Nov 152020
 


Pablo Picasso Les femmes d’Alger Version 0 1955

 

New US Defense Chief Tells Troops ‘Time To Come Home’ (F24)
Biden’s Transition Team: War Profiteers, Beltway Chickenhawks (GZ)
The Filthy Rich War Hawks That Make up Biden’s New Foreign Policy Team (MPN)
Cecilia Muñoz Defended Family Separations Under Obama, Joins Biden Team (DN)
Biden Will Fail To Bring Back ‘Normal’ Politics (Cook)
How Pence & GOP Senators Could Try To Steal The Election (DP)
Donald Trump’s Likeliest Path To Staying In Office (du Quenoy)
Everybody Knows the Fight was Fixed (Curtin)
Lockdowns Haven’t Brought Down COVID Mortality, But Killed Millions Of Jobs (Mises)
COVID19 Vaccines May Have Potentially Unpleasant Side Effects (Kaiser)
Australia Revels In Covid-free Days (G.)
The Huge New Trade Deal ‘Western’ Media Do Not Like To Talk About (MoA)
The Housing Bubble is Even Bigger Than the Stock Market Bubble (Mish)
The EU Funds Global iPhone And Facebook Surveillance (F.)
Bay Area Food Bank Now Serves 500k Working-Poor As Demand “Doubles” (ZH)

 

 

 

 

Great War of 2020

 

 

“We are not a people of perpetual war — it is the antithesis of everything for which we stand and for which our ancestors fought. All wars must end,” the memo reads. “Ending wars requires compromise and partnership. We met the challenge; we gave it our all. Now, it’s time to come home.”

New US Defense Chief Tells Troops ‘Time To Come Home’ (F24)

Newly appointed Pentagon chief Christopher Miller signaled Saturday that he could accelerate the withdrawal of US troops from Afghanistan and the Middle East, saying, “It’s time to come home.” “All wars must end,” Miller, named acting defense secretary by President Donald Trump on Monday, said in his first message to the US armed services. He said that the US is committed to defeating Al Qaeda, 19 years after the September 11 attacks on the United States, and is “on the verge of defeating” the group. “Many are weary of war — I’m one of them,” he wrote in the message, dated Friday but posted early Saturday on the Defense Department’s website. “But this is the critical phase in which we transition our efforts from a leadership to supporting role,” he said.

“Ending wars requires compromise and partnership. We met the challenge; we gave it our all. Now, it’s time to come home.” Miller did not mention specific US troop deployments, but the reference to Al Qaeda appeared to single out Afghanistan and Iraq, where US troops were deployed after the September 11 attacks. The former US special forces officer and counterterrorism expert was named to lead the Department of Defense after Trump fired Mark Esper. Trump, who lost to Democrat Joe Biden in the November 3 election, has been pressing to pull US forces out of both countries since he came into office four years ago. Any such action would have to come in the 67 days before Biden takes office on January 20.

Esper cut US forces in Afghanistan by nearly two-thirds in the wake of the February 29 US-Taliban peace deal. But, drawing a line, he said he would hold troop numbers at 4,500 after this month until the Taliban, as they negotiate with the government in Kabul, follow through on pledged reductions in violence. Trump, however, has pushed for continued cuts, tweeting that he wants the troops “home by Christmas,” December 25. His national security advisor Robert O’Brien has said the goal is to cut to 2,500 by February.

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It’s a long list.

Biden’s Transition Team: War Profiteers, Beltway Chickenhawks (GZ)

A glance at the Biden-Harris agency review teams should provide a rude awakening to anyone who believed a Biden administration could be “pushed to the left” An eye-popping array of corporate consultants, war profiteers, and national security hawks have been appointed by President-elect Joe Biden to agency review teams that will set the agenda for his administration. A substantial percentage of them worked in the United States government when Barack Obama was president. The appointments should provide a rude awakening to anyone who believed a Biden administration could be pressured to move in a progressive direction, especially on foreign policy. If the agency teams are any indication, Biden will be firmly insulated from any pressure to depart from the neoliberal status quo, which the former vice president has pledged to restore.

Instead, he is likely to be pushed in an opposite direction, towards an interventionist foreign policy dictated by elite Beltway interests and consumed by Cold War fever. A prime example of the interventionist-minded establishment-oriented figures filling the Biden-Harris Defense Department agency team is Lisa Sawyer. She served as director for NATO and European strategic affairs for the National Security Council from 2014 to 2015, and worked for Wall Street’s JPMorgan Chase as a foreign policy adviser. Sawyer was part of the Center for a New American Security’s “Task Force on the Future of US Coercive Economic Statecraft,” which essentially means she participated in meetings that focused on methods of economic warfare that could be used to destabilize countries that refused to bow to American empire.

Sawyer believes the US government is not doing enough to deter Russian “aggression,” US troop levels in Europe should return to the levels they were at in 2012, and offensive weapons shipments to Ukraine should continue and increase in violation of the Minsk Agreements. “Instead of saying we will lift sanctions when Russia decides to comply with the next agreement, say that we will raise them until they do. Instead of kowtowing to Russia’s supposed spears of influence, provide Ukraine the lethal assistance it so desperately needs and increase US support to vulnerable nations in the gray zone,” Sawyer declared when testifying before the Senate Armed Services Committee in 2017.

US assistant secretary of state for African affairs Linda Thomas-Greenfield was appointed leader of the Biden-Harris State Department team. She is a stalwart ally of former US national security adviser Susan Rice, who pushed for war in Libya, supported the invasion of Iraq, and was involved in the decision to remove peacekeepers from the United Nations which enabled Rwanda genocide. As a developer and manager for US policy toward sub-Saharan Africa, she cheered President George W. Bush’s Millennium Challenge Account, a neocolonialist policy designed to privilege US corporations and facilitate the economic exploitation of so-called emerging African economies.

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And then there’s more. Enjoy your cabal.

The Filthy Rich War Hawks That Make up Biden’s New Foreign Policy Team (MPN)

Biden is no stranger to the rich and powerful. He kicked off his presidential campaign last year with a dinner for ultra-rich patrons at a Manhattan hotel, insisting that “nothing would fundamentally change” if he were elected, reassuring them that he would never demonize the rich and that they were not at fault for growing inequality. “I need you very badly,” he concluded. The former vice-president’s team is also looking to be made up of extremely wealthy individuals as well. His transition task squad has been, in his website’s words, crafted to ensure they “reflect the values and priorities of the incoming administration,” and includes executives from Lyft, Amazon, Capital One, Uber, Visa, and JP Morgan.

One name being strongly floated for a cabinet position is former mayor of Chicago Rahm Emanuel, a move being met with vocal opposition from the left. Emanuel’s first tour of duty in the White House came under President Bill Clinton, where he was one of the key architects of the North American Free Trade Agreement (NAFTA), a deal that decimated manufacturing in the Midwest, hobbled union power, and sent well paying blue-collar jobs to Mexico. In 2016, Trump constantly brought up NAFTA as a weapon to attack Hillary Clinton, winning him votes (and states) across the region. Emanuel also pushed through welfare “reform” bills that sharply reduced benefits for the poor and worked with Biden on the now-infamous 1994 Crime Bill, a key accelerator of mass incarceration.

He then left politics to pursue a lucrative career in finance — something that quickly netted him a reported $16 million fortune — before returning and becoming President Obama’s advisor and enforcer. Many of the president-elect’s potential picks for foreign policy positions — including Susan Rice and Michele Flourney — have onlookers worried. “With a Biden administration, we can expect a continuation of the Middle East wars and possible escalations in places like Syria. Biden could be better than Trump on Iran and Yemen, but judging by his potential cabinet picks, that should not be expected without significant pressure from antiwar activists and lobbyists in Washington,” Dave DeCamp, assistant news editor of AntiWar.com told MintPress.

“His administration will likely be more successful than Trump at expanding the empire, with a more diplomatic and coherent approach at building alliances to face Russia and China.” Rice, who was the U.S. ambassador to the United Nations and National Security Advisor under Obama, has amassed a fortune of around $40 million. After leaving office, she was given a spot on the board of Netflix, being paid $366,666 as a base salary. On top of that, she was given $2.3 million worth of the company’s stock. However, it is her husband, former ABC News executive producer Ian O. Cameron (whose father was a super-wealthy industrialist), who is the prime source of her wealth. She was a key driver in U.S. action in Libya, and also successfully lobbied Obama to place harsher sanctions on North Korea and Iran.

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Unpossible, that was all Trump, remember?

Cecilia Muñoz Defended Family Separations Under Obama, Joins Biden Team (DN)

Joe Biden has named President Obama’s former top immigration adviser Cecilia Muñoz to his transition team. During her time in the White House, Muñoz often justified Obama’s harsh immigration enforcement policies, including the administration’s deportation of thousands of Central American children and its decision to kill an executive order that would have halted deportations. In 2011, Muñoz was interviewed by PBS’s Maria Hinojosa. Cecilia Muñoz: “At the end of the day, when you have an immigration law that’s broken and you have a community of 10 million, 11 million people living and working in the United States illegally, some of these things are going to happen, even if the law is executed with perfection. There will be parents separated from their children. We don’t have to like it, but it is a result of having a broken system of laws. And the answer to that problem is reforming the law.”

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“Those now bleating about how dangerous his current assertions of election fraud are should remember they were the ones who smashed that particular glass house..”

Biden Will Fail To Bring Back ‘Normal’ Politics (Cook)

The narrowly averted Trump second term has at least prompted liberal pundits to draw one significant lesson that is being endlessly repeated: Biden must avoid returning to the old “normal”, the one that existed before Trump, because that version of “normal” was exactly what delivered Trump in the first place. These commentators fear that, if Biden doesn’t play his cards wisely, we will end up in 2024 with a Trump 2.0, or even a rerun from Trump himself, reinvigorated after four years of tweet-sniping from the sidelines. They are right to be worried. But their analysis does not properly explain the political drama that is unfolding, or where it heads next. There is a two-fold problem with the “no return to normal” argument.

The first is that the liberal media and political class making this argument are doing so in entirely bad-faith. For four years they have turned US politics and its coverage into a simple-minded, ratings-grabbing horror show. A vile, narcissist businessman, in collusion with an evil Russian mastermind, usurped the title of most powerful person on the planet that should have been bestowed on Hillary Clinton. As Krystal Ball has rightly mocked, even now the media are whipping up fears that the “Orange Mussolini” may stage some kind of cack-handed coup to block the handover to Biden. These stories have been narrated to us by much of the corporate media over and over again – and precisely so that we do not think too hard about why Trump beat Clinton in 2016.

The reality, far too troubling for most liberals to admit, is that Trump proved popular because a lot of the problems he identified were true, even if he raised them in bad faith himself and had no intention of doing anything meaningful to fix them. Trump was right about the need for the US to stop interfering in the affairs of the rest of the world under the pretence of humanitarian concern and a supposed desire to spread democracy at the end of the barrel of a gun. In practice, however, lumbered with that permanent bureaucracy, delegating his authority to the usual war hawks like John Bolton, and eager to please the Christian evangelical and Israel lobbies, Trump did little to stop such destructive meddling. But at least he was correct rhetorically.

Equally, Trump looked all too right in berating the establishment media for promoting “fake news”, especially as coverage of his presidency was dominated by an evidence-free narrative claiming he had colluded with Russia to steal the election. Those now bleating about how dangerous his current assertions of election fraud are should remember they were the ones who smashed that particular glass house with their own volley of stones back in 2016.

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Steal? You sure?

How Pence & GOP Senators Could Try To Steal The Election (DP)

Since Donald Trump lost the election, he and GOP state legislators have suggested that the race was marred by voter fraud, and Trump administration officials have been publicly talking about Trump remaining president. On Friday, Vice President Mike Pence reportedly told a conservative group that there is already a “plan” for a second Trump term. Though Republicans have not produced any evidence to substantiate the fraud claims, they have continued to promote the fraud allegations — which could serve as a rationale for state legislatures, Republican electors and Mike Pence to try to use the Electoral College system to hand Trump a second term.

The unlikely-but-possible scenario revolves around the prospect of competing slates of electors. That situation has only arisen once in the modern era, when in 1960 then-vice president Richard Nixon faced a decision on whether to recognize Hawaii’s Republican or Democratic electors during the joint session of Congress to certify that year’s election results. The mini controversy spotlighted the pivotal role that the vice president can potentially play in the Electoral College system — and according to Harvard University law professor Larry Lessig, it should worry everyone right now.

In an interview with The Daily Poster, Lessig explained how Vice President Mike Pence could try to recognize slates of Republican electors sent to Congress from five Biden states where GOP legislators have started voicing allegations of voter fraud. In that situation, the Republican-controlled U.S. Senate would be in a position to decide on Pence’s move — and if they backed him up, Lessig says they could potentially throw the presidency to Trump. So far, GOP leaders in four of those states are saying they will not try to replace Biden electors with Trump electors in defiance of certified election results. Lessig’s group Equal Citizens is launching a petition on its website that calls on Republican U.S. senators to commit right now to uphold elector slates that represent the will of the popular vote in all states.

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“26 out of the 50 state delegations are majority Republican. Assuming they deliver strict party-line votes, Trump would win the contingent election and be constitutionally re-elected..”

Donald Trump’s Likeliest Path To Staying In Office (du Quenoy)

So far, the media debate revolves almost entirely around the final tabulation of votes. If enough evidence of fraud surfaces, and if court rulings based on that evidence favour Trump decisively, it is possible that he could win by court decision. Another scenario, however, lies in the recesses of the American Constitution. A significant part of Trump’s legal strategy is oriented toward preventing crucial states from certifying results that would be averse to him. All states require vote certification before electors are dispatched. Two states, Maine and Nebraska, allow slates of electors to be split in their support of candidates, but neither is among the states in contention. If Trump can throw sufficient dirt on the electoral process to convince the courts to issue injunctions against certification in just enough states, neither candidate would win the majority of 270 electoral votes needed to triumph in the Electoral College.

In that scenario, Article Two of the US Constitution, as modified by the Twelfth Amendment, provides for a “contingent election” in which the president is chosen by the House of Representatives from among the top three electoral vote winners, while the vice president is chosen by the Senate (recall that the electoral voting for president and vice president are separate). A “contingent election” provides for the vice president to be elected by a simple majority of votes cast by individual Senators. With a Republican Senate majority in the current Congress, Mike Pence would presumably win re-election as vice president. In the bigger contest, however, the House’s vote for president is not by individual ballot, but rather by state delegation en bloc. That means that all the Representatives from each state would cast one collective vote for president.

In the current Congress, 26 out of the 50 state delegations are majority Republican. Assuming they deliver strict party-line votes, Trump would win the contingent election and be constitutionally re-elected. This procedure is obscure, but not unprecedented in choosing American presidents. Thomas Jefferson was elected president in a contingent election in 1801, when the electoral vote in the previous year’s election resulted in a tie between him and incumbent president John Adams. In 1825, Adams’s son John Quincy Adams also won the presidency in a contingent election, in which four candidates split the Electoral College vote that resulted from the election of 1824. The younger Adams prevailed over Andrew Jackson, who had won large pluralities in both the popular and electoral votes.

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“Neither has the guts or the intelligence. They are nowhere men who fear the fate that John Kennedy faced squarely when he turned against the CIA and the war machine.”

Everybody Knows the Fight was Fixed (Curtin)

At the end of Henrik Ibsen’s classic play, A Doll’s House, Nora, the aggrieved wife, leaves her husband’s house and all the illusions that sustained its marriage of lies. She chooses freedom over fantasy. She will no longer be played with like a doll but will try to become a free woman – a singular one. “There is another task I must undertake first. I must try and educate myself,” she tells her husband Torvald, a man completely incapable of understanding the social programming that has made him society’s slave. When Nora closes the doll’s house door behind her, the sound is like a hammer blow of freedom. For anyone who has seen the play, even when knowing the outcome in advance, that sound is profound. It keeps echoing. It interrogates one’s conscience.

The echo asks: Do you live inside America’s doll house where a vast tapestry of lies, bad faith, and cheap grace keep you caged in comfort, as you repeat the habits that have been drilled into you? In this doll’s house of propaganda into which America has been converted, a great many of our basic assumptions are totally illusory. Americans who voted for either Trump or Biden in the 2020 election are like Torvald clones. They refuse to open that door so they might close it behind them. They live in the doll’s house – all 146+ million of them. Like Torvald, they are comforted. They are programmed and propagandized, embracing the illusion that the electoral system is not structured and controlled to make sure no significant change can occur, no matter who is president. It is a sad reality promoted as democracy.

They will prattle on and give all sorts of reasons why they voted, and for whom, and how if you don’t vote you have no right to bitch, and how it’s this sacred right to vote that makes democracy great, blah blah blah. It’s all sheer nonsense. For the U.S.A. is not a democracy; it is an oligarchy run by the wealthy for the wealthy. This is not a big secret. Everybody knows this is true; knows the electoral system is sheer show business with the presidential extravaganza drawing the big money from corporate lobbyists, investment bankers, credit card companies, lawyers, business and hedge fund executives, Silicon Valley honchos, think tanks, Wall Street gamblers, millionaires, billionaires, et. al. Biden and Trump spent over 3 billion dollars on the election. They are owned by the money people.

Both are old men with long, shameful histories. A quick inquiry will show how the rich have profited immensely from their tenures in office. There is not one hint that they could change and have a miraculous conversion while in future office, like JFK. Neither has the guts or the intelligence. They are nowhere men who fear the fate that John Kennedy faced squarely when he turned against the CIA and the war machine. They join the craven company of Johnson, Ford, Carter, Reagan G.H.W. Bush, Clinton, George W. Bush, and Obama. They all got the message that was sent from the streets of Dallas in 1963: You don’t want to die, do you?

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But it’s easy to find the exact opposite view as well.

Lockdowns Haven’t Brought Down COVID Mortality, But Killed Millions Of Jobs (Mises)

[..] many proponents of lockdowns still contend that every covid infection is a failure of public policy. But this position is largely a luxury of white-collar workers who can afford to work from home. Lockdowns have been described as “the worst assault on the working class in half a century.” Martin Kulldorff, a biostatistician, says, “the blue-collar class is ‘out there working, including high-risk people in their 60s.” Kulldorff’s colleague Jay Bhattacharya notes that one reason “minority populations have had higher mortality in the U.S. from the epidemic is because they don’t often have the option…to stay at home.” In effect, top-down lockdown policies are “regressive” and reflect a “monomania,” says Dr. Bhattacharya. With this in mind, it is easy to see why more affluent Americans tend to view restrictive measures as the appropriate response.

For many Americans, prolonged periods of time without gainful employment, income, or social interaction are not only impossible but potentially deadly. Martin Kulldorff notes that covid-19 restrictions do not consider broader public health issues and create collateral damage; among the collateral damage is a “worsening incidence of cardiovascular disease and cancer and an alarming decline in immunization.” Dr. Bhattacharya correctly notes that society will be “counting the health harms from these lockdowns for a very long time.” Bhattacharya emphasized the politicization of these restrictions: “When Black Lives Matter protests broke out in the spring, ‘1,300 epidemiologists signed a letter saying that the gatherings were consistent with good public health practice,’” while those same epidemiologists argued that “we should essentially quarantine in place.”

Such a contradiction defies logic and undercuts arguments about the lethality of this virus. If this novel virus truly were as devastating to the broader public as advertised, then political leaders supporting mass protests and riots during a pandemic seem to be ill founded. This contradiction has been cited in countless lawsuits challenging the validity and constitutionality of covid-19 restrictions. Separately, these often heavy-handed restrictions have targeted constitutionally protected rights like the freedom of religion. Supreme Court Justice Samuel Alito criticized the Nevada governor’s restrictions saying, “that Nevada would discriminate in favor of the powerful gaming industry and its employees may not come as a surprise…We have a duty to defend the Constitution, and even a public health emergency does not absolve us of that responsibility.” This scathing criticism, however, did not gain the support of the Supreme Court as a 5–4 majority deferred to the governor’s “responsibility to protect the public in a pandemic.”

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“We are asking people to take a vaccine that is going to hurt..”

COVID19 Vaccines May Have Potentially Unpleasant Side Effects (Kaiser)

Pfizer is expected to seek federal permission to release its Covid-19 vaccine by the end of November, a move that holds promise for quelling the pandemic but also sets up a tight time frame to make sure consumers understand what it will mean to get the shots. The vaccine, and likely most others, will require two doses to work, injections that must be given weeks apart, company protocols show. Scientists anticipate that the shots will cause enervating flu-like side effects — including sore arms, muscle aches and fever — that could last days and temporarily sideline some people from work or school. And even if a vaccine proves 90 percent effective, the rate Pfizer touted for its product, 1 in 10 recipients would still be vulnerable. That means, at least in the short term, as population-level immunity grows, people can’t stop social distancing and throw away their masks.

[..] Pfizer and its partner, the German company BioNTech, said Monday that their vaccine appears to protect 9 in 10 people from getting Covid-19, although they didn’t release underlying data. It’s the first of four Covid-19 vaccines in large-scale efficacy tests in the U.S. to have posted results. Data from early trials of several Covid-19 vaccines suggest that consumers will need to be prepared for side effects that, while technically mild, could disrupt daily life. A senior Pfizer executive told the news outlet Stat that side effects from the company’s vaccine appear to be comparable to those of standard adult vaccines but worse than those of the company’s pneumonia vaccine, Prevnar, or typical flu shots.

The two-dose Shingrix vaccine, for instance, which protects older adults against the virus that causes painful shingles, results in sore arms in 78 percent of recipients and muscle pain and fatigue in more than 40 percent of those who take it. Prevnar and common flu shots can cause injection-site pain, aches and fever. “We are asking people to take a vaccine that is going to hurt,” said Dr. William Schaffner, a professor of preventive medicine and health policy at Vanderbilt University Medical Center. “There are lots of sore arms and substantial numbers of people who feel crummy, with headaches and muscle pain, for a day or two.”

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For how long?

Australia Revels In Covid-free Days (G.)

When the premier of Queensland held her regular Covid-19 update on Friday she couldn’t help letting a smile creep across her face. “Now, here’s a good one,” Annastacia Palaszczuk told reporters. “I think all Queenslanders are going to be happy about it.” She went on to announce that Brisbane’s Suncorp stadium would host a capacity 52,500 crowd for the forthcoming State of Origin rugby league decider against New South Wales next week. “The cauldron can be filled to 100% capacity,” she said. In the midst of the pandemic, the idea of responsible leaders encouraging citizens to gather in large crowds to sit or stand shoulder to shoulder with strangers might seem to be a case of extreme recklessness.


