Mar 072019
 


Wassily Kandinsky Succession 1935

 

 

While we’re on the issue of the Green New Deal, here’s an article by Dr. D. with an intro by Dr. D., one he sent me in the mail that contained the actual article, and that I think shouldn’t go to waste. I hope he agrees.

Waste being the key term here, because he arrives at the same conclusion I’ve often remarked upon: that our societies and economies exist to maximize waste production. Make them more efficient and they collapse.

Ergo: no Green New Deal is any use if you don’t radically change the economic models. Let’s see AOC et al address that, and then we can talk. It’s not as if a shift towards wind and solar will decrease the economic need for waste production (though it may change the waste composition), and thus efficiency is merely a double-edged sword at the very best.

Here’s Dr. D. First intro, then article:

 

 

Dr. D: [..] of course there are a thousand things I can say, but I wanted to make just this one point:  that the economy as we know it is prohibited from contracting by its own system structure.  One thing I couldn’t expand on is that I believe it is almost entirely unconscious.  People like AOC, the Aspen Ecological Center, these people have in the back of their minds “What is possible” and “how things are done” and “can I sell this or will people turn away.” 
 
As I say, the idea of saying, “Everything will be perfect, just live like a Zen Monk” is a non-starter.  Why, I don’t know, as it’s very pleasant and quite provable. WHY that is in the back of OUR minds (and only ours, they often say “humans” are violent, mean or exploitative, but Algonquins or Kalahari Bushmen might show otherwise), is another whole question, however, it is the root of our, and only OUR, western culture: limitless growth and progress. A religion of Progress that replaces God himself, as the Archdruid would say.
 
However, here we are. And our system parameters, of our western system do NOT permit ANY contraction of growth or progress. At this point, the entire economic and financial system would collapse, and as we no longer have any religion, community, or moral framework, or possibly even reason, our whole society would collapse with it. 
 
That’s a lot to take on, so let’s just simply ask in public why we are calling for 20 years of furious concrete/CO2-producing growth must occur to rebuild those windmills and 4,000 buildings a day, or whether we should just take the Yankee mantra (and no doubt a Norwegian one too) to “Use it up, wear it out, make it do, or do without.” There is so much wasted you could dumpster dive and Craigslist the first 10 years, giving us enormous resources to apply to raw energy use. But we won’t, and no one will even say it, although everyone knows it, has done it, and CLAIMS there’s an urgent crisis. 
 
So let’s start here and ask why we’re not doing the most stupid, basic, cheap, things, like turning down the thermostat and walking to the store AT ALL, instead of (sorry to pick on this) saving the bats in Mauritania, or the whales in Japan. Why?  Because then SOMEBODY ELSE has to take a boot to the teeth, not me in Brooklyn or London. And we will MAKE THEM take in the teeth for me, so I DON’T HAVE TO. We were already down this road in 1970 as the Archdruid has said, we already made this decision not to wear sweaters way back. Instead, I can claim rights to $100 Trillion in wealth and dole it out like the queen, making friends and fame without limit. 
 
But it won’t work, and we need to get on it right away. I believe the leaders already know we’re going to hit the wall and are purposefully trying to hit the accelerator as with outlawing seeds, meat, poisoning soil and water, outlawing gardens, controlling travel – these are all the foundations of Stalin about to approach Ukraine. I can see that in 20 approaches they’re pushing, but I don’t expect them to be very successful.  Such as, WE are going to have to do it, not the other guy. And I in fact do, but I’m pretty busy, so this is the best I can do right now. 
 
And perhaps you too.

 

 

The Real New Deal

 

Dr. D: The Green New Deal has taken front page headlines lately, and the discussion on how to green the economy and become more ecological is real. Certainly all sides have wide agreement, where while the Left may call for salvation from Global Warming, yet the Right will call for efficient resource use, preserved farmland and better hunting camps. Everyone loves National Parks, being one of the largest tourist draws in our nation and also for our fellow nations worldwide, nobody likes to see animals run down or the environment destroyed.

With so much agreement, so widespread, it’s difficult to see why a consensus cannot be agreed on. Even if the means are different – statist control vs volunteer capitalism – surely the goals would be reached in any case. Perhaps with two methods, approaches, and visions, attaining our common goals could be far easier. If so, then why does there seem to be such obstacles and reluctance in our joint moment into a greener, better future? The Left says it’s because of the Right, and the Right because of the Left. Yet I can tell you it’s neither: it’s simply math and physics.

An “Economy” is the “the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services.” That is to say they are the static things, like land, rivers, and copper mines, as well as the specific ways in which those blank resources are put to use: the transportation of them to factories, their manufacture, sale, and disposal. This encompasses things not on-ledger, like where environmental and social costs are offloaded, and who is enjoying the benefit of a resource that will run out for our children. This is also the things that are on-ledger, such as who benefits from profits or productivity, and which sectors are subsidized and which are starved. The Financial System rides atop of the Economic System, simply accounting it, keeping track of it, and sending the messages to it about where the needs are and which products should go where.

But neither exist in a vacuum. Although we generally overlook it, the Economic and Financial Systems are an expression of our personal beliefs and values, and those of our nation and national culture or personality. So in the U.S., we have chosen to measure our national prosperity using headline metrics such as the S&P and the GDP. These change character from time to time, as we used to measure the GNP, and now follow the NASDAQ. And the way we characterize them is also relevant: in the U.S., for instance, we measure all government spending in GDP as if it were private spending; that is, as if it were a profit, not an expense.

Nor is this financial arcana: although when this choice was made to make it seem the economy was stronger during the Great Depression, “you optimize what you measure”, and now the government itself has become the economy, with $22T in debts owed, and is directing most resources, but at a LOSS, not a profit. We then record that loss as prosperity. Nor is that different for the S&P or NASDAQ: if the popular financial numbers decline, the Fed will openly take money from the people and push the numbers back up again to indicate “success” and “prosperity” as we measure it. Yet the money borrowed from the taxpayers, the currency holders, makes them poorer, not richer.

 


World energy consumption per capita based on 2003 data from the International Energy Agency

 

What does this have to do with the Green New Deal and our joint goal of a cleaner, greener world? Well, the Green New Deal proposes to spend vast sums of money to transfer energy use to renewables and carbon-free sources, and there are unimaginable profits to be made should anyone do this. Unfortunately, the fact this hasn’t occurred is strong proof that it’s not possible. Not that green energy can’t be made or doesn’t exist, but that it’s not PROFITABLE to do so – that’s why the government, or rather the taxpayers, are asked to pay for it. But profit is only money, as the MMT-believers will avow.

What really matters is that thermodynamically, the EROEI, the “energy returned on energy invested” is too low. That is to say, you put in 90 calories and get out only 91. Or worse, put in 101 calories and get out only 90. This is easily shown in a wide variety of green projects, from solar – it’s estimated the electric produced over 20 years is equal to the glass-and-silicon manufacture – to ethanol, where despite enormous carbon, petrol, and water use in the cement, steel, shipping, and manufacturing of the distilling plant, the corn may only produce 10 units gain per 90 invested, or possibly none at all.

This is likely true for windmills, which if needing repair will add costs, while requiring a full-scale standing grid behind them at all times, as well as electric cars, which not only require a grid, but also may use more energy and cause more pollution in mining and smelting the batteries than the vehicle saves over a lifetime. Nor was this a surprise: again, as bad a system as financial accounting is in a system riddled with stock frauds and subsidies, nevertheless, if any of these saved energy, the huge drop in input costs – no gas used – would immediately render all these projects profitable, and not in need of a subsidy.

This is how coal replaced wood, and tractors replaced horses – sometimes in as little as 10 years. This is how LEDs instantly replaced incandescents, or the Prius replaced the K-car –lower costs, better products. And is how the U.S. has had one of the largest drops in CO2 emissions despite shutting down green subsidies and pulling out of the Paris Accord – organically, by market forces. Because despite our terrible, corrupt, interventionist system screwing up all the incentives, everybody loves a deal, and those arbitrages, those improvements still stand out.

 

Since we’re already using our technical limit, there is another way we can join together, reduce energy use, reduce waste and green the planet: lower demand.

The U.S. uses about half our energy for transportation, and if you’ve been to America, you know that most of that transportation is unnecessary: people live on average +20 minutes from work, and our oversized, centralized schools mean they are nearly as far. It’s not uncommon for every child to have a 40-minute bus ride each morning and night to and from school, and although more efficient than cars, there’s little need, only habit. We concentrated millions of small schools into a few huge ones from 1950 to 2000, just as we concentrated millions of small towns and shops into a few mega-centers. The remaining small businesses – dentists, phone stores, pizza shops – are randomly distributed, without any location in neighborhoods nor any access to public transit, and this would take decades to transform.

Nor is this a thing the people prefer. Commuting is one of the least-liked aspects of modern life as well as the most energy-intensive one. So instead of following massive hundred-trillion debt expenditures that show no promise of returning value, shouldn’t we grasp the low hanging fruit of efficiency? In fact, thermodynamically, efficiency is the only game in town, a 100 or 1,000:1 EROEI instead of 1.2:1. We have even done this from time to time during wars when massive campaigns led to massive efficiency, massive production, massive savings, ration books, and near-total recycling.

But nobody wants that. And that’s why the Green New Deal is structured exclusively as a SPENDING program, and not a SAVING one, because we don’t want to save, we want to SPEND. Part of this of course is that it’s more fun to spend than to save, but more importantly, it’s what we do, it’s what we measure. If you were to have a Green New Deal that is easy to implement and proven to work like the WWII model, GDP and profits would fall sharply. Although much, perhaps most, energy is wasted on unimportant things, the higher efficiencies would mean lower sales, lower production, and lower throughput EVEN IF IT MEANT A HIGHER QUALITY OF LIFE. This is easily seen in the U.S. vs Japan or Europe comparisons:

 


World energy consumption per capita based on 2013 data from the World Bank

 

The U.S. uses 10,000kg oil while Japan uses 5,000 and Portugal uses 2,500, and while there are important differences between nations, we don’t think of Japan or Portugal as sacrificing quality of life. This is strictly a choice, a design built up over lifetimes of effort. So if we could become as efficient as Japan and live far better too, why don’t we? This is a no-argument left-right win that can be implemented in hours, why isn’t capturing this easy gain the real target of the GND?

“You get what you incentivize.” If efficiency were the Real Green Deal, money would NOT be spent in Congress, Companies would NOT be paid, and lobbyists go home empty and poor. People would NOT be employed for the new projects and they would NOT vote for the new Congressmen. Government spending falls, even private-sector GDP would decline, and falling with it would be protected sectors of the economy like oil and utilities. How do you sell “Let’s cancel the party and stay home with the lights out”?

But it’s far worse than that in ways we don’t see. We think about New Deal SPENDING because spending has been exclusively incentivized for 100 years. The economy, the society, the financial system have all been built around GROWTH, not efficiency; MORE, not less, until the systems themselves can no longer function with anything less than unceasing expansion, ever-increasing, forever.

