Jan 102017
 
 January 10, 2017  Posted by at 11:07 am Finance Tagged with: , , , , , , , ,  4 Responses »
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Jack Delano Truck service station on U.S. 1, NY Avenue, Washington, DC 1940

Pity the Sad Legacy of Barack Obama (Cornel West)
State Dep.: Presenting Evidence Of Russian Hacking Would Be Irresponsible (ZH)
Breakaway Senate Republicans Push to Delay Obamacare Repeal (BBG)
If Trump Tries To Lower Drug Prices, God Help Him: Top Medicare Official (MW)
Democrats Seek 9/11-Style Commission To Investigate Russian Hacking (G.)
Jeremy Corbyn: UK Can Be Better Off Out Of The EU (G.)
Britain’s Dangerous Post-Brexit Borrowing Binge (BBG)
Shadow Lending Leaves Chinese Banks Looking Exposed (BBG)
Thousands Of US Troops Arrive In Europe (ZH)
Top Economists Grapple With Public Disdain (WSJ)
The Harsh Reality (Kath.)
European Commission: ‘Untenable’ Situation In Greek Refugee Camps (AP)

 

 

“..a depressing decline in the highest office of the most powerful empire in the history of the world.”

Pity the Sad Legacy of Barack Obama (Cornel West)

Eight years ago the world was on the brink of a grand celebration: the inauguration of a brilliant and charismatic black president of the United States of America. Today we are on the edge of an abyss: the installation of a mendacious and cathartic white president who will replace him. This is a depressing decline in the highest office of the most powerful empire in the history of the world. It could easily produce a pervasive cynicism and poisonous nihilism. Is there really any hope for truth and justice in this decadent time? Does America even have the capacity to be honest about itself and come to terms with its self-destructive addiction to money-worship and cowardly xenophobia?

Ralph Waldo Emerson and Herman Melville – the two great public intellectuals of 19th-century America – wrestled with similar questions and reached the same conclusion as Heraclitus: character is destiny (“sow a character and you reap a destiny”). The age of Barack Obama may have been our last chance to break from our neoliberal soulcraft. We are rooted in market-driven brands that shun integrity and profit-driven policies that trump public goods. Our “post-integrity” and “post-truth” world is suffocated by entertaining brands and money-making activities that have little or nothing to do with truth, integrity or the long-term survival of the planet. We are witnessing the postmodern version of the full-scale gangsterization of the world. The reign of Obama did not produce the nightmare of Donald Trump – but it did contribute to it. And those Obama cheerleaders who refused to make him accountable bear some responsibility.

A few of us begged and pleaded with Obama to break with the Wall Street priorities and bail out Main Street. But he followed the advice of his “smart” neoliberal advisers to bail out Wall Street. In March 2009, Obama met with Wall Street leaders. He proclaimed: I stand between you and the pitchforks. I am on your side and I will protect you, he promised them. And not one Wall Street criminal executive went to jail. We called for the accountability of US torturers of innocent Muslims and the transparency of US drone strikes killing innocent civilians. Obama’s administration told us no civilians had been killed. And then we were told a few had been killed. And then told maybe 65 or so had been killed. Yet when an American civilian, Warren Weinstein, was killed in 2015 there was an immediate press conference with deep apologies and financial compensation. And today we still don’t know how many have had their lives taken away.

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Because the 9/11 commission was so successful?

Democrats Seek 9/11-Style Commission To Investigate Russian Hacking (G.)

Democratic members of the US Congress called on Monday for the creation of an independent commission to investigate Russia’s attempts to intervene in the 2016 election, similar to the September 11 panel that investigated the 2001 attacks on the United States. Their “Protecting our Democracy Act” would create a 12-member, bipartisan independent panel to interview witnesses, obtain documents, issue subpoenas and receive public testimony to examine attempts by Moscow and any other entities to influence the election. The panel members would not be members of Congress. The legislation is one of many calls by lawmakers to look into Russian involvement in the contest, in which Republican Donald Trump defeated Democrat Hillary Clinton in the White House race, confounding opinion polls.

Republicans also kept control of the Senate and House of Representatives by larger-than-expected margins. US intelligence agencies on Friday released a report saying that President Vladimir Putin of Russia ordered an effort to help Trump’s electoral chances by discrediting Clinton. Russia has denied the hacking allegations. A Kremlin spokesman said on Monday they were “reminiscent of a witch-hunt”. “There is no question that Russia attacked us,” Senator Ben Cardin, the top Democrat on the Senate foreign relations committee, told a news conference. Versions of the bill were introduced in both the Senate and House. In the Senate it has 10 sponsors. In the House it is backed by every member of the Democratic caucus, said Representative Elijah Cummings, the top Democrat on the House oversight committee. However, no Republicans currently back the bill, so its prospects are dim, given Republican control of both houses of Congress.

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And then after that commission is done investogating, they won’t tell anyone?

State Dep.: Presenting Evidence Of Russian Hacking Would Be Irresponsible (ZH)

One recurring lament throughout the theatrically dramatic campaign involving reports and emotional appeals by US intelligence agencies such as the CIA (whose primary function is the creation of disinformation) to ordinary Americans, that Russia had “hacked the US presidential election” is that for all the bluster and “conviction”, there has been zero evidence. And, as it turns out, there won’t be any, because according to the US State Department, US intelligence agencies were right to not reveal evidence of their proof that Russia interfered in US elections, and comparisons with intelligence reports that Iraq had WMDs were not relevant in the current year.

Asked by RT’s Gayane Chichakyan if Friday’s public intelligence report should have contained any proof of Russian intervention, State Department spokesman John Kirby said that no one should be surprised that US intelligence agencies were keeping evidence secret in order to protect sources and methods. “Most American people understand that they have the responsibility to protect their sources and methods,” Kirby said, adding it would be “irresponsible” to do otherwise. Actually, with the Iraq WMD fiasco strill fresh in “American people’s” minds, it is irresponsible to think most Americans are still naive idiots who will believe whatever the “intelligence agencies” will tell them.

Alas, none of that has filtered through to the appropriate authorities, and Kirby said that it was “up to the agencies to decide which information they share with the public. We rely on them to make that determination for themselves.” And, in this case, it meant sharing no information at all. The assessment in Friday’s report was made “by all 17 intelligence communities. All of them came to the same basic conclusion: that Russia interfered in the US election,” Kirby said. “All of our intelligence communities came to the same basic conclusion, over and over again.” They just couldn’t prove it, instead hoping that by repeating the same statement over and over would be sufficient.

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Get an alternative is place first, makes sense.

Breakaway Senate Republicans Push to Delay Obamacare Repeal (BBG)

A breakaway group of five moderate Senate Republicans pushed Monday to delay a bill repealing Obamacare until March — potentially enough pressure to force the party’s leadership to comply. The step is the latest sign of some Republicans’ growing uneasiness about their leadership’s plan to repeal the law with no consensus on a replacement as part of an effort to deliver swiftly on one of President-elect Donald Trump’s top campaign promises. Senators Bob Corker of Tennessee, Rob Portman of Ohio, Susan Collins of Maine, Bill Cassidy of Louisiana and Lisa Murkowski of Alaska offered an amendment Monday to the budget resolution that would extend the target date for the committees to write an Obamacare repeal bill to March 3 from Jan. 27.

“As President-elect Trump has stated, repeal and replace should take place simultaneously, and this amendment will give the incoming administration more time to outline its priorities,” Corker said in a statement. “By extending the deadline for budget reconciliation instructions until March, Congress and the incoming administration will each have additional time to get the policy right.” With Democrats opposed to a straight repeal bill, Republicans can lose no more than one backer if they want to fast-track their approach before Trump takes office. Republican leaders in the Senate are hoping to adopt the budget resolution – which would allow an Obamacare repeal bill to pass with 50 votes and escape a Senate filibuster – early Thursday after a marathon session of amendment votes.

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The power of the US pharmaceutical industry is scary.

If Trump Tries To Lower Drug Prices, God Help Him: Top Medicare Official (MW)

President-elect Donald Trump said on the campaign trail that Medicare should negotiate for lower drug prices. “God help him,” Acting Centers for Medicare and Medicaid Administrator Andy Slavitt said at the JP Morgan Health Care Conference in San Francisco on Monday. “He’s not wrong, but you need a lot of … to coin a phrase that’s been used, a fair amount of stamina if you are going to deal with the pharmaceutical industry on this topic.” Drug-pricing talk has been in the air at the JP Morgan conference, with a new administration about to take office and adding tremendous regulatory uncertainty to this sector. Despite critical comments made during election season, the president-elect has largely been seen by pharmaceutical and biotechnology companies as a positive, deregulatory force for their industry.

But the issue, still very much in the public eye, may not be off the table. Trump vowed to “bring drug prices down” in December comments to Time. The U.S. pays far more than other countries for pharmaceutical drugs, and has for a long time. “If [Trump] has the stamina he will see two things… the American public is being taken advantage of. And secondly, we are funding the R&D for free riders across the world,” Slavitt said. “And I don’t think the president-elect… is going to take too well to that.” While other countries use government negotiations to bring down drug costs, the tactic is often seen as anathema to the American free-market system. But, “this is a topic that will eventually be dealt with,” Slavitt predicted. “It’s easier to deal with this in 2017 than it will be in 2021 or 2022, when it is crippling the finances of health care.”

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Too many people are already invested in the opposite idea.

Jeremy Corbyn: UK Can Be Better Off Out Of The EU (G.)

Jeremy Corbyn will use his first speech of 2017 to claim that Britain can be better off outside the EU and insist that the Labour party has no principled objection to ending the free movement of European workers in the UK. Setting out his party’s pitch on Brexit in the year that Theresa May will trigger article 50, the Labour leader will also reach for the language of leave campaigners by promising to deliver on a pledge to spend millions of pounds extra on the NHS every week. He will say Labour’s priority in EU negotiations will remain full access to the European single market, but that his party wants “managed migration” and to repatriate powers from Brussels that would allow governments to intervene in struggling industries such as steel.

Sources suggested that the economic demands were about tariff-free access to the single market, rather than membership that they argued did not exist. Corbyn’s speech and planned media appearances represent the first example of a new anti-establishment drive designed by strategists to emphasise and spread his image as a leftwing populist to a new set of voters. They hope the revamp will help overturn poor poll ratings across the country, particularly with a looming byelection in Copeland, Cumbria. Speaking in Peterborough, chosen because it is a marginal Tory seat that voted heavily in favour of Brexit, and which Labour is targeting, Corbyn will lay into May’s failure to reveal any Brexit planning, and say that Labour will not give the government a free pass in the negotiations.