But in Australia, where the Covid-19 pandemic has largely been controlled after months of lockdowns, border closures and strict limits on gatherings, moments like these are becoming more and more common. Last month, footage from a packed nightclub in Western Australia went viral, offering a surreal image of pre-Covid normality even as countries in the northern hemisphere began to return to lockdowns amid surging case numbers. In Sydney, about 40,000 fans were present for the rugby league grand final last month. The country has reason to be bullish about its successes. On Friday, Australia recorded no new cases of the virus for the fifth day in a row. In Victoria, where a second-wave spike of the virus forced Melbourne into a months-long lockdown and left hundreds dead, Friday marked the 14th day in a row with no new cases.

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Includes Australia, South Korea and New Zealand.

The Huge New Trade Deal ‘Western’ Media Do Not Like To Talk About (MoA)

Tomorrow a new trade agreement between 15 Asian states will be signed. It will soon be seen as a milestone in the global economic history. But only very few ‘western’ media have taken note of it or of the huge consequences the new agreement will have. The agreement is also a huge victory for China over U.S. hegemony in Asia: Fifteen Asia-Pacific nations including China and Japan plan to sign the world’s biggest free trade deal this weekend. The FTA will cut tariffs, strengthen supply chains with common rules of origin, and codify new e-commerce rules. The Regional Comprehensive Economic Partnership (RCEP) is expected to be announced at the Association of Southeast Asian Nations (ASEAN) Summit, which Vietnam is hosting virtually.


It will involve the ten member states of the ASEAN bloc – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – as well as their trade partners Australia, China, Japan, New Zealand, and South Korea. The new economic bloc will thus represent around a third of the world’s gross domestic product and population. It will become the first-ever free trade agreement to include China, Japan, and South Korea – Asia’s first, second and fourth-largest economies. The economies of the RCEP members are growing faster than the rest of the world. The agreement is likely to accelerate their growth. India is the only country that was invited but is missing in the deal. Its Hindu-fascist Modi regime had bet on the U.S. led anti-Chinese QUAD initiative pressed for by Trump and Pompeo and thereby lost out in trade terms.

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Bubbles “R” The Economy

The Housing Bubble is Even Bigger Than the Stock Market Bubble (Mish)

Stocks may be expensive based on historical measures, but it’s nothing compared to skyrocketing home values says Robert Shiller.


“Consider that the Case-Shiller National Home Price index has gained in excess of 6% per year on average since January 2012, while net rental income has barely kept up with inflation, increasing just less than 2% per year. The result is that home prices seem as overvalued as they were in the spring of 2005, nine months before the peak. One way to measure home valuations is with a cyclically adjusted price to earnings (CAPE) ratio developed by Yale University professor and Nobel Laureate Robert Shiller for stocks. The concept can be applied to a broad swath of assets by dividing the current price of an asset by the average annual inflation-adjusted earnings over the prior 10 years. The chart above shows CAPE for U.S. home prices and the S&P 500 Index since 1996.

The bad news is all previous history came at higher mortgage rates. The average 30-year fixed mortgage rate fell below 3% for the first time in August 2020, and rates are close to the lowest possible levels given the credit risk and costs of writing mortgages. It’s one thing to be a peak valuation, it’s another to be at peak valuation with no discernable upside.” Shiller compared home prices to stocks based on CAPE. To compute the CAPE for housing he used rent. My chart looks at household income vs the Case-Shiller Home Price Index. Both indexes have a base year of 2000. Household income is annual and the latest year available is 2019. I used Case-Shiller quarterly data. Since 2000, median household income is up about 64%. Home prices are up 118%. Robert Shiller calls this a bubble and so do I.

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Just lovely.

The EU Funds Global iPhone And Facebook Surveillance (F.)

Police across the world are getting special training from a little-known European Union agency on how best to snoop on Facebook and Apple iPhones, according to documents obtained by nonprofit Privacy International. The files reveal that CEPOL, the EU’s law enforcement training agency, instructed officers across the globe, from within Europe and in Africa, on how to use malware and other tools to gain access to citizens’ phones and monitor social networks. In some cases, the training was funded by EU aid coffers and went to countries with histories of human rights abuses, Privacy International warned. Furious about the previously secret initiatives that are aiding surveillance rather than protecting people from it, Privacy International and fellow human rights organizations are calling for reform, demanding that aid money going to intelligence training be diverted to more altruistic programs.


The revelations land just days after the EU Parliament announced plans to curb spy tool exports where human rights abuses were possible. “Today’s revelations confirm our worst fears about the diversion and securitization of EU aid,” said Edin Omanovic, advocacy director of Privacy International. “Instead of helping people who face daily threats from unaccountable surveillance agencies, including activists, journalists and people just looking for better lives, this ‘aid’ risks doing the very opposite. “The EU as the world’s largest provider of aid and a powerful force for change must enact urgent reforms to these secretive and unacceptable programmes. Failure to do so is a betrayal not just of the purpose of aid and the people it’s supposed to benefit, but of the EU’s own values.”

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Silicon Valley.

Bay Area Food Bank Now Serves 500k Working-Poor As Demand “Doubles” (ZH)

The virus pandemic is threatening another lost decade, similar to the Great Recession of 2007-2009, or even the Great Depression of the 1930s, for America’s working poor. Widespread permanent job loss and the collapse of small and medium-sized enterprises have become a severe risk to the broader recovery – as the economic fallout from the virus-induced downturn could linger for years. Case in point, the San Francisco Bay Area has lost 350,000 jobs this year – leaving many households with food and housing insecurity problems ahead of the holiday season. Local news station KQED offers a sobering reminder of the economic devastation left behind from the virus – and one that will likely continue to intensify as virus cases explode to new highs, forcing state officials to reimpose new social distancing restrictions.

KQED said, “food banks are racing to keep up with increased demand for food — and volunteers.” One of the top food banks in the state, called Second Harvest of Silicon Valley, has “literally doubled the amount of food we’re distributing,” said CEO Leslie Bacho. Bacho continued: “We already serving a quarter-million people. Now we’re serving a half million people.” She said many of the folks picking up care packages at food banks across the Bay Area are coming for the first time. “This is a testament to how the pandemic-induced economic crisis is disproportionately impacting low-wage workers,” she added.

“We are seeing so many people who are already just living on the edge, having to then burn through their savings,” Bacho said. “More than half the people we’re serving now have never sought food assistance before.” Someone named “Gabriel” sent Second Harvest of Silicon Valley a donation of around $1,300 – the letter Gabriel received from the food bank outlines the dire situation playing out in the Bay Area.

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Mar 232020
 


Harris&Ewing House-Capitol tunnel (may get moving walk), Washington, DC 1939

 

How Long to 1 Million US Cases? (Mish)
Nobel Laureate Predicts A Quicker Coronavirus Recovery (LAT)
Canadian Doctor Rigs Ventilator to Treat 9 Patients Instead of One (IE)
Coronavirus May Have Existed In Italy Since November: Local Researcher (CGTN)
The Epicenter of the COVID-19 Pandemic and Humanitarian Crises in Italy (NEJM)
The Government Budget Deficit Is About To Explode (CNBC)
Senate Democrats Block Mammoth Coronavirus Stimulus Package (Hill)
Blame Game Heats Up As Senate Motion Fails (Hill)
Total Cost of Her COVID-19 Treatment: $34,927.43 (Time)
Coronavirus Reveals Financial Irresponsibility Of Americans (Hill)
Preventing COVID-19 From Infecting the Commercial Mortgage Market (Barrack)
Singapore Airlines Slashes 96% Of Capacity, Grounds Most Planes (CNA)
China’s Housing Bubble Bursts (ZH)
New Zealand To Go Into Month-Long Lockdown (G.)

 

 

Cases 345,292 (+ 33,496 from yesterday’s 311,796)

Deaths 14,925 (+ 1,854 from yesterday’s 13,071)

 

 

Haven’t shown these two graphs from Worldometer in a while. Obvious enough?!

 

 

 

From Worldometer yesterday evening (before their day’s close)

One look at the US suffices:

 

 

From Worldometer -NOTE: mortality rate for closed cases is at 13% !! –

 

 

From SCMP: (SCMP appears to have given up on timely updating)

 

 

From COVID2019Live.info:

 

 

From COVID2019.app:

 

 

Reported US coronavirus cases via @CNN:

3/1: 89
3/2: 105
3/3: 125
3/4: 159
3/5: 227
3/6: 331
3/7: 444
3/8: 564
3/9: 728
3/10: 1,000
3/11: 1,267
3/12: 1,645
3/13: 2,204
3/14: 2,826
3/15: 3,505
3/16: 4,466
3/17: 6,135
3/18: 8,760
3/19: 13,229
3/20: 18,763
3/21: 25,740
Now: 35,070

Note: unlike many other nations, US numbers are updated several times a day.
Note 2: about half of US cases are in New York State. It it were a country, it would be in 7th place in the world.

 

 

The US would have to pass China in total infections by Thursday, 35,000 vs 81,000 now. Almost tripling in 3 days. I don’t know, and I’m not the biggest optimist around here.

How Long to 1 Million US Cases? (Mish)

Inquiring minds are investigating a relatively new data feed from the Covid Tracking Project. I plot four data series for the US: Negative tests, positive tests, hospitalized, and deaths. Arguably, hospitalizations are the most significant column but the project only has two days worth of data. Once I have another dfats point or two, I will plot a trendline manually.


Trendlines At the current pace, the number of positive coronavirus cases would hit 100,000 on March 26, and 1,000,000 on April 3. At the current pace, the number of coronavirus deaths would hit 1,000 on March 26, and 10,000 on April 5. Those are not my projections, those are observations of what would happen if the current trends last that long at the same pace.

Read more …

Your good news of the day. Based on new deaths levelling off.

Nobel Laureate Predicts A Quicker Coronavirus Recovery (LAT)

Michael Levitt, a Nobel laureate and Stanford biophysicist, began analyzing the number of COVID-19 cases worldwide in January and correctly calculated that China would get through the worst of its coronavirus outbreak long before many health experts had predicted. Now he foresees a similar outcome in the United States and the rest of the world. While many epidemiologists are warning of months, or even years, of massive social disruption and millions of deaths, Levitt says the data simply don’t support such a dire scenario — especially in areas where reasonable social distancing measures are in place. “What we need is to control the panic,” he said. In the grand scheme, “we’re going to be fine.”

Here’s what Levitt noticed in China: On Jan. 31, the country had 46 new deaths due to the novel coronavirus, compared with 42 new deaths the day before. Although the number of daily deaths had increased, the rate of that increase had begun to ease off. Essentially, although the car was still speeding up, it was not accelerating as rapidly as before. “This suggests that the rate of increase in number of the deaths will slow down even more over the next week,” Levitt wrote in a report he sent to friends Feb. 1 that was widely shared on Chinese social media. And soon, he predicted, the number of deaths would be decreasing every day.

Three weeks later, Levitt told the China Daily News that the virus’ rate of growth had peaked. He predicted that the total number of confirmed COVID-19 cases in China would end up around 80,000, with about 3,250 deaths. This forecast turned out to be remarkably accurate: As of March 16, China had counted a total of 80,298 cases and 3,245 deaths — in a nation of nearly 1.4 billion people where roughly 10 million die every year. The number of newly diagnosed patients has dropped to around 25 a day, with no cases of community spread reported since Wednesday. Now Levitt, who received the 2013 Nobel Prize in chemistry for developing complex models of chemical systems, is seeing similar turning points in other nations, even ones that did not instill the draconian isolation measures that China did.

He analyzed 78 countries with more than 50 reported cases of COVID-19 every day and sees “signs of recovery.” He’s not looking at cumulative cases, but the number of new cases every day — and the percentage growth in that number from one day to the next. [..] Based on the experience of the Diamond Princess, he estimates that being exposed to the new coronavirus doubles a person’s risk of dying in the next two months. However, most people have an extremely low risk of death in a two-month period, and that risk remains extremely low even when doubled.

Read more …

More good news. He can do it in 10 minutes.

Canadian Doctor Rigs Ventilator to Treat 9 Patients Instead of One (IE)

As hospitals scramble to secure more ventilators, some doctors are getting creative in order to help their patients. Such is the case with Canadian doctor Dr. Alain Gauthier, an anesthetist at the Perth and Smiths Falls District Hospital in Ontario. Gauthier, who has a Ph.D. in respiratory mechanics, turned one hospital ventilator into a machine that can serve nine clients using do-it-yourself mechanics. The process was so brilliant that some have even called him an “evil genius.” Gauthier was inspired by YouTube videos created by two Detroit doctors in 2006, according to CBC News. He said he created a complex ventilator to offer people the best chance at survival. “At one point we may not have other options,” Gauthier told CBC News. “The option could be well, we let people die or we give that a chance.”

Read more …

I would lend much more credence to this if it didn’t come from the state-run China Global Television Network. It feels like they want to plant the narrative out there that it didn’t start in China at all.

Coronavirus May Have Existed In Italy Since November: Local Researcher (CGTN)

As COVID-19 spreads across the world, many are interested in the origin of the virus behind this deadly disease. Fingers have been pointed at China, the U.S. and other places. Recently, a pharmacological researcher provided another possible lead to National Public Radio (NPR), a U.S. media outlet. Dr. Giuseppe Remuzzi, director of the Mario Negri Institute for Pharmacological Research in Italy, said he heard from general practitioners in the country’s Lombardy region that “they remember having seen very strange pneumonia, very severe, particularly in old people in December and even November.” “This means that the virus was circulating, at least in [the northern region of Lombardy and before we were aware of this outbreak occurring in China,” he told NPR.

Though Dr. Remuzzi originally used these words to answer a different question – why Italy acted later than expected on COVID-19 – NPR singled out this particular information in a tweet because it may relate to the origin of the novel coronavirus. China’s CCTV did the same thing by putting it on the headline of their report, though Dr. Remuzzi’s latest research mainly concerns how dire the situation is for Italy rather than the origin of the disease. What’s more interesting is that the English-language comments under the NPR tweet seem to completely differ from the Chinese-language ones under the CCTV Weibo. Many English comments suspect that China hid the situation from the world for a long time and that’s why similar symptoms showed up in Italy before the outbreak.

“China lied, people died” was most liked comment under NPR’s tweet. “So the Chinese government covered it up for even longer than we thought,” another comment said. A lot of Chinese comments, on the other hand, concluded that the virus originated in the U.S., so both China and Italy are victims. “Go to Trump for answers,” said a Weibo comment with more than 2,500 likes. “COVID-19 is a U.S. virus,” said another comment.

Read more …

When hospitals become super-spreaders. All it takes is enough sick people.

“Lombardy’s health care workers have been badly hit w/ infections–the differences with other regions are staggering. A recent paper by local docs argues that hospitals might be a key source of transmission there.”

The Epicenter of the COVID-19 Pandemic and Humanitarian Crises in Italy (NEJM)

In a pandemic, patient-centered care is inadequate and must be replaced by community-centered care. Solutions for Covid-19 are required for the entire population, not only for hospitals. The catastrophe unfolding in wealthy Lombardy could happen anywhere. Clinicians at a hospital at the epicenter call for a long-term plan for the next pandemic. We work at the Papa Giovanni XXIII Hospital in Bergamo, a brand-new state-of-the-art facility with 48 intensive-care beds. Despite being a relatively small city, this is the epicenter of the Italian epidemic, listing 4,305 cases at this moment — more than Milan or anywhere else in the country. Lombardy is one of the richest and most densely populated regions in Europe and is now the most severely affected one. The WHO reported 74,346 laboratory-confirmed cases in Europe on March 18 — 35,713 of them in Italy.


Our own hospital is highly contaminated, and we are far beyond the tipping point: 300 beds out of 900 are occupied by Covid-19 patients. Fully 70% of ICU beds in our hospital are reserved for critically ill Covid-19 patients with a reasonable chance to survive. The situation here is dismal as we operate well below our normal standard of care. Wait times for an intensive care bed are hours long. Older patients are not being resuscitated and die alone without appropriate palliative care, while the family is notified over the phone, often by a well-intentioned, exhausted, and emotionally depleted physician with no prior contact. But the situation in the surrounding area is even worse. Most hospitals are overcrowded, nearing collapse while medications, mechanical ventilators, oxygen, and personal protective equipment are not available.

Patients lay on floor mattresses. The health care system struggles to deliver regular services — even pregnancy care and child delivery — while cemeteries are overwhelmed, which will create another public health problem. In hospitals, health care workers and ancillary staff are alone, trying to keep the system operational. Outside the hospitals, communities are neglected, vaccination programs are on standby, and the situation in prisons is becoming explosive with no social distancing. We have been in quarantine since March 10. Unfortunately, the outside world seems unaware that in Bergamo, this outbreak is out of control.


Western health care systems have been built around the concept of patient-centered care, but an epidemic requires a change of perspective toward a concept of community-centered care. What we are painfully learning is that we need experts in public health and epidemics, yet this has not been the focus of decision makers at the national, regional, and hospital levels. We lack expertise on epidemic conditions, guiding us to adopt special measures to reduce epidemiologically negative behaviors. For example, we are learning that hospitals might be the main Covid-19 carriers, as they are rapidly populated by infected patients, facilitating transmission to uninfected patients. Patients are transported by our regional system,1 which also contributes to spreading the disease as its ambulances and personnel rapidly become vectors. Health workers are asymptomatic carriers or sick without surveillance; some might die, including young people, which increases the stress of those on the front line.

Read more …

“It’s truly a bridge to the other side of an act of God…”

The Government Budget Deficit Is About To Explode (CNBC)

Remember when people were all worked up over trillion-dollar government budget deficits? Those might seem like the good old days, once Congress and the White House finish up the coronavirus rescue package expected to be approved in the next few days. Estimates of just how big the final bill would be vary, but it’s assured that it will be a historic moment for sheer fiscal force being exerted at a time of economic duress. Administration statements over the past few days point to something on the order of $2 trillion in economic juice. By contrast, then-President Barack Obama ushered an $831 billion package through during the financial crisis.

That type of fiscal burden comes as the government already has chalked up $624.5 billion in red ink through just the first five months of the fiscal year, which started in October. That spending pace extrapolated through the full fiscal year would lead to a $1.5 trillion deficit, and that’s aside from any of the spending to combat the coronavirus. Already, the national debt stands at more than $23.5 trillion and will be on track to eclipse $25 trillion. Taxpayers shelled out $574.6 billion in fiscal 2019 on interest payments for the debt and another $229.1 billion in fiscal 2020. In short, the shock from the COVID-19 spread will blow a fiscal hole through Washington, D.C., that could take years if not decades to patch.

Hand-wringing over what this will all do to the debt and deficit situation, however, will have to wait for another day. In times of crisis, there is little patience for fiscal austerity, only a sense of urgency that while government spending can’t stop the virus from spreading, it can mitigate what will be profound economic damage. “It’s truly a bridge to the other side of an act of God,” economist Paul McCulley told CNBC.com. “We’ll deal down the road with the impacts on so many fronts of society with the whole thing. Right now, worrying about fiscal incontinence is the exact opposite of where we should be. We should have fiscal robustness implemented through effectively a joint venture between fiscal and monetary policy.”

Read more …

Romney to Senate Dems: “Keep this up a little longer and we will go from social distancing to social destruction.”

Senate Democrats Block Mammoth Coronavirus Stimulus Package (Hill)

Senate Democrats on Sunday blocked a coronavirus stimulus package from moving forward as talks on several key provisions remain stalled. Senators voted 47-47 on advancing a “shell” bill, a placeholder that the text of the stimulus legislation would have been swapped into, falling short of the three-fifths threshold needed to advance the proposal. Hopes of a quick stimulus deal quickly unraveled on Sunday as the four congressional leaders and Treasury Secretary Steven Mnuchin failed to break the impasse. Senate Majority Leader Mitch McConnell (R-Ky.) also delayed the procedural vote for three hours as they tried to get a deal. Democratic senators argue that the GOP bill includes several “non-starters” and walks back areas of agreement, such as expanding unemployment insurance, they thought they had reached with Republicans.

They emerged from a closed-door lunch fuming over the bill circulated by Republicans and called for McConnell to hold off on the 3 p.m. cloture vote. “We are pleading with McConnell not to call this vote,” Sen. Dick Durbin (Ill.), the No. 2 Senate Democrat, said after the lunch. “It’s a serious mistake. We have not negotiated this to the point of agreement yet.” Sen. Doug Jones (D-Ala.), who is up for reelection in a deeply red state, said that the Senate needed to be “as unified as possible.” “We don’t need split votes,” he said. Sen. Ed Markey (D-Mass.) added that the proposal put forward by Republicans was “totally inadequate.” That resulted in McConnell delaying the vote to 6 p.m.

Read more …

I vote against all politicians.

Blame Game Heats Up As Senate Motion Fails (Hill)

The finger-pointing on Capitol Hill reached a fever pitch Sunday evening, as both sides rushed to blame the other after a Senate motion to move a mammoth coronavirus relief bill failed on the chamber floor. Senate Majority Leader Mitch McConnell (R-Ky.) quickly took to the floor to hammer Democratic leaders, particularly Speaker Nancy Pelosi (D-Calif.), for what he characterized as petty obstruction that ignores the urgency of the crisis. “We were doing a good job of coming together until this morning, when the Speaker showed up — we don’t have a Speaker in the Senate, that’s in the House — and when the leader [Sen. Charles Schumer (D-N.Y.)] and the speaker came in [they] blew everything up,” an agitated McConnell, his face flushed, said walking off the Senate floor.

Democrats quickly countered with accusations that it was McConnell who had abandoned the negotiations the night before, when the Senate leader announced that Republicans would begin drafting the massive stimulus package before Democrats had endorsed it. “There was a good spirit of negotiation into early last night. And right about 8 o’clock, our side sensed a sort of change in attitude, an unwillingness to give and negotiate, for reasons we don’t fully understand,” said Sen. Tom Carper (D-Del.). The tense back-and-forth came moments after Democrats blocked a procedural motion to advance Congress’s third round of emergency relief — a package approaching $2 trillion — in response to the global coronavirus pandemic, which has devastated markets, sparked mass layoffs and ravaged businesses large and small across the country.

