May 212018
 


Margaret Bourke-White Great Ohio River Flood, Louisville, Kentucky 1937

 

The Soaring Dollar Will Lead To An “Explosive” Market Repricing (ZH)
Draghi Calls for Consolidation of Debts? (Martin Armstrong)
Italy’s Organic Crisis (Thomas Fazi)
Italy Has A New Government As Populist Parties Agree On New Premier (ZH)
Argentina: From The “Confidence Fairy” To The -Still Devilish- IMF (CF)
US-China Trade War ‘On Hold’ As America Backs Off On Tariffs (Ind.)
Bill Aimed At Saving Community Banks Is Already Killing Them (Dayen)
EU Blocking Cities’ Efforts To Curb Airbnb (G.)
End Of Greek Bailout Means Fresh Cuts To Salaries, Pensions (K.)
Why Boomtown New Zealand Has A Homelessness Crisis
Hundreds Of Homeless People Fined And Imprisoned In UK (G.)
Scientists Revise Their Understanding of Novichok (Slane)

 

 

Dollar shortage grows as interest rates grow.

The Soaring Dollar Will Lead To An “Explosive” Market Repricing (ZH)

Something curious took place one month ago when the PBOC announced on April 17 that it would cut the reserve requirement ratio (RRR) by 1% to ease financial conditions: it broke what until then had been a rangebound market for both the US Dollar and the US 10Y Treasury, sending both the dollar index and 10Y yields soaring…

… which led to an immediate tightening in financial conditions both domestically and around the globe, and which has – at least initially – manifested itself in a sharp repricing of emerging market risk, resulting in a plunge EM currencies, bonds and stocks.

Adding to the market response, this violent move took place at the same time as geopolitical fears about Iran oil exports amid concerns about a new war in the middle east and Trump’s nuclear deal pullout, sent oil soaring – with Brent rising above $80 this week for the first time since 2014 – a move which is counterintuitive in the context of the sharply stronger dollar, and which has resulted in even tighter financial conditions across the globe, but especially for emerging market importers of oil.

Meanwhile, all this is playing out in the context of a world where the Fed continues to shrink its balance sheet – a public sector “Quantitative Tightening (QT)” – further tightening monetary conditions (i.e., shrinking the global dollar supply amid growing demand), even as high grade US corporate bond issuance has dropped off a cliff for cash-rich companies which now opt to repatriate cash instead of issuing domestic bonds, with the resulting private sector deleveraging, or “private sector QT”, further exacerbating tighter monetary conditions and the growing dollar shortage (resulting in an even higher dollar).

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Europe has no bond market left. Japan has no bond market left. All they have is central banks.

Draghi Calls for Consolidation of Debts? (Martin Armstrong)

COMMENT: You were here in Brussels a few weeks ago. Suddenly, the ECB is talking about the need to merge the debts to prevent a crisis. So your lobbying here seems to work. – RGV, Brussels. REPLY: I do not lobby. It is rather common knowledge I have made those proposals since the EU commission attended our World Economic Conference held back in 1998 in London. I focused on the reason the Euro would fail if the debts were not consolidated. So it is not a fair statement to say I meet in Brussels to lobby for anything. I meet with people who call me in because of a crisis brewing.

So everyone else understands what this is about, the ECB President Mario Draghi has come out and proposed interlocking the euro countries to create a “stronger” and “new vehicle” as a “crisis instrument” to save Europe. He is arguing that this should prevent countries from drifting apart in the event of severe economic shocks. Draghi has said it provides “an extra layer of stabilization” which is a code phrase for the coming bond crash. He has conceded that the legal structure is difficult because what he is really talking about is the consolidation of national debts into a single Eurobond market. There is no bond market that is viable in Europe after the end of Quantitative Easing. There will be NO BID.

There is no viable bond market left in Europe. The worst debt is below US rates only because the ECB is the buyer. Stop the buying and the ceiling comes crashing down. This is why what he is saying is just using a different label. He is not calling it debt consolidation, just an extra layer of stabilization to bind the members closer together. It will be a hard sell and it may take the crisis before anyone looks at this. You have “bail-in” policies because of the same problem. If the banks in Italy need a bailout from Brussels, then other members will look at it as a subsidization for Italy which is unfair. There is no real EU unity behind the curtain which is when the debt was NEVER consolidated from day one. They wanted a single currency, but not a single responsibility for the debt.

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“..20% of Italy’s industrial capacity has been destroyed, and 30% of the country’s firms have defaulted..”

Italy’s Organic Crisis (Thomas Fazi)

The Italian Marxist Antonio Gramsci coined the term “organic crisis” to describe a crisis that differs from ”ordinary” financial, economic, or political crises. An organic crisis is a “comprehensive crisis,” encompassing the totality of a system or order that, for whatever reason, is no longer able to generate societal consensus (in material or ideological terms). [..] Gramsci was talking about Italy in the 1910s. A century later, the country is facing another organic crisis. More specifically, it is a crisis of the post-Maastricht model of Italian capitalism, inaugurated in the early 1990s.

[..] The downfall of the political establishment—and the rise of the “populist” parties—can only be understood against the backdrop of the “the longest and deepest recession in Italy’s history,” as the governor of the Italian central bank, Ignazio Visco, described it. Since the financial crisis of 2007–9, Italy’s GDP has shrunk by a massive 10%, regressing to levels last seen over a decade ago. In terms of per capita GDP, the situation is even more shocking: according to this measure, Italy has regressed back to levels of twenty years ago, before the country became a founding member of the single currency. Italy and Greece are the only industrialized countries that have yet to see economic activity surpass pre–financial crisis levels.

As a result, around 20% of Italy’s industrial capacity has been destroyed, and 30% of the country’s firms have defaulted. Such wealth destruction has, in turn, sent shockwaves throughout the country’s banking system, which was (and still is) heavily exposed to small and medium-sized enterprises (SMEs). Italy’s unemployment crisis continues to be one of the worst in all of Europe. Italy has an official unemployment rate of 11% (12% in southern Italy) and a youth unemployment rate of 35% (with peaks of 60% in some southern regions). And this is not even considering underemployed and discouraged workers (people who have given up looking for a job and therefore don’t even figure in official statistics).

If we take these categories into consideration, we arrive at a staggering effective unemployment rate of 30%, which is the highest in all of Europe. Poverty has also risen dramatically in recent years, with 23% of the population, about one in four Italians, now at risk of poverty—the highest level since 1989.

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Europe gets nervous.

Italy Has A New Government As Populist Parties Agree On New Premier (ZH)

Taking the biggest step toward forming Italy’s next government, the head of the anti-immigration League party Matteo Salvini said he’s reached a deal with Five Star leader Luidi Di Maio on forming a populist government, and picked a premier. According to a report in Corriere, Florence University law professor Giuseppe Conte was chosen as prime minister, while Matteo Salvini would be proposed as interior minister, and Five Star head Luigi and Di Maio would be labor minister. On Saturday, Il Messaggero reported that Salvatore Rossi, the Bank of Italy’s director general, could be picked as finance minister.

Today, Ansa added that according to Di Maio, Five Star will head joint ministry of economic development and labor; separately Giancarlo Giorgetti, Matteo Salvini’s right-hand man, will be proposed as economy minister, while Nicola Molteni would become minister of the infrastructure and transport and Gian Marco Centinaio would head the department of Agriculture and Tourism. ANSA added that Salvini will present the proposal to President Sergio Mattarella on Monday. As Bloomberg adds, the endgame follows a week of turmoil in Italian bonds and stocks triggered by reports about the coalition’s spending plans and rejection of European Union budget rules.

Italy’s 10-year yield spread over German bonds shot up to 165 bps on Friday, the most since October, prompting a warning from Paris. French Finance Minister Bruno Le Maire said in a Sunday interview with Europe 1 radio that “if the new government took the risk of not respecting its commitments on debt, the deficit and the cleanup of banks, the financial stability of the entire euro zone will be threatened.” Salvini fired back on Twitter, suggesting the warning was “unacceptable” interference. “Italians first!” he said, clearly referencing Donald Trump.

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No crisis until now because so much was borrowed. Crisis now because so much was borrowed. It’s like a blue print for the entire world.

Argentina: From The “Confidence Fairy” To The -Still Devilish- IMF (CF)

[..] looking at the external front, one may even be forgiven for asking: why did this crisis take so long to burst? Argentina was haemorrhaging dollars for many years, and with no sign of reversal: since 2016 the domestic non-financial sector acquired an accumulated amount of USD 41 billion in external assets. During the same period, the current account deficit totalled another USD 30 billion, in the form of trade deficit, tourism deficit, profit remittances by foreign companies and increasing interest payments. The well-known factor that allowed all these trends to last until now is the foreign borrowing spree that involved the government, provinces, firms, and the central bank, including the inflow from short-term investors for carry trade operations.

In the case of debt issuance, since 2016 the central government, provinces and private companies, have issued a whopping USD 88 billion of new foreign debt (13% of GDP). In the case of carry trade operations, since 2016 the economy recorded USD 14 billon of short-term capital inflows (2% of GDP). The favourite peso-denominated asset for this operations were the debt liabilities of the central bank called LEBAC (Letters of the Central Bank). Because of this, the outstanding stock of this instrument has now become the centre of all attention. It is important to understand the LEBACs. They were originally conceived as an inter-bank and central bank liquidity management instrument.

Since the lifting of foreign exchange and capital controls and the adoption of inflation targeting, the stock of LEBACs grew by USD 18 billion. Moreover, the composition of holders has changed significantly since 2015: At that time, domestic banks held 71% of the stock, and other investors held 29%. In 2018 that proportion has reverted to 38% banks/62% to other non-financial institution holders, which includes other non-financial public institutions (such as the social security administration) (17%), domestic mutual investment funds (16%), firms (14%), individuals (9%), and foreign investors (5%). That means that a large part of all the new issuance of LEBAC is held by investors outside the regulatory scope of the central bank, especially individuals and foreign investors. [..] these holdings could easily be converted into foreign currency, causing a large FX depreciation.

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They’re talking.

US-China Trade War ‘On Hold’ As America Backs Off On Tariffs (Ind.)

The US will hold off on imposing steep tariffs on China that ignited fears of a trade war as both sides pursue a broader deal, a top economic official said. “We’re putting the trade war on hold,” Treasury secretary Steve Mnuchin said during an appearance on Fox News Sunday. “We have agreed to put the tariffs on hold”. The announcement of a detente in the escalating trade dispute came after Chinese officials visited Washington last week, leading the White House to release an optimistic statement about both sides agreeing to take “measures to substantially reduce the United States trade deficit in goods with China” and to work on expanding trade and protecting intellectual property.

Donald Trump has railed against trade imbalances, particularly with China, as he seeks to renegotiate America’s economic relationship with other nations he accuses of exploiting the US. Breaking with some of his top economic advisers, Mr Trump announced earlier this year that he would levy tariffs on steel and aluminium. He also signed a memorandum seeking tariffs on $60bn worth of Chinese goods. [..] Mr Mnuchin signalled that America was using the leverage from tariff threats to pivot to negotiation, saying talks with Chinese officials had produced “very meaningful progress” – including a “Very productive” oval office meeting between Mr Trump and a top Chinese official.

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Unintended?

Bill Aimed At Saving Community Banks Is Already Killing Them (Dayen)

After initial reluctance, House Republicans have finally reached an agreement to move forward on a bipartisan bank deregulation bill that the Senate passed in March. Its stated aim — to help rural community banks thrive against growing Wall Street power — appears to have been enough to power it across the finish line. But banking industry analysts say the bill is already having the opposite effect, and its loosening of regulations on medium-sized banks is encouraging a rush of consolidation — all of which ends with an increasing number of community banks being swallowed up and closed down. “We absolutely expect bank consolidation to accelerate,” Wells Fargo’s Mike Mayo told CNBC the day after the Senate passed the deregulation bill in March.

The reason? Banks no longer face the prospect of stricter and more costly regulatory scrutiny as they grow. And regional banks in Virginia, Ohio, Mississippi, and Wisconsin have already taken note before the bill has even passed into law, announcing buyouts of smaller rivals. The expected consolidation simply furthers an existing trend. Community banks have been struggling for decades against an epidemic of consolidation; the number of banks in America has fallen by nearly two-thirds in the past 30 years. Ironically, the one state that has seemingly figured out how to arrest this systemic abandonment of smaller communities is North Dakota, the home state of the bill’s co-author, Democratic Sen. Heidi Heitkamp. That’s because North Dakota has a public bank.

Using idle state tax revenue as its deposit base, the Bank of North Dakota partners with community lenders on infrastructure, agriculture, and small business loans. It has thrived, earning record profits for 14 straight years, which have funneled back into state coffers. And while Heitkamp has complained that the Dodd-Frank Act has been disastrous for community banks, in North Dakota they appear to be doing well. According to a Institute for Local Self-Reliance analysis of Federal Deposit Insurance Corp. data, North Dakota has more banks per capita than any other state, and lends to small businesses at a rate that is four times the national average.

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The wonders of lobbying.

EU Blocking Cities’ Efforts To Curb Airbnb (G.)

The explosive rise of short-stay Airbnb holiday rentals may be shutting locals out of housing and changing neighbourhoods across Europe, but cities’ efforts to halt it are being stymied by EU policies to promote the “sharing economy”, campaigners say. “It’s pretty clear,” said Kenneth Haar, author of UnfairBnB, a study published this month by the Brussels-based campaign group Corporate Europe Observatory. “Airbnb is under a lot of pressure locally across Europe, and they’re trying to use the top-down power of the EU institutions to fight back.” While it might have started as a “community” of amateur hosts offering spare rooms or temporarily vacant homes to travellers, Airbnb had seen three-digit growth in several European cities since 2014 and was now a big, powerful corporation with the lobbying clout to match, Haar said.

The platform lists around 20,500 addresses in in Berlin, 18,500 in Barcelona, 61,000 in Paris and nearly 19,000 in Amsterdam. Data scraped by the campaign group InsideAirbnb suggests that in these and other tourist hotspots, more than half – sometimes as many as 85% – of listings are whole apartments. Many of the properties are also rented out year-round, removing tens of thousands of homes from the residential rental market. Even in cities where short-term lets are now restricted, about 30% of Airbnb listings are available for three or more months a year, the data indicates. In those where they are not, such as Rome and Venice, the figure exceeds 90%.

[..] local attempts to protect residents’ access to affordable housing and preserve the face of city-centre neighbourhoods are being undermined, campaigners say, by the EU’s determination to see the “collaborative economy” as a key future driver of innovation and job creation across the bloc. “The commission seems almost hypnotised by the prospect of a strong sharing economy, and not really interested in its negative consequences,” said Haar. “Commissioners talk about ‘opportunities, not threats’. The parliament, too, recently condemned cities’ attempts to restrict lettings on online platforms.”

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The torture never stops. Death by a thousand cuts.

End Of Greek Bailout Means Fresh Cuts To Salaries, Pensions (K.)

Millions of salaried workers and pensioners stand to lose at least one monthly payment within two years, in 2019 and 2020. For Greece to boast of a successful – as the government desires – exit from the third bailout program without facing any obstacles by August, the Finance Ministry has ruled out the option of avoiding a reduction to pensions from 2019 and will also be proceeding with demands to reduce the minimum tax threshold as of 2020. [..] January 2019 is when the barrage of cuts to pensions is due to start, lasting at least until 2022, with reductions to main as well as auxiliary pensions and also the abolition of family benefits. The bulk of cuts will affect some 1.1 million retirees, who will see their main pension slashed as of this December (when the January 2019 pensions are paid out) by up to 18%.

In total, in the private and public sector, the reduction of pension expenditure from this particular measure in 2019 is estimated at 2.13 billion euros. Reductions will start at 5 euros a month and may reach up to 350 euros a month. There will even be cuts to pensions where there is no personal difference, owing to the abolition of family benefits currently being paid out with the pensions in the public and private sectors. This is expected to concern around 1 million pensioners. Some 200,000 pensioners will also be affected by the cut of the personal difference from auxiliary pensions. According to the midterm fiscal plan, the reduction in 2019 will amount to savings of 232 million euros for state coffers, which is the amount pensioners will also be deprived of.

According to the government’s plans, the sum of cuts that will become evident as of this December will mean that new pensions will eventually be 30 percent below the original level before the law introduced in May 2016 by then labor minister Giorgos Katrougalos. Therefore, the vast majority of monthly pensions will hover in the 700-euro range, even for retirees who used to bring in an average of 1,300 euros.

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“They’re a long way down a hole that was created by somebody else..”

Why Boomtown New Zealand Has A Homelessness Crisis

New Zealand’s dairy-fuelled economy has for several years been the envy of the rich world, yet despite the rise in prosperity tens of thousands of residents are sleeping in cars, shop entrances and alleyways. The emerging crisis has created a milestone that New Zealanders won’t be proud of: the highest homelessness rate among the 35 high-income OECD countries. It’s a curious problem afflicting boom towns where some residents get pushed onto the streets as they can no longer afford the rocketing rents in a flourishing economy – let alone purchase a house as the price of property has soared. “I have no assets at the moment,” said 64-year-old Victor Young, who spoke to Reuters at a soup kitchen in New Zealand’s capital, Wellington.

“It’s not a kind country, it’s not an easy country. I slept in my car 20 days last year. I worked 30 hours a week.” That sentiment is something the country’s popular Prime Minister Jacinda Ardern would like to reverse. Last Thursday, across town from the Sisters of Compassion Soup Kitchen, her Labour-led government unveiled its first budget with an ambitious plan to build social infrastructure. The government has allocated NZ$3.8 billion ($2.62 billion) of new capital spending over a five-year period. This includes an extra NZ$634 million for housing, on top of the NZ$2.1 billion previously announced to fund Kiwibuild, a government building program to increase affordable housing supply.

[..] But experts say the government’s first budget underwhelms on the radical reforms the wider public wanted. “They’re a long way down a hole that was created by somebody else and they haven’t really got a great or easy solution,” said John Tookey, professor of construction management at Auckland University of Technology. He said the government’s much-vaunted Kiwibuild could come unstuck because there weren’t enough skilled workers to deliver on its ambitious target to build 100,000 homes in the next decade.

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Where does this originate? WIth Theresa May of course.

Hundreds Of Homeless People Fined And Imprisoned In UK (G.)

Growing numbers of vulnerable homeless people are being fined, given criminal convictions and even imprisoned for begging and rough sleeping. Despite updated Home Office guidance at the start of the year, which instructs councils not to target people for being homeless and sleeping rough, the Guardian has found over 50 local authorities with public space protection orders (PSPOs) in place Homeless people are banned from town centres, routinely fined hundreds of pounds and sent to prison if caught repeatedly asking for money in some cases. Local authorities in England and Wales have issued hundreds of fixed-penalty notices and pursued criminal convictions for “begging”, “persistent and aggressive begging” and “loitering” since they were given strengthened powers to combat antisocial behaviour in 2014 by then home secretary, Theresa May.

Cases include a man jailed for four months for breaching a criminal behaviour order (CBO) in Gloucester for begging – about which the judge admitted “I will be sending a man to prison for asking for food when he was hungry” – and a man fined £105 after a child dropped £2 in his sleeping bag. Data obtained by the Guardian through freedom of information found that at least 51 people have been convicted of breaching a PSPO for begging or loitering and failing to pay the fine since 2014, receiving CBOs in some cases and fines up to £1,100. Hundreds of fixed-penalty notices have been issued. Lawyers, charities and campaigners described the findings as “grotesque inhumanity”, saying disadvantaged groups were fined for being poor.

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“..one of its primary effects is to generate in its victims a strong desire to go out for a beer followed by a pizza.”

Scientists Revise Their Understanding of Novichok (Slane)

Warning: This article is likely to contain traces of satire. In the aftermath of the poisoning of Sergei and Yulia Skripal in Salisbury on 4th March, scientists are currently re-evaluating their understanding of A-234 – or Novichok as it is more commonly known. Prior to the poisoning, it had been thought that the substance was around 5-8 times more toxic than VX nerve agent, and therefore that just a tiny drop would be likely to kill a person within minutes or possibly even seconds of them coming into contact with it. In the unlikely event of a person surviving, it was believed that their central nervous system would be completely destroyed, and that they would suffer numerous chronic health issues, including cirrhosis, toxic hepatitis, and epilepsy before dying a premature and miserable death, probably within a year or so.

However, according to an anonymous source at the Porton Down laboratory, which is located just a few miles down the road from Salisbury, scientists now believe they may have completely misunderstood the properties and effects of the chemical: “All the available information we had about Novichok before March this year suggested that it was by far the most lethal nerve agent ever produced, and we had assumed that even the tiniest drop would kill a person within minutes. However, after studying the movements of the Skripals after being poisoned, we have now revised our understanding, and we now believe that one of its primary effects is to generate in its victims a strong desire to go out for a beer followed by a pizza.”

Yet it’s not only the effects of the substance that have led to this reappraisal, but also its mysterious ability to move about from location to location, seemingly at will. According to the source: “At first, differing reports of the location of the poisoning baffled us. First it was the restaurant, then it was the pub, followed by the bench, the car, the cemetery, the flowers, the luggage, the porridge, and then finally the door handle three weeks after the incident. However, we now believe we have an explanation for this phenomena. When Novichok was developed, we think it may have been given the ability to appear in one place, only to then disappear and turn up in an entirely different place.

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May 042018
 
 May 4, 2018  Posted by at 8:32 am Finance Tagged with: , , , , , , , , , , , , , ,  


Herri met de Bles c1510-after 1555 Saint Jerome medidating

 

Fed’s QE Unwind Accelerates Sharply (WS)
The Root of It All (Batnick)
Tesla Is A Zombie Company (F.)
With No Letup In Home Prices, The California Exodus Surges (MW)
Demand For US Soybeans Remains Strong Despite China (CNBC)
US Charges VW Ex-CEO With Conspiracy And Fraud (G.)
Mueller’s Questions for Trump Show Folly of Special-Counsel Appointments (NR)
Why We Need To Be Propagandized For Our Own Good (CJ)
Neocons Form Brand New Russia-Bashing ‘Think’ Tank (RI)
UK Pushes To Strengthen Anti-Russia Alliance (G.)
Nobel Prize For Literature Postponed Amid Swedish Academy Turmoil (BBC)
Jacinda Ardern Pledges Shelter For All Homeless People Within Four Weeks (G.)

 

 

As most voices seem convinced QT would be madness.

Fed’s QE Unwind Accelerates Sharply (WS)

The QE Unwind is ramping up toward cruising speed. The Fed’s balance sheet for the week ending May 2, released this afternoon, shows a total drop of $104 billion since the beginning of the QE Unwind in October – to the lowest level since June 11, 2014. During the years and iterations of QE, the Fed acquired $3.4 trillion in Treasury securities and mortgage-backed securities. The mortgages underlying those MBS are guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The “balance sheet normalization,” as the Fed calls it, was nudged into motion last October. But the pace accelerates every quarter until it reaches up to $50 billion a month in Q4 this year.

This would trim the balance sheet by up to $420 billion this year, and by up to $600 billion in 2019 and every year going forward, until the Fed considers the balance sheet to be adequately “normalized” — or until something big breaks, whichever comes first. [..] The balance of Treasury securities fell by $17.6 billion in April. This is up 60% from March, when $11 billion “rolled off.” Since the beginning of the QE-Unwind, $70 billion in Treasuries “rolled off.” Now at $2,395 billion, the balance of Treasuries has hit the lowest level since June 18, 2014.

[..] Residential MBS are different from regular bonds. Holders receive principal payments on a regular basis as the underlying mortgages are paid down or are paid off. At maturity, the remaining principal is paid off. Over the years, to keep the MBS balance from declining, the New York Fed’s Open Market Operations (OMO) has been continually buying MBS. But settlement of those trades occurs two to three months later. The Fed books the trades on an as-settled basis. The time lag between the trade and settlement causes the large weekly fluctuations on the Fed’s balance sheet. And it also delays when MBS that “rolled off” actually disappear from the balance sheet.