If GDP drops for any reason, even for efficiency and an easy increase in the quality of life – even to save all life on earth – consumption drops. A simpler life with fewer miles driven means less gas wasted and fewer cars sold. Fewer cars means fewer meals out. Sales drop. Employment drops. Stock markets drop. The lower valuation of companies means bond quality drops. Lower sales and lower activity mean tax revenue drops. Government programs drop. Treasury bonds drop and with it, military power drops. As stocks, bonds, and T-bill drop, pensions drop. Insurance drops. In short, the entire economy drops, contracts, goes into a sharp deflation and depression with world-wide unemployment and mass bankruptcies.

But worse than that. Economies come and go, wax and wane and adjust to the new realities. However, unlike previous eras, under a debt-based fiat-money system, one thing does NOT drop: debt. As the value of all things declines, the debt owed only increases. By companies. By citizens. By whole governments. And so soon as the numbers in a debt-based system stop increasing, that debt defaults.

 

Now in previous times, the relative values of debts, assets, and money would simply re-adjust. Bonds would fall, gold (cash) would rise. Bad companies and inefficiencies would be driven out, and the system would recover without the dead weight and bad ideas at a more accurate pricing. But that won’t happen this time. Because everything is so highly leveraged and centralized, and the financial system is our primary means of directing the economy, that system under a debt-based fiat system would almost entirely collapse, and the disruptions of reforming and restarting it would almost certainly take years, during which the economy itself, the production of wheat bread and toothpaste, heating oil and electric lights, would come to a virtual halt, threatening the lives of millions, hundred millions, even billions worldwide.

Wars would start. Nations would fall. So while we don’t think of these things, the reality is, if one were to have a major contraction, much less plan a voluntary, intentional one, the pressure to stop it would be overwhelming and from every side: retail, political, financial, human, ecological, economic, military; there is no way such a plan could be seriously considered, much less implemented. WE ARE NEVER MOVING TO EFFICIENCY UNDER A DEBT-BASED MONETARY SYSTEM. End of story. To the contrary: such a system incentivizes and even DEMANDS new waste and expensive, ruinous ideas like the Green New Deal. And even if they fail, they must ever-increase.

So why are we not having a Green New Deal of easy efficiency, one that we know works, but instead spending ever-more on ever more massive expenditures that are ever-less fruitful? Because this is what the system is designed to do. It’s what it depends on. And as you get what you incentivize, every body, everywhere in the system, will be incentivized to do this or die trying. And this will continue until we change the base assumptions, what we measure, what we capture and profit by. Left or Right, big or small, town or country, public or private, nothing can change in our system until we change it, until we change our beliefs about who we are, what we want, and what we are doing.

For me, I prefer easy, provable gains and a higher, easier quality of life, and I’m not afraid to make those changes that improve us without being at the expense of others. And we will need to face where we are and the challenges of the steps before us. Because essentially we all agree. We not only need a New Green Deal, we need a New Deal altogether. A better one, a fairer one. A possible one. One with a future. So let’s start acting like it and begin.

 

 

Nov 012017
 
 November 1, 2017  Posted by at 9:37 am Finance Tagged with: , , , , , , , , ,  5 Responses »


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.”)

Read more …

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.

Read more …

“..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

Read more …

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.

Read more …

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.

Read more …

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.

Read more …

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.”

Read more …

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.

Read more …

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.

Read more …

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.

Read more …

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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Sep 242017
 
 September 24, 2017  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , ,  4 Responses »


Elliott Erwitt Gateway Center Demolition Area Pittsburgh 1950

 

All The Bubbles That Are About To Pop In One Chart (Dillian)
America’s $20 Trillion Debt In Global Context (HowMuch)
Accounting Error Spells Chaos For Global Economy (Graeber)
The American Golden Calf (PL)
Boobs on Credit (Jim Quinn)
Bernanke Past the Point of No Return (AM)
Janet Yellen’s 78-Month Plan for US National Monetary Policy (AM)
A Private Solution For China’s Zombie Company Problem? Unlikely (R.)
More Chinese Cities Impose Property Control Measures (R.)
The Tide Is Starting To Turn Against The World’s Digital Giants (G.)
Why Uber’s Fate Could Herald Backlash Against ‘Digital Disruptors’ (G.)
France’s Far-Left Leader Urges French ‘Resistance’ Against Macron (R.)
Spain Rebuffed in Boosting Control Over Catalonia’s Police (BBG)
No Storm Ever Destroyed a Grid Like Maria Ruined Puerto Rico’s (BBG)

 

 

It’s big graphs day today. This is Jared Dillian’s.

All The Bubbles That Are About To Pop In One Chart (Dillian)

It wasn’t always this way. We never used to get a giant, speculative bubble every seven to eight years. We really didn’t. In 2000, we had the dot-com bubble. In 2007, we had the housing bubble. In 2017, we have the everything bubble. I did not coin the term “the everything bubble.” I do not know who did. Apologies (and much respect) to the person I stole it from. Why do we call it the everything bubble? Well, there is a bubble in a bunch of asset classes simultaneously. And the infographic below that my colleagues at Mauldin Economics created paints the picture best. I don’t usually predict downturns, but this time I bet my reputation that a downturn is coming. And soon.

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Private debt would be more useful. But okay…

America’s $20 Trillion Debt In Global Context (HowMuch)

The U.S. federal government just passed a record $20 trillion in publicly held debt. That’s bigger than the entire economy of every country in the European Union, combined. The debt will only grow higher unless President Trump and the U.S. Congress can agree to unprecedented spending cuts combined with tax increases. Don’t count on that happening anytime soon. Most people think that an eye-popping $20+ trillion debt is insurmountable, and in fact, it is the largest in the world by far. But when you look at another fiscal measure—the ratio of debt-to-GDP—the U.S. is not in the worst situation. Our visualization allows you to quickly see how the U.S. government’s debt compares to other countries around the world. The size of the country correlates to the size of the debt. The U.S. and Japan stand out because they have the highest debts in the world ($20.17T and $11.59T, respectively).

Other countries, like Germany and Brazil, appear much smaller because their debts are comparatively tiny ($2.45T and $1.45T, respectively). We then color-coded each country according to its debt-to-GDP ratio. Green countries have a healthy margin, but dark red and fuchsia countries have debts that are even bigger than their entire economies. The debt-to-GDP ratio is a critical metric for evaluating a country’s fiscal health. It makes a lot of sense for the American government to have a higher debt than a much smaller country, like Germany. That’s why it’s important to consider the GDP of each country, a number which represents the sum of all transactions occurring in the economy. Once you understand the public debt as a percentage of GDP, you get a level playing field for countries on different economic scales. When you think about it like this, the U.S. isn’t even among the ten worst sovereign debts in the world.

Top 10 countries with the Worst Debt-to-GDP Ratios
1. Japan (245% at $11.59B)
2. Greece (173% at $338B)
3. Italy (138% at $138B)
4. Portugal (133% at $274B)
5. Belgium (111% at $111B)
6. Spain (106% at $106B)
7. Canada (106% at $106B)
8. Ireland (105% at $105B)
9. France (98% at $98B)
10. Brazil (82% at $82B)

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Dave Graeber suggests (strongly) that official UK numbers miss -intentionally or not- a huge chunk of household debt. Government debt could be involved, but even then.

Accounting Error Spells Chaos For Global Economy (Graeber)

The thing that always struck me is how much the morality of debt—that anyone in debt has only themselves to blame, that deadbeats are contemptible—stubbornly refuses to die. Even now, when the situation is largely engineered by government policy, the first impulse of pundits and other popular moralists is invariably to assume the real problem must, somehow, be a bunch of lazy freeloaders, living beyond their means. As a result, by the standards of public discourse that exist today—that is, the sort of things it’s considered acceptable coming from the mouth of a politician or TV commentator or government economist—it’s not really legitimate to worry about rising levels of household debt simply because it causes misery or deprivation, if it means millions of actual flesh and blood human beings will be living lives of fear, anxiety, and constant humiliation.


Illustration Rachel Bolton

It’s only really legitimate to worry about rising levels of household debt insofar as it might be likely to cause another financial crisis. (Such a crisis, after all, might well affect the lives of the rich and upper reaches of the professional and managerial classes, that is, the kind of lives that policy-makers feel they have to take account of.) And even then, it must be posed as a moral problem caused by irresponsible self-indulgence—as one Daily Mail headline recently put it: “Your neighbour’s shiny new SUV is about to crash the economy!” Yet the two impulses are clearly in tension. To look at debt in macro-economic terms does make it easier to see it as a structural problem, as the result of self-conscious policy decisions. As a result, everyone seems to want to minimise the problem. Here are the numbers that they published in 2017, which a friend of mine who works in the City translated into handy tabular form:

The attentive reader will note that the image is symmetrical. Up to around 2014, at least, the top and bottom half exactly mirror one another. This is exactly as things should be: it’s an “accounting identity”, as in a ledger sheet, debits and credits have to add up. The remarkable thing is that after 2014, they don’t, and in the projected future, the top and bottom are actually quite different. When I first saw this diagram I was startled and confused. Was I missing something? Was there something about the math I didn’t understand? I passed the image on to two different economists and asked just that: isn’t there something wrong with the numbers here?

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A version of the ugly duckling. Behind Trump’s words on athletes and the anthem. Many people like the athletes, but some 75% of Americans think they should respect the flag. Trump thought this through.

The American Golden Calf (PL)

As a young boy, I enjoyed my family’s bantam chickens that laid very small eggs and hatched very small chicks. Theirs was a small and miniature world. One day one of my bantams started sitting on eggs to hatch its chicks. Something happened to her eggs but she continued to sit, so I decided to put a duck egg under her. Duck eggs are at least three times bigger than bantam eggs and take a few days longer to hatch, but she dutifully sat on the egg several days longer. She hatched the duckling and, as you can imagine, it thought that his world was normal and that the bantam hen was his mother. The duckling eventually grew into a full sized mallard duck, probably five or six times the size of its bantam mother. The full-grown duck would follow its hen mother around as would normal chicks. It was a funny sight to watch.

But I remember thinking, even as a small boy, that the duck’s entire reality was that the bantam hen was his mother and that was the way the world worked. He had no need to consider anything else. This is the world of the American people today. Their perceptions of reality control them and they who control their perceptions control the American people. Our perception of America has always been that she is the mother country and ordained by God, good and just and a beacon of freedom. This is hammered into our psyches from our early days. From pre-school up, we are taught to worship the state. I don’t know if it is still done, but in the public (non)education system, for many years, schoolchildren across the South — and elsewhere, I suppose — recited the Pledge of Allegiance each morning.

Political rallies and government meetings are still often begun with a recitation of the pledge. People say it with patriotic fervor, with their hands placed dutifully on their hearts. Sporting events, political rallies and other public venues are often kicked off with the playing and/or singing of the Star Spangled Banner. Before the song begins, people are instructed to rise, men to remove their hats,and people place their hands over their hearts. They don’t realize its value as a propaganda tool. We have come to equate the flag, the pledge and the national anthem with patriotism, and patriotism with government, country and support for government, support for foreign wars and veterans. Anything less is “un-American.”

