaiting trial on sedition charges for their parts in the 1 October referendum, which Spanish courts ruled illegal.

The region’s deposed president, Carles Puigdemont, and four of his former cabinet ministers went into self-imposed exile in Belgium last week after Madrid responded to Catalonia’s declaration of independence by firing his administration, dissolving the parliament and calling regional elections for December. Spain’s high court issued an arrest warrant for for all five last week on sedition and rebellion charges. Forcadell and the five MPs were summoned last week to the supreme court, which handles cases of people who enjoy parliamentary immunity, but it gave them more time to prepare their defences. They are suspected of having followed a “concerted strategy to declare independence” before the official declaration of the Catalan parliament on 27 October, which Spain’s constitutional court annulled on Wednesday.

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The narrative is that rich parties organize protests. But there are certainly people simply wanting to prevent people being thrown out into the streets.

EU Gives Greece Foreclosure Ultimatum (K.)

European officials have given the government an ultimatum to proceed with electronic foreclosures on homes later in the month or else the country’s third bailout review will not be concluded. The warning came despite the recent positive messages emanating from Brussels and Washington that Greece is making progress in the review and is on course to reach an agreement with creditors on a technical level by the end of the year. But lenders appear adamant that the review’s conclusion will be jeopardized if foreclosures do not take place as scheduled and if notaries, who have borne the brunt of attacks by anti-establishment groups and protesters, are not protected. “If the Greek government has the will to protect notaries it will find the way to achieve this,” a source told Kathimerini, adding that “if they want to stop the violence they can do it.”

The sources told Kathimerini they expect to see foreclosures beginning on November 27 “at all banks and throughout the country and not just isolated cases.” Auditors have repeatedly made it clear that the resumption of foreclosures, which have dragged during the crisis years due to strikes by lawyers and notaries and more recently due to anti-austerity protesters, is a prerequisite for the successful conclusion of Greece’s current bailout review. The ultimatum, however, appears to have motivated the government to take action so that foreclosures resume and notaries are protected as sources said that all necessary measures will be taken to “ensure strategic debt defaulters do not hide behind the attacks against notaries.”

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The plot is Greeks themselves?!

The Plot Against Greece (K.)

If some power wanted to undermine all that is good in a country, to waste its natural beauty and people, to damage its past, present and future, it need look no further than Greece. Here it would see the result of a long-term conspiracy against the coue beginning of the modern Greek state, the Greeks were under foreign tutelage. In the past few decades, though, as a member of the European Union, we had begun to believe that we could function as an independent country, without patrons. And suddentry. Fortunately, the Greeks are fighters, they resist as much as they can. That is why the country is still beautiful, with talented, generous people, with bright children capable of competing with the best in the world. The “enemy,” though, holds the people hostage, keeping them from reaching their full potential, from making the country what it could be.

From thnly, bankrupt, we found ourselves under strict supervision again. It is understandable, then, that we blame foreigners for all our ills – those powers that want to suck us dry of our wealth, to keep us weak and under control. Because it is certain that we are not the ones who benefit from continued political and economic insecurity, from unpredictable and excessive taxation, disdain for investments, dysfunctional justice, a weakened education system. The only beneficiaries are the tricksters who know how to exploit the situation – and other countries. When we have almost no investments and the country’s strongest selling point as a tourist destination is its stability in an unstable region, it is clear that we are not creating added value, we are not establishing foundations for the future. Investments go elsewhere and Greece keeps falling behind the competition.

In the World Bank’s latest Doing Business survey of 190 countries, Greece was ranked 67th, from 61st last year (and 60th and 58th before that). It is incredible that after seven years of crisis and three bailout agreements it should still be so difficult to set up a business in Greece. And yet, there is stiff resistance to improving the situation: Taxes and social security contributions are way above the European Union average; there are long delays in the justice system, conflicting and confusing laws and regulations, along with a public administration determined to obstruct whatever it can, encourage corruption and send businesses elsewhere.

Other countries gain even more when thousands of Greek doctors and others with special skills move away in search of a better life, taking with them the money invested in their education. So why should we not believe that it is in our foreign partners’ interests to keep Greece at this level? In the past, they lent us money, now they loot our human resources (and later perhaps our still-to-be-discovered fossil fuels, according to a long-running conspiracy theory). Our partners did not stop lending us money, but now it comes not from their banks but from their taxpayers, and with strict conditions.

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Well well. Something good comes out of that mess of a government.

UK Will Back Total Ban On Bee-Harming Pesticides (G.)

A total ban on insect-harming pesticides in fields across Europe will be backed by the UK, environment secretary Michael Gove has revealed. The decision reverses the government’s previous position and is justified by recent new evidence showing neonicotinoids have contaminated the whole landscape and cause damage to colonies of bees. It also follows the revelation that 75% of all flying insects have disappeared in Germany and probably much further afield, a discovery Gove said had shocked him. Neonicotinoids are the world’s most widely used insecticide but in 2013 the European Union banned their use on flowering crops, although the UK was among the nations opposing the ban. The European Commission now wants a total ban on their use outside of greenhouses, with a vote expected in December, and the UK’s new position makes it very likely to pass.

“The weight of evidence now shows the risks neonicotinoids pose to our environment, particularly to the bees and other pollinators which play such a key part in our £100bn food industry, is greater than previously understood,” said Gove. “I believe this justifies further restrictions on their use. We cannot afford to put our pollinator populations at risk.” In an article for the Guardian, Gove said: “As is always the case, a deteriorating environment is ultimately bad economic news as well.” He said pollinators boost the yield and quality of UK crops by £400m-£680m every year and said, for example, gala apple growers are now having to spend £5.7m a year to do replace the work of lost natural pollinators.

Gove said the evidence of neonicotinoids’ harm to pollinators has grown stronger since 2013, including a landmark field trial published in July that showed neonicotinoids damage bee populations, not just individual insects, and a global analysis of honey revealing worldwide contamination by the insecticides. [..] Gove’s decision has delighted campaigners and scientists who have long argued that heavy pesticide use, along with the destruction of habitat and disease, are having a devastating impact on insects. “Michael Gove is to be congratulated for listening to the experts on this issue and backing tougher restrictions,” said Friends of the Earth’s chief executive Craig Bennett. “But lessons also need to be learned – we now need to move away from chemical-intensive farming and instead boost support for less damaging ways of tackling persistent weeds and pests.

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Nov 072017
 
 November 7, 2017  Posted by at 10:07 am Finance Tagged with: , , , , , , , , , ,  5 Responses »
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Edward S. Curtis Zuni Girl with Jar c. 1903

 

Saudi Arabia’s Government Purge — And How Washington Corruption Enabled It (IC)
Saudi Arabia Accuses Lebanon Of ‘Declaring War,’ Egypt Calls For Calm (CNBC)
Oil Prices Surge On Saudi Purge (CNBC)
The Black Swan In Plain Sight – Debt Out The Wazoo (Stockman)
What Could Go Wrong? (Jim Kunstler)
Growing Homeless Camps Contrast With West Coast Tech Wealth (AP)
Profiting from Puerto Rico’s Pain (New Yorker)
Sacked Catalan President Condemns ‘Brutal Judicial Offensive’ (G.)
Bernie Sanders Warns Of ‘International Oligarchy’ – Paradise Papers (G.)
End These Offshore Games Or Our Democracy Will Die (G.)
Four False Viral Claims Spread by Journalists on Twitter in One Week (GG)
Growing Number of Greeks Unable To Pay Taxes (K.)
Greek Notaries Refuse To Carry Out Foreclosures (K.)
Hawking: AI Could Be ‘Worst Event In The History Of Our Civilization’ (CNBC)
The Charter of the Forest (Standing)

 

 

Reading a lot on Saudi. This is good by Ryan Grim. ” And make no mistake, MBS is a project of the UAE — an odd turn of events given the relative sizes of the two countries.”

Saudi Arabia’s Government Purge — And How Washington Corruption Enabled It (IC)

Whatever the official explanation, it is being read around the world as a power grab by the kingdom’s rising crown prince. “The sweeping campaign of arrests appears to be the latest move to consolidate the power of Crown Prince Mohammed bin Salman, the favorite son and top adviser of King Salman,” as the New York Times put it. “The king had decreed the creation of a powerful new anti-corruption committee, headed by the crown prince, only hours before the committee ordered the arrests. The men are being held in the Ritz-Carlton Riyadh. “There is no jail for royals,” a Saudi source noted. The move marks a moment of reckoning for Washington’s foreign policy establishment, which struck a bargain of sorts with Mohammed bin Salman, known as MBS, and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S. who has been MBS’s leading advocate in Washington.

The unspoken arrangement was clear: The UAE and Saudi Arabia would pump millions into Washington’s political ecosystem while mouthing a belief in “reform,” and Washington would pretend to believe that they meant it. MBS has won praise for some policies, like an openness to reconsidering Saudi Arabia’s ban on women drivers. Meanwhile, however, the 32-year-old MBS has been pursuing a dangerously impulsive and aggressive regional policy, which has included a heightening of tensions with Iran, a catastrophic war on Yemen, and a blockade of ostensible ally Qatar. Those regional policies have been disasters for the millions who have suffered the consequences, including the starving people of Yemen, as well as for Saudi Arabia, but MBS has dug in harder and harder. And his supporters in Washington have not blinked.

The platitudes about reform were also challenged by recent mass arrests of religious figures and repression of anything that has remotely approached less than full support of MBS. The latest purge comes just days after White House adviser Jared Kushner, a close ally of Otaiba, visited Riyadh, and just hours after a bizarre-even-for-Trump tweet. Whatever legitimate debate there was about MBS ended Saturday — his drive to consolidate power is now too obvious to ignore. And that puts denizens of Washington’s think tank world in a difficult spot, as they have come to rely heavily on the Saudi and UAE end of the bargain. As The Intercept reported earlier, one think tank alone, the Middle East Institute, got a massive $20 million commitment from the UAE. And make no mistake, MBS is a project of the UAE — an odd turn of events given the relative sizes of the two countries.

“Our relationship with them is based on strategic depth, shared interests, and most importantly the hope that we could influence them. Not the other way around,” Otaiba has said privately. For the past two years, Otaiba has introduced MBS around Washington and offered assurances of his commitment to modernizing and reforming Saudi Arabia, according to people who’ve spoken with him, confirmed by emails leaked by the group, Global Leaks. When confronted with damning headlines, Otaiba tends to acknowledge the reform project is a work in progress, but insists that it is progress nonetheless, and in MBS resides the best chance of the region.

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“The region cannot support more turmoil..”

Saudi Arabia Accuses Lebanon Of ‘Declaring War,’ Egypt Calls For Calm (CNBC)

Egyptian President Abdel Fattah al-Sisi called on Middle Eastern nations to maintain stability just as tensions were suddenly spiking between Lebanon and Saudi Arabia. “The stability of the region is very important and we all have to protect it … I am talking to all the parties in the region to preserve it,” Al-Sisi said in an interview with CNBC over the weekend that aired Tuesday morning. On Saturday, Lebanese Prime Minister Saad al-Hariri shocked the political establishment in Beirut by announcing his resignation. The leader said he was stepping down amid concerns of a potential assassination plot against him. Speaking from Riyadh, Hariri criticized Iran, and its Lebanese ally Hezbollah, for igniting conflict in the region.

Following the CNBC interview, Reuters reported that Saudi Arabia sharply escalated rhetoric in the region by declaring that Lebanon had — figuratively at least — declared “war” against it because of aggression from Hezbollah. Saudi Gulf Affairs Minister Thamer al-Sabhan said the government of Lebanon “would be dealt with as a government declaring war on Saudi Arabia,” Reuters reported. When asked whether the time had come for Egypt to consider its own measures against Hezbollah, Al-Sisi replied, “The subject is not about taking on or not taking on, the subject is about the status of the fragile stability in the region in light of the unrest facing the region.” “The region cannot support more turmoil,” he said.

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What OPEC couldn’t do.

Oil Prices Surge On Saudi Purge (CNBC)

Oil prices surged to their highest levels since the summer of 2015 on Monday as a major political shakeup in Saudi Arabia underpinned a rally fueled by geopolitical risk, analysts said. Crude futures hit the new highs overnight after the powerful Saudi Crown Prince Mohammad bin Salman coordinated the arrest of several princes and ministers, ostensibly as part of crackdown on corruption. Prices pulled back in morning trade as the market digested a wealth of analysis on the Saudi purge, but futures suddenly shot higher at midday. International benchmark Brent crude oil topped $64 a barrel for the first time since June 2015. Meanwhile U.S. West Texas Intermediate crude broke above $57, a level the market has not seen since July 2015.