Democrats have raised a long list of objections to the Republicans’ proposal, saying the bill does too little to protect the unemployed, feed the hungry, subsidize states and cushion students facing mounds of debt. They’re also up in arms over language to provide up to $500 billion in loans and guarantees for corporations, at the sole discretion of the administration.

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And she was lucky enough to get tested.

Total Cost of Her COVID-19 Treatment: $34,927.43 (Time)

When Danni Askini started feeling chest pain, shortness of breath and a migraine all at once on a Saturday in late February, she called the oncologist who had been treating her lymphoma. Her doctor thought she might be reacting poorly to a new medication, so she sent Askini to a Boston-area emergency room. There, doctors told her it was likely pneumonia and sent her home. Over the next several days, Askini saw her temperature spike and drop dangerously, and she developed a cough that gurgled because of all the liquid in her lungs. After two more trips to the ER that week, Askini was given a final test on the seventh day of her illness, and once doctors helped manage her flu and pneumonia symptoms, they again sent her home to recover. She waited another three days for a lab to process her test, and at last she had a diagnosis: COVID-19.

A few days later, Askini got the bills for her testing and treatment: $34,927.43. “I was pretty sticker-shocked,” she says. “I personally don’t know anybody who has that kind of money.” Like 27 million other Americans, Askini was uninsured when she first entered the hospital. She and her husband had been planning to move to Washington, D.C. this month so she could take a new job, but she hadn’t started yet. Now that those plans are on hold, Askini applied for Medicaid and is hoping the program will retroactively cover her bills. If not, she’ll be on the hook. She’ll be in good company. Public health experts predict that tens of thousands and possibly millions of people across the United States will likely need to be hospitalized for COVID-19 in the foreseeable future.

And Congress has yet to address the problem. On March 18, it passed the Families First Coronavirus Response Act, which covers testing costs going forward, but it doesn’t do anything to address the cost of treatment. While most people infected with COVID-19 will not need to be hospitalized and can recover at home, according to the World Health Organization, those who do need to go to the ICU can likely expect big bills, regardless of what insurance they have. As the U.S. government works on another stimulus package, future relief is likely to help ease some economic problems caused by the coronavirus pandemic, but gaps remain.

Read more …

Of course there are Americans who borrow and spend too much. But how for the love of God is that a licence to even risk labeling people working 3 jobs and still not making ends meet, as irresponsible idiots who should save more? Who is irresponsible around here?

Coronavirus Reveals Financial Irresponsibility Of Americans (Hill)

How long could you sustain your household if you were to stop earning income? If you are like most Americans, the answer is not for long. Only 40 percent of Americans can afford an unexpected $1,000 expense with their savings. In fact, nearly 80 percent of workers are living paycheck to paycheck. It is no surprise that the probability of an economic recession brought on by the coronavirus pandemic caused many to worry. In major cities such as Boston, New York, Los Angeles, and San Francisco, restaurants and businesses have been ordered to close. For many hourly workers, this means no paychecks in the coming weeks. Almost one in five Americans have already lost their jobs or have reduced hours.

At the same time, salaried workers are concerned about job security, as mass layoffs at numerous companies loom. While the situation is understandably stressful for every person affected, it serves as a sobering reminder that Americans must learn to live within their means and regularly save money. The need for all Americans to be able to sustain themselves for at least a few months on savings is accentuated during a time of crisis. This means planning ahead when times are good. Financial planners suggest saving at least 20 percent of take home income, while spending at most 30 percent on discretionary items. Yet too many workers still fail to think twice about spending entire paychecks for things they want but do not need.

Recent decades have offered us relative luxury. More than 80 percent of Americans own smartphones. The same portion of households own one high definition flat screen television, while over half of households own more than one. Over 60 percent of Americans dine out at least once a week, while nearly 20 percent dine out three or more times a week. The current panic is refocusing us on what is important. We now stockpile the things necessary for our health. Smartphones, fancy televisions, and restaurant meals are usually luxuries rather than necessities. Living within our means is not just rhetoric. It is a means of guarding ourselves during times like these. We have so much to learn from those who came before us. How many of our grandparents fared the austerity of the World Wars and the Great Depression, discovering to save, mend, and repair?

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The richer suffer more, they’ll have you know. What pricks this dick’s balloon, though, is suggesting that prior to corona, there was a “normal chain of revenue generation etc.” and “solid economic fundamentals”. There haven’t been any normal markets, and that includes commercial mortgages, since Alan Greenspan. You may like to disagree, but just wait till the Fed folds.

Preventing COVID-19 From Infecting the Commercial Mortgage Market (Barrack)

As a major participant in the non-bank real estate lending industry, I am fully supportive of the nation’s extraordinary response to contain COVID-19. The profound impact of the COVID-19 pandemic on the public health and safety of all Americans is unprecedented and the response measures being taken by federal, state, and local government agencies are essential and critical. One aspect of this all-out assault on an invisible enemy — in the effort to suppress the contagion and manage the precious resources of our medical community and first responders — has been the unfortunate but necessary cessation of general commerce nationwide.

Now everyone, from corporations and small and mid-sized businesses to employees and laborers from all walks of life, has been displaced from the normal chain of revenue generation, cash flow, and income necessary to meet their obligations, from payment of salaries, rent payments, mortgage payments, and all other debts and bills required in the daily life of every business and every American. As a direct consequence of the necessary response measures to COVID-19, high performing mortgage loans across the entire commercial real estate sector (approximately $16 trillion in aggregate), which had previously been grounded in solid economic fundamentals, are suddenly experiencing a temporary meltdown in cash flows.

We are seeing the beginning of a second crisis that will occur in the financial markets that underpin the lifeblood of these employees, workers, and businesses. Based on my own personal past experiences I would like to share with you some thoughts on how to alleviate the potential blockage in the commercial mortgage market which is beginning to raise its perilous head. Addressing this major looming crisis in liquidity in a coordinated manner will be essential in averting a crisis in credit and a long term economic recession.

Read more …

This is just one of many such reports, of course. What I found interesting is that just 5 days ago, Singapore Airlines said it would cut flight capacity by 50%. And you wonder: what happened since Wednesday?

Emirates announced yesterday they would cut all flights, only to be told some flights are essential to services. Those are reinstated.

Singapore Airlines Slashes 96% Of Capacity, Grounds Most Planes (CNA)

Singapore Airlines (SIA) will cut 96 per cent of its capacity that had been scheduled up to the end of April, said the airline on Monday (Mar 23). The decision was made after the further tightening of border controls around the world over the last week to stem the COVID-19 outbreak, SIA said in a news release. About 138 SIA and SilkAir planes, out of a total fleet of 147, will be grounded as a result. Scoot, the company’s low-cost unit, will suspend “most of its network” and will ground all but two of its 49 planes. This comes amid the “greatest challenge that the SIA Group has faced in its existence”, the company said.


“It is unclear when the SIA Group can begin to resume normal services, given the uncertainty as to when the stringent border controls will be lifted,” it said. “The resultant collapse in the demand for air travel has led to a significant decline in SIA’s passenger revenues.” Over the last few days, the SIA Group has drawn on its lines of credits to meet its immediate cash flow requirements, it said, adding that it is in discussions with several financial institutions on its future funding requirements. “The company is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs,” it added. SIA said it is in talks with aircraft manufacturers to defer upcoming deliveries, in the hopes of delaying payment for those deliveries.

Read more …

This is a bigger threat to Xi than the coronavirus. And why does it happen? Because China’s second-largest property developer wants to be the world’s biggest maker of electric cars…

China’s Housing Bubble Bursts (ZH)

Now that the world is firmly focusing on apocalyptic forecasts about the state of the US and global economy, with St Louis Fed president James Bullard the latest to pour gasoline into the fire with his worst-case prediction of a 50% GDP drop and 30% surge in unemployment in Q2, it is easy to forget that China, which started this whole pandemic, is still in economic lockdown. And while Beijing is pretending that the Shanghai Sniffles are now firmly behind it, and forcing people back to work while openly fabricating disease numbers – because like Lloyd Blankfein it has realized that an economic depression is an even worse outcome than millions infected – the reality is that China’s economy is facing an unprecedented crisis of its own.


Today we got a stark reminder of that, when Evergrande Group – China’s second-largest property developer by sales – tumbled in early trading Monday after saying it expects full-year earnings to fall by half. As Bloomberg first reported, the residential property developer said in an exchange filing Sunday that net profit for 2019 is expected to come in it around 33.5 billion yuan ($4.7 billion), a drop of about 50% from the previous year. “The decrease in profit is mainly attributable to the delivery and settlement of the lower-priced clearance stock properties in 2019, which drove down the unit price of the property delivered,” Evergrande said. That sent the firm’s Hong Kong-traded shares down as much as 17.4% on Monday, the biggest intraday drop since July 2015.

And with the stock tumbling by more than two-thirds since its late 2017 highs, Citigroup downgraded the stock to “sell” and slashed its price target by 56%, as the expected decline in core profit was far below Citigroup’s estimate of a 27% year-on-year drop. To be sure, there are plenty of reasons to dump the stock: Evergrande is one of China’s most-indebted developers with net debt of $88.5 billion as of June. As Bloomberg reminds us, the company has been pouring billions of dollars into acquisitions as its Chairman and major shareholder Hui Ka Yan pursues an ambition to make Evergrande the world’s biggest maker of electric cars in the next three to five years.

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Ardern sounds a bit too convinced. It’s still just one view.

New Zealand To Go Into Month-Long Lockdown (G.)

New Zealand is preparing to enter a month-long nationwide lockdown from Wednesday night, with the entire country ordered to stay home apart from those in essential services. On Monday the nation was given two days to prepare for schools, businesses and community services to turn off the lights in a desperate bid to stem the spread of the coronavirus. The move came after the number of cases of Covid-19 in New Zealand rose past 100. In an address to the nation, the prime minister, Jacinda Ardern, said she was not willing to put the lives of her citizens in danger. “The worst-case scenario is simply intolerable, it would represent the greatest loss of New Zealanders’ lives in our history and I will not take that chance.”

Ardern announced the country would move to level three measures immediately, and then to four – the highest level – on Wednesday from 11.59pm. “I say to all New Zealanders: the government will do all it can to protect you. Now I’m asking you to do everything you can to protect all of us. Kiwis – go home.” The lockdown will last a month, and if the trend of cases slowed, could be partially eased in specific areas after that. Ardern said it was now established that community transmission was happening in New Zealand and that, if it took off, the number of cases would double every five days, with modelling advising the government that tens of thousands of New Zealanders could die.

[..] Ardern said if the country did not lock down it would face a death toll beyond anything ever experienced before, and she wanted to give health services “a fighting chance”. Thirty-six new cases of the coronavirus were confirmed on Monday, bringing the nationwide total to 102, spread across the North and South islands. Ardern said she knew the measures would be anxiety-inducing for many New Zealanders and they needed to be “strong and kind” to each other during the unprecedented crisis. “Today, get your neighbour’s phone number, set up a community group chat, get your gear to work from home, cancel social gatherings of any size or shape, prepare to walk around the block while keeping a two-metre distance between you.

Read more …

 

 

Oddly appropriate:

 

 

 

 

 

If you read us, support us.

Apr 142019
 


Edward Hopper The Sheridan Theatre 1937

 

Draghi Worries About Fate Of Fed’s Independence (MW)
The Most Splendid Housing Bubbles in Canada Deflate (WS)
UK Tories Face European Elections Drubbing (Ind.)
Corbyn Told To Promise Final Say Referendum (Ind.)
It’s The UK Political System, Not Just MPs, That Is Failing (G.)
UK Media, MPs Unveil Latest Assange Deception (Cook)
American Values: Embassies Are For Chopping Up Journalists (McDonald)
Assange Is In The Dock, But Investigative Journalism Is On Trial (Crikey)
The Obvious Dirty Dealings Behind Julian Assange’s Arrest (OG)
Anonymous Attacks Continue Against Ecuadorian Government Websites (Cassandra)

 

 

Independence from what? Reality?

Draghi Worries About Fate Of Fed’s Independence (MW)

Concerns about central-bank independence are on the rise.Take, for example, the cover of this week’s edition of the Economist. And while not solely a U.S. concern, a steady stream of complaints by President Donald Trump about the Federal Reserve’s earlier string of interest-rate hikes and his announcement he would nominate Stephen Moore and Herman Cain — both widely criticized as unqualified and likely to act at the behest of the White house on policy decisions — to the central bank’s governing board have sparked fears the central bank’s policy independence could be at risk. (Four Republican senators have said they would vote against Cain if he were formally put forward, likely sinking his chances.)

On Saturday, European Central Bank President Mario Draghi appeared to take notice: ‘I’m certainly worried about central bank independence in other countries, especially…in the most important jurisdiction in the world.’ Draghi’s remarks, as reported by Reuters, came at a news conference at the spring meetings of the IMF and World Bank in Washington. They also marked a rare instance of a central banker opining about the operations of a foreign central bank. “If the central bank is not independent, then people may well think that monetary policy decisions follow political advice rather than objective assessment of the economic outlook,” said Draghi.

Read more …

Amid all the loud news, both Canada and Australia are slipping fast.

The Most Splendid Housing Bubbles in Canada Deflate (WS)

Canada’s housing markets barely dipped during the Financial Crisis when US housing markets ran into deep trouble, causing the Mortgage Crisis that begat all kinds of other crises. Canadian homeowners and banks watched the mess from across the border and shook their heads. But now, after an 18-year housing boom, the downturn has arrived in Vancouver and Toronto, among the formerly hottest housing bubbles in the world.


The Teranet-National Bank House Price Index tracks single-family house prices, based on “sales pairs,” similar to the S&P CoreLogic Case Shiller index for US housing markets. It compares the sales price of a house in the current month to the prior sale of the same house years earlier. Using “sales pairs” eliminates the issues that affect median-price indices. But the median-price data for Vancouver is a lot more disconcerting than the Teranet data. So let’s compare how Vancouver’s housing bubble stacks up against the legendary but now also deflating housing bubble in San Francisco.

House prices in the Greater Toronto Area fell 0.3% in March from February and are down 4.3% from the peak in July 2017, the steepest 20-month decline since May 2009. From January 2002 through the peak in July 2017, the index soared 218% — meaning that house prices more than tripled. But that pales compared to Vancouver, where house prices more than quadrupled. I converted this Teranet index for Toronto house prices to “percent-change since January 2002” and overlaid the insane mind-boggling housing bubble in the San Francisco Bay Area, and it shows just how majestic the 18-year Toronto housing bubble has been:

Read more …

European elections in Britain do seem surreal.

UK Tories Face European Elections Drubbing (Ind.)

The Conservatives are facing a humiliating defeat at the European elections next month after support for the party slumped to its lowest level since 2013, according to a new poll. The survey shows the Tories on just 28 per cent when it comes to general election voting intention – a four-point fall which leaves them trailing Labour on 32. When voters were asked which party they will vote for at the European elections, Theresa May’s party languished on 16 per cent, eight points behind Labour on 24. In a clear sign support for the Conservatives is crumbling over the failure to deliver Brexit, 56 per cent of people who voted to leave at the 2016 referendum said they would back Ukip or Nigel Farage’s newly formed Brexit Party during next month’s vote.


The Brexit Party is on 15 per cent, while Ukip stands at 14 per cent when it comes to European voting intention, the YouGov poll for The Times indicated. By comparison, the Lib Dems and the Greens are both on 8 per cent, while Change UK has 7 per cent support. No 10 is still hoping to get a deal through parliament in time to avoid participation in the European elections on 23 May. But the UK is formally on track to hold the poll, having informed the EU authorities ahead of Friday’s deadline that it would be taking part. Boris Johnson’s backers have suggested he may not even campaign on behalf of his party next month in an effort to show his displeasure at the UK’s involvement. “Boris won’t campaign in European elections. He believes the prospect of the UK fielding candidates is utterly preposterous,” a source told The Times.

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Something only a small group wants. But then, that’s true of all Brexit issues and ‘solutions’.

Corbyn Told To Promise Final Say Referendum (Ind.)

Jeremy Corbyn is under intense pressure from within his shadow cabinet to give a strong commitment to a new Brexit referendum as part of Labour’s European election campaign offer. A string of senior shadow ministers are advocating a new public vote, alongside MPs from the left and right of the party, buoyed by a groundswell of support from the membership. The Independent understands Labour is now beginning the process of drawing up its manifesto with those wanting to give the public a final say on Brexit pushing the leader to make a strong bid for the Remain vote on polling day. Mr Corbyn’s team is currently engaged in talks with the Conservatives in an effort to find a Brexit compromise deal that can enjoy majority support in the House of Commons, with a referendum having been discussed during the negotiations.


The leader’s office emphasised that decisions on the manifesto were yet to be discussed, with the party simultaneously defending its majorities against the pro-Remain Change UK party run by Labour defectors and Nigel Farage’s new Brexit Party. One shadow cabinet source told The Independent: “We can’t credibly agree to any deal unless there is a confirmatory referendum attached to it. “We should be telling people about that, the support is there to be had.” The European elections are set to become a rerun of the 2016 referendum campaign with parties positioning themselves along the Brexit spectrum from Leave to Remain.

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Party before country.

It’s The UK Political System, Not Just MPs, That Is Failing (G.)

Brexit has prompted a recurring nightmare among an increasingly incredulous population: our very own Groundhog Day. Two weeks after the EU granted us an 11th-hour extension to prevent us crashing out without a deal, we are back in exactly the same position. The only thing standing between us and next Friday’s cliff edge is the hope the EU gifts us another extension. Meanwhile, the political turmoil engulfing the country worsens, the two main parties increasingly consumed by division and disarray and the political leadership we so desperately need to avert crisis as elusive as ever. It’s hard to believe that the Westminster model of democracy was one prized by constitutional theorists for the stability it purportedly delivers. As the stakes get higher, our political system has proved less and less capable of delivering a resolution to the gridlock that has infected Westminster.

Brexit has been a story of the favouring of party management over the national interest. From the very beginning, Theresa May’s approach to Brexit – from her premature decision to trigger article 50 to her red lines on freedom of movement and the customs union – has been driven not by a strategy to unite the country in the wake of a divisive referendum but to keep her Brexit ultras on side. Only now it has become clear that there are MPs in her party so fanatically dogmatic that they would rather hold out for no deal than vote for her deal has she opened compromise talks with Labour. But Labour emerged from the talks on Friday complaining that no changes to the political declaration were on offer, suggesting that this move may have been more about trying to lay blame for any further delay on the opposition.

Labour’s strategy has been no less determined by party interest. Jeremy Corbyn has kept a position of barely credible ambiguity for as long as possible to avoid alienating any of its voters. Labour has maintained the charade that it could deliver a Brexit deal that delivers all the benefits of EU membership with none of costs. And Labour has failed to provide any leadership support for a confirmatory referendum on any Brexit deal, with the shadow cabinet split on the issue. Time is running out for Labour to decide once and for all whether it will properly swing its weight behind a referendum. Thanks to the mess the Tories are in, Corbyn is in a position of power, if he only chooses to use it.

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Another excellent essay from Jonathan Cook.

UK Media, MPs Unveil Latest Assange Deception (Cook)

[..] the public conversation in the UK, sympathetically reported by the Guardian, supposedly Britain’s only major liberal news outlet, is going to be about who has first dibs on Assange. Here’s the first paragraph of the Guardian front-page article: “Political pressure is mounting on [Home Secretary] Sajid Javid to prioritise action that would allow Julian Assange to be extradited to Sweden, amid concerns that US charges relating to Wikileaks’ activities risked overshadowing longstanding allegations of rape.” So the concern is not that Assange is facing rendition to the US, it is that the US claim might “overshadow” an outstanding legal case in Sweden. The 70 MPs who signed the letter to Javid hope to kill two birds with one stone.

First, they are legitimising the discourse of the Trump administration. This is no longer about an illegitimate US extradition request on Assange we should all be loudly protesting. It is a competition between two legal claims, and a debate about which one should find legal remedy first. It weighs a woman’s sexual assault allegation against Assange and Wikileaks’ exposure of war crimes committed by the US military in Iraq and Afghanistan. It suggests that both are in the same category, that they are similar potential crimes. But there should only be one response to the US extradition claim on Assange. That it is entirely illegitimate. No debate. Anything less, any equivocation is to collude in the Trump administration’s narrative. The Swedish claim, if it is revived, is an entirely separate matter.

[..] In another article on Assange on Friday, the Guardian – echoing a common media refrain – reported as fact a demonstrably false claim: “Assange initially took refuge in the Ecuadorian embassy to avoid extradition to Sweden.” There could be no possible reason for its reporters to make this elementary mistake other than that the Guardian is still waging its long-running campaign against Assange, the information revolution he represents and the challenge he poses to the corporate media of which the Guardian is a key part.

[..] Assange was previously wanted for questioning, and has never been charged with anything. If the Swedish extradition request is revived, it will be so that he can be questioned about those allegations. I should also point out, as almost no one else is, that Assange did not “flee” questioning. He offered Swedish prosecutors to question him at the embassy. Even though questioning overseas in extradition cases is common – Sweden has done it dozens of times – Sweden repeatedly refused in Assange’s case, leading the Swedish appeal court to criticise the prosecutors. When he was finally questioned after four years of delays, Swedish prosecutors violated his rights by refusing access to his Swedish lawyer.

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First amendment anyone?

American Values: Embassies Are For Chopping Up Journalists (McDonald)

202310Fair-minded people across the world have rightly condemned the US-ordered arrest of Julian Assange. However, few have noted how it fits part of a pattern of American hypocrisy when it comes to the treatment of journalists. Only six months ago, Jamal Khashoggi was murdered and hacked to pieces by Saudi agents at the kingdom’s consulate in Istanbul. He was a columnist at the Washington Post and editor-in-chief of the Al-Arab News Channel, known for his sharp criticism of the illegal US-backed Saudi war on Yemen. Despite a CIA conclusion that Crown Prince Mohammed bin Salman ordered the gruesome assassination, President Donald Trump stood by his ally and no meaningful sanctions or penalties were directed towards Riyadh.


Turkey itself remains a NATO member, and close US partner, despite holding more journalists behind bars than any other nation on earth. This figure stood at 68, at the end of last year, around one-quarter of the global total of 251. Now we have the indictment of Assange, which seeks to criminalize basic functions of journalism. For instance, keeping sources anonymous or deleting records of conversations. Indeed, it also appears to be a breach of America’s own First Amendment. He has been targeted by Washington for exposing evidence of appalling atrocities, carried out by the US military, in Iraq and Afghanistan. And, as a result, Assange sought sanctuary in the small London embassy of Ecuador. What followed was relentless pressure on Quito to reverse the asylum it granted the Wikileaks founder and it culminated in his arrest.