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“What happens when a bimbo defaults on her boob loan? How narrow minded of me.”

Boobs on Credit (Jim Quinn)

As I was driving to work yesterday morning on the Schuylkill Expressway a commercial comes on the radio from a plastic surgeon advertising for anyone looking for a better set of boobs. I had never heard a plastic surgeon commercial before, so I thought that was unusual. But, that wasn’t the best part. This plastic surgeon was offering no money down 18 month interest free financing on your new boobs. I wonder if they are moving boobs with subprime debt the same way the auto companies have used subprime debt to move cars. Of course, when a deadbeat defaults on an auto loan the car is easily repossessed. What happens when a bimbo defaults on her boob loan? How narrow minded of me. What happens when some dude who wants to be a bimbo defaults on his/her loan? I guess it was just a matter of time before breast enhancement met debt enhancement in this warped world of materialism, narcissism, financialization, and delusions.

Now that revolving credit has reached a new all-time high of $1 trillion and total consumer debt outstanding has exceeded it’s 2008 peak at $12.8 trillion, the Fed has completed its job of helping the average American again in-debt themselves up to their eyeballs. This is considered a success story in this twisted, perverted, bizarro world we call America today. The solution to an epic debt induced global financial catastrophe caused by Federal Reserve easy money, Wall Street fraud, and Washington DC corruption has been to increase global debt by 50% since 2007, with virtually all of it created by central bankers and the governments they control. In what demented Ivy League educated academic mind would piling $68 trillion more debt on the backs of taxpayers as a cure for a disease caused by the initial $149 trillion of debt be considered rational and sustainable? It’s like having pancreatic cancer and trying to cure it with a self inflicted gunshot.

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The following two pieces are fom the same article.

Bernanke Past the Point of No Return (AM)

In late November 2008, Federal Reserve Chairman Ben Bernanke put in place a fait accompli. But he didn’t recognize it at the time. For he was blinded by his myopic prejudices. Bernanke, a self-fancied Great Depression history buff with the highest academic credentials, gazed back 80 years, observed several credit market parallels, and then made a preconceived diagnosis. After that, he picked up his copy of A Monetary History of the United States by Milton Friedman and Anna Schwartz, turned to the chapter on the Great Depression, and got to work expanding the Fed’s balance sheet. Now here is something all those “Great Depression experts” always neglect to mention: the Fed’s holdings of government securities expanded my more than 400% between late 1929 and early 1933.

Friedman’s often repeated assertion that the Fed “didn’t pump enough” in the early 1930s – which is held up as the gospel truth by nearly everyone – is simply untrue. It is true that the money supply collapsed anyway – but not because the Fed didn’t try to pump it up. Many contingent circumstances mitigated against money supply expansion: too many banks went bankrupt, taking all their uncovered deposit money to money heaven, as there was no FDIC insurance; only 50% of all banks were even members of the Federal Reserve system; no-one wanted to borrow or lend in view of the massive economic contraction and the Hoover administration’s ill-conceived interventionism. We can also tentatively conclude that the economy’s pool of real funding was under great pressure, which was exacerbated as a result of the trade war triggered by the protectionist Smoot-Hawley tariff enacted in June 1930.

The collapse in international trade and investment meant that the pool of savings of the rest of the globe was no longer accessible. Bernanke’s dirty deed commenced with the purchase of $600 billion in mortgage-backed securities, using digital monetary credits conjured up from thin air. By March 2009, he’d run up the Fed’s balance sheet from $900 billion to $1.75 trillion. Then, over the next five years, he ballooned it out to $4.5 trillion. All the while, Bernanke flattered his ego with platitudes that he was preventing Great Depression II. Did it ever occur to him he was merely postponing a much-needed financial liquidation and rebalancing? Did he comprehend that his actions were distorting the economy further and setting it up for an even greater bust?

Perhaps Bernanke understood exactly what he was doing. As many readers have insisted over the years, the Fed works for the big banks and big money interests. Not Main Street. Regardless, the Fed recognizes that the optics of its $4.5 trillion balance sheet have become a bit skewed. The Great Recession officially ended over eight years ago. Why is the Fed’s balance sheet still extremely bloated?


US broad true money supply TMS-2 and assets held by the Federal Reserve

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A 6.5 year plan.

Janet Yellen’s 78-Month Plan for US National Monetary Policy (AM)

By our back of the napkin calculation, starting with October’s initial $10 billion reduction, then incrementally increasing the reduction by $10 billion each quarter until hitting $50 billion per month, and then contracting by $50 billion a month from there, it will take 78-months for the Fed to get its balance sheet back to $900 billion (i.e., where it was before Bernanke’s act of depravity). Thus, in roughly six and a half years, or in March 2024, monetary policy will be back to normal. If you recall, the Soviets operated under five-year plans for the development of the national economy of the USSR. Now, Yellen, an ardent central planner and control freak, has charted the Fed’s 78-month plan for the national monetary policy of the United States. Have you ever heard of something so ridiculous?

However, while the Soviets were zealous believers in their plans, we suspect the Fed will be as committed to the cause as a fat person to a New Year’s Day diet. In truth, the Fed will never, ever reduce its balance sheet to $900 billion. They won’t even get close; they are well past the point of no return. In the early 1930s the Soviet planners under Stalin had a great idea: why not fulfill the 5 year plan in four years? This showed that nothing was impossible for the “new Soviet man” and two plus two was henceforth five. As Marxists will explain, this is in perfect keeping with the rules of polylogism. Even the laws of mathematics must bend to proletarian logic. For starters, financial markets will not allow the Fed to execute its 78-month tightening program according to plan. At some point, credit markets will have a severe reaction.

This would ripple through stock markets and nearly all assets that are propped up by cheap credit. What’s more, if this doesn’t panic the Fed from its master 78-month monetary policy plan, the economy will. No doubt, at some point within the next 78-months the U.S. economy will shrink. What will the Fed do then? Will they continue to tighten in the face of a contracting economy? No way. They will ease, and then they will ease some more. They won’t stop until it is near impossible for an honest person to work hard, save their money, and pay their way in life. Many fine fellows were already pickled over by the Fed in the last easing cycle and lost their way. More are bound to follow.


Guess who’s lying in wait… it will be found out that a creature long held to be extinct was merely hibernating in its cave, sharpening its claws.

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China’s just shifting debt around, hoping it’ll end up under a carpet some place. But the zombies merely start infecting healthy businesses.

A Private Solution For China’s Zombie Company Problem? Unlikely (R.)

China’s latest push to revive its bloated state-owned sector is set to pick up pace this year, with bankers and investors expecting possible spin-offs and asset sales to follow a key Communist Party Congress in October. But the effort is likely to only involve a limited role for private money, even as Beijing has been promoting it as crucial for reforming state-owned enterprises (SOEs), according to people familiar with China’s plans. Beijing would likely lean on cash-rich SOEs like China Life Insurance and Citic Group to bail out the largest of the struggling companies, the people said. They cited China Life stepping in to help China Unicom raise $12 billion last month. A limited role for private capital would raise questions about the depth of any overhaul of the SOEs.

China hopes to speed up the reforms in order to meet ambitious economic growth targets and manage its corporate debt burden. “The current model allows winners, companies doing better, to partially own those doing worse,” said Alicia Garcia-Herrero, chief Asia Pacific economist at Natixis. “In other words, this is a reshuffling of profit, loss among SOEs to a large extent.” China Life is in talks with China Three Gorges New Energy, a unit of the country’s top hydropower developer, according to sources familiar with the matter. China’s state-run companies dominate the country’s key industries, from banking to insurance, energy, and telecoms. They retain an edge over their private rivals in investing both locally and overseas, in part thanks to easier financing.

But they also produce lower returns than their private counterparts and account for the biggest proportion of the bad loans on the books of the country’s banks. The fund raising by Unicom, a state-owned telecoms group, had sparked hopes for the mixed ownership effort, as outlined in a 2015 government plan. The partial privatization of Unicom in August, involving 14 investors, including the tech giants Alibaba and Tencent, was welcomed by markets. But, as Beijing balanced the need for cash with the need for control, China Life ended up with a 10.6 percent stake in the company, nearly a third of the total sold. New investors, including China Life, were given three of 15 board seats.

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Feels half ass.

More Chinese Cities Impose Property Control Measures (R.)

A number of second-tier cities in China have rolled out property speculation curbs in an effort to cool home property sales, according to the official Xinhua News Agency and documents published by some municipal governments. The city of Shijiazhuang, southwest of Beijing, has banned investors from selling newly bought homes for up to five years, while Changsha in Hunan province banned homeowners from buying a second property for up to three years from the time of their first home purchase, Xinhua said. Changsha has also limited property sales to non local residents to one unit per person. The city of Chongqing, as well as Nancang in the southern province of Jiangxi, meanwhile, banned transactions of new and second-hand homes for two years after purchase.

The various measures took effect last week. Additionally, Xian in Shaanxi province has asked real estate developers from Monday to report home prices to local price-monitoring departments before sale and reiterated its pledge to crack down on property price manipulation and speculation. The latest property clampdowns follow moves in June by two Chinese cities, Xian in Shaanxi and Zhenzhou in Henan province, to cool their property markets. Average new home prices in China’s 70 major cities rose 0.2 percent in August from a month ago, data from the statistics bureau showed.

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I’m not convinced. Besides, Google and Facebook already are branches of the intelligence industry.

The Tide Is Starting To Turn Against The World’s Digital Giants (G.)

In his wonderful book The Swerve: How the Renaissance Began, the literary historian Stephen Greenblatt traces the origins of the Renaissance back to the rediscovery of a 2,000-year-old poem by Lucretius, De Rerum Natura (On the Nature of Things). The book is a riveting explanation of how a huge cultural shift can ultimately spring from faint stirrings in the undergrowth. Professor Greenblatt is probably not interested in the giant corporations that now dominate our world, but I am, and in the spirit of The Swerve I’ve been looking for signs that big changes might be on the way. You don’t have to dig very deep to find them. Some are pretty obvious. In 2014, for example, the European Court of Justice decided that EU citizens had the so-called “right to be forgotten” and that Google would have to comply if it wanted to continue to do business in Europe.

In May this year, the European commission fined Facebook €110m for “providing misleading information” about its takeover of WhatsApp. And in June the commission levied a whopping €2.4bn fine on Google for abusing its monopoly in search. Since the European commission is the only regulator in the world that seems to have the muscle and inclination to take on the internet giants, these developments were relatively predictable. What’s more interesting are various straws in the wind that show how digital behemoths are losing their shine. Many of these relate to Brexit and the election of Donald Trump, and to the dawning of a realisation that Google and Facebook in particular may have played some role in these political earthquakes.