WTI finished Monday’s session $1.71 or 3.1 percent, higher at $57.35. Brent was trading up $2.04, or 3.3 percent, at $64.11 by 2:27 p.m. ET. Analysts cautioned against pinning the surge on any one headline, or even the Saudi arrests alone. Instead, they said a growing cloud of geopolitical uncertainty was unleashing animal spirits in an already bullish market. “You can grab all sorts of different headlines when you have a runaway market, and this is a runaway market right now,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. In this kind of environment, “people throw caution to the wind, and this is like the grand finale of fireworks,” he said.

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More debt, fast.

The Black Swan In Plain Sight – Debt Out The Wazoo (Stockman)

The black swan in plain sight does emit the Donald’s orangish glow, but at the end of the day its true color is actually red. That is, monumental towers of rapidly rising debt loom everywhere on the planet. For the moment, the artificial cash flow from this unsustainable borrowing spree is keeping a simulacrum of growth and prosperity alive. Yet this whole outbreak of debt madness – represented by $225 trillion outstanding on a global basis – is careening toward a financial and economic dead end that will soon crush today’s fiscally profligate politicians and heedless financial punters, alike, in a devastating reset of bond yields. For our first case in point, the always excellent Wolf Richter published a great chart over the weekend on the exploding US public debt.

To say the least, it constitutes a clanging wake-up call amidst the absolute fantasy world that prevails on both ends of the Acela Corridor. That’s because during the mere 8 weeks since the public debt ceiling was suspended by the Donald’s end-run with Nancy and Chuckles in September, the national debt has spiked by $640 billion. That’s about $16 billion per Federal business day, and they are not done yet. The US Treasury will continue to borrow heavily until the current debt ceiling “suspension” expires on December 8 – at which time it will repair to the old game of divesting trusting funds and employing other gimmicks which circumvent the ceiling, while waiting for Congress to blink and raise the ceiling or authorize a new “temporary” suspension.

As Wolf pointed out, this pattern played out during the debt showdowns of 2013 and 2015, as well, when the resulting “temporary” suspension resulted in borrowing spikes of $464 billion and $650 billion, respectively. Accordingly, Washington has suspended it way into a $5.7 trillion increase in the public debt in just six years since October 2011. That is, during a period which supposedly constitutes the third longest business expansion in US history.

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“The “narrative” is firmest before its falseness is proved by the turn of events, and there are an awful lot of events out there waiting to present, like debutantes dressing for a winter ball.”

What Could Go Wrong? (Jim Kunstler)

The economy isn’t growing and can’t grow. The economy is a revenant of something that used to exist, an industrial economy that has rolled over and died and come back as a moldy ghoul feeding on the ghostly memories of itself. Stocks go up because the unprecedented low interest rates established by the Fed allow company CEOs to “lever-up” issuing bonds (i.e. borrow “money” from, cough cough, “investors”) and then use the borrowed “money” to buy back their own stock to raise the share value, so they can justify their companies’ boards-of-directors jacking up their salaries and bonuses — based on the ghost of the idea that higher stock prices represent the creation of more actual things of value (front-end-loaders, pepperoni sticks, oil drilling rigs).

The economy is actually contracting because we can’t afford the energy it takes to run the things we do — mostly just driving around — and unemployment is not historically low, it’s simply mis-represented by not including the tens of millions of people who have dropped out of the work force. And an epic wickedness combined with cowardice drives the old legacy news business to look the other way and concoct its good times “narrative.” If any of the reporters at The New York Times and The Wall Street Journal really understand the legerdemain at work in these “mysteries” of finance, they’re afraid to say. The companies they work for are dying, like so many other enterprises in the non-financial realm of the used-to-be economy, and they don’t want to be out of paycheck until the lights finally go out.

The “narrative” is firmest before its falseness is proved by the turn of events, and there are an awful lot of events out there waiting to present, like debutantes dressing for a winter ball. The debt ceiling… North Korea… Mueller… Hillarygate….the state pension funds….That so many agree the USA has entered a permanent plateau of exquisite prosperity is a sure sign of its imminent implosion. What could go wrong?

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All bubbles disrupt.

Growing Homeless Camps Contrast With West Coast Tech Wealth (AP)

SEATTLE — Housing prices are soaring here thanks to the tech industry, but the boom comes with a consequence: A surge in homelessness marked by 400 unauthorized tent camps in parks, under bridges, on freeway medians and along busy sidewalks. The liberal city is trying to figure out what to do. “I’ve got economically zero unemployment in my city, and I’ve got thousands of homeless people that actually are working and just can’t afford housing,” said Seattle City Councilman Mike O’Brien. “There’s nowhere for these folks to move to.” That struggle is not Seattle’s alone. A homeless crisis is rocking the entire West Coast, pushing abject poverty into the open like never before. Public health is at risk, several cities have declared states of emergency, and cities and counties are spending millions – in some cases billions – in a search for solutions.

San Diego now scrubs its sidewalks with bleach to counter a deadly hepatitis A outbreak. In Anaheim, 400 people sleep along a bike path in the shadow of Angel Stadium. Organizers in Portland lit incense at an outdoor food festival to cover up the stench of urine in a parking lot where vendors set up shop. Homelessness is not new on the West Coast. But interviews with local officials and those who serve the homeless in California, Oregon and Washington — coupled with an Associated Press review of preliminary homeless data — confirm it’s getting worse. People who were once able to get by, even if they suffered a setback, are now pushed to the streets because housing has become so expensive. All it takes is a prolonged illness, a lost job, a broken limb, a family crisis. What was once a blip in fortunes now seems a life sentence.

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“There is no European Union standing ready to bail out Puerto Rico.”

Profiting from Puerto Rico’s Pain (New Yorker)

In 2012, Cate Long was working at the news service Reuters, where she wrote a daily column on the municipal-bond market. Municipal bonds are typically a sleepy corner of investing. They are forms of debt issued by states, counties, or cities, usually to fund infrastructure projects, such as airports and highways, and they are generally considered a safe investment, paying relatively low levels of interest. Finding a compelling story about the municipal-bond market is not an easy task, so when Long came across a document related to an $800 million bond sale that Puerto Rico would be undertaking that spring, she decided to look at the numbers more closely. What she found was startling. “I sat down and read it for a couple of hours, and I said, ‘These people are going to default,’ ” she told me recently. “It was pretty obvious.”

In the column she wrote about her analysis, titled “Puerto Rico Is America’s Greece,” Long expressed concern about the island’s economic health, calling it “America’s own Third World country.” At the time, Puerto Rico’s per-capita income was just $15,203 (less than half that of Mississippi, the poorest of the fifty states), and 45% of its residents were living below the poverty line. Puerto Rico also had a “massive” amount of debt, and was issuing even more bonds, which mutual funds and individuals were eagerly buying up, in spite of the warning signs. In her article, Long seemed to charge almost everyone involved, borrowers and creditors alike, with disingenuousness, incompetence, or both. “As happened with Greece, bond investors continue to buy the debt assuming at some point the government will be bailed out by somebody, somewhere,” she wrote.

“Caution, bond investors: There is no European Union standing ready to bail out Puerto Rico.” The article sent shock waves through the investment community. Moody’s Investors Service, which provides credit ratings, asked Long to come to its offices and defend her findings. (Her defense was, essentially, “I’m looking at the numbers.”) Nevertheless, the island continued its unsustainable borrowing for years—and Wall Street investors kept lending it money. By 2017, five years after Long’s warning, Puerto Rico’s bond debt had soared to $74 billion, almost a third of which was held by hedge funds. Meanwhile, the government was struggling to provide basic services to residents.

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Guess: he won’t be back in Catalonia in time for the Dec 21 elections.

Sacked Catalan President Condemns ‘Brutal Judicial Offensive’ (G.)

The deposed Catalan president, Carles Puigdemont, has accused the Spanish authorities of conducting a “brutal judicial offensive” against members of his ousted government and said he was afraid they would not receive an unbiased hearing in Spanish courts. Writing in the Guardian, Puigdemont said it was a “colossal outrage” that he and 13 colleagues were being investigated over possible charges including sedition and rebellion in relation to their roles in last month’s declaration of independence. “Today, the leaders of this democratic project stand accused of rebellion and face the severest punishment possible under the Spanish penal code; the same as for cases of terrorism and murder: 30 years in prison,” he said.

Puigdemont said he doubted that he and his colleagues would get a “fair and independent hearing” and called for “scrutiny from abroad” to help bring the Catalan crisis to a political, rather than judicial, conclusion. He added: “The Spanish state must honour what was said so many times in the years of terrorism: end violence and we can talk about everything. We, the supporters of Catalan independence, have never opted for violence, on the contrary. But now we find it was all a lie that everything is up for discussion.” The former Catalan leader fled to Brussels with a handful of cabinet colleagues last week, hours before Spain’s attorney general announced he would be seeking to bring charges of rebellion, sedition and misuse of public funds against them.

On Thursday, a national court judge ordered the jailing of the eight Catalan politicians and, a day later, issued a European arrest warrant for Puigdemont and four of his allies. Late on Sunday, a Belgian judge granted the five conditional release. They will make their first appearance in court on 17 November when a judge will decide on whether to execute the arrest warrant. The conditions of release include a ban on them leaving Belgium until their appearance in the court of first instance in Brussels later this month. With the extradition process likely to take months rather than weeks, there is growing scope for Puigdemont’s presence in Belgium to cause the country’s coalition government serious difficulties.

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No kidding.

Bernie Sanders Warns Of ‘International Oligarchy’ – Paradise Papers (G.)

Bernie Sanders has warned that the world is rapidly becoming an “international oligarchy” controlled by a tiny number of billionaires, highlighted by the revelations in the Paradise Papers. In a statement to the Guardian in the wake of the massive leak of documents exposing the secrets of offshore investors, Sanders said that the enrichment of wealthy individuals and companies in tax havens was “the major issue of our time”. He said the Paradise Papers opened the door on a “major problem not just for the US but for governments throughout the world”. “The major issue of our time is the rapid movement toward international oligarchy in which a handful of billionaires own and control a significant part of the global economy. The Paradise Papers shows how these billionaires and multinational corporations get richer by hiding their wealth and profits and avoid paying their fair share of taxes,” the US senator from Vermont said.

Sanders, who came in a close second to Hillary Clinton in the race for the Democratic presidential nomination last year, pointed the finger of blame for the flourishing of offshore holdings on both Congress and the Trump administration. He told the Guardian that Republicans in Congress were responsible for providing “even more tax breaks to profitable corporations like Apple and Nike”. The same tax breaks, he said, were being seized upon by super-wealthy members of Trump’s cabinet “who avoid billions in US taxes by shifting American jobs and profits to offshore tax havens. We need to close these loopholes and demand a fair and progressive tax system.”

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“We must accept that Big Finance and runaway inequality are incompatible with either a functioning democracy or a sustainable economy.”

End These Offshore Games Or Our Democracy Will Die (G.)

Tax avoidance is now so systemic that the Queen’s own wealth managers apparently see nothing wrong with her receiving £82m a year from taxpayers while shunting £10m into the Caymans and elsewhere. Shuttling between tax havens is so commonplace that economist Gabriel Zucman describes it as an “elite sport” – a sport in which the loser each time is the rest of society, which sees its taxbase shrink. These papers are aptly named: they outline a model that is paradise for the super-rich and purgatory for the rest of us. The second myth of British politics is that austerity was the only correct response to the high-living of the New Labour boom. That was always opposed by some of us – now it is exploded with each new tax investigation.

Drawing in part on data from last year’s Panama Papers and the HSBC files leaked in 2015, Zucman recently co-published a study that found wealthy Britons have stashed about £300bn – equivalent to 15% of our GDP – in offshore tax havens. Three hundred billion quid would more than cover our entire education budget for the rest of this decade and into the 2020s. Or, if you prefer, it is the equivalent of £350m being paid into the NHS every week for the next 16 years. Instead, it is funnelled offshore and used to buy yachts and mansions and other baubles – tax efficiently, of course. The economics of David Cameron and George Osborne can be summed up simply: punish the poor, but reward the rich for fear they will flee offshore. To that end, they scrapped the 50p tax rate for millionaires, they drove down corporation tax to a record low, and cut sweetheart deals with companies such as Google who couldn’t be bothered to pay even that much.