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“That would forestall extradition for long enough for Jeremy Corbyn to become PM, at which point extradition would be refused. But it may be just all screaming chaos.”

Assange Is In The Dock, But Investigative Journalism Is On Trial (Crikey)

Team Assange had a defence on the jumping bail thing: “Your honour, my client had a reasonable fear that from remand he would be extradited to the US.” That was received reasonably. “Also that the previous presiding judge Lady Arbuthnot, did not recuse herself …” That was not. “You had ample time to raise this issue, and now you are traducing the reputation of a fine judge…” Snow went on. I thought of Peter Cook’s great monologue of the summing-up of the Jeremy Thorpe trial: “You have ruined the reputation of one of the most pretty defendants.” Once Assange had been found guilty of skipping bail, it got even weirder. “Your situation is a product of your narcissism,” said the magistrate clearly riled. He did not want the situation of Justice Lady Arbuthnot further explored. I am happy to do so.


Lady Arbuthnot, who ruled on the lawfulness of Assange’s continued criminalisation in the UK in 2015, is the wife of Lord Arbuthnot, a Conservative who has held multiple defence industry posts over the last two decades. This sally got short shrift, but it seemed to me intended to do so. Although when I asked a member of the legal team how it had all gone, they said “well, you saw that shit show in there”. So perhaps not. Assange is now on remand awaiting sentencing for the fleeing bail charge — the Magistrates Court having transferred it to the Crown Court, so a larger maximum sentence of 12 months instead of six, can be awarded. Is that a plan too? That would forestall extradition for long enough for Jeremy Corbyn to become PM, at which point extradition would be refused. But it may be just all screaming chaos.

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“Of course, the idea that Moreno is handling the economy brilliantly, but somehow also needs over $10 billion dollars in loans is never addressed.”

The Obvious Dirty Dealings Behind Julian Assange’s Arrest (OG)

The US has been planning to have Julian Assange handed over for a longtime, that much is obvious. Mike Pence, the Vice President, was visiting Ecuador last year, notionally to discuss the Venezuela situation, and trade. But it was fairly obvious at the time, and even more so now, that they were discussing the details of Assange being handed over to UK authorities, and eventually extradited to the US. “Trade”, indeed. In terms of quid pro quo, the situation is clear-cut – In February, Ecuador got a $4.2 BILLION loan approved by the International Monetary Fund (amongst other pay-outs). Reuters reported on February 19th of this year:

“Ecuador has reached a $4.2 billion staff-level financing deal with the IMF, President Lenin Moreno said on Wednesday, as the Andean country grapples with a large fiscal deficit and heavy external debt. The country will also receive $6 billion in loans from multilateral institutions including the World Bank, the Inter-American Development Bank, and the CAF Andean development bank…” So, less than 2 months ago, it was announced Ecuador was going to receive over 10 billion dollars of loans. Where all that money will eventually end up is anyone’s guess, it certainly isn’t being spent on infrastructure or state enterprise: “Moreno has begun to implement an austerity plan that includes layoffs of workers at state-owned companies and cuts to gasoline subsidies, also plans to find a private operator for state-run telecoms company CNT and other state-owned firms.”

President Moreno has already been the subject of numerous corruption accusations. So these “loans”, nominally for “[creating] work opportunities for those who have not yet found something stable”, could more realistically be described as “a pay-off”. More than just money, Lenin Moreno has been gifted something all insecure third-world leaders crave: Western approval. The Economist ran a story on April 12th, the day after Assange was arrested, praising Lenin Moreno’s economic policies, and blaming the previous administration for the “mess” that Moreno has to clear up. (Of course, the idea that Moreno is handling the economy brilliantly, but somehow also needs over $10 billion dollars in loans is never addressed. A tiny logical contradiction compared with the nonsense the MSM dish-up on a daily basis).

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Expect it to be used against Assange.

Anonymous Attacks Continue Against Ecuadorian Government Websites (Cassandra)

Over 30 websites belonging to the Ecuadorian government are now offline — some of them defaced — in protest of the arrest of WikiLeaks founder Julian Assange. The hackers are calling their efforts #OpEcuador, and are also promoting #OpUS and #OpUK. The United States and United Kingdom have not yet been hit with any cyber attacks, that we know of. It is important to note that none of this was directed by WikiLeaks or Assange himself. Supporters are acting on their own with the attacks. A data dump from the hackers warns that “Ecuador Government websites has been taken #Offline with 1 Direct attack. There are few most important websites that’s still down at this time. If some of their servers comes up again, we will fire again to take them down!”

Websites that have been hit include the Central bank of Ecuador, their Ministry of Interior, the Ecuadorian Assembly in UK and the main website for the Government of Ecuador — mot of which had been down for over twelve hours by Saturday evening. The hackers primarily appear to be speaking and coordinating in Spanish — though one of the data dumps was in Indonesia. A Twitter account belonging to the hackers stated that if the websites come back online they will “burn their servers.” The hacking group also called for other supporters to join them.


An InfoSec expert and Assange supporter who has been monitoring the situation told the Gateway Pundit that he is concerned that the attacks will be used against Assange by the media. “My opinion is that it’s deserved karma, but it could enable the anti-Assange media to divert attention away from Julian’s value to journalism by wrongly associating him with reckless hacktivism culture.” He also expressed concern about there being collateral damage within the large data dumps that are being posted online. Other supporters expressed similar concerns, though many still agreed that the attacks are warranted.

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Feb 272019
 


Salvador Dali Remorse – Sphinx Embedded in the Sand 1931

 

Michael Cohen Testimony: Trump A ‘Racist’, ‘Cheat’ And ‘Conman’ (G.)
3 Days That Will Decide Brexit – March 12-14th Will Seal Britain’s Fate (Exp.)
UK Economy Could Be 9% Weaker Under No-Deal Brexit – Government (G.)
The UK Doesn’t Have The Right Pallets For Exporting To The EU (BI)
The War on Venezuela is Built on Lies (Pilger)
Survival of the Richest (Nomi Prins)
Hey Yellen, It Was Trump Who Was Right (Every)
Now that Housing Bubble #2 Is Bursting…How Low Will It Go? (CHS)
Russia’s Share Of European Gas Market Surges To Almost 37%, Dwarfing LNG (RT)
UK Hunger Survey To Measure Food Insecurity (G.)
Glyphosate Found In 95% Of Wine And Beer (Ind.)
Am I The Only One Who’s Terrified About The Warm Weather? (G.)

 

 

Lots of wet panties, male and female, today in anticipation of Michael Cohen’s testimony. Of course, it’s been leaked, full text is here. A few quotes:

I may once again be in a party of one, but I think it’s awfully weak, it’s grasping for stuff rather than conveying it. First, there’s the inevitable Assange link:

In July 2016 [..] Mr. Stone told Mr. Trump that he had just gotten off the phone with Julian Assange and that Mr. Assange told Mr. Stone that, within a couple of days, there would be a massive dump of emails that would damage Hillary Clinton’s campaign. Mr. Trump responded by stating to the effect of “wouldn’t that be great.”

Anything related to Assange, whether from Mueller or Cohen, lacks credibility as long as he can’t defend himself against it. And Trump merely says: wouldn’t that be great? Not exactly the stuff of collusion or conspiracy.

Just as inevitable in smear campaigns: Trump the racist.

Mr. Trump is a racist. The country has seen Mr. Trump court white supremacists and bigots. You have heard him call poorer countries “shitholes.” While we were once driving through a struggling neighborhood in Chicago, he commented that only black people could live that way. And, he told me that black people would never vote for him because they were too stupid.

Calling a country a shithole is not racist. The policies that have created a situation in which many shithole countries are populated by black people stem from many decades of US/Europe policies that predate Trump. The rest is not racist either, if you look closer. Perhaps Trump is a bit racist, like so many Americans. But Cohen’s prepared words don’t show that.

Also: Trump doesn’t tell the full truth about his wealth. But Michael Cohen always has…

It was my experience that Mr. Trump inflated his total assets when it served his purposes, such as trying to be listed among the wealthiest people in Forbes, and deflated his assets to reduce his real estate taxes.

Gee, lock him up. I don’t get it. There’s so much wrong with Trump, but politics and media have singled out Russia collusion, and then failed to prove a thing about it, and now they switch to ‘racist conman’, with the weakest of accusations. I swear, they might as well all be working for the Donald.

Michael Cohen Testimony: Trump A ‘Racist’, ‘Cheat’ And ‘Conman’ (G.)

Michael Cohen is to accuse Donald Trump of being a “conman” and a “cheat” who had advanced knowledge that a longtime adviser was communicating with WikiLeaks during the 2016 campaign, according to opening testimony he will deliver to Congress on Wednesday. Cohen’s prepared remarks, confirmed by the Guardian, include a series of explosive allegations about the presidential campaign. The president’s former lawyer, who will publicly testify before the House oversight committee on Wednesday, will state that Trump was told by Roger Stone that WikiLeaks would publish emails stolen from the Democratic National Committee and Hillary Clinton’s campaign.

“In July 2016, days before the Democratic convention, I was in Mr Trump’s office when his secretary announced that Roger Stone was on the phone. Mr Trump put Mr Stone on the speakerphone,” Cohen’s opening statement reads. “Mr Stone told Mr Trump that he had just gotten off the phone with Julian Assange and that Mr Assange told Mr Stone that, within a couple of days, there would be a massive dump of emails that would damage Hillary Clinton’s campaign. Mr Trump responded by stating to the effect of ‘wouldn’t that be great.’” The remarkable allegations by Cohen go further than what has been made public thus far by the special counsel investigation into potential collusion between the Trump campaign in Moscow.

Cohen will also suggest his instructions to lie to Congress about a possible Trump Tower deal in Moscow during the 2016 campaign came from the president – albeit not directly. “In conversations we had during the campaign, at the same time I was actively negotiating in Russia for him, he would look me in the eye and tell me there’s no business in Russia and then go out and lie to the American people by saying the same thing,” Cohen will say. “In his way, he was telling me to lie.” “Mr Trump did not directly tell me to lie to Congress. That’s not how he operates,” he will add.

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Humor me and please read this. It’s so confusing that you almost forget it’s also complete madness.

3 Days That Will Decide Brexit – March 12-14th Will Seal Britain’s Fate (Exp.)

In a dramatic statement to the House of Commons, Mrs May confirmed that she will put her Withdrawal Agreement – including whatever additional assurances she has secured from Brussels – to a “meaningful vote” by March 12. If that fails, MPs will be offered two separate votes the following day – one on a no-deal Brexit, and the other on requesting an extension to the two-year Article 50 negotiation process to delay EU withdrawal beyond March 29. The sequence of votes will be proposed in an amendable motion tabled by the Prime Minister for debate and vote in the Commons on Wednesday. To uproar in the Commons, Mrs May told MPs: “They are commitments I am making as Prime Minister and I will stick by them, as I have previous commitments to make statements and table amendable motions by specific dates.”

Deputy Political Editor for Sky News Beth Rigby tweeted of Mrs May’s speech: “This really is a big shift. “May has finally played her cards and sided with the Europhile wing of her party .. “Vote for her deal (March 12) Vote for no-deal (March 13) Vote for delay (March 14) .. “Only yesterday she refused to even acknowledge there might have to be a delay to Brexit.”

Mrs May has declared a meaningful vote will take place by March 12, where MPs will vote on her Brexit deal. Should this deal not be voted through, on March 13, MPs will then be offered two separate votes by March 13 on whether the UK leaves with no deal or delays Brexit beyond March 29. The delay will then be voted on March 14, when a motion would be brought forward on whether Parliament wishes to seek a short limited extension to Article 50. If the House votes for an extension, this extension will have to be approved by the House with the EU and then necessary legislation will be brought forward to change the exit date.

[..] In her statement to MPs following a Cabinet meeting with senior colleagues at 10 Downing Street, Theresa May said she wanted to set out “three further commitments” to the Commons. She said: “First, we will hold a second meaningful vote by Tuesday, March 12 at the latest. “Second, if the Government has not won a meaningful vote by Tuesday, March 12, then it will – in addition to its obligations to table a neutral amendable motion under Section 13 of the EU Withdrawal Act – table a motion to be voted on by Wednesday March 13 at the latest, asking this House if it supports leaving the EU without a Withdrawal Agreement and a framework for a future relationship on March 29.

“So the United Kingdom will only leave without a deal on March 29 if there is explicit consent in the House for that outcome. “Third, if the House, having rejected the deal negotiated with the EU, then rejects leaving on March 29 without a Withdrawal Agreement and future framework, the Government will on March 14 bring forward a motion on whether Parliament wants to seek a short, limited extension to Article 50.” The Prime Minister also said she still believes she will be able to secure a deal: “I’ve had a real sense from the meetings I’ve had, and the conversations I’ve had in recent days, that we can achieve that deal. “It’s within our grasp to leave with a deal on March 29 and that’s where all of my energies are going to be focused.”

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Scared yet? Because that’s the idea.

UK Economy Could Be 9% Weaker Under No-Deal Brexit – Government (G.)

The government has issued a bleak warning over a no-deal Brexit, estimating the UK economy could be 9% weaker in the long run, businesses in Northern Ireland might go bust and food prices will increase. In an official document only published after repeated demands by the former Conservative MP Anna Soubry, the government also revealed it was behind on contingency planning for a third of “critical projects” in relation to business and trade. The latest no-deal notice states:

• The economy would be 6%-9% smaller over the next 15 years than it otherwise might have been, in the event of no deal, in line with Bank of England forecasts. • The flow of goods through Dover would be “very significantly reduced for months”. • With 30% of food coming from the EU, prices are likely to increase and there is a risk that panic buying might create shortages. • Only six of the 40 planned international trade agreements have been signed.

The document was published just hours after Theresa May was forced to promise two key votes, allowing MPs the option to reject no deal and to potentially delay Brexit for a short period, following pressure from remain-minded cabinet ministers. The prime minister set out a timetable that includes a vote on her Brexit deal by 12 March; if that fails, a vote the following day to support no deal, and if that also fails, a vote on 14 March on extending article 50. The delay is likely to further agitate the Tory party’s Eurosceptics, with Brexiter ministers including Andrea Leadsom and Liz Truss expressing their frustration over the issue in cabinet on Tuesday morning. Speaking in the House of Commons on Tuesday, May did not specify the length of any delay, saying only that she would prefer it to be the shortest possible. An extension beyond the end of June would involve the UK taking part in the European parliament elections.

[..] The no-deal notice said customs checks alone could cost businesses £13bn a year and that it was impossible to predict the impact of new tariffs. It said this was partly because the government’s communications to businesses and individuals about the need to prepare for no deal had not been effective. [..] The EU, which would treat the UK as a third country in the event of no deal, could impose tariffs of 70% on beef exports, 45% on lamb and 10% on cars, it said. “This would be compounded by the challenges of even modest reductions in flow at the border.”

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Absolutely fabulous.

The UK Doesn’t Have The Right Pallets For Exporting To The EU (BI)

The UK government is due to hold emergency talks with industry leaders on Tuesday after discovering that the country doesn’t have the right pallets to continue exporting goods to the European Union if it leaves without a deal next month. Under strict EU rules, pallets – wooden or plastic structures that companies use to transport large volumes of goods – arriving from non-member states must be heat-treated or cleaned to prevent contamination and have specific markings to confirm that they meet standards. Most pallets that British exporters are using do not conform to the rules for non-EU countries, or “third countries,” as EU member states follow a much more relaxed set of regulations.

The Department for Environment, Food, and Rural Affairs last week told business leaders that the UK would not have enough EU-approved pallets for exporting to the continent if it leaves without a withdrawal agreement next month. That means UK companies would be competing for a small number of pallets that meet EU rules, and those that miss out would be forced to wait for new pallets, which could take weeks to be ready. DEFRA has arranged for a conference call on Tuesday morning to discuss the pallet shortage, with 31 days until Brexit day on March 29. “It is the tiny, procedural, mundane-seeming stuff that will absolutely trip people up,” one industry figure briefed by Theresa May’s government told Business Insider, adding that the country was “not even remotely ready” for a no-deal Brexit.

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Chavez is the guy US intelligence have been chasing for so long, and still trying to get at after his death.

Got to love the man quoting world literature. Also because in the next article, Nomi Prins does the same.

The War on Venezuela is Built on Lies (Pilger)

Travelling with Hugo Chavez, I soon understood the threat of Venezuela. At a farming co-operative in Lara state, people waited patiently and with good humor in the heat. Jugs of water and melon juice were passed around. A guitar was played; a woman, Katarina, stood and sang with a husky contralto. “What did her words say?” I asked. “That we are proud,” was the reply. The applause for her merged with the arrival of Chavez. Under one arm he carried a satchel bursting with books. He wore his big red shirt and greeted people by name, stopping to listen. What struck me was his capacity to listen. But now he read. For almost two hours he read into the microphone from the stack of books beside him: Orwell, Dickens, Tolstoy, Zola, Hemingway, Chomsky, Neruda: a page here, a line or two there. People clapped and whistled as he moved from author to author.

Then farmers took the microphone and told him what they knew, and what they needed; one ancient face, carved it seemed from a nearby banyan, made a long, critical speech on the subject of irrigation; Chavez took notes. Wine is grown here, a dark Syrah type grape. “John, John, come up here,” said El Presidente, having watched me fall asleep in the heat and the depths of Oliver Twist. “He likes red wine,” Chavez told the cheering, whistling audience, and presented me with a bottle of “vino de la gente.” My few words in bad Spanish brought whistles and laughter. Watching Chavez with the people, la gente, made sense of a man who promised, on coming to power, that his every move would be subject to the will of the people. In eight years, Chavez won eight elections and referendums: a world record. He was electorally the most popular head of state in the Western Hemisphere, probably in the world.

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See? Like Pilger and Chavez, Nomi talks about literature. No space here to do this justice, please go read it. Key point: unlike the poor(er), the rich don’t live off the rewards of labor, but of that of wealth.

Survival of the Richest (Nomi Prins)

In George Orwell’s iconic 1945 novel, Animal Farm, the pigs who gain control in a rebellion against a human farmer eventually impose a dictatorship on the other animals on the basis of a single commandment: “All animals are equal, but some animals are more equal than others.” In terms of the American republic, the modern equivalent would be: “All citizens are equal, but the wealthy are so much more equal than anyone else (and plan to remain that way).” Certainly, inequality is the economic great wall between those with power and those without it. As the animals of Orwell’s farm grew ever less equal, so in the present moment in a country that still claims equal opportunity for its citizens, one in which three Americans now have as much wealth as the bottom half of society (160 million people), you could certainly say that we live in an increasingly Orwellian society.

Or perhaps an increasingly Twainian one. After all, Mark Twain and Charles Dudley Warner wrote a classic 1873 novel that put an unforgettable label on their moment and could do the same for ours. The Gilded Age: A Tale of Today depicted the greed and political corruption of post-Civil War America. Its title caught the spirit of what proved to be a long moment when the uber-rich came to dominate Washington and the rest of America. It was a period saturated with robber barons, professional grifters, and incomprehensibly wealthy banking magnates. (Anything sound familiar?) The main difference between that last century’s gilded moment and this one was that those robber barons built tangible things like railroads.

Today’s equivalent crew of the mega-wealthy build remarkably intangible things like tech and electronic platforms, while a grifter of a president opts for the only new infrastructure in sight, a great wall to nowhere. In Twain’s epoch, the U.S. was emerging from the Civil War. Opportunists were rising from the ashes of the nation’s battered soul. Land speculation, government lobbying, and shady deals soon converged to create an unequal society of the first order (at least until now). Soon after their novel came out, a series of recessions ravaged the country, followed by a 1907 financial panic in New York City caused by a speculator-led copper-market scam.

To fully grasp the nature of inequality in our twenty-first-century gilded age, it’s important to understand the difference between wealth and income and what kinds of inequality stem from each. Simply put, income is how much money you make in terms of paid work or any return on investments or assets (or other things you own that have the potential to change in value). Wealth is simply the gross accumulation of those very assets and any return or appreciation on them. The more wealth you have, the easier it is to have a higher annual income.

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Tyler got his hands on a piece by Michael Every at Dutch Rabobank.

Hey Yellen, It Was Trump Who Was Right (Every)

Rabo are already predicting a US recession in 2020, which will drag many down with it, and as the OECD now warns that swollen corporate debt piles, which central banks have so encouraged, is of ever lower quality and potentially more dangerous than it was back in 2008. 54% of investment grade bonds are now BBB-rated, up from 30% in 2008. The OECD argues “In the case of a downturn, highly leveraged companies would face difficulties in servicing their debt, which in turn, through higher default rates, may amplify the effects…Any developments in these areas will come at a time when non-financial companies in the next three years will have to pay back or refinance about USD4 trillion worth of corporate bonds. This is close to the total balance sheet of the US Federal Reserve.”

Guess what guys? China is right ahead of you on that curve – which is why it is trying to find another whale to nuke ASAP: things are looking truly ugly given many firms can’t even pay the interest on their debt, let alone the principle. And guess what else? That OECD and China warning sounds like an admission of the Minsky debt dynamic that you might have thought all central banks would have to have learned the lessons of post-GFC. Apparently not, however – because they think they already know everything. As former Fed Chair Yellen mocked yesterday, Trump doesn’t understand what the Fed’s dual mandates of price stability and stable employment are. That might well be true.

But was it the Fed or Trump who publicly called out how dangerous continuous Fed rate hikes are in a debt-laden, Minsky-teetering financial system where the yield curve is still inverted 9bps on 1s-5s even after a pause? I think Yellen will find it was Trump who was right and the Fed who was forced into a humiliating and frankly incongruous policy U-turn. So much expertise! Trump also made a similar intervention over oil prices overnight, and once again they dipped, though are opening up strongly this morning in Asia. [..] easy policy in the UK; ultra-easy policy in China; promises of more easing in Japan; an ECB U-turn to come(?); and the Fed on hold and stopping QT soon at least. And that’s with bullish markets and reasonable global growth – just wait until things head south: if all you have is a nuke, everything looks like a whale.

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Every bubble that bursts ends up below its starting level. Nicole had these graphs, Tulip, South Sea etc., that showed just that. This graph doesn’t quite do that.