After comparing the prime minister’s refusal to offer MPs a vote on the final Brexit deal to the behaviour of Henry VIII in a Guardian interview, Corbyn will say: “Not since the second world war has Britain’s ruling elite so recklessly put the country in such an exposed position without a plan.”

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This should scare people.

Britain’s Dangerous Post-Brexit Borrowing Binge (BBG)

For the U.K. economy, the good news is that following the Brexit vote, the sky hasn’t fallen as many predicted; on the contrary, it’s been a period of unexpected fair weather. The bad news is that the benign outlook is encouraging a surge in borrowing, leaving households vulnerable if the Bank of England decides to tighten monetary policy. Andy Haldane, the chief economist at the central bank, said last week that as far as the British consumer is concerned, “it’s almost as though the referendum had not taken place.” That, he says, helps explain why the central bank’s gloomy prognosis of what a vote to leave the European Union would do to the economy has thus far turned out to be wrong. The nation appears to have been in celebratory mood this Christmas.

Credit-card company Visa said on Monday that U.K. spending jumped 2.6% in December from a year earlier, led by a 7.3% jump in hotels, restaurants and bars. In the final three months of 2016, overall spending posted its strongest growth in two years, Visa said. Britons have been loading up on debt. At the start of 2000, households had debts about equivalent to their disposable income. The ratio surged in the following years, peaking at 160% in the first quarter of 2008. As the financial crisis took its toll, people scaled back on borrowing, and the ratio had dropped to about 137% by September 2015. But it then rose for four consecutive quarters, with the most recently available figures showing a jump to 143% in the third quarter of last year:

As the chart shows, Brits are more indebted than their peers in either the U.S. or the euro zone. Perhaps unsurprisingly, while British households are still making their payments on secured loans such as mortgages, defaults on unsecured loans surged as the total debt burden climbed:

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“Of late [..] liquidity in China has been a mere accounting artifact.”

Shadow Lending Leaves Chinese Banks Looking Exposed (BBG)

In their obsession with China’s falling foreign-exchange reserves, investors may be ignoring a more painful Catch-22: a growing shortage of bank deposits. Left unaddressed, the lenders’ liquidity squeeze could leave them dangerously exposed to fickle wholesale financing, while trying to ease the shortage could worsen capital flight. Take Bank of Jinzhou. With just 0.3% of the $22 trillion in assets of the 35 publicly traded Chinese lenders, the bank appears remarkably liquid. Its 57% loan-to-deposit ratio in June was below the median reading of 67%. The Hong Kong-listed institution’s 200 billion yuan ($30 billion) deposit base offered ample support to a loan portfolio only a little higher than half that amount.

Of late, however, liquidity in China has been a mere accounting artifact. Customers’ deposits aren’t sufficient to finance Bank of Jinzhou’s 213 billion yuan in shadow loans, which are debt securities that the lender classifies as receivables. To make up the shortfall, it has borrowed 142 billion yuan from other financial institutions. Of this, as much as 78% is short-term financing. After adjusting for shadow lending, S&P Global Ratings pegged Bank of Jinzhou’s loan-to-deposit ratio at the end of 2015 at 153%. Bank of Jinzhou is hardly the only Chinese bank flirting with illiquidity: Almost all are sitting on a pile of debt masquerading as receivables.

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Nobel Peace Prize.

Thousands Of US Troops Arrive In Europe (ZH)

Just days after we reported that the US had begun deploying some 2,800 tanks, trucks and other military equipment to Germany, from where they would be transported by rail and road to Eastern Europe as part of a buildup of NATO reinforcements against “Russian expansion”, the next US deployment has made its way to Europe over the weekend, when some 4,000 US troops arrived in the German port of Bremerheven, on their way to Wroclaw, Poland under a planned NATO operation to “reassure the alliance’s Eastern European allies” in the face of what NATO has dubbed mounting Russian aggression. The American soldiers landed in Wroclaw, home to a key Nato and Polish air base in south-west Poland.

The troops will be followed by the roughly 2,800 tanks and other pieces of military equipment which are currently en route from Germany. The delivery of US Abrams tanks, Paladin artillery, and Bradley fighting vehicles, as well as supporting troops, marks a new phase of America’s continuous presence in Europe, which will now be based on a nine-month rotation. Why provoke Russia with yet another mass deployment? Because as NATO Major General Timothy McGuire told reporters, last week, when asked if the large deployment was meant to send a message to Russia, “The best way to maintain the peace is through preparation.” And while we are quoting, here is another good line from the movie Spice Like Us: “A weapon unused is a useless weapon.” The US military industrial complex is doing everything in its power to make sure a lot of weapons are used in the future.

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The priesthood is aghast.

Top Economists Grapple With Public Disdain (WSJ)

The nation’s leading economists are suffering an identity crisis as many of the institutions they helped build and causes they advanced have come in for public scorn and rejection at the ballot box. The angst was on display this weekend at the annual conference of the American Economic Association, the profession’s largest gathering. The conference is a showcase for agenda-setting research, a giant job fair for the nation’s most promising young economists and, this year, the site of endless discussion about how to rebuild trust in the discipline. Many academic economists have been champions of free trade and globalization, ideas under assault among rising populist movements in advanced economies around the world.

The rise of President-elect Donald Trump, with his fierce rhetoric against elites, in particular, left many at this conference questioning their place in the world. “The economic elite did many things to undermine their credibility while people’s economic fortunes were taking a turn for the worse,” said Steven Davis, an economist at the University of Chicago. But a road map for regaining trust is elusive. “I used to think facts and analysis will ultimately carry the day but now I’m not quite sure.” [..] Surveys from the Pew Research Center have documented dwindling support for free trade. In 2014, 60% of Democratic voters and 55% of Republican voters supported such trade agreements. In an October survey, however, support among Democrats had fallen to 56% and support among Republicans had nose-dived to 24%.

Over a billion people moved out of poverty in developing countries in the last 25 years, lifted in part by global trade and other economic prescriptions, but those same policies created winners and losers in the West. Another Pew study last year compared views of whether it was good for the U.S. to be so involved in the global economy: 86% of scholars said it was good, and just 2% bad. Among the general public, 49% thought it was bad, and just 44% good.

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A lot of snow in Athens overnight. Very cold too. It’s worse on the islands. And all we get is blame games.

The Harsh Reality (Kath.)

The refugees and migrants, thousands of people from Asia and Africa who are wintering in Greece in the hope that their dream will come true and that they will move on to central and northern Europe (imagined as hospitable by need) are harboring no illusions about this country. Greece is a country with real problems: economic, social and now weather-related. These people have to put up with the same problems as we do but the place where they are doing it from is far more difficult: They have no safe accommodation, no money and limited freedom. The additional shows of solidarity that may have come with the holiday season (even if mere publicity stunts designed for the television cameras) were soon to be wiped out by the cold snap, which also affected the islands of the Aegean. There will be no such thing as halcyon days for these people.

Official assurances by government officials that the authorities managed to provide warm and safe shelter for all asylum seekers and migrants offer little comfort, as no amount of political will, or plain desire for that matter, can reverse the situation on the ground. The problems faced by the refugee population are not tackled by prohibiting photographers from documenting the situation inside the Moria camp on Lesvos island. You cannot remedy reality by banning its representation. Is it that we do not want to taint the nation’s image in the eyes of our European partners? But the image of Greece is only part of the bigger European image. What is now happening at Moria, or any other migrant camp in Greece or Italy, is not disconnected from the values and priorities in the rest of Europe, in Poland, Austria, Slovakia or Denmark.

European Union countries, which had pledged to take in 160,000 people from Greece and Italy, have so far absorbed below 5% of that figure. Just 6,212 lucky few have been relocated from Greece and 1,950 from Italy, making a total of 8,162. The inaction, the indifference and the amoralistic policy of Europe (which is also fed by electoral concerns and growing far-right intolerance) should not serve as an alibi for the Greek government. In dealing with the migrant crisis, the SYRIZA-led administration has reacted without a clear plan or good coordination with other governments. And one last thing: The decision of Lesvos’s hoteliers to close their doors to refugees and migrants is barely in line with all the idealized rhetoric about a community’s obligations toward a supplicant – and it seems even more out of line under the existing circumstances.

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The EU hands 10s of millions in taxpayer funds to NGOs. As these fail to do what they receive the money for, it’s back to blaming Greece.

European Commission: ‘Untenable’ Situation In Greek Refugee Camps (AP)

The European Commission says conditions for refugees on Greek islands and in other camps where they are housed in tents despite severe cold weather, is “untenable.” Heavy snowfall has hit large swaths of Greece, including the eastern Aegean islands where thousands of refugees are stranded. Giorgos Kyritsis, spokesman for the government’s crisis committee on migration, told Greece’s Skai television that just under 1,000 people remain housed in tents on the islands. The severe weather had been forecast well in advance, and the government has come under fire for not acting fast enough to ensure all refugees are adequately housed. Commission spokeswoman Natasha Bertaud said the commission “is aware that the situation is currently untenable, but we also have to be clear” that conditions in reception centers are the responsibility of Greek authorities.


January 10 : homeless man sleeps on Athens beach Photo: Eurokinisi

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Dec 222015
 
 December 22, 2015  Posted by at 9:06 am Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle December 22 2015
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DPC Old Absinthe House, bar, New Orleans 1906

Global Investors Are More Exposed To Interest-Rate Hikes Than Ever (BBG)
The Keynesian Recovery Meme Is About To Get Mugged, Part 1 (Stockman)
Brent Oil Hits 11-Year Low As Global Supply Balloons (Reuters)
US Gas Prices Fall Below $2 – In Some Places Under $1.60 (MarketWatch)
The Real “Death Cross” Of Oil Markets (ZH)
Risk Of Insolvency Hangs Over UK High Street Retailers (Guardian)
UK Economy Concerns As Household Debt Balloons To £40 Billion (PA)
The Bank of Japan’s $2.5 Billion Plan to Buy Non-Existent ETFs (BBG)
China ‘Suspends’ Another Unofficial PMI Data Set For A ‘Major Adjustment’ (ZH)
Zimbabwe To Make Chinese Yuan Legal Currency After Beijing Cancels Debts (AFP)
Russia, EU Trade Talks Fail, Kiev Set To Face Retaliation (Reuters)
Political Uprising In Spain Shatters Illusion Of Eurozone Recovery (AEP)
Portugal Taxpayers Face €3 Billion Loss After 2nd Bank Bailout In 2 Years (ZH)
Christmas Present (Jim Kunstler)
Et Tu, Brute? – How Empires Die (Thomas)
Do We Need The Fed? (Ron Paul)
Apple Says UK Surveillance Law Would Endanger All Customers (BBG)
Half of World’s Coal Must Go Unmined to Meet Paris Climate Target (BBG)
It’s ‘Almost Too Late’ To Stop A Global Superbug Crisis (PA)

Because the entire system is leveraged to the hilt.