The result is that London has more super-rich residents than any other city – yet however soft the kid gloves with which they are treated, our wealthiest 0.01% stick 30-40% of their wealth offshore. In high-tax Sweden, by contrast, the rich do not use havens half as much. The logic that has underpinned our tax system over this entire decade is rubbish. [..] Add the City of London to Britain’s crown dependencies such as Jersey and the Isle of Man, and overseas territories such as the Caymans, and Britain’s tax havens account for nearly a quarter of the entire offshore financial industry. According to Deutsche Bank, London itself receives about £1bn a month in what it calls “hidden capital flows”, much of it Russian. It ends up in Stucco-fronted houses and fine art.

Much of this could be changed, and quickly. Britain has previously ordered the Caymans and other overseas territories to decriminalise homosexuality and abolish the death penalty. It could do the same with tax transparency, in an Order of Council that, a Mayfair tax lawyer recently told me, need be no longer than two sides of A4. We could change the rules on Lords and Commons’ members’ interests so that all offshore holdings would have to be registered. These are the fixes, but a real solution is ultimately political. We must accept that Big Finance and runaway inequality are incompatible with either a functioning democracy or a sustainable economy. Britain either shrinks the City of London, or the City of London will swallow Britain.

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Lots of talk about this, with widely differing views.

Four False Viral Claims Spread by Journalists on Twitter in One Week (GG)

There is ample talk, particularly of late, about the threats posed by social media to democracy and political discourse. Yet one of the primary ways that democracy is degraded by platforms such as Facebook and Twitter is, for obvious reasons, typically ignored in such discussions: the way they are used by American journalists to endorse factually false claims that quickly spread and become viral, entrenched into narratives, and thus can never be adequately corrected. The design of Twitter, where many political journalists spend their time, is in large part responsible for this damage. Its space constraints mean that tweeted headlines or tiny summaries of reporting are often assumed to be true with no critical analysis of their accuracy, and are easily spread.

Claims from journalists that people want to believe are shared like wildfire, while less popular, subsequent corrections or nuanced debunking are easily ignored. Whatever one’s views are on the actual impact of Twitter Russian bots, surely the propensity of journalistic falsehoods to spread far and wide is at least as significant. Just in the last week alone, there have been four major factually false claims that have gone viral because journalists on Twitter endorsed and spread them: three about the controversy involving Donna Brazile and the DNC, and one about documents and emails published by WikiLeaks during the 2016 campaign. It’s well worth examining them, both to document what the actual truth is as well as to understand how often and easily this online journalistic misleading occurs:

Viral Falsehood #1: The Clinton/DNC agreement cited by Brazile only applied to the General Election, not the primary.

Viral Falsehood #2: Sanders signed the same agreement with the DNC that Clinton did.

Viral Falsehood #3: Brazile stupidly thought she could unilaterally remove Clinton as the nominee.

Viral Falsehood #4: Evidence has emerged proving that the content of WikiLeaks documents and emails was doctored.

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Deep deep deeper and down.

Growing Number of Greeks Unable To Pay Taxes (K.)

Almost half a million taxpayers were added to the long list of debtors to the state in the month of September, according to the latest data from the Independent Authority for Public Revenue. The authority’s figures are a reflection of citizens’ increasing inability to pay their taxes, with 410,000 not paying their second income tax installment and the ENFIA property tax in September. More specifically, 4,267,408 taxpayers owed money to the Greek state in September, up from 3,857,086 in August. Moreover, by the end of September, the amount of unpaid taxes since the beginning of the year came to 9.25 billion euros. What concerns the government is whether the 410,000 that couldn’t pay their taxes in September will join the Finance Ministry’s 12-month installment program, as the hole in tax revenues will only grow if they don’t.

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What good will kicking people out do?

Greek Notaries Refuse To Carry Out Foreclosures (K.)

The outlook for property foreclosures in Greece is unclear after notaries announced a boycott on auctions until the end of the year, citing abuse by protesters, though foreign creditors expect the first online auctions to take place this month. According to sources, Greece’s lenders have suggested that the responsibility for foreclosures be shifted from notaries to Greek courts or possibly to Justice Ministry officials. The latter model, which has been tried and tested in Germany and Spain, was first mooted last month during a visit to Athens by bailout monitors. The auditors made it clear that the resumption of foreclosures on the homes of overindebted Greeks, which have dragged during the crisis years due to strikes by lawyers and notaries and more recently due to anti-austerity protesters, is a prerequisite for the successful conclusion of Greece’s current bailout review.

In comments at Monday’s summit of eurozone finance ministers in Brussels, ECB President Mario Draghi indicated that the resumption of property auctions would help banks by reducing the large proportion of bad loans that they hold. Commenting, Greek Finance Ministry sources said Athens was committed to “not taking our foot off the gas in the implementation of reforms for the review.” One of the many conditions of the latest review is that Greece launch electronic foreclosures. The first is supposed to take place on November 29. However, it is unclear how that procedure will be carried out in view of the protracted walkout by Greek notaries.

In a joint statement on Monday, the associations representing notaries in Athens, Piraeus and the islands of the Aegean and the Dodecanese said they will not be conducting any property auctions through December 31. The decision was reached during a meeting on Saturday with a vote of 134 in favor and 132 against. The associations said the decision was aimed at initiating talks with the Justice Ministry in order to provide protection to notaries who have come under attack – often violent – by anti-establishment groups and protesters opposed to foreclosures. Notaries also want the Justice Ministry to be made responsible for electronic auctions, as well as to address any disputes that may arise from them.

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I don’t share his optimism.

Hawking: AI Could Be ‘Worst Event In The History Of Our Civilization’ (CNBC)

The emergence of artificial intelligence (AI) could be the “worst event in the history of our civilization” unless society finds a way to control its development, high-profile physicist Stephen Hawking said Monday. He made the comments during a talk at the Web Summit technology conference in Lisbon, Portugal, in which he said, “computers can, in theory, emulate human intelligence, and exceed it.” Hawking talked up the potential of AI to help undo damage done to the natural world, or eradicate poverty and disease, with every aspect of society being “transformed.” But he admitted the future was uncertain. “Success in creating effective AI, could be the biggest event in the history of our civilization. Or the worst. We just don’t know. So we cannot know if we will be infinitely helped by AI, or ignored by it and side-lined, or conceivably destroyed by it,” Hawking said during the speech.

“Unless we learn how to prepare for, and avoid, the potential risks, AI could be the worst event in the history of our civilization. It brings dangers, like powerful autonomous weapons, or new ways for the few to oppress the many. It could bring great disruption to our economy.” Hawking explained that to avoid this potential reality, creators of AI need to “employ best practice and effective management.” The scientist highlighted some of the legislative work being carried out in Europe, particularly proposals put forward by lawmakers earlier this year to establish new rules around AI and robotics. Members of the European Parliament said European Union-wide rules were needed on the matter. Such developments are giving Hawking hope.

“I am an optimist and I believe that we can create AI for the good of the world. That it can work in harmony with us. We simply need to be aware of the dangers, identify them, employ the best possible practice and management, and prepare for its consequences well in advance,” Hawking said.

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We want one!

The Charter of the Forest (Standing)

Eight hundred years ago this month, after the death of a detested king and the defeat of a French invasion in the Battle of Lincoln, one of the foundation stones of the British constitution was laid down. It was the Charter of the Forest, sealed in St Paul’s on November 6, 1217, alongside a shortened Charter of Liberties from 2 years earlier (which became the Magna Carta). The Charter of the Forest was the first environmental charter forced on any government. It was the first to assert the rights of the property-less, of the commoners, and of the commons. It also made a modest advance for feminism, as it coincided with recognition of the rights of widows to have access to means of subsistence and to refuse to be remarried. The Charter has the distinction of having been on the statute books for longer than any other piece of legislation.

It was repealed 754 years later, in 1971, by a Tory government. In 2015, while spending lavishly on celebrating the Magna Carta anniversary, the government was asked in a written question in the House of Lords whether it would be celebrating the Charter this year. A Minister of Justice, Lord Faulks, airily dismissed the idea, stating that it was unimportant, without international significance. Yet earlier this year the American Bar Association suggested the Charter of the Forest had been a foundation of the American Constitution and that it was more important now than ever before. They were right. It is scarcely surprising that the political Right want to ignore the Charter. It is about the economic rights of the property-less, limiting private property rights and rolling back the enclosure of land, returning vast expanses to the commons.

It was remarkably subversive Sadly, whereas every school child is taught about the Magna Carta, few hear of the Charter. Yet for hundreds of years the Charter led the Magna Carta. It had to be read out in every church in England four times a year. It inspired struggles against enclosure and the plunder of the commons by the monarchy, aristocracy and emerging capitalist class, famously influencing the Diggers and Levellers in the 17th century, and protests against enclosure in the 18th and 19th. At the heart of the Charter, which is hard to understand unless words that have faded from use are interpreted, is the concept of the commons and the need to protect them and to compensate commoners for their loss. It is scarcely surprising that a government that is privatising and commercialising the remaining commons should wish to ignore it.

In 1066, William the Conqueror not only distributed parts of the commons to his bandits but also turned large tracts of them into ‘royal forests’ – ie, his own hunting grounds. By the time of the Domesday Book in 1086, there were 25 such forests. William’s successors expanded and turned them into revenue-raising zones to help pay for their wars. By 1217, there were 143 royal forests. The Charter achieved a reversal, and forced the monarchy to recognise the right of free men and women to pursue their livelihoods in forests. The notion of forest was much broader than it is today, and included villages and areas with few trees, such as Dartmoor and Exmoor. The forest was where commoners lived and worked collaboratively.

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Nov 042017
 
 November 4, 2017  Posted by at 2:11 pm Finance Tagged with: , , , , , , , , ,  5 Responses »
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Claude Monet The house at Yerres 1876

 

If there is one thing the Spain vs Catalonia conflict reminds us of, it has got to be Turkey. And that is a much bigger problem for the EU than it realizes. First of all, Brussels can no longer insist that this is an internal, domestic, Spanish issue, since Catalan president Puidgemont is in…Brussels. So are 4 members of his government.

That moves decisions to be made about his situation from the Spanish legal system to its Belgian counterpart. And the two are not identical twins. Even if both countries are EU members. This may expose a very large European problem: the lack of equality among justice systems. Citizens of EU member countries are free to move and work across the Union, but they are subject to different laws and constitutions.

The way the Spanish government tries to go after Puidgemont is exactly the same as the way Turkish president Erdogan tries to get to his perceived archenemy, Fethullah Gülen, a longtime resident of Pennsylvania. But the US doesn’t want to extradite Gülen, not even now Turkey arrests US embassy personnel. The Americans have had enough of Erdogan.

Erdogan accuses Gülen of organizing a coup. Spanish PM Rajoy accuses the Catalan government of the same. But they are not the same kind of coup. The Turkish one saw violence and death. The Spanish one did not, at least not from the side of those who allegedly perpetrated the coup.

Brussels should have intervened in the Catalonia mess a long time ago, called a meeting, instead of claiming this had nothing to do with the EU, a claim as cowardly as it is cheap. You’re either a union or you’re not. And if you are, the well-being of all your citizens is your responsibility. You don’t get to cherry pick. You got to walk your talk.

Belgian news paper De Standaard today makes an interesting distinction. It says the Belgian judicial system is not asked to “extradite” Puidgemont to Spain (uitlevering), but to “surrender” him (overlevering). Legal gibberish.

The paper also states that the case will go through three different courts, each of which has 15 days to announce a decision, so Puidgemont is safe for at least a month and a half. And then on December 21, Rajoy had called elections in Catalonia. For which, reportedly, he will seek to ban several parties. Don’t be surprised if that includes Puidgemont’s.

Moreover, even if the democratically elected president of Catalonia loses all appeals available to him, he could then ask for asylum in Belgium (apparently, Belgium is the only EU member country in which EU citizens can ask for asylum). And then you would really get into a mix-up of EU versus Belgian versus Spanish laws. In a way this is good, it would test a system that is not prepared at all for such divergences.

But what a disaster this is, once more, for the EU. It has shown zero leadership in the case, neither from the likes of European Commission head Juncker nor from Angela Merkel, its most powerful head of state. How can one not conclude that the Union is completely rudderless? This is just as bad as the refugee crisis, and the beheading of the Greek economy.

Threatening people with 30-year jail terms for organizing a peaceful vote is not what the EU should stand for. And now that is does, it threatens its own survival. Europe cannot be the land of Erdogan or Franco, it cannot look the other way and live.