[..] Total assets on the Fed’s balance sheet dropped by $30 billion in April, and by $104 billion since the beginning of the QE-Unwind, to $4,356 billion. This is the lowest since June 11, 2014. Note that total assets are now down by $160 billion from the peak in January 2015:

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“The poor stay poor, the rich get rich. That’s how it goes. Everybody knows.”

The Root of It All (Batnick)

Steven Pinker wrote, “In almost every year from 1992 through 2015, an era in which the rate of violent crime plummeted, a majority of Americans told pollsters that crime was rising. In late 2015, large majorities in eleven developed countries said that “the world is getting worse.” But crime isn’t rising, and the world is objectively getting better. And while life is improving at the macro level, at the micro level, people aren’t feeling so great. So what gives? We tend to expect the worst as a way to insulate ourselves from disappointment. Life is not about good or bad, it’s about better or worse, so if things don’t turn out as bad as we imagine, we’re pleasantly surprised. If you were asked to think about how your life could improve, a few things might come to mind.

But imagine how your life could get worse, and a barrage of negative possibilities fills your brain. The risk and reward of every day life is asymmetrical. This is why being a pessimist feels safe and being an optimist feels reckless. [..] While the news certainly isn’t doing anyone any favors, there are legitimate reasons why people don’t feel like things are getting better. For too many, they aren’t. The chart below shows the change in real income since 1980. This chart is the root of all the negative things facing our society. People in the top 20% saw their income increase by 60%. People in the bottom 20% saw their income rise by just 5% over the same time. As Leonard Cohen said, “The poor stay poor, the rich get rich. That’s how it goes. Everybody knows.”

Real income increased 38% from 1980-2016, or just 0.87% per year, and 70% of that increase went to people in the top 20%. Things are better, especially around the world, but in our country, way too many people are getting left behind. Extreme poverty is collapsing, but relative poverty is exploding, and everything in life is relative. If things don’t feel better than they were two hundred years ago, it’s because people compare themselves to their neighbors, not to their ancestors.

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As simple as that.

Tesla Is A Zombie Company (F.)

Tesla’s quarter was terrible from a financial perspective, as I had expected. The controlling figure I use, operating cash flow (operating loss plus depreciation minus capital expenditures,) was reported as -$836 million in the quarter, which very nearly approximates one quarter of 2017’s full year cash outflow of $3.4 billion. Things are not improving at Tesla from a financial perspective, and the second quarter is likely to be just as bad as the first. For the third consecutive quarter, Tesla posted negative EBITDA (-$180 million) and if this were any other company, there would be an active death watch on the Street. Tesla’s bonds have dropped sharply in today’s trading, now quoted at 87 cents on the dollar.

This is not surprising given that Tesla is not even remotely close to earning enough profit to cover its interest expense, which management estimated would be $160 million in the second quarter. Tesla added $346 million to its now $10 billion debt pile in the quarter, and the management’s weasel-worded projection of “positive net income excluding non-cash stock based compensation in Q3 and Q4” would still leave Tesla short of covering its debt service costs, by my calculations. So, from a financial perspective, Tesla is a zombie company. There is simply no justification for Tesla’s current market capitalization of $47.2 billion, and the market eventually figures these things out. It’s actually been a slow burn for Tesla shares, not a plummet, but that can be just as painful.

On September 12, 2014, Teslashares closed at $279.20 and the Nasdaq Composite closed at 4567.60. As of this writing, Tesla is trading at $279.04 and the Nasdaq is trading at 7011.00. So that’s where the value destruction Musk has wrought is evident. His shares are down slightly in a period in which his peer companies have collectively risen 53.5%.

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Housing bubbles break communities.

With No Letup In Home Prices, The California Exodus Surges (MW)

Over a million more people moved out of California from 2006 to 2016 than moved in, according to a new report, due mainly to the high cost of housing that hits lower-income people the hardest. “A strong economy can also be dysfunctional,” noted the report, a project of Next 10 and Beacon Economics. Housing costs are much higher in California than in other states, yet wages for workers in the lower income brackets aren’t. And the state attracts more highly-educated high-earners who can afford pricey homes. There are many reasons for the housing crunch, but the lack of new construction may be the most significant.

According to the report, from 2008 to 2017, an average of 24.7 new housing permits were filed for every 100 new residents in California. That’s well below the national average of 43.1 permits per 100 people. If this trend persists, the researchers argued, analysts forecast the state will be about 3 million homes short by 2025. California homeowners spend an average of 21.9% of their income on housing costs, the 49th worst in the nation, while renters spend 32.8%, the 48th worst. The median rent statewide in 2016 was $1,375, which is 40.2% higher than the national average. And the median home price was — wait for it — more than double that of the national average.

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Globally, supple has a hard time keeping up with demand. Everybody involved knows this.

Demand For US Soybeans Remains Strong Despite China (CNBC)

Demand for U.S. soybeans remains strong, regardless of worries China could target the crop in retaliation over Trump administration tariffs. China has canceled several shipments of U.S. soybeans in the last month, raising questions over whether the country is taking preemptive action against the U.S. by reducing purchases. But analysts say the reduction is a minor amount and is not that surprising from a seasonal perspective. The “U.S. accounts for 37 percent of total soybean exports throughout the world. Beyond Brazil, there’s really nobody else,” said Rich Nelson, director of research at Allendale, an agricultural market research and trading firm. “Despite the trade concerns, there’s really nobody else. You’re just simply not going to have a massive decline in U.S. soybean exports,” he said.

Chinese cancellations of U.S. soybean orders for the week ended April 26 resulted in a decline of 133,700 metric tons in net sales to China, USDA Foreign Agricultural Service data showed Thursday. But 66,000 metric tons of those soybeans were sent to Vietnam instead, the data showed. Meanwhile, the U.S. sold 82,700 metric tons of soybeans in new sales to Mexico, 68,800 to Taiwan, 60,000 to Argentina and 52,600 to the Netherlands. Although Argentina is the third-largest exporter of soybeans, a severe drought has reduced production by 7 million tons to 40 million, according to USDA estimates. “That just goes to show we’re not dependent on China for soybean exports,” said Michael Stumo, head of Coalition for a Prosperous America, a nonprofit representing the interests of those in manufacturing, agriculture and labor unions.

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Germany doesn’t extradite its citizens.

US Charges VW Ex-CEO With Conspiracy And Fraud (G.)

US authorities have charged Volkswagen’s former chief executive officer Martin Winterkorn with conspiracy and wire fraud in relation to the car company’s efforts to cheat on US diesel emissions tests. Winterkorn, who resigned in 2015 as the scandal was revealed, conspired to defraud the US and violate the Clean Air Act, federal laws designed to control air pollution, according to an indictment unsealed on Thursday in a Michigan federal court. Five other VW executives were also charged in the indictment. He becomes the highest-ranking executive to be charged over “dieselgate” – a scheme where VW used software to trick government emissions testers.

“The indictment unsealed today alleges that Volkswagen’s scheme to cheat its legal requirements went all the way to the top of the company,” said US attorney general Jeff Sessions. “These are serious allegations and we’ll prosecute this case to the full extent of the law.” When news of the scheme broke Winterkorn said he was “stunned that misconduct on such a scale was possible in the Volkswagen Group”. He denied any knowledge of the scandal – which was used to evade pollution limits on nearly 600,000 diesel vehicles. Last December, Oliver Schmidt, a senior Volkswagen executive, was jailed for seven years and fined $400,000 for his part in the scheme. Schmidt, who had returned to Germany, was arrested while on holiday in Florida. VW pleaded guilty as a corporation in March, agreeing to pay a record $4.3bn in fines.

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“If Bob Mueller wants that kind of control over the executive branch, he should run for president. Otherwise, he is an inferior executive official who has been given a limited license — ultimately, by the chief executive — to investigate crime. If he doesn’t have an obvious crime, he has no business inventing one, much less probing his superior’s judgment. He should stand down.”

Mueller’s Questions for Trump Show Folly of Special-Counsel Appointments (NR)

I am assuming the authenticity of the questions that Special Counsel Robert Mueller reportedly wants to ask President Trump. The questions indicate that, after a year of his own investigation and two years of FBI investigation, the prosecutor lacks evidence of a crime. Yet he seeks to probe the chief executive’s motives and thought processes regarding exercises of presidential power that were lawful, regardless of one’s view of their wisdom. If Bob Mueller wants that kind of control over the executive branch, he should run for president. Otherwise, he is an inferior executive official who has been given a limited license — ultimately, by the chief executive — to investigate crime. If he doesn’t have an obvious crime, he has no business inventing one, much less probing his superior’s judgment. He should stand down.

The questions, reported by the New York Times, underscore that the special counsel is a pernicious institution. Trump should decline the interview. More to the point, the Justice Department should not permit Mueller to seek to interrogate the president on so paltry and presumptuous a showing.

When should a president be subject to criminal investigation? It is a bedrock principle that no one is above the law. The Framers made clear that this includes the president. But, like everything else, bedrock principles do not exist in a vacuum. They vie with other principles. Two competing considerations are especially significant here. First, our law-enforcement system is based on prosecutorial discretion. Under this principle, the desirability of prosecuting even a palpable violation of law must be balanced against other societal needs and desires. We trust prosecutors to perform this cost-benefit analysis with modesty about their mission and sensitivity to the disruption their investigations cause.

Second, the president is the most essential official in the world’s most consequential government. That government’s effectiveness is necessarily compromised if the president is under the cloud of an investigation. Not only are the president’s personal credibility and capability diminished; such an investigation discourages talented people from serving in an administration, further undermining good governance. The country is inexorably harmed because a suspect administration’s capacity to execute the laws and pursue the interests of the United States is undermined.

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Caitlin Johnstone on the Atlantic Council.

Why We Need To Be Propagandized For Our Own Good (CJ)

I sometimes try to get establishment loyalists to explain to me exactly why we’re all meant to be terrified of this “Russian propaganda” thing they keep carrying on about. What is the threat, specifically? That it makes the public less willing to go to war with Russia and its allies? That it makes us less trusting of lying, torturing, coup-staging intelligence agencies? Does accidentally catching a glimpse of that green RT logo turn you to stone like Medusa, or melt your face like in Raiders of the Lost Ark? “Well, it makes us lose trust in our institutions,” is the most common reply. Okay. So? Where’s the threat there? We know for a fact that we’ve been lied to by those institutions. Iraq isn’t just something we imagined. We should be skeptical of claims made by western governments, intelligence agencies and mass media. How specifically is that skepticism dangerous?

Trying to get answers to such questions from rank-and-file empire loyalists is like pulling teeth, and they are equally lacking in the mass media who are constantly sounding the alarm about Russian propaganda. All I see are stories about Russia funding environmentalists (the horror!), giving a voice to civil rights activists (oh noes!), and retweeting articles supportive of Jeremy Corbyn (think of the children!). At its very most dramatic, this horrifying, dangerous epidemic of Russian propaganda is telling westerners to be skeptical of what they’re being told about the Skripal poisoning and the alleged Douma gas attack, both of which do happen to have some very significant causes for skepticism.

When you try to get down to the brass tacks of the actual argument being made and demand specific details about the specific threats we’re meant to be worried about, there aren’t any to be found. Nobody’s been able to tell me what specifically is so dangerous about westerners being exposed to the Russian side of international debates, or of Russians giving a platform to one or both sides of an American domestic debate. Even if every single one of the allegations about Russian bots and disinformation are true (and they aren’t), where is the actual clear and present danger? No one can say. No one, that is, except the Atlantic Council.

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The entire MSM can’t get the job done?!

Neocons Form Brand New Russia-Bashing ‘Think’ Tank (RI)

A group of neocon heartthrobs have banded together with an eclectic array of Russiagaters to form a visionary organization committed to protecting Western democracy. You can also pre-order their book, according to their website. Chaired by pompous chess wizard turned Kremlinologist Garry Kasparov, the brand-new Renew Democracy Initiative (RDI) is the latest three-letter-initialism non-profit devoted to “the defense of democratic freedom and prosperity.” The trailblazing think tank has already sent shockwaves through Washington, DC and every European capital. Celebrated war cheerleader Max Boot, who serves on RDI’s board of directors, announced the creation of this highly original organization in a Washington Post op-ed.

Interestingly, the unveiling started with a laundry list of 10 other groups that are already “protesting Trump and championing democracy.” So why does the world need RDI, then? Because RDI is different – some might even say “special.” Unlike the dozens of other well-financed bastions of status-quo thinking, RDI aims to “unite both the center-left and center-right” by promoting “liberty, democracy and sanity in an age of discord.” And where will this much-needed sanity come from? From RDI’s all-star team of important intellectuals and free thinkers, of course – some of whom just happen to be really tight with the other 10 groups mentioned in Boot’s WaPo piece. Dear Mr. Boot: does fighting Putin with the Committee to Investigate Russia allow enough spare time to fight Putin with the Renew Democracy Initiative? Curious minds want to know.

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It’s contagious.

UK Pushes To Strengthen Anti-Russia Alliance (G.)

The UK will use a series of international summits this year to call for a comprehensive strategy to combat Russian disinformation and urge a rethink over traditional diplomatic dialogue with Moscow, following the Kremlin’s aggressive campaign of denials over the use of chemical weapons in the UK and Syria. British diplomats plan to use four major summits this year – the G7, the G20, Nato and the European Union – to try to deepen the alliance against Russia hastily built by the Foreign Office after the poisoning of the former Russian double agent Sergei Skripal in Salisbury in March. “The foreign secretary regards Russia’s response to Douma and Salisbury as a turning point and thinks there is international support to do more,” a Whitehall official said.

“The areas the UK are most likely to pursue are countering Russian disinformation and finding a mechanism to enforce accountability for the use of chemical weapons.” Former Foreign Office officials admit that an institutional reluctance to call out Russia once permeated British diplomatic thinking, but say that after the poisoning of Skripal and his daughter, Yulia, that attitude is evaporating. A cross-party alliance in parliament has developed which sees the question of Russian corruption no longer through the prism of finance, but instead as a security and foreign policy threat, requiring fresh sanctions even if this causes short-term economic damage to the UK.

[..] For some old hands in the Foreign Office with deep experience of Russia, however, demonising Russia is a disastrous strategy. Sir Anthony Brenton, the British ambassador to Russia between 2004 and 2008, insists a fruitful common agenda with Moscow on issues such as nuclear disarmament, Islamist terrorism and cyberwarfare is still possible. “What on earth was her majesty’s foreign secretary doing comparing the Russian World Cup with Hitler’s 1936 Olympics?” he asked. “If you are looking for a single statement really calculated to infuriate the Russians there it is, or indeed the defence secretary telling Russia to shut up. Elementary diplomacy goes a long way with the Russians and we need to get back to that.

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Still feels like a weird story.

Nobel Prize For Literature Postponed Amid Swedish Academy Turmoil (BBC)

The organisation that decides the Nobel Prize for Literature has said it will not announce an award this year, after it was engulfed in a scandal over sexual assault allegations. The Swedish Academy has been in crisis over its handling of allegations against the husband of a member. She has since quit, as have the academy’s head and four other members. The academy says it will now announce the 2018 winner along with the 2019 winner next year.

The scandal is the biggest to hit the prize since it was first awarded in 1901. The academy said the decision had been made due to a lack of public confidence. Some academy members had argued that the prize should proceed to protect the tradition, but others said the institution was in no state to present the award. Apart from six years during the world wars, there has been only one year when the prize was not awarded. No worthy winner was found in 1935.

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You go girl. The only right thing to do.

Jacinda Ardern Pledges Shelter For All Homeless People Within Four Weeks (G.)

The New Zealand government has promised to get the country’s homeless population off the streets and into shelter in time for winter. In a joint announcement on Friday, housing minister Phil Twyford and prime minister Jacinda Ardern announced a NZ$100m emergency housing package to tackle the ballooning problem. An estimated 40,000 people live in cars, tents and garages amid a chronic housing shortage in the nation of 4.7 million people. “We’re pulling out all the stops to support people in need and urgently increase housing supply this winter,” said housing minister Phil Twyford. “Our government will make sure everyone is helped to find warm, dry housing this winter.”

With winter starting on 1 June in the southern hemisphere, less than four weeks away, the government has put out an urgent call for anyone with additional accommodation that may be suitable to house homeless people. Seasonal worker accommodation such as shearers quarters, private rental properties, motor camps and maraes (Maori meeting houses) would all be considered. New Zealand has the highest rates of homelessness in the OECD, with more than 40,000 people living on the streets, in emergency housing or in substandard conditions. Per capita New Zealand’s homeless population is almost twice as bad as Australia, which is placed third on the list. More than half of New Zealand’s homeless population live in Auckland but it is also growing in smaller cities such as Rotorua, Tauranga, Queenstown and Wellington.

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Apr 252018
 
 April 25, 2018  Posted by at 8:27 am Finance Tagged with: , , , , , , , , , ,  


Amedeo Modigliani Nu allongé 1917

 

Why All Companies Fear ‘Death By Amazon’ (G.)
Richmond Fed Manufacturing Survey Crashes By Most In 25 Years (ZH)
Markets Better Prepare for Stagflation (DDMB)
Trade War With US And China’s $14 Trillion Debt-Ridden Economy (CNBC)
Big Farms Set To Pay The Price As EU Eyes Subsidy Cuts (Pol.)
In Japan, New Rules May Leave Home-Sharing Industry Out In The Cold (R.)
Palma de Mallorca To Ban Holiday Rentals After Residents’ Complaints (BBC)
Greece Uncovers Tax Evading Airbnb Owners By Posing as Customers (KTG)
World Wine Output Falls To 60-Year Low (R.)
Homelessness In UK ’10 Times Worse’ Than Official Figures Suggest (Ind.)
Over One In Five Greeks Can’t Make Ends Meet (K.)
Greek Minister Drafts Action Plans Amid Fears Over Refugee Influx (K.)
Greek Government Defies Court on Asylum Seekers (HRW)
Arctic Sea Ice Contains Huge Quantity Of Microplastics (Ind.)

 

 

Do we want monopolies? We’re letting them grow in front of our eyes.

Why All Companies Fear ‘Death By Amazon’ (G.)

Although its retail site is the most visible of its business strands, the $740bn company has quietly stretched its tentacles into an astonishing range of unrelated industries. Google and Facebook might have cornered the online advertising market, but Amazon’s business successes now include groceries, TV, robotics, cloud services and consumer electronics. “If you try to measure power by how many executives are up at night because of X company, I think Amazon would win,” said Lina Khan, legal fellow with the Open Markets Program at the thinktank New America. Amazon has a restaurant delivery service, a music streaming service and an Etsy clone called Amazon Homemade. It makes hugely successful hardware and software; it makes movies, television shows and video games.

It runs a labour brokerage for computer-based work and another for manual labour. It publishes books, sells books, and owns the popular social network site for book readers GoodReads.com. It sells diapers, baby food, snacks, clothing, furniture and batteries. It sells ads, processes payments, and makes small loans. It is the unexpected owner of a huge number of websites – everything from the gaming livestream site Twitch to the movie database IMDb. Of the top 10 US industries by GDP (information, manufacturing non-durable goods, retail trade, wholesale trade, manufacturing durable goods, healthcare, finance and insurance, state and local government, professional and business services, and real estate), Amazon has a finger in all but real estate.

And how confident can the real estate industry be right now that Amazon won’t at some point decide to allow people to buy and sell homes on its platform? “I see them as kind of a great white shark,” said Greer. “You don’t really want to mess with them.” “It’s basically become a railroad for the 21st century,” added Khan. “It’s existential for so many businesses but also competing with all those businesses.” What makes Amazon so frightening for rival businesses is that it can use its expertise in data analytics to move into almost any sector. “Amazon has all this data available. They track what people are searching for, what they click, what they don’t,” said Greer. “Every time you’re searching for something and don’t click, you’re telling Amazon that there’s a gap.”

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Recovery.

Richmond Fed Manufacturing Survey Crashes By Most In 25 Years (ZH)

When hope dies… against expectations of a small rise from March to a 16 print, April came in at a disastrous -3 (the worst data since Sept 2016). From record highs just a couple months ago, Richmond Fed manufacturing has crashed by the most in the survey’s 25 year history into contraction…

It was a bloodbath below the surface too. New orders collapsed to -9 from +17, order backlogs plunged to -4 from +10 and while wages and employees rose, workweek dropped notably. Finally, prices paid rose once again even as new orders crashed… Must be the weather, right?

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No, inflation is not “heating up by all metrics”. But we get the point.

Markets Better Prepare for Stagflation (DDMB)

Investors better wake up to the growing risk of stagflation. The coming weeks promise to deliver the verdict on how they should be positioned. By all metrics, inflation is heating up. But it’s not clear the same can said for underlying economic activity. According to producers, input costs have risen for six of the past eight months. And it’s not just big companies that are feeling pressure. One in four small businesses say they plan to raise prices, a 10-year high, according to the National Federation of Independent Business. Inflation’s persistence will finally begin to trickle through to consumers.

David Rosenberg, chief economist at the wealth management company Gluskin Sheff, recently quipped that investors “better say a prayer for Jay Powell,” the Federal Reserve chair. The deniers will dismiss the suggestion. But Rosenberg is serious, citing the core consumer price index’s March leap to 2.1%, a level that breaches the Fed’s 2% inflation target. “There is going to be a price to be paid for last year’s string of wireless-induced 0.1% prints which are falling out of the year-over-year math,” Rosenberg explained, referring to the collapse in wireless services that skewed inflation lower in 2017. “I see 50/50 odds of a 3% core inflation by year end.”

[..] The New York Fed’s regional survey also raised red flags. Delivery Times remained near their highest levels in seven years while New Orders, Backlogs and Employment all declined. The survey showed an even gloomier outlook for the future. The six-month business activity outlook dove to 18.8 from 44.1, the weakest since February 2016. Though one month can never make a trend, the depth of the plunge is bound to have raised eyebrows given that prior moves of its magnitude tend to coincide with recession.

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China’s so bloated with debt it is very vulnerable.

Trade War With US And China’s $14 Trillion Debt-Ridden Economy (CNBC)

While some of the rhetoric around trade tariffs on China has died down over the last couple of weeks, the prospect of a trade war has not. On April 18, China imposed preliminary antidumping tariffs of 178.6% on sorghum, a crop used to make alcohol and biofuels, while President Donald Trump’s threat to impose tariffs on $150 billion worth of goods on everything from solar panels to aircraft to cars remains on the table. If an actual U.S. trade war ensues, then China’s economic growth prospects could be negatively impacted in a significant way. While the country’s economy has shifted inward over the last few years, relying on its own citizens to fuel growth, it still exports billions of dollars in goods and services every year.

Last year it sold $506 billion in exports to the United States — nearly 20% of its exports go to America — while the United States sold just $130 billion to the Chinese. In January the IMF said China’s economic growth would top 6.6% in 2018, but it could now drop by as much as 0.5% if these tariffs are imposed — and it could slow even further if a global trade war truly heats up. China’s economy can likely weather a small decline in growth, in part because of its increased reliance on domestic spending, but this isn’t the only potentially GDP-destroying situation it’s dealing with.

Over the last few years, China’s debt-to-GDP has ballooned to more than 300% from 160% a decade ago, causing many people, including Chinese officials, to warn of a financial-sector debt bubble that’s waiting to burst. [..] How did it get so bad? After the recession, the country spent trillions on infrastructure projects, with many banks, including unregulated or “shadow” banks, loaning money to companies that have been unable to pay back their debts. According to a Chinese news outlet, Lai Xiaoming, chairman of China Huarong Asset Management, one of the country’s biggest asset management firms, said that total volume of nonperforming loans could hit a record $476 billion by 2020.

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Why the insects are dying. Europe should cut subsidies for anyone using chemicals.

Big Farms Set To Pay The Price As EU Eyes Subsidy Cuts (Pol.)