Global Investors Are More Exposed To Interest-Rate Hikes Than Ever (BBG)

With any luck, the world economy will eventually be strong enough for central banks to follow the U.S. Federal Reserve in ending what has been an unprecedented period of extremely low interest rates. If and when they do, they’ll run straight into the same issue that the Fed now faces: Raising rates will precipitate unusually large losses for investors. Over the past several years, investors have gone to great lengths in their search for returns in a low-rate environment. They’ve done so in part by buying longer-maturity bonds, which tend to offer higher yields but are also more sensitive to changes in rates. One gauge of this risk is effective duration, which estimates the percentage decline in a bond’s price given a one-percentage-point increase in yield.

The measure is near all-time highs in the U.S., according to a report issued last week by the Office of Financial Research. The situation globally is no less precarious. Consider the effective duration for the BofA Merrill Lynch Global Broad Market Index, which tracks about $45 trillion in investment-grade bonds issued in major currencies – including government, corporate, mortgage and other asset-backed securities. As of last week, it stood at 6.6, meaning that a one-percentage-point increase in yield would wipe almost $3 trillion off the value of all the bonds included in the index. That’s a larger potential loss than at just about any point since the index’s inception in 1996. Here’s how that looks:

The high level of interest-rate risk illustrates a dilemma for central bankers everywhere. The power of traditional monetary stimulus depends in large part on the willingness of people and companies to borrow for new projects and purchases. But as the debt burden grows, it makes markets and the entire economy more susceptible to rate increases. It can also undermine the effect of rate cuts, as borrowers increasingly struggle under the weight of their existing obligations.

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“These academic pettifoggers are so blinded by their tinker toy macro-model that they can’t even see the flashing red lights warning of recession just ahead.”

The Keynesian Recovery Meme Is About To Get Mugged, Part 1 (Stockman)

Yellen said at least one thing of importance last week, but not in a good way. She confessed to the frightening truth that the FOMC formulates its policies and actions based on forecasts of future economic developments. My point is not simply that our monetary politburo couldn’t forecast its way out of a paper bag; that much they have proved in spades during their last few years of madcap money printing. Notwithstanding the most aggressive monetary stimulus in recorded history – 84 months of ZIRP and $3.5 trillion of bond purchases – average real GDP growth has barely amounted to 50% of the Fed’s preceding year forecast; and even that shortfall is understated owing to the BEA’s systemic suppression of the GDP deflator.

What I am getting at is that it’s inherently impossible to forecast the economic future, but that is especially true when the forecasting model is an obsolete Keynesian relic which essentially assumes a closed US economy and that balance sheets don’t matter. Actually, balance sheets now matter more than anything else. The $225 trillion of debt weighing on the world economy – up an astonishing 5.5X in the last two decades – imposes a stiff barrier to growth that our Keynesian monetary suzerains ignore entirely. Likewise, the economy is now seamlessly global, meaning that everything which counts such as labor supply and wage trends, capacity utilization and investment rates and the pace of business activity and inventory stocks is planetary in nature. By contrast, due to the narrow range of activity they capture, the BLS’ deeply flawed domestic labor statistics are nearly useless. And they are a seriously lagging indicator to boot.

Nevertheless, Yellen & Co. are obsessed with the immeasurable and largely irrelevant level of “slack” in the domestic labor market. They falsely view it as a proxy for the purported gap between potential and actual GDP. Not surprisingly, they are now under the supreme illusion that the labor slack has been largely absorbed and the output gap nearly closed. So they are raising money market rates by a smidgeon to confirm the US economy’s strength and that the Keynesian nirvana of full employment is near at hand. No it isn’t! These academic pettifoggers are so blinded by their tinker toy macro-model that they can’t even see the flashing red lights warning of recession just ahead.

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Oil went up a whiff overnight. I always look at the spread between WTI and Brent. The smaller it gets, the higher the risks. Usually, it hovers between $2-3. Right now, it’s at 50 cents.

Brent Oil Hits 11-Year Low As Global Supply Balloons (Reuters)

Brent oil cratered to its lowest price in more than 11 years on Monday, as demand for heating oil slumped on warmer-than-normal temperatures and traders tested for a bottom. U.S. crude remained above its 2009 low and settled up a penny a barrel as traders squared positions ahead of the January contract’s expiration. The February contract declined and analysts expect stockpiles to build again this week, signaling further oversupply in already glutted market. Concerns about swelling global crude supply and slow demand sparked by economic weakness in China have been recurring themes during this year’s rout. Analysts said the market was still testing for a bottom. “The key in finding the bottom of the market comes in a tightening of the supply side,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

OPEC and Russia will keep producing at high volumes, increasing pressure on U.S. producers to throttle back production, he said. “I think we’re getting ready for another round of capex cuts in North America,” he said. Heating oil futures weighed down the crude complex, hitting a new July 2004 low warmer-than-expected temperatures have hit seasonal demand. “The market is waiting for the next announcement,” said Tyche Capital Advisors senior research analyst John Macaluso. “The equity markets are waiting on crude oil, and crude oil is waiting for a bounce before shorts will come back into the market.” Crude short-sellers will be reluctant to return before U.S. crude recovers to $35.50, he said. Global oil production is running close to record highs. With more barrels poised to enter the market from nations such as Iran and Libya, the price of crude is set for its largest monthly percentage decline in seven years.

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“..1% of stations selling gas at $1.59 a gallon..”

US Gas Prices Fall Below $2 – In Some Places Under $1.60 (MarketWatch)

Christmas came early for U.S. drivers on Monday, as the national average gasoline price fell below $2 a gallon for the first time since March 2009. AAA put the average U.S. gas price at $1.998 per gallon on Monday, while fuel-price tracking service GasBuddy.com calculated the national average at $1.995 a gallon. That’s the lowest price by either measure since March 25, 2009. Unsurprisingly, drivers can credit a global glut of crude oil for the steady pressure on gas prices. Brent crude the global oil benchmark, plumbed levels last seen in 2004 on Monday, while the January contract for the U.S. benchmark CLF6, -0.20% West Texas Intermediate crude, was down 49 cents, or 1.4%, ahead of expiration at $34.24 a barrel on Nymex. The most-active February contract is down 1.3% at $35.58.

“In areas where there are no refinery bottlenecks, we’ve been able to see the falling price of crude oil translated directly into cheaper gas prices,” said Patrick DeHaan, senior petroleum analyst at GasBuddy.com, in a phone interview. Nymex reformulated gasoline futures for January delivery slumped 6.33 cents, or 5%, to $1.2114 a gallon. So how low are gas prices? In much of the country, the price is already well under $2 a gallon, AAA notes, with 1% of stations selling gas at $1.59 a gallon. On a state-by-state basis, Missouri has the lowest average price at $1.77, followed by Oklahoma and South Carolina at $1.78, and Tennessee and Kansas at $1.79.

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China. That’s all.

The Real “Death Cross” Of Oil Markets (ZH)

The ‘death cross’ of these two energy market indicators is all one needs to know about the oil market… As Bloomberg notes, total industry oil stocks reported by the International Energy Agency rose for a third month, increasing by 0.5% to the highest on record at 2.99 billion barrels. China’s Beige Book, released last week, showed further economic deterioration in one of the world’s largest commodity-consuming nations in the fourth quarter. Until these two indicators change direction, lower-er for longer-er will remain.

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Lots of last legs there.

Risk Of Insolvency Hangs Over UK High Street Retailers (Guardian)

A string of retailers could face insolvency in the new year with tough trading on the high street in the run-up to Christmas leaving businesses fighting for survival, two influential industry bodies have warned. Widespread discounting and warmer-than-average weather have cranked up the pressure on high street retailers over the festive period. In the last few years a number of high street retailers have called in administrations either just before or after Christmas, including Woolworths, HMV, Zavvi, and Jessops. Retailers generate roughly 40% of their annual profits between October and December, underlining the importance of the period. However, if a high street business struggles during the festive season then its death knell is typically the quarterly rental payment they have to make to landlords at the end of December.

Atradius, one of the world’s largest trade credit insurers, has warned that retailers face a “perfect storm” that could lead to a bleak start to 2016 and a “fresh wave of insolvencies”. The comments from Atradius are significant because if a credit insurer refuses to back a retailer then suppliers will be unable to insure their orders with the business and could decide not to provide it with products. Owen Bassett, senior risk underwriter at Atradius, said: “Those who went into the fourth quarter needing – rather than wanting – a strong performance could be looking at a troubled future. “Experience tells us that when retailers need an exceptional seasonal sales period and then hit financial difficulty, we often see failures in the first quarter. It is not unusual in this sector to be loss-making during Q1 and with the first payment of quarterly rent due in January it can be difficult to survive after a poor Q4.”

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Private debt. Should have a lot more attention. And not just in Britain.

UK Economy Concerns As Household Debt Balloons To £40 Billion (PA)

Families are expected to run up £40bn of debt this year, sparking fears about Britain’s economic recovery. Labour raised concerns that millions of households would face “serious hardship” if interest rates rise and warned the borrowing trend could harm the economy. The latest Office for Budget Responsibility (OBR) forecasts have found that households have moved from a surplus of £67bn in 2010, the year the coalition took power, to a £40bn deficit this year. Unsustainable borrowing is on course to near the levels reached in the run-up to the 2008 financial crash, according to Labour. Seema Malhotra, the shadow chief secretary to the Treasury, said: “George Osborne is relying on millions of British families going further into debt to hit his growth targets.

“This is risky behaviour from a chancellor whose policy decisions are hurting, not helping, British families. Alarm bells should be ringing. There is a real risk that millions of families will face serious hardship if interest rates start to rise. “Of course families need access to credit and the ability to borrow to invest for the future. George Osborne should be seeking to rebalance the economy away from an over-reliance on borrowing and debt. “Labour is clear about the need for a strong and sustainable economic recovery. Osborne’s short-term political decisions risk real long-term damage to the finances of millions of British families and the nation’s economy.” The former business secretary Sir Vince Cable warned Britain was returning to “old and unhappily discredited” methods of economic growth. He told the Independent: “We’re back on the treadmill of growth being sustained by personal borrowing. Much of it is against an inflating housing stock.