This was not because the leadership of the two companies actively sought these outcomes, but because people began to realise that the infrastructure they had built for their core business of extracting users’ data and selling it to companies for ad-targeting purposes could be – and was – “weaponised” by political actors in order to achieve political goals. Public concern about these discoveries was not exactly mollified by the responses of the companies’ bosses – which were variously dismissive, evasive (“it’s just the algorithms – nothing to do with us”), disingenuous, inept and politically naive. They had to be like that, because a franker response would reveal that taking responsibility for what happens on their platforms would vaporise the business model that has made them so rich and powerful.

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Why let Uber grow as big as it has and only then act?

Why Uber’s Fate Could Herald Backlash Against ‘Digital Disruptors’ (G.)

In the mind of many Uber supporters, the Transport for London (TfL) decision – coming a few days before Khan’s appearance at the Labour party conference – revealed an organisation in thrall to established labour interests. Sources told the Observer that the decision was communicated to Uber only two minutes before it was announced and that there had been only one meeting in the last year between the company and the senior team at TfL who insisted that the licence renewal could not be discussed. “TfL has once again caved into pressure from unions who never miss an opportunity to rip off passengers,” said Alex Wild, research director at the rightwing pressure group Taxpayers’ Alliance. The pushback against the laissez-faire philosophy of the US west coast’s tech community is being waged on both sides of the Atlantic.

In the US, calls to regulate technology companies have made strange bedfellows of Democratic senator Elizabeth Warren and ex-White House aide and Breitbart chief Steve Bannon. Last week the former chief strategist to Donald Trump reiterated his view that firms such as Facebook and Google should be regulated like “public utilities”. Meanwhile progressives such as Warren warn of the monopolistic behaviour of Google, Amazon, and Apple while pushing for a renewed debate over antitrust laws. “Silicon Valley is going from being heroes to villains,” said Vivek Wadhwa, a distinguished fellow and adjunct professor at Carnegie Mellon University. “It’s been brewing for quite a while, but there’s a big shift happening.” But, still, the speed of this shift has surprised many. “In our wildest dreams we didn’t think TfL would refuse the licence,” said Maria Ludkin, legal director at the GMB union. “We thought they’d attach conditions to make sure Uber would improve passenger and driver safety.”

[..] Ironically, while many drivers like Abdul have leapt to Uber’s defence, it was the company’s treatment of them that drew attention to the aggressive corporate culture which brought about its downfall in the capital. Last October, following a case brought by the GMB that has wide-ranging implications for all companies in the gig economy, an employment tribunal ruled that Uber’s UK drivers should be classed as workers rather than as self-employed. “We’d had an epidemic of companies saying their people are self-employed when in fact, when you examine their rights and responsibilities, the way they’re acting each day, it’s pretty clear they’re either fully employed or are workers entitled to sickness pay, etc,” Ludkin said. “We brought the Uber case because we had so many drivers coming to us. We looked at their contracts and thought it was a ludicrous idea that 30,000 of them were self-employed, which was Uber’s position.”

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Let’s see what’s left of the famed French protests. Note: the US is not alone in contesting crowd sizes.

France’s Far-Left Leader Urges French ‘Resistance’ Against Macron (R.)

French far-left opposition party leader Jean-Luc Melenchon drew tens of thousands to a rally on Saturday against President Emmanuel Macron’s labor reforms, aiming to reinforce his credentials as Macron’s strongest political opponent. Trade union protests against Macron’s plan to make hiring and firing easier and give companies more power over working conditions seem to be losing steam, but Melenchon said his “France Unbowed” party was calling on unions to join them and together “keep up the fight”. “The battle is not over, it is only starting,” Melenchon told the crowd gathered on the Place de la Republique where the rally against what Melenchon has called “a social coup d‘etat” ended.

In a warning to Macron, who has said he will not bow to street pressure, Melenchon said: “It is the street that defeated the kings, it is the street that defeated the Nazis,” while the crowd chanted “Resistance! Resistance!” It remains to be seen whether Melenchon and his party have the capacity to mobilize the kind of street resistance which forced the last two presidents to dilute their own attempts to loosen the labor code. Melenchon tweeted that over 150,000 demonstrators had turned up while police put the number at 30,000. A campaign rally in March, weeks before the presidential election, drew some 130,000 people, party officials had said.

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Pitting police forces against each other is a recipe for trouble. Peaceful resistance is teh way to go for Catalonia. But…

Spain Rebuffed in Boosting Control Over Catalonia’s Police (BBG)

Police in Spain’s rebel region of Catalonia rejected giving more control to the central government in defiance of authorities in Madrid who are trying to suppress an independence referendum on Oct. 1. The SAP union, the largest trade group for the 17,000-member Mossos d’Esquadra regional force, said it would resist hours after prosecutors Saturday ordered that it accept central-government coordination. The rejection echoed comments by Catalan separatist authorities. “We don’t accept this interference of the state, jumping over all existing coordination mechanisms,” the region’s Interior Department chief Joaquim Forn said in brief televised comments. “The Mossos won’t renounce exercising their functions in loyalty to the Catalan people.”

The disobedience may fuel speculation the Mossos aren’t committed to work with the national Civil Guard in Spain’s largest regional economy. The standoff came a day after Prime Minister Mariano Rajoy’s government acknowledged it’s sending more reinforcements to help control street demonstrations and carry out a separate court order to halt the vote. Officials in Madrid have quietly rented cruise ships including the Rhapsody and moored them in Catalan ports as temporary housing for riot police and other security officials being sent to the region in what El Correo newspaper said may ultimately exceed the number of Mossos by the referendum date.

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“100% of the system run by the Puerto Rico Power Authority is offline”. How long till people will start dying in hospitals?

No Storm Ever Destroyed a Grid Like Maria Ruined Puerto Rico’s (BBG)

You don’t even have to leave the airport to see that Hurricane Maria has laid waste to Puerto Rico’s power grid. On Friday, the San Juan airport was abandoned. No electricity meant no air conditioning, and no air conditioning meant hot and muggy air wafting through the terminals. Ceilings were leaking. Floors were wet. Only the military, relying on its own sight and radar systems, was landing planes. The airport is one of the first places crews will restore power – whenever they can get to it. Hundreds are still waiting for the all-clear to move in and start the arduous task of resurrecting Puerto Rico’s grid. The devastation that Maria exacted on Puerto Rico’s aging and grossly neglected electricity system when it slammed ashore as a Category 4 storm two days ago is unprecedented – not just for the island but for all of the U.S.

100% of the system run by the Puerto Rico Power Authority is offline, because Maria damaged every part of it. The territory is facing weeks, if not months, without service as utility workers repair power plants and lines that were already falling apart. “I have seen a lot damage in the 32 years that I have been in this business, and from this particular perspective, it’s about as large a scale damage as I have ever seen,” said Wendul G. Hagler II, a brigadier general in the National Guard, which is assisting in the response. No federal agency dared on Friday to estimate how long it’ll take to re-energize Puerto Rico. If it’s any indication of how far they’ve gotten, the island’s power authority known as Prepa is only now starting to assess the damage.

“We are only a couple of days in from the storm – there could be lots of issues and confusion at the beginning of something like this,” said Kenneth Buell, a director at the U.S. Energy Department who is helping lead the federal response in Puerto Rico. “We are in the phase where we have people queued up and lining up resources.” What Buell does know is Puerto Rico’s power plants seem inexplicably clustered along the island’s south coast, a hard-to-reach region that was left completely exposed to all of Maria’s wrath. A chain of high-voltage lines thrown across the island’s mountainous middle connect those plants to the cities in the north.

Puerto Rico’s rich hydropower resources have also taken a hit. On Friday, the National Weather Service pleaded for people to evacuate an area in the northwest corner of the island after a dam burst. “All areas surrounding the Guajataca River should evacuate NOW. Their lives are in DANGER!,” the service said on Twitter. And that’s not to mention the state of Puerto Rico’s grid before the storm. Government-owned Prepa, operating under court protection from creditors, has more than $8 billion in debt but little to show for it. Even before the storm, outages were common, and the median plant age is 44 years, more than twice the industry average.

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Aug 212014
 
 August 21, 2014  Posted by at 7:12 pm Energy, Finance Tagged with: , , , , ,  7 Responses »


Dorothea Lange Country filling station owned by tobacco farmer, Granville County, NC Jul 1939

I woke up today to a request to comment on an article I hadn’t even read yet at the time. Now, I don’t do requests, but when I saw that it was an article by my favorite nemesis Ambrose Evans-Pritchard, and I read it, I thought alright, let’s have a go. Just this once.

Ambrose sings the praise of solar and natural gas in this one, and that‘s not because he’s green, the only green he likes is the color of money. And that’s just why he’s interested in solar etc.: great fortunes to be made!

As is usual in his finance articles, Ambrose is great at collecting data, and far from great at interpreting them. He gets carried away by grand visions. But that, in my eyes, makes him charming too. Finance is easily dull enough that it needs its ‘color(ful) commentators’.

Since Ambrose talks a lot about the demise of oil, and the risk of prices falling further, I’ll start off with a Yahoo Finance article that features Dan Dicker, who’s not so sure about those price drops.

Personally, I would think too many people draw too many hasty and easy conclusions. All you need in today’s world to raise oil prices is one bomb in the wrong – or is that the right? – place, and to make that happen, I’m sure Big Oil would be more than happy to drop a Little Boy.

In my view betting against oil and gas is either for big time gamblers or for people who don’t think or know enough about 1) how volatile production and delivery is at the moment, and 2) what oil really is (unique carbon structures).

To top it off, I’ll conclude with the best take down I’ve seen in a while of the imaginary German solar miracle. Might as well throw that in too. First, then, Dan Dicker:

Crude Oil ‘Super Spike’ May Be Coming

Commodity traders and analysts have wondered why oil hasn’t gone higher. Geopolitical tensions abound across the world; the Middle East seemingly hasn’t been this unstable in years. In fact, some believe the commodity could actually go lower. [..]

Dan Dicker, president of MercBloc and author of Oil’s Endless Bid, says much has changed in the past few years, other factors also explain why oil has stagnated recently: Investment banks, particularly Morgan Stanley, Goldman Sachs, and JPMorgan have not only left oil trading but have also abandoned the oil marketing business, which used to bring a steady supply of new players to the energy market. Individual oil traders (including Dicker himself) have disappeared as well.

Dicker speculates around 3,000 traders have left the industry. Remaining funds are trend and algorithmic firms with long-term positions already established. The big alpha players remaining in the oil trading business are physical commodity, private firms like Glencore, Vitol, and Trifugura among others. Dicker believes these changes have all but killed immediate speculative activity, which has been good for consumers in the short term, but will be bad for the prospects of cheaper oil in the long term.

Without the liquidity provided by these players in the energy market, a crude oil ‘super-spike’ could be in the cards. The demise of offshore oil drilling could also be a catalyst in Dicker’s mind, not to mention oil supplies going offline in places like Libya, and decreasing in countries like Iran and Iraq.