EU Budget Commissioner Günther Oettinger said Monday that Brussels plans to cut its payments to Europe’s biggest farms in the next budget cycle in order to reduce the bloc’s lavish agricultural subsidies by 6%. Brussels is due to make a proposal for the EU’s 2021-2027 budget framework on May 2, and cutbacks are seen as inevitable because Britain will no longer be contributing funds. Agricultural spending is one of the most obvious targets for cost cutting because the Common Agricultural Policy represents almost 40% of the EU budget, or some €59 billion each year.

When asked by POLITICO about CAP cuts on the sidelines of a trade conference in Hannover, Oettinger said: “We cannot fully exempt the existing programs from cutbacks. And in comparison to 2020, as the last year of the existing financial framework, my proposal will focus on approximately 6%, a moderate 6%, reductions.” One of the biggest criticisms of the CAP is that it has prioritized big landowners with direct payments based on acreage. Some 80% of CAP funds go to 20% of farms, owned by the likes of British royalty and major multinational companies. Oettinger said the new budget model would aim to balance that slightly.

“What we have in mind is degressive funding: That means a very big business receives for its hectares a little bit less money than a small enterprise. And that’s exactly what we still have to discuss within the next next days. On Wednesday, we will have a discussion between [Agriculture Commissioner Phil] Hogan and me on this.” Hogan has already told farmers to prepare for belt-tightening. “We need to be realistic: In the absence of more money from member states, there will be a cut to the CAP budget. My job as I see it is to build the strongest possible coalition to resist the worst of these cuts, and achieve the best outcome in a difficult scenario,” he said last week.

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Governments are starting to tackle Airbnb.

In Japan, New Rules May Leave Home-Sharing Industry Out In The Cold (R.)

Japan’s new home-sharing law was meant to ease a shortage of hotel rooms, bring order to an unregulated market and offer more lodging options for foreign visitors ahead of next year’s Rugby World Cup and the 2020 Tokyo Olympics. Instead, the law is likely to stifle Airbnb Inc and other home-sharing businesses when it is enacted in June and force many homeowners to stop offering their services, renters and experts say. The “minpaku,” or private temporary lodging law, the first national legal framework for short-term home rental in Asia, limits home-sharing to 180 days a year, a cap some hosts say makes it difficult to turn a profit.

More important, local governments, which have final authority to regulate services in their areas, are imposing even more severe restrictions, citing security or noise concerns. For example, Tokyo’s Chuo ward, home to the tony Ginza shopping district, has banned weekday rentals on grounds that allowing strangers into apartment buildings during the week could be unsafe. That’s a huge disappointment for Airbnb “superhost” Mika, who asked that her last name not be used because home-renting is now officially allowed only in certain zones. She has enjoyed hosting international visitors in her spare two-bedroom apartment but will stop because her building management has decided to ban the service ahead of the law’s enactment.

“I was able to meet many different people I would have not met otherwise,” said Mika, 53, who started renting out her apartment after she used a home-sharing service overseas. “I may sell my condo.” Mika added that if she were to rent the apartment out on a monthly basis, she would only make one-third of what she does from short-term rentals. The ancient capital of Kyoto, which draws more than 50 million tourists a year, will allow private lodging in residential areas only between Jan. 15 and March 16, avoiding the popular spring and fall tourist seasons.

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“..only 645 of 11,000 holiday rentals being offered to tourists on Palma have the licence required to do so.”

Palma de Mallorca To Ban Holiday Rentals After Residents’ Complaints (BBC)

The Spanish resort city of Palma, on the island of Majorca, is to ban flat owners from renting their apartments to travellers, becoming the first place in Spain to introduce such a measure. The restrictions follow complaints from residents of rising rents due to short holiday lets through websites and apps. Palma’s mayor says the ban, to be introduced in July, will be a model for cities suffering with mass tourism. But business associations say many families will be financially impacted. It was not immediately clear if the ban was restricted only to private flats advertised by their owners on apps or websites.

Houses and chalets will be exempt from the restrictions unless they are located inside protected areas, next to the airport or in industrial zones. Palma, like many other cities around the world, has seen an increase in visitor numbers driven, in part, by private rental accommodation offered through websites and apps. Officials from the local left-wing governing coalition cited a study suggesting that the number of non-licensed apartments on offer to tourists increased by 50% between 2015 and 2017. According to Spanish newspaper El País, only 645 of 11,000 holiday rentals being offered to tourists on Palma have the licence required to do so.

Locally, there is resentment over tourism pushing up prices – rents in Palma have reportedly increased 40% since 2013 – but also about deteriorating conditions in neighbourhoods popular with travellers due to noise and bad behaviour. “Palma is a determined and courageous city,” Mayor Antoni Noguera said. “We agreed on this [ban] based on the general interest [of the city] and we believe it will set the trend for other cities when they see that finding a balance is key.”

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They’re all doing it all wrong. Simply force Airbnb to supply numbers on all rentals.

Greece Uncovers Tax Evading Airbnb Owners By Posing as Customers (KTG)

Tax inspectors uncover tax evading Airbnb owners by pretending to be customers. According to Greece’s Independent Authority for Public Revenue (AADE), the trap has revealed a total of 55 Airbnbn tax evaders, so far. In some cases, the ‘fake customers’ even proceeded to booking an Airbnb flat. The first Airbnb owners who failed to declare their earnings from home-sharing practices were uncovered by Greece’s Independent Authority for Public Revenue (AADE) this week. Under a pilot program aiming to weed out violators, AADE inspectors posed as customers seeking to rent out short-term accommodation via the Airbnb platform. The undercover inspections focused on central points in the Greek capital as well as on luxury options available on popular Greek islands. In some cases, AADE authorities even proceeded to book.

According to AADE, 55 proprietors who had not proceeded with the mandatory declaration of earnings from home-sharing services were notified of the violation. A total of 39 came forward and proceeded with corrections to their income tax declarations indicating additional property income of approximately 921,163 euros resulting in over 200,000 euros going into state coffers. It should be noted that all owners renting out their properties on home-sharing platforms are required by Greek law to declare earned incomes from short-term lease in 2017 on their E2 Forms (column 7).

For income up to 12,000 euros, tax is imposed at a rate of 15%. Takings between 12,001 and 35,000 euros will be taxed at a 35% rate; annual gains over 35,000 euros at a 45% rate. For those offering additional services on the side, the earnings are assessed as income from business activity and taxed at 22% for earnings up to 20,000 euros, 29% for yields between 20,001 and 30,000 euros, 37% for takings between 30,001 and 40,000 euros, and 45% for profits exceeding 40,000 euros.

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Looked it up: World population 60 years ago was less than 3 billion (it hit that in 1960). It is now 7.5 billion. Ergo: people used to drink over 2x as much wine back then.

World Wine Output Falls To 60-Year Low (R.)

Wine production totaled 250 million hectoliters last year, down 8.6% from 2016, data from the Paris-based International Organisation of Vine and Wine (OIV) released on Tuesday showed. It is the lowest level since 1957, when it had fallen to 173.8 million hectoliters, the OIV told Reuters. A hectoliter represents 100 liters, or the equivalent of just over 133 standard 75 cl wine bottles. All top wine producers in the EU have been hit by harsh weather last year, which lead to an overall fall in the bloc of 14.6% to 141 million hectoliters.

The OIV’s projections, which exclude juice and must (new wine), put Italian wine production down 17% at 42.5 million hectoliters, French output down 19% at 36.7 million and Spanish production down 20% at 32.1 million. The French government said last year production had hit a record low due to a series of poor weather conditions including spring frosts, drought and storms that affected most of the main growing regions including Bordeaux and Champagne. In contrast, production remained nearly stable in the United States, the world’s fourth largest producer, and China, which has become the world’s seventh largest wine producer behind Australia and Argentina.

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Failed state.

Homelessness In UK ’10 Times Worse’ Than Official Figures Suggest (Ind.)

The true scale of homelessness in the UK is almost 10 times worse than official figures suggest, according to a new report. Homeless charity Justlife warns thousands of people are being “forgotten in statistics” after it estimated that at least 51,500 people were living in B&Bs in the year to April 2016 – compared with 5,870 official B&B placements recorded by the government. It comes after a separate investigation found that 78 homeless people died last winter – an average of at least two a week. The report by the Bureau of Investigative Journalism revealed the fatalities included rough sleepers, people recognised as “statutory homeless” and people staying in temporary accommodation.

Justlife reached its estimate on the homeless B&B population using data gathered from Freedom of Information requests to local authorities, along with other information from the government’s Rural and Urban Classification for Local Authority Districts data. Christa Maciver, author of the report, said: “We can no longer ignore the tens of thousands of people stuck homeless, hidden and ignored in our cities. This report shows there is so much we don’t know and that we really need to be calculating homelessness more accurately.

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And another failed state.

Over One In Five Greeks Can’t Make Ends Meet (K.)

Last year 21.1% of Greeks – or more than one in five – were unable to cover their basic needs, such as the timely payment of utility bills and regular consumption of meat, according to Eurostat. That 21.1% in 2017 may constitute a minor improvement from the 22.4% rate in 2016, but is still a particularly high level. This rate was also the second highest in the European Union and translates to a large share of the population, or 2.24 million people.

The people or households in that category are by definition those unable to meet the costs of at least four of the following: payment of utility bills in time, sufficient heating at home, tackling extraordinary expenses, consumption of meat (or fish or the equivalent in vegetables) on a regular basis, a one-week vacation away from home, and capacity to purchase a TV set, a washing machine, a car or a telephone. The age group with the highest rate of material deprivation in Greece includes those between 20 and 24 years, amounting to 32.6% – or one in three – though this is according to 2016 data. Notably, the year with the highest material deprivation rate in Greece from 2003 to 2017 (for which Eurostat has data), was 2009.

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Arrivals on Lesbos are 4 times what they were last year this time.

Greek Minister Drafts Action Plans Amid Fears Over Refugee Influx (K.)

Migration Minister Dimitris Vitsas conceded on Tuesday that he is “worried” about the significant increase in the flow of migrants and refugees to Greece observed recently. Vitsas said that arrivals on Lesvos had increased almost fourfold since last year, noting that daily arrivals were 54 on average last year compared to the 206 migrants who arrived on the island on Tuesday. Between January and April, more than 7,000 migrants and refugees arrived on the islands of the eastern Aegean, he said, noting that just 112 people were returned to Turkey during that same period. However, Vitsas appeared far more concerned with the increase in arrivals over the Greek-Turkish land border, noting that 340 people crossed the border on Tuesday.

“I’m not scared about the islands because we know what we have to do. What is really worrisome is the huge increase through Evros,” he said. Under pressure from the opposition over mistakes and omissions in the government’s current migration policy, Vitsas said that his ministry has prepared two plans to deal with the situation and pledged to outline their content to political party leaders in private. According to Bulgarian government statistics, 356 migrants have crossed into that country from Turkey since the beginning of the year. In the same period, more than 2,700 crossed Turkey’s land border with Greece, Vitsas said.

There are fears that the difference in flows is due to deteriorating ties between Greece and Turkey while relations between Sofia and Ankara are good, particularly since Bulgarian authorities returned alleged supporters of the US-exiled Turkish cleric Fethullah Gulen to Turkey in 2016. Security along Turkey’s border with Bulgaria has intensified since then. The opposite has been happening along the Greek border since the detention of two Greek soldiers who strayed across the border in early March. Greek border guards are now more cautious, and less inclined to crack down on migrants.

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Curious. Athens should be open about EU pressure on the topic.

Greek Government Defies Court on Asylum Seekers (HRW)

The Greek government’s move on April 20, 2018, overturning a binding court ruling ordering it to end its abusive policy of trapping asylum seekers on Greece’s islands raises rule of law concerns, 21 human rights and humanitarian organizations said today. Rather than carrying out the April 17 ruling by the Council of State, the country’s highest administrative court, the government issued an administrative decision reinstating the policy, known as the “containment policy.” It also introduced a bill on April 19 to clear the way to restore the policy in Greek law. Parliament members should oppose such changes and press the government to respect the ruling.

Parliament began discussing the draft law on April 24. But the government has preempted the debate on the bill, including the issue of the containment policy by reinstating it. On April 20, the new director of the asylum service reissued an administrative order setting down the reasons for the containment policy. Among grounds given to justify the restrictions imposed by the policy are the need to implement an EU-Turkey deal on migration and a broader public interest claim. But the decision goes against the Council of State ruling and Greece’s responsibilities under international, EU and Greek law, as it offers insufficient justification for the restrictions, the groups said.

The Council of State’s April 17 ruling said that Greece’s containment policy had no legal basis and that there were no imperative reasons under EU and Greek law justifying the restrictions to the freedom of movement of asylum seekers. It ordered the annulment of the administrative decision imposing the restrictions and permitted the free movement of asylum seekers arriving on the islands following the ruling’s publication. The ruling also highlighted that the disproportionate distribution of asylum seekers has overburdened the islands. The ruling is limited, however, applying only to new arrivals.

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“Each litre of sea ice contained around 12,000 particles of plastic..”

Arctic Sea Ice Contains Huge Quantity Of Microplastics (Ind.)

Scientists have found an unprecedented number of microplastics frozen in Arctic sea ice, demonstrating the alarming extent to which they are pervading marine environments. Analysis of ice cores from across the region found levels of the pollution were up to three times higher than previously thought. Each litre of sea ice contained around 12,000 particles of plastic, which scientists are now concerned are being ingested by native animals. Based on their analysis, the researchers were even able to trace the tiny fragments’ paths from their places of origin, from fishing vessels in Siberia to everyday detritus that had accumulated in the infamous Great Pacific Garbage Patch.

“We are seeing a clear human imprint in the Arctic,” the study’s first author, Dr Ilka Peeken, told The Independent. “It suggests that microplastics are now ubiquitous within the surface waters of the world’s ocean,” said Dr Jeremy Wilkinson, a sea ice physicist at the British Antarctic Survey who was not involved with the study. “Nowhere is immune.”

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Apr 122018
 


The marine and the kitten, Korean War, 1952

 

It’s Pure Math – We’re Headed for a Train Wreck (USAW)
Licence to Kill (Le Monde Diplomatique)
It’s No Longer Advertising – It’s Behaviour Modification (BBC)
Zuckerberg’s Answer To Facebook’s Problems: More Facebook (Ind.)
The Uncomfortable Question: Is Facebook A Monopoly? (MW)
UK Economic Growth Has Fallen By Half (G.)
More Than 100,000 British Households Set To Be Homeless By 2020 (Ind.)
US Interest Payments Will Outpace Military Spending by 2023 (BBG)
The Deep State Closes In On The Donald, Part 1 (Stockman)
James Comey Is About To ‘Shock The President And His Team’ (MW)
Warrant for Catalan Minister Details ‘Violent Revolt’ (BBC)
New Zealand Bans All New Offshore Oil Exploration (G.)
Climate Change Could Trigger Volcanic Eruptions Across The World (Ind.)
Cities Around The World Should Prepare For Running Out Of Water (CNBC)
Gulf Stream Current At Its Weakest In At Least 1,600 Years (G>)

 

 

”What happens when the world figures out that three billion ounces of physical silver cannot and will not be delivered to the buyers? ”

It’s Pure Math – We’re Headed for a Train Wreck (USAW)

Financial writer and gold expert Bill Holter says China has a lot of weapons to fight a trade war with the U.S. China could stop buying Treasury bonds (as it reportedly already has done). It could sell Treasury bonds. It could slash the value of the Yuan, or something much simpler could happen such as a failed delivery of physical precious metals. Holter says, “If what has happened so far in the first three months of the year were to continue for the full year, you would be over three billion ounces (of silver). That is not deliverable.”What happens when the world figures out that three billion ounces of physical silver cannot and will not be delivered to the buyers?

Holter explains, “That’s called an old fashion run on the banks. “It will be a run on the entire system. You would have a run on every metals exchange, and you would probably have runs on many physical commodities. Confidence throughout the whole system would break. You would basically show the western fractional reserve system is a fraud and has been for many, many years. . . . Can London deliver a billion ounces, or two billion ounces or three billion ounces of silver? The answer to that is no.” So, when does this all blow up? Holter says, “I think this whole thing has a very good chance of blowing this year.”

There are a variety of financial trip wires, according to Bill Holter, such as thousands of sealed criminal indictments that will be unsealed in 2018. Holter also points out the explosion of global debt. Holter charges, “It’s now $237 trillion. The amount of debt grew by $21 trillion globally over the last 12 months. That’s roughly 10 %. How much did global GDP grow? 2% or 3%, I mean that is totally unsustainable.” The biggest worry for Holter right now is escalating military action in Syria. Holter warns, “This is so, so dangerous. Obviously, you worry about a hot war because with the weapons you have today, you could have WWIII start in a heartbeat. But look at the market today. It’s up 400 or 500 points. You have talk of trade wars. You have talk of hot wars. It’s amazing the markets can hold together and ignore potential annihilation.”

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These people are all the same.

Licence to Kill (Le Monde Diplomatique)

British police say their investigation into the poisoning of former Russian army colonel Sergei Skripal in Salisbury may take many months, yet prime minister Theresa May has already identified the guilty party, claiming the order came from the Kremlin. Foreign secretary Boris Johnson, sees the incident as ‘part of a pattern of reckless behaviour by President Vladimir Putin,’ which is the ‘common thread that joins [the poisoning] with [Russia’s] annexation of Crimea, the cyberattacks in Ukraine, the hacking of Germany’s parliament … interference in foreign elections’ and ‘indulgence of Assad’s atrocities in Syria’. The reasoning goes: if Putin is capable of doing it, then he must be guilty.

From Leon Trotsky, killed with an ice pick in Mexico, to Alexander Litvinenko, poisoned with polonium in London, Russia’s security services have undoubtedly liquidated many opponents of the Kremlin living abroad. Other countries have resorted to such measures without triggering the same diplomatic uproar. France, Germany and the US have been involved in the kind of state-sponsored assassination that has so offended Johnson, yet this has not stopped them joining him and May in railing against Russia. Israel has taken great care to avoid commenting, perhaps because it is one of the countries that most frequently ‘carry out this kind of operation, known as an “extraterritorial elimination”’.

The list of Palestinians, including official representatives, killed by Israel’s secret service abroad makes the Russians look like amateurs: at least half a dozen in Paris alone, without serious consequences. Moroccan opposition leader Mehdi Ben Barka also disappeared in Paris; the African National Congress’s chief representative in France, Dulcie September, and more recently three Kurdish activists, were assassinated there. Across the Atlantic, Orlando Letelier, a minister under former Chilean president Salvador Allende, was killed in Washington DC by agents of Augusto Pinochet, which did not stop Ronald Reagan from feting Pinochet; and Margaret Thatcher was happy to drink tea (without polonium) with the dictator and present him with a silver dish.

‘Extraterritorial elimination’ is also a fitting term for the US practice of killing presumed terrorists abroad with drones. Barack Obama officially authorised more than 2,300 such killings during his presidency. For his part, François Hollande has admitted to ordering extrajudicial killings of ‘enemies of the state’ when he was president (an average of one a month during his term), though none of his political allies reproached him for it during the Socialist Party primaries in January 2017. François de Rugy, who has since become president of France’s National Assembly, even said at the time: ‘Yes, it is sometimes necessary.’

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Core: “..it can no longer be called advertising any more – it has turned into behaviour modification.”

It’s a moot discussion anyway. People pay for their phone + subscription. Why wouldn’t they pay for social media too? Few bucks a month?!

Point is, Facebook make their money off of ads AND added benefits (sell data). They don’t want to be an ad-less platform. That would take away the benefits.

It’s No Longer Advertising – It’s Behaviour Modification (BBC)

An influential tech evangelist has called at the TED 2018 conference for an overhaul of Facebook and Google’s business models. Jaron Lanier, who is often referred to as a “father of virtual reality”, told the Vancouver event that the two firms should let users pay for their services as an alternative to relying on ads. “These companies need to change,” he said. But on Tuesday, Facebook’s chief suggested this would not be popular. “A number of people suggest that we should offer a version where people can not have ads if they pay a monthly subscription, and certainly we consider ideas like that,” Mark Zuckerberg told a panel of senators in Washington.

“But overall, I think that the ads experience is going to be the best one. “I think in general, people like not having to pay for a service. A lot of people can’t afford to pay for a service around the world,” Mr Zuckerberg added. Mr Lanier was a frequent TED (Technology, Entertainment and Design) speaker during the 1980s. But, he said, even then he had realised that “the technology we needed and loved could also be our undoing”. “We made a very particular mistake in the 90s when early digital culture had this lefty, socialist mission, which meant that everything on the internet must be available for free,” he added. That decision led directly to the advertising model that allows Google and Facebook to flourish, he explained.

“In the beginning it was cute but as computers became more efficient and algorithms got better, it can no longer be called advertising any more – it has turned into behaviour modification.” It was, he said, a “tragic mistake” rather than a “wave of evil”, pointing out that he knew and loved many people working at the two tech empires. But, he explained, the advertising model had led to addictive social media platforms that rewarded people for sharing their information with “likes”. He also claimed that Google and Facebook had become as “hooked and trapped” on the advertising model as their users. “It is time to turn back the clock and remake that decision. Many people would pay for search and social networks,” Mr Lanier said.

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“..using data to target and shape behaviours is an integral part of social media.”

Zuckerberg’s Answer To Facebook’s Problems: More Facebook (Ind.)

As this hearing made painfully clear, using data to target and shape behaviours is an integral part of social media. It is the potential use of our data that is of real value. Data informed targeting is woven into Facebook’s DNA; the only way to change that is to change its structure and purpose. Under questioning Zuckerberg suggested that Facebook is going through a “broader philosophical shift”, taking them from simply producing tools for “empowering” people to the need now to take a “more proactive role” in “policing the ecosystem”. This implies that they seek an even more powerful position – both as producers and regulators – and a larger roll-out of their particular ideals and philosophies.

The answer to the problems of Facebook, it seemed to be suggested, is more Facebook and more of its current business model. The account was of a purer Facebook that gives you connectivity, voice and control of your information, untainted by any issues, missteps or unwanted players. An enhanced version of what we already have is what was being proposed as the solution. Putting the obvious problems to one side for the moment, the other question is whether we really share the ideals of Facebook.

The tone of this hearing was apologetic, but it leaves us to question if change is actually possible. We might trust Zuckerberg to be responsible, this doesn’t mean that we need to accept the ideals that are wrapped up in these media and the type of world that is being imagined. The problems clearly need attention, but we might also wonder about the ideals that will play such a powerful part in our collective future. The ideals and models of Facebook will continue to expand unless we think a little more about the future that we want to bring into existence.

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How is that a question?

The Uncomfortable Question: Is Facebook A Monopoly? (MW)

Asked by Graham if he felt Facebook had a monopoly, Zuckerberg replied, “It certainly doesn’t feel like that to me.” Senator Kamala Harris, the only Democrat to mention monopoly power during the hearing, noted later that Zuckerberg never really answered Graham’s question. “Every monopolist tries to enlarge the market definition such that his own share of it is insignificant,” said Marshall Steinbaum, the research director at the Roosevelt Institute, the nonprofit partner to the Franklin D. Roosevelt Presidential Library and Museum. “But the fact that he couldn’t name his competitors spoke volumes: Facebook controls the network over which information is proliferated, and it decides who sees what–always to its own benefit. That is a textbook monopolist and it is a company that in its current form cannot be allowed to exist.”

Sen. Ron Johnson, a Republican from Wisconsin, noted that Zuckerberg told Graham that he didn’t think Facebook was a monopoly. “You’re obviously a big player in the space. That might be an area for competition, correct, if somebody else wants to create a social platform that allows a user to monetize their own data?” Johnson asked. Yes, says Zuckerberg. Sen. Dan Sullivan, a Republican from Alaska, asked Zuckerberg if Facebook was too powerful. “All — really all over the world, the Facebook — 2 billion users, over 200 million Americans, 40 billion in revenue. I believe you and Google have almost 75% of the digital advertising in the U.S. Is — one of the key issues here, is Facebook too powerful? Are you too powerful? And do you think you’re too powerful?” asks Sullivan.

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Gee, what a surprise.

UK Economic Growth Has Fallen By Half (G.)