That may be why the German armed forces, the Bundeswehr, have prepared a report that looks at future scenarios for Europe, including worst-case ones. The article in Der Spiegel is in German only, and my command of the language is a tad rusty, but the translation through Google is surprisingly accurate, I only had to change a few words.

The authors don’t seek the worst case option in either Spain or Greece, but perhaps they should. Then again, some of their projections are stark enough to offer plenty food for thought.

 

Military planners think EU collapse is conceivable

According to SPIEGEL information, the Bundeswehr played through social and political trends until 2040 for the first time. Strategists are also developing a worst-case scenario. The Bundeswehr believes that an end to the West in its current form over the next few decades is possible. This is according to information from Der Spiegel from the “Strategic Perspective 2040”, which was adopted at the end of February by the top of the Ministry of Defense and since then kept under wraps.

For the first time in its history, the Bundeswehr’s 102-page document shows how social trends and international conflicts could influence German security policy in the coming decades. The study sets the framework in which the Bundeswehr of the future is likely to move.

The paper does not yet provide any concrete conclusions for equipment and strength. In one of the six scenarios (“The EU in Disintegration and Germany in Reactive Mode”), the authors assume a “multiple confrontation”. The future projection describes a world in which the international order erodes after “decades of instability”, value systems worldwide diverge and globalization is stopped.

“The EU enlargement has been largely abandoned, other states have left the community, Europe has lost its global competitiveness,” write the Bundeswehr strategists: “The increasingly disorderly, sometimes chaotic and conflict-prone world has dramatically changed the security environment of Germany and Europe.” In the fifth scenario (“West against East”), some eastern EU countries are freezing the state of European integration while others have “joined the Eastern bloc”.

In the fourth scenario (“multipolar competition”), extremism is on the rise and there are EU partners who “even occasionally seem to seek a specific approach to Russia’s” state capitalist model “. The document expressly makes no prognosis, but all scenarios are “plausible with the 2040 time horizon,” write the authors. The simulations were developed by scientists of the Federal Armed Forces Planning Office.

Funny, that ‘future projection’ looks a lot like how I see the EU today, not in 2040.

There’s a longer article behind a paywall at Der Spiegel, but this should be sufficient to get a conversation going. Angela Merkel may be all EU all the time, just like all her EU peers, but her own army has serious questions about that. And given the Catalonia swamp, who could doubt that they are right about having doubts?

Yanis Varoufakis’ DiEM25 movement is all set towards democratizing the EU, but how realistic is that goal? How divergent does a Union have to get before you give up on it? Poland, Hungary, Czechia all want completely different things from what Holland and Germany want. New French president Macron is finding out as we speak that he can only do what Merkel allows him to.

And then along comes Spain and tries to inflict Franco era laws and violence on its citizens. But Brussels does nothing, and neither does Berlin. Refugees can rot away on Greek islands if eastern Europe doesn’t want them, and Catalan grandmas can get beaten to a pulp by the remnants of Franco’s troops, Brussels has zilch.

The way the EU functions today is no accident, and it’s not some new development. Present-day Brussels is the culmination of 50-60 years of institutionalization. You don’t change that with an election here or there.

Will Catalonia be the endgame of Brussels? Will it be the refugee crisis? Brexit? It’s impossible to say, but what is certain is that in its present state, the Union has no future. And at the same time, there’s no solution in sight. The powers that be are deeply invested, and they’re not going to let go just because some country, or part of a country, or political party, or group of voters wants them to.

The EU is profoundly anti-democratic, and it intends to stay that way. But imagine that Belgium ‘surrenders’ Puidgemont, a man whose movement has lifted anti-violence to a whole new and modern level, and Rajoy jails him for 30 years, and the next day sits in on some meeting in Brussels, what picture does that paint for the 500 million EU citizens?

They’re crazy if they think they can get away with this.

 

 

Nov 022017
 
 November 2, 2017  Posted by at 9:32 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Marc Riboud Painting the Eiffel Tower 1953

 

The US Isn’t Prepared for the Next Recession (Atlantic)
The New Fed Chair Will Watch an Economy Fraught With Risks (BBG)
The Can Kickers’ Cacophony (Stockman)
New Zealand’s Housing Boom Has Come to an End (BBG)
Australia Mortgage Stress Is Rapidly Increasing (DFA)
Scandinavia Property Markets Are Up 70% But Experts Say There’s No Bubble (BBG)
City Could Lose 10,000 Jobs On Day One Of Brexit – Bank Of England (G.)
Child Poverty In Britain Set To Soar To New Record (G.)
The Limits of Russian Sanctions (HBlatt)
Spanish Court To Question Catalonia Separatists – Except Puigdemont (AFP)
Monsanto, BASF Weed Killers Strain US States With Damage Complaints (R.)
Greece Concerned Over 200% Spike In Refugee, Migrant Arrivals (K.)
Greece Mulls Emergency Housing Measures After Migrant Spike (AP)
Refugees In Greece Demand Transfer To Germany, Start Hunger Strike (R.)

 

 

Oh well, we’ll just bail out the banks then.

The US Isn’t Prepared for the Next Recession (Atlantic)

Maybe it will start with a failed initial public offering, followed by the revelation of widespread fraud in Silicon Valley. Perhaps energy prices will spike, sapping the finances of anyone who drives a car to work. Maybe a foreign crisis will cause a credit crunch, or President Trump will spark a global trade war. A recession might seem like a distant concern, with the latest data showing that the current, extraordinarily economic long expansion just keeps humming along. But one will hit eventually, for some reason or another—that’s how economies work. And when it does, the country won’t be ready. The average middle-class household has largely recovered from the Great Recession, which began nearly 10 years ago, in December 2007.

The growing economy has started to boost earnings across the income spectrum, and higher housing prices have done the same for net worth. The amount of debt that households owe is falling, too. Yet millions of people remain in perilous financial shape, with little to buffer them in the event of a layoff. Roughly half of respondents to a Federal Reserve survey conducted in 2015 said that they could not come up with $400 in an emergency, with a third saying they could not cover three months of expenses, even if they sold assets, dipped into retirement accounts, and asked friends and family for help. Outsize wealth and income continue to accumulate at the very top of the scale, and the finances of millions of American families remain fragile. Americans are no worse off than they were when the last recession hit, in other words, but a decade of growth has not made them more secure, either.

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He really said it: “Torsten Slok, chief international economist at Deutsche Bank in New York: “The world economy has never been in better shape”

The New Fed Chair Will Watch an Economy Fraught With Risks (BBG)

Jerome Powell, said to be President Donald Trump’s pick to be the next Federal Reserve chairman, is set to take the reins of the world’s most important central bank at a time when the U.S. economy is on a roll. Growth is accelerating, inflation is tame and unemployment is the lowest in 16 years. Such a backdrop should initially enable a new Fed chairman to keep gradually raising interest rates from historic lows with the aim of stretching out what is already the third-longest U.S. upswing. Expansions don’t die of old age. Rather, they typically are brought down by the bursting of asset bubbles, shocks like natural disasters or political upheaval, or errors by central banks. Faster rate hikes could cool the stock market but risk holding inflation below the central bank’s target, possibly tipping the economy into a recession.

Tightening too slowly could stoke asset values even further. Powell, and Trump by association, will own the outcome. Powell has the added dilemma that his Fed would confront any slump in growth with little in its policy arsenal. There is barely room to cut rates deeply, and the backup plan – quantitative easing – is now the subject of Republican lawmaker ire. “Powell has been dealt some cards in this poker game that aren’t helpful for carrying out monetary policy,” said Torsten Slok, chief international economist at Deutsche Bank in New York. “The world economy has never been in better shape, but it is a very unthankful job to be a central banker these days.”

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“What lies around the corner is an immense fiscal catastrophe. That’s the inexorable result of the current cacophony of can-kicking in the Imperial City.”

The Can Kickers’ Cacophony (Stockman)

[..] if by some miracle the Donald survives the Mueller assault, the GOP retains it majority in the bi-elections and the Republican party finally gets some serious fiscal gumption, it would still not be able to impact the deficit much before 2022. Yet by then, the baseline level of red ink by CBO’s lights will be $1.02 trillion per year or nearly $1.2 trillion with the tax cut add-on permitted under this year’s budget resolution. Nor can that dire prospect be mitigated by attacking the 25% part of the budget left over for so-called discretionary or appropriated programs. That’s because upwards of $10 trillion of the $13.6 trillion baseline in this category is accounted for by national security, veterans, homeland security, border control and public infrastructure – all of which Trump and much of the Congressional GOP want to increase.

In short, the GOP is now in the midst of kicking the fiscal can right straight into a terminal crisis. Indeed, they have as much as admitted that in the implicit numbers in their phony FY 2018 budget resolution, which really wasn’t a budget plan at all, but merely a de facto amendment to the Senate rules to circumvent the normal 60-vote rule on the tax bill. Stated differently, none of the $5 trillion in deficit cuts in the GOP’s budget resolution are real because none of them are subject to reconciliation. So the true fact of the case is that the GOP majorities on Capitol Hill have just passed a budget resolution which incorporates CBO’s baseline deficit of $10.1 trillion over the next decade and adds $1.5 trillion more.

In turn, that computes out to a $32.2 trillion public debt by 2027 or 135% of GDP. And that assumes Rosy Scenario economics, too. Namely, that there will be no recession for 207 months thru 2027 – a feat that is double the longest unbroken economic expansion in recorded history. In this context, the Donald tweeted yesterday a giant tax cut is just around the corner: “The Republican House members are working hard (and late) toward the Massive Tax Cuts that they know you deserve. These will be biggest ever!” No they won’t be! What lies around the corner is an immense fiscal catastrophe. That’s the inexorable result of the current cacophony of can-kicking in the Imperial City. And as we shall address tomorrow, there is no chance that Jerome Powell or any other busload of central bankers can save the day. The monetary can has been kicked way too long, as well.

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Question is how bad will the fall be?

New Zealand’s Housing Boom Has Come to an End (BBG)

House prices in New Zealand’s largest city posted their first annual decline in six years in October, bringing an end to the nation’s property boom. Prices in the Auckland region fell 0.6% from a year earlier, helping to slow the rate of growth nationwide to 3.9%, a five-year low, property research agency Quotable Value said Thursday. Auckland’s average house price has soared 90% in the last 10 years to more than NZ$1 million ($690,000), underpinning a 56% climb in the national average to NZ$647,000. The new Labour-led government this week announced it will ban foreigners from buying existing homes as it seeks to make housing more affordable for first-time buyers, a central pledge in its election campaign.

Labour also plans to build 100,000 dwellings over the next 10 years to address a shortage, and it will change tax structures to make housing less attractive to investors, who have stoked the property boom. “There appears to be a trend of slowing in the rate of growth, with the frenzy induced by high numbers of investors in the market subsiding and a return to more normal levels of activity in housing markets around the country,” QV spokeswoman Andrea Rush said in a statement. While the surge in prices since 2012 is largely due to a supply shortage amid record immigration, investors played a key role. That prompted the central bank to last year tighten lending restrictions on them, which has helped take the heat out of the market.

Outside Auckland, which is home to a third of New Zealand’s 4.8 million people, price growth has slowed dramatically in cities that saw double-digit gains in 2016. Hamilton prices rose just 1.1% in the year to October, the QV report shows, down from a peak of 31.5% in July last year. In capital city Wellington, where supply is constrained, values rose 10% in the year. In Christchurch, which is over-supplied, prices fell 1.6%.

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People bought far more than they can afford.

Australia Mortgage Stress Is Rapidly Increasing (DFA)

Digital Finance Analytics has released the October 2017 Mortgage Stress and Default Analysis update. Across Australia, more than 910,000 households are estimated to be now in mortgage stress (last month 905,000) and more than 21,000 of these in severe stress, up by 3,000 from last month. This equates to 29.2% of households. We see continued default pressure building in Western Australia, as well as among more affluent household, beyond the traditional mortgage belts across the country. We estimate that more than 52,000 households risk 30-day default in the next 12 months, up 3,000 from last month. We expect bank portfolio losses to be around 2.8 basis points ahead, though with losses in WA rising to 4.9 basis points.

Risks in the system continue to rise, and while recent strengthening of lending standards will help protect new borrowers, there are many households currently holding loans which would not now be approved. As continued pressure from low wage growth and rising costs bites, those with larger mortgages are having more difficulty balancing the family budget. These stressed households are less likely to spend at the shops, which will act as a further drag anchor on future growth, one reason why retail spending is muted. The number of households impacted are economically significant, especially as household debt continues to climb to new record levels. Mortgage lending is still growing at three times income. This is not sustainable.