This is leading to an upcoming oil supply crisis he says, and ultimately with liquidity not what it once was, and with the cost of oil now making it prohibitive to develop new sources, ultimately the fundamentals will have to matter again. “When you have an oil price that’s hanging around $95, you won’t see a $10 spike, you’ll see a $40 spike, because that’s what will be necessary to get these guys (oil exploration and production companies) ginned up” in order to produce more crude supply.

And then Ambrose’s big screen technicolor dreams about solar and great fortunes:

Oil Industry On Borrowed Time As Switch To Gas And Solar Accelerates

… world energy markets are entering a period of “extreme flux”, with oil caught in triple encirclement by cheap natural gas, much more efficient vehicles and breathtaking advances in solar power as scientists crack the secrets.

… eroding the assumptions that have underpinned a threefold rise in Western oil industry debt to $600bn since 2005, much of it to hunt for crude in prohibitively expensive places. Costs rose 9% in 2012 and 11% last year [..]

Gasoline demand in the OECD rich states has been sliding in absolute terms since 2007, punctuated by ups and downs, but dropping overall from 15.5m barrels a day (b/d) of crude to 14m b/d.

The ‘OECD rich states’ have gotten a lot less rich since 2007, not a trivial detail.

Citigroup’s report – “Energy 2020: The Revolution Will Not Be Televised” – says the average efficiency of new cars in the US has risen by 4.6 miles per gallon (mpg) since 2008 [..] Gasoline demand will slide by 900,000 b/d in the US alone by 2020. China has even more draconian curbs coming into force, with a 50mpg fuel economy mandate by 2020. Its output of electric cars is up 177% in a year, and hybrids are up 567%. India will reach 50mpg by 2021, Mexico by 2025.

What those percentages mean is that they had barely any hybrids or electric cars before; these kinds of increases are meaningless. And also: a 50mpg fuel economy mandate is not what I would call draconian.

[..] The US shale revolution has caused natural gas prices in North America to collapse. With a long delay, and by convoluted means, this effect is spreading to Asia, where liquefied natural gas (LNG) prices have halved this year. Natural gas lorries are expected to take around 4% of the US market this year as new taxes and pollution laws come to bear. “We think a large portion of the freight market could utilise LNG and penetration rates could ultimately top 40% … “

This may be so, but the revolution won’t last; we already know that. If we now hastily adapt our infrastructure thinking it will, we’ll be in deep doodoo soon.

The industry can at last tap a “large investor universe” through the market for asset-backed securities. It priced debt below 5% last year. Some US electric companies are starting to build solar farms for hard-headed commercial reasons as a hedge against future shifts in the gas price. Roughly 29% of all electricity capacity added in America last year came from solar. [..]

More empty numbers: what this means is simply that very little capacity was added in the US in 2013.

… installed solar power in the US across all sectors has dropped from $6 a watt to $2.59 in four years, largely due to the collapse in the cost of solar cells. [..] The clinching shift will come when the battery storage is cheap enough and lasts long enough for users to draw down their surplus generated during the day to cover needs at night, opening the way for mass exodus from the grid

Wow, wow! Any idea what a mass exodus from the grid would mean? First, there are plenty of things you can’t run on solar. Second, you can’t just close down half the grid. You’ll have to redo and redesign the whole thing if you lose large numbers of clients. Not everything scales up in simple ways, and not everything scales down easily either.

Harvard is working on an organic flow battery using quinones – from rhubarb – instead of rare earth metals. It hopes to cut battery costs by two-thirds within three years. Rivals at the University of Southern California think they can eventually slash the cost by 90% below today’s lithium-ion batteries.

I’m sure batteries will get better and cheaper. Whether that will happen at the pace Ambrose fantasizes about comes with a big question mark. I’m all for rhubarb batteries, but …

It is a fair bet that scientists will have conquered intermittency by the end of the decade, at which point the switch to renewables becomes a stampede. This is where great fortunes may be made, perhaps the mirror image of the wealth to be lost on fossil defaults. Brokers Sanford Bernstein call it the new order of “global energy deflation”. Technology momentum is unstoppable, and one-way only.

This is where we go from fact to techno happy fantasy. And the one about ‘great fortunes’, of course. I doubt it’s a ‘fair bet’ that all problems with intermittent energy sources will be solved over the next 5 years and 4 months. What’s going to do the trick, molten salt and rhubarb? Whenever someone says things like ‘technology momentum is unstoppable’, I want to go check on my cucumbers.

There’s enough hot air being sold in the shale industry, we don’t need another plot in the energy field that’s also nothing but pure financial speculation. We are never going to replace oil and gas one on one with some other miraculous source of energy, and if the reason why is not clear, there is a ton of information in the Automatic Earth archives that can explain.

Oil-patronage regimes violate the loose rule that societies with a per capita income above $10,000 become more tolerant, rational and pluralist over time, so we may be doing a favour for these nations if we curb our appetite for oil. Their revolutions may, however, be televised.

I never saw the ‘loose rule’ Ambrose mentions, but there can be no doubt that many regimes built on oil revenues face a very uncertain future as supplies dwindle. And as their own, often rapidly growing, populations use ever more of those resources themselves, as our friend Jeffrey Brown has explained for years in his Export Land Model. I just doubt that low global market prices will play the protagonist part in this.

And now that we’re so deep into the promises of solar, why not break them down to the ground in one fell swoop, so we can all have our own two feet solidly planted on that same ground? Unless you would rather fantasize with Ambrose, but rest assured, the vast majority of it is fantasy, founded upon dreams of multi trillion dollar wealth. In my view, reality is the better option, but I can’t decide for you.

From Robert Wilson at the Energy Collective:

Reality Check: Germany Does Not Get Half of its Energy from Solar Panels

The rise of the Internet means that simple factual issues can be checked quicker than would have been believed possible a generation ago. The rise of social media means that facts are not checked, they are retweeted. Such is the case with renewable energy in Germany, where it appears almost anything is to be believed.

Here is the most popular meme: “Germany now gets half of its energy from solar panels.” This does the rounds of Twitter and Facebook almost every day. In fact, it has now spread to more reputable outlets such as Popular Mechanics, and has even appeared on the website of Richard Dawkins, the inventor of the term meme, under the headline “Germany Now Produces Half Of Its Energy Using Solar.” The problem, of course, is that Germany does not get half of its energy from solar panels, and will not do so any time soon.

As with any myth there are multiple versions. In this case it is either that Germany gets half of its electricity or half its energy from solar panels. The latter version is easily refuted by pointing out that the majority of German energy consumption is not in the form of electricity. BMWs, Mercedes and Volkswagens run on petrol and diesel, not electricity. The more common version of the myth is debunked with simple reference to Germany’s official statistics for electricity generation.

And what they tell us is quite simple. Germany does not get half of its electricity from solar panels, instead the figure is around ten times lower. Last year only 4.5% of Germany’s gross electricity generation came from solar panels, far short of 50%. And if you want to think that half of Germany’s electricity comes from something green you will be disappointed. 46% of generation comes from coal. And just over half of coal powered electricity in Germany comes from burning lignite, perhaps the most polluting way to generate electricity on the planet.

GermanyElectricityMix

These statistics, then, make it clear that the “solar revolution” that has supposedly occurred in Germany is not worth the name, and is mostly just a combination of hype and wishful thinking. I can make this even clearer by comparing the growth of solar in Germany with that of more old fashioned forms of electricity generation.

In 1990, Britain got no electricity whatsoever from gas power plants. Yet, within one decade this went from zero to forty percent. This is a much more rapid growth than has been in German solar wind, or anything else. In fact, no country has grown any source of renewable electricity at such a speed. An even more sobering comparison, given Germany’s much trumped green credentials, is with the growth of coal power plants this decade. At the end of last year Germany had a total of 36 gigawatts of installed solar capacity, and this produced 28.3 terawatt hours of electricity.

However, between 2011 and 2015 Germany is opening 10.7 gigawatts of new coal power plant capacity. The consulting company Poyry projects that these new coal power plants will have average capacity factors of 80%. If so, they will have a combined average annual output of 75 terawatt hours. In other words, in five years Germany is opening coal capacity which will have an annual output of more than double that from all of its solar panels. However, this comparison is perhaps too generous. Solar panels typically last twenty to twenty five years, but coal power plants easily last twice that long.

What we are seeing in Germany, then, is much more of a coal lock-in than a solar revolution. And solar power in Germany faces fundamental problems. For obvious physical reasons – the sun always sets – there is absolutely no output from solar panels a lot of the time. In the case of Germany it is around 46% of the time. However, Germany can, on a sunny day, get a lot of its electricity demand from solar panels. On the occasional sunny day solar panel output can exceed half of total electricity demand. This is the source of the myth that Germany gets half of its electricity from solar panels. Media reports on solar in Germany focus on the peak, and not on the average. The average, well, that’s one tenth of the peak, but I guess not even half of the story.

[..] The new German government has put in place a long-term target of having between 2.5 and 3.5 gigawatts of solar panels installed each year. If we take the higher figure, and assume that 3.5 gigawatts is installed each year, it will take Germany almost ninety years to reach 50% solar electricity. This however is an underestimate. Solar panels must be replaced every twenty or twenty fives years, and 50% solar energy in Germany would require massive advances in energy storage techniques. Germany, then, is around a century away from getting half of its electricity from solar panels. Does this look like a revolution?

Note

Statistics for Germany’s energy consumption are available from BP and Eurostat. In total, solar energy was 2% of Germany’s primary energy consumption last year, using BP’s statistics. The precise percentage however will vary depending on how energy consumption is defined. If we used the IEA’s definition of primary energy consumption for solar, then the figure would be around 1%. I discussed the problem of measuring renewable energy consumption here.

There you go. 4.5% of German electricity, and 1% of its primary energy, came from solar in 2013. Since the intermittency of solar places hard limits on its use in the central electricity grid (of about 15%), Germany is increasing its coal – no, make that lignite – capacity, which is about the opposite of solar in an environmental sense.

Since Germany is hooked up to the European grid, it can rely to an extent on France’s nuclear power to balance out the intermittency issue – after it shut down its own nukes -, but that too comes with limits.

It seems like we’ll all just have to wait for, and dream about, yet to be invented veggie batteries and salty power storage. Something tells me even just the dreams will take a lot of money, from the already hugely – if not fatally – indebted economies we all live in.

Hoping for solutions on nation-wide scales doesn’t appear to be a wise choice. But you can do your own thing. Cut your energy use, even 90% is certainly possible. Be creative. There’s nothing wrong with solar, it’s just not a panacea for all our future troubles. We ourselves must be the solution.

Look, say you live in Germany and you get an electric car. Then you’re driving on 46% lignite. Nasty stuff. And another 16% nuclear. Is that what you want? It’ll take a very long time, if it ever happens (which is very doubtful), to change those numbers significantly towards more benign sources. Why not just drive less? It’s easier, faster, and a whole lot more likely to actually make a difference.

Don’t miss!