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Abenomics is a different way of saying anything goes.

The Bank of Japan’s $2.5 Billion Plan to Buy Non-Existent ETFs (BBG)

Haruhiko Kuroda has a new plan. He’s going to buy $2.5 billion of something that doesn’t exist. Markets were roiled Friday after the Bank of Japan unveiled measures including purchasing exchange-traded funds that track companies which are “proactively making investment in physical and human capital.” The central bank will spend 300 billion yen ($2.5 billion) a year from April buying such securities to offset the market impact as it resumes selling stocks purchased earlier from financial institutions. The only problem is such ETFs have never been made in Japan, at least not yet. Even as fund providers start hundreds of so-called “smart beta” products that choose stocks based on everything from dividends to volatility, ETFs that pick companies for how they deploy their cash are rare in global markets.

“These kinds of ETFs don’t exist now. Using capital spending as a factor in deciding what goes in an ETF is quite unusual,” said Koei Imai, who oversees $25 billion of ETFs at Nikko Asset Management Co. in Tokyo. “I think the message from the BOJ is for us to go out and make them.” The central bank is aware such products aren’t yet available and in the meantime will buy ETFs tracking the JPX-Nikkei Index 400, a government-backed equity measure started last year that chooses companies based on return on equity and operating profit. The BOJ also already purchases ETFs linked to the Nikkei 225 Stock Average and Topix index and owns roughly half of the market for ETFs in Japan.

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How to kill confidence.

China ‘Suspends’ Another Unofficial PMI Data Set For A ‘Major Adjustment’ (ZH)

For the second time in two months, an economic data series that indicate drastically weak performance in China has been “suspended.” Having seen Markit/Caixin’s flash gauge of China’s manufacturing discontinued in October (having plunged notably divergently from the government’s official data), Bloomberg reports that the publishers of the alternative China Minxin PMI will stop updating the series to make a “major adjustment.” Guess which time series was just “suspended”…

As Bloomberg details,

Release of the unofficial purchasing managers index jointly compiled by China Minsheng Banking Corp. and the China Academy of New Supply-side Economics will be suspended starting this month, the Beijing-based academy said in an e-mailed statement Monday, about six hours before the latest monthly data were scheduled for release.

Minxin’s suspension is the second in recent months as policy makers in the world’s second-largest economy struggle to arrest a deceleration in growth. Another early estimate of China’s manufacturing sector, a flash gauge of a purchasing managers index compiled by Markit Economics and sponsored by Caixin Media, was discontinued Oct. 1. Minxin’s PMI readings are based on a monthly survey covering more than 4,000 companies, about 70% of which are smaller enterprises. The private gauges have shown a more volatile picture than the official PMIs in the past year.

The manufacturing PMI declined to 42.4 in November from 43.3 in October, while the non-manufacturing reading fell to 42.9 from 44.2, according the the latest release. The factory gauge fell to a record low of 41.9 in August. China’s official PMI from the National Bureau of Statistics fell to a three-year low of 49.6 in November.

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Humor?

Zimbabwe To Make Chinese Yuan Legal Currency After Beijing Cancels Debts (AFP)

Zimbabwe has announced that it will make the Chinese yuan legal tender after Beijing confirmed it would cancel $40m in debts. “They [China] said they are cancelling our debts that are maturing this year and we are in the process of finalising the debt instruments and calculating the debts,” minister Patrick Chinamasa said in a statement. Chinamasa also announced that Zimbabwe will officially make the Chinese yuan legal tender as it seeks to increase trade with Beijing. Zimbabwe abandoned its own dollar in 2009 after hyperinflation, which had peaked at around 500bn%, rendered it unusable. It then started using a slew of foreign currencies, including the US dollar and the South African rand.

The yuan was later added to the basket of the foreign currencies, but its use had not been approved yet for public transactions in the market dominated by the greenback. Use of the yuan “will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe,” the minister said. Zimbabwe’s central bank chief John Mangudya was in negotiations with the People’s Bank of China “to see whether we can enhance its usage here,” said Chinamasa. China is Zimbabwe’s biggest trading partner following Zimbabwe’s isolation by its former western trading partners over Harare’s human rights record.

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Europe’s dumb struggle with Moscow continues.

Russia, EU Trade Talks Fail, Kiev Set To Face Retaliation (Reuters)

The EU failed to allay Russia’s concerns about Ukraine’s free-trade accord with the 28-nation bloc on Monday, leaving Kiev to face Russian retaliation through tighter bilateral trade rules from 2016. Closer ties between Ukraine and the EU, including the free trade deal, were at the heart of a battle for influence between Brussels and Moscow in Russia’s former satellite. When the then-Ukrainian president, Viktor Yanukovich, ditched the accord in early 2014 under pressure from Russia, protests erupted on the street of Kiev leading to a crisis in which he fled power and a pro-Europe leadership took over. The EU and Ukraine delayed implementation of their trade deal by a year out of deference to Moscow’s concerns that it could lead to a flood of European imports across its borders, damaging the competitiveness of Russian exports.

But comments by EU and Russian officials on Monday indicated that numerous meetings between the two sides to try to narrow differences and assuage Moscow’s concerns had failed. EU Trade Commissioner Cecilia Malmstrom raised doubts about the validity of the Russian concerns, saying some were “not real.” “We have been very open in listening to some of the concerns of Russia. Some of them we think are not real in economic terms. Some of them could potentially be real,” Malmstrom told a news conference following final talks in Brussels. Russian Economy Minister Alexei Ulyukayev, speaking in Brussels, said there was no deal and Moscow would scrap trade preferences dating back to 2011 for Ukraine as of 2016, when the bilateral EU-Ukraine deal will be implemented. “An agreement has not been reached. We were left with our concerns on our own and we are forced to safeguard our economic interest unilaterally,” Ulyukayev told reporters.

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A stalemate that seems to end in either a fragile left government or new elections.

Political Uprising In Spain Shatters Illusion Of Eurozone Recovery (AEP)

Spain risks months of political paralysis and a corrosive showdown with Germany over fiscal austerity after insurgent movements smashed the traditional two-party system, leaving the country almost ungovernable. The electoral earthquake over the weekend in one of the eurozone’s ‘big four’ states has echoes of the shock upsets in Greece and Portugal this year, a reminder that the delayed political fuse from years of economic depression and mass unemployment can detonate even once the worst seems to be over. Bank stocks plummeted on the Madrid bourse as startled investors awoke to the possibility of a Left-wing coalition that included the ultra-radical Podemos party, which won 20.7pc of the votes with threats to overturn the government’s bank bail-out and to restructure financial debt.

Pablo Iglesias, the pony-tailed leader of the Podemos rebellion, warned Brussels, Berlin, and Frankfurt that Spain was retaking control over its own destiny after years of kowtowing to eurozone demands. “Our message to Europe is clear. Spain will never again be the periphery of Germany. We will strive to restore the meaning of the word sovereignty to our country,” he said. The risk spread on Spanish 10-year bonds jumped eight basis points to 123 over German Bunds, though there is no imminent danger of a fresh debt crisis as long as the European Central Bank is buying Spanish bonds under quantitative easing. The IBEX index of equities slid 2.5pc, with Banco Popular and Caixabank both off 7pc. Premier Mariano Rajoy has lost his absolute majority in the Cortes.

Support for the conservative Partido Popular crashed from 44pc to 29pc, costing Mr Rajoy 5m votes as a festering corruption scandal took its toll. The electorate punished the two mainstream parties that have dominated Spanish politics since the end of the Franco dictatorship in the 1970s, and which by turns became the reluctant enforcers of eurozone austerity. The Socialists (PSOE) averted electoral collapse but have lost their hegemony over the Left and risk being outflanked and ultimately destroyed by Podemos, just as Syriza annihilated the once-dominant PASOK party in Greece. It had been widely assumed that Mr Rajoy would have enough seats to form a coalition with the free-market and anti-corruption party Ciudadanos, but this new reform movement stalled in the closing weeks of the campaign.

“There is enormous austerity fatigue and the country as a whole has clearly shifted to the Left,” said sovereign bond strategist Nicholas Spiro. Yet the Left has not won enough votes either to form a clear government. “The issue now is whether Spain is governable. All the parties are at daggers drawn and this could drag on for weeks. I don’t see any sustainable solution. We can certainly forget about reform,” he said. Mr Spiro said Spain has already seen a “dramatic deterioration” in the underlying public finances over the last eighteen months, although this has been disguised by a cyclical rebound, the stimulus of cheap oil and a weak euro, and QE from Frankfurt. “They have simply gone for growth,” he said.

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Posterchild no more.

Portugal Taxpayers Face €3 Billion Loss After 2nd Bank Bailout In 2 Years (ZH)

Back in August of 2014, Portugal had an idea. Lisbon would use some €5 billion from the country’s Resolution Fund to shore up (read: bailout) Portugal’s second largest bank by assets, Banco Espirito Santo. The idea, basically, was to sell off Novo Banco SA (the “good bank” that was spun out of BES) in relatively short order and use the proceeds to pay back the Resolution Fun. That way, the cost to taxpayers would be zero. You didn’t have to be a financial wizard or a fortune teller to predict what was likely to happen next. Unsurprisingly, the auction process didn’t go so well.

As we recounted in September, there were any number of reasons why Portugal had trouble selling Novo, not the least of which was that two potential bidders – Anbang Insurance Group and Fosun International which, you’re reminded, is run by the recently “disappeared” Chinese Warren Buffett – suddenly became far more risk-averse in the wake of the financial market turmoil in China. Talks with US PE (Apollo specifically) also went south, presumably because no one knows if this “good” bank will actually turn out to need more capital going forward given that NPLs sit at something like 20% while the H1 loss totaled €250 million thanks to higher provisioning for said NPLs. Now, the auction process has been mothballed and will restart in January. This matters because if the bank can’t be sold, the cost of the bailout ends up being tacked onto Lisbon’s budget.

The impact is substantial. In September, when the effort to sell Novo collapsed, the government restated its 2014 deficit which, after accounting for the bailout, ballooned to 7.2% of GDP from 4.5%. Portugal will tell you that this is only “temporary,” but let’s face it, if they haven’t managed to sell it by now, then one has to believe the prospects are grim – at least in terms of fetching anything that looks like a decent price. Well don’t look now, but Portugal’s seventh-largest bank, Banco Internacional do Funchal, now needs a bailout too. Banif (as it’s known) will be split into a “good” and “bad” bank, and its “healthy” assets will be sold to Banco Santander for €150 million. The government will inject up to €2.2 billion the European Commission said on Monday, to cover “future contingencies.”