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This time is different: “healthy re-balancing”

Scandinavia Property Markets Are Up 70% But Experts Say There’s No Bubble (BBG)

Scandinavia’s red-hot property markets may be showing signs of cooling, but rumors of a bursting bubble are greatly exaggerated. That’s the consensus among local economists, who point to strong fundamentals and persistently low interest rates as evidence that the downturn is a “healthy re-balancing” rather than a harbinger of an imminent collapse. “If you ask me what is the main risk to the macro scenario, I’d say it’s probably house prices,” said Erik Bruce, senior economist at Nordea Bank in Oslo. “But I find it hard to see them dropping significantly with interest rates at this level, unemployment falling and optimism coming back.” Average house prices have shot up around 70% in both Sweden and Norway over the past decade (in Copenhagen they’ve nearly doubled since 2012, the year Danish rates first turned negative).

After years of warnings about excessive debt and overheating from financial regulators and central bankers, they’re now slowing in both Stockholm and Oslo. The adjustment in Norway’s capital city comes as the government there has tightened lending standards in order to reduce speculative buying. “These measures have worked,” said Bruce, noting that prices in Oslo are down 7-8% from their peak. In Stockholm, it’s more about supply and demand. The number of apartments up for sale in the Swedish capital hit a nine-year high in October, but real estate agents say they are having problems unloading properties as buyers and sellers drift apart on price. “New trends often start in Stockholm,” said Nordea’s Sweden-based economist Torbjorn Isaksson, so we expect “house prices at the national level to level out, going forward.”

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Should be glad to see all those bankers go.

City Could Lose 10,000 Jobs On Day One Of Brexit – Bank Of England (G.)

The Bank of England has warned that 10,000 jobs could leave the City on “day one” after the UK leaves the EU. Sam Woods, a deputy governor of the Bank, also admitted that forecasts of 75,000 job losses over the long-term were “plausible” at an appearance before peers on the Lords EU financial affairs sub-committee on Wednesday. Woods runs the regulatory arm of the Bank and based his estimate of 10,000 jobs on responses he received from 400 banks and financial firms required to provide him with their contingency plans for a hard Brexit. He has been reviewing the plans since July and said some were being put in place – with banks reserving school places and hiring office space – but that this process would get under way “in earnest” in the first quarter of 2018.

The estimate of 75,000 job losses was made by consultancy Oliver Wyman, and based on the assumption that the UK would be left to rely on World Trade Organisation rules with no transition period after March 2019, when the UK leaves the EU. Under this scenario, £10bn of tax revenue might also be lost, it said. The 75,000 estimate includes the knock-on effect of fewer City jobs to other parts of the economy. Woods said this was not a Bank of England estimate, but described it as being within a plausible range of job losses that would happen in the long term if the UK left the EU without a trade deal. He said the actual number was a “moving feast” and that the initial impact of about 10,000 roles amounted to 2% of the total employed in bank and insurance jobs, or less than 1% of financial services jobs.

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If ‘only’ a 30% child poverty rate is presented as a triumph, your society is a very dismal failure.

Child Poverty In Britain Set To Soar To New Record (G.)

The number of children living in poverty will soar to a record 5.2 million over the next five years as government welfare cuts bite deepest on households with young families, a leading UK thinktank has said. New research from the Institute for Fiscal Studies predicts an increase of more than a million in the number of children living in poverty, more than reversing all the progress made over the past 20 years. The IFS said freezing benefits, the introduction of universal credit and less generous tax credits would mean a surge in child poverty and that the steepest increases would be in the most deprived parts of the country. “Across all regions, relative child poverty is projected to increase markedly,” the IFS said. “The smallest increases are in the south, but even there relative child poverty is projected to rise by at least four percentage points.

The northern regions, the Midlands, Wales and Northern Ireland are projected to see increases of at least eight percentage points.” The report’s findings, which also predict a widening of the gap between rich and poor and four more years of weak income growth, pose a direct challenge to Theresa May, who arrived in Downing Street pledging to help those “just about managing”. May has slightly softened the impact of the £12bn of welfare cuts announced by the then chancellor George Osborne after the 2015 general election, but the IFS said the impact on poor families would still be severe. By 2021-22, the IFS expects 37% of children to be living in relative poverty – defined as a household where the income is less than 60% of the UK median – after housing costs have been taken into account.

The thinktank said this was the highest percentage since modern records began in 1961. Tackling child poverty was a priority for Labour when it took office in 1997 and over the next 13 years the rate fell from 34% to just under 30%. Since then, the relative child poverty rate has remained unchanged but, according to the IFS, is now set to increase by seven percentage points to 37% over the next five years.

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What doesn’t kill you makes you stronger.

The Limits of Russian Sanctions (HBlatt)

For Russia’s economy, the end of 2014 was something of a perfect storm, Elvira Nabiullina, the country’s central bank chief, remembers. In addition to sanctions imposed by the West, Russia had to deal with a collapse in oil prices. “The effect of the oil price was larger than that of the sanctions,” she said in an interview. “Now the economy has gotten used to both factors. The economy is growing again.” That may not be what European and American leaders would like to hear. After all, the whole point of economic sanctions is to convince political leaders like Russian President Vladimir Putin to change course. Sanctions were imposed on Russia in the aftermath of its annexation of Crimea from Ukraine.

The numbers bear out Ms. Nabiullina’s argument. Russia’s economy grew at a 2.5% annual rate in the second quarter of this year, nearly a five-year high and the third straight quarter of growth for Russia after nearly two years in a recession. Overall the IMF sees the economy growing 1.8% this year. Ms. Nabiullina’s remarks could give fodder to both sides of the Atlantic: Critics of sanctions, which include a number of German politicians and companies that have close business ties to Russia, would point out that there’s little point in continuing something that is having little effect. Supporters would say this is an argument for making sanctions even tougher – something the United States is considering imposing unilaterally by targeting energy firms, over the stiff opposition of German and European politicians who fear their own economies will be caught in the crossfire.

Ms. Nabiullina of course is no politician. Her job as central bank chief is to steer the Russian economy. But she did say that she believes sanctions are here to stay. “Our forecasts for continued economic development are built on the assumption that they will remain in place.” Even if the Russian economy has adapted, it would be wrong to say that sanctions have had no effect at all. Ms. Nabiullina said that foreign direct investment in Russia has fallen since December 2014 as the economy fell into a downward spiral, though she said some foreign investors are starting to return to the country’s bond markets. “That shows Russia’s macro-economic stability.”

Inflation also remains a mixed bag in the country. Ms. Nabiullina noted that inflation has fallen to below 3% – better even than her own medium-target of keeping price increases at 4% or below – but she said Russians have yet to be convinced that prices will remain stable. Interest rates, which were cut slightly on Friday to 8.25%, are being held high in Russia because consumer and business decisions are being driven more by inflation expectations than by actual inflation. “The population is accustomed to high inflation and doesn’t yet believe that it can stay low for a long period,” she said. “That is why our monetary policy remains strict.”

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Will Spain make the mistake of parading them as criminals in public?

Spanish Court To Question Catalonia Separatists – Except Puigdemont (AFP)

Spain is set for another day of drama in the Catalonia crisis on Thursday with a judge in Madrid to question the deposed leaders of the region’s separatist government. Notable by his likely absence, however, will be the dismissed Catalan president Carles Puigdemont, who is in Brussels and refusing to come, according to his lawyer. “He will not go to Madrid and I have suggested that he be questioned here in Belgium,” Paul Bekaert told Spain’s TV3 television on Wednesday. The hearing at the national court in Madrid, which deals with major criminal cases, is to start at 9am and to continue on Friday. The judge wants to question Puigdemont and 13 others over their efforts to spearhead Catalonia’s independence drive, which has plunged Spain into its biggest crisis in decades.

[..] On Monday, Spain’s chief prosecutor said he was seeking charges of rebellion – punishable by up to 30 years in prison – sedition and misuse of public funds against the 14. The speaker of the Catalan parliament, Carme Forcadell, and five parliamentary deputies will also be questioned over the same alleged offences, but by a judge at the supreme court. It was unclear how many of them will show up. Puigdemont, 54, has dismissed the accusations as politically motivated and on Tuesday said he would remain in Brussels until he had guarantees that any proceedings would be impartial. In a statement, he said there was a concerted effort to divide his government.

Some will go before a national audience “to denounce the drive of Spanish justice to pursue political ideas”, while others “will stay in Brussels to decry this political process to the international community”, he wrote. Puigdemont has retained the support of many in Catalonia. Maria Angels Selgas, a 60-year-old sales manager in Barcelona, said that for her, Puigdemont was still the Catalan president. “If they humiliate him then they humiliate also the more than 2 million Catalans who voted ‘yes’ in the referendum,” she said.

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Time to close them down. There’s too much toxicity involved, we can’t afford it.

Monsanto, BASF Weed Killers Strain US States With Damage Complaints (R.)

U.S. farmers have overwhelmed state governments with thousands of complaints about crop damage linked to new versions of weed killers, threatening future sales by manufacturers Monsanto and BASF. Monsanto is banking on weed killers using a chemical known as dicamba – and seeds engineered to resist it – to dominate soybean production in the United States, the world’s second-largest exporter. The United States has faced a weed-killer crisis this year caused by the new formulations of dicamba-based herbicides, which farmers and weed experts say have harmed crops because they evaporate and drift away from where they are applied. Monsanto and BASF say the herbicides are safe when properly applied. They need to convince regulators after the flood of complaints to state agriculture departments.

The U.S. Environmental Protection Agency (EPA) last year approved use of the weed killers on dicamba-resistant crops during the summer growing season. Previously, farmers used dicamba to kill weeds before they planted seeds, and not while the crops were growing. However, the EPA approved such use only until Nov. 9, 2018, because “extraordinary precautions” are needed to prevent dicamba products from tainting vulnerable crops, a spokesman told Reuters in a statement last week. The agency wanted to be able to step in if there were problems, he said. Next year, the EPA will determine whether to extend its approval by reviewing damage complaints and consulting with state and industry experts. States are separately considering new restrictions on usage for 2018.

Major soybean-growing states, including Arkansas, Missouri and Illinois, each received roughly four years’ worth of complaints about possible pesticide damage to crops this year due to dicamba use, state regulators said. Now agriculture officials face long backlogs of cases to investigate, which are driving up costs for lab tests and overtime. Several states had to reassign employees to handle the load. “We don’t have the staff to be able to handle 400 investigations in a year plus do all the other required work,” said Paul Bailey, director of the Plant Industries division of the Missouri Department of Agriculture. In Missouri, farmers filed about 310 complaints over suspected dicamba damage, on top of the roughly 80 complaints about pesticides the state receives in a typical year, he said. Nationwide, states launched 2,708 investigations into dicamba-related plant injury by Oct. 15, according to data compiled by the University of Missouri.

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Where’s Mutti Merkel?

Greece Concerned Over 200% Spike In Refugee, Migrant Arrivals (K.)

Migration Policy Minister Yiannis Mouzalas on Wednesday conceded that the migration problem is becoming more difficult to manage as the number of people arriving on the shores of Greek islands from Turkey since August is up 200% compared to the same period last year. Describing the spike as a “special phase” in the migration problem, Mouzalas added that while the average arrival rate in July was 87 people per day, it shot up to 156 per day in August, while in the months of September and October it rose even further, to 214 per day. With around 4,000 people arriving on the islands in October alone, Mouzalas described the situation at the congested camps on Lesvos as “very bad” and on Chios as “bad.” Nonetheless, he said that Greece continues to view the joint declaration of the EU and Turkey in March to stem the flow of migrants into Europe as valid.

Greece, he said, has intensified diplomatic efforts to ensure the implementation of the agreement which he described as “decisive for the future of Greece.” Referring to the scant number of returns of migrants to Turkey from Greece, Mouzalas said, “We would like to see more returns because that will restore the order of things.” He attributed the low number of returns to Turkey – 1,360 people since the deal was activated – to the way asylum applications are examined in Greece. “We are the only country that has four levels of examination of asylum applications,” he said, while admitting that some of the migrants whose applications have been rejected find illegal means to leave the islands and travel to the mainland.

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Cruise ships.

Greece Mulls Emergency Housing Measures After Migrant Spike (AP)

Greece’s government is considering emergency measures to house migrants and refugees confined to Greek islands over the winter months following a roughly four-fold increase in the number of daily arrivals from Turkey. Migration Minister Yannis Mouzalas said Wednesday that average arrivals had jumped since mid-August from about 50 per day to more than 200. He added the government could use ferries or military ships to provide additional housing space over the winter if alternatives provided by local municipalities were exhausted. Under a 2016 deal between Turkey and the EU migrants and refugees reaching Greek islands from the Turkish mainland are not allow to travel to the Greek mainland before their asylum claims are examined. Mouzalas said the agreement was not under threat but that the rise in migrant arrivals was “concerning.”