Coming Crash To Create A Human Tragedy Of Epic Proportions (John Embry)

Today a man who has been involved in the financial markets for 50 years warned King World News that the coming stock market crash is going to create a human tragedy of epic proportions. John Embry, who is business partners with billionaire Eric Sprott, also discussed what is really happening in the economy. Embry: “I was in downtown Minneapolis over the weekend and I was struck by how few people were in the major stores such as Saks. But there was massive amounts of inventory and the prices were astounding. I bought a leather bag with wheels on it so I could pull it. It was listed at $599. It was then marked down to under $300, and then they gave me another 30% discount when I bought it…. “So this is just more evidence of a struggling retail environment. My experience is indicative of the true state of the economy. We get so many falsified and bogus numbers about the alleged strength of the U.S. economy.

Now there are pockets of strength. I was just talking with someone about how robust things are in Texas. But the big problem is that the average citizen, who is the lead consumer in the United States, is getting seriously squeezed. That’s why they aren’t going to be able to carry the economy. And people need to remember that consumers represent 70% of the economy. So right now the price action in markets doesn’t have anything to do with reality. We’ve seen strength in the stock market this week and we have also seen renewed weakness in gold and silver. The stock market is extremely overvalued and it’s where it is because of monetary creation. They can’t allow that excess monetary creation to be exposed so they suppress the prices of gold and silver temporarily. That’s the reality as we see it today. It’s unsustainable, but for the time being they are able to maintain the illusion.

The central planners, led by the United States, came up with the ingenious plan to suppress gold and silver prices back in the 1990s because there was empirical evidence that gold prices were correlated with real interest rates. That was depicted in a paper that was co-authored by Lawrence Summers in the late 1980s. Thus, a rising gold price would be accompanied by rising real interest rates based on the historical evidence. And this would be problematic in the short run for the economy and financial assets. So they came up with the scheme to suppress both gold and silver prices together because they are interrelated. And this has worked quite well for years. These depressed gold and silver prices have permitted real interest rates to be driven down to negative levels, thus permitting financial asset prices to trade at preposterously high levels. The genius turned out to be in the use of derivatives, naked shorting, and all sorts of arcane financial practices that were designed to control gold and silver prices. This has also permitted fortunes to be made by the elites in financial markets.

And this has worked. You see this enormous split now between the upper 1, 2, 3%, and the rest of society. But unfortunately now we are on the cusp of the stupidity aspect of human behavior, which is what Einstein always believed to be infinite. We now have massive bubbles in stocks, bonds, and urban real estate, which are essentially the collateral for the ludicrously over-levered world financial system.

But with the global economy now weakening virtually everywhere, this bubble-mania has a limited shelf life. And when it comes crashing down it’s going to create a human tragedy of epic proportions. So this is human stupidity run amok. Now as I said last week, we are not debating the ultimate outcome. Instead, we will most likely have a global hyperinflation, followed by a debt clean-out and a new world currency system. However, what can’t be ruled out is a 1930s style debt deflation starting almost immediately in the event of critical mistakes by our so-called genius leaders who believe they have everything under control.

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The Italian Job: Borrowing And Printing Lead To Economic Dead End (Stockman)

Earlier this week Bloomberg published a devastating chart showing real hourly wage growth for the first 60 months of every cycle going back to 1949. The 11 cycle average gain was 9% and the largest was 19% a half century back. Fast forward to the 60 months of ZIRP and QE since the Great Recession officially ended in June 2009, however, and you get a drastically different picture: Real hourly wages have risen by just 0.5%, and in the great scheme of things that’s a rounding error.

Surely the above chart is also flat-out proof that massive money printing doesn’t work. After all, reflating wages, jobs and incomes is what the monetary politburo claims it’s all about. Indeed, the Fed has insouciantly cast a blind eye to the massive bubbles building everywhere in the financial system, and has kept money market rates relentlessly at zero for six years running on the grounds that it is not yet done “stimulating” the labor market. So why does this abysmally failed and dangerous experiment continue unabated—as Yellen will undoubtedly confirm at Jackson Hole? Self-evidently, it is irresistibly convenient to both Wall Street and Washington.

The former gorges on a massive diet of carry trade gambling windfalls thanks to ZIRP and the Greenspan/Bernanke/Yellen “put”; and the latter gets a fiscal get-out-of-jail-free card owing to the Fed’s massive repression of interest rates. Indeed, with the public debt now topping $17.7 trillion, the implicit (and fraudulent) debt service relief from current ultra-low interest rates amounts to upwards of $500 billion per year. Stated differently, where there should be extreme caution on Wall Street, there is actually irrational exuberance beyond Alan Greenspan’s wildest imagination back in December 1996. And where there should be fiscal panic in Washington owing to prospective red ink of another $15 trillion over the next decade (under “un-rosy scenario”), there is unmitigated and universal complacency.

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Well, not for a while.

The Fed Can Now Never Return To Quantitative Easing (MarketWatch)

“Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has, the more one wants.” — Benjamin Franklin

The Federal Reserve is desperate to raise rates so that they can lower them again. Think about that statement for a second. By definition, every day that goes by, we are getting closer to a recession. Yes — a recession. Business cycles still exist, and recessions tend to happen when it seems like everything is good. Feel good about Draghi’s “whatever it takes” moment? Last I checked, Germany and Italy are suffering from contracting GDP, and deflaton risks are meaningfully rising in Europe. In the U.S., the Fed needs to raise rates to have ammunition to fight the next recession, which for all we know, may be coming much sooner than we think as global growth continues to be questioned, and disinflationary forces continue to permeate worldwide. Of course, it remains to be seen if the Fed can possibly do this when inflation remains muted.

There are some that are arguing that another round of quantiative easing is coming. The Fed isn’t done with bond buying because we are in the “QE4EVA” period. I disagree. I think the Fed may never do quantitative easing again. Why? Because if they do, then Yellen would be admitting that the Fed has turned Japanese, and the last thing the Fed wants is to lose credibility by being perceived as a different shade of the Bank of Japan that can never leave the marketplace Deflation is a real problem, and is decades in the making for developed economies. Remember — the problem for all central banks has never been the amount of money in the system. It was, is, and continues to be the usage of money throughout the system. The velocity of money simply isn’t turning in a way that suggests reflation is coming. If anything, the velocity of money has completely crashed despite all kinds of stimulus.

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I believe this means one thing and one thing only: Risk management will likely return with a vengeance on the realization that we are entering a dangerous phase of future economic growth and inflation expectations worldwide. People forget that, mathematically, what matters for longer-term wealth creation is not getting big upside gains, but avoiding big downside losses. Note that the velocity of money peaked some time around the mid 1990s — this is not a trend that happened after the 2008 financial crisis. This is something deeper, and I think another round of QE won’t help, won’t matter, and won’t reverse this trend. So what if the S&P 500 drops 20% in a correction? The Fed may not be able to do anything about it given that all of their tools have failed to actually increase reflationary pressure.

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Inside The Fed: How ZIRP Was Born Out Of Thin Air (Sheehan)

There is little else left in the asset-pricing world than central bankers. The redoubtable Ben Hunt, chief risk officer at Salient investment managers ($20 billion under management), wrote on David Stockman’s Contra Corner: “I’ve spent the past few weeks meeting Salient clients and partners across the country…. When I had conversations [with clients and partners] six months ago, I would get a fair amount of resistance to the notion that narratives dominate markets and that we’re in an Emperor’s New Clothes world. Today, everyone believes that market price levels are largely driven by monetary policy and that we are being played by politicians and central bankers using their words for effect rather than direct communication. No one requires convincing that markets are unsupported by real world economic activity. Everyone believes that this will all end badly, and the only real question is when.”

This might be referred to as “End-of the-Cycle Mispricing, but, what a cycle! End-of-the-Cycle Mispricing discussed the derangement of prices, in all assets. Money managers as a whole have not considered protection for their funds when everyone runs for the door at once. The “catastrophic bond” paper linked to the discussion was specific, but, there are plenty of avenues to construct such protection. What follows is a transcription of just how ignorant, moreover, willingly ignorant, and, it may be, enthusiastically ignorant, was the Bernanke Fed when it decided that holding interest rates at zero% would be its policy. Before plunging through the looking glass, here is the conclusion: If ever there was a time to protect one’s assets from further FOMC derangement, this is it. If you do not (and cannot) design a Personal Protection Plan, buy cash, gold nuggets, and silver eagles.

Reading the transcript from the December 15-16, 2008, FOMC meeting, it is clear the Federal Open Market Committee was embarking on its zero-interest rate policy (ZIRP – which is still all we’ve got) as an experiment. By way of background, the FOMC had cut the Fed funds rate cut from 5.25% on June 29, 2006 to 1.00% on October 29, 2014. Most of reduction had been over the previous few months as the pillars fell: Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs, and Morgan Stanley. The last two converted to commercial banks and received government protection as well as deposit-taking authorization. The December meeting addressed whether the funds rate should be cut to zero (ZIRP), or, to some halfway house. As has been true throughout Bernanke’s chairmanship, the 284-page debate could only have been held in the Eccles Building. The funds rate had been trading below the declared rate for a couple of months. One can only imagine the ecstasy at the Fed on December 12, 2008, when the funds rate traded at 0.00%: the “zero-bound.” This had been Professor Bernanke’s ad pitch since the early 1990s.

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Central Bankers Are Getting Itchy (Bloomberg)

At his Aug. 13 press conference to present the Bank of England’s quarterly inflation report, Governor Mark Carney sashayed around a direct question asking whether an early interest-rate increase might be a helpful way to ensure borrowing costs rise only slowly and gradually. Minutes of the central bank’s most recent policy meeting, released today, suggest his discomfort was warranted — and that an increase is likely even before wages start to grow. Two of the nine Monetary Policy Committee members voted to raise the benchmark rate from its record low 0.5% when they met Aug. 6-7. It’s the first crack in the consensus since July 2011.

“An early rise would facilitate the committee’s aspiration that rises in bank rate should be only gradual,” was an argument put forward by Martin Weale and Ian McCafferty, the two dissenters. Economic circumstances, they said, were “sufficient to justify an immediate rise in bank rate.” The majority disagreed. “For most members, there remained insufficient evidence of inflationary pressures to justify an immediate increase. There would be merit in waiting to see firmer evidence that solid increases in pay growth were in prospect before tightening.” Note the words “in prospect.”

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Bring it!

Fed Officials Said Job Gains May Bring Faster Rate Increase (Bloomberg)

Federal Reserve officials raised the possibility they might raise rates sooner than anticipated, as they neared agreement on an exit strategy, according to minutes of their July meeting. “Many participants noted that if convergence toward the committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated,” the minutes, released today in Washington, read. Fed Chair Janet Yellen has committed to use monetary policy to strengthen the labor market so long as inflation remains in check. “Many participants” at the meeting still also saw “a larger gap between current labor market conditions and those consistent with their assessments of normal levels of labor utilization,” the minutes showed.