Hilariously, the bailout was necessary because the bank was unable to repay a previous government cash injection. “The government injected €1.1 billion of fresh capital into the lender in January 2013 to allow it to meet minimum capital thresholds imposed by the banking regulator,” WSJ writes. For its trouble, Lisbon got a 60% stake in the bank and several hundred million worth of CoCos which the bank missed a payment on last year. “That,” WSJ goes on to note, “triggered close scrutiny by the European Commission, which opened an investigation into the legality of the state aid.” “The commission had said that Banif’s restructuring plan might not be enough to allow the bank to repay the state,” Bloomberg adds. “The Bank of Portugal said in the statement on Sunday that a ‘probable’ decision from the commission declaring the state aid illegal would create a shortage of capital at the bank.”

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“We now enter the “discovery” phase of financial collapse, where things labeled “capital” and “credit” turn out to be mere holograms.”

Christmas Present (Jim Kunstler)

Theory du jour: the new Star Wars movie is sucking in whatever meager disposable lucre remains among the economically-flayed mid-to-lower orders of America. In fact, I propose a new index showing an inverse relationship between Star Wars box office receipts and soundness of the financial commonweal. In other words, Star Wars is all that remains of the US economy outside of the obscure workings of Wall Street — and that heretofore magical realm is not looking too rosy either in this season of the Great Rate Hike after puking up 623 points of the DJIA last Thursday and Friday. Here I confess: for thirty years I have hated those stupid space movies, as much for their badly-written scripts (all mumbo-jumbo exposition of nonsensical story-lines between explosions) as for the degenerate techno-narcissism they promote in a society literally dying from the diminishing returns and unintended consequences of technology.

It adds up to an ominous Yuletide. Turns out that the vehicle the Federal Reserve’s Open Market Committee was driving in its game of “chicken” with oncoming reality was a hearse. The occupants are ghosts, but don’t know it. A lot of commentators around the web think that the Fed “pulled the trigger” on interest rates to save its credibility. Uh, wrong. They had already lost their credibility. What remains is for these ghosts to helplessly watch over the awesome workout, which has obviously been underway for quite a while in the crash of commodity prices (and whole national economies — e.g. Brazil, Canada, Australia), the janky regions of the bond markets, the related death of the shale oil industry, and the imploding hedge fund scene. As it were, all credit these days looks shopworn and threadbare, as if the capital markets had by stealth turned into a swap meet of previously-owned optimism.

Who believes in anything these days besides the allure of fraud? Capital is supposedly plentiful these days — look how much has rushed into the dollar from the nervous former go-go nations with their wobbling ziggurats of bad loans and surfeit of production capacity — but what actually constitutes that capital? Answer: the dwindling faith anyone will pay you back next Tuesday for a hamburger today. We now enter the “discovery” phase of financial collapse, where things labeled “capital” and “credit” turn out to be mere holograms. Fed Chair Janet Yellen herself had a sort of hologramatic look last Wednesday when she stepped onto her Delphic platform to reveal the long-heralded interest rate news. Perhaps Mrs. Yellen is a figment conjured by George Lucas’s Industrial Light & Magic shop (now owned by Disney). What could be more fitting in a smoke-and-mirrors culture?

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Recognizable patterns.

Et Tu, Brute? – How Empires Die (Thomas)

The state-owned Bank of China has been ordered by an American court to hand over customer information to the US. The bank has refused to comply, as to do so would violate China’s privacy law. The US court has subsequently ordered the Bank of China to pay a fine of $50,000 per day. Any guess as to how this is likely to turn out? China is a sovereign nation, halfway around the globe from the US, yet the US seems to feel that it’s somehow entitled to set the rules for China (as well as the other nations in the world). When China sees fit to develop islands in the South China Sea that it has laid claim to for centuries, it begins to hear threatening noises from the US military. A candidate for US president declares that he would buzz the islands with Air Force One, the Presidential jet, saying, “They’ll know we mean business.”

All over the world, those who live outside the US are increasingly observing that the US has become so drunk with power that they’re threatening both friend and foe with fines, trade restrictions, monetary sanctions, warfare, and invasions. And in so-observing, those of us who have studied the history of empires note that history is once again repeating itself. Time and time again, great empires build themselves up through industriousness and sound economic management only to subsequently decline into debt, complacency, and an entitlement mind-set. Over the millennia, empires as disparate as Persia, Rome, Spain, and Great Britain rose to dominate the world. Of course, we know how those empires turned out and, by extension, we might hazard an educated guess as to how the present American Empire will end.

In the final throes of empire-decline, we invariably observe the more sociopathic trends of a failing power, such as we’re seeing today from the US. First and foremost, any empire declines as a result of economic mismanagement. Decline from within (pandering to the populace with “bread and circuses”) and without (endless conquest and/or maintenance of dominance over far-flung geography) drain even the wealthiest government. Even eighteenth-century Spain, with all its billions in stolen New World gold, could not pay its ever-increasing bills and warfare-driven debt. Typically, the empire of the day enjoys the world’s greatest fighting force/armada/weapons build-up yet, when the money runs out, the war machine simply stops. Soldiers think more about their empty bellies than how much ammunition they have left.

Generals continue to issue orders, but they cease to be followed after the supply lines begin to dry up. And the leaders of a collapsing empire invariably make a fatal mistake: they assume that all the goodwill the empire gained when it was on its rise is permanent – that it will continue, even if the empire behaves like the world’s foremost bully. This is never the outcome. Invariably, as the decline nears its end, allies, without ever saying so, begin to withdraw their support. We see this today, as European leaders (America’s most essential allies) realise that the empire is becoming an arrogant liability and they begin cutting deals with the other side, as European leaders are now doing with Russia and others.

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“The only way to avoid future crashes is for the Fed to stop creating inflation and bubbles.”

Do We Need The Fed? (Ron Paul)

Stocks rose Wednesday following the Fed’s announcement of the first interest rate increase since 2006. However, stocks fell just two days later. One reason the positive reaction to the Fed’s announcement did not last long is that the Fed seems to lack confidence in the economy and is unsure what policies it should adopt in the future. At her Wednesday press conference, Fed Chair Janet Yellen acknowledged continuing “cyclical weakness” in the job market. She also suggested that future rate increases are likely to be as small, or even smaller, then Wednesday’s. However, she also expressed concerns over increasing inflation, which suggests the Fed may be open to bigger rate increases. Many investors and those who rely on interest from savings for a substantial part of their income cheered the increase.

However, others expressed concern that even this small rate increase will weaken the already fragile job market. These critics echo the claims of many economists and economic historians who blame past economic crises, including the Great Depression, on ill-timed money tightening by the Fed. While the Federal Reserve is responsible for our boom-bust economy, recessions and depressions are not caused by tight monetary policy. Instead, the real cause of economic crisis is the loose money policies that precede the Fed’s tightening. When the Fed floods the market with artificially created money, it lowers the interest rates, which are the price of money. As the price of money, interest rates send signals to businesses and investors regarding the wisdom of making certain types of investments.

When the rates are artificially lowered by the Fed instead of naturally lowered by the market, businesses and investors receive distorted signals. The result is over-investment in certain sectors of the economy, such as housing. This creates the temporary illusion of prosperity. However, since the boom is rooted in the Fed’s manipulation of the interest rates, eventually the bubble will burst and the economy will slide into recession. While the Federal Reserve may tighten the money supply before an economic downturn, the tightening is simply a futile attempt to control the inflation resulting from the Fed’s earlier increases in the money supply. After the bubble inevitably bursts, the Federal Reserve will inevitability try to revive the economy via new money creation, which starts the whole boom-bust cycle all over again. The only way to avoid future crashes is for the Fed to stop creating inflation and bubbles.

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The more they can infringe on privacy, the more they will.

Apple Says UK Surveillance Law Would Endanger All Customers (BBG)

Apple outlined its opposition to a proposed U.K. surveillance law, saying threats to national security don’t justify weakening privacy and putting the data of hundreds of millions of users at risk. The world’s most valuable company is leading a Silicon Valley challenge to the proposed U.K. law, called the Investigatory Powers bill, which attempts to strengthen the capabilities of law-enforcement agencies to investigate potential crimes or terrorist attacks. The bill would, among other things, give the government the ability to see the Internet browsing history of U.K. citizens. Apple said the U.K. government already has access to an unprecedented amount of data.

The Cupertino, California-based company is particularly concerned the bill would weaken digital privacy tools such as encryption, creating vulnerabilities that will be exploited by sophisticated hackers and government spy agencies. In response to the U.K. rules, other governments would probably adopt their own new laws, “paralyzing multinational corporations under the weight of what could be dozens or hundreds of contradictory country-specific laws,” Apple said. “The creation of backdoors and intercept capabilities would weaken the protections built into Apple products and endanger all our customers,” Apple said in an eight-page submission to the U.K. committee considering the bill. “A key left under the doormat would not just be there for the good guys. The bad guys would find it too.”

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And that will not happen.

Half of World’s Coal Must Go Unmined to Meet Paris Climate Target (BBG)

Coal, the fuel that powered the industrial revolution, is in hiding. While the world still has 890 billion tons of reserves, enough to last more than 65 years, about half must stay underground if nations are to meet environmental limits agreed to earlier this month in Paris, Bank of America Corp. said in a report. Burning less coal is the easiest way to lower emissions blamed for climate change, the bank said. The pact reached by 195 nations doesn’t target specific fuels, yet coal remains the world’s largest source of planet-warming carbon dioxide. A global oversupply of the power plant fuel has pushed producers into bankruptcy and sent prices to at least seven-year lows. The Paris agreement only further diminishes prospects for a recovery.

“The latest carbon initiatives are the nail in the coffin for global coal,” Sabine Schels, Peter Helles and Franciso Blanch, analysts at Bank of America said in the Dec. 18 report. If emissions limits take hold, “50% of the world’s current coal reserves may never be dug out.” Coal demand stopped growing in 2014 for the first time since the 1990s as China’s economy cooled, the Paris-based International Energy Agency said Dec. 18. Coal for delivery to Amsterdam, Rotterdam, and Antwerp, an Atlantic benchmark, is trading near an eight-year low. Newcastle coal, a barometer for the Asia-Pacific market, is at the cheapest in records going back to 2008, data compiled by Bloomberg show.

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Last month, the warning came from China. Now it’s England and Wales.