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Right in front of Parliament.

Refugees In Greece Demand Transfer To Germany, Start Hunger Strike (R.)

A group of mainly Syrian women and children who have been stranded in Greece pitched tents opposite parliament in Athens on Wednesday in a protest against delays in reuniting with relatives in Germany. Some of the refugees, who say they have been in Greece for over a year, said they had begun a hunger strike. “Our family ties our stronger than your illegal agreements,” read a banner held up by one woman, referring to deals on refugees between European Union nations. Greek media have reported that Greece and Germany informally agreed in May to slow down refugee reunification, stranding families in Greece for months after they fled Syria’s civil war. Greece denies this.

“What we’ve managed to do on family reunification is to have an increase of about 27% this year compared with last year, even though we’re accused of cutting back family reunification and doing deals to cut back family reunification,” Migration Minister Yannis Mouzalas told reporters. Mouzalas said Greece had assurances from Germany that refugees whose applications have been accepted will eventually go to Germany even if there are delays. He denied that refugees had to pay for their flights. Applications for asylum, reunification and relocation to other European countries can take months to be processed.

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Nov 012017
 
 November 1, 2017  Posted by at 9:37 am Finance Tagged with: , , , , , , , , ,  5 Responses »
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Pablo Picasso Blue nude 1902

 

Americans Are Officially Freaking Out (BBG)
Mueller Mugs America: The Case Of Baby George Papadopoulos (Stockman)
Some Of The Scariest Charts In Finance To Celebrate Halloween (BV)
Most Of UK Fruit And Veg Is From Other EU Nations, Brexit To Be Dramatic (G.)
Corbyn Has a Plan to Get May’s Tories to Give Up 58 Brexit Secrets (BBG)
Australia’s Housing Boom Is ‘Officially Over’ – UBS (BBG)
Government Raids On Catalonia Police Spark Fears Of Wider Crackdown (Ind.)
Puigdemont Says Can’t Return To Catalonia, Spain Intent On ‘Vengeance’ (Ind.)
New Jersey Sues OxyContin Maker, Links Marketing To Opioid Crisis (R.)
Germany Forced To Pay Consumers To Use More Electricity
Greece Plans An Unprecedented €30 Billion Debt Swap (BBG)
Greek PM Under Fire Over Migrants, Refugees (K.)

 

 

Major point in this: the media freaks out the people.

Americans Are Officially Freaking Out (BBG)

For those lying awake at night worried about health care, the economy, and an overall feeling of divide between you and your neighbors, there’s at least one source of comfort: Your neighbors might very well be lying awake, too. Almost two-thirds of Americans, or 63%, report being stressed about the future of the nation, according to the American Psychological Association’s Eleventh Stress in America survey, conducted in August and released on Wednesday. This worry about the fate of the union tops longstanding stressors such as money (62%) and work (61%) and also cuts across political proclivities. However, a significantly larger proportion of Democrats (73%) reported feeling stress than independents (59%) and Republicans (56%).

The “current social divisiveness” in America was reported by 59% of those surveyed as a cause of their own malaise. When the APA surveyed Americans a year ago, 52% said they were stressed by the presidential campaign. Since then, anxieties have only grown. A majority of the more than 3,400 Americans polled, 59%, said “they consider this to to be the lowest point in our nation’s history that they can remember.” That sentiment spanned generations, including those that lived through World War II, the Vietnam War, and the terrorist attacks of Sept. 11. (Some 30% of people polled cited terrorism as a source of concern, a number that’s likely to rise given the alleged terrorist attack in New York City on Tuesday.)

“We have a picture that says people are concerned,” said Arthur Evans, APA’s chief executive officer. “Any one data point may not not be so important, but taken together, it starts to paint a picture.” The survey didn’t ask respondents specifically about the administration of President Donald Trump, Evans said. He points to the “acrimony in the public discourse” and “the general feeling that we are divided as a country” as being more important than any particular person or political party. [..] And keeping up with the latest developments is a source of worry all its own. Most Americans—56%—said they want to stay informed, but the news causes them stress. (Yet even more, 72%, said “the media blows things out of proportion.”)

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Who brought in Baby George? Haven’t seen anyone dig into his contacts. His story doesn’t seem to add up. Been pushing Russia on Trump far too much. A Trojan Horse?

Mueller Mugs America: The Case Of Baby George Papadopoulos (Stockman)

This is how the Deep State crushes disobedience by the unwashed American public. It indicts not only ham sandwiches but, apparently, political infants in diapers too, if that’s what it takes. Hence the sudden notoriety of Baby George Papadopoulos, who pled guilty to “lying” about an essentially immaterial date to the FBI. Oh, and by all signs and signals that plea came after this 30 year-old novice had been wearing a wire for several months. So here’s how this noxious act of bullying by Robert Mueller’s Federally-deputized thugs came down. It seems that during the early months of 2016, when Trump was winning primary after primary against all mainstream media expectations, the Donald’s establishment betters began attacking his foreign policy credentials with special malice aforethought.

That was mainly owing to his sensible suggestion that it would be better to seek rapprochement with Russia rather than pursue Hillary’s Cold War 2.0 and that 25 years after the disappearance of the Soviet Union from the pages of history that NATO was obsolete. Since this totally plausible (and correct) viewpoint was deeply offensive to the Imperial City’s group think and threatened the Warfare State’s existential need for a fearsome enemy, Trump’s ruminations about making a deal with Putin were belittled. They were, in fact, attributed not to a fresh look at the realities abroad or the possibility that homeland security does not require a global empire, but to the candidate’s lack of any pedigreed foreign policy advisors. Indeed, when it came to the Republican-oriented foreign policy establishment-nearly all of which had joined the Never Trump cause-the Donald added insult to injury.

That is, by suggesting he got his foreign policy views watching TV (like most of Washington) and that he could do a better job against terrorism than the Pentagon generals (not hard). At length, however, the “who are your foreign policy advisors” meme got so relentless that the Donald relented. On March 21, 2016 he announced a group of five advisors that exactly no one who was anyone in the Imperial City had ever heard of, and for good reason. Trump apparently rarely even met with the Five and no one running the campaign paid much attention to them. Still, Baby George’s carelessness about the exact dates and sequences of utterly irrelevant and inconsequential events is enough to get him time in one of Uncle Sam’s hospitality suites.

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“..ECB QE is currently 7 times bigger than net issuance. So is it any wonder why yields have fallen, and what happens when the ECB tries to turn off the easy money tap?”

Some Of The Scariest Charts In Finance To Celebrate Halloween (BV)

Investment markets have been remarkably resilient over the course of 2017. Sure, the geopolitical environment has thrown up a few frightening days which saw markets sell-off but on the whole volatility has been muted and most asset classes have generated solid total returns. That said, any horror movie fan will tell you that the scariest part of a horror film happens when things are relatively calm. With that in mind, here are a few charts that shine a light on a number of threats that are lurking just below the surface of the global economy.


ECB quantitative easing has propped up government bond markets

The strength of the European economy, and signs of labour market healing across the euro area, has been the surprise story of 2017. It is undeniable that the ECB, and its quantitative easing programme, has played a huge part in the economic success seen to date. Many point to the fall in yields on peripheral area debt as a sign that the euro sovereign debt crisis is well and truly over. The question is, do falling yields signify increasing confidence in the ability of euro area nations to repay their debt, or do they simply reflect the asset purchases that the ECB has conducted since the QE programme started? The above chart, published in the most recent IMF Global Financial Stability Report, shows that official purchases of euro area debt has eclipsed net issuance since May 2015. Indeed, ECB QE is currently 7 times bigger than net issuance. So is it any wonder why yields have fallen, and what happens when the ECB tries to turn off the easy money tap?


Debt is a beast that cannot be tamed

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The EU forces food transports across the Union. Damn transport costs, including pollution. The result: “the system is very fragile”. Don’t depend for your essentials on people living 1000 miles away. It’s not that hard.

Most Of UK Fruit And Veg Is From Other EU Nations, Brexit To Be Dramatic (G.)

The UK faces serious health implications if the government fails to agree a Brexit deal, finds a report that says of 35 portions of fruit and vegetables, a figure relating to the five-a-day recommendation for individuals, just one “portion” is grown in the UK and picked by British or non-EU workers. The report, to mark the launch of a new RSA commission examining the impact of Brexit on food and farming, found that the five-a-day health target – which adds up to the 35 portions of fruit and vegetables a week – was overwhelmingly met by food grown in the EU or harvested by EU workers in the UK. Sue Pritchard, director of the RSA Food, Farming and Countryside Commission, said Brexit offered a great opportunity to reshape farming and food, but warned that no deal over the exit from the union would have a dramatic and immediate effect.

“What would be available on the shelves would change dramatically. There will be delays at ports and all along the food supply system – the impact will be felt very, very quickly,” she said. The study found that of the average 28 portions consumed by Britons of the recommended weekly intake of 35 portions of fruit and vegetables, the equivalent of 11 portions came from the EU, seven from the rest of the world and nine arose from the UK and were harvested by workers from other EU countries. The equivalent of just one portion was grown in the UK and harvested by British or non-EU workers. Pritchard added: “If there is no deal the system is very fragile and the impact in the UK food supply is likely to be dramatic.” The majority of farmers backed Brexit, but the National Farmers’ Union has since suggested that crops will “rot in the fields” and that Britain will be unable to produce the food if the government cannot secure a deal that allows tens of thousands of EU workers to continue to work on UK farms.

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Fitting. The entire country is back in Victorian times.

Corbyn Has a Plan to Get May’s Tories to Give Up 58 Brexit Secrets (BBG)

The main U.K. opposition party wants to deploy a parliamentary tool hardly used since the 19th century to get Theresa May’s Conservatives to spill Brexit secrets. The political prize? The release of 58 studies on how leaving the European Union will affect industries that make up 88 percent of the economy. Brexit Secretary David Davis said he didn’t want to publish the studies because it would compromise the U.K.’s negotiating position. On Monday, he listed the sectors in a letter but stopped short of revealing more. Jeremy Corbyn’s Labour wants to use an obscure legislative device to force the hand of Tories, who have been coy about what the economic fallout might be when the country leaves the 28-nation bloc.

On Wednesday, Labour will argue that lawmakers should have the right to see the studies, and will ask Parliament to vote to make “an humble address” to Queen Elizabeth II, asking her to order her ministers to release the assessments to the House of Commons Brexit Committee. This means-to-an-end hasn’t been used much since Victorian times. “Ministers cannot keep withholding vital information from Parliament about the impact of Brexit on jobs and the economy,” Labour Brexit spokesman Keir Starmer said in an emailed statement.

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Panic in Canberra.

Australia’s Housing Boom Is ‘Officially Over’ – UBS (BBG)

The housing boom that has seen Australian home prices more than double since the turn of the century is “officially over,” after data showed prices now flatlining, UBS said. National house prices were unchanged in October from September, while annual growth has slowed to 7% from more than 10% as recently as July, CoreLogic data released Wednesday showed. “There is now a persistent and sharp slowdown unfolding,” UBS economists led by George Tharenou said in a report. “This suggests a tightening of financial conditions is unfolding, which we expect to weigh on consumption growth via a fading household-wealth effect.”

An end to Australia’s property boom will be welcome news for first-time buyers, who have struggled to break into the market after surging prices propelled Sydney past London and New York to be the second-most expensive housing market. Less impressed may be property investors, already squeezed by regulatory lending curbs that drove up mortgage rates. The cooling housing market may encourage the Reserve Bank to keep interest rates at a record low. A rate hike would be undesirable as it would put further downward pressure on dwelling prices, said Diana Mousina, senior economist at AMP Capital Investors.

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Once they start locking up people, will Catalans still be non-violent?

Government Raids On Catalonia Police Spark Fears Of Wider Crackdown (Ind.)

The acrimony and recriminations which followed Catalonia’s declaration of independence shows little sign of defusing following the fleeing of president Carles Puigdemont to Brussels. Spain’s civil guard raided the headquarters of the regional police, Mossos d’Esquadra, today drawing accusations of starting a crackdown. Computers and documents were taken away from the building in Sabadell as well as seven other offices. “We are carrying out inspections related to the Mossos d’Esquadra’s communications on the day of the illegal referendum,” said a civil guard spokesman. “This is something we are entitled to do.” The Mossos had been ordered by Madrid to stop the vote taking place, but they had refused, pointing out that this would have led to clashes with activists who had been protecting the polling stations. The national police, who were sent in, seized ballot boxes sparking violence.