The release of the minutes set the stage for Yellen’s speech on labor markets Aug. 22 at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming. She has focused on low labor-force participation, weak wage growth and elevated levels of long-term unemployment to emphasize continued slack. “She’s going to make the case that while some data points are better, universally all the data points aren’t strong, and because we’re not seeing a surge in inflation that gives the Fed a little more leeway to be cautious,” Phil Orlando, chief equity strategist at Pittsburgh-based Federated Investors Inc., said in an interview.

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More Ambrose equals more Keynes.

Nobel Economists Say Policy Blunders Pushing Europe Into Depression (AEP)

An array of Nobel economists have launched a blistering attack on the eurozone’s economic strategy, warning that contractionary policies risk years of depression and a fresh eruption of the debt crisis. “Historians are going to tar and feather Europe’s central bankers,” said Professor Peter Diamond, the world’s leading expert on unemployment. “Young people in Spain and Italy who hit the job market in this recession are going to be affected for decades. It is a terrible outcome, and it is surprising how little uproar there has been over policies that are so stunningly destructive,” he told The Telegraph at a gathering of Nobel laureates at Lake Constance. “It could be avoided with better use of stimulus, and spending on infrastructure. That would boost growth and helped the debt to GDP ratio,” Mr Diamond said, echoing a widely-heard critique among the Nobel elites that Europe’s policies have been self-defeating.

Professor Joseph Stiglitz said austerity policies had been a “disastrous failure” and are directly responsible for the failed recovery over the first half of this year, with Italy falling into a triple-dip recession, France registering zero growth and even Germany contracting in the second quarter. “There is a risk of a depression lasting years, leaving even Japan’s Lost Decade in the shade. The eurozone economy is 20pc below its trend growth rate,” he said. Mr Stiglitz said the eurozone authorities had massively underestimated the contractionary effects of austerity and continue to persist in error despite claims that the crisis is over. “I am very concerned about the future of monetary union, and they haven’t yet felt the impact of geopolitical tensions.” He said the eurozone needs joint debt issuance to repair the structural flaws of EMU, but almost no progress has been made. “Europe suffers from fatal politics,” he said.

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Pot and kettle.

Angela Merkel Scolds Italy And France Over Faltering Eurozone Recovery (Guardian)

Angela Merkel has delivered a sharp rebuke to Italy and France for hindering the eurozone’s recovery by breaking longstanding fiscal rules. The German chancellor, under pressure following a fall in GDP in the second quarter, said faltering growth was the direct result of the 18-member currency zone’s inability to punish those countries that ran high deficits in contravention of limits set by Brussels. She said Germany had shown it was possible to cut the government’s annual spending deficit while at the same time improve the economic situation. Speaking to an audience of Nobel prize-winning economists in the Bavarian town of Lindau, she said individual countries had ignored Brussels and the European Central Bank (ECB) to continue running larger deficits than allowed by the fiscal rules. “We have very little, if any, possibility of sanctioning those countries that break the rules,” she said.

Her comments echoed those of ECB president Mario Draghi, who last month warned that without moves to strengthen the fiscal pact and impose punishments on rule-breaking countries, the eurozone project could flounder. The two speeches highlight the growing frustration among senior eurozone policymakers at the failure of France and Italy to meet the 3% deficit target set by Brussels with Germany’s support. The eurozone economy stalled in the last quarter following poor output figures from France and Italy and a slowdown in Germany, much of it blamed on a drop in demand for German goods from its largest neighbours and the Ukraine crisis. However, critics of Merkel and her finance minister Wolfgang Schaeuble, argue that Germany is the source of the currency zone’s problems following its pursuit of balanced budgets while harder-hit countries have yet to rebuild their banking sectors and bolster consumer confidence.

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Euro-Area Shows Signs of Weakening as Surveys Miss Forecasts (Bloomberg)

Euro-area manufacturing and services activity slowed in August, signaling that the economy of the 18-nation region remains vulnerable to weak inflation and rising tensions with Russia. A Purchasing Managers Index for both industries fell to 52.8 from 53.8 in July, London-based Markit Economics said today. A reading exceeding 50 indicates expansion. Economists predicted a decline to 53.4, according to the median of 20 estimates in a Bloomberg News survey. While the gauge has signaled growth for more than a year, economic expansion in the euro area unexpectedly halted in the second quarter amid weakness in the region’s three largest economies.

With inflation below 1% since October, unemployment near record highs and rising political tensions, the European Central Bank unveiled a stimulus package in June that policy makers say will take months to show results. “If there was a risk of a strong impact from the Russia-Ukraine crisis, this data can be taken as a sign of resilience of the euro-area economy,” said Chiara Corsa, an economist with UniCredit SpA in Milan. Still, data signal “that the slowdown in global trade is hurting growth. This should ring an alarm bell for the outlook in the third quarter,” she said.

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2014 Consensus US GDP Growth Forecast Now Impossible (STA)

There is much hope pinned on continuing economic recovery in the United States despite a deterioration of the global economy virtually everywhere else. According to the May 2014 Blue Chip Economic Consensus Forecasts: “U.S. real GDP is expected to increase by 2.4% in 2014 as a whole, 0.5 of a%age point lower than the 2.9% growth rate projected in the February 2014 forecast. For 2015 the consensus forecast now expects an overall 3.0% growth in U.S. real GDP, same as the February 2014 forecast.”

Let’s do some quick math. Real, inflation-adjusted, Gross Domestic Product (GDP) for the first quarter of 2014 was -2.13% annualized after being revised slightly higher from -2.96%. The first estimate of the second quarter’s economic growth was 3.89% annualized. If we average the two together, the first half of 2014 is currently sporting an annualized growth rate of 0.88%. Got it? Here is my point. In order for real economic growth to hit the current target of 2.4% annualized for the entire year, the final two-quarters of 2014 must hit a minimum growth rate of 3.92%. The chart below shows the history of quarterly annual growth rates of the economy since 2006.

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Unexpected, anyone?

US Car Repos Soar 70% As Auto Subprime Bubble Pops (Zero Hedge)

While on the surface the US economy has been chugging along from GDP-crashing “snow in the winter” to GDP-cratering “warmer|cooler than expected weather in the spring|summer|fall”, with bouts of GDP-boosting inventory accumulation inbetween, in recent months two very disturbing trends about that all important dynamo behind the economy, the US consumer, have emerged. On one hand we wrote three weeks ago that a “shocking” 77 million, or one third, of Americans face debt collectiors: a statistic which crushes any suggestion that US household credit is substantially improving based on trends in 30, 60, or 90-day delinquency, as it means that the real pain is not at the near-end of the default/delinquency timetable, but the far end, which incidentally has just as dire an impact on one’s credit score as a plain vanilla default (and explains why none other than Fair Issac has jumped in to “adjust” its credit methodology to artificially boost FICO scores of these millions of Americans).

On the other hand, we have been closely following the ongoing deterioration of the car subprime loan bubble: something that both Bloomberg and the Fed have both also been paying close attention to recently, yet a bubble which nobody wants to burst, because as we wrote several days ago, it is none other than the subprime car loan bubble that allowed car production to surge the most last month since Obama’s Cash for Clunkers capital misallocation program, in the process lifting overall manufacturing and Industrial Production, and thus GDP. Earlier today Experian released its latest, Q2, metrics that tie these two very worrying trends together, namely the trend in delinquencies, defaults and repossessions. As NBC summarizes: “The repo man is getting very busy as a growing number of car and truck owners are struggling to make their monthly auto loan payments.

Experian, which analyses millions of auto loans, said Wednesday that the%age of those loans that were delinquent or ended up in default with the vehicle being repossessed surged in the second quarter of this year.” Hyperbole? Hardly. In fact, the auto loan subprime bubble may be the latest to burst (after student loans) as the rate of car repossessions jumped 70.2% in the second quarter, with much of that increase coming from finance companies not run by automakers, banks or credit unions. The good news: the%age of auto loans that end in default is just 0.62% of all auto loans. However, as everyone but the Fed knows, what matters is the flow, not the stock, and the direction and acceleration in defaults simply means that the maximum saturation point has been reached and going forward lenders will experience ever greater losses, which in turn will limit their willingness to offer subprime loans to US consumers desperate to find a house (because clearly one doesn’t need to home when one can sleep in their Chevy Tahoe).

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One of many bad numbers from China.

China’s Services Sector Growth Slows to Nine-Year Low (IBTimes)

China’s services sector growth has slowed, largely due to persisting weakness in the property market. The results of a survey, compiled by HSBC and Markit, showed that China’s services purchasing managers’ index (PMI) plummeted to a near nine-year low of 50.0 in July from a 15-month high of 53.1 in June. Meanwhile, a government-compiled services PMI for the non-manufacturing sector has eased to a six-month low of 54.2 in July from 55 in June, logging its weakest reading since January. A reading above the 50 threshold demarcates expanding activity from a contraction. Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: “…Both the new business and outstanding business indices declined from their levels in June.

“The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities as property related activity, such as agencies and residential services, see less business. Meanwhile, the employment and business sentiment indices remain stable. In the coming months, we think the service sector may get some support from the recovery in investment. “But today’s data points to the need of continued policy support to offset the drag from the property correction and consolidate the economic recovery,” Hongbin added.

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Not nearly enough.

Bank of America Braced For $17 Billion Settlement Over Mortgages Case (FT)

The US Department of Justice is poised to announce a record $16bn-$17bn settlement with Bank of America over allegations it misled buyers of mortgage-backed securities that proved to be packaged with faulty loans. The record settlement, expected to be announced on Thursday, would be the largest arising from the subprime crisis, and one of the largest ever to be agreed in corporate America. US prosecutors are also preparing a civil lawsuit against Angelo Mozilo, co-founder of Countrywide Financial, in a final effort to target the figure most associated with the subprime mortgage boom which preceded the financial crisis. The US attorney’s office in Los Angeles is working on the case and plans charges against several other former Countrywide executives, according to a person familiar with the matter.

The pursuit of Mr Mozilo, first reported by Bloomberg News, could result in a suit being filed in the coming weeks. “We do not comment on rumours concerning any investigation. There is no sound basis, in law or fact, for the government to bring a claim against Mr Mozilo,” said David Siegel, a lawyer for the Countrywide co-founder. He added that his client “stands virtually alone among banking and mortgage executives to actually have been pursued by this government and already paid a record penalty in settlement”. BofA acquired Countrywide in 2008 in a $4bn deal that is widely considered to be one of the worst corporate acquisitions of all time, costing the bank billions of dollars in subsequent losses and litigation.

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To think that guy’s been out of prison all those years.

Countrywide’s Mozilo Said to Face U.S. Suit Over Loans (Bloomberg)

Countrywide Financial Corp. co-founder Angelo Mozilo hasn’t entirely escaped prosecutors’ wrath for his company’s risky lending. A U.S. government task force wielding an innovative legal strategy plans to bring a civil case against him over the excesses of the subprime-mortgage boom. The last-ditch effort comes three years after the Justice Department abandoned a criminal probe of Mozilo. In 2012, public anger over the lack of prosecutions stemming from the financial crisis spurred the Obama administration to create a team devoted to investigating fraud in mortgage-backed securities. The group has wrestled at least $20 billion from Wall Street banks using a law with a relatively low threshold for suing and a long period to bring cases.