It’s ‘Almost Too Late’ To Stop A Global Superbug Crisis (PA)

It is “almost too late” to stop a global superbug crisis caused by the misuse of antibiotics, a leading expert has warned. Scientists have a “50-50” chance of salvaging existing antibiotics from bacteria which has become resistant to its effects, according to Dr David Brown. The director at Antibiotic Research UK, whose discoveries helped make more than £20bn ($30bn) in pharmaceutical sales, said efforts to find new antibiotics are “totally failing” despite significant investment and research. It comes after a gene was discovered which makes infectious bacteria resistant to the last line of antibiotic defence, colistin (polymyxins). The resistance to the colistin antibiotic is considered to be a “major step” towards completely untreatable infections and has been found in pigs and humans in England and Wales.

Public Health England said the risk posed to humans by the mcr-1 gene was “low” but was being monitored closely. Performing surgery, treating infections and even travelling abroad safely all rely to some extent on access to effective antibiotics. It is feared the crisis could further penetrate Europe as displaced migrants enter from a war-torn Middle East, where countries such as Syria have increasing levels of antibiotic resistance. Dr Brown told said: “It is almost too late. We needed to start research 10 years ago and we still have no global monitoring system in place. “The issue is people have tried to find new antibiotics but it is totally failing – there has been no new chemical class of drug to treat gram-negative infections for more than 40 years.

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Nov 092014
 
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DPC League Island Navy Yard, Philadelphia. USS Brooklyn spar deck 1898

Fed to Markets: Brace for Volatility (WSJ)
Central Banks Warn of Possible Bumpy Ride for Markets (Bloomberg)
US Earnings Outlook Might Be Less Rosy Than Investors Think (Reuters)
Gorbachev Warns US, Allies Put World On ‘The Brink Of A New Cold War’ (FT)
Hungary Under ‘Great Pressure’ From US Over Its Energy Deals With Russia (RT)
Kuroda Sprang Easing Surprise To Head Off Damaging Inflation Forecast (Reuters)
It’s a Bad Time to Be a Saver in Europe (Bloomberg)
We Can Control Risks Facing The Economy, Says China’s Xi Jinping (Reuters)
Sweden Grapples With Massive Household Debt As Rates Hit Zero (Reuters)
UK Condemned Over Arms Sales To Repressive States (Observer)
It’s Official: Spain is Unraveling (Don Quijones)
Catalans Prepare to Open the Polls in Defiance of Spain (Bloomberg)
The Albanian World Cup Gambler Who Robbed The National Vault (Reuters)
Prepare For An Invasion From The North: “Polar Vortex, The Sequel” (CBS)
Harsh Winter Outlook Made More Dire by Siberia Snow (Bloomberg)
Bird Decline Poses Loss Not Just For Environment, But Human Soul (Guardian)

As rate hikes come.

Fed to Markets: Brace for Volatility (WSJ)

Federal Reserve officials are warning investors and foreign central bankers to brace for market turbulence as the Fed prepares to raise short-term interest rates next year. In a speech to central bankers Friday in Paris, Fed Chairwoman Janet Yellen said rate increases, when they materialize in advanced economies, “could lead to some heightened financial volatility.” New York Fed President William Dudley, at the same conference, issued a more detailed alert. “This shift in policy will undoubtedly be accompanied by some degree of market turbulence,” he said of future rate increases in the U.S. “Moreover, it could create significant challenges for those emerging market economies that have been the beneficiaries of large capital inflows in recent years.”

They offered their warnings as the Labor Department released new data showing the U.S. job market is improving faster than the Fed expects. The unemployment rate, at 5.8% in October, was below the 6.3% to 6.6% range the Fed projected last December for the end of 2014. In September, the Fed revised that projection to 5.9%-6.0%, still higher than the October rate. Other metrics being watched closely by the Fed showed continued gains. For instance, the percentage of the U.S. population that is employed rose to 59.2%, its highest level since July 2009. This employment-to-population ratio increased one percentage point from a year earlier, its largest one-year gain since March 1995. The Fed is eyeing rate increases as unemployment declines and slack in the economy slowly diminishes. Higher rates will be aimed at preventing the economy from overheating.

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“Normalization could lead to some heightened financial volatility .. ”

Central Banks Warn of Possible Bumpy Ride for Markets (Bloomberg)

Global central bankers said financial markets could suffer a bout of turbulence – again – when they begin to withdraw monetary stimulus. Janet Yellen and William Dudley of the Fed, Mexico’s Agustin Carstens and Bank of England Governor Mark Carney were among those to use a Paris conference of policy makers yesterday to talk about potential fallout from the eventual shift from record-low interest rates used to revive growth since the global financial crisis in 2008. “Normalization could lead to some heightened financial volatility,” Yellen told the gathering convened by the Bank of France. Carney said “the transition could be bumpy.” The comments suggest central bankers are trying to prepare better for the global effects of any withdrawal than in 2013, when then-Chairman Ben S. Bernanke unexpectedly signaled the Fed could soon start reducing bond purchases. That pushed up yields and rattled investors worldwide in the so-called taper tantrum.

Fed Chair Yellen and Dudley, president of the Fed Bank of New York, recognized the importance of U.S. officials being clear in their plans. “The Federal Reserve will strive to clearly and transparently communicate its monetary policy strategy in order to minimize the likelihood of surprises that could disrupt financial markets,” Yellen said. [..] Given a likely increase in U.S. rates next year will “undoubtedly be accompanied by some degree of market turbulence,” Dudley said the central bank has an obligation to provide global stability. “It is clear in retrospect that our attempts in the spring of 2013 to provide guidance about the potential timing and pace of tapering confused market participants,” Dudley said. With that episode in mind, Carstens said there is a “potential for financial market disruption” amid the unwinding of unconventional monetary policy.

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They’re hot air.

US Earnings Outlook Might Be Less Rosy Than Investors Think (Reuters)

With the U.S. Q3 earnings season almost at an end, many investors are breathing a sigh of relief as more companies surpassed profit expectations than in any quarter since 2010. But some analysts say investors may be brushing off their worries about corporate profits a little too soon. While most S&P 500 companies beat analysts’ expectations for third-quarter earnings, many just barely topped estimates, said Pankaj Patel at Evercore ISI in New York. Of the S&P 500 companies that had reported results as of early this week, 66% exceeded expectations, according to Evercore’s data analysis. But that figure falls to just 43% after stripping away companies that beat expectations by 5% or less, Patel’s research shows. The figure excluding beats of 5% or less is also well below the%age of beats according to data based on Thomson Reuters polls of analysts. On that data, 74% of S&P 500 companies so far have exceeded analysts’ expectations, which is the highest for any quarter since the second quarter of 2010.

Results have come in from 88% of the S&P 500. The results could mean that an increasing number of companies are trying to “manage their beat rate,” possibly to mask profit weakness, Patel said, noting that companies that exceed expectations by 5% or less typically see their share prices decline in the three days following results. “The beat rate is artificially high, but people still watch that %,” Patel said. “They keep buying and the market goes higher.” The S&P 500 has risen more than 3% since Oct. 8, roughly when this earnings season began. The index is up 9.1% from its Oct. 15 low. In addition, analysts’ keep trimming their profit forecasts. Estimates for fourth-quarter earnings are down from the start of the quarter, along with estimates for the first part of 2015. Earnings growth for the fourth quarter now is estimated at 7.6% compared with an Oct. 1 forecast for 11.1% growth, Thomson Reuters data showed. For the 2015 first quarter, profit growth is seen at 8.8%, down from an Oct. 1 forecast for 11.5% growth.

Moreover, the magnitude by which Q4 estimates are falling has increased compared with the previous quarter, said Nick Raich, chief executive officer of The Earnings Scout, a research firm specializing in earnings trends. In outlooks given by companies themselves – done by only a minority of companies – the news is not good. Negative outlooks outnumber positive ones for Q4 so far by a ratio of 3.9 to 1, up from the third quarter’s ratio of 3.3 to 1, Thomson Reuters data showed. “That’s a worsening trend,” Raich said. “The outlooks have gotten a little bit worse this quarter.” Outlooks could become even dimmer if lackluster demand overseas translates into weak results for the fourth quarter. “The United States clearly is the bright spot in the world,” said Uri Landesman, president of Platinum Partners in New York. “The rest of the world isn’t nearly as strong, so demand coming from certain places is weaker, and the currency is going to have an enormous impact going forward.”

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How many western officials have you seen trying to address Gorby’s accusations?

Gorbachev Warns US, Allies Put World On ‘The Brink Of A New Cold War’ (FT)

Former Soviet Union leader Mikhail Gorbachev warned on Saturday that the Ukraine crisis had brought the world to “the brink of a new Cold War”. “The world is on the brink of a new Cold War. Some say it has already begun, ” said the 83-year-old former Kremlin chief in a sombre speech delivered in Berlin at an event to mark the 25th anniversary of the fall of the Berlin Wall this weekend. He was speaking as reports from eastern Ukraine suggested that Kiev’s troops and the Russia-backed rebels may be preparing for renewed fighting. Agency reporters in eastern Ukraine said they saw more than 80 unmarked military vehicles on the move on Saturday in rebel-controlled areas of eastern Ukraine. The apparent escalation threatens the fragile ceasefire agreed in Minsk in early September and increases the danger of further pressure on east-west relations.

Speaking at a conference within a few metres of the iconic Brandenburg Gate, Mr Gorbachev accused the west, led by the US, of “triumphalism” after the fall of the Berlin Wall ended Soviet dominance in eastern Europe. Trust between Russia and the west had “collapsed” in the last few months, he said, highlighting the damage done by the Ukraine crisis. He called for new initiatives to restore trust, including a lifting of personal sanctions imposed by the US and the EU on top Russian officials in response to Moscow’s actions in Ukraine. Mr Gorbachev clearly sees the west as the culprit in the crisis, having given his unequivocal backing to Mr Putin last week. He said, before arriving in Germany, that he was “absolutely convinced that Putin protects Russia’s interests better than anyone else.”

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Hungary PM Orban is an interesting man. The country is doing quite well, relatively.

Hungary Under ‘Great Pressure’ From US Over Its Energy Deals With Russia (RT)

Washington is exerting heavy pressure on Hungary over the country’s decision to give a green light for the construction of the South Stream gas pipeline and expedite the construction by allowing companies without licenses to participate in the project. “The US is putting Hungary under great pressure fearing Moscow’s rapprochement with Budapest,”Hungarian media cited Prime Minister Viktor Orban saying in Munich, Germany after a meeting with Bavarian state premier Horst Seehofer. Orban said that Hungary’s relations with Russia have become “entangled in geopolitical and military and security policy issues,” AFP reports. The PM said that US is retaliating for Budapest’s willingness to endorse the South Stream gas pipeline development as well as a deal that would see Russia’s Rosatom expand Hungary’s nuclear power.