Economic growth in the UK is expected to have fallen by half in the opening months of the year, one of Britain’s leading forecasting bodies has said, amid renewed concerns for the health of the economy. The National Institute for Economic and Social Research (NIESR) said growth was set to fall to 0.2% in the first quarter of 2018 from 0.4% in the final three months of last year, when the economy enjoyed a mini-recovery despite an overall slowdown in 2017 triggered by the Brexit vote. Amit Kara, head of UK macroeconomic forecasting at the thinktank, said the main reason for the weakness was severe weather in March, dubbed the “beast from the east” in the media, which was likely to have disrupted activity in all major sectors of the economy.

The estimate, which comes ahead of official figures from the Office for National Statistics later this month, followed news that Britain’s factories recorded a surprise fall in production in February, in the first drop in activity in the sector for almost a year. Confirming fears of a slowdown in the UK economy so far this year, figures from the ONS showed manufacturing output declined by 0.2% in February, falling well behind economists’ expectations for growth of 0.2%. There was also a sharp drop in construction output, suggesting continued pain for the industry amid the fallout from the collapse of Carillion. Monthly output unexpectedly fell by 1.6% in February, as builders were hit by the snow at the end of the month.

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One might think May et al have bigger things on their minds than going to war.

More Than 100,000 British Households Set To Be Homeless By 2020 (Ind.)

Tens of thousands more families will be trapped in temporary accommodation across England over the next two years if current homelessness trends continue, a report has warned. More than 100,000 households will be living in B&Bs, hostels and other forms of temporary housing by 2020, as rising housing costs and insecure work continue to “lock” people into poverty, according to research commissioned by Crisis and the Joseph Rowntree Foundation (JRF). The annual Homelessness Monitor shows that 70% of local authorities in England are struggling to find any stable housing for homeless people in their area, while a striking 89% reported difficulties in finding private rented accommodation.

As a result, many councils have found themselves forced to place ever more homeless people in emergency housing, including B&Bs and hostels, leading to urgent calls for more permanent and genuinely affordable homes to be built. Government figures published last month revealed almost 79,000 families were staying in temporary housing in the last three months of last year because they didn’t have a permanent home, compared with 48,010 in the same period eight years before. There had been a significant reduction in families living in such conditions before the coalition government came into power, with the number having fallen by 52% between 2004 and 2010 under the Labour government.

But the figure has crept up in each of the past seven years, from 69,140 in the last quarter of 2015, to 75,740 in the same period in 2016 and 78,930 at the end of last year. The new report warns that if current trends continue, with housing supply “dwindling” and rents outstripping wages and benefits, more than 100,000 such households will fall into this trap by 2020.

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Unless they go to war.

US Interest Payments Will Outpace Military Spending by 2023 (BBG)

The head of the Congressional Budget Office warned lawmakers that the U.S. government is on track to pay more to its creditors than on its own military, as interest rates and debt levels continue to climb. CBO chief Keith Hall told the Senate Budget Committee Wednesday that America’s net interest payments will triple over the coming decade, outpacing military expenditures. He called the data point “one of my favorite figures” used to highlight the challenges posed by the country’s ballooning debt. His office’s budget and economic forecasts, published Monday, show net interest payments first outstripping defense outlays in fiscal 2023 and reaching $915 billion five years later.

The increase will come as debt held by the public almost doubles to $28.7 trillion in fiscal 2028 from this year, according to the CBO, a non-partisan arm of Congress. “My point is that the interest cost is just starting to swamp things like defense spending,” Hall said. “Whatever the fix is going to be, it needs to be something that’s pretty big.”

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“..when you consider the broader context and what the Russian side is now saying, it is just plain idiotic to own the S&P 500 at 24X.”

The Deep State Closes In On The Donald, Part 1 (Stockman)

Perhaps we have missed something: Like the possibility that the canyons of Wall Street are actually located on another planet several light years from earth! Otherwise, how can you explain the equipoise of a stock market sitting at the tippy-top of a nine-year bubble expansion and confronted with the potential outbreak of World War Three? Folks, like some alien abductors, the Deep State has taken the Donald hostage, and with ball-and-chain finality. Whatever pre-election predilection he had to challenge the Warfare State has apparently been completely liquidated. Trump’s early AM tweet today, in fact, embodies the words of a man who had more than a few screws loose when he took the oath, but under the relentless pounding of the Imperial City’s investigators, partisans, apparatchiks and lynch-mob media has now gone stark raving mad. To wit:

“….Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it! Yes, maybe Wall Street has figured out that the Donald is more bluster than bite. Yet when you consider the broader context and what the Russian side is now saying, it is just plain idiotic to own the S&P 500 at 24X. After all, earnings that have been going nowhere for the past three years (earnings per share have inched-up from $106 in September 2014 to $109 in December 2017), and now could be ambushed by a hot war accident in Syria that would rapidly escalate. Indeed, did the robo-machines and boys and girls down in the casino not ponder the meaning of this message from the Kremlin? It does not leave much to the imagination:

#Russian ambassador in beirut : “If there is a strike by the Americans on #Syria , then… the missiles will be downed and even the sources from which the missiles were fired,” Zasypkin told Hezbollah’s al-Manar TV, speaking in Arabic. Sure, the odds are quite high that the clever folks in the Pentagon will figure out how to keep the pending attack reasonably antiseptic. That is, they will bomb a whole bunch of places in Syria where the Russians and Iranians are not (after being warned); and also deploy stand-off submarine platforms to launch cruise missiles and high-flying stealth aircraft to drop smart bombs, thereby keeping American pilots and ships out of harm’s way. Then, after unleashing the Donald’s version of “shock and awe” they will claim that Assad has just received the spanking of his life and that the Russians and Iranians have been messaged with malice aforethought.

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How to sell a book.

James Comey Is About To ‘Shock The President And His Team’ (MW)

‘How strange is it for you to sit here and compare the president to a mob boss?’ That’s the question ABC’s George Stephanopoulos asked James Comey in a teaser for an interview set to air Sunday night at 10 p.m. as a “20/20” special. A source told Axios that what the former FBI director had to say during that interview is “going to shock the president and his team” and “certainly add more meat to the charges swirling around Trump.” The source added that the interview included information that’s never been divulged before and left people in the room “stunned.” Comey apparently answered every question. The five-hour interview was taped Monday at his Washington-area home ahead of the release of his book, “A Higher Loyalty,” which comes out Tuesday.

Comey is about to go on a promotional media blitz, according to Politico, including a live interview with CNN on April 19, a visit to MSNBC the same day, an interview on Fox News on April 26 and one with PBS NewsHour on April 30. The book, already topping Amazon’s best-seller list, is expected to reveal details about Trump pressuring Comey to shut down at least part of the FBI investigation into Russian interference in the election and other related issues. Separately, Dana Boente, the FBI’s general counsel who had led the Russia investigation in the early days of the Trump administration, has been asked to testify by Mueller, according to a letter obtained by MSNBC.

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A sick joke.

Warrant for Catalan Minister Details ‘Violent Revolt’ (BBC)

A former Catalan minister fighting extradition from Scotland to Spain faces charges of causing widespread violence against police. BBC Scotland has obtained a copy of the European arrest warrant for former education minister Clara Ponsatí. The St Andrews University professor is wanted in Spain on charges of rebellion and misappropriation of public funds. Ms Ponsati’s lawyer Aamer Anwar said: “My client Clara Ponsati utterly refutes the charges.” He added: “Clara is an esteemed University professor who has never committed a criminal act in her life.

As an education minister for just over two months along with her government she promoted a peaceful referendum, yet if extradited and convicted could face a sentence of up to 33 years, thus facing the real prospect of spending the rest of her natural life in prison. “We are instructed to submit that this warrant is a desperate and politically motivated prosecution by the Spanish authorities. Across Europe lawyers have already successfully challenged the credibility of the charges of violent rebellion. “Now in Scotland Clara is accused of orchestrating violence, yet the warrant fails in over 19 pages to ever specify a single act of violence or incitement attributable to her.” The warrant includes lengthy details of violent confrontations at polling stations across the region.

Prof Ponsatí is being pursued by the Spanish government over her involvement in last year’s Catalan independence referendum, which was ruled illegal by Spanish courts. She handed herself in to police in Edinburgh in March, and was subsequently released on bail following a preliminary hearing. The case is due to call in the Scottish courts again on Thursday. The arrest warrant says that the more serious crime of rebellion applies to those “who revolt violently and publicly” for purposes including “declaring the independence of a part of the national territory.”

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“Half the world’s whale and dolphin species visit or live in New Zealand waters..”

New Zealand Bans All New Offshore Oil Exploration (G.)

The New Zealand government will grant no new offshore oil exploration permits in a move that is being hailed by conservation and environmental groups as a historic victory in the battle against climate change. The ban will apply to new permits and won’t affect the existing 22, some of which have decades left on their exploration rights and cover an area of 100,000 sq km. The prime minister, Jacinda Ardern, said her government “has a plan to transition towards a carbon-neutral future, one that looks 30 years in advance”. “Transitions have to start somewhere and unless we make decisions today that will essentially take effect in 30 or more years’ time, we run the risk of acting too late and causing abrupt shocks to communities and our country.”

The Labour coalition government was elected last year and made tackling climate change one of the cornerstones of its policies, committing to transition to 100% of electricity generation from renewable sources by 2035 and making the economy carbon neutral by 2050. Greenpeace New Zealand said the government’s announcement was a “historic moment” for the country and “a huge win for our climate and people power”. Last month Ardern accepted a 50,000-strong Greenpeace petition calling for an end to offshore oil and gas exploration. “The tide has turned irreversibly against big oil in New Zealand,” said the Greenpeace New Zealand executive director, Russel Norman.

[..] the Forest & Bird conservation group said the ban was a “huge step forward” for the country and sent a message to the oil and gas industry that New Zealand waters were no longer “their playground”. “Half the world’s whale and dolphin species visit or live in New Zealand waters, from the critically endangered Maui’s dolphin to giant blue whales,” said the group’s chief executive, Kevin Hague.

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Instability.

Climate Change Could Trigger Volcanic Eruptions Across The World (Ind.)

Besides having a disastrous impact on sea levels and weather, a warming climate could also trigger catastrophic volcanic eruptions across the planet Volcanic eruptions alter the climate by spewing smoke and ash into the atmosphere, but scientists now also think the opposite might be true – changes in climate could actually cause volcanic eruptions. According to Gioachino Roberti, a PhD student at the University of Clermont Auvergne, glaciers can suppress volcanic eruptions by providing mountains with structural stability. As the climate becomes warmer, ice melting from these mountains removes support from their slopes, potentially leading to landslides and collapse.

“Imagine the ice like some sort of protective layer – when the ice melts away, the mountain is free to collapse,” said Mr Roberti. “If your mountain is a volcano you have another problem. “Volcanoes are a pressurised system and if you remove pressure by ice melting and landslide, you have a problem.” Presenting his work at the European Geosciences Union General Assembly, Mr Roberti explained a case study he and his collaborators had investigated in Canada. Though not famous for its volcanic activity, Canada is home to hundreds of potentially active volcanoes. The scientists chose to focus on Mount Meager, a glaciated volcano north of Vancouver.

Mount Meager’s last eruption was over 2000 years ago, but Mr Roberti chose to focus on Mount Meager for a more recent natural disaster that took place there. In summer 2010, the largest landslide in Canadian history occurred on the southern part of the volcano. “The glacier base of the slope retreated and during the hottest part of the summer, the slope catastrophically failed – the whole mountain started to move at a very high velocity,” said Mr Roberti. This was followed in 2016 by the formation of ice caves in the glacier as hot volcanic gases seeped out of the volcano. “This is the first time this has happened there – so the equilibrium of the mountain is changing,” said Mr Roberti.

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They won’t until it’s too late.

Cities Around The World Should Prepare For Running Out Of Water (CNBC)

It’s called “Day Zero”: when Cape Town, South Africa’s bustling port city, sees its water taps run dry, and its population thrust into a perilous situation. Originally projected for this year, the impending crisis has been delayed in part by severe measures — the city instituted restrictions that amount to less than one sixth of an average American’s water consumption. Yet despite that effort, “Day Zero” is still projected to arrive next year. And when it comes, the crisis will see the government switching off all the taps and rationing the resource through collection points. That future isn’t just Cape Town’s. It’s a scenario cities around the globe may face, experts say.

It may be hard to fathom just how cities could be at risk of a water scarcity crisis when approximately 70% of the world is made up of the resource. The stark reality, however, is that the percentage of fresh water probably only amounts to about 2.5 percent, according to often-cited assessments. Even then, a significant supply is locked up in ice and snow, which means just 1 percent of all fresh water is easily accessible to the global population. Inequality in access to water is also quickly becoming a problem. While the affluent can find ways to get access to water— through deliveries or in-built tanks — poorer populations are left to their own devices. That situation oftentimes leads to water theft — for profit, for survival, or for both.

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A longtime fear. Slowing of the thermohaline circulation will turn Western Europe into a very cold place.

Gulf Stream Current At Its Weakest In At Least 1,600 Years (G>)

The warm Atlantic current linked to severe and abrupt changes in the climate in the past is now at its weakest in at least 1,600 years, new research shows. The findings, based on multiple lines of scientific evidence, throw into question previous predictions that a catastrophic collapse of the Gulf Stream would take centuries to occur. Such a collapse would see western Europe suffer far more extreme winters, sea levels rise fast on the eastern seaboard of the US and would disrupt vital tropical rains. The new research shows the current is now 15% weaker than around 400AD, an exceptionally large deviation, and that human-caused global warming is responsible for at least a significant part of the weakening.

The current, known as the Atlantic Meridional Overturning Circulation (Amoc), carries warm water northwards towards the north pole. There it cools, becomes denser and sinks, and then flows back southwards. But global warming hampers the cooling of the water, while melting ice in the Arctic, particularly from Greenland, floods the area with less dense freshwater, weakening the Amoc current. Scientists know that Amoc has slowed since 2004, when instruments were deployed at sea to measure it. But now two new studies have provided comprehensive ocean-based evidence that the weakening is unprecedented in at least 1,600 years, which is as far back as the new research stretches.

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Dec 242017
 
 December 24, 2017  Posted by at 5:47 pm Finance Tagged with: , , , , , , , , , ,  


Walter Hege Caryatid overlooking the city of Athens 1930

 

Christmas is the time when the western world makes a doomed attempt to remember a story whose meaning it has long forgotten, and still claim the story as its own every single time, every single year, claim it as its foundation, the foundation of the principles that guide its societies, its politics and its religion.

Western countries, whether they’re predominantly Catholic or Protestant, label themselves Christian, after Jesus Christ, a man their holy scriptures say is/was the Son of their God, and after his teachings, his sermons and the example his own life is supposed to have been for all his followers. Turn the other cheek, help those in need, don’t judge.

But as we celebrate Jesus’ birth at the time of winter solstice, and we acknowledge that he and his parents, Joseph and Maria, were refugees driven into exile, and the only place the birth could take place was a manger far away from their home, we lose out on the connection to our savior from the very first moment.

Because we sit in our warm and cosy homes, surrounded by meals worthy of kings, and presents worthy of princes and princesses, while frail forms and emaciated children are fainting at our doors. While we are quite aware that whatever Jesus meant to say 2000 years ago, and some of that may have been lost over time, one thing we do know is that he didn’t mean this.

There’s no way he meant for us to, two millennia down the road, to look at present day refugees driven into exile far away from home, just like he and his parents were, and not lift a finger to help them. So when politicians like UK PM Theresa May say in their Christmas messages to their nations that they should “take pride in their Christian heritage”, that’s not just empty rhetoric, it’s hollow.

But as long as religion still sells, and there are many countries where it does, perhaps nowhere more than the US, politicians will quote Jesus and do the opposite of what he actually said according to the bible, and all without blinking once. The thirst for power over others does strange things to people, and our societies are still fully unprepared for that, and we still hear them say one thing and do another, and we still believe what they say. We’re suckers for snake oil.

 

Actual clergymen and other people of real faith may be somewhat different from politicians and their flocks, but as long as the Vatican remains opulently rich and clad in gold while Catholics and others around the world live in die in misery, perhaps we should question the link between Jesus and the church, the very link the latter base their entire authority on.

Perhaps, as well, we should question any and all claims of being ‘God’s own country’ made by any and all nations who send their best and bravest to go and kill the best and bravest of other nations for the sake of religion, resources or empire. Nothing of that has anything to do with Jesus.

And perhaps we should look for Jesus not in the people who talk about him, but in those who act like him, and like he told his contemporaries to act. And yeah, that takes me to Greece, and the Automatic Earth for Athens fund.

 

Not in any kind of presumptuous way, mind you, certainly not when it comes to me, but I have met quite a few people who seem to understand Jesus much better than most politicians and church leaders do, they just don’t talk about it, they do it. That much must have become clear through the past 2,5 years and 13-14 articles (for links, see bottom of this article) that I’ve written about them.

The reason I haven’t written much on the topic over the past 9 months or so comes down pretty much to growing pains, for lack of a better term. In my view, my friend Konstantinos and his social kitchen project, O Allos Anthropos (the Other Human), had become too dependent on Automatic Earth readers for donations, which is not a healthy situation for anyone involved.

I didn’t want to continually ask our readers for more money, and O Allos Anthropos needed to find other sources for fund-raising. The problem is that is easier said than done, for multiple reasons. If you have no experience when it comes to fund-raising, it’s hard to know where to start, and it’s hard to organize yourselves to do it. And then you end up broke, as O Allos Anthropos is right now.

Still, I think they could have tried a bit harder, but then, it’s not about me. It’s about the people we help, the refugees and homeless. If you follow my essays at the Automatic Earth a little, you will know that the situation for both groups (and sometimes they’re the same people) is still deteriorating at a rapid pace. And as much as the Greek people are willing to help, most of them are getting poorer fast as well.

Between ever more and higher taxes on the one hand, and ever more cuts to wages and pensions on the other, a recovery of the Greek economy slips further away and out of view by the day, taking people’s ability to take care of the very poorest out with it. And in this case, too, politicians are not going to lend a helping hand unless they see political gain in it.

 

Greek Minister for Migration Yiannis Mouzalas recently said he could not exclude the possibility that refugees would die on the Greek islands this winter. He’s had two years to do just that, though. That’s enough time to run out of excuses to blame the situation on anyone else. But he’s right: people will probably die there this winter.

There are thousands living in summer tents with no heating, surrounded by wet mud and sheer misery, and with sanitation facilities that provide no privacy and are dirtier than many a manger in a stable could be. If anything, they make one think of Joseph and Mary all over again; just worse, probably. The EU reportedly has spent $1.4 billion on the situation so far, and this is the result.

Mouzalas was nominated for the Council of Europe’s human rights commissioner, and it was no big surprise he didn’t get the job. Though with the example of Saudi Arabia chosen to head a key UN human rights panel, anything is possible.

 

There is no way that it’s impossible to build adequate facilities for some 20,000 refugees and migrants with $1.4 billion. If that doesn’t work, and it hasn’t, one can only conclude that various parties involved, the EU, the Greek government, and the alphabet soup of NGOs operating in Greece, don’t see these facilities as their no. 1 priority. Thing is, who’s going to call them on it, and what good would that do?

The only priority the EU has when it comes to refugees is to keep them out; the politicians in power in member states read the polls and see their voters don’t want refugees in their countries. So they fund armies and detention camps in Libya etc., where people are sold for $400 or so in open slave markets. And then they talk about Christian values.

Greece has been completely swamped and torn apart by the issue, granted, but that doesn’t mean Mouzalas and Tsipras et al couldn’t have done -and do- a lot more to guarantee at least minimal human dignity to those stuck, if not incarcerated, on the islands. There are hundreds if not thousands of underage children, women, sick people, elderly, stuck in conditions not even the ass and the oxen were in 2,000 years ago.

There’s no way that’s the best we can do. It’s an utter disgrace that shames any and all Christian values, and the man they were named after.

O Allos Anthropos cannot solve these issues, all it can so is help where it can. First, feed the homeless Greeks and refugees in the cities, especially Athens. Then, make life more bearable for those hardest hit by both their circumstances and the way the political classes and the humanitarian-industrial complex deal with them.

And in the end that’s perhaps the only thing we can do: not try and launch huge movements and sweep away a status quo, but work on a small scale, a human scale, human-to-human. Work on a Jesus scale, rather than a Church scale. I know, there are many churches that do help where they can, but that too is most effective where the scale is smallest.

 

 

Konstantinos has taken O Allos Anthropos to Bodrum in Turkey this summer, a place where many thousands of Syrians and other refugees are now held up instead of sailing to the Greek islands. These people have nowhere to go, Greece is largely off limits – though the numbers crossing are increasing again- while in the countries they fled, the west is fighting for prominence instead of helping them rebuild.

We will not solve this problem, or at least it will take many years, and the needs of the worst-off, both Greeks and refugees, are immediate. The only way we have to save the world, or make it a better place, is one person at a time. Everyone who tries to do anything on a larger scale fails miserably.

So that’s what we’ll do. Konstantinos and I, and all the other people involved. One person at a time. We can only do that with your help tough. So once again, please be generous this Christmas. Do that spirit honor. Let’s make 2018 a good year for everyone who needs help to make it one.

 

 

For donations to Konstantinos and O Allos Anthropos, the Automatic Earth has a Paypal widget on our front page, top left hand corner. On our Sales and Donations page, there is an address to send money orders and checks if you don’t like Paypal. Our Bitcoin address is 1HYLLUR2JFs24X1zTS4XbNJidGo2XNHiTT. For other forms of payment, drop us a line at Contact • at • TheAutomaticEarth • com.

To tell donations for Kostantinos apart from those for the Automatic Earth (which badly needs them too!), any amounts that come in ending in either $0.99 or $0.37, will go to O Allos Anthropos. Every penny goes where it belongs, no overhead. Guaranteed. It’s a matter of honor.

 

Please give generously.

 

 

A list of the articles I wrote so far about Konstantinos and Athens.

June 16 2015

The Automatic Earth Moves To Athens

June 19 2015

Update: Automatic Earth for Athens Fund

June 25 2015

Off to Greece, and an Update on our Athens Fund

July 8 2015

Automatic Earth Fund for Athens Makes First Donation

July 11 2015

AE for Athens Fund 2nd Donation: The Man Who Cooks In The Street

July 22 2015

AE Fund for Athens: Update no. 3: Peristeri

Nov 24 2015

The Automatic Earth -Finally- Returns To Athens

Dec 25 2015

Help the Automatic Earth Help the Poorest Greeks and Refugees

Feb 1 2016

The Automatic Earth is Back in Athens, Again

Mar 2 2016

The Automatic Earth for Athens Fund Feeds Refugees (Too)

Aug 9 2016

Meanwhile in Greece..

Nov 28 2016

The Other Human Needs Your Help This Christmas

Dec 21 2016

The Automatic Earth in Greece: Big Dreams for 2017

Mar 23 2017

The Automatic Earth Still Helps Greeks and Refugees

 

 


Konstantinos and a happy refugee

 

 

Dec 202017
 
 December 20, 2017  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , ,  


Claude Monet Houses of Parliament, Sunset 1904

 

Bitcoin Plunges Over $2,500, Bounces Back Somewhat, Bitcoin Cash Surges (MW)
Coinbase Enables -Then Disables- Bitcoin Cash Trading: Insider Trading? (BI)
From Bitcoin To Hashgraph: The Crypto Revolution (Mike Maloney)
Is It 1999? 2007? Or Both? (Roberts)
China Is Having Second Thoughts About Cracking Down On Ballooning Debt (CNBC)
EU Commission May Launch Moves To Punish Poland Over Legal Reforms (R.)
Facebook’s New Nemesis Is a Besuited German Antitrust Watchdog (BBG)
Un-Merry Christmas: Perverse Incentives to Over-Consume and Over-Spend (CHS)
Too Late, Theresa – Brexit Offer To EU Citizens Leaves Many Cold (R.)
Centuries-Old Gibraltar Dispute Threatens Brexit Progress (BBG)
UK Government Condemned Over ‘Abject Failure’ To Tackle Homelessness (Ind.)
Salaries Continue To Decline In Greece
Footage Emerges From Lesbos Refugee Camp Showing Shocking Conditions (K.)
10 People Injured In Clashes At Moria Refugee Camp On Lesbos (K.)
Our Selective Blindness Is Lethal To The Living World (G.)