Now that Housing Bubble #2 Is Bursting…How Low Will It Go? (CHS)

There are two generalities that can be applied to all asset bubbles: 1. Bubbles inflate for longer and reach higher levels than most pre-bubble analysts expected 2. All bubbles burst, despite mantra-like claims that “this time it’s different” The bubble burst tends to follow a symmetrical reversal of very similar time durations and magnitudes as the initial rise. If the bubble took four years to inflate and rose by X, the retrace tends to take about the same length of time and tends to retrace much or all of X. If we look at the chart of the Case-Shiller Housing Index below, this symmetry is visible in Housing Bubble #1 which skyrocketed from 2003-2007 and burst from 2008-2012.

Housing Bubble #1 wasn’t allowed to fully retrace the bubble, as the Federal Reserve lowered interest rates to near-zero in 2009 and bought $1+ trillion in sketchy mortgage-backed securities (MBS), essentially turning America’s mortgage market into a branch of the central bank and federal agency guarantors of mortgages (Fannie and Freddie, VA, FHA). These unprecedented measures stopped the bubble decline by instantly making millions of people who previously could not qualify for a privately originated mortgage qualified buyers. This vast expansion of the pool of buyers (expanded by a flood of buyers from China and other hot-money locales) drove sales and prices higher for six years (2012-2018).

As noted on the chart below, this suggests the bubble burst will likely run from 2019-2025, give or take a few quarters. The question is: what’s the likely magnitude of the decline? Scenario 1 (blue line) is a symmetrical repeat of Housing Bubble #2: a retrace of the majority of the bubble’s rise but not 100%, which reverses off this somewhat higher base to start Housing Bubble #3. Since the mainstream consensus denies the possibility that Housing Bubble #2 even exists (perish the thought that real estate prices could ever–gasp–drop), they most certainly deny the possibility that prices could retrace much of the gains since 2012.

More realistic analysts would probably agree that if the current slowdown (never say recession, it might cost you your job) gathers momentum, some decline in housing prices is possible. They would likely agree with Scenario 1 that any such decline would be modest and would simply set the stage for an even grander housing bubble #3. But there is a good case for Scenario 2, in which price plummets below the 2012 lows and keeps on going, ultimately retracing the entire housing bubble gains from 2003.

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Interesting how Europe smears Putin wherever it can, except where it counts.

Russia’s Share Of European Gas Market Surges To Almost 37%, Dwarfing LNG (RT)

Russia’s state-run energy major Gazprom said its share of sales of natural gas in the European Union has increased to 36.7 percent last year, rising over two percent against 34.2 percent in 2017. “In 2018, according to preliminary data, the share of gas supplies to the EU countries and Turkey has reached an all-time high and totaled 36.7 percent,” the director general of Gazprom Export Elena Burmistrova said at Gazprom’s Investor Day event, taking place in Singapore. Burmistrova added that Gazprom’s gas exports to Europe last year amounted to record 201.8 billion cubic meters, and is expected to significantly grow by 2035 due to the increasing demand.

According to a member of Gazprom’s management committee, Oleg Aksyutin, the company saw no threat to Gazprom’s business in the European market from global producers of liquefied natural gas (LNG), including the US. The company’s gas exports to Europe are reportedly three times more than the amount of LNG shipped to Europe by all global producers combined. Though the share of LNG shipments have been growing, it still makes up only 13 percent of the entire gas market, according to Burmistrova. The executive added that prices for natural gas saw a significant surge. “In 2018, in accordance with linked fuel prices, the average price of Gazprom gas increased by 24.6 percent to $245.5 for 1,000 cubic meters,” she said, stressing that in 2016 it stood at $167.

When it comes to China, one of the world’s biggest energy consumers, Gazprom is planning to become the country’s biggest supplier as soon as 2035, with the company’s share expected to reach 13 percent of Chinese overall consumption by the same year.

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It’s completely insane that any western country would have to do a Hunger Survey. Don’t fall for thinking it’s normal.

UK Hunger Survey To Measure Food Insecurity (G.)

The government is to introduce an official measure of how often low-income families across the UK skip meals or go hungry because they cannot afford to buy enough food, the Guardian can reveal. A national index of food insecurity is to be incorporated into an established UK-wide annual survey run by the Department for Work and Pensions (DWP) that monitors household incomes and living standards. Campaigners, who have been calling for the measure for three years, said the move was “a massive step forward” that would provide authoritative evidence of the extent and causes of hunger in the UK. They say food insecurity is strongly linked to poverty caused by austerity and welfare cuts and is driving widening health inequality.

Food insecurity is generally defined as experiencing hunger, the inability to secure food of sufficient quality and quantity to enable good health and participation in society, and cutting down on food because of a lack of money. The decision, which took campaigners by surprise, was revealed at an informal meeting on Tuesday attended by the DWP, the Office for National Statistics, Public Health England and the Scottish and Welsh governments, as well as a number of food poverty charities. Ministers have for years resisted calls to bring England into line with the US and Canada by measuring food insecurity. Critics said this was to avoid shedding unwanted light on the impact of welfare policy and the public health consequences of being unable to eat regularly or healthily.

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Why the hunger? Here’s why: we feed ourselves with plastics and poison.

Glyphosate Found In 95% Of Wine And Beer (Ind.)

A new study has shown that traces of a commonly-used and possibly cancerous weed killer can be found in the majority of wine and beer. Researches tested five wines and 15 beers from the US, Asia and Europe for traces of pesticide glyphosate. The research found that of the 20 samples, 19 (95 per cent) contained particles of the chemical, including products labelled as organic. The US Public Interest Research Group, which conducted the study, said the levels of the pesticide aren’t necessarily dangerous, but are still concerning. In 2015, the World Health Organisation’s International Agency categorised glyphosate as “probably carcinogenic to humans”, leading the state of California to add it to its list of chemicals that can cause cancer, which makes companies responsible for providing warnings to potential consumers.

The findings of the study coincide with the beginning of a class action lawsuit against Bayer, which acquired Monsanto last year. The suit claims that Roundup caused thousands of plaintiffs to develop non-Hodgkins lymphoma, a type of blood cancer. The first plaintiff, Ed Hardeman, testified this week, alleging that his use of the chemical on his 56 acres of land caused him to develop cancer aged 66. [..] Bayer has not commented on the results of the study, but the researchers are calling for glyphosate to be banned unless it can be proven safe.

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The earth’s weather system is far too complex to draw conclusions from a sunny day. The only things we can say about the climate must be based on long-term stats. This kind of article doesn’t help one bit, it merely points out the author literally doesn’t know what he’s talking about.

Am I The Only One Who’s Terrified About The Warm Weather? (G.)

They were everywhere in London on the weekend. The people in short sleeves or sandals. The ones with sunglasses ostentatiously hanging from the front of their shirts or balanced on top of their heads. The beer gardens and riverside pubs of the capital were heaving; corner shops ran out of ice-cream. Outside it was 17C (62F). Monday was another warm day, without a cloud in the sky, and in the late afternoon the light took on a magical, honey-coloured hue. It brought to mind one of those summer evenings you remember from childhood, when you’d be in the park all day and your parents let you stay out until bedtime, and you felt like you were doing something deliciously naughty just by being there.

Except it isn’t early summer: it’s February. And the entire developed world has not so much been doing something slightly naughty as systematically attacking the global ecosystem over a period of decades, and that’s how we go into this mess. We should try to hold on to this fact as young, posh men the nation over develop a strange delusion that anyone would want to see their elbows; this is not supposed to be happening. Less than a month ago, there was video footage of extreme cold weather coming out of Chicago. Forks supported in midair by suddenly frozen noodles, water poured from kettles instantly freezing on its way to the ground: you know the sort of thing.

OK, that was on the other side of the world, and was extreme and terrifying enough. But at least it was terrifying in the right direction. On Monday, though, the temperature hit 20.3C in Ceredigion, west Wales: the highest February temperature ever recorded in Britain and the first time the thermometer had breached 20C in winter. The BBC weather account tweeted it out with a gif of the sunshine icon and the same excitable breathlessness with which Springwatch would announce it had found a new type of vole. My response contained a single word, repeated seven times. It began with F.

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Feb 222019
 


Salvador Dali The ghost of Vermeer of Delft which can be used as a table 1934

 

US Housing Market In Freefall As New Buyers Can’t Afford A Home (ZH)
Canadians Continue To Plunder Equity From Their Homes (ZH)
Bursting Of Australia’s Housing Bubble Could Topple The Government (ZH)
EU Expects May to Request Three-Month Delay to Brexit (BBG)
Theresa May Warned Dozens Of Tories Could Rebel Over No-Deal Brexit (BBC)
Record Surplus Gives UK Pre-Brexit Boost (G.)
Anti-Semitism Is Cover For A Much Deeper Divide In UK Labour Party (Cook)
Macron Calls Anti-Zionism A Form Of Antisemitism (Ind.)
Philadelphia Sues Seven Big Banks For Bond Collusion (RT)
FBI Lawyer Reveals Infiltration In Trump Campaign (ET)
Judge Imposes Sweeping Gag Order On Roger Stone (MW)
Hungary Takes ‘Hundreds Of Venezuelan Refugees With Hungarian Ancestry’ (Ind.)
Julian Assange Gets A New Australian Passport (SMH)
US Cities Burn Recyclables After China Bans Imports (G.)
World Food Supply Under ‘Severe Threat’ From Loss Of Biodiversity (G.)

 

 

Meanwhile in the real world that central bankers don’t want you to see:

US Housing Market In Freefall As New Buyers Can’t Afford A Home (ZH)

[..] with consensus expecting a tiny rebounding in January following December’s sharp drop, the deterioration in the US home market continued, and January existing home unexpectedly dropped 1.2% (exp. +0.2%), to 4.94 million, missing expectations of a rebound to 5.00 million. After December’s revision higher to 5.00 million, the January SAAR of 4.94 million was the first sub-5MM print since 2015, while the parallel pending home sales series confirms even more weakness is in store. Needless to say, it is very troubling that Americans are unable to afford home purchases with the 30% mortgage at just 4.5%, and suggests that even if inflation picks up, the Fed may have no choice but to keep rates flat to avoid a housing market crash.

As usual, NAR chief economist Larry Yun was optimistic, saying that he does not expect the numbers to decline further going forward. “Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.” One wonders what “gains in household income” he is talking about. Meanwhile, properties are failing to sell as the slowdown spreads: Properties remained on the market for an average of 49 days in January, up from 46 days in December and 42 days a year ago. Thirty-eight percent of homes sold in January were on the market for less than a month.

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“Vancouver [..] saw home sales fall about 40% in January from the same month a year earlier.”

Canadians Continue To Plunder Equity From Their Homes (ZH)

Canadians are accelerating the rate at which they borrow cash against their homes, despite the fact that the real estate market is slumping in the country. This exposes the country’s financial system to obvious vulnerabilities, according to rating company DBRS and Bloomberg. Home equity lines of credit in Canada reached a record $184.5 billion (USD) as of October 31, which equates to 11.3% of total household credit. This is the highest share since mid 2015, according to a report released last Thursday. Canadians are drawing on their home’s equity to fund everything from home renovations to car purchases. And they’re doing it so quickly that borrowing has grown faster than mortgages since 2017.

Analyst Robert Colangelo, who published the report on Thursday, commented: “The flexibility of Helocs could increase financial system vulnerabilities. In the event of a correction, borrowers could find themselves with a debt load that exceeds the value of their home, which is often referred to as negative equity.” Obviously, home equity lines of credit can decrease visibility for lenders to identify credit problems as consumers use the equity in their homes to consolidate high interest loans and unsecured debt into one lump sum at a lower rate. Out of all of the Canadian banks, Toronto Dominion bank has the largest exposure to Helocs at about 39%, followed by Royal Bank of Canada which has 18% exposure. Other large banks are averaging 11% exposure, according to the report.

And the timing for Helocs to grow couldn’t be worse. Toronto’s real estate market continues to feel pain. Sales of new homes in the city fell to the lowest in almost 2 decades in 2018 and a glut of unsold condominiums continue to pile up, according to a Building Industry and Land Development Association report released February 1. Vancouver, still feeling the deflationary effects of a foreign real estate bubble popping, saw home sales fall about 40% in January from the same month a year earlier.

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People aged 65-74: A$566,000 wealthier in 2015-16 than the same age group was 12 years earlier. People aged 25-34: A$38,000.

That could topple a lot more than only a government.

Bursting Of Australia’s Housing Bubble Could Topple The Government (ZH)

In one of the world’s most developed economies, soaring costs for housing and education are rapidly widening the wealth-distribution gap between the younger and older generations amid the backdrop of one of the longest economic expansions in the country’s history. As younger workers grapple with the notion that they may never be able to afford a home, a backlash is stirring in the political arena, as younger voters embrace progressive (some would say “socialist”) politicians. No, we’re not talking about the US. We’re talking about Australia. After six years of tumultuous Liberal rule, the Labour Party is hoping to wrest back control of the government during elections later this year.

And it sees tackling this intergenerational divide as the best way to do it. And combating the country’s increasingly unaffordable housing bubble is a key plank of its proposals. The party has pledged to curb tax breaks for property investors that helped drive up home prices (alongside an influx of foreign capital). Labor leader Bill Shorten has promised to scrap tax refunds worth A$5 billion ($3.6 billion) a year for share investors. The benefits are already being seen in the polls, where Labour is seeing a slight advantage. After 27 years of uninterrupted economic growth, Australians are struggling with the fact that the wealthy have enjoyed the bulk of the economic benefits.

While Australia has avoided recession for 27 years, the spoils have not been shared evenly as older people capture a greater share of the nation’s wealth. According to the Grattan Institute, households headed by people aged 65-74 were on average A$566,000 wealthier in 2015-16 than the same age group was 12 years earlier. That far outstrips growth in other bands and compares with just A$38,000 for the 25-34 age group. [..] While Sydney’s median house price is still more than A$900,000 [..] prices have already fallen 12% since their mid-2017 peak.

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Doesn’t she want to run down the clock?

EU Expects May to Request Three-Month Delay to Brexit (BBG)

The European Union expects U.K. Prime Minister Theresa May to be forced to request a three-month delay to Brexit, two EU officials said. Discussions between the two sides suggest May will ask for an extension to the two-year negotiating period if the British Parliament backs the Brexit deal but it isn’t signed off until an EU summit on March 21-22. That is emerging as the EU’s current plan. The EU sees this as a “technical extension” to give British Parliament time to pass necessary legislation related to its departure from the bloc. Anything longer than three months would put the U.K. under pressure to take part in European elections on May 23-26, something that both sides are keen to avoid.

May is racing against the clock to change a controversial part of her deal, known as the “backstop,” in a way that would be acceptable to both the U.K. Parliament and the EU. However, with just five weeks to go until the U.K.’s scheduled departure from the EU and talks at an impasse, ministers and lawmakers in her own party are threatening to vote against her next week to give Parliament control of the process. The prime minister has repeatedly spoken out against a delay, saying she wants to take the U.K. out of the EU as scheduled at the end of March. She’s never completely ruled it out, however. Any postponement would have to be requested by the U.K. and accepted by all the remaining 27 EU governments.

EU officials say the three-month extension would happen under their most optimistic scenario. The risk remains that the U.K. could leave the bloc March 29 without a deal. Alternatively, May could be forced to contemplate a longer delay if she can’t get backing for the agreement, according to one official.

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Chances that Parliament will vote her deal through are slim.

Theresa May Warned Dozens Of Tories Could Rebel Over No-Deal Brexit (BBC)

Dozens of normally loyal Conservative MPs could rebel against the government in a bid to prevent a “no-deal” Brexit, Downing Street has been warned. Leaders of the Brexit Delivery Group of both Leavers and Remainers say MPs may back alternatives if Mrs May’s reworked deal cannot command a Commons majority. Co-chairman Andrew Percy told the BBC more than 30 may try to block no deal. The government says “productive” talks in Brussels aimed at addressing MPs’ concerns continue “urgently”. The UK remains on course to leave the European Union on 29 March. But the government has repeatedly refused to rule out the possibility of the UK leaving without a formal deal, in the event that Mrs May cannot get MPs to approve the deal she negotiated with Brussels in time.

Many MPs fear that scenario would be damaging to business and cause chaos at ports. However, Brexiteers in the European Research Group (ERG) of Conservative MPs insist the “no-deal” option must be preserved as negotiating leverage in Brussels. Mr Percy told the BBC members of his group were becoming “tired” of the ERG’s refusal to back the prime minister. In a letter to government whips, he and co-chairman Simon Hart write: “Not only does this risk damaging the national interest, but also… we are putting in jeopardy the very thing many colleagues have spent decades campaigning for; our exit from the European Union.”

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The wonders of strip-mining social programs.

Record Surplus Gives UK Pre-Brexit Boost (G.)

Britain has recorded the biggest-ever monthly surplus in public finances since the early 1990s, putting the government on a strong footing in the run-up to Brexit, now less than 40 days away. In a rare piece of positive economic news for Philip Hammond as he prepares for his spring statement next month, income from taxes outstripped public spending by £14.9bn, the biggest January surplus since records began in 1993. Although January is typically a surplus month for the exchequer because of seasonal trends in the payment of taxes, the Office for National Statistics said last month’s surplus was £5.5bn larger than a year ago. Income and capital gains tax receipts increased by 14%, twice the average growth rate earlier in the year.

Combined, the income from self-assessed income taxes and capital gains tax receipts was £21.4bn, the highest in January since comparable records began in 2000. The data comes after several disappointing months for the chancellor, as borrowing came in worse than forecast. Government borrowing for the first 10 months of the financial year has, however, fallen almost by half, as tax receipts have been much stronger than expected. The exchequer has borrowed about £21.2bn this year so far, £18.5bn lower than at the same point a year ago, and the lowest since the 10 months to January 2001. The latest update means the government could be on track to reduce the deficit – the gap between spending and tax income – close to its target of £25.5bn set by the Office for Budget Responsibility, which is 39% less than in 2017-18.

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Who in the party will defend Corbyn?

Anti-Semitism Is Cover For A Much Deeper Divide In UK Labour Party (Cook)

The announcement by seven MPs from the UK Labour Party on Monday that they were breaking away and creating a new parliamentary faction marked the biggest internal upheaval in a British political party in nearly 40 years, when the SDP split from Labour. On Wednesday, they were joined by an eighth Labour MP, Joan Ryan, and three Conservative MPs. There are predictions more will follow. With the UK teetering on the brink of crashing out of the European Union with no deal on Brexit, the founders of the so-called Independent Group made reference to their opposition to Brexit. The chief concern cited for the split by the eight Labour MPs, though, was a supposed “anti-semitism crisis” in the party.

The breakaway faction seemingly agrees that anti-semitism has become so endemic in the party since Jeremy Corbyn became leader more than three years ago that they were left with no choice but to quit. Corbyn, it should be noted, is the first leader of a major British party to explicitly prioritise the rights of Palestinians over Israel’s continuing belligerent occupation of the Palestinian territories. Luciana Berger, a Jewish MP who has highlighted what she sees as an anti-semitism problem under Corbyn, led the charge, stating at the Independent Group’s launch that she had reached “the sickening conclusion” that Labour was “institutionally racist”. She and her allies claim she has been hounded out of the party by “anti-semitic bullying”.

[..] The timing of the defections was strange, occurring shortly after the Labour leadership revealed the findings of an investigation into complaints of anti-semitism in the party. These were the very complaints that MPs such as Berger have been citing as proof of the party’s “institutional racism”. And yet, the report decisively undercut their claims – not only of endemic anti-semitism in Labour, but of any significant problem at all. That echoed an earlier report by the Commons home affairs committee, which found there was “no reliable, empirical evidence” that Labour had more of an anti-semitism problem than any other British political party. Nonetheless, the facts seem to be playing little or no part in influencing the anti-semitism narrative. This latest report was thus almost entirely ignored by Corbyn’s opponents and by the mainstream media.

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Macron gambles that he can silence the Yellow Vests with antisemitism smear.

Macron Calls Anti-Zionism A Form Of Antisemitism (Ind.)

Emmanuel Macron has declared anti-Zionism a form of antisemitism as he ramps up France’s crackdown on racism against Jewish people. Speaking at the 34th annual dinner of the Representative Council of Jewish Institutions of France, Mr Macron said a surge in antisemitic attacks in his country had not been seen since World War Two. He promised a new law to tackle hate speech on the internet and said France would adopt the definition of antisemitism set by the International Holocaust Remembrance Alliance (IHRA). The IHRA definition does not use the phrase “anti-Zionism” but does say denying the Jewish people their right to self-determination “e.g., by claiming that the existence of a State of Israel is a racist endeavour,” is antisemitic.

Some critics of Israel, its occupation of territory internationally recognised as Palestinian, and its isolation of the Gaza Strip, say they risk being unfairly branded antisemitic, although the IHRA definition says: “criticism of Israel similar to that levelled against any other country” is not. Mr Macron’s words were well received from the World Jewish Congress which said: “This is just the beginning of a long road ahead. Adopting this definition of anti-Semitism must be followed by concrete steps to encode into law and ensure that this is enforced.”

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Stop suing the banks. Sue their execs instead.

Philadelphia Sues Seven Big Banks For Bond Collusion (RT)

The city of Philadelphia is suing Bank of America and six other major banks for conspiring to manipulate the rates of municipal bonds, illegally making millions of dollars while depriving the city of funds for public services. Pennsylvania’s largest city, with over 1.5 million residents, filed the complaint late on Wednesday in the federal court in Manhattan. The city accuses Bank of America, Barclays, Citigroup, Goldman Sachs, JP Morgan Chase, Royal Bank of Canada and Wells Fargo of colluding to manipulate rates of variable-rate demand obligations (VRDO), of which Philadelphia has issued over $1.6 billion-worth. The fees the banks collected, in violation of federal antitrust laws, have deprived Philadelphia and other jurisdictions of critical funding for public services, the lawsuit claims.

According to the court documents, the banks are already being criminally investigated by the Department of Justice’s antitrust division, while the US Securities and Exchange Commission (SEC) has contacted four of the defendants with questions about their conduct. The lawsuit claims that phone and email records will show that the banks agreed not to compete with each other for VRDO remarketing services between February 2008 and June 2016, resulting in artificially high rates and banks collecting fees “for doing, essentially, nothing.”