Under a deal worth up to €10 billion Rosatom will build a 2,000 megawatt addition to Hungary’s state-owned nuclear power plant MVM Paksi Atomeromu. Russia is Hungary’s largest trade partner outside of the EU, with exports worth $3.4 billion in 2013. Also it is highly dependent on Russian energy. “We don’t want to get close to anyone, and we don’t intend to move away from anybody,” Orban said.“We are not pursuing a pro-Russian policy but a pro-Hungarian policy,” as expansion of the nuclear plant was the “only possible means” to lower dependence on external energy resources. The PM remained firm that “cheap energy is key in strengthening Hungary’s competitiveness” as he also defended the law which gave a green light for the construction of the South Stream pipeline that would bypass Ukraine as a transit nation in EU gas supply chain. It “ensures Hungary gas supplies by eliminating risks posed by situation in Ukraine,” Orban said.“Even if South Stream does not diversify gas sources, it diversifies delivery routes.”

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A forecast based on slumping oil prices.

Kuroda Sprang Easing Surprise To Head Off Damaging Inflation Forecast (Reuters)

The Bank of Japan Governor not only surprised the markets with his latest splurge of monetary easing. He sprang it on his own board members just two days earlier, jolted into action to stop them making a low-ball forecast that might have sunk his flagship inflation target. To achieve maximum effect for the shock decision, Haruhiko Kuroda and right-hand man Masayoshi Amamiya kept only a handful of elite central bank bureaucrats in the loop as they laid the ground for the expansion of their quantitative and qualitative easing (QQE) program. They didn’t even give the usual forewarning to senior bureaucrats at the Ministry of Finance, according to interviews with nearly a dozen insiders and government sources with knowledge of the bank’s deliberations.

No leaks reached the media, and the announcement at the Oct. 31 policy meeting pushed the Nikkei stock average to seven-year highs and the yen to seven-year lows against the dollar. The market reaction will have been welcome news to Kuroda, but the impact he wanted above all was to alter inflation expectations in a country that has struggled with crippling deflation for two decades. Timing was critical – and not of his choosing. At the policy meeting the board would also issue a new consumer inflation forecast for the next fiscal year, based on the median estimate from the nine members. But two days before publication, the preliminary estimate was only around 1.5%, three of the sources said. That was well below the 1.9% forecast made in July, and if published could have been fatal to his key goal of hitting 2% from April next year.

Since price expectations play a key role in the consumer behaviours that ultimately determine prices, doubts about the target could be self-fulfilling. There were other triggers for action, including October’s plunge in oil prices and the fact that an easing burst would have more market impact in the week the U.S. Federal Reserve decided to turn its own liquidity taps off. But it was the inflation forecast that convinced Kuroda and his aides to go for another burst of stimulus, three sources said. Board members would then have to revisit their estimates in light of the new action.

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“If you’re a central bank, it’s not a good sign when institutions actively seek to deter customers from owning your currency.”

It’s a Bad Time to Be a Saver in Europe (Bloomberg)

In the post-crisis economic environment, with record-low interest rates in many countries, it’s better to be a borrower than a lender, despite Shakespeare’s admonition to be neither. These days, however, it’s even worse to be a saver. Since the European Central Bank in June sought to prod banks to lend more – by imposing negative interest rates on banks’ ECB deposits – savers are discovering that banks aren’t the only ones paying for the privilege of having cash on hand. At least three banks – State Street Corp., Bank of New York Mellon, and Deutsche Skatbank – have introduced negative rates for large euro deposits. It makes financial sense for the banks: If the ECB is charging them 0.2% for holding their cash, banks have a fiduciary duty to try to recoup that cost.

The result is that depositors suffer the consequences of the ECB’s interest-rate tyranny. They would do better to stash their money in mattresses. The ECB addressed the implications of its monetary-policy shift on its website after it cut its deposit rate below zero. It asked the question: “Do I now have to pay my bank to keep my savings for me? What is the effect of this negative deposit rate on my savings?” And then it answered itself:

There will be no direct impact on your savings. Only banks that deposit money in certain accounts at the ECB have to pay. Commercial banks may of course choose to lower interest rates for savers. The ECB’s interest rate decisions will in fact benefit savers in the end because they support growth and thus create a climate in which interest rates can gradually return to higher levels.

So the first sentence turned out to be incorrect. And the final sentence provides scant comfort to a depositor whose hard-earned cash is dribbling away and is too pessimistic about the future of the European economy to find more productive uses for the money, such as spending it or investing it. We’ve been here before, including in 2012 when depositors fled the euro and piled into other currencies. Credit Suisse imposed negative rates on Swiss franc cash balances, for example, and said it would “invite our customers to keep cash balances as low as possible to avoid negative credit charges.” State Street also imposed negative rates on Danish kroner deposits. If you’re a central bank, it’s not a good sign when institutions actively seek to deter customers from owning your currency.

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Sure.

We Can Control Risks Facing The Economy, Says China’s Xi Jinping (Reuters)

The risks faced by China’s economy are “not so scary” and the government is confident it can head off the dangers, president Xi Jinping told global business leaders on Sunday to dispel worries about the world’s second-largest economy. In a speech to chief executives at the Asia Pacific Economic Cooperation (Apec) CEO summit, Xi said even if China’s economy were to grow 7%, that would still rank it at the forefront of the world’s economies. China’s economy, the world’s second-largest, has had a rocky year. Growth slid to a low not seen since the 2008/09 global financial crisis in the third quarter dragged by a housing slowdown, softening domestic demand and unsteady exports. “Some people worry that China’s economic growth will fall further, can it climb over the ridge?” Xi said. “There are indeed risks, but it’s not so scary.

“Even at growth of around 7%, regardless of speed or volume, (we) are among the best in the world,” he said, noting that China’s economy remained “stable”. The remarks from Xi came a day after data showed annual growth in Chinese exports and imports cooled in October, in another sign of fragility in the economy that could prompt policymakers to take further action to stoke growth. To shore up activity, policymakers have loosened monetary and fiscal policies since April to ensure that the economy can grow by around 7.5% this year. A marked slowdown in growth would hit countries all over the world, but especially commodity producers such as Australia, Indonesia and Brazil that have benefited from strong Chinese demand.

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This will not end well. There are limits.

Sweden Grapples With Massive Household Debt As Rates Hit Zero (Reuters)

Sweden’s new center-left government and its financial authorities are under huge pressure when they meet on Tuesday to tackle a mountain of household debt that is casting a long shadow over one of Europe’s few economic bright spots. Having slashed rates to zero to fight the risk of deflation, top Swedish officials are now in a quandary over how to rein in borrowing and house price rises without sending the real estate market into a downward spiral. The country’s AAA-rated economy is still one of Europe’s strongest, with low public debt, sound state finances and banks among the best capitalized and most profitable in Europe. But consumers, barely touched by the financial crisis, have loaded up on cheap mortgages and caused Swedish property prices to triple over the last 20 years, prompting a warning from the IMF that the market is 20% overvalued. Adding to the problem: Sweden has built too few houses for the last 20 years and its capital Stockholm is one of Europe’s fastest growing cities.

Critics say the former center-right government added fuel to the fire by slashing real estate taxes and leaving 30% mortgage tax relief untouched. Meanwhile, Sweden’s household debt-to-income ratio has risen to above 170% – among Europe’s highest. The worry is that private consumption, nearly half of GDP, would suffer if rates rose or property prices fell. “The longer we wait, the bigger the imbalances are,” said Bengt Hansson, analyst at the Swedish National Board of Housing Planning and Building. “We already have a bubble, but we will avoid an even bigger bubble.” It will be hard to dissuade bullish Swedish consumers. In Stockholm’s frenzied housing market, buyers make multi-million crown offers to snap up flats they may only have seen in photographs. And cranes and scaffolding are common sights in suburbia as householders take advantage of generous tax breaks for home improvements.

“We don’t think it will crash badly,” said Peter, a 47 year-old investment advisor, who with his wife Maria has just bought a house in Stockholm for around 12 million Swedish crowns ($1.62 million). “It might stop going up for a while, but over the longer term we expect it to go up,” he added, suggesting the lack of housing and population growth in Stockholm would support prices. Attempts by regulators so far to slow credit growth – squeezing banks by making them put aside more capital and draw up voluntary mortgage pay-down plans – have not worked because interest rates have continued to fall. Last week the central bank cut rates to zero in an attempt to answer criticism that it is not doing enough to tackle another economic risk – deflation – even while it acknowledged the problem that would create in containing household debt. “There is a fairly large consensus that household debt is a concern,” Swedish central bank chairman Stefan Ingves said after the cut. “If households continue to borrow, we could end up with very big problems later on, and this is what we want to avoid.”

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They all do it. We have no morals left.

UK Condemned Over Arms Sales To Repressive States (Observer)

The government has been accused of dishonesty over arms sales as new figures reveal that the value of British weapons sales to “countries of concern” has already hit £60m this year. Former Tory defence minister Sir John Stanley, who chairs the Commons committees on arms export controls, says ministers failed to come clean on a “significant change in policy” that makes it easier to export arms to countries with a poor human rights record. He said in a recent parliamentary debate that the government has not acknowledged that such a change has taken place, and it “should consider most carefully whether they should now offer an apology to the committees”.

The government used to reject arms export licences where there was concern they might be used for “internal repression”, but now a licence will be refused only if there is a “clear risk” that military equipment might be used in violation of international law. Former Foreign Office minister Peter Hain, who established the strict criteria on arms sales, last night demanded that the government be transparent about the change and called for parliament to be allowed a vote. He said: “The present government has run a coach and horses through our arms export controls, circumventing the legislation we put in place by putting a particular spin on it. It has enabled them to sell arms to countries and for purposes that should not be allowed under the legislation.

“There is a clear policy in the legislation that arms should only be sold to countries for defensive purposes and not for internal suppression or external aggression. In the case of Gaza over the summer, that has clearly been flouted. Bahrain is another example.” Data from the Department for Business, Innovation and Skills reveals that in the first six months of 2014 the UK granted licences worth £63.2m of arms sales to 18 of the 28 states on its official blacklist, countries about which the Foreign Office has the “most serious wide-ranging human rights concerns”. Israel, Saudi Arabia, the Central African Republic, Sri Lanka and Russia were among the countries that Britain approved military equipment for.