The raids were viewed by some as the beginning of a punitive drive which will continue against separatists. As the news of the raids came in the afternoon, a group of activists approached police in Plaza de Colon in Barcelona city centre, the scene of huge demonstrations in recent weeks, offering sympathy and solidarity. The officers, whose chief Josep Lluis Trapero was sacked by Madrid at the weekend, were cautious in their response. “We are waiting to hear more details,” said one. “We don’t know any more than you do.” For Adreia Carbonell, a 23-year-old student and supporter of independence, the civil guard action was an ominous pointer for the future. “It is a form of counter-revolution,” she said. “The Spanish can now do what they like. There will be more raids, more arrests soon, you will see. They are intimidating our police who protect us and of course our government has gone.”

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Double-sided. He’s gotten much weaker by leaving. But probably avoided a long jail term.

Puigdemont Says Can’t Return To Catalonia, Spain Intent On ‘Vengeance’ (Ind.)

Hot, last-minute and chaotic, ousted Catalan leader Carles Puigdemont’s first press conference since fleeing Barcelona for Brussels was a fitting tribute to the political crisis that has gripped Spain. Amid speculation that he and members of his former cabinet would seek political asylum, fuelled by the comments of a Belgian minister, the disputed Catalan president instead recommitted himself to the independence cause. It is believed that Mr Puigdemont and his colleagues drove across the border into France before flying to Brussels on Monday, after Spain took over control of the Catalan region’s government and agencies. Mr Puigdemont said he could not return to Spain unless given clear assurances that he will be protected, accusing Madrid of being intent on “vengeance”.

He and his colleagues would stay in Belgium as long as their safety was not assured in Spain and would “continue our work despite the limits imposed on us.” Insisting he remained the rightful leader of Catalonia, Mr Puigdemont said his centre-right PDeCAT party would nonetheless accept the challenge of regional elections called for 21 December “with all our strength” and vowed that Catalan separatists would come out to vote. Spain wants Catalonia “to abandon our political project, and they won’t achieve it,” he said. As the news emerged on Monday that Mr Puigdemont’s contingent had fled the country, there was a distinct sense of deflation among those of his allies who remained in Barcelona to carry out a planned campaign of civil disobedience.

And as he entered the building in Brussels, he walked past protesters holding Spanish national flags and a sign that read “Estado de Derecho” – “Rule Of Law”. Other anti-independence demonstrators waving Catalan and Spanish flags chanted “viva Espana, viva Cataluña!” amid a heavy presence from Belgian police.

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Horses and barns.

New Jersey Sues OxyContin Maker, Links Marketing To Opioid Crisis (R.)

New Jersey on Tuesday sued Purdue Pharma LP, accusing the maker of the chronic pain medication OxyContin of fueling the state’s opioid crisis through deceptive marketing to doctors and patients, including the elderly and the “opioid-naive.” The state’s attorney general, Christopher Porrino, faulted what he called Purdue’s “almost inconceivable callousness and irresponsibility” in a decade-long campaign of downplaying the risks and exaggerating the benefits of opioids in the pursuit of profit. “We vigorously deny these allegations and look forward to the opportunity to present our defense,” Purdue said in a statement. “We are deeply troubled by the opioid crisis and we are dedicated to being part of the solution.” At least 11 U.S. states have sued Purdue over opioids, including a complaint filed by Alaska on Monday.

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The grid’s a harsh mistress.

Germany Forced To Pay Consumers To Use More Electricity

A stormy weekend led to free electricity in Germany, as Bloomberg reports wind generation reached a record, forcing power producers to pay customers the most since Christmas 2012 to use electricity. Power prices turned negative as wind output reached 39,409 megawatts on Saturday, equivalent to the output of about 40 nuclear reactors. To keep the grid supply and demand in balance, negative prices encourage producers to either shut power stations or else pay consumers to take the extra electricity off the network.

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We get the intent, but what does this solve?

Greece Plans An Unprecedented €30 Billion Debt Swap (BBG)

The Greek government is planning an unprecedented debt swap worth 29.7 billion euros ($34.5 billion) aimed at boosting the liquidity of its paper and easing the sale of new bonds in the future. Under a project that could be launched in mid November, the government plans to swap 20 bonds issued after a restructuring of Greek debt held by private investors in 2012 with as many as five new fixed-coupon bonds, according to two senior bankers with knowledge of the swap plan. The bank officials requested anonymity as the plan has yet to be made public. The maturities of the new bonds may be the same as for the existing notes, which range from 2023 to 2042. “The move aims to address the current illiquidity of the Greek bond market, ” according to analysts at Pantelakis Securities SA in Athens.

It will also “establish a decent yield curve, thus facilitating the country’s return to public debt markets.” The move comes as Greece prepares for life after the end of its current bailout program in August 2018. The debt swap is a step toward the country’s full return to markets required to avoid a new bailout program. The government plans to tap the bond market in 2018 to raise at least 6 billion euros to create an adequate buffer to honor debt obligations, according to a government official. The government has yet to decide on the exact timing of the swap, the Greek official said on condition of anonymity. One of the bank officials said that transaction could start on Nov. 13 and the settlement could happen a week later. The goal is to conclude the swap before the next mission of the country’s creditors, which is scheduled for the last week of November.

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Maybe SYRIZA is the only force that can stop this.

Greek PM Under Fire Over Migrants, Refugees (K.)

Prime Minister Alexis Tsipras and his migration minister came under a hail of fire Monday from a radical faction within SYRIZA over the plight of the thousands of refugees and migrants stranded in Greece. The criticism was launched during a meeting of the party’s political secretariat at which Tsipras had hoped to showcase his government’s success in steering the country toward a post-bailout era. But instead, the government and Migration Policy Minister Yiannis Mouzalas were slammed by members of the political secretariat that represent the Group of 53 faction – seen as a custodian of party purity – within SYRIZA, over the consistent violation of migrants and refugees’ human rights. More specifically, they blamed the leftist-led coalition government and Mouzalas for delays in providing migrants and refugees with appropriate accommodation as winter approaches.

Moreover, they slammed Tsipras for failing to absorb funds from the European Union and other international organizations intended to aid migrants and refugees. The government was also chided by the Group of 53 for giving its full support to last year’s agreement between the European Union and Turkey to stem the flow of migrants into Europe, while EU countries were not doing the same. “If you think I’m doing everything wrong, then I’ll resign,” Mouzalas told his critics at the meeting. However, members of the faction shot back, calling Mouzalas a hypocrite as they said he is planning to leave the ministry anyway as his name has been put forward for a seat on the Council of Europe.

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Oct 302017
 
 October 30, 2017  Posted by at 9:36 am Finance Tagged with: , , , , , , , , ,  8 Responses »
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Salvador Dalí Cadaques 1923

 

The Dollar’s Enjoying a Renaissance (BBG)
Biggest Stock Collapse in World History Has No End in Sight (BBG)
China’s Bonds Spell Disaster (BBG)
China’s Debt Battle Has Global Growth at Stake (BBG)
China Corporate Bond Investors’ Luck May Be About to Run Out (BBG)
China Bond Selloff Spreads to Stocks as Deleveraging Risks Mount (BBG)
US Regulator Wants To Loosen Leash On Wells Fargo (R.)
Damning Verdict On UK Austerity In Major Report (Ind.)
Plan To Create $400 Million Army in Sahel Faces UN Moment Of Truth (G.)
Greek Islanders Are ‘Heroes,’ Says European Commission VP (K.)
Bushman Banter’ Was Crucial To Hunter-Gatherers’ Evolutionary Success (G.)

 

 

“More than a dead cat bounce?!”

The Dollar’s Enjoying a Renaissance (BBG)

After getting pummeled all year by the euro, the dollar is having a moment. In Wall Street parlance, it may be more than just a dead-cat bounce, as politics, economic fundamentals and technicals have converged to give the greenback a boost. The U.S. currency surged in the immediate aftermath of Donald Trump’s election victory before suffering a long descent that lasted from December until last month. That’s when the political viability of U.S. fiscal policy reform in the shape of – as yet to be detailed – tax cuts (and maybe even tax reform) became increasingly likely. Although equity markets have reflected optimism all year that tax cuts would come, the dollar has conveyed doubt along with gold and bonds. The Bloomberg Dollar Index is up more than 4% from its low for the year on Sept. 8, partially rebounding from the more than 10% drop since the end of December.

There could be more to come in the short term if tax cuts happen, because the legislation is likely to contain a provision that would allow U.S. companies to repatriate significant foreign profits and further bolster the economy. That could spark more inflation and put U.S. monetary policy on a more aggressive path. In terms of the euro, the political situation in Europe has been a distraction. After the election of the far-right Alternative for Germany party to the Bundestag on Sept. 24, the independence movement in the Spanish autonomous region of Catalonia has devolved into a political rat’s nest. Uncertainty, regionalism and the risk of escalating discord in Spain are adding to the political dissonance – a stark contrast to the apparent acceptance of U.S. Senate Republicans of higher national debt levels in exchange for tax cuts.

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Lots of Bloomberg today. After the Party Congress, things start to look very different. Stocks and bonds both under a lot of pressure.

Biggest Stock Collapse in World History Has No End in Sight (BBG)

It’s going to take more than the biggest stock slump in world history to convince analysts that PetroChina has finally hit bottom. Ten years after PetroChina peaked on its first day of trading in Shanghai, the state-owned energy producer has lost about $800 billion of market value – a sum large enough to buy every listed company in Italy, or circle the Earth 31 times with $100 bills. In current dollar terms, it’s the world’s biggest-ever wipeout of shareholder wealth. And it may only get worse. If the average analyst estimate compiled by Bloomberg proves right, PetroChina’s Shanghai shares will sink 16% to an all-time low in the next 12 months.

The stock has been pummeled by some of China’s biggest economic policy shifts of the past decade, including the government’s move away from a commodity-intensive development model and its attempts to clamp down on speculative manias of the sort that turned PetroChina into the world’s first trillion-dollar company in 2007. Throw in oil’s 44% drop over the last 10 years and Chinese President Xi Jinping’s ambitious plans to promote electric vehicles, and it’s easy to see why analysts are still bearish. It doesn’t help that PetroChina shares trade at 36 times estimated 12-month earnings, a 53% premium versus global peers. “It’s going to be tough times ahead for PetroChina,” said Toshihiko Takamoto, a Singapore-based money manager at Asset Management One, which oversees about $800 million in Asia. “Why would anyone want to buy the stock when it’s trading for more than 30 times earnings?”

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No mincing words.

China’s Bonds Spell Disaster (BBG)

Qin Han, chief fixed-income analyst at Guotai Junan Securities, doesn’t mince his words when it comes to the rout in Chinese bonds. “Considering the pace of the slump, which is very fast, it’s fair to say we are likely in a bond disaster,” Qin said. Shorter-tenor notes led the selloff in government debt on Monday, making the yield curve inversion the steepest since at least 2006, according to data compiled by Bloomberg. Concern that rising borrowing costs and inflation will erode returns have weighed on the debt market in the past month, with one top-performing macro fund manager saying he was shorting Chinese bonds.

The yield on five-year government bonds surged nine basis points to 3.97% as of 1:29 p.m. in Shanghai, while the cost on 10-year notes jumped six basis points to 3.9%, with the spread reaching eight basis points earlier Monday. The yield gap will widen further, and the cost on debt due in a decade will likely reach 4% “very soon,” said Qin. “The yield will become even more inverted as fragile sentiment prevails,” he said. “Yes, this is overselling, but it’s not the time to buy yet as the overselling could last longer.”

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It’s not just China that’s affected.

China’s Debt Battle Has Global Growth at Stake (BBG)

It used to be that when America sneezed, the world caught a cold. This time around, it’s the risk of a sickly China that poses a bigger threat. The world’s second-largest economy is now trying to ward off the sniffles. While output is still growing at a pace that sees GDP double every decade, the problem remains that much of that has been fueled by a massive buildup of credit. Total borrowing climbed to about 260% of the economy’s size by the end of 2016, up from 162% in 2008, and will hit close to 320% by 2021 according to Bloomberg Intelligence estimates. Economy-wide debt levels are on track to rank among “the highest in the world,” according to Tom Orlik, BI’s Chief Asia Economist. That path may be what prompted outgoing People’s Bank of China Governor Zhou Xiaochuan to warn of the risk of a plunge in asset values following a debt binge, or a “Minsky Moment,” earlier this month.