 

 

Pretty wild. You sure you want your savings go through that?

Bitcoin Plunges Over $2,500, Bounces Back Somewhat, Bitcoin Cash Surges (MW)

The price of bitcoin plunged about 14% — more than $2,500 — Tuesday night after cryptocurrency trading site Coinbase said it would allow its customers to buy and sell its rival offshoot currency, bitcoin cash. In a matter of hours, the price of bitcoin dropped from $18,125 to as low as $15,578. Bitcoin later rallied somewhat and was trading within a $1,000-range; it was last at $16,875 Tuesday night. Bitcoin futures on the CME Group’s Chicago Mercantile Exchange were last trading at $17,425, off more than $700 from the afternoon. Bitcoin cash, meanwhile, rallied more than 50% to all-time highs above $3,300. It was last trading at $3,303, according to CoinMarketCap. “Sends and receives are available immediately,” Coinbase said in a blog post Tuesday announcing bitcoin-cash trading.

“Buys and sells will be available to all customers once there is sufficient liquidity on GDAX. We anticipate that this will take a few hours.” However, Coinbase and its GDAX exchange late Tuesday suspended bitcoin-cash trading after just four minutes until 9 a.m. Pacific time Wednesday, apparently until traffic settles down and liquidity is established. Bitcoin cash was created by a split from bitcoin on Aug. 1 by a faction of disgruntled developers, and allows virtual miners to process transactions in larger units — 8 megabytes rather than the 1-MB bitcoin blocks. The fledgling cryptocurrency has expanded 10-fold since then, and is now the third-largest by market cap, at $55.6 billion, according to CoinMarketCap.com.

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Volatility, liquidity, insider trading.

Coinbase Enables -Then Disables- Bitcoin Cash Trading: Insider Trading? (BI)

Coinbase, one of the largest cryptocurrency trading platforms, shocked the crypto-world with its announcement Tuesday evening that it would allow users to buy and sell bitcoin cash. The news sent bitcoin cash, the spin-off cryptocurrency of bitcoin launched in August, to an all-time high above $3,609 per data from Markets Insider. On Coinbase’s GDAX platform, the price of the cryptocurrency reached well above $8,000 per coin. Bitcoin cash’s appreciation began slightly before the announcement on some exchanges, raising concerns about the possibility of insider trading by employees with advanced knowledge of the news. Coinbase CEO Brian Armstrong said in a post early Wednesday morning that the company was looking into the matter.

“Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter”, he said. If we find evidence of any employee or contractor violating our policies- directly or indirectly- I will not hesitate to terminate the employee immediately and take appropriate legal action. The price spike appeared to put pressure on Coinbase. Nearly four hours after the San Francisco-based firm announced it was supporting bitcoin cash trading, it said users wouldn’t be able to buy and sell the cryptocurrency until Wednesday. “An update on Bitcoin Cash for our customers: sends and receives are functional,” the company said in a tweet at 11:15 p.m. ET. “Buys and sells on Coinbase.com and in our mobile apps will be available to all customers once there is sufficient liquidity on GDAX. We anticipate that this will happen tomorrow.”

Ouch. The company said in a blog post it disabled trading because of “significant volatility.” In addition to bitcoin cash spiking by almost $1,000, cryptocurrency trading volumes reached an all-time high above $49 billion, according to data from CoinMarketCap. Coinbase has struggled to fully function under such demand in the past.


Bitcoin this week

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Our friend and gold bug Mike has lofty words.

From Bitcoin To Hashgraph: The Crypto Revolution (Mike Maloney)

Today, mankind stands at a crossroads, and the path that humanity chooses may have a greater impact on our freedom and prosperity than any event in history. In 2008 a new technology was introduced that is so important that its destiny, and the destiny of mankind are inextricably linked. It is so powerful that if captured and controlled, it could enslave all of humanity. But if allowed to remain free and flourish – it could foster unimaginable levels of peace and prosperity. It has the power to replace all financial systems globally, to supplant 90% of Wall St, and to provide some functions of government. It has no agenda. It’s always fair and impartial. It can not be manipulated, subverted, corrupted or cheated.

And – it inverts the power structure and places control of one’s destiny in the hands of the individual. In the future, when we look back at the 2.6 million-year timeline of human development and the major turning points that led to modern civilization – the creation of farming, the domestication of animals, the invention of the wheel, the harnessing of electricity and the splitting of the atom – the sixty year development of computers, the internet and this new technology will be looked upon as a single event…a turning point that will change the course of human history. It’s called Full Consensus Distibuted Ledger Technology, and so far its major use has been for cryptocurrencies such as Bitcoin….but its potential goes far, far beyond that.

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Of course, as always, Lance has a lot more to say (click the link). I picked out his graph beacuse it is exceptionally strong.

Is It 1999? 2007? Or Both? (Roberts)

I have combined the three periods below, scaled to 100, so you can see just how far we have currently gone. Sure. This time could be different. It just probably isn’t.

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Beijing has been aware of this for a long time. Don’t watch what they say, watch what they do.

China Is Having Second Thoughts About Cracking Down On Ballooning Debt (CNBC)

China is planning to relax its goal of cutting debt in its economic outline that’s set for release Wednesday, The Wall Street Journal reported Tuesday. The revised plan will instead clamp down on the rise in borrowing, sources told the WSJ. The move would fly in the face of the Chinese government’s mission to bring down the country’s soaring debt, a goal President Xi Jinping has made a cornerstone to his economic platform. The weakened priority may prove to be a concession by top Communist Party leaders that China’s economy may be more reliant on leveraged growth than the government would like. The Journal added that, by cooling its stance on debt, Beijing is hinting that it would rather fuel growth with higher debt than pursue austerity measures.

Chinese debt levels jumped the most in four years in September, according to Reuters. There’s speculation that the size of China’s debt load may be three times its economy. China may be feeling pressure to keep its economy growing as the U.S. is set to pass its biggest tax overhaul in 30 years this week, which will lower the corporate tax rate to theoretically make more companies competitive with China. To be sure, Xi and the Communist Party have been hard at work to curb borrowing between banks, the Journal noted. But since the crackdown on intrabank lending, smaller banks have scaled risky borrowing.

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Don’t think Poland will react very well to being ‘punished’.

EU Commission May Launch Moves To Punish Poland Over Legal Reforms (R.)

In what would be an unprecedented move, the European Commission could invoke Article 7 of the European Union’s founding Lisbon Treaty to punish Warsaw for breaking its rules on human rights and democratic values. “Unless the Polish government postpones these court reforms, we will have no choice but to trigger Article 7,” said a senior EU official before a Commission meeting on Wednesday, where Poland’s reforms are on the agenda. Poland’s new prime minister Mateusz Morawiecki said in Brussels last week that “the decision has already been made”. The Commission’s deputy head Frans Timmermans warned in July that Poland was “perilously close” to facing sanctions. Such a punishment could still be blocked. Hungary, Poland’s closest ally in the EU, is likely to argue strongly against it.

But the mere threat of it underlines the sharp deterioration in ties between Warsaw and Brussels since the socially conservative Law and Justice (PiS) won power in late 2015. The Commission says Poland’s judicial reforms limit judges’ independence. Polish President Andrzej Duda has until Jan. 5 to sign them into law. If all EU governments agree, Poland could have its voting rights in the EU suspended, and may also see cuts in billions of euros of EU aid. The PiS government rejects accusations of undemocratic behavior and says its reforms are needed because courts are slow, inefficient and steeped in a communist era-mentality.

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Cartel Office, no less.

Facebook’s New Nemesis Is a Besuited German Antitrust Watchdog (BBG)

Andreas Mundt is Facebook’s new nemesis. Mundt, 57, is the president of the Federal Cartel Office, Germany’s competition regulator. For nearly two years, his agency has been probing whether a key part of the Silicon Valley giant’s business model is an abuse of a market dominance. In a case that caused much surprise outside Germany, Mundt unveiled preliminary findings on Tuesday, saying Facebook may take advantage of its popularity to bully users into agreeing to terms and conditions they often don’t understand. The small print allows using the data to generate the targeted ads that make the company so rich. “Competition law would be poorer without somebody like Andreas Mundt,” said Nelson Jung, a lawyer at Clifford Chance in London. “He’s characterized by his willingness to push boundaries and challenge the status quo.”

Facebook took a dim view, saying the report painted an “inaccurate picture” of how it operates, homing in on the criticism that it’s dominant, an important legal term that might curb future behavior. [..] Facebook didn’t hold back in its attempt to rebut Mundt’s report, saying that it’s wrong to label it as “dominant” in Germany. “A dominant company can save the expense of innovating because it doesn’t have to fear someone else developing better features. We must constantly innovate to attract people. If we fail, people will go elsewhere.” According to Mundt, when data is called the new currency of the digital age, then the relationship to competition law is obvious. That’s also why he’s rejecting criticism that the probe blurs the line between privacy and antitrust enforcement.

“It can only be an antitrust issue if a customer can’t avoid the company because it’s dominating the market. Of course that has a privacy angle but it certainly also has an antitrust angle.” Mundt calls the Facebook investigation a “pioneer case” since “for the first time we’re looking into the relation between market power and big data.” For him, it’s as important as the European Union’s clampdown on Alphabet’s Google, which in July was fined 2.4 billion-euros for skewing shopping search results. “I like the Google decision, it set out some markers for the future,” Mundt said. “That’s what we’re trying with the Facebook case as well, regardless of what the result will now be.”

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Well, Toys ‘R’ Us is already dying. Our economies run on overspending.

Un-Merry Christmas: Perverse Incentives to Over-Consume and Over-Spend (CHS)

Few topics are off-limits nowadays: the personal and private are now splashed everywhere for all to see. One topic is still taboo: the holiday’s perverse incentives to over-consume and over-spend,lest our economy implode. This topic is taboo because it strikes at the very heart of our socio-economic system, which is fundamentally based on permanent growth, the faster the better, as if unlimited expansion on a finite planet is not just possible, but desirable. In the current Mode of Production, the solution to every social and economic ill is to “grow our way out of it.” The solution to unemployment: jump-start growth by expanding consumption, spending and borrowing. The solution to stagnant wages: jump-start growth. The solution to declining profits: jump-start growth. The solution to government deficit spending: jump-start growth. And so on.

So what happens when most people have not just the basics of life, but a surplus of stuff? Where is the growth going to come from if people already have everything? The answer is three-fold: 1. Replace a perfectly good product with a new product and dump the old one in the landfill. 2. Buy duplicates and put the surplus products in the closet or storage facility. 3. Buy gimmicks (Pet Rocks, etc.) that are tossed in the dump shortly after the holiday gift-giving season ends. But does this Landfill Economy make sense? The cheap oil is about gone, and so does it make any rational sense to burn the last of the cheap fossil fuels on assembling stuff nobody needs in China, shipping it thousands of miles to retailers or Amazon warehouses, adding it to the immense piles of stuff most households already own, and then shipping the old but still functional products to the landfill, just to keep the economy humming?

This is of course insane. Decisions aren’t being made as if scarcity matters; the goals and incentives are set to encourage perverse and destructive overconsumption and overspending: not only are we squandering resources in the sacrifice to the false gods of “growth,” we’re indebting households to do so, stripping income that could have been saved and invested in productive uses. In the lunatic asylum of the current economic model, media anchors sport grins of delirious joy when reporting increases in holiday spending, as if a bump higher from $680 billion to $700 billion is a gargantuan win for the flailing economy.

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There are no Britons ready to fill the roles at either the high end -academics- or the low end -fruit pickers-.

Too Late, Theresa – Brexit Offer To EU Citizens Leaves Many Cold (R.)

Back from Brussels with a hard-fought Brexit deal, Prime Minister Theresa May wrote an open letter to the three million citizens of other European Union states living in Britain. “I know our country would be poorer if you left and I want you to stay,” she wrote after striking the initial agreement, which promises to secure their British residency rights after Brexit and allows the negotiations to move onto trade relations. But for some EU nationals – who have endured uncertainty over their rights since the Brexit vote in June 2016, not to mention an unpleasant feeling that many Britons do not want them around – May’s Dec. 8 deal is too little, too late. It’s too late to keep German nurse Daniela Jones in the chronically short-staffed National Health Service (NHS), where she worked for 35 years.

It’s too late for French psychotherapist Baya Salmon-Hawk, who after 40 years in Britain has moved to Ireland to remain in the EU. It’s too late for French accountant Nathalie Duran, who is planning early retirement in France because after 31 years as a taxpayer in Britain she objects to being told she has to pay a fee and fill in forms to be granted a new “settled status”. “I will have to regretfully decline your generous offer for settled status and oblige your lovely countrymen’s wishes and go home,” she wrote on Facebook in a response to May laden with irony. Duran told Reuters that the prime minister’s “late outpouring of love” for EU citizens, after years of tough talk on the need to cut immigration, could not mask negative attitudes towards immigrants unleashed by the Brexit vote. “I think it’s turning ugly,” said 56-year-old Duran. “It’s now OK to say ‘go home foreigners’.”

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It’s whack-a-mole thing. New issues keep popping up.

Centuries-Old Gibraltar Dispute Threatens Brexit Progress (BBG)

A 300-year-old argument between Britain and Spain over a small piece of land is threatening to derail Theresa May’s plans to help businesses navigate Brexit. U.K. officials fear Spain will threaten to veto a Brexit transition phase if the British prime minister refuses to negotiate a separate deal with the government in Madrid that covers the disputed territory of Gibraltar. While the peninsula has been in British hands since 1713, Spain maintains a claim over the 2.6 square miles (6.7 square kilometers) of land. Fears are growing among ministers in London that a new framework for the next phase of Brexit talks, due to be outlined by the European Union on Wednesday, might reignite the centuries-old arguments, a U.K. official said.

May faces pressure to quickly strike a deal on transitional terms to assure U.K.-based businesses that trade rules won’t change suddenly on Brexit day in March 2019. May wants an agreement on the transition – or “implementation” – phase by March 2018 in order to shift talks on to the long-term future trade agreement. She hopes the two-year period of stability immediately after Brexit will help encourage businesses to stay based in the U.K. Last week, Spanish Prime Minister Mariano Rajoy suggested his government would need to give its explicit consent to any transitional deal affecting Gibraltar. The measure would require separate negotiations between London and Madrid, he said. [..] One U.K. official who asked not to be identified said British overseas territories must be included within the EU’s guidelines for negotiating an overall transitional period. To do anything else would be a contradiction in the EU’s own position, the official said.

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So does Labour stand up for them? really? How do they do that?

UK Government Condemned Over ‘Abject Failure’ To Tackle Homelessness (Ind.)

The Government has been condemned for taking an “unacceptably complacent” attitude towards tackling homelessness, as soaring numbers of people are forced to live on the streets or in temporary accommodation. A damning report by the cross-party Public Accounts Committee (PAC) said ministerial attempts to solve the “national crisis” had ended in “abject failure”. Figures show more than 9,000 people are sleeping rough on the streets of England at any one time – up 134% since 2011. Over 79,000 households, including 120,000 children, are meanwhile homeless and living in temporary accommodation – a rise of 65% since 2010.

Recent research by charity Shelter revealed that child homelessness has reached a 10-year high, with nearly 130,000 children in Britain set to wake up homeless and in temporary accommodation this Christmas. But the Government’s commitment to eliminate rough sleeping by 2027 will only address the “tip of the iceberg”, according to the PAC report, which found there to be an “unacceptable shortage” of realistic housing options for the homeless or those at risk of homelessness.

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Which cuts consumer spending, which cuts jobs, which cuts consumer spending, rinse and repeat.

Salaries Continue To Decline In Greece

Salaries have declined considerably and the number of workers on low wages has expanded, explaining the increase in jobs recorded by the Labor Ministry’s hirings database Ergani this year. A direct comparison of the first three weeks of October 2017 with the same period last year changes the rosy image of the local labor market that the government is attempting to present. The figures for this year show that more than six in 10 (64.27%) of the total 1,824,437 workers employed at 247,236 enterprises were on salaries of up to 1,000 euros per month gross. Fewer than two-thirds of them, accounting for 759,326 in absolute figures or 41.62% of all workers, were employed full-time, while the rest (22.65%) appeared to have part-time jobs that earned less than 500 euros a month.

Data also show the number of self-employed increased by 121,913 from October 2016, but this was not accompanied by an increase in salaries. The average salary in October 2017 dropped to 1,024.90 euros from 1,060.30 a year earlier. Across the labor market, full-time workers accounted for 68.44% of the total, virtually unchanged from the 68.28% rate in October 2016. However, the number of enterprises rose by 14,085, or 6.04%, from 233,151 in October last year. Over the 12-month period, flexible employment (part-time and shift work) grew by 30,556 jobs or 7.98%.

A growing trend has been recorded toward jobs paying between 500 and 600 euros per month: One in nine workers (11% or 200,759) fall into this revenue category, up by a remarkable 13.9% from October 2016 – a rise that is far greater than the overall increase in jobs. Eurostat data showed on Tuesday that while the hourly cost of labor in Greece rose 0.8% in the third quarter of 2017, salary costs fell 1.8% and non-salary costs (social security contributions etc) increased 8.6%.

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It’ll be a bitter winter.

Footage Emerges From Lesbos Refugee Camp Showing Shocking Conditions (K.)

US-based internet media company BuzzFeed has published a series of photographs and videos shot by residents inside the government-run Moria refugee and migrant processing center on the eastern Aegean island of Lesvos. The scenes of misery and squalor are also evident in a report on Deutsche Welle on Monday, which was International Migrants Day, showing footage taken by hidden camera inside the same facility. BuzzFeed’s Ryan Broderick said in his report that a 25-year-old man from Iraq named Noor and a 27-year-old man from Syria named Ammar agreed to provide the reporter with videos from inside the fenced-in perimeter of the former army camp, which is run by the Greek military.

The footage, which Broderick also posed on his Twitter account, provides a rare glimpse at conditions inside the camp, which was originally built to accommodate some 2,000 migrants and refugees and is now home to around 6,000 people, including unaccompanied minors, children, pregnant women and disabled or elderly individuals. Images of a shower area show a row of filthy stalls with doors hanging off their hinges, allowing little if any privacy. Many residents collect water in plastic bottles to bathe themselves rather than entering the showers, the witnesses inside the facility are quoted as saying after sending photographs of huge piles of plastic water bottled. The toilets are so unsanitary, they add, that many residents prefer to go to the bathroom in the open air, in a part of an olive tree grove set aside for this purpose.

Streets in the camp flood in the rain and are lined with tents that may accommodate more than one family and have been strengthened to withstand winter conditions with plastic sheets. In another video, two police officers are seen forcibly carrying a man by his arms and leg and shouting abuse at him after breaking up a fight between residents. Several international rights groups have decried conditions at Moria for months, calling on the Greek government to ease overcrowding and improve accommodation and sanitation standards. Squalid and cramped conditions have also led to riots and fights breaking out inside the facility.

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“300 to 350 unaccompanied minors and hundreds of children, women and elderly and disabled people.”

10 People Injured In Clashes At Moria Refugee Camp On Lesbos (K.)

Around 10 people were rushed to hospital on Lesvos on Tuesday night following violent clashes between rival groups in the Moria refugee and migrant camp. Riot police were called in to quell the unrest, which reportedly broke out between rival groups of Iraqi and Afghan nationals and resulted in several small fires being set. Tension is rife at Moria, where scant resources are being stretched at almost three times the camp’s capacity and conditions are squalid.

Among its 6,000-plus residents there are around 300 to 350 unaccompanied minors and hundreds of children, women and elderly and disabled people. Tuesday night’s clashes came a day after American news outlet BuzzFeed and Germany’s Deutsche Welle published videos of the camp’s interior showing the extent of the filth and squalor to which residents are being subjected. Journalists are not allowed into the military-run camp without the prior agreement of authorities, so the exact extent of Tuesday’s and other similar clashes are not known.

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Blind to the species that were already gone when you were born.

Our Selective Blindness Is Lethal To The Living World (G.)

What you see is not what others see. We inhabit parallel worlds of perception, bounded by our interests and experience. What is obvious to some is invisible to others. I might find myself standing, transfixed, by the roadside, watching a sparrowhawk hunting among the bushes, astonished that other people could ignore it. But they might just as well be wondering how I could have failed to notice the new V6 Pentastar Sahara that just drove past. As the psychologist Richard Wiseman points out: “At any one moment, your eyes and brain only have the processing power to look at a very small part of your surroundings … your brain quickly identifies what it considers to be the most significant aspects of your surroundings, and focuses almost all of its attention on these elements.” Everything else remains unseen.

Our selective blindness is lethal to the living world. Joni Mitchell’s claim that “you don’t know what you’ve got till it’s gone” is, sadly, untrue: our collective memory is wiped clean by ecological loss. One of the most important concepts defining our relationship to the natural world is shifting baseline syndrome, coined by the fisheries biologist Daniel Pauly. The people of each generation perceive the state of the ecosystems they encountered in their childhood as normal and natural. When wildlife is depleted, we might notice the loss, but we are unaware that the baseline by which we judge the decline is in fact a state of extreme depletion. So we forget that the default state of almost all ecosystems – on land and at sea – is domination by a megafauna.

We are unaware that there is something deeply weird about British waters; they are not thronged with great whales, vast shoals of bluefin tuna, two-metre cod and halibut the size of doors, as they were until a few centuries ago. We are unaware that the absence of elephants, rhinos, lions, scimitar cats, hyenas and hippos, that lived in this country during the last interglacial period (when the climate was almost identical to today’s), is also an artefact of human activity. And the erosion continues. Few people younger than me know that it was once normal to see fields white with mushrooms, or rivers black with eels at the autumn equinox, or that every patch of nettles was once reamed by caterpillars. I can picture a moment at which the birds stop singing, and people wake up and make breakfast and go to work without noticing that anything has changed.

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Dec 062017
 
 December 6, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , , ,  


Balthus Therèse dreaming 1938

 

Just How Big Could The Next Correction Be? (Roberts)
Second Canadian Mortgage Lender Crashes After Admitting Mortgage Fraud (ZH)
Toronto Housing Prices Fall Amid Growing Pool of Homes for Sale (BBG)
Plunder Capitalism (Paul Craig Roberts)
‘We Can’t Go On Like This’: Resignation In EU As Brexit Talks Stutter (G.)
Theresa May Faces New Brexit Revolt From Boris Johnson (BBG)
Most Brits Still Want Brexit But Expect It All to End Badly (BBG)
Juncker Seeks Greater Commission Control over Eurozone (Spiegel)
What Now? (Jim Kunstler)
The Premature Delisting of the Yellowstone Grizzly Bear (CP)
Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts (K.)
Aid Groups Warn Of Looming Emergency At Greek Asylum Centres (G.)
Europe’s Migrant Crisis: Millions Still to Come (Kern)
US Homeless Population Rises For The First Time Since The Great Recession (G.)
Nearly 130,000 British Children To Wake Up Homeless This Christmas (Ind.)

 

 

From a larger article by Lance, This is Nuts. A 40% crash is starting to sound like a lowball.

Just How Big Could The Next Correction Be? (Roberts)

Just how big could the next correction be? As stated above, just a correction back to the initial “critical support” set at the 2016 lows would equate to a 29.1% decline. However, the risk, as noted above, is that a correction of that magnitude would begin to trigger margin calls, junk bond defaults, blow up the “VIX” short-carry and trigger a wave of automated selling as the algorithms begin to sell in tandem. Such a combination of events could conceivably push markets to either strong support at the previous two bull market peaks or to support at the 2011 peak which coincides with the topping formations of 2000 and 2007. Such a correction would entail either a 41.1% to 49.2% decline.