Relying on the same anti-fraud law, the Financial Institutions Reform, Recovery and Enforcement Act, the U.S. attorney’s office in Los Angeles is preparing to sue Mozilo and as many as 10 other former Countrywide employees, according to two people with knowledge of the matter. The case may be helped along by an imminent U.S. settlement with Bank of America, which acquired Countrywide in 2008. That resolution may come as soon as today with Bank of America expected to pay as much as $17 billion and to acknowledge improper mortgage practices at Countrywide.

U.S. prosecutors dropped a criminal probe of Mozilo in early 2011, a person with knowledge of the matter said at the time. The Citizens for Responsibility and Ethics in Washington, a watchdog group, sued the Justice Department in June to try to obtain its records detailing investigations of Mozilo and Countrywide. The group faulted the government for failing to prosecute either Mozilo or the company “despite substantial evidence of wrongdoing.” Mozilo agreed to settle the SEC case in October 2010 by paying a $22.5 million fine and disgorging $45 million of gains from stock sales at what the regulator said were inflated prices. Bank of America covered a portion of his penalties.

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Oil Industry On Borrowed Time As Switch To Gas And Solar Accelerates (AEP)

There may be little point battling icebergs to drill in the Arctic, or in trying to extract oil from the ultra-deepwater fields in the mid-Atlantic, beneath layers of salt, three kilometres into the Earth. The props beneath the global oil industry are slowly decaying. The big traded energy companies resemble the telecom giants of the late 1990s, heavily leveraged to a business model already threatened by fast-moving technology. Citigroup warns – or cheerfully acclaims, depending on your point of view – that world energy markets are entering a period of “extreme flux”, with oil caught in triple encirclement by cheap natural gas, much more efficient vehicles and breathtaking advances in solar power as scientists crack the secrets.

The combined effect is to “bend” to the curve of global oil use over coming years, eroding the assumptions that have underpinned a threefold rise in Western oil industry debt to $600bn since 2005, much of it to hunt for crude in prohibitively expensive places. Costs rose 9% in 2012 and 11% last year, according to the US Energy Department. There may be little point battling icebergs to drill in the Arctic, or in trying to extract oil from the ultra-deepwater fields in the mid-Atlantic, beneath layers of salt, three kilometres into the Earth. The “oil intensity” of global GDP has already halved since 1980s. We are becoming more frugal. Gasoline demand in the OECD rich states has been sliding in absolute terms since 2007, punctuated by ups and downs, but dropping overall from 15.5m barrels a day (b/d) of crude to 14m b/d.

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TEXT

Crude Oil ‘Super Spike’ May Be Coming (Yahoo)

Another bad day for traders bullish on energy as WTI crude oil slid 2%, hitting its lowest level since January. Across the pond Brent crude traded at its lowest level in almost 14 months. From the heady days of mid-2008 when it traded at nearly $150 a barrel, crude oil has had quite a rocky ride. After sliding down to the $30s and rallying back around $120, crude has settled in around the $90 to $110 range for the past two years. Commodity traders and analysts have wondered why oil hasn’t gone higher. Geopolitical tensions abound across the world; the Middle East seemingly hasn’t been this unstable in years. In fact, some believe the commodity could actually go lower. Blake Morrow posits that with North American production rising, vehicles becoming more efficient, and crude oil’s inability to rally with global equities, all signs point to a bearish future for oil.

Dan Dicker, president of MercBloc and author of Oil’s Endless Bid says much has changed in the past few years, other factors also explain why oil has stagnated recently: Investment banks, particularly Morgan Stanley, Goldman Sachs, and JPMorgan have not only left oil trading but have also abandoned the oil marketing business, which used to bring a steady supply of new players to the energy market. Individual oil traders (including Dicker himself) have disappeared as well. Dicker speculates around 3,000 traders have left the industry. Remaining funds are trend and algorithmic firms with long-term positions already established. The big alpha players remaining in the oil trading business are physical commodity, private firms like Glencore, Vitol, and Trifugura among others. Dicker believes these changes have all but killed immediate speculative activity, which has been good for consumers in the short term, but will be bad for the prospects of cheaper oil in the long term.

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TEXT

Ten Lumps of Coal Info (Energy Burrito)

While I’ve been digging into a bunch of different commodities recently, there have been a number of interesting bits and bobs relating to coal that I’ve been squirreling away. Hence, here are ten tidbits that I wanted to share:

1) Coal is currently used to meet 30% of global primary energy needs, which is the highest level since 1970. It is used to generate 41% of the world’s electricity and is used in the production of 70% of the world’s steel.

2) According to the World Resources Institute, almost 1,200 coal-fired power plants had been proposed globally in 2012, with China and Pakistan accounting for the majority of these projects.

3) Japan, a country with no natural energy resources to speak of, invested $19.7 billion in overseas coal projects in the last seven years according to the NRDC. Germany’s state development bank, KfW, followed a similar path, lending $3.7 billion in the last eight years to coal projects in Greece, India, Serbia, South Africa and Australia.

4) As the chart below from the IEA illustrates, international trade in coal is hardly on the wane. Coal exports totaled 1,300 million tonnes last year. The top five coal importers are China, Japan, India, Korea, and Chinese Taipei (note: all in Asia), while the top five exporters are Indonesia, Australia, Russia, the US and Colombia).

5) Recent research states as much as one fifth of global exports lose money at $72 a ton.

6) Over 2,000 smaller mines in China are expected to close by 2015, as a growing share of coal production is uneconomic. According to data from the National Bureau of Statistics, output in China – the world’s biggest producer – rose to 3.68 billion tons in 2013, up from 3.65 billion the previous year.

7) Beijing is banning coal use in six main districts of Beijing by 2020 in an effort to combat air pollution. It will stop the use of coal and coal products and shut down all coal-fired power plants and other coal facilities. Coal accounts for approximately one quarter of the city’s total energy consumption.

8) US coal consumption is expected to grow by 2.5% to 949 million short tons this year, according to the EIA, due to its relative attractiveness in the face of higher year-over-year natural gas prices. It is expected to drop by 2.7% in 2015, however, due to coal plant retirements (h/t the MATS ruling from the EPA).

9) US coal production is expected to grow 2.5% this year, according to the EIA, due to aforementioned higher consumption, as well as a need to replenish inventories.

10) Over 60% of Africa lacks access to electricity (aka over 600 million people). The EIA projects Africa to increase its coal consumption by 70% by 2040. It has 35 billion tons of recoverable coal reserves, but as the BP statistical review highlights, comparatively low levels of both production and consumption compared with other regions of the world.

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Ice loss contributes 1 centimeter (0.4 inch) per decade to sea level rise, and this rate has doubled since 2009.

Greenland, Antarctic Ice Loss Doubles In Past 5 Years (BBC)

A new assessment from Europe’s CryoSat spacecraft shows Greenland to be losing about 375 cu km of ice each year. Added to the discharges coming from Antarctica, it means Earth’s two big ice sheets are now dumping roughly 500 cu km of ice in the oceans annually. “The contribution of both ice sheets together to sea level rise has doubled since 2009,” said Angelika Humbert from Germany’s Alfred Wegener Institute. “To us, that’s an incredible number,” she told BBC News. In its report to The Cryosphere journal, the AWI team does not actually calculate a sea-level rise equivalent number, but if this volume is considered to be all ice (a small part will be snow) then the contribution is likely to be on the order of just over a millimetre per year. This is the latest study to use the precision altimetry data being gathered by the European Space Agency’s CryoSat platform.

The satellite was launched in 2010 with a sophisticated radar instrument specifically designed to measure the shape of the polar ice sheets. The AWI group, led by senior researcher Veit Helm, has taken just over two years’ worth of data centred on 2012/2013 to build what are called digital elevation models (DEMs) of Greenland and Antarctica, and to asses their evolution. These models incorporate a total of 14 million individual height measurements for Greenland and another 200 million for Antarctica. When compared with similar data-sets assembled by the US space agency’s IceSat mission between 2003 and 2009, the scientists are able then to calculate changes in ice volume beyond just the CryoSat snapshot.

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China buys ivory. That’s why this happens. How hard is it to say the buck stops here?

Elephant Poaching Deaths Reach Tipping Point In Africa (BBC)

Africa’s elephants have reached a tipping point: more are being killed each year than are being born, a study suggests. Researchers believe that since 2010 an average of nearly 35,000 elephants have been killed annually on the continent. They warn that if the rate of poaching continues, the animals could be wiped out in 100 years. The work is published in the Proceedings of the National Academy of Sciences. Lead author George Wittemyer, from Colorado State University, said: “We are shredding the fabric of elephant society and exterminating populations across the continent.”

The illegal trade in elephant tusks has soared in recent years, and a kilogram of ivory is now worth thousands of dollars. Much of the demand has been driven by a rapidly growing market in Asia. If this is sustained, then we will see significant declines over time.” While conservationists have long said the outlook was bleak, this study provides a detailed assessment of the impact this is having on Africa’s elephants. The researchers have found that between 2010 and 2013, Africa lost an average of 7% of its entire elephant population each year. Because elephant births boost the population by about 5% annually, this means that overall more of the animals are being killed than are being born.

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8000 earthquakes in 2 weeks.

Iceland Registers 300 Earthquakes In 8 Hours, Evacuates Volcano Area (BBC)

Iceland’s authorities have evacuated an area close to the country’s Bardarbunga volcano over fears it could erupt. The area, which is more than 300km (190 miles) from the capital Reykjavik, has no permanent residents but sits within a national park popular with tourists. The move came as geologists said about 300 earthquakes had been detected in the area since midnight on Tuesday. Iceland’s Eyjafjallajokull volcano erupted in 2010, producing an ash cloud that severely disrupted air travel. The national civil protection agency said the decision to evacuate more than 300 people close to Bardarbunga was a “precautionary” safety measure. “It cannot be ruled out that the seismic activity in Bardarbunga could lead to a volcanic eruption,” it added.

On Monday, Iceland’s meteorological office raised its assessment of the risk level to the aviation industry from yellow to orange. The orange alert, the fourth level on a five-grade scale, indicates that a volcano is showing “escalating unrest with increased potential of eruption”. The Bardarbunga volcanic system is located under the north-west region of Iceland’s Vatnajokull glacier. Authorities say any eruption in the volcano, which sits under an ice cap, could result in flooding of the area north of the glacier. The volcano was said to be stable on Wednesday but scientists warned that it is big enough to disrupt air traffic over the Atlantic if an eruption does occur. The Eyjafjallajokull eruption in April 2010 caused the largest closure of European airspace since World War Two, with losses estimated at between 1.5bn and 2.5bn euros (£1.3-2.2bn).

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