Given that China is forecast by the International Monetary Fund to contribute more than a third of global growth this year, controlling China’s debt matters far beyond its borders. There are two key components of China’s credit clampdown, each posing challenges to policy makers. First is wringing out bets on property prices. As President Xi Jinping put it in a keynote policy speech to the Communist Party leadership on Oct. 18: Housing is for living in, not for speculation. The latest data show that in some areas, prices are still surging in many cities despite a raft of measures to make it harder for investors to buy real estate with borrowed money. Xi’an, China’s ancient capital, saw home values soar almost 15% in September from a year before. It will be up to regulators to come up with measures that deliver on Xi’s mandate without tipping housing into a downward spiral.

Property crashes in the U.S., Japan and U.K. over the past three decades amply illustrated how damaging they can be to economies. The second key challenge is progress in aligning borrowing costs with borrowers’ ability to repay — rather than with their relationship with the state. China’s financial system has long let companies that are state owned or are seen to be implementing state initiatives get funding more cheaply than others. That’s thanks to the assumption the government would step in if needed to back them up. To help encourage capital to be deployed more efficiently – and to prevent firms that are effectively insolvent keep going thanks to continued funding – policy makers have begun to gradually take away implicit support.

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“A majority of non-bank financial institutions’ debt holdings are corporate bonds, so their selloff can lead to severe consequences..”

China Corporate Bond Investors’ Luck May Be About to Run Out (BBG)

Investors in Chinese company bonds have so far avoided the brunt of a debt selloff that’s driven 10-year sovereign yields to the highest in three years. Their luck may be about to run out. Now that the Communist Party Congress is over, China’s bond holders may be about to get hit by “daggers falling from the sky,” said Huachuang Securities Co., referring to aggressive deleveraging policies. Plus, accelerating inflation and the risk that China’s central bank may follow the Federal Reserve in raising borrowing costs are casting a shadow over the entire bond market. That all means that the situation that’s existed for most of 2017 – sovereign yields rising, and corporate debt remaining relatively resilient – is at risk of cracking. As appetite for bonds of any kind dwindles and authorities roll out measures that target higher-risk investments, company securities are in the line of fire.

“It’s very likely we will see a significant increase in corporate yields in the coming year,” said David Qu, a market economist at Australia & New Zealand Banking in Shanghai. “The trigger could be tougher regulations or a default. A majority of non-bank financial institutions’ debt holdings are corporate bonds, so their selloff can lead to severe consequences. Banks are underestimating authorities’ intentions to tighten regulations.” Signs of a turnaround are already beginning to show, with the yield on three-year AAA notes – the most common grading for Chinese corporate debt – rising 21 basis points this month to the highest level since early June. The spread between those notes and government debt has climbed in October and was last at 116 basis points, though it’s still a long way from this year’s peak of 150 basis points in April.

Losses accelerated earlier this month after People’s Bank of China Governor Zhou Xiaochuan voiced concern about high borrowing levels and signaled that growth could beat expectations. If concerns on regulation intensify and risks of a debt repayment failure appear, the market may go through a major correction in the near term, Huachuang analysts including Qu Qing wrote in a note last week.

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How far will Xi go? Is that big yuan devaluation still in play?

China Bond Selloff Spreads to Stocks as Deleveraging Risks Mount (BBG)

Chinese stocks fell the most since early August, breaking the calm that persisted through the recent Communist Party Congress, as government bonds extended a monthly rout amid concern the government will step up efforts to reduce leverage in the financial sector. The Shanghai Composite Index dropped as much as 1.7% on Monday, and was 0.8% lower at 11:27 a.m. local time. Small-cap shares bore the brunt of the selling, with the ChiNext gauge tumbling as much as 2.5%. Equity indexes in Hong Kong pared gains. The 10-year yield climbed five basis points to 3.90%, a three-year high. While China’s equity market was subdued for most of this month amid state efforts to limit volatility during the twice-a-decade Party gathering, sovereign yields have been climbing.

There’s more than 1 trillion yuan ($150 billion) of funding provided by the central bank that matures this week, the most since February. “Pessimism in the bond market is spilling over to the stocks,” said Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong. “Surging yields of the government bonds are resulting in worsened sentiment and higher funding costs for companies, of which smaller ones will suffer most as they rely more heavily on the market rather than bank loans for financing.” There are also early signs economic data may weaken, after solid figures for most of this year buoyed equities. Chinese shares held steady during the week-long Congress amid speculation the “National Team,” as state-backed funds are referred to, would step in to avoid any large swings.

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Yeah, that sounds great. Wells Fargo should be shut down and its execs put on trial.

US Regulator Wants To Loosen Leash On Wells Fargo (R.)

A leading U.S. regulator wants to make it easier for Wells Fargo to pay employees when they leave, loosening a restriction in place since a phony accounts scandal hit the bank last year, according to people familiar with the matter. The initiative comes as President Donald Trump is trying to lighten rules on Wall Street and the bank regulator, Keith Noreika, acting Comptroller of the Currency (OCC), must weigh whether to vet new Wells Fargo executives. If Noreika’s approach prevails, the OCC could go easier on Wells Fargo and any other large banks sanctioned in the future. Since Noreika took control of the OCC in May, he has advocated easing up on sanctions imposed on Wells Fargo in the wake of the scandal over abusive sales practices, according to current and former officials.

Wells Fargo reached a $190 million settlement in September 2016 after admitting that its sales staff opened as many as 2.1 million accounts without customers’ consent. Since then the estimate has climbed to as many as 3.5 million. As part of the deal with regulators, incoming Wells Fargo executives can face a vetting from the OCC while severance payouts must be cleared by the OCC and a sister agency, the Federal Deposit Insurance Corporation. But Noreika wants officials to work faster when they review severance pay and the agency can choose to waive its check on incoming executives. Hundreds of Wells Fargo employees have had their severance payouts frozen when they left as regulators tried to determine what role those employees might have had in the scandal.

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High time for the Tories to leave.

Damning Verdict On UK Austerity In Major Report (Ind.)

Despite years of painful austerity, the UK’s level of public spending is today no lower as a share of national income than it was after 11 years of a Labour government in 2008, according to a report by the Institute for Fiscal Studies. The major report from the UK’s leading economic think tank shows that deep cuts have left the NHS, schools and prisons in a “fragile state”, and have merely returned public spending to pre-financial crisis levels. The document presents a challenge to claims that Conservative-driven austerity saved the public finances following years of Labour overspending. The think tank’s report goes on to conclude that in the light of the data, Chancellor Philip Hammond’s plan to abolish the UK’s deficit by the mid-2020s is “no longer sensible”.

With his critical Budget approaching in November, it challenges him to admit the target looks “increasingly unlikely” in the light of a worsening economic outlook, exacerbated by Britain’s “terrible” productivity and uncertainty over Brexit. The IFS analysis of public spending levels appears in its pre-Budget look at the Chancellor’s options published on Monday. It found public spending as a share of national income was at a similar level both now and shortly before the financial crash, an event David Cameron and George Osborne claimed Labour overspending left the country ill-prepared for. In 2007-08, public spending as a share of GDP was 39%, it peaked in 2009-10 at 45.1% and is forecast to be 39.6% this year, according to the IFS.

The main justification for austerity has been the need to reduce and eventually abolish the deficit, a target that the IFS refers to as “ever-receding”. The IFS argues Mr Hammond’s critical budget speech next month, will be given against a backdrop of a worsening economic outlook that demands austerity goals are rethought. [..] The IFS report said: “It looks like [Mr Hammond] will face a substantial deterioration in the projected state of the public finances. “He will know that seven years of ‘austerity’ have left many public services in a fragile state. And, in the known unknowns surrounding both the shape and impact of Brexit, he faces even greater than usual levels of economic uncertainty.”

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Armies. The only answer we have.

Plan To Create $400 Million Army in Sahel Faces UN Moment Of Truth (G.)

Unprecedented plans to combat human trafficking and terrorism across the Sahel and into Libya will face a major credibility test on Monday when the UN decides whether to back a new proposed five-nation joint security force across the region. The 5,000-strong army costing $400m in the first year is designed to end growing insecurity, a driving force of migration, and combat endemic people-smuggling that has since 2014 seen 30,000 killed in the Sahara and an estimated 10,000 drowned in the central Mediterranean. The joint G5 force, due to be fully operational next spring and working across five Sahel states, has the strong backing of France and Italy, but is suffering a massive shortfall in funds, doubts about its mandate and claims that the Sahel region needs better coordinated development aid, and fewer security responses, to combat migration.

The Trump administration, opposed to multilateral initiatives, has so far refused to let the UN back the G5 Sahel force with cash. The force commanders claim they need €423m in its first year, but so far only €108m has been raised, almost half from the EU. The British say they support the force in principle, but have offered no funds as yet. Western diplomats hope the US will provide substantial bilateral funding for the operation, even if they refuse to channel their contribution multilaterally through the UN. France, with the support of the UN secretary general, António Guterres, and regional African leaders, has been pouring diplomatic resources into persuading a sceptical Trump administration that the UN should financially back the force.

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With a straight face. But the refugees must stay on the islands, even if there’s no place for them.

Greek Islanders Are ‘Heroes,’ Says European Commission VP (K.)

The Greek islanders in the eastern Aegean who have helped thousands of refugees under adverse conditions are “heroes,” according to the European Commission’s First Vice President Frans Timmermans. In an interview with Sunday’s Kathimerini ahead of his visit to Greece on Monday, Timmermans said that, despite being under immense pressure, the mayors and residents of the islands are doing everything in their power to help refugees.Timmermans, who has described the situation on the islands as “unacceptable,” expressed concern over the difficulty the Greek government has in absorbing EU funds – around €1 billion – for infrastructure to shelter some 50,000 refugees.

“We are faced with a series of problems,” he said, adding that that the Commission’s experience “has shown that it’s hard to get the support we provide in the spot where it is needed most.” Timmermans, who was one of the main architects of last year’s deal between the EU and Turkey to stem the flow of migrants into Europe, said that people whose asylum applications have been processed should be returned to Turkey as stipulated in the agreement. But with just 1,600 returns having taken place since 2016, Timmermans said that “this doesn’t happen enough.” He refrained from placing blame on either Greece or Turkey but insisted that the system must not be changed. Migrants, he said, must stay on the islands, despite the difficulties, because their transfer to the mainland would send a wrong message and create a new wave of arrivals.

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” If the success of a civilisation is judged by its endurance over time, this means the Khoisan are by far the most successful, stable and sustainable civilisation in human history.”

Bushman Banter’ Was Crucial To Hunter-Gatherers’ Evolutionary Success (G.)

Barely a day goes by when proponents of greater taxation, universal income and other initiatives aimed at addressing systematic inequality are not accused of inciting the “politics of envy”. Doing so is an effective way of closing down debate; envy is, after all, among the deadliest of the “deadly sins”. Yet politicians inclined to dismiss inequality in this way may do so at their peril. For the evidence of our hunting and gathering ancestors suggests we are hard-wired to respond viscerally to inequality. In the 1960s, the Ju/’hoansi “Bushmen” of the Kalahari desert became famous for turning established views of social evolution on their head. But their contribution to our understanding of the human story is far more important than simply making us rethink our past.

Until then, it had been widely believed that hunter gatherers endured a near-constant battle against starvation. But when a young Canadian anthropologist, Richard B Lee, conducted a series of simple economic input-output analyses of the Ju/’hoansi as they went about their daily lives, he found not only did they make a good living from hunting and gathering, but they did so on the basis of only 15 hours’ work per week. On the strength of this, anthropologists redubbed hunter-gatherers “the original affluent society”. I started working with Ju/’hoansi in the early 1990s. By then, more than a half-century of land dispossession meant that, other than in a few remote areas, they formed a highly marginalised underclass eking out a living on the dismal fringes of an ever-expanding global economy. I have been documenting their often traumatic encounters with modernity ever since.

The importance of understanding how hunter-gatherers made such a good living has only recently come to light, thanks to a sequence of genomic studies and archaeological discoveries. These show that the broader Bushmen population (referred to collectively as Khoisan) are far older than we had ever imagined, and have been hunting and gathering continuously in southern Africa for well over 150,000 years. If the success of a civilisation is judged by its endurance over time, this means the Khoisan are by far the most successful, stable and sustainable civilisation in human history.

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