Similar lawsuits are already being litigated in Massachusetts, California, Illinois and New York, accusing major banks of conspiring to “robo-reset” the rates of state VRDOs without any considerations for the local markets or investor demand, violating the requirement to market and price the bonds at the lowest possible interest rates. Plaintiffs in those four lawsuits are seeking to recover over $1 billion in fees, ranging from $100 million in Massachusetts and $349 million in Illinois to $719 million in California, while the New York numbers have not been made available yet.

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Some things are impossible to properly summarize in a few lines. Read the whole thing at Epoch Times.

And again: the US needs a Special Counsel for this. The FBI cannot be a state within the state.

FBI Lawyer Reveals Infiltration In Trump Campaign (ET)

A key player in the FBI’s counterintelligence investigation of Donald Trump and his 2016 presidential campaign was Trisha Anderson, who, at the time, was the No. 2 lawyer at the agency’s Office of General Counsel. Despite having no specific experience in counterintelligence before coming to the FBI, Anderson was, in some manner, involved in virtually all of the significant events of the investigation. Anderson told members of the House Judiciary and Oversight committees in August last year during closed-door testimony that she was one of only about 10 people who had known about the Trump–Russia investigation prior to its official opening.

A transcript of Anderson’s testimony, which was reviewed for this article, reveals that she had read all of the FBI’s FD302 forms detailing information that the author of the Steele dossier, former British spy Christopher Steele, had provided to high-ranking Department of Justice (DOJ) official Bruce Ohr. Anderson also told lawmakers that she personally signed off on the original application for a warrant to spy on former Trump campaign adviser Carter Page without having read it. The FBI relied heavily on the unverified information in the Steele dossier—which was paid for by the Clinton campaign and the Democratic National Committee—to obtain the FISA warrant.

Anderson also was part of a small group of FBI personnel who got to read then-FBI Director James Comey’s memos about conversations he had with President Donald Trump. Besides the investigation into Trump, Anderson also was involved in the FBI’s investigation of Hillary Clinton for sending classified information using a private server. Anderson’s testimony reveals that she received the original referral from the inspectors general for both the State Department and Intelligence Community on Clinton after hundreds of classified emails had been found on her server. Her testimony also raises questions as to whether then-Attorney General Loretta Lynch had a conflict of interest.

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Get the impressions Stone’s getting bored sitting at home.

Judge Imposes Sweeping Gag Order On Roger Stone (MW)

A judge imposed a sweeping gag order on Roger Stone, the former political adviser to President Donald Trump, after he created an Instagram post of the judge presiding over his criminal case next to an image that appeared to show the crosshairs of a gun. Stone told the judge at a hearing Thursday he made an “egregious error.” The new gag order prevents Stone from making any public comments on the case or investigation other than to solicit funds for his legal defense. If Stone violates the new gag order, his bond will be revoked and he’ll be detained. “There will not be a third chance,” District Judge Amy Berman Jackson said.

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I had no idea.

Hungary Takes ‘Hundreds Of Venezuelan Refugees With Hungarian Ancestry’ (Ind.)

Hungary has accepted around 300 refugees from crisis-hit Venezuela, according to media reports from the country – surprising observers of its usually anti-immigration government. The refugees, who are thought to have Hungarian ancestry, are understood to have been welcomed into the country with the tacit support of the Orban administration and the help of the Hungarian Charity Service of the Order of Malta. The news has come as a surprise in the conservative central European state, given the anti-immigration stances and refugee crackdowns of premier Viktor Orban.

“We are speaking about Hungarians and we do not consider Hungarians migrants,” Mr Orban’s chief of staff, Gergely Gulyas, told a press conference in response to the report. Confirming that the programme began in April 2018, he added: “They, like any other Hungarian, have a right to return home.” A controversial law passed by the Orban government last year restricted the activities of NGOs and charities that provide assistance to migrants. The law was de facto targeted at those groups helping people arriving by land from the Middle East and Africa. The Hungarian opposition seized on the latest developments, claiming the government was acting hypocritically.

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He got it back in October apparently, so no big immediate change.

And Center Alliance Senator Patrick having asked for the passport only so Julian can give himself up to the UK police doesn’t help either.

Julian Assange Gets A New Australian Passport (SMH)

A Department of Foreign Affairs and Trade official confirmed in a Senate estimates hearing on Thursday that Mr Assange’s 2018 application for a new passport had been accepted. Consular and Crisis Management Division first assistant secretary Andrew Todd said, “Mr Assange does have an Australian passport”. [..] The department is understood to have issued Mr Assange with his new passport in October. A DFAT official at an estimate’s hearing in October said Mr Assange’s passport application had “not been rejected”. But absolute confirmation that he has actually received a new passport did not come until Thursday’s heading. DFAT officials told the estimates hearing they had no knowledge of legal proceedings against Mr Assange in the United States.

Documents show Mr Assange’s UK-based lawyer, Jennifer Robinson, applied for a new passport on his behalf in mid-2018. DFAT replied that it was of the belief that Mr Assange’s entitlement to a passport may be affected by ongoing legal proceedings in the United Kingdom. “Specifically, we understand you may be the subject of an arrest warrant in connection with a ‘serious foreign offence’ within the meaning of section 13 of the Australian Passports Act 2005,” DFAT replied. “In order to progress your application, we require confirmation that section 13 is not enlivened by your circumstances. To this end, we ask that you provide us with confirmation that section 13 no longer applies to you. Until this time, your passport application will remain on hold.”

Centre Alliance senator Rex Patrick, who has pursued Mr Assange’s right to a passport in recent estimates hearings, said that, given Mr Assange’s failing health, the best thing would be for him to leave the Ecuador embassy and face the British justice system over breaching his bail conditions. After that, he should return to Australia, Senator Patrick said.

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“Nearly four in 10 children in the city have asthma, while the rate of ovarian cancer is 64% higher than the rest of Pennsylvania and lung cancer rates are 24% higher..”

US Cities Burn Recyclables After China Bans Imports (G.)

The conscientious citizens of Philadelphia continue to put their pizza boxes, plastic bottles, yoghurt containers and other items into recycling bins. But in the past three months, half of these recyclables have been loaded on to trucks, taken to a hulking incineration facility and burned, according to the city’s government. It’s a situation being replicated across the US as cities struggle to adapt to a recent ban by China on the import of items intended for reuse. The loss of this overseas dumping ground means that plastics, paper and glass set aside for recycling by Americans is being stuffed into domestic landfills or is simply burned in vast volumes. This new reality risks an increase of plumes of toxic pollution that threaten the largely black and Latino communities who live near heavy industry and dumping sites in the US.

About 200 tons of recycling material is sent to the huge Covanta incinerator in Chester City, Pennsylvania, just outside Philadelphia, every day since China’s import ban came into practice last year, the company says. [..] Some experts worry that burning plastic recycling will create a new fog of dioxins that will worsen an already alarming health situation in Chester. Nearly four in 10 children in the city have asthma, while the rate of ovarian cancer is 64% higher than the rest of Pennsylvania and lung cancer rates are 24% higher, according to state health statistics. The dilemma with what to do with items earmarked for recycling is playing out across the US. The country generates more than 250m tons of waste a year, according to the EPA, with about a third of this recycled and composted.

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Monoculture ‘R’ Us. You add it all up, the soil is poisoned, the food is poisoned, vertebrates are disappearing, insects are going gone, and how much longer for the human species?

World Food Supply Under ‘Severe Threat’ From Loss Of Biodiversity (G.)

The world’s capacity to produce food is being undermined by humanity’s failure to protect biodiversity, according to the first UN study of the plants, animals and micro-organisms that help to put meals on our plates. The stark warning was issued by the Food and Agriculture Organisation after scientists found evidence the natural support systems that underpin the human diet are deteriorating around the world as farms, cities and factories gobble up land and pump out chemicals. Over the last two decades, approximately 20% of the earth’s vegetated surface has become less productive, said the report, launched on Friday. It noted a “debilitating” loss of soil biodiversity, forests, grasslands, coral reefs, mangroves, seagrass beds and genetic diversity in crop and livestock species. In the oceans, a third of fishing areas are being overharvested.

Many species that are indirectly involved in food production, such as birds that eat crop pests and mangrove trees that help to purify water, are less abundant than in the past, noted the study, which collated global data, academic papers and reports by the governments of 91 countries. It found 63% of plants, 11% of birds, and 5% of fish and fungi were in decline. Pollinators, which provide essential services to three-quarters of the world’s crops, are under threat. As well as the well-documented decline of bees and other insects, the report noted that 17% of vertebrate pollinators, such as bats and birds, were threatened with extinction. Once lost, the species that are critical to our food systems cannot be recovered, it said. “This places the future of our food and the environment under severe threat.”

“The foundations of our food systems are being undermined,” wrote Graziano da Silva, the director general of the Food and Agriculture Organisation, in an introduction to the study. “Parts of the global report make sombre reading. It is deeply concerning that in so many production systems in so many countries, biodiversity for food and agriculture and the ecosystem services it provides are reported to be in decline.” Agriculture was often to blame, he said, due to land-use changes and unsustainable management practices, such as over-exploitation of the soil and a reliance on pesticides, herbicides and other agro-chemicals. Most countries said the main driver for biodiversity loss was land conversion, as forests were cut down for farm fields, and meadows covered in concrete for cities, factories and roads. Other causes include overexploitation of water supplies, pollution, over-harvesting, the spread of invasive species and climate change.

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Dec 272018
 


Giovanni Bellini The Feast of the Gods c1514 (completed by his disciple, Titian, 1529)

 

Trump Declares End To US ‘Policeman’ Role In Surprise Iraq Visit (AFP)
Dow Rallies 1,000 Points, Biggest Single-Day Point Gain Ever (CNBC)
Why Stocks Soared: US Pension Funds Rebalance With $64 Billion Buy Order (ZH)
Plunge Protection And/Or Deeply Underwater Public Sector Pension Funds (CI)
Pretty Much All Of Wall Street Thinks The Market Will Rally In 2019 (CNBC)
The Most Splendid Housing Bubbles in America Decline (WS)
Kremlin Considers Changing Constitution To Extend Putin Presidency (ZH)
US Population Growth Hits 80-Year Low (ZH)
Japan Shrinks As Birthrate Falls To Lowest Level In History (G.)
Falling Total Fertility Rate Should Be Welcomed, Population Expert (G.)

 

 

Strangest thing was the level of secrecy, blinded windows the whole flight, no phones; Trump felt really under threat.

Trump Declares End To US ‘Policeman’ Role In Surprise Iraq Visit (AFP)

President Donald Trump used a lightning visit to Iraq — his first with US troops in a conflict zone since being elected — to defend the withdrawal from Syria and to declare an end to America’s role as the global “policeman.” Trump landed at 7:16 pm local time at Al-Asad Air Base in western Iraq, accompanied by his wife Melania, following what he described as a stressful, secrecy shrouded flight on a “pitch black” Air Force One. The president spoke to a group of about 100 mostly special forces personnel and separately with military leaders before leaving a few hours later. A planned meeting with Iraqi Prime Minister Adel Abdel Mahdi was scrapped and replaced by a phone call, the premier’s office said.

White House video showed a smiling Trump shaking hands with camouflage-clad personnel, signing autographs and posing for photos at the base in Iraq. Morale-boosting presidential visits to US troops in war zones have been a longstanding tradition in the years following the September 11, 2001 terrorist attacks. Trump has taken considerable criticism for declining to visit in the first two years of his presidency. But speculation had been mounting that he would finally make the gesture following his controversial plan to slash troop levels in Afghanistan and his order to withdraw entirely from Syria. At the Iraqi military base, Trump sought to defend his “America First” policy of pulling back from multinational alliances, including what to many Americans seem like the endless wars of the Middle East.

“It’s not fair when the burden is all on us,” he said. “We don’t want to be taken advantage of any more by countries that use us and use our incredible military to protect them. They don’t pay for it and they’re going to have to.” “We are spread out all over the world. We are in countries most people haven’t even heard about. Frankly, it’s ridiculous,” he added. Trump told reporters he had overruled generals asking to extend the Syria deployment, where about 2,000 US forces, joined by other foreign troops, assist local fighters battling the Islamic State jihadist group. “You can’t have any more time. You’ve had enough time,” he said he told the top brass.

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Precisely what you’d expect in a non-functional market, or a non-market, whatever the immeditate trigger.

Then again, Trump DID say to buy the dip. Made a lot of people a lot of money.

Dow Rallies 1,000 Points, Biggest Single-Day Point Gain Ever (CNBC)

Stocks posted their best day in nearly a decade on Wednesday, with the Dow Jones Industrial Average notching its largest one-day point gain in history. Rallies in retail and energy shares led the gains, as Wall Street recovered the steep losses suffered in the previous session. The 30-stock Dow closed 1,086.25 points higher, or 4.98 percent, at 22,878.45. Wednesday’s gain also marked the biggest upside move on a percentage basis since March 23, 2009, when it rose 5.8 percentage points. The S&P 500 also catapulted 4.96 percent — its best day since March 2009 — to 2,467.70 as the consumer discretionary, energy and tech sectors all climbed more than 6 percent. The Nasdaq Composite also had its best day since March 23, 2009, surging 5.84 percent to 6,554.36. Wednesday also marked the biggest post-Christmas rally for U.S. stocks ever.

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Losses on bonds are so big they have to move into the stocks that lost 20% or so lately?!

Why Stocks Soared: US Pension Funds Rebalance With $64 Billion Buy Order (ZH)

Last Friday, when stocks were tumbling, we reported “some good news for the bulls” which was lost in the overall chaos over the latest mutual fund liquidation discussed earlier. And no, we did not anticipate that President Trump would activate the Plunge Protection Team over the weekend: the good news in question was that as Wells Fargo calculated U.S. defined-benefit pensions fund would need to implement a “giant rebalancing out of bonds and into stocks” – in fact the biggest in history – with the bank estimating roughly $64 billion in equity purchases in the last trading days of the quarter and year, prompting the banks to ask if traders are about to make pension rebalancing “great” again.

Judging by today’s market action, the answer is a resounding yes, even though as Wells warned investors and traders looking for a desperately needed respite from market gyrations “may have to deal with yet one more seismic bout of volatility before Dec 31 finally pops up on their calendar dials.” For those who missed our Friday post on the topic, Wells explained where this massive rebalancing comes from: the huge, end-of-quarter buy order was precipitated by the jarring divergence between equity and bond performances both in Q4 and the month of December. The stocks in the bank’s pro forma pension asset blend had suffered a 14% loss this quarter, including about an 8.5% drop in December. Contrast this with a roughly +1.6% quarterly total return for the domestic aggregate bond index.

The gap between equity and bond performance in pension portfolios would have been even larger had IG credit OAS not widened nearly 40 bps in Q4. As a result of this need for massive quarter-end rebalancing, corporate pensions would need to boost their equity portfolios by as much as $64 billion into year-end. Getting a bit more granular, Wells analyst Boris Rjavinski wrote that domestic stocks – both large cap and small cap – may need disproportionately large boosts of $35 billion and $21 billion, respectively, compared to “only” $9 billion for global developed equities. This is driven by large performance gaps within equity markets: U.S. stocks have trailed global and EM equities in Q4 and December after outperforming the ROW for quarters on end.

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A bit of both.

Plunge Protection And/Or Deeply Underwater Public Sector Pension Funds (CI)

The Dow rose over 1,000 points (almost 5%) after President Trump’s adviser Kevin Hassett assured skittish markets that Fed Chair Jerome Powell is 100% safe. Talk about plunge protection. After numerous jawboning by Fed board members, the Trump administration did its own plunge protection. Of course, an alternative explanation is a rotational shift of public sector pension funds from fixed-income in equities. OR did we just experience the first leg down in the eventual deflation of the massive asset bubble with the bubble deflation taking months … or years. Welcome to the financial circus!

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That means they expect Jay Powell to reverse course.

Pretty Much All Of Wall Street Thinks The Market Will Rally In 2019 (CNBC)

Wells Fargo strategist Christopher Harvey sharply reduced his expectations for the stock market in 2019, making him easily the least optimistic forecaster on Wall Street. Even with the sharp cut, though, pretty much every major house on the Street sees the market higher in the year ahead, despite the brutal correction and potential bear market that looms over investors as 2018 comes to a tumultuous close. Before the new year even begins, Harvey cut his price target for the S&P 500 from an original outlook of 3,079 to a much more muted 2,665. That’s a 13.4 percent reduction that the bank’s head of equity strategy attributed largely to fears of an over-aggressive Federal Reserve, which hiked its benchmark interest rate four times this year, most recently on Dec. 19.

The move “is due to our more comprehensive understanding of the Fed’s near-term philosophy and the belief that it will cause the growth deceleration to intensify,” Harvey said in a note to clients. Still, the new target represents a virtually exact 13.4 percent upside from Monday’s close. Harvey’s peers all agree that stocks are heading higher, from Morgan Stanley’s 2,750 price target all the way up to Deutsche Bank’s robust 3,250 for the large-cap index.

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By far the biggest bubble. The economy runs on this bubble.

The Most Splendid Housing Bubbles in America Decline (WS)

Seattle house prices drop 4.4% in four months, biggest drop since Housing Bust 1; Prices deflate in San Francisco Bay Area, San Diego, Denver, and Portland. Some of the markets in this select group of the most spending housing bubbles in America have turned the corner, according to the S&P CoreLogic Case-Shiller Home Price Index, released this morning for October, confirming other more immediate data. This includes the Seattle metro, the five-county San Francisco Bay Area, the San Diego metro, the Denver metro, and the Portland metro. In these metros, house prices have skidded the fastest, and in some cases for the first time, since the Housing Bust. In other markets, house prices have been flat for months. And in a few markets on this list, prices rose.

On a national basis, these dynamics get washed out. Single-family house prices in the US, according to the S&P CoreLogic Case-Shiller National Home Price Index, ticked up a smidgen on a month-to-month basis in October, and rose 5.5% compared to a year ago (not seasonally-adjusted). This year-over-year growth rate has been slowing from the 6%-plus range that reigned from September last year to July this year. The index is now 11.6% above the July 2006 peak of “Housing Bubble 1” (the first housing bubble in this millennium), which came to be called “bubble” and “unsustainable” only after it had begun to implode during “Housing Bust 1”:

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“What am I going to do, stay until I’m 100 years old? No.”

Kremlin Considers Changing Constitution To Extend Putin Presidency (ZH)

After last March’s not so shocking vote by China’s National People’s Congress to overwhelmingly pass a constitutional amendment to eliminate China’s presidential term limits, paving the way for President Xi Jinping to stay in power after his second term ends in 2023, it appears Russia is now inching toward the same scenario at a moment when, as one Moscow-based analyst put it, “The general sense is that there’s no one to replace Putin as the guarantor of the system.” Just prior to Russian President Vladimir Putin getting elected to his final possible term allowed under the constitution last March, Newsweek announced The End of The Putin Era is in Sight — looking ahead to the end of his term in 2024 — but even this could be in doubt, perhaps predictably, as this week Russian parliament raised the possibility of altering the constitution as rumors continue to circulate that the Kremlin is seeking ways to keep the popular 66-year old multi-term leader in power.

Currently the Russian constitution prohibits a president from being elected for more than two consecutive terms, but on Tuesday during a scripted meeting with Putin the speaker of Russia’s parliament, Vyacheslav Volodin, broached the issue, saying according to Bloomberg: “There are questions in society, esteemed Vladimir Vladimirovich,” Volodin said, addressing Putin in the respectful form, according to a Kremlin transcript. “This is the time when we could answer these questions, without in any way threatening the fundamental provisions” of the constitution, he added. “The law, even one like the Basic Law, isn’t dogma.”

Noting that the current constitution was drafted a quarter-century ago, Volodin continued, “That was a very difficult time. A time when the state stood on the edge of collapse, when social obligations weren’t fulfilled, when our citizens lost faith in the authorities.” [..] Perhaps the best quote on the issue came last Spring, however, when Putin was presented with a question of his prospects after 2024 just after his reelection to a second consecutive term. He said, “At present I don’t plan any constitutional reforms.” And when asked about seeking office in 2030, as allowed by current law, he quipped, “What am I going to do, stay until I’m 100 years old? No.”

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And the US is nowhere near as extreme as Europe, Japan, China. Because: immigration.

US Population Growth Hits 80-Year Low (ZH)

Last week, the Brookings Institution published a new report regarding population data from the US Census Bureau. The data showed population change estimates for the year ending in July 2018. Brookings said the national rate of population growth collapsed to its lowest level since 1937, “a result of declines in the number of births, gains in the number of deaths, and that the nation’s under age 18 population has declined since the 2010 census.” This new report comes after recent government data showed geographic mobility within the US is at historic lows. Some states —particularly in the Mountain West—are expanding at a quick rate, but approximately 20% of all states showed evidence of population losses over the last two years. The aging American population (i.e., those pesky baby boomers) is the broader cause for the downward shift in demographic trends that could cripple the nation in the years and decades ahead.

The population growth rate of 0.62% for 2017-2018 is the lowest registered since the end of the Great Depression. While the nation’s growth rate has fluctuated through wars, economic upheavals, baby booms, and baby busts, the current rate reflects a further fall that has also registered below the Great Recession low in 2007-2009. “These downward growth trends initially reflected declines in immigration as well as lower natural increase (the excess of births over deaths) because the economy was down. But over the past few years, as immigration gained slight momentum, reduced natural increase was more responsible for the overall decline in population growth—as it dropped from 1.6 million in 2000-2001 to just above 1 million in 2017-2018. There were fewer births than in recent decades and more deaths than in earlier years,” said Brookings.

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A development that’s clearest perhaps in Japan, but will spread all over.

Japan Shrinks As Birthrate Falls To Lowest Level In History (G.)

Japan suffered its biggest population decline on record this year, according to new figures that underline the country’s losing battle to raise its birth rate. The number of births fell to its lowest since records began more than a century ago, the health and welfare ministry said, soon after parliament approved an immigration bill that will pave the way for the arrival of hundreds of thousands of blue-collar workers to address the worst labour shortage in decades. The ministry estimated 921,000 babies will have been born by the end of 2018 – 25,000 fewer than last year and the lowest number since comparable records began in 1899. It is also the third year in a row the number of births has been below one million.