I won’t even mention the remote, but real, possibility of a nearly 75% retracement to the previous lows of the last two “bear markets.” That can’t happen you say? It wouldn’t even match the decline following the 1929 crash of 85%. Furthermore, as technical analyst J. Brett Freeze, CFA, recently noted: “The Wave Principle suggests that the S&P 500 Index is completing a 60-year, five-wave motive structure. If this analysis is correct, it also suggests that a multi-year, three-wave corrective structure is immediately ahead. We do not make explicit price forecasts, but the Wave Principle proposes to us that, at a minimum, the lows of 2009 will be surpassed as the corrective structure completes.” Anything is possible.

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Behing every bubble there is fraud.

Second Canadian Mortgage Lender Crashes After Admitting Mortgage Fraud (ZH)

Back in April/May, Canada’s biggest mortgage lender, Home Capital Group, crashed its way into the headlines, coming clean over its balance sheet-full of liar loans, suffered a bank run, and was forced to take emergency liquidty from taxpaying pensioners, and was eventually bailed out by good old Warren Buffett. “Probably nothing…”

Well just when everyone though that crisis was over, a second cockroach in the Canadian mortgage bubble fiasco just emerged… Laurentian Bank of Canada fell the most in almost nine years after reporting it found customer misrepresentations on some mortgage loans it sold to another firm.

Echoing problems that almost sunk Home Capital Group, Bloomberg reports that: An audit “identified documentation issues and client misrepresentations” with some mortgages from its B2B Bank unit that were sold to a third-party firm, the lender said Tuesday in its annual report. Laurentian said it will repurchase about C$89 million ($70 million) of those mortgages in the first quarter, or 4.9% of such loans sold to the firm. It will buy back an additional C$91 million of mortgages “inadvertently” sold to the firm, also in the first quarter. Just as we saw with Home Capital, the CEO initially shrugged it off as immaterial: “This is largely a documentation and securitization-eligibility issue,” Chief Executive Officer Francois Desjardins said in a call with analysts. “It is not material for the bank, its operations, its funding nor its capital. We have worked to change processes to ensure that this issue is resolved.”

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Pop.

Toronto Housing Prices Fall Amid Growing Pool of Homes for Sale (BBG)

Canada’s largest housing market continues to see prices fall amid a widening pool of homes for sale, though there are signs the correction is beginning to lure in some new buyers. The Toronto Real Estate Board’s benchmark home price index fell for the sixth consecutive month, down another 0.4% from October. The index has fallen 8.8% since May – the largest six-month decline in the history of data back to 2000. For the first time since 2009, the average price of a home sold in Toronto – at C$761,757 ($600,991) in November – failed to surpass levels from a year earlier.

Toronto’s housing market, dubbed one of the riskiest housing bubble cities by UBS, has slumped over the past few months amid government rules and harsher mortgage guidelines aimed at curbing demand. That’s coincided with a sharp increase in supply with new listings up 37% from a year earlier. [..] Toronto realtors sold 7,374 units in November. While that’s down 13% from a year earlier, the number is one of the highest readings for the month over the past decade. The correction in Toronto’s housing market has been primarily in Toronto’s detached market, where average prices surpassed C$1.2 million earlier this year. The price index for single family detached homes is down 12% since May. The condominium price index is little changed from record levels earlier this year.

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“..the tax cut edges us closer to revolution resulting from complete distrust of government..”

Plunder Capitalism (Paul Craig Roberts)

I deplore the tax cut that has passed Congress. It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics. The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends. In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One%, or more precisely a fraction of the One% wallowing in billions of dollars. Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government. The current tax legislation drops the corporate tax rate to 20%. This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year.

The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950. A single person is taxed at a rate of 33% on all income above $191,651. 33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible. In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation. The rich with their capital gains from their equity holdings are taxed at 15%. Even single individuals who earn between $1 and $9,325 are taxed at 10% on their pittance.

The neoliberal economists who are the shills for the rich, Wall Street, and the Banks-Too-Big-Too-Fail claim, erroneously, that by cutting the corporate income tax rate to 20% all sorts of offshored profits will be brought back to the US and lead to a booming economy and higher wages. This is absolute total nonsense. The money won’t come back, because it is invested abroad where labor costs are lower, if invested at all instead of buying back the corporation’s stock or buying other existing companies. After 20 years of offshoring US manufacturing and professional tradable skills and the incomes associated with the jobs, who is going to invest in America? The American population has no income with which to purchase the goods and services from new investment, and the American population’s credit cards are maxed out.

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“We have to treat the UK political system like a rotten egg..”

‘We Can’t Go On Like This’: Resignation In EU As Brexit Talks Stutter (G.)

Theresa May has less than a week to salvage a Brexit deal that would open the way to trade talks before the end of the year, amid increasing signs of impatience within the EU over her handling of the process. EU negotiators expect the prime minister to return to Brussels very soon, but have said time is running out to strike a deal at a European summit next week. “The show is now in London,” said the chief spokesman of the European commission president, Jean-Claude Juncker. “We stand ready here in the commission to resume talks with the United Kingdom at any moment in time when we get the sign that London is ready.” While the next “final” deadline for stage one has not been defined publicly, several EU sources said the deal would have to be struck by the end of the week, with either Friday or Sunday as the last resort.

One EU ambassador told the Guardian the failure to reach a deal on Northern Ireland was a microcosm of a wider problem. “At root the problem is that [May] seems incapable of making a decision and is afraid of her own shadow,” the source said. “We cannot go on like this, with no idea what the UK wants. She just has to have the conversation with her own cabinet, and if that upsets someone, or someone resigns, so be it. She has to say what kind of trading relationship she is seeking. We cannot do it for her, and she cannot defer forever.” For weeks, European officials have walked a tightrope between sticking to the EU’s tough negotiating stance and seeking to avoid action or words that could destabilise the fragile May government. “We have to treat the UK political system like a rotten egg,” said one EU source in the run-up to Monday’s talks, suggesting that if “the realities of the world” dawned too soon, the British government could become more fragile.

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Cats in a sack.

Theresa May Faces New Brexit Revolt From Boris Johnson (BBG)

Prime Minister Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, a split that threatens to undermine her hopes of breaking the deadlock in negotiations. Efforts to rescue Brexit talks from an embarrassing breakdown on Monday prompted fresh divisions in the U.K. Cabinet on Tuesday, as leading Brexit-backers challenged the prime minister just days before a key deadline in talks. Brexit Secretary David Davis told Parliament he wanted the whole country to remain close to EU economic regulations after the split, a move that could have helped unblock talks that broke down over the issue of the Irish border.

Keeping the whole U.K. close to EU regulation would make it easier to avoid a border on the island of Ireland without putting up a new barrier between Northern Ireland and the rest of the U.K. The prospect of a border within the U.K. is a red line for the Northern Irish party that keeps Theresa May in power in London. Foreign Secretary Boris Johnson and Environment Secretary Michael Gove, who together led the Brexit campaign in last year’s referendum, raised concerns about the plan, according to people familiar with the matter. The ministers believe the proposals threaten to dilute Brexit and Johnson raised his fears during a meeting of May’s Cabinet on Tuesday. Part of the Brexit narrative in the last 18 months has been that the split will allow the U.K. to break free from EU rules and chart its own course with free-trade deals around the world.

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“What’s clear, is that May will be blamed for any failure.”

Most Brits Still Want Brexit But Expect It All to End Badly (BBG)

British voters increasingly think Brexit is being mishandled. But that doesn’t mean they’re turning their backs on the idea of abandoning the EU – just on Prime Minister Theresa May’s Conservative government. A report by the National Centre For Social Research published Wednesday found that 52% of people believe the country will get a bad deal, compared to 37% in February, a month before May began divorce proceedings. Even before this week’s embarrassing breakdown, only one in five Brits said the government was handling the talks well. Among those supporting Brexit, 61% thought May was conducting talks badly. The survey of 2,200 people was completed in October, before reports that May was increasing the amount of money she was willing to pay to leave and also before the recent dramatic turn of events that has May at the mercy of a Northern Irish ally.

The findings speak to the sense of disconnect between how the population feels about a process they triggered with the 2016 referendum – and the political realities of a fragile government riven with divisions and bogged down in increasingly technical negotiations. The survey found little change in people’s attitude to Brexit itself. [..] this suggests that rather than regretting their vote, Leave supporters are coming to see it as a good idea badly implemented, something that could help Jeremy Corbyn’s opposition Labour Party. While Britons wonder what is going on – and perhaps even why leaving needs to be so complicated – the EU gave May until the end of the week to deliver a solution to an intractable problem – how to avoid a hard border in Ireland after Northern Ireland leaves the bloc along with the rest of the U.K.

Britain needs to provide an answer that satisfies all sides to move on to trade. What’s clear, is that May will be blamed for any failure. She set the clock for Britain’s exit in March 2019 and was relying on a summit next week to get EU leaders to allow discussions to begin on commerce, as well as a grace period to give businesses time to adapt.

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Merkel blinking will have far reaching repercussions. But Europeans don’t want more centralization.

Juncker Seeks Greater Commission Control over Eurozone (Spiegel)

Jean-Claude Juncker never lets others outshine him if he spots an opportunity to give the European project a boost. And that goes for friends and enemies alike. Indeed, the European Commission president has now come up with a project that not only transgressions the mandate given him by the leaders of the European Union member states, but also pits him against all the Eurozone finance ministers as well. Juncker was supposed to reach an agreement with finance ministers from the common currency area on proposals for deepening European integration he will present at the forthcoming EU summit later this month. Plans for greater EU integration are currently in vogue, a trend started by French President Emmanuel Macron, who presented his ideas for a better Europe two days after the German election in late September.

But instead of getting the finance ministers on board, Juncker has embarked on an ego trip. On Wednesday, the Commission is to present its plan without any input from the finance ministers whatsoever. The Eurogroup of 19 Eurozone finance ministers met in Brussels on Monday and on Tuesday it was the turn of Ecofin, which represents the EU finance ministers, but officially neither group was consulted on the Commission’s plans. “The entire approach is a disaster,” one participant complained. And because the national experts had no input, it’s unlikely that EU heads of state and government will do more than simply take note of Juncker’s proposals. The timing is an expression of rivalry between the Commission and the EU member states when it comes to questions relating to theeconomic and currency union. And the finance ministers aren’t likely to be impressed with the content, either. After all, the Commission’s proposals are designed to increase its own influence at the expense of the member states.

But there is more at stake than just a few bruised Brussels egos. The clash over competencies between European institutions risks torpedoing the French president’s drive for reform. For the first time in years, the French have seized the opportunity to once again set the tone in the EU. Yet, their call to arms is being met with hardly any response. Germany is preoccupied with forming a new government – and nothing much happens in Brussels without Chancellor Angela Merkel. Juncker, though, does not want to stand accused of wasting the chance to implement reforms. His central idea is to turn the EU bailout fund, the European Stability Mechanism, into an EU institution.

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How much longer for Mueller now the WSJ has called for his head?

What Now? (Jim Kunstler)

“Contact with Russians.” Grown men and women, doubling and re-doubling down on a political fantasy, repeat this prayer hour after hour on the cable channels and Web waves as if trying to exorcise a nation possessed by the unholy hosts of Hell. But such vicars of the news as Wolf Blitzer, Rachel Maddow, Chuck Todd, and Dean Baquet (of The New York Times) only shove the country closer to a cliff of constitutional crisis. To a certain class of people — a class that includes a lot of Intellectuals-Yet-Idiots, as Nassim Taleb has dubbed them — President Donald Trump is a figure of supernatural malignity who must be ousted at all costs. I did not vote for Donald Trump and I do not admire him; but I rather resent the dishonesty that is being marshaled against him, especially the mis-use of judicial procedure and the mendacious propagandizing of the nation in service to that end.

This is what it comes down to: General Mike Flynn, designated National Security Advisor, conferred with Russian Ambassador Sergey Kislyak after the 2016 election about two pressing matters: a vote in the UN orchestrated against Israel, and sanctions imposed against Russia by outgoing President Obama on December 28, two weeks before the inauguration. Both these matters could be viewed as bits of mischief designed deliberately to create foreign policy problems for the incoming administration. Flynn’s discussions with Ambassador Kislyak amounted to what are called “back channel talks.” These informal, probing communications occur all the time and everywhere in American foreign policy, especially the transitional months every four or eight years when a new president comes in. They are necessarily secret because they concern issues of high sensitivity.

Every incoming presidential staff in my lifetime (going back to Dwight Eisenhower) has conducted back-channel talks with foreign diplomats in order to directly assess where things stand, minus public posturing and bloviating. And so that is what Mike Flynn did, as incoming National Security Advisor, after an eight-year run of worsening relations with Russia under Obama that Trump publicly pledged to improve. And now he’s been charged with lying to the FBI about it. Which raises some enormous and troubling questions well beyond the simple charge, questions that suggest a US government at war against itself.

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What’s America without grizzlies?

The Premature Delisting of the Yellowstone Grizzly Bear (CP)

The Fish and Wildlife Service (FWS) has decided to delist the Yellowstone grizzly bears, removing them from the protection afforded by the Endangered Species Act (ESA). And state wildlife agencies in Wyoming and Montana are anxious to start sport hunting the bears. If you follow environmental politics, it is very clear why industries like the oil and gas industry, livestock industry and timber industry and the politicians they elect to represent their interests are anxious to see the bear delisted. Without ESA listing, environmentally destructive practices will have fewer restrictions, hence greater profits at the expense of the bear and its habitat. Delisting is opposed by a number of environmental groups [..] Conspicuously absent from the list of organizations opposing delisting is the Greater Yellowstone Coalition.

Proponents of delisting, including the FWS, argue that with as many as 700 grizzlies in the Greater Yellowstone Ecosystem, thus ensuring the bears are now safe from extinction. Seven hundred bears may sound like a big number. But this figure lacks context. Consider that the Greater Yellowstone Ecosystem is nearly 28 million acres in total area. That is nearly the same acreage as the state of New York. Now ask yourself if 700 bears spread over an area the size of New York sounds like a lot of bears? Many population ecologists believe 700 bears is far too small a number of animals to ensure long-term population viability. Rather than hundreds, we need several thousand bears.

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But politicians talk of growth.

Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts (K.)

The next batch of pension cuts, voted through in the last couple of years and set to come into force within the next two years, will take total losses for pensioners since the start of the bailout period in 2010 up to 70%. A recent European Commission report on the course of Greece’s bailout program revealed that the reforms passed since 2015 will slash up to 7% of the country’s GDP up to 2030. The United Pensioners network has made its own calculations and estimates that the impending cuts will exacerbate pensioners’ already difficult position, with 1.5 million of them threatened with poverty. The network argues that when the cuts expected in 2018 and 2019 are added to those implemented since 2010, the reduction in pensions will reach 70%.

Network chief Nikos Hatzopoulos notes that “owing to the additional measures up until 2019, the flexibility in employment and the reduction of state funding from 18 billion to 12 billion euros, by 2021, one in every two pensioners will get a net pension of 550 euros [per month]. If one also takes into account the reduction of the tax-free threshold, the net amount will come to 480 euros.” Pensioners who retired before 2016 stand to lose up to 18% of their main and auxiliary pensions, while the new pensions to be issued based on the law introduced in May 2016 by then minister Giorgos Katrougalos will be up to 30% lower.

More than 140,000 retirees on low pensions will see their EKAS supplement decrease in 2018, as another 238 million euros per year is to be slashed from the budget for benefits for low income pensioners. The number of recipients will drop from 210,000 to 70,000 in just one year. There will also be a reduction in new auxiliary pensions (with applications dating from January 2015), a 6% cut to the retirement lump sum, and a freeze on existing pensions for another four years, as retirees will not get the nominal raise they would normally receive based on the growth rate and inflation.

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A few hundred have been moved, but thousands more must be.

Aid Groups Warn Of Looming Emergency At Greek Asylum Centres (G.)

Humanitarian groups have warned of a looming emergency on Greece’s eastern Aegean islands, the day after residents converged on Athens in protest at policies that have seen thousands of migrants and refugees marooned in reception centres. A surge in arrivals from neighbouring Turkey has seen numbers soar with officials speaking of a four-fold increase in men, women and children seeking asylum on Chios, Kos, Leros, Lesbos and Samos. Conditions are deteriorating in the vastly overcrowded camps in a situation that Médecins Sans Frontières (MSF) on Wednesday warned was “beyond desperate”. “In Lesbos, entire families who recently arrived from countries including Syria, Afghanistan and Iraq are packed into small summer tents, under the rain and in low temperatures struggling to keep dry and warm,” said Aria Danika, MSF’s project coordinator on the island.

“In our mental health clinic we have received an average of 10 patients with acute mental distress every day, including many who tried to kill themselves or self-harm. The situation on the island was already terrible. Now it’s beyond desperate.” Demonstrators – led by delegations of officials from Chios, Lesbos and Samos – gathered in the Athens sunshine on Tuesday to demand that the government move people out of camps. “Action has to be taken now, before it is too late,” said Panos Pitsios, president of the town council of Mytilene, Lesbos’s capital. “We are heading towards an eruption, a situation that is on the verge of getting out of control.”

The strategy of stranding migrants and refugees in remote camps where tensions have also mounted between rival ethnicities has also been condemned by human rights groups. Organisations increasingly fear that unless asylum seekers are transferred to the mainland where facilities are less crowded and better equipped, thousands could be left out in the cold as winter approaches.

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Biblical proportions.

Europe’s Migrant Crisis: Millions Still to Come (Kern)

The African Union-European Union (AU-EU) summit, held in in Abidjan, Côte d’Ivoire, on November 29-30, 2017, has ended in abject failure after the 55 African and 28 European leaders attending the event were unable to agree on even basic measures to prevent potentially tens of millions of African migrants from flooding Europe. Despite high expectations and grand statements, the only concrete decision to come out of Abidjan was the promise to evacuate 3,800 African migrants stranded in Libya. More than six million migrants are waiting in countries around the Mediterranean to cross into Europe, according to a classified German government report leaked to Bild. The report said that one million people are waiting in Libya; another one million are waiting in Egypt, 720,000 in Jordan, 430,000 in Algeria, 160,000 in Tunisia, and 50,000 in Morocco.

More than three million others who are waiting in Turkey are currently prevented from crossing into Europe by the EU’s migrant deal with Turkish President Recep Tayyip Erdogan. The former head of the British embassy in Benghazi, Joe Walker-Cousins, warned that as many as a million migrants from countries across Africa are already on the way to Libya and Europe. The EU’s efforts to train a Libyan coast guard was “too little and too late,” he said. “My informants in the area tell me there are potentially one million migrants, if not more, already coming up through the pipeline from central Africa and the Horn of Africa.” The President of the European Parliament, Antonio Tajani, said that Europe is “underestimating” the scale and severity of the migration crisis and that “millions of Africans” will flood the continent in the next few years unless urgent action is taken.

In an interview with Il Messagero, Tajani said there would be an exodus “of biblical proportions that would be impossible to stop” if Europe failed to confront the problem now: “Population growth, climate change, desertification, wars, famine in Somalia and Sudan. These are the factors that are forcing people to leave. “When people lose hope, they risk crossing the Sahara and the Mediterranean because it is worse to stay at home, where they run enormous risks. If we don’t confront this soon, we will find ourselves with millions of people on our doorstep within five years. “Today we are trying to solve a problem of a few thousand people, but we need to have a strategy for millions of people.”

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Recovery.

US Homeless Population Rises For The First Time Since The Great Recession (G.)

America’s homeless population has risen this year for the first time since the Great Recession, propelled by the housing crisis afflicting the west coast, according to a new federal study. The study has found that 553,742 people were homeless on a single night this year, a 0.7% increase over last year. It suggests that despite a fizzy stock market and a burgeoning gross domestic product, the poorest Americans are still struggling to meet their most basic needs. “The improved economy is a good thing, but it does put pressure on the rental market, which does put pressure on the poorest Angelenos,” said Peter Lynn, head of the Los Angeles homelessness agency. The most dramatic spike in the nation was in his region, where a record 55,000 people were counted. “Clearly we have an outsize effect on the national homelessness picture.”

Ben Carson, secretary of the Department of Housing and Urban Development, which produced the report, said in a statement: “This is not a federal problem – it’s everybody’s problem.” Advocates who have witnessed the homelessness crisis unfold since it emerged in the early 1980s are grimly astonished by its persistence. “I never in a million years thought that it would drag on for three decades with no end in sight,” said Bob Erlenbusch, who began working in Los Angeles in 1984. The government mandates that cities and regions perform a homeless street count every two years, when volunteers fan out everywhere from frozen parks in Anchorage to palm-lined streets in Beverly Hills and enumerate people by hand. Those numbers are combined with the total staying in shelters and temporary housing. The tally is considered a crucial indicator of broad trends, but owing to the difficulties involved it is also widely regarded as an undercount.

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There is neither a valid reason nor a justification for this. It’s simply a lack of basic values.

Nearly 130,000 British Children To Wake Up Homeless This Christmas (Ind.)

Nearly 130,000 children in Britain will wake up homeless and in temporary accommodation this Christmas as child homelessness reaches a 10-year high, new research shows. The number of youngsters who will be spending the festive period in temporary accommodation such as B&Bs and hostels – often with a single room for the whole family and no kitchen – is up 7% on last year, amounting to an additional 8,000 children, according to a report by charity Shelter. Interviews carried out by the charity reveal a quarter of families in temporary accommodation have no access to a kitchen, with many having to eat meals on the bed or floor of their room. The vast majority live in a single room, with more than a third of parents saying they have to share a bed with their children.

An analysis of government figures by Shelter shows that one in every 111 children is currently homeless in the UK, with at least 140 families becoming homeless every day. In England, where the highest number of families are placed into B&Bs, 45% stay beyond the six-week legal limit. The report also lays bare the psychological turmoil experienced by families living in these cramped conditions for often long periods of time, with three-quarters of parents saying their children’s mental health had been badly affected by living in such settings.

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Nov 252017
 
 November 25, 2017  Posted by at 9:51 am Finance Tagged with: , , , , , , , , , ,  


Walter Kelleher 13th Macy’s Thanksgiving Day Parade NYC 1937

 

Canada’s Household Debt Levels Higher Than Any Other Country (CNBC)
As America Gives Thanks, Homelessness Sets New Records (Snyder)
UK Council Proposes £1,000 Fines For Homeless People Sleeping In Tents (G.)
UK Faces Longest Fall in Living Standards on Record (BBG)
Britain Has 10-Day Absolute Deadline On Key Brexit Issues: Tusk (R.)
Germany’s Voice Suddenly Missing in Brussels (Spiegel)
Tesla’s Newest Promises Break the Laws of Batteries (BBG)
The Old Songs (Jim Kunstler)
Let’s Adopt The U.S. Naval Policy of 1890 (Rossini)
The US-Saudi Starvation Blockade (Buchanan)
Horrified By Libya Slave Trade, Rwanda Offers Refuge To Migrants (IBT)
Mediterranean ‘By Far World’s Deadliest Border’ For Migrants – IOM (R.)
The Refugee Scandal on the Island of Lesbos (Spiegel)
Endangered Butterfly, Mexican Shrub May Be Hurdles to Trump Wall (BBG)

 

 

Canada, Australia, New Zealand; and Sweden, Denmark and Norway.

Canada’s Household Debt Levels Higher Than Any Other Country (CNBC)

Household debt levels in Canada are higher than in any other country, according to a report by the Organization for Economic Cooperation and Development (OECD). In a preliminary version of the report, set to be released fully next month, the OECD found Canada’s household debt ranked as the highest among the 35 developed and developing countries the group monitors. The rapid accumulation of household debt for Canadians could also leave its economy particularly vulnerable to shocks, the organization said. “Although in part this reflects strong population growth, these developments may entail significant risk to financial stability given the direct exposure of the financial system to the housing market,” the OECD said. The group found Canada’s household debt-to-GDP ratio had ballooned to 101% — significantly higher than any other nation studied.