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How much corruption can one government shake off?

It’s Official: Spain is Unraveling (Don Quijones)

Since taking office in late 2011, Rajoy’s government has been embroiled in one sordid political scandal after another. In the latest episode, the Punica Affair, more than 100 politicians have been arrested and charged with varying acts of white collar crime, including taking kick backs from private sector companies. Payment often came in the form of cash-stuffed envelopes although, as El Confidencial reports, it could also include completely free-of-charge construction work on a politicians’ property, luxury holidays, hunting trips and even an intimate evening or two with a high-class prostitute. Most of the politicians involved in the scandal are – or at least were – members of the governing Popular Party. The rest belong – or at least belonged – to the other partner in Spain’s (until now) two-party system, the not-really-socialist-at-all party, the PSOE.

The good news is that some of Spain’s corrupt politicians and business figures are finally seeing the sharp (or at least not entirely blunt) end of the law. Scores have been arrested and some are even going down. The bad news is that Rajoy’s scandal-tarnished government of self.serving mediocrities still stands, albeit more precariously than ever. In El Pais‘ latest poll of voters’ intentions in next year’s general election, the Popular Party (PP) was, for the first time in decades, relegated to third place. Indeed, the two incumbent parties – the PP and PSOE – were unable to muster 50% of the vote between them. The most popular party in the poll was Podemos, a stridently left-wing political movement founded just at the beginning of this year. In May’s European elections the party picked up five seats; now, six months later, it is apparently the hottest contender for the spoils in next year’s general election, picking up 27% of the votes polled – 6%% more than PP and one more than PSOE.

Lead by Pablo Iglesias, a firebrand (or as the right-wing media like to call him “demagogic”) 35-year-old professor of political science, Podemos has masterfully exploited the general public’s disaffection with a political establishment that serves no one’s interests but its own – and, of course, those of the country’s biggest businesses and banks. The political establishment is quite rightly blamed for stoking and feeding the country’s biggest ever real estate bubble. Thanks to a change in the property laws enacted in 1997 by the Aznar government, local and regional administrations were encouraged to part-finance themselves through granting authorization for ever larger public and private construction projects, many of which turned out to be white elephants (empty toll roads, high-speed train stations planted slap bang in the middle of nowhere, ghost airports…).

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That same corrupt government demands the moral high road when it comes to Catalunya.

Catalans Prepare to Open the Polls in Defiance of Spain (Bloomberg)

In more than 900 towns across Catalonia, an army of volunteers is preparing to open polling stations today and offer compatriots a vote on independence in defiance of Spain’s central government and its highest court. The informal ballot, stripped of legal validity by a Constitutional Court ruling in September, poses two questions: Do you want Catalonia to be a state? And should that state be independent? Separatists led by regional president Artur Mas aim to win a majority in favor of breaking up Spain and use that mandate to force Prime Minister Mariano Rajoy to negotiate. The runup to the vote has been marked by legal salvos: Rajoy’s government reminded public officials in Catalonia of their obligation to respect the Constitutional Court ban as Mas had an appeal to that ruling thrown out by the Supreme Court.

The Catalan government talked of filing a lawsuit against Spain in an international court while an activist group in Madrid responded with its own suit to state prosecutors demanding police halt the balloting. “The Spanish government is being really short-sighted,” said Alex Quiroga, a lecturer in Spanish history at Newcastle University in England. “Continually saying ‘no’ and appealing to the Constitutional Court doesn’t help. It’s clear that only through negotiation can they solve the problem.” Spain’s prosecutor’s office in Catalonia asked regional police to report on any public-sector premises such as schools being used for the vote and to gather information about the persons responsible for allowing their use, according to an e-mailed statement from the prosecutor. It also requested Catalonia’s Education Department to explain whether it asked principals to allow the schools to be used for the vote.

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Great story. “All three keys needed to access the vault were kept in his personal safe.”

The Albanian World Cup Gambler Who Robbed The National Vault (Reuters)

In the end, it wasn’t the security cameras or the audit inspections in the vault of Albania’s central bank that brought down Ardian Bitraj. It was the high blood pressure and lack of sleep, the burden of a multi-million-dollar secret. Sitting down with his boss this July, Bitraj confessed his deception: over a four-year period he had stolen the equivalent of $6.5 million from the vault, covering his tracks by stuffing the empty cash boxes with books and balls of string. The revelation brought down the central bank governor, led to the arrest of 18 employees and tarnished the reputation of an institution once lauded for its professionalism. And all for the sake of a gambling habit that led to massive losses, culminating in a series of fatal bets on the soccer World Cup.

The full story of the Balkan bank heist is only just emerging, gleaned by Reuters in interviews with bankers, investigators and others involved, and from legal documents including a transcript of Bitraj’s confession. It started in May 2010, when Bitraj, who had risen to become head of the cash processing department at the bank, first opened the metal and plastic clasps to the wooden boxes that hold its cash reserves in the cryptically named X Building on the outskirts of the capital Tirana. Bitraj, 45, had a penchant for placing bets on soccer matches, so roughly once a month he would wait for his co-workers to leave the room and swipe up to 2 million leks, roughly $18,000, according to the confession.

Choosing carefully how he returned the boxes, Bitraj would make sure those he had tampered with were not in line for delivery to Albania’s commercial banks, nor likely to be picked on in the regular random audit of the vault. As the thefts mounted, he would stuff the boxes with packaging, balls of string and books to replace the weight of the cash. All three keys needed to access the vault were kept in his personal safe. In statements to police, bank employees said they had not received any directive on how or where to store the keys. Bitraj says auditors checked only 2% of the cash boxes in the vault. Fired governor Ardian Fullani says it was 5%, maintaining that checks in the former communist country were comparable with other central banks in Europe.

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Beware the US economy, or rather the reports and excuses that will be written on the cold.

Prepare For An Invasion From The North: “Polar Vortex, The Sequel” (CBS)

Prepare yourself for an invasion from the north. A blast of polar air is about to send temperatures plunging in the heart of America. It’s the return of the polar vortex that brought misery a year ago. A mass of whirling cold air will dip southward this weekend, sending the mercury plunging. As the cold air moves south and east, it has the potential to affect as many as 243 million people with wind chills in the single digits in some places and snow. It’s all triggered by a Super Typhoon named Nuri. Images from the European Space Station show that Nuri is a growing meteorological bomb blanketing the Bering Sea. The 50-foot waves and 100 mile-an-hour winds will make conditions similar to those we had two years ago, and could make Nuri the biggest storm of the year.

But it would be wrong to think that it will affect only Alaska’s far-flung Aleutian Islands or those famous fishermen who work in the North Pacific. WBBM’s meteorologist Megan Glaros in Chicago explains. “The remnants of Super Typhoon Nuri will create a big buckle in the jet stream,” Glaros says. “And in several days time, it’s going to mean a big dip in the jet which will connect us with a big mass of Arctic air – taking temperatures east of the Rockies down to 10 to 30 degrees below average.” Say “a big mass of arctic air” to anyone who lives in the Midwest and it conjures painful memories of the dreaded polar vortex that hit the region last winter.

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“A rapid advance of Eurasian snow cover during the month of October favors that the upcoming winter will be cold across the Northern Hemisphere …”

Harsh Winter Outlook Made More Dire by Siberia Snow (Bloomberg)

Remember how evidence was mounting last month that early snowfall was accumulating across Siberia? And remember how there’s a theory that says this snowfall signals a cold winter? So in the two and a half weeks since, the news for the winter-haters has, unfortunately, only gotten worse. About 14.1 million square kilometers of snow blanketed Siberia at the end of October, the second most in records going back to 1967, according to Rutgers University’s Global Snow Lab. The record was in 1976, which broke a streak of mild winters in the eastern U.S. In addition, the speed at which snow has covered the region is the fastest since at least 1998. Taken together they signal greater chances for frigid air to spill out of the Arctic into more temperate regions of North America, Europe and Asia, said Judah Cohen, director of seasonal forecasting at Atmospheric and Environmental Research in Lexington, Massachusetts, who developed the theory linking Siberian snow with winter weather.

“A rapid advance of Eurasian snow cover during the month of October favors that the upcoming winter will be cold across the Northern Hemisphere,” Cohen said in an interview yesterday. “This past October the signal was quite robust.” There are a few steps to get from the snows of Siberia to the chills in New York City. Cold air builds over the expanse of snow, strengthening the pressure system known as a Siberian high. The high weakens the winds that circle the North Pole, allowing the cold air to leak into the lower latitudes. The term Polar Vortex actually refers to those winds, not the frigid weather.

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The connection between our souls and our living world was lost in our heads long ago. 147 million fewer sparrows, a drop of 62% of their total population, since 1980; starling numbers have fallen by 45 million or 53%; skylarks are down by 37 million (46%).

Bird Decline Poses Loss Not Just For Environment, But Human Soul (Guardian)

‘That’s a buzzard!” says Richard Gregory, gesturing at a tall birch tree stump 50 metres or so away, from which a flapping streak of brown and white has just disappeared. “That was a buzzard. That’s one of the ones I was telling you about. It’s back.” When Gregory was a young child, toddling around the green bits of Cheshire with a monocular, a glimpse of a buzzard made for a thrilling day out – though he was mad about birds by the age of four, he was in his teens before he ticked the large raptor off his list. Now, though, thanks to reintroduction projects and legal protections, its number and that of several other birds of prey is on the up in Britain.

We glimpse another one, as it happens, a few minutes later, and while I suppose there is just a possibility it was the same bird on a second swoop, I’m counting that as a double sighting. The recovery in recent decades of Britain’s raptor population is welcome for a number of reasons. Firstly, it means I was right after all that time I spotted a red kite while driving up the A1 and everyone else in the car said I was talking rubbish. Secondly, it’s a snatch of good news in what could otherwise seem an unrelentingly grim picture. These are bad days to be a bird. A study released this week found that the most common birds in Europe are declining at an alarming rate, and that is not an idle term.

By studying 30 years of data across 25 countries, conservationists estimated that there are now a brain-boggling 421 million fewer birds flapping across the continent’s skies than were around in 1980. House sparrows alone account for a third of that decline, with 147 million fewer birds, a drop of 62% of their total population; starling numbers have fallen by 45 million or 53%; skylarks are down by 37 million (46%). Yes, the marsh harrier has recovered a bit, and feral pigeons and ring necked parakeets are doing well in cities, but overall, concluded the report, “global biodiversity is undergoing unprecedented decline”, and some of the species taking the hardest hit are birds which were once, not so long ago, abundant in our skies.

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