Combined with the estimated number of deaths this year – a postwar high of 1.37 million – the natural decline of Japan’s population by 448,000 is the biggest ever. The data suggests the government will struggle to reach its goal of raising the birth rate – the average number of children a woman has during her lifetime – to 1.8 by April 2026. The current birth rate stands at 1.43, well below the 2.07 required to keep the population stable. The prime minister, Shinzo Abe, has described Japan’s demographics as a national crisis and promised to increase childcare places and introduce other measures to encourage couples to have more children.

But the number of children on waiting lists for state-funded daycare increased for the third year in a row last year, raising doubts over his plans to provide a place for every child by April 2020. Japanese people have an impressive life expectancy – 87.2 years for women and 81.01 years for men – which experts attribute to regular medical examinations, universal healthcare coverage and, among older generations, a preference for Japan’s traditional low-fat diet. But the growing population of older people is expected to place unprecedented strain on health and welfare services in the decades to come.

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Look, you can be an expert on population change, if you want, but that doesn’t make you an expert on the influence of artificial intelligence on populations, or on population decline and economies. Those are completely different topics.

Falling Total Fertility Rate Should Be Welcomed, Population Expert (G.)

Declining fertility rates around the world should be cause for celebration, not alarm, a leading expert has said, warning that the focus on boosting populations was outdated and potentially bad for women. Recent figures revealed that, globally, women now have on average 2.4 children in their lifetime a measure known as total fertility rate (TFR). But while in some countries that figure is far higher – in Niger it is more than seven – in almost half of countries, including the UK, Russia and Japan, it has fallen to below two. Such declines have been met with alarm, with some warning that the “baby bust” puts countries at risk of a depopulation disaster.

But Sarah Harper, former director of the Royal Institution and an expert on population change, working at the University of Oxford, said that far from igniting alarm and panic falling total fertility rates were to be embraced, and countries should not worry if their population is not growing. Harper pointed out that artificial intelligence, migration, and a healthier old age, meant countries no longer needed booming populations to hold their own. “This idea that you need lots and lots of people to defend your country and to grow your country economically, that is really old thinking,” she said.

Having fewer children is also undoubtedly positive from an environmental point of view; recent research has found that having one fewer child reduces a parent’s carbon footprint by 58 tonnes of CO2 a year. Capping our consumption, said Harper, was crucial, not least because countries in Africa and Asia, where the fastest population rises were occurring, would need a bigger share of resources if global inequality were to be curbed. “What we should be saying is no, [a declining total fertility rate] is actually really good because we were terrified 25 years ago that maximum world population was going to be 24bn,” said Harper, who has three children herself.

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Sep 042018
 
 September 4, 2018  Posted by at 9:04 am Finance Tagged with: , , , , , , , , , ,  8 Responses »


Edward S. Curtis Lucille, Dakota Sioux 1907

 

Department of Homeland Security Lied About Russia Hacking US Voter Sites (CN)
Housing Bubble Pops in Sydney & Melbourne
Sydney, Melbourne Have Zero Cashflow Positive Suburbs Left (News.com.au)
Europe’s News Agencies Blast Google, Facebook For ‘Plundering’ Content (AFP)
The Emerging Market Crisis Is Back. And This Time It’s Serious (CNBC)
Bringing Up The Bodies in Emerging Markets (Napier)
Brexit Is The Wrong Diagnosis Of A Real Crisis (LSE)
China Says It Is Helping Africa Develop, Not Accumulate Debt (R.)
The Uncomfortable Hiatus (Kunstler)
Brazil Court Lifts Ban On Monsanto’s Glyphosate Weedkiller (AFP)

 

 

Read this excellent piece by Gareth Porter and you’ll never believe another single word about meddling. DHS made it all up, because it wanted to be the no. 1 cybersecurity unit in the US.

Department of Homeland Security Lied About Russia Hacking US Voter Sites (CN)

The narrative of Russian intelligence attacking state and local election boards and threatening the integrity of U.S. elections has achieved near-universal acceptance by media and political elites. And now it has been accepted by the Trump administration’s intelligence chief, Dan Coats, as well. But the real story behind that narrative, recounted here for the first time, reveals that the Department of Homeland Security (DHS) created and nurtured an account that was grossly and deliberately deceptive. DHS compiled an intelligence report suggesting hackers linked to the Russian government could have targeted voter-related websites in many states and then leaked a sensational story of Russian attacks on those sites without the qualifications that would have revealed a different story.

When state election officials began asking questions, they discovered that the DHS claims were false and, in at least one case, laughable. The National Security Agency and special counsel Robert Mueller’s investigating team have also claimed evidence that Russian military intelligence was behind election infrastructure hacking, but on closer examination, those claims turn out to be speculative and misleading as well. Mueller’s indictment of 12 GRU military intelligence officers does not cite any violations of U.S. election laws though it claims Russia interfered with the 2016 election.

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“With impeccable timing, there is a flood of new condos expected to be completed over the next two years..”

Housing Bubble Pops in Sydney & Melbourne

In Sydney, breeding ground for one of the world’s biggest housing bubbles, prices of single-family houses dropped 7.3% in August, compared to a year earlier. Prices of “units” — condos in US lingo — fell 2.2% year-over-year. Price declines were the sharpest at the high end, with prices down 8.1% in the most expensive quarter of home sales. Prices of all types of homes combined fell 5.6%, according to CoreLogic’s Daily Home Value Index. The index is down 5.8% from its peak last September:

Melbourne, where the inflection point has been lagging a few months behind Sydney’s, is in the process of catching up. Over the three month-period, June-August, prices fell 2.0%, making Melbourne the weakest housing market among the capital cities. By segment, house prices fell 2.7% from a year ago while condo prices still inched up 1.5%. At the most expensive quarter of sales, prices fell 5.2% from a year ago. For all types of dwellings combined, prices declined 1.7% year-over-year, to the lowest level since early June 2017, according to CoreLogic. Prices are down 3.6% from their peak at the end of November 2017:

[..] With impeccable timing, there is a flood of new condos expected to be completed over the next two years, something avid crane-counters in Sydney and Melbourne have been swearing for a while. Here are some of these astounding numbers that CoreLogic estimates based on data it collected from the industry: Greater Sydney: In 2019: 31,500 new condos are scheduled to be completed. In 2020, another 45,500 condos are expected to be completed. This brings the two-year total of new condos to 77,000 units, which will increase the total stock of condos by 9.3%! Greater Melbourne: The oncoming flood of new condos is expected to reach 29,000 units in 2019 and nearly 50,000 units in 2020. Over the two years, this will increase the total stock of condos by nearly 79,000 units, or by 11.5%!

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“Even property investors have been priced out of the market.”

Sydney, Melbourne Have Zero Cashflow Positive Suburbs Left (News.com.au)

Even property investors have been priced out of the market. There are “currently no suburbs” in Sydney, Melbourne or Canberra where an investor can buy a detached house and expect it to be cashflow positive with a deposit of 20 per cent or less, according to an analysis by Propertyology. Releasing a list of the country’s “best capital city cash cow suburbs”, the research firm said buyers would have to travel to the Central Coast, 100km from the Sydney CBD, before finding an investment property with decent cashflow. Even then, a median-priced $490,000 house in Lake Munmorah — the least worst “Sydney” suburb identified in Propertyology’s list — will leave the investor $3093 out of pocket.

“Victoria paints a similar picture, with greater Melbourne’s best locations for cash flow investors within the municipality of Melton — 40km northwest of the CBD,” Propertyology head of research Simon Pressley said in a statement. It comes as CoreLogic figures showed national dwelling values fell for the 11th consecutive month in August, led by weakness in the two major capitals that comprise about 60 per cent of Australia’s housing market by value. Negatively geared properties — when the rental return is less than the interest payments and other costs — are “okay when you’re getting 10 per cent capital growth year in, year out”, said AMP Capital chief economist Dr Shane Oliver.

But investors now face falling house prices, rising interest rates, tighter lending conditions and the possibility of a future Labor government cracking down on negative gearing and capital gains tax breaks. “The equation gets more complicated,” Dr Oliver said.

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Getting rich off of other people’s work.

Europe’s News Agencies Blast Google, Facebook For ‘Plundering’ Content (AFP)

Europe’s biggest news agencies accused Google and Facebook of “plundering” news for free on Tuesday in a joint statement that called on the internet giants to share more of their revenues with the media. In a column signed by the CEOs of around 20 agencies including France’s Agence France-Presse, Britain’s Press Association and Germany’s Deutsche Presse-Agentur they called on the European Parliament to update copyright law in the EU to help address a “grotesque imbalance”. “The internet giants’ plundering of the news media’s content and of their advertising revenue poses a threat both to consumers and to democracy,” the column said.

European Parliament lawmakers are to set to debate a new copyright law this month that would force the internet giants to pay more for creative content used on their platforms such as news, music or movies. A first draft of the law was rejected in July and the plans have been firmly opposed by US tech firms, as well as advocates of internet freedom who fear that the regulations could lead to higher costs for consumers. “Can the titans of the internet compensate the media without asking people to pay for access to the internet, as they claim they would be forced to? The answer is clearly ‘yes’,” the column said. The joint statement from the agencies, which are major suppliers of news, photos and video, said Facebook reported revenues of $40 billion (34 billion euros) in 2017 and profits of $16 billion, while Google made $12.7 billion on sales of $110 billion.

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Been here before. This time is wider and deeper.

The Emerging Market Crisis Is Back. And This Time It’s Serious (CNBC)

Markets have a very short attention span. Like babies, they move on quickly from one toy, or in this case an event, to another. For instance, markets seem to have moved on from the formation of the “Fragile Five,” a group of countries that suffered heavily when the U.S. Federal Reserve started to roll back its bond-buying program in 2013. Made up of Brazil, India, Indonesia, Turkey and South Africa, this group was marked by heavy currency depreciation, high current account deficits and political instability at home. The slump in commodity prices and fears of a Chinese slowdown kept the pressure on these economies. However, they have started to see a comeback; in India and Indonesia, for example, a change in government has led to political and economic reforms.

Investors started crowding this space and inflows into funds with exposure to these markets increased. But markets are feeling a sense of deja vu. Blame it on a stronger dollar, escalating tensions since President Donald Trump came to power, worries over a full-fledged trade war with China or rising interest rates in the U.S., this time around the crisis seems to have entered a new phase. The damage is far more widespread. The crisis has engulfed countries across the globe — from economies in South America, to Turkey, South Africa and some of the bigger economies in Asia, such as India and China. A number of these countries are seeing their currency fall to record levels, high inflation and unemployment, and in some cases, escalating tensions with the United States.

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“..the rise of the rule of man begins to squeeze out the rule of law..”

Bringing Up The Bodies in Emerging Markets (Napier)

Investors brought up in the developed world take for granted the stability and continuation of the rule of law. They expect it to be as available and constant as air. Anyway, what role can a consideration of the rule of law play in trying to obtain index beating quarterly returns? It is this myopia and not the myopia associated with the short-term dumping of assets, because they are labelled ‘emerging markets’, that is particularly dangerous. The history of emerging markets is the history of populism, the real populism that subverts human rights and property rights. On the rise in emerging markets, this populism is resulting in a growing exodus of what are now very large sums, even in global terms, of local savings.

It is the shift in local savings, more so than foreign savings, that is pushing emerging market exchange rates to ever lower levels. It is not the flighty financial capital seeking slightly better interest rate differentials that departs in situations like this. It is the financial capital that funds development and growth that flees, as the rise of the rule of man begins to squeeze out the rule of law. The loss of such capital has profound long-term economic impacts. There is a key reason why the strong men are on the rise and the rule of law on the decline: the world is failing to inflate away its debts. Even before we invented paper money, there was a well recognized method of inflating away debts.

Perhaps most famously Henry VIII’s so-called great debasement (1544-1551) inflated away the excessive debts run up to fund wars with France and Scotland, as well as a bit of lavish spending by the king himself. Your analyst meets investors almost every day who believe that inflation is currently playing a similar role. However, such an assertion ignores the fact that the global non-financial debt to GDP ratio is now 244% up from what seemed a dangerous level of 210% of GDP as the global economy peaked in December 2007.

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A nation that hasn’t moved in decades.

Brexit Is The Wrong Diagnosis Of A Real Crisis (LSE)

The Leave campaign in 2016 had a lot in common with the 1979 Conservative election manifesto. Both evoked the threat of a bureaucratic super-state and something approaching a conspiracy of that state against the public. Both promised to rescue a Greater Britain from the conspiratorial political forces that were holding it back. Both campaigns were a misdiagnosis of the real crisis at hand. This time we face a crisis of ungovernability potentially far more severe than that of the 1970s; but its roots are less in Europe than in the failures of the homegrown neoliberal reforms of the British state.

The last three decades of state reform in Western democracies have aggravated rather than resolved the social divisions that emerged with de-industrialisation. Over the last thirty years, liberal market economies in general and the UK in particular have transformed the character of their states through privatization and outsourcing, through the development of quasi markets in welfare, and the rejection of industrial policies. At the same time, permissive tax and regulatory regimes have encouraged large corporations to opt out of their former social obligations in the name of maximising shareholder value.

The ‘supply-side revolution’ of the last thirty years was driven by the dominant New Right diagnosis of the economic crises of the 1970s and based on the radical public choice economics aligned with the Chicago and Virginia schools. According to this diagnosis it was the state that was primarily responsible for the end of the post-war ‘golden age of growth’ because of its inhibition of the market. Thus, according to the New Right and later New Labour too, it wasn’t technological change, or de-industrialisation in the face of emerging markets, it wasn’t the Nixon shock, or the end of Bretton Woods, nor rising exchange rate instability, it wasn’t stagflation or the oil crises that had confronted the country with a need to re-evaluate its production regime. It was the state. And so it was the state, above all else, that had to be transformed.

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But still there’s “A wave of African nations seeking to restructure their debt with China”. Care to explain?

China Says It Is Helping Africa Develop, Not Accumulate Debt (R.)

China is helping Africa achieve development, not accumulate debt, a top Chinese official said on Tuesday, as the government pushes back against criticism it is loading the continent with an unsustainable burden during a major summit in Beijing. Chinese President Xi Jinping on Monday pledged funds of $60 billion to African nations at the opening of the Forum for China-Africa Cooperation, matching the size of the financing package offered at the last summit in Johannesburg in 2015. A wave of African nations seeking to restructure their debt with China has served as a reality check for Beijing’s relationship with the continent, though most countries still see Chinese lending as the best bet to develop their economies.

“If we take a closer look at these African countries that are heavily in debt, China is not their main creditor,” China’s special envoy for Africa, Xu Jinghu, told a news conference. “It’s senseless and baseless to shift the blame onto China for debt problems.” China would carefully choose projects that avoid causing debt problems when pushing forward with Xi’s pledges to Africa, she added. “When we cooperate with African countries we will conscientiously and fully carry out feasibility studies, to choose which projects can go ahead. These projects will take into account their development prospects so as to help African countries achieve sustainable development and avoid debt or financial problems.”

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“The shale oil “miracle” was a stunt enabled by supernaturally low interest rates..”

The Uncomfortable Hiatus (Kunstler)

Energy: The shale oil “miracle” was a stunt enabled by supernaturally low interest rates, i.e. Federal Reserve policy. Even The New York Times said so yesterday (The Next Financial Crisis Lurks Underground). For all that, the shale oil producers still couldn’t make money at it. If interest rates go up, the industry will choke on the debt it has already accumulated and lose access to new loans. If the Fed reverses its current course — say, to rescue the stock and bond markets — then the shale oil industry has perhaps three more years before it collapses on a geological basis, maybe less. After that, we’re out of tricks. It will affect everything. The perceived solution is to run all our stuff on electricity, with the electricity produced by other means than fossil fuels, so-called alt energy.

This will only happen on the most limited basis and perhaps not at all. (And it is apart from the question of the decrepit electric grid itself.) What’s required is a political conversation about how we inhabit the landscape, how we do business, and what kind of business we do. The prospect of dismantling suburbia — or at least moving out of it — is evidently unthinkable. But it’s going to happen whether we make plans and policies, or we’re dragged kicking and screaming away from it. Corporate tyranny: The nation is groaning under despotic corporate rule. The fragility of these operations is moving toward criticality. As with shale oil, they depend largely on dishonest financial legerdemain. They are also threatened by the crack-up of globalism, and its 12,000-mile supply lines, now well underway. Get ready for business at a much smaller scale.

Hard as this sounds, it presents great opportunities for making Americans useful again, that is, giving them something to do, a meaningful place in society, and livelihoods. The implosion of national chain retail is already underway. Amazon is not the answer, because each Amazon sales item requires a separate truck trip to its destination, and that just doesn’t square with our energy predicament. We’ve got to rebuild main street economies and the layers of local and regional distribution that support them. That’s where many jobs and careers are.

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In the most corrupt places on earth, Monsanto can do what it wants.

Brazil Court Lifts Ban On Monsanto’s Glyphosate Weedkiller (AFP)

An appellate court on Monday lifted a court-ordered suspension of licenses in Brazil for products containing glyphosate, an industrial weedkiller in common use in Latin America’s agricultural powerhouse. Federal appeals court judge Kassio Marques ruled that “nothing justified” the suspension by a lower court, saying it had been abruptly imposed “without previous analysis of the grave impact it would have on the country’s economy and on production in general.” The suspension, which had been ordered August 3 by a federal judge in Brasilia, was supposed to go into effect on Monday until a “toxicological re-evaluation” of all products containing glyphosate could be completed by Brazil’s sanitary authority.

The ban also was to have extended to products containing the chemicals thiram and abamectin. Glyphosate is used in weedkillers like Roundup, made by Monsanto, whose parent company Bayer had urged that the ban be scrapped. Bayer hailed the suspension as “very good news for Brazilian farmers.” It comes just weeks after a jury in California ordered Monsanto to pay $289 million to a dying former school groundskeeper for failing to warn him of the risk that Roundup might cause cancer.

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Feb 142018
 
 February 14, 2018  Posted by at 10:56 am Finance Tagged with: , , , , , , , ,  1 Response »


Times Square, New York 1954

 

The Payback Date For Today’s Economic Recovery Is Getting Closer (WEF/PS)
Big Reset Looms for Corporate Credit Market (WS)
Record $23 Billion Flees World’s Largest ETF (BBG)
Wednesday Could Be a Huge Day for the VIX (BBG)
Europe Has a $1 Trillion Bad-Loan Problem (BBG)
Draghi Faces Impossible Task To Weaken The Euro; He Might Not Even Try (CNBC)
Greek Bond Yields Keep Increasing (K.)
Britons Face Surge In Household Debts In Next Five Years (G.)
The World’s Biggest Housing Bubbles According To UBS (VisualC)
UK House Price Growth Accelerates To 5.2% (Ind.)
First-Time Buyers Hit 10-Year High As Buy-to-let Property Sales Fade (G.)
House Price Flatlining Is A Good Thing, Despite Estate Agents’ Gripes (G.)
Boris Johnson: Stopping Brexit Would Be ‘Disastrous’ (Ind.)

 

 

But nary a soul still sees a payback ahead….

The Payback Date For Today’s Economic Recovery Is Getting Closer (WEF/PS)

In recent days, the initial New Year optimism of many investors may have been jolted by fears of an economic slowdown resulting from interest-rate hikes. But no one should be surprised if the current sharp fall in equity prices is followed by a swift return to bullishness, at least in the short term. Despite the recent slide, the mood supporting stocks remains out of sync with the caution expressed by political leaders. Market participants could easily be forgiven for their early-year euphoria. After a solid 2017, key macroeconomic data – on unemployment, inflation, and consumer and business sentiment – as well as GDP forecasts all indicated that strong growth would continue in 2018. The result – in the United States and across most major economies – has been a rare moment of optimism in the context of the last decade.

For starters, the macro data are positively synchronized and inflation remains tame. Moreover, the IMF’s recent upward revision of global growth data came at precisely the point in the cycle when the economy should be showing signs of slowing. Moreover, stock markets’ record highs are no longer relying so much on loose monetary policy for support. Bullishness is underpinned by evidence of a notable uptick in capital investment. In the US, gross domestic private investment rose 5.1% year on year in the fourth quarter of 2017 and is nearly 90% higher than at the trough of the Great Recession, in the third quarter of 2009. This is emblematic of a deeper resurgence in corporate spending – as witnessed in durable goods orders. New orders for US manufactured durable goods beat expectations, climbing 2.9% month on month to December 2017 and 1.7% in November.

Other data tell a similar story. In 2017, the US Federal Reserve’s Industrial Production and Capacity Utilization index recorded its largest calendar year gain since 2010, increasing 3.6%. In addition, US President Donald Trump’s reiteration of his pledge to seek $1.5 trillion in spending on infrastructure and public capital programs will further bolster market sentiment. All of this bullishness will continue to stand in stark contrast to warnings by many world leaders. In just the last few weeks, German Chancellor Angela Merkel cautioned that the current international order is under threat. French President Emmanuel Macron noted that globalization is in the midst of a major crisis, and Canadian Prime Minister Justin Trudeau has stated that the unrest we see around the world is palpable and “isn’t going away.”

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Ne’er a lesson learned: Collateralized Loan Obligations.

Big Reset Looms for Corporate Credit Market (WS)

“Leveraged loans,” extended to junk-rated and highly leveraged companies, are too risky for banks to keep on their books. Banks sell them to loan mutual funds, or they slice-and-dice them into structured Collateralized Loan Obligations (CLOs) and sell them to institutional investors. This way, the banks get the rich fees but slough off the risk to investors, such as asset managers and pension funds. This has turned into a booming market. Issuance has soared. And given the pandemic chase for yield, the risk premium that investors are demanding to buy the highest rated “tranches” of these CLOs has dropped to the lowest since the Financial Crisis. Mass Mutual’s investment subsidiary, Barings, has packaged leveraged loans into a $517-million CLO that is sold in “tranches” of different risk levels.

[..] These floating-rate CLOs are attractive to asset managers in an environment of rising interest rates. If rates rise further, Libor rises in tandem, and investors would be protected against rising rates by the Libor-plus feature of the yields. Libor has surged in near-parallel with the US three-month Treasury yield and on Monday reached 1.83%. So the yield of Barings CLO was 2.82%. While the Libor-plus structure compensates investors for the risk of rising yields and inflation, it does not compensate investors for credit risk!

[..] One of the measures that track whether “financial conditions” are getting “easier” or tighter is the weekly St. Louis Fed Financial Stress Index. In this index, zero represents “normal.” A negative number indicates that financial conditions are easier than “normal”; a positive number indicates that they’re tighter than “normal.” The index, which is made up of 18 components – including six yield spreads, including one based on the 3-month Libor – had dropped to a historic low of -1.6 on November 3, 2017. Despite the Fed’s rate hikes and the accelerating QE Unwind, it has since ticked up only a smidgen and remains firmly in negative territory, at -1.35.