In comparison, the ratio for South Korea was the next highest at slightly under 93%, with the U.K. third at over 88%. In the U.S., the household debt-to-GDP ratio was around 80%, while Germany and France had a ratio below 60%. “Research points to a number of links between high indebtedness and the risks of severe recessions,” the group said. While virtually all countries witnessed soaring debt loads ahead of the credit crisis a decade ago, most have seen their indebtedness reduce over time. However, for Canada — and some countries in Scandinavia — this has not been the case, with OECD pinning the blame on inflated house prices. “OECD countries that have experienced the strongest increases in household debt since the crisis have also the steepest rise in house prices,” the group said.

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Highest since the Great Depression.

As America Gives Thanks, Homelessness Sets New Records (Snyder)

If the U.S. economy was actually in good shape, we would expect that the number of people that are homeless would be going down or at least stabilizing. Instead, we have a growing national crisis on our hands. In fact, within the past two years “at least 10 cities or municipal regions in California, Oregon and Washington” have declared a state of emergency because the number of homeless is growing so rapidly. Things are particularly bad in southern California, and this year the Midnight Mission will literally be feeding a small army of people that have nowhere to sleep at night… “Thanksgiving meals will be served to thousands of homeless and near-homeless individuals today on Skid Row and in Pasadena and Canoga Park amid calls for donations and volunteers for the rest of the year. The Midnight Mission will serve Thanksgiving brunch to nearly 2,500 homeless and near-homeless men, women and children, according to Georgia Berkovich, its director of public affairs.”

Overall, the Midnight Mission serves more than a million meals a year, and Berkovich says that homelessness hasn’t been this bad in southern California “since the Great Depression”… “Berkovich said the group has been serving nearly 1 million meals a year each year since 2013. “We haven’t seen numbers like this since the Great Depression,” she said.” And of course the official numbers confirm what Berkovich is claiming. According to an article published earlier this year, the number of homeless people living in Los Angeles County has never been higher…”The number of homeless people in Los Angeles has jumped to a new record, as city officials grapple with a humanitarian crisis of proportions remarkable for a modern American metropolis. Municipal leaders said that a recent count over several nights found 55,188 homeless people living in a survey region comprising most of Los Angeles County, up more than 25% from last year.”

If the California economy is truly doing well, then why is this happening? We see the same thing happening when we look at the east coast. Just check out these numbers from New York City… “In recent years the number of homeless people has grown. Whereas rents increased by 18% between 2005 and 2015, incomes rose by 5%. When Rudy Giuliani entered City Hall in 1994, 24,000 people lived in shelters. About 31,000 lived in them when Mike Bloomberg became mayor in 2002. When Bill de Blasio entered City Hall in 2014, 51,500 did. The number of homeless people now in shelters is around 63,000. For New York, this is the highest that the homeless population has been since the Great Depression, and city leaders are trying to come up with a solution.”

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It’s getting to be time for Hoovervilles.

UK Council Proposes £1,000 Fines For Homeless People Sleeping In Tents (G.)

A council has been called “cruel and callous” for proposing £1,000 fines to homeless people sleeping in tents in the city centre. Stoke-on-Trent council in Staffordshire is consulting on a public space protection order (PSPO) that will make it an offence for a person to “assemble, erect, occupy or use” a tent unless part of a council-sanctioned activity such as a music festival. Under such a scheme anyone who fails to pay their £100 on-the-spot penalty notice can be prosecuted and could be fined up to £1,000 in court. Though only currently at the consultation stage, the PSPO would cover the city centre, Hanley park, Festival park and Octagon retail park.

Ruth Smeeth, the Labour MP for Stoke-on-Trent North and Kidsgrove, said: “This is a cruel and callous policy to inflict on our most vulnerable in the lead-up to Christmas. We do have a growing problem with homelessness here in Stoke-on-Trent, but punishing people for their misfortune is no way to fix it. “It’s right and proper that the police take action to stop antisocial behaviour on our streets, but punishing the homeless simply for being homeless is appalling. “In recent years we’ve seen local funding for drug and alcohol treatment slashed and support to tackle homelessness cut to the bone. Locking these people up or saddling them with debt they can’t pay will only make the problem worse.”

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Incompetence.

UK Faces Longest Fall in Living Standards on Record (BBG)

Britons were warned they are on course for the longest fall in living standards since records began 60 years ago after the U.K.’s fiscal watchdog took the ax to its outlook for economic growth. In an analysis of the government’s latest budget and accompanying report by the Office for Budget Responsibility, the Resolution Foundation said on Thursday that the economy is set to be 42 billion pounds ($56 billion) smaller in 2022 than the OBR predicted in March. It also calculated wages will not return to their pre-financial crisis levels of 2007 until at least 2025 once inflation is taken into account. Average annual pay is now projected to be 1,030 pounds lower in 2022 than the March forecasts and household disposable incomes will fall for an unprecedented 19 straight quarters between 2015 and 2020, according to Resolution.

The analysis was reinforced by the Institute for Fiscal Studies, which said the OBR’s forecasts implied average earnings would be almost 1,400 pounds lower in 2021 than predicted before the 2016 Brexit referendum and still below their 2008 level. “We are in danger of losing not just one but getting on for two decades of earnings growth,” IFS Director Paul Johnson told a briefing in London on Thursday. The warnings underscore the challenge Chancellor of the Exchequer Philip Hammond faced on Wednesday when he released a budget that left him little room for fiscal maneuver as Brexit looms. The OBR slashed its growth forecasts as a result of weak productivity, and Hammond piled further pressure on the budget by pledging extra cash for the health service and abolishing the tax on some housing purchases for first-time buyers.

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Tusk pretends to speak with a powerful mandate, but…

Britain Has 10-Day Absolute Deadline On Key Brexit Issues: Tusk (R.)

Britain has only 10 days left to deliver on all three areas of its divorce terms with the European Union if London wants to start talks on a transition period after Brexit and a future relationship, the chairman of EU leaders Donald Tusk said. “We need to see progress from UK within 10 days on all issues, including on Ireland,” Tusk tweeted on Friday after a meeting with British Prime Minister Theresa May in Brussels. “Sufficient progress in Brexit talks at December council is possible but still a huge challenge,” he said on Twitter. An EU official said that May agreed in the one-hour discussions that Dec. 4 was the “absolute deadline” to allow the EU’s Brexit negotiator Michel Barnier to recommend moving onto the next stage on trade and future ties.

“Tusk presented the timeline ahead of the December European Council, with Dec. 4 as the absolute deadline for the UK to make additional efforts, allowing Barnier to be in a position to recommend sufficient progress,” the official said. “May agreed to this timeframe,” the official said. The official said Tusk had warned that if there was no progress within next 10 days, that would make moving forward impossible. The official said that the way Ireland’s border with Northern Ireland functioned after Britain leaves the EU in March 2019 was still an issue.

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… that mandate has severely weakened now Germany’s in trouble…

Germany’s Voice Suddenly Missing in Brussels (Spiegel)

European Union Budget Commissioner Günther Oettinger wanted to know what is going on in Germany. To find out, he set up a number of meetings in Berlin this week, including one in the Chancellery. He also arranged to chat with Christian Lindner, the head of the Free Democrats (FDP) and the man who unexpectedly turned his back on German coalition talks in Berlin last Sunday night. The reason for Oettinger’s interest in the political developments in Germany is simple. He has been assigned with writing a draft EU budget for the next 10 years and his due date is next May. He is currently traveling from capital to capital on the Continent to determine how member states envision EU spending for the period from 2018 to 2027.

But the German voice, which generally carries significant weight when it comes to budgetary questions,is silent these days. “The long process of assembling a government is weakening Germany’s influence in Brussels,” says Oettinger. “German influence on important issues is currently undiscernible.” The failure of German coalition negotiations in Berlin has caught the European Union completely off guard. Ahead of elections in France and the Netherlands earlier this year, there had been widespread concern about the rise of the right wing and potential difficulties when it came to assembling a governing coalition in those countries. Few such concerns were voiced ahead of Germany’s general election on Sept. 24. Everyone assumed that Germany was solid.

Now, though, French President Emmanuel Macron has taken center stage in the EU with his ambitious reform proposals while European Council President Donald Tusk has already come up with a detailed timeline for transforming Macron’s vision into concrete policy decisions. And suddenly, Germany has vanished. “You’re ruining our entire presidency,” complained Kaja Tael, Estonia’s permanent representative in Brussels. Estonia currently holds the EU’s rotating presidency.

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Still surprised by these things?

Tesla’s Newest Promises Break the Laws of Batteries (BBG)

Elon Musk knows how to make promises. Even by his own standards, the promises made last week while introducing two new Tesla vehicles—the heavy-duty Semi Truck and the speedy Roadster—are monuments of envelope pushing. To deliver, according to close observers of battery technology, Tesla would have to far exceed what is currently thought possible. Take the Tesla Semi: Musk vowed it would haul an unprecedented 80,000 pounds for 500 miles on a single charge, then recharge 400 miles of range in 30 minutes. That would require, based on Bloomberg estimates, a charging system that’s 10 times more powerful than one of the fastest battery-charging networks on the road today—Tesla’s own Superchargers.

The diminutive Tesla Roadster is promised to be the quickest production car ever built. But that achievement would mean squeezing into its tiny frame a battery twice as powerful as the largest battery currently available in an electric car. These claims are so far beyond current industry standards for electric vehicles that they would require either advances in battery technology or a new understanding of how batteries are put to use, said Sam Jaffe, battery analyst for Cairn Energy Research in Boulder, Colorado. In some cases, experts suspect Tesla might be banking on technological improvements between now and the time when new vehicles are actually ready for delivery.

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“There is some kind of revolution coming to American life.”

The Old Songs (Jim Kunstler)

It probably all comes down to money. Money represents the mojo to keep on keeping on, and there is probably nothing more unreal in American life these days than the way we measure our money — literally, what it’s worth, and what everything related to it is worth. So there is nothing more unreal in our national life than the idea that it’s possible to keep on keeping on as we do. The weeks ahead may be most illuminating on this score. The debt ceiling suspension runs out on December 8, around the same time that the tax reform question will resolve one way or another. The debt ceiling means that the treasury can’t issue any more bonds, bills, or notes. That is, it can’t borrow any more money to pretend the government can keep running.

[..] There’s a fair chance that congress may not be able to resolve the debt ceiling deadline. The votes may just not be there. If the deadline comes and goes, the treasury can only use incoming tax revenues to cover its costs, and it won’t be enough. It will have to choose whether it issues paychecks to the roughly 2.7 million US government employees, or pays the vendors that sell things like warplanes to the military, or pay out so-called entitlements like Medicare and SNAP cards, or pay the interest on the previously-issued bonds, debts, and bills that the US has racked up over the years. Believe it or not, making those interest payments is probably the top priority, because failing to do that would shove the nation officially into default for the first time and destroy the country’s credit standing. The full faith and credit in the US dollar would shatter.

And then the fun and games would really cease. The country would discover it doesn’t have its mojo working, as another old song goes. The reality of being truly broke will set in. After all, there are two basic ways of going broke as a nation: you can run out of money; or you can have plenty of money that is worthless. Take your pick. There is some kind of revolution coming to American life. One way or another, it amounts to a much lower standard of living. The journey there may take the public by surprise, a la Ernest Hemingway’s crack about how a character in one of his stories went broke: slowly, and then all at once. The main question about this journey must be whether it is accompanied by political violence. One would have to think the potential for that is pretty high, given levels of animosity and delusional thinking among the two opposing factions — can we even call them Left and Right anymore? — which may even exceed the ill-feeling of 1861.

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Amen.

Let’s Adopt The U.S. Naval Policy of 1890 (Rossini)

Back in 1890, the U.S. Naval Policy Board said in a report: “We fear no encroachments on our territory, nor are we tempted at present to encroach on that of others. We have no colonies, nor any desire to acquire them.” First, let’s discuss the aspect of the statement that has not changed one iota since 1890: “We fear no encroachments on our territory”. In 2017, we can say the exact same statement with total confidence. No state on the planet has any interest in conquering America. No one is interested in ruling over our WalMart/McDonald’s society. No one is interested in taking over Washington D.C. and inheriting 20,000,000,000,000 in debt. No one is interested in ruling a nation of people who are in debt up to their eyeballs with student loans, auto loans, mortgage loans, credit card loans….loans…loans…loans…loans…loans… No one is interested!

Which leads to the part of the statement that has changed since 1890: “..nor are we tempted at present to encroach on that of others.” In 1898, that aspect changed, and the U.S. federal government has never looked back. In 1898, the U.S. got its first taste of the conquering game. It swiftly took control of the Philippines, Guam, Puerto Rico, Cuba, and Hawaii. All of a sudden 11 million people were under a new American Empire. A few decades later, after the first high wore off, one of the worst decisions in the history of the world was made: U.S. President Woodrow Wilson tricked the American public into entering an exhausted and stalemated European war between princes. The “war to end all wars” was the war that would lead to the death of hundreds of millions over the next century.

The rest, of course, is history, and here we are: Broke….A country with middle-class that is disappearing, and 50% of the American public receiving some kind of welfare from a bankrupt government. U.S. Naval Policy in 1890 is where it’s at. The sooner we adopt it, the better.

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History repeats AND rhymes.

The US-Saudi Starvation Blockade (Buchanan)

Our aim is to “starve the whole population – men, women, and children, old and young, wounded and sound – into submission,” said First Lord of the Admiralty Winston Churchill. He was speaking of Germany at the outset of the Great War of 1914-1918. Americans denounced as inhumane this starvation blockade that would eventually take the lives of a million German civilians. Yet when we went to war in 1917, a U.S. admiral told British Prime Minister Lloyd George, “You will find that it will take us only two months to become as great criminals as you are.” After the Armistice of Nov. 11, 1918, however, the starvation blockade was not lifted until Germany capitulated to all Allied demands in the Treaty of Versailles.

As late as March 1919, four months after the Germans laid down their arms, Churchill arose in Parliament to exult, “We are enforcing the blockade with rigor, and Germany is very near starvation.” So grave were conditions in Germany that Gen. Sir Herbert Plumer protested to Lloyd George in Paris that morale among his troops on the Rhine was sinking from seeing “hordes of skinny and bloated children pawing over the offal from British cantonments.” The starvation blockade was a war crime and a crime against humanity. But the horrors of the Second World War made people forget this milestone on the Western road to barbarism. A comparable crime is being committed today against the poorest people in the Arab world – and with the complicity of the United States.

[..] Almost 90% of Yemen’s food, fuel and medicine is imported, and these imports are being cut off. The largest cities under Houthi control, the port of Hodaida and Sanaa, the capital, have lost access to drinking water because the fuel needed to purify the water is not there. Thousands have died of cholera. Hundreds of thousands are at risk. Children are in danger from a diphtheria epidemic. Critical drugs and medicines have stopped coming in, a death sentence for diabetics and cancer patients. If airfields and ports under Houthi control are not allowed to open and the necessities of life and humanitarian aid are not allowed to flow in, the Yemenis face famine and starvation. What did these people do to deserve this? What did they do to us that we would assist the Saudis in doing this to them?

The Houthis are not al-Qaida or ISIS. Those are Sunni terrorist groups, and the Houthis detest them. Is this now the American way of war? Are we Americans, this Thanksgiving and Christmas, prepared to collude in a human rights catastrophe that will engender a hatred of us among generations of Yemeni and stain the name of our country?

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We can’t afford Yemen, and we can’t afford Libya. We need to stop these medieval situations.

Horrified By Libya Slave Trade, Rwanda Offers Refuge To Migrants (IBT)

Rwanda has opened its doors to migrants stuck in Libya and announced plans to take in as many as 30,000 people. The offer of help comes in response to an exposé into Libya’s underbelly where slave trade is flourishing. It involves migrants from other parts of Africa who are stuck in the country as they wait for an opportunity to cross into Europe. The government is still ironing out the details regarding how it plans to move interested parties from the northern part of the continent to the east. “Rwanda is currently under discussions… to see how we can help in welcoming migrants held captive in Libya,” Rwanda’s Foreign Minister Louise Mushikiwabo told AFP. “It has just been decided, so numbers and means are still under discussion, but Rwanda estimates the number to be welcomed around 30,000,” she said.

“For Africans being sold in Libya: Rwanda is small, but we will find some space!” she tweeted. In its investigation into the slave market in Libya, CNN was able to capture footage of auctions held in the capital city of Tripoli, where bids were accepted for men to be used for manual labour. While the videos only featured males, they have raised concerns over a similar fate for women and children who escaped their countries to come to Libya. “Rwanda, like the rest of the world, was horrified by the images of the tragedy currently unfolding in Libya, where African men, women and children who were on the road to exile, have been held and turned into slaves,” Mushikiwabo continued. “Given Rwanda’s political philosophy and our own history, we cannot remain silent when human beings are being mistreated and auctioned off like cattle,” she said. The minister was referring to her nation’s own dark history wherein over 800,000 people (mostly Tutsi) were killed in 1994 in one of the worst genocides in world history.

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You see, Angela, the power you crave comes with responsibilities.

Mediterranean ‘By Far World’s Deadliest Border’ For Migrants – IOM (R.)

More than 33,000 migrants have died at sea trying to reach European shores this century, making the Mediterranean “by far the world’s deadliest border”, the United Nations migration agency said on Friday. After record arrivals from 2014 to 2016, the European Union’s deal with Turkey to stop arrivals from Greece, and robust patrols off Libya’s coast have greatly reduced the flow, the International Organization for Migration (IOM) said. Professor Philippe Fargues of the European University Institute in Florence, author of the report, said the figures probably underestimated the actual scale of the human tragedy. “The report states that at least 33,761 migrants were reported to have died or gone missing in the Mediterranean between the year 2000 to 2017. This number is as of June 30,” IOM’s Jorge Galindo told a Geneva news briefing.

“It concludes that Europe’s Mediterranean border is by far the world’s deadliest,” he said. So far this year some 161,000 migrants and refugees have arrived in Europe by sea, about 75% of them landing in Italy with the rest in Greece, Cyprus and Spain, according to IOM figures. Nearly 3,000 others are dead or missing, it said. “Shutting the shorter and less dangerous routes can open longer and more dangerous routes, thus increasing the likelihood of dying at sea,” Fargues said. The report said: “Cooperation with Turkey to stem irregular flows is now being replicated with Libya, the main country of departure of migrants smuggled along the central route; however, such an approach is not only morally reprehensible but likely to be unsuccessful, given the context of extremely poor governance, instability and political fragmentation in Libya.”

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Brussels and Athens have run out of excuses.

The Refugee Scandal on the Island of Lesbos (Spiegel)

Those wishing to visit ground zero of European ignominy must simply drive up an olive tree-covered hill on the island of Lesbos until the high cement walls of Camp Moria come into view. “Welcome to prison,” someone has spray-painted on the walls. The dreadful stench of urine and garbage greets visitors and the ground is covered with hundreds of plastic bags. It is raining, and filthy water has collected ankle-deep on the road. The migrants who come out of the camp are covered with thin plastic capes and many of them are wearing only flipflops on their feet as they walk through the soup. Children are crying as men jostle their way through the crowd. Welcome to one of the most shameful sites in all of Europe. Camp Moria was originally built to handle 2,330 refugees. But currently it is home to 6,489.

[..] Conditions on the island of Lesbos haverarely been as precarious as they are today. Just as winter is arriving in Greece, some 15,000 refugees find themselves trapped in the five “hotspots” located on Greek islands in the Aegean Sea. Fully 8,357 of them are on Lesbos, living in horrific conditions in overcrowded, completely inadequate shelters. A huge number of refugees are forced to sleep in tents designed for summer conditions and many of them fear for their safety because of the close quarters and the repeated clashes in the main camp. Dozens of refugees have begun a hunger strike on Lesbos. The European Union’s refugee deal with Turkey may have managed to cut the number of people reaching Greece by 97%, but dozens of migrants continue to arrive every day.

Thus far this year, around 11,000 people have crossed over to the island from Turkey – a tiny number compared to the 12,500 who arrived on a single day in August 2015. But back then, newcomers were taken to the mainland and allowed to continue their journeys through the Balkans toward Hungary, Austria and, ultimately, Germany. Now, though, the former registration facilities have essentially been transformed into prisons. [..] he government in Athens has had plenty of time to learn its lesson from last winter, when five refugees died in Camp Moria, some of them because they were trying to heat their tents. Now, the country’s immigration minister is seeking to solve the problem at the last minute ahead of this winter by renting hotels on Lesbos and bringing in two ships from Piraeus that can accommodate a total of 3,000 refugees.

On the island of Lesbos though, where residents have shown remarkable patience thus far, there is widespread opposition to the plan. On Monday, the mayor of Lesbos, known for being a moderate, called for a general strike and declared war on the Greek government. He accuses Athens of seeking to use the need to establish winter facilities as an excuse to transform Lesbos into a prison island.

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Let’s finish on a lighter note.

Endangered Butterfly, Mexican Shrub May Be Hurdles to Trump Wall (BBG)

Environmentalists suing to block President Donald Trump from constructing a wall along the Mexican border say the project would imperil endangered species including the Quino checkerspot butterfly and the Mexican flannel bush. The Homeland Security Department has asserted authority under federal immigration law to waive compliance with environmental protection statutes because 14 miles of existing fencing near San Diego is “no longer optimal for border patrol operations.”

Defenders of Wildlife, the Animal Legal Defense Fund, the Sierra Club and the Center for Biological Diversity argued in court filings this week that the Trump administration’s attempts to sidestep the National Environmental Policy Act and the Endangered Species Act are unconstitutional. A hearing over the dispute is set for February before U.S. District Judge Gonzalo Curiel, whom Trump scorned during the presidential campaign over the San Diego jurist’s handling of the Trump University fraud litigation. Trump attacked Curiel as being biased against him because of his Mexican heritage, saying the Indiana-born judge had issued rulings against him as retribution for his pledge to build a wall between the U.S. and its neighbor to the south.

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Nov 082017
 
 November 8, 2017  Posted by at 9:56 am Finance Tagged with: , , , , , , , , ,  


Henri Cartier Bresson Nehru Announces Gandhi’s Death, Birla House, Delhi, India Jan 30, 1948

 

700 Years of Data Forewarn of Rapid Reversal From Low Interest Rates (BBG)
Saudi Banks Freeze More Than 1,200 Bank Accounts in Anti-Corruption Purge (R.)
Saudi Crackdown to Confiscate Up to $800 Billion in Assets (WSJ)
Leaked Secret Israeli Cable Confirms Israeli-Saudi Coordination In Lebanon (ZH)
Lebanon – The Next Front In The Great Gas War (Golem XIV)
UK Sales Of Bombs And Missiles To Saudi Arabia Increase By Almost 500% (Ind.)
May to Lose Second Top Minister in One Week Over Secret Israel Meetings (BBG)
Those Who Broke The Economy Cannot Fix It (Ann Pettifor)
German ‘Wise Men’ Sound Alarm Over ‘Overheating’ Economy (R.)
Bean Counters: Lost in Paradise (Ren.)
British Mainstream Media Spreading Dangerous MMT Ideas (Bilbo)
Brick-and-Mortar Meltdown Sinks Property Prices (WS)
Catalan Secessionist Parties Fail To Agree On Unity Ticket For Vote (R.)
1 in 200 British, 1 in 60 Londoners Are Homeless (G.)

 

 

Long term is always better.

700 Years of Data Forewarn of Rapid Reversal From Low Interest Rates (BBG)

Forget secular stagnation. One historian says the world is actually in its ninth “real rate depression” and 700 years of data show that – when it comes – the turnaround could be sudden. In research published on the Bank of England’s staff blog, Harvard University’s Paul Schmelzing says most work pointing to a period of permanently lower equilibrium real interest rates is too short term. Instead, he tracked the risk-free rate since 1311 by identifying the dominant asset of each period – starting with sovereign rates in the Italian city states in the 14th and 15th centuries and moving to long-term rates in Spain, then the Province of Holland, the U.K., Germany, and finally the U.S. Real rates, or the benchmark interest rates minus inflation, have averaged 4.78% while the 200-year real-rate average is 2.6%.

That makes the current market environment “severely depressed,” Schmelzing wrote. However, it’s simply following a five-century downward trend, in which there have been nine periods of secular decline followed by reversals. The current period – since the 1980s – is the second-longest recorded and its closest historical analogy is the global “Long Depression” of the 1880s and 1890s which saw low productivity growth, deflationary price dynamics, and the rise of global populism and protectionism. This spell seems to have ended without a push from policy makers. That could be good news for those struggling to find a fix for the current low-rate environment. “There is strong evidence suggesting that the last ‘secular stagnation cycle’ started fading relatively autonomously after just over two decades following the key financial shock, not requiring the aid of decisive fiscal or monetary stimulus.”

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There’ll be more.

Saudi Banks Freeze More Than 1,200 Bank Accounts in Anti-Corruption Purge (R.)

Saudi Arabian banks have frozen more than 1,200 accounts belonging to individuals and companies in the kingdom as part of the government’s anti-corruption purge, bankers and lawyers said on Tuesday. They added that the number is continuing to rise. Dozens of royal family members, officials and business executives have been detained in the crackdown and are facing allegations of money laundering, bribery, extorting officials and taking advantage of public office for personal gain. Since Sunday, the central bank has been expanding the list of accounts it is requiring lenders to freeze on an almost hourly basis, one regional banker said, declining to be named because he was not authorised to speak to media.

The banker did not name the companies affected but said they included listed and unlisted firms across many sectors. He added that if the freezes stayed in place for long, they could start to hurt day-to-day business activities such as paying staff and creditors or making other transactions. A second banker said, however, that most of the frozen accounts belonged to individuals rather than companies, and that banks were being allowed by the regulator to continue to fund existing commitments. Among top business executives detained in the probe are billionaire Prince Alwaleed bin Talal, chairman of investment firm Kingdom Holding; Nasser bin Aqeel al-Tayyar, founder of Al Tayyar Travel; and Amr al-Dabbagh, chairman of builder Red Sea International.

The stocks of all three companies, which have issued statements saying they continue to operate as normal, plunged between 9 and 10% on Tuesday. One of the bankers speaking to Reuters said the central bank had met with some foreign banks this week to reassure them that the freezing of accounts targeted individuals, and that firms linked to those people would not be damaged.

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WSJ has gone full paywall.

Saudi Crackdown to Confiscate Up to $800 Billion in Assets (WSJ)

The Saudi government is aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite, according to people familiar with the matter. Several prominent businessmen are among those who have been arrested in the days since Saudi authorities launched the crackdown on Saturday, by detaining more than 60 princes, officials and other prominent Saudis, according to those people and others. The country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of “persons of interest” and said the move is “in response to the Attorney General’s request pending the legal cases against them.”

The purge is the most extensive of the kingdom’s elite in recent history. Crown Prince Mohammed bin Salman, the son of King Salman, was named heir to the throne in June and has moved to consolidate power. He has said that tackling corruption at the highest level is necessary to overhaul what has long been an oil-dependent economy. The crackdown could also help replenish state coffers. The government has said that assets accumulated through corruption will become state property, and people familiar with the matter say the government estimates the value of assets it can reclaim at up to 3 trillion Saudi riyal, or $800 billion.

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Strange bedfellows.

Leaked Secret Israeli Cable Confirms Israeli-Saudi Coordination In Lebanon (ZH)

Early this morning, Israeli Channel 10 news published a leaked diplomatic cable which had been sent to all Israeli ambassadors throughout the world concerning the chaotic events that unfolded over the weekend in Lebanon and Saudi Arabia, which began with Lebanese Prime Minister Saad Hariri’s unexpected resignation after he was summoned to Riyadh by his Saudi-backers, and led to the Saudis announcing that Lebanon had “declared war” against the kingdom. The classified embassy cable, written in Hebrew, constitutes the first formal evidence proving that the Saudis and Israelis are deliberately coordinating to escalate the situation in the Middle East. The explosive classified Israeli cable reveals the following:

• On Sunday, just after Lebanese PM Hariri’s shocking resignation, Israel sent a cable to all of its embassies with the request that its diplomats do everything possible to ramp up diplomatic pressure against Hezbollah and Iran.
• The cable urged support for Saudi Arabia’s war against Iran-backed Houthis in Yemen.
• The cable stressed that Iran was engaged in “regional subversion”.
• Israeli diplomats were urged to appeal to the “highest officials” within their host countries to attempt to expel Hezbollah from Lebanese government and politics.

As is already well-known, the Saudi and Israeli common cause against perceived Iranian influence and expansion in places like Syria, Lebanon and Iraq of late has led the historic bitter enemies down a pragmatic path of unspoken cooperation as both seem to have placed the break up of the so-called “Shia crescent” as their primary policy goal in the region. For Israel, Hezbollah has long been its greatest foe, which Israeli leaders see as an extension of Iran’s territorial presence right up against the Jewish state’s northern border.

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“Having failed to liberate the Syrians, Saudi, the West, its Sunni Gulf allies and Israel will now see if they can succeed in blocking any Iranian gas ambitions by liberating the Lebanese from their own government.”

Lebanon – The Next Front In The Great Gas War (Golem XIV)

The Great Gas War has already two distinct fronts: The now relatively quiet Northern Front in Ukraine and the Southern Front in Syria in which the Western empire has been losing. It looks to me that Lebanon is being targeted as the next front, where the West hopes its loses might be recouped. Yesterday, November 6th, Reuters reported, “Saudi Arabia said on Monday that Lebanon had declared war against it because of attacks against the Kingdom by the Lebanese Shi‘ite group Hezbollah.” This comes after Israel, Saudi’s long time though largely un-offical best friend in the region, has been very publicly preparing to renew its own war with Lebanon – or more accurately with Hezbollah. As the American news journal Newsweek put it recently, “ISRAEL PREPARES FOR ANOTHER WAR WITH HEZBOLLAH AS IDF PRACTICES LEBANON INVASION.”

Why now and why Lebanon? Well the rulers of Saudi, a Sunni dominated country, will tell us that it is because Hezbollah is a Shia terrorist organisation. “Hezbollah” literally means the “Party of Allah” or “Party of God”. Saudi Gulf affairs minister Thamer al-Sabhan yesterday pointedly referred to Hezbollah as, “the Lebanese Party of the Devil”. Saudi is not alone of course, Hezbollah has also been listed as a terrorist organisation by America, Israel, the Arab League, the UK and the EU. It is also, however, part of the popular government of Lebanon having seats in its parliament. I suggest, however, a powerful reason that a new war with Hezbollah may be in the offing is because Lebanon is the next link in any gas pipeline that could potentially bring Iranian Gas to Europe.

That was the reason the West decided to “liberate” the Syrian people and it will be why they decide to enforce the same salvation upon the people of Lebanon. Having failed to liberate the Syrians, Saudi, the West, its Sunni Gulf allies and Israel will now see if they can succeed in blocking any Iranian gas ambitions by liberating the Lebanese from their own government. I would not be surprised to hear quite soon from opposition groups vocally denouncing the government or at least Hezbollah. I expect spokes people from those groups to suddenly get a global platform along-side American and regional supporters such as Saudi.

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How to spell insanity.

UK Sales Of Bombs And Missiles To Saudi Arabia Increase By Almost 500% (Ind.)

The number of British-made bombs and missiles sold to Saudi Arabia since the start of its bloody campaign in Yemen has risen by almost 500%, The Independent can reveal. More than £4.6bn of arms were sold in the first two years of bombings, with the Government grant increasing numbers of export licences despite mounting evidence of war crimes and massacres at hospitals, schools and weddings. The United Nations says air strikes by the Saudi-led coalition are the main cause of almost 5,295 civilian deaths and 8,873 casualties confirmed so far, warning that the real figure is “likely to be far higher”. It has condemned the “entirely man-made catastrophe” leaving millions more on the brink of famine and sparking the world’s worst cholera epidemic, while blacklisting Saudi Arabia for killing and maiming children.

There is also fresh concern over the Kingdom’s attempt to shut all air, land and sea ports into Yemen, which it said was to stop the flow of weapons but will also halt aid imports. British-made bombs have been found at the scene of bombings deemed to violate international law but the UK has continued its political and material support for Riyadh’s campaign. Figures from the Department for International Trade (DIT) show that in the two years leading up to the Yemen war, £33m of ML4 licences covering bombs, missiles and countermeasures were approved. But in the two years since the start of Saudi bombing in March 2015, the figure increased by 457% to £1.9bn, according to calculations by Campaign Against the Arms Trade (CAAT). Licences covering aircraft including Eurofighter jets have also risen by 70% to £2.6bn in the same period.

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Secret meetings as the Middle East is imploding. And arms sales are exploding.

May to Lose Second Top Minister in One Week Over Secret Israel Meetings (BBG)

Prime Minister Theresa May is weighing whether to fire a member of her cabinet only seven days after her defense secretary quit in a sexual harassment scandal, as the U.K. government faces fresh turmoil in the midst of Brexit talks. May is likely to dismiss her International Development Secretary Priti Patel in a row over a succession of unauthorized meetings she held with Israeli officials behind the prime minister’s back, according to reports from the BBC and The Sun Tuesday, which the U.K. government declined to deny. The premier has not yet had the chance to speak to Patel – who is on an official trip to Africa – about the latest revelations. A conversation would be expected before a decision is made about the minister’s future. If she is forced out, Patel will be the second minister to depart May’s cabinet in one week, after Michael Fallon resigned from the defense ministry amid allegations over his past behavior toward women.

For some, May’s latest headache is yet another demonstration of her weakness, which draws repeated questions over how her government can last long enough to see Brexit to the finish line. If more dominoes drop – in the shape of senior ministers – the last one to fall could ultimately be the prime minister herself. “The destabilizing effect on an already weak administration has prompted another burst of speculation that May could soon be forced to resign,” Mujtaba Rahman of Eurasia Group said in a note to clients. He thought one likely scenario is for May to be toppled if she fails to get a grip on the latest crisis and is ousted because her MPs judge that the government cannot go on like this – and is incapable of recovering the authority a prime minister needs.

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The British economy is being bled dry….

Those Who Broke The Economy Cannot Fix It (Ann Pettifor)

Make no mistake, last week’s increase in interest rates was a big deal. Painful as it might be for a good share of the population, the real point is that the Bank is signalling the end of a particular phase of monetary policy. Since 2010 the counterpart to self-defeating austerity policies has been expansionary monetary policies. These have inflated assets – enriching the already-rich, while failing to stimulate wider economic recovery. Yesterday the Bank of England’s Monetary Policy Committee signalled an end of this dangerous game. But this technocratic realignment makes no difference to the fact that ‘the Guardians of the nation’s finances’ – Bank and Treasury economists – have failed absolutely to revive the economy.

You need look no further than the (ongoing) decline in real wages, to continuing low levels of private investment, and to the dangers of rising household debt. A small interest rate rise is hardly likely to improve these conditions. Bank and Treasury economists (aided and abetted by the OBR) are guilty of defeatism. They argue that despite their powers, THERE IS NOTHING TO BE DONE. It is assumed that somehow ‘the invisible hand’ or ‘the markets’ will, without intervention by the authorities, correct the weakness, insecurity and failures of the British economy. The prolonged and painfully weak recovery is regularly blamed on something defined as “productivity”. By shifting responsibility for economic failure on to productivity, the Bank, Treasury and OBR economists are saying that somehow economic failure is inherent to the economy – to businesses and especially to workers.

“Nothing to do with us, guv” they mutter. They add that the situation has been exacerbated by the vote to leave the EU. This is a handy way of denying that the ongoing economic failure of the British economy (and the Brexit vote) can be explained by austerity policies, and the failures of the financial system. By taking this approach, economists at the Bank have – conveniently – set the scene for endorsing further inaction by the Chancellor later this month. Yesterday the Governor of the Bank was flanked by Ben Broadbent and Dave Ramsden. Ben Broadbent, as a Goldman Sachs economist, was among the earliest to call for austerity policies. Dave Ramsden (who did not vote for the rate rise) implemented these policies as top economist at the Treasury.

But both Broadbent and Ramsden were senior figures in economic policy-making throughout the debt inflation that preceded the crisis, and (we presume) supporters of financial globalisation. It is obvious to anyone with an ounce of common sense that austerity policies have hurt the most vulnerable, and damaged Britain’s economic potential, by forcing a brutal adjustment to lower quality and lower paid work. Labour has been forced to bear the brunt of the Global Financial Crisis. The weakness in productivity is just the outcome of these policies, not the cause.

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… while Germany’s needs diverge ever more from those of southern Europe.

German ‘Wise Men’ Sound Alarm Over ‘Overheating’ Economy (R.)

The German economy is at risk of overheating, according to a leaked advisory council report that follows pressure from the Bundesbank for a swifter end to the ECB’s expansive monetary policy. In their annual report, seen by Handelsblatt newspaper, the five “wise men” who advise the German government on economic policy said the economy, which they expected to expand strongly this year and next, was moving gradually into a “boom phase”. “There are clear signs that economic capacity is over-utilised,” read the report, which is due to be published on Wednesday. Germans have been among the foremost critics of the ECB’s bond-buying program, which was introduced three years ago to depress borrowing costs and reignite growth in the euro zone’s heavily indebted southern periphery.

The wise men expected Germany’s economy to expand by 2% this year and by 2.2% in 2018, Handelsblatt said. With unemployment at its lowest level since the early 1990s, Germany’s circumstances are very different from Italy’s or Spain‘s, straining the ECB’s ‘one-size-fits-all’ monetary policy. ECB President Mario Draghi last month announced a halving n the size of its 2 trillion euro bond-buying program, but this is far from the return to conventional monetary policy many Germans, including Bundesbank president Jens Weidmann, demand. Without an intervention to cool the economy, Germany’s hawks fear the buoyant economy could tip over into an inflationary cycle. Last week, a senior official from Chancellor Angela Merkel’s conservatives warned that German savers would not tolerate continued low interest rates for much longer.

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Accountants and auditors are not doing their jobs.

Bean Counters: Lost in Paradise (Ren.)

“The phrase ‘Set a thief to catch a thief’ is common parlance,” says Professor Atul K. Shah. “‘Set a global brand of professional accountants to rob society and pilfer its taxes, bleeding governments’, is not, but it should be.’ Professor Bill Black says internal controls are absolutely critical in reducing fraud by insiders in particular, but not just insiders, as the Paradise Papers have repeatedly demonstrated. Emile Woolf says there is no way to remove control fraud and dodgy accounting practices from the economy without first prosecuting the culprits. “The devils that committed this criminal negligence – with the exception of the Royal Bank of Scotland (RBS) – have never been fined or prosecuted” he said. “What you can then do is create a ring fenced fund inside those institutions, earmarked to save them from going under. But the company has to recognise it has to be paid back.

“RBS is incapable of paying back the billions of fines it still owes for misconduct,” he says. “Where does that money come from and where does it go? Without the fines RBS would have made £100 million profit this year, but because of the reserve for fines in the USA and UK, all those fines are far too great to allow for payment of a dividend.” Of course calculating a true profit figure is difficult when a significant portion of that profit is fraudulent, because it doesn’t take into account the result of the inequities of ten years ago. “The worrying thing for all of us is if it happens again,” he says. “My hope is that three years from now, banks will be forced to recognise their loans that will never be repaid. But my worry is that this is going to be after the next financial crisis, because it’s happening again. There is no redeeming features in the present. The only difference is the next crisis is going to be bigger.”

Joel Benjamin told Renegade Inc that accounting is as much about *what* you count or don’t count as it is *how* you count it. “This is evidenced through the practice of ‘base erosion and profit shifting’ – shifting profits to offshore low or no tax jurisdictions, ” he said. In the space of 50 years, Britain’s economy has transformed from an industrial power house, to that of a finance-led extractive parasite, where the cash starved productive economy receives less than 10% of bank credit. “Until the Big Four accountancy firms are accurately viewed as enablers of corporate offshore dealing, regulatory arbitrage and ardent defenders of the neoliberal order, not the ‘reputable’ objective independent arbiters of the public interest as they claim, society will continue to be taken for a ride, and public services and social cohesion will continue their long decline,” he said.

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Bill Mitchell in a long talk with his alter ego.

British Mainstream Media Spreading Dangerous MMT Ideas (Bilbo)

Mitchell tried to tell me that governments do not spend by ‘printing money’ but rather just adjust bank accounts with numbers. But I know as anyone in the street knows that they just want to print more and more. That is at the core of MMT – they want the government to go on a spending spree and just ignore the inflationary consequences. They hide that by saying that “public spending cannot be unlimited and must be commensurate to the capacity of the economy” which is just a smokescreen that I can see through. And everybody will see through it. It is code for spend like a drunken’ sailor – throw money at lazy people who cannot be bothered finding a job. Throw money at public schools that teach socialist doctrines – you know about inequality and stuff like that.

Throw money at public hospitals so that people can receive unlimited health care without having to pay for it – that is the quickest way to encourage waste and bad behaviour. People know that they can just get sick and no matter what their income is they will get some care. Where is the incentive to stay healthy in that sort of system. The article also shows how stupid Mitchell is when it says he: “… debunks the idea that governments borrow money from international markets and with it the notion that they are hostage to the market.” Well where the hell else do they get the cash from? Does he really think we are that stupid? How come China has all those US government debt bonds or whatever they are called and the US government is spending the Chinese cash? How does he explain that obvious point?

Well he tried to claim the Chinese doesn’t issue US dollars and that only the US government issues US dollars so that it cannot possibly be funded by the Chinese. I don’t buy that, not that I understood anything he said about this – all this talk about trade surpluses accumulating financial claims in the currency that the deficit country issues, and then allowing the surplus nation to use those claims (say, US dollars in the first instance) to purchase US dollar financial assets etc ad nauseum. As if that tells us anything. How come the Chinese can loan the US government money that is what I want to know? Mitchell told the journalist that Jeremy Corbyn should not worry about international capital markets because Britain could impose capital controls if it wanted to. That gets to the nub of my worries – socialist governments stealing hard-earned cash from investors who actually have some get up and go.

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Malls don’t look like good investments.

Brick-and-Mortar Meltdown Sinks Property Prices (WS)

Commercial real estate prices soared relentlessly for years after the Financial Crisis, to such a degree that the Fed has been publicly fretting about them. Why? Because US financial institutions hold nearly $4 trillion of commercial real estate loans. But the boom in most CRE sectors is over. The Green Street Property Price Index – which measures values across five major property sectors – had soared 107% from May 2009 to the plateau that began late last year, and 27% from the peak of the totally crazy prior bubble that ended with such spectacular fireworks. But it has now turned around, dragged down by a plunge in prices for retail space. The CPPI by Green Street Advisors dropped 1.1% in October from September. In terms of points, the 1.4-point decline was the largest monthly decline since March 2009. The index is now below where it had been in June 2016:

This phenomenal bubble, as depicted by the chart above, has even worried the Fed because US financial institutions hold nearly $4 trillion of CRE loans, according to Boston Fed governor Eric Rosengren earlier this year. Of them, $1.2 trillion are held by smaller banks (less than $50 billion in assets). These smaller banks tends to have a loan book that is heavily concentrated on CRE loans, and these banks are less able to withstand shocks to collateral values. Rosengren found that among the root causes of the Financial Crisis “was a significant decline in collateral values of residential and commercial real estate.” But the CRE bubble isn’t unraveling as gently as the chart suggests. Some sectors are still surging, while others are plunging. According to the report, the index, which captures the prices at which CRE transactions are currently being negotiated and contracted, “was pushed down by falling mall valuations.”

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Puidgemont predicted to get 14-15 out of 135 seats. He won’t be the leader.

Catalan Secessionist Parties Fail To Agree On Unity Ticket For Vote (R.)

Catalan secessionist parties on Tuesday failed to agree on a united ticket to contest a December snap regional election, making it more difficult to rule the region after the vote and press ahead with their collective bid to split from Spain. Catalonia’s secessionist push has plunged Spain into its worst political crisis in four decades, triggered a business exodus, forced Madrid to cut its economic forecast and reopened old wounds from Spain’s civil war in the 1930s. Pro-independence groups have called for a general strike in the restive region on Wednesday. Catalan political parties had until midnight on Tuesday to register coalitions ahead of the Dec. 21 vote, but the two main forces which formed an alliance to rule the region for the last two years did not manage to agree on a new pact in time.

While they could still find an agreement after the vote, political analysts say the lack of a deal on a joint campaign may also trigger a leadership fight at the top of the movement. This is because center-right PdeCat (Catalan Democratic Party) of sacked Catalan president Carles Puigdemont is expected to be overtaken by leftist Esquerra Republicana de Catalunya (ERC) of former regional vice president Oriol Junqueras. Puigdemont and Junqueras are the two main leaders behind the current secession bid that last month led to a unilateral declaration of independence which Spain thwarted by imposing direct rule on the region. Junqueras is currently in custody pending a potential trial on charges of sedition, rebellion and misuse of public funds. Puigdemont, who faces the same charges, is currently in self-imposed exile in Belgium and has said he would oppose extradition.

An opinion poll released on Sunday by Barcelona-based newspaper La Vanguardia showed Junqueras’ ERC could garner between 45 and 46 seats in the 135-strong regional assembly while Puigdemont’s PdeCat would win between 14 and 15 seats. In order to reach the 68-seat threshold for a majority, they would then have to form a parliamentary alliance with anti-capitalist CUP, which is expected to get seven or eight seats. Such an alliance previously existed between 2015 and 2017.

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Down the drain.

1 in 200 British, 1 in 60 Londoners Are Homeless (G.)

More than 300,000 people in Britain – equivalent to one in every 200 – are officially recorded as homeless or living in inadequate homes, according to figures released by the charity Shelter. Using official government data and freedom of information returns from local authorities, it estimates that 307,000 people are sleeping rough, or accommodated in temporary housing, bed and breakfast rooms, or hostels – an increase of 13,000 over the past year. Shelter said the figures were an underestimate as they did not include people trapped in so-called “hidden homelessness”, who have nowhere to live but are not recorded as needing housing assistance, and end up “sofa surfing”. London, where one in every 59 people are homeless, remains Britain’s homelessness centre. Of the top 50 local authority homelessness “hotspots”, 18 were in Greater London, with Newham, where one in 27 residents are homeless, worst hit.

However, while London’s homeless rates have remained largely stable over the past year, the figures show the problem is becoming worse in leafier commuter areas bordering the capital, such as Broxbourne, Luton, and Chelmsford. Big regional cities have also seen substantial year-on-year increases in the rate of homelessness. In Manchester, one in 154 people are homeless (compared with one in 266 in 2016); in Birmingham one in 88 are homeless (119); in Bristol one in 170 are affected (199). Polly Neate, chief executive of Shelter, said: “It’s shocking to think that today, more than 300,000 people in Britain are waking up homeless. Some will have spent the night shivering on a cold pavement, others crammed into a dingy hostel room with their children. And what is worse, many are simply unaccounted for.

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Nov 072017
 
 November 7, 2017  Posted by at 10:07 am Finance Tagged with: , , , , , , , , , ,  


Edward S. Curtis Zuni Girl with Jar c. 1903

 

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

 

 

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

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

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

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

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

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

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“The region cannot support more turmoil..”

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

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

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

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What OPEC couldn’t do.

Oil Prices Surge On Saudi Purge (CNBC)

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

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

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More debt, fast.

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

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

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

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

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

What Could Go Wrong? (Jim Kunstler)

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

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

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

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All bubbles disrupt.

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

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

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

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

Profiting from Puerto Rico’s Pain (New Yorker)

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

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

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

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

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

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

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

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

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No kidding.

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

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

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

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

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

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

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

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

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

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Lots of talk about this, with widely differing views.

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

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

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

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

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

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

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

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Deep deep deeper and down.

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

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

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What good will kicking people out do?

Greek Notaries Refuse To Carry Out Foreclosures (K.)

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

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

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

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I don’t share his optimism.

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

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

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

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

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We want one!

The Charter of the Forest (Standing)

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

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

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

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

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