The Financial Stress Index and the two-year Treasury yield usually move roughly in parallel. But since July 2016, about the time the Fed stopped flip-flopping on rate hikes, the two-year yield began rising and more recently spiking, while the Financial Stress Index initially fell. The chart below shows this disconnect between the St. Louis Fed’s Financial Stress Index (red, left scale) and the two-year Treasury yield (black, right scale). Note the tiny rise of the red line over the past few weeks (circled in blue):

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Volatility ain’t done with you yet.

Record $23 Billion Flees World’s Largest ETF (BBG)

Investors actively abandoned the world’s biggest passive fund during the onset of market mayhem. The SPDR S&P 500 exchange-traded fund (ticker SPY) suffered a record $23.6 billion in outflows last week amid the worst momentum swing in history for the underlying U.S. equity benchmark. Outflows amounted to 8% of the fund’s total assets at the start of the week, a rate of withdrawals not seen since August 2010. A blowup in volatility-linked products sent markets haywire, eliciting waves of risk aversion from jittery investors. Strategists at JPMorgan said the swiftness and severity of the positioning unwind is a sign that further selling from the likes of commodity trading advisors and risk parity funds “should be limited from here.”

“The picture we are getting in the U.S. equity ETF space is one of advanced rather than early state de-risking,” they added. The five-session stampede for the exits erased the previous nine weeks of inflows into the fund, which is issued by State Street. The combination of price declines and withdrawals erased $38.6 billion in SPY’s assets. That’s nearly double the second-worst showing of $19.4 billion in asset shrinkage during the week ending Aug. 21, 2015, when China’s surprise devaluation of the yuan roiled markets. Prior to this recent market tumult, extreme enthusiasm for U.S. equities had propelled the fund’s total assets above $300 billion.

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What you say? Volatility?

Wednesday Could Be a Huge Day for the VIX (BBG)

Tomorrow’s VIX options expiration could prove extra volatile for the gauge. The Cboe Volatility Index tends to have bigger swings on days its contracts mature, with intraday moves of 13% on average on the past 12 monthly expirations. That compares with a mean daily fluctuation of 10% in the year through January. Of course, that was before this month, when a record VIX surge on Feb. 5 sent its average intraday move for February to almost 60%. What’s more, the recent market turmoil has led to a surge in the number of VIX contracts, and put open interest almost tripled to a record since the Jan. 17 expiration. Counting puts and calls, there are 15.4 million VIX options outstanding, and 40% of them mature tomorrow. While most stock-index options expire on the third Friday of every month, monthly VIX contracts expire two days earlier, on the Wednesday.

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Wait for rates to rise.

Europe Has a $1 Trillion Bad-Loan Problem (BBG)

For European banks, it’s a headache that just won’t go away: the €944 billion ($1.17 trillion) of non-performing loans that’s weighing down their balance sheets. Economists say the pile of past-due and delinquent debt makes it harder for banks to lend more money, hurting their earnings. European authorities are prodding lenders to sell or wind down non-performing credit, but they’re split on how to tackle the issue, and some investors are disappointed by the pace of progress.

The problem is particularly acute in the countries that were hit hardest by the sovereign debt crisis. Greece, which has yet to exit its bailout program, tops the list of non-performing loans as a share of total credit, while Italy has the biggest pile of bad debt in absolute terms.

Italian banks have fixed goals for shrinking their bad credit levels by selling portfolios or winding down loans. Intesa Sanpaolo, the country’s biggest bank by market value, got a head start on its rivals two years ago and plans to accelerate the reduction of non-performing loans, Chief Executive Officer Carlo Messina said last month. He says other Italian banks “are doing the right job” and should make further progress this year.

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Trumped.

Draghi Faces Impossible Task To Weaken The Euro; He Might Not Even Try (CNBC)

Mario Draghi is facing yet another headache this year as a strong currency threatens to derail his quest to keep prices stable, with many analysts suggesting there’s no easy way out for the president of the ECB. Investors have been flocking to the single currency as the euro zone economy keeps growing and political risks dissipate. However, that could become a problem for the ECB as a stronger currency can mean that European-produced products become pricier and less attractive outside the region. The euro has risen nearly 3% against the U.S. dollar since the start of the year, at a time when the ECB has been assessing how to reduce its monetary stimulus – which aims to increase lending and stoke consumer prices. At the bank’s last press conference in January, Draghi admitted that recent volatility in the exchange rate was a “source of uncertainty.”

The ECB’s primary target has always been inflation and not the exchange rate and Draghi — like many central bankers around the world — has been cautious when speaking of his own currency. However, analysts believe that Draghi wouldn’t be able to talk down the euro, even if he wanted to. “I believe it will be difficult for the ECB to talk the euro down in a very significant manner as it has already pretty much exhausted its preferred expansionary monetary policy instruments which it could use to weaken the currency (rate hikes and QE),” Thu Lan Nguyen at Commerzbank told CNBC via email. “And as the G-20 nations have agreed that they will refrain from manipulating their exchange rates, interventions are not a viable option either. Or even directly talking the euro down for that matter, because other nations would see this as a violation of the agreement as well,” she said.

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As everyone else’s yields rise (often from below zero), Greece is helpless.

Greek Bond Yields Keep Increasing (K.)

Greek bond yields continued to rise Tuesday, increasing worries about the cost of borrowing the country will face once it has to cover all of its financing needs through the market. At the same time Finance Minister Euclid Tsakalotos is adamant that Greece will not need a precautionary credit line and is embarking on a series of contacts in an attempt to attract investor interest. Tsakalotos departed on Tuesday for Paris for meetings with representatives of investment companies, hoping to convince them about the prospects of the Greek economy. He will continue his mission in London on Thursday. He is due back to Athens on Friday. The Greek 10-year bond saw its yield climb further on Tuesday, reaching 4.38% from 4.29% on Monday, while the yield on five-year paper advanced from 3.64% to 3.77% in a day. The 7-year debt yield exceeded 4%, having been sold to investors with a 3.5% yield just last Thursday.

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I shudder to imagine what Britain will look like in 5 years time.

Britons Face Surge In Household Debts In Next Five Years (G.)

Britons will spend almost a third more on their mortgages and other household debts over the next five years, according to new data, sparking fears many may struggle to cope with mounting costs if interest rates rise as predicted. The projection, revealed by a freedom of information request to the Office for Budget Responsibility, found household debt servicing costs were set to climb 29% by 2023, the vast majority of which are likely to be mortgages. The rise may take homeowners by surprise, given that costs fell 9% over the previous five years and also declined as a share of household income by almost a quarter due to historically low interest rates.

The Bank of England has indicated that it plans to raise interest rates from as early as May. On Monday the Resolution Foundation warned it could hit millions of low-income families who have relied on cheap credit. The Bank’s governor, Mark Carney, has said he believes the growing economy, including GDP growth and rising average wages, warrants a rise in interest rates from their low of 0.5%. Labour’s analysis found that an average household would see an increase of £468 in annual debt costs, from £1,983 in 2018 to £2,451 by 2023. The shadow chancellor, John McDonnell, called the figures “eye-watering increases in the potential costs faced by working families at a time when incomes are being squeezed”.

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Nice series of articles on UK housing. Nice because contradictory.

The World’s Biggest Housing Bubbles According To UBS (VisualC)

If you had $1 billion to spend on safe real estate assets, where would you look to buy? For many funds, financial institutions, and wealthy individuals, the perception is that the world’s financial centers are the places to be. After all, world-class cities like New York, London, and Hong Kong will never go out of style, and their extremely robust and high-density city centers limit the supply of quality assets to buy. But what happens when too many people pile into a “safe” asset? According to UBS, certain cities have seen prices rise at rates that are potentially not sustainable – and eight of these financial centers are at risk of having real estate bubbles that could eventually deflate.

Every year, UBS publishes the Global Real Estate Bubble Index, and the most recent edition shows several key markets in bubble territory. The bank highlights Toronto as the biggest potential bubble risk, noting that real prices have doubled over 13 years, while real rents and real income have only increased 5% and 10% respectively. However, the largest city in Canada was certainly not the only global financial center with real estate appreciating at rapid rates in the last year. In Munich, Toronto, Amsterdam, Sydney and Hong Kong, prices rose more than 10% in the last year alone. Annual increases at a 10% clip would lead to the doubling of prices every seven years, something the bank says is unsustainable.

In the last year, there were three key markets where prices did not rise: London, Milan, and Singapore. London is particularly notable, since it holds more millionaires than any other city in the world and is rated as the #1 financial center globally.

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Article above: Prices did not rise in London. Article below: they did.

UK House Price Growth Accelerates To 5.2% (Ind.)

UK house price growth accelerated to 5.2% in the year to December, new official data shows. That was a rise from 5% in the twelve months to November. The jump exceeds rises in average wages, prompting experts to warn of a further strain on affordability. The average UK house price hit £227,000 in December 2017, up £1,000 from the previous month and £12,000 higher than in December 2016. The house price index compiled by the Office for National Statistics and the Land Registry shows Scotland and the South-west experienced the highest annual house price growth, registering 7.7% and 7.5% respectively.

Average prices in England rose 5% in the year, to £244,000 while Wales saw house prices increase by 5.4% over the last 12 months to stand at £154,000. Growth in Northern Ireland was slightly more subdued, with the average price rising 4.3% to £130,000. Richard Snook, a senior economist at PwC, said the overall UK rise was above his projection made at the start of 2017. [..] “In terms of regional trends, London prices showed a slight recovery from the sharp fall in November so the picture is one of a market that has plateaued since the summer. London prices are just 2.5% above their level a year ago.

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And first time buyers rise. That’s supposed to be a good thing.

First-Time Buyers Hit 10-Year High As Buy-to-let Property Sales Fade (G.)

The number of first-time buyers hit the highest level for a decade in 2017 while lending for buy-to-let has gone into retreat, according to official figures. A total of 365,000 buyers took ownership of their first home last year, an increase of 7.4% on 2016 and the highest number since 2006, said UK Finance, the trade body for Britain’s banks. Its data showed that the average first-time buyer was 30 and had an income of £41,000. Property experts said the government’s help-to-buy programme plus lower deposit and cheap mortgage deals propelled first-time buyers in 2017. But in a sign that the boom may be waning, the figures for December show the number slipped compared with the same month last year. The slowdown comes despite the stamp duty cut in the November budget, which is expected to save four out of five first-time buyers up to £5,000.

The raft of tax measures on buy-to-let introduced last year has sent the sector swiftly into retreat. There were 5,300 new buy-to-let house purchase mortgages completed in December, 17.2% fewer than in the same month a year earlier. Paul Smee, of UK Finance, said: “2017 saw the number of first-time buyers reach its highest level in a decade, which is welcome news for those getting started on the housing ladder. “But although the market remains competitive there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year. [..] Separate figures from the Office for National Statistics revealed that house price inflation in 2017 was 5.2%, taking the price of a typical UK home to £226,760.

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OK, we’ve had rising prices and falling prices. Flatlining is door no. 3.

House Price Flatlining Is A Good Thing, Despite Estate Agents’ Gripes (G.)

Over the past year the rate of house price inflation has fallen while the number of first-time buyers has risen to its highest level since 2006. These two facts are connected: the reason young people have become renters rather than owner-occupiers is that property became expensive. Property has become so dear that the average first-time buyer is now 30 years old and has a salary of £41,000 a year. Owner-occupation rates have fallen from 70% to 63% over the past decade and it is not difficult to see why. Ultra-low interest rates mean that it has never been cheaper to service a mortgage, but that doesn’t matter all that much when the price of a home relative to incomes is so high.

For those who want to buy their own home, the good news is that house-price inflation will be modest in 2018. Earnings growth is still around 2.5%; the Bank of England is warning that interest rates are likely to go up faster and by more than previously expected; and tax changes that have helped cause a 17% annual drop in buy-to-let purchases in the year to December are going to become more stringent in April. House prices would already be falling were it not for the fact that interest rates and unemployment are low. It was the combination of 15% interest rates and a doubling of the jobless total that caused the property-price collapse of the early 1990s, and a repeat of that looks highly improbable because of a (welcome) lack of distressed sellers.

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For his career.

Boris Johnson: Stopping Brexit Would Be ‘Disastrous’ (Ind.)

Boris Johnson will say he fears people are becoming “even more determined” in their efforts to stop Britain’s withdrawal from the European Union (EU), as he sets out in a major speech what allies claim is a liberal vision of Brexit. The Foreign Secretary’s Valentine’s Day address – entitled the Road to Brexit – will be the first in a series of set pieces from Cabinet ministers and preludes Theresa May’s address in Germany this weekend. At a central London location, Mr Johnson will say he fears that some are becoming “even more determined” to stop Brexit and “frustrate the will of the people”.

“I believe that would be a disastrous mistake that would lead to permanent and ineradicable feelings of betrayal,” Mr Johnson will say. “We cannot and will not let it happen.” “But if we are to carry this project through to national success – as we must – then we must reach out to those who still have anxieties. “I want to try today to anatomise at least some of those fears and to show to the best of my ability that they are unfounded, and that the very opposite is usually true: that Brexit is not grounds for fear but hope.”

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Jan 202018
 


Vincent van Gogh Lane near Arles 1888

 

US Government Shutdown Begins As Spending Bill Fails In Senate (R.)
Trump To Tout US Economy, Urge Fair Trade At Elite Davos Forum (R.)
What Will Rising Mortgage Rates Do to Housing Bubble 2? (WS)
Fever Pitch (Jim Kunstler)
NSA Deleted Surveillance Data Court Had Ordered It To Preserve (Pol.)
Russia Accuses US Of “Carving Out Alternative Government” In Syria (ZH)
Europe Must Wake Up To Drastic Consequences Of A Hard Brexit (Joris Luyendijk)
UK Banks Turn Off Lending Taps To Households (G.)
The Carillion Whitewash (Coppola)
Hundreds Of UK MPs Call On Supermarkets To Scrap Plastic Packaging (G.)
The Untreatable: The Centenary of Spanish Flu (LRB)

 

 

Maybe it’s better this way: expose the failing systems. Bring out your dead.

US Government Shutdown Begins As Spending Bill Fails In Senate (R.)

The U.S. government shut down at midnight on Friday after Democrats and Republicans failed to reach a last-minute deal to fund its operations, divided in a bitter dispute over immigration and border security. In a dramatic late-night session, senators blocked a bill to extend government funding through Feb. 16. The bill needed 60 votes in the 100-member Senate but fell short, with only 50 supporting it. Most Democrats opposed the bill because their efforts to include protections for hundreds of thousands of mostly young immigrants known as Dreamers failed. Huddled negotiations by Senate Majority Leader Mitch McConnell and Senate Democratic leader Chuck Schumer in the last minutes before midnight were unsuccessful, and the U.S. government technically ran out of money at midnight.

The shutdown formally began on Saturday, the first anniversary of President Donald Trump’s inauguration. Trump immediately sought to blame Democrats. “Tonight, they put politics above our national security, military families, vulnerable children, and our country’s ability to serve all Americans,” the White House said in a statement. It also said it would not discuss immigration until the government is up and running again. “We will not negotiate the status of unlawful immigrants while Democrats hold our lawful citizens hostage over their reckless demands. This is the behavior of obstructionist losers, not legislators.” In return, Schumer pointed the finger directly at Trump. “It’s almost as if you were rooting for a shutdown and now we’ll have one and the blame should crash entirely on President Trump’s shoulders,” he said.

Until a funding deal is worked out, scores of federal agencies across the country will be unable to operate, and hundreds of thousands of “non-essential” federal workers will be put on temporary unpaid leave. The Republican-controlled House of Representatives passed a stopgap funding measure on Thursday. But Republicans then needed the support of at least 10 Democrats to pass the bill in the Senate. While five Democrats ended up voting for the measure, five Republicans voted against it. Democratic leaders demanded that the measure include protections from deportation for about 700,000 undocumented immigrants known as Dreamers who arrived in the United States as children.

Despite bipartisan negotiations, Republican leaders refused to include those protections, and neither side was willing to back down. McConnell and Schumer insisted they were still committed to finding an agreement that restores government funding as soon as possible. Trump, who had made strict measures on immigration a cornerstone of his presidential campaign, last week rejected a bipartisan proposal, saying he wanted to include any deal for Dreamers in a bigger legislative package that also boosts funding for a border wall and tighter security at the U.S. border with Mexico.

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A lion’s den indeed.

Trump To Tout US Economy, Urge Fair Trade At Elite Davos Forum (R.)

U.S. President Donald Trump will be entering something of a lion’s den when he visits the elitist enclave of Davos next week, rubbing shoulders with the same “globalists” that he campaigned against in winning the 2016 election. Aides said some of Trump’s advisers had argued against him attending the World Economic Forum in order to steer clear of the event, which brings together political leaders, CEOs and top bankers. But in the end, they said, Trump, the first sitting U.S. president to attend the forum since Bill Clinton in 2000, wanted to go to call attention to growth in the U.S. economy and the soaring stock market. A senior administration official said Trump is expected to take a double-edged message to the forum in Switzerland, where he is to deliver a speech and meet some world leaders.

In his speech, Trump is expected to urge the world to invest in the United States to take advantage of his deregulatory and tax cut policies, stress his “America First” agenda and call for fairer, more reciprocal trade, the official said. During his 2016 election campaign, Trump blamed globalization for ravaging American manufacturing jobs as companies sought to reduce labor costs by relocating to Mexico and elsewhere. “Globalization has made the financial elite who donate to politicians very wealthy. But it has left millions of our workers with nothing but poverty and heartache,” he said on June 28, 2016, in Pennsylvania. Trump retains the same anti-globalist beliefs but has struggled to rewrite trade deals that he sees as benefiting other countries.

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This is going to hurt.

What Will Rising Mortgage Rates Do to Housing Bubble 2? (WS)

The US government bond market has further soured this week, with Treasuries selling off across the spectrum. When bond prices fall, yields rise. For example, the two-year Treasury yield rose to 2.06% on Friday, the highest since September 2008. In the chart, note the determined spike of 79 basis points since September 8, 2017. That was the month when the Fed announced the highly telegraphed details of its QE Unwind. September as month of the QE-Unwind announcement keeps cropping up. All kinds of things began to happen, at first quietly, without drawing much attention. But then the trajectory just kept going.

The three-year yield, which had gone nowhere for the first eight months of 2017, rose to 2.20% on Friday, the highest since October 1, 2008. It has spiked 82 basis points since September 8:

The ten-year yield – the benchmark for financial markets that most influences US mortgage rates – jumped to 2.66% late Friday. This is particularly interesting because the 10-year yield had declined from March 2017 into August despite the Fed’s three rate hikes last year, and rising short-term yields. At 2.66%, the 10-year yield has reached its highest level since April 2014, when the “Taper Tantrum” was winding down. That Taper Tantrum was the bond market’s way of saying “we’re shocked and appalled,” when Chairman Bernanke dropped hints the Fed might eventually begin tapering what the market had called “QE Infinity.” The 10-year yield has now doubled since the historic intraday low on July 7, 2016 of 1.32% (it closed that day at 1.37%, a historic closing low):

Friday capped four weeks of pain in the Treasury market. But it has not impacted yet the corporate bond market, and the spread in yields between Treasuries and corporate bonds, and particularly junk bonds, has further narrowed. And it has not yet impacted the stock market, and there has been no adjustment in the market’s risk pricing yet. But it has impacted the mortgage market. On Friday, the average 30-year fixed-rate mortgage with conforming loan balances ($417,000 or less) for top-tier borrowers, according to Mortgage News Daily, ended at 4.23%, the highest in nine months. But historically, 4.25% is still very low. And likely just the beginning of a long, uneven climb higher. And the impact on mortgage payments can be sizable. When rates rise for example from 3.5% to 4.5%, the payment for a $250,000 mortgage jumps by $144 to $1,267 a month. This can move the payment out of reach for households that have trouble making ends meet.

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Rising markets and fever as flu symptoms.

Fever Pitch (Jim Kunstler)

In case you’re worked up about the looming federal government shut-down, this is exactly how we’re supposed to roll in the long emergency: everything organized at the gigantic scale is going to wobble and fail. It’s nature’s way of saying, “get smaller, get realer, scale down, and get local.” The catch is, we probably won’t listen to nature. Instead, we’ll just behave like bystanders and do nothing until the full force of failure is upon us, just as we’re doing with climate change — the tragedy of the commons at planetary scale. The failure of national party politics is deep and systemic, as you would expect from activities nurtured in a shit-hole called Washington, corruption being the manifestation of sepsis. The lethal vector of this illness is money.

There’s the money flowing into the “campaign funds” (so-called) of congressmen and senators, of course, but there’s also the “money” that is flowing in and out of the leviathan government — a whole lot of it is not really there. It’s a figment of promises to pay back loans on top of a monumental heap of past promises that will never be kept. The threatened government shutdown is just a symptom of the illness: a society doing things out of scale, trying to run its excessive activities by check-kiting and accounting fraud. What could go wrong? Not the stock and bond markets, I’m sure. Though… wait a minute… that hockey-stick surge in equities looks a little bit like the action of a thermometer measuring the rising body temperature of a very sick patient.

From 25,000 to 26,000 on the Dow — in what? seven days? — is kind of like the flu victim going from 98.6 to 105 after onset. And we know what happens to humans up around the 105 Fahrenheit body temperature level: the brain starts to sputter and smoke. Soon, it’s lights out and don’t let your karma smack you on the butt going through the exit.

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State within the state. F*ck the courts.

NSA Deleted Surveillance Data Court Had Ordered It To Preserve (Pol.)

The National Security Agency destroyed surveillance data it pledged to preserve in connection with pending lawsuits and apparently never took some of the steps it told a federal court it had taken to make sure the information wasn’t destroyed, according to recent court filings. Word of the NSA’s foul-up is emerging just as Congress has extended for six years the legal authority the agency uses for much of its surveillance work conducted through U.S. internet providers and tech firms. President Donald Trump signed that measure into law Friday. Since 2007, the NSA has been under court orders to preserve data about certain of its surveillance efforts that came under legal attack following disclosures that President George W. Bush ordered warrantless wiretapping of international communications after the 2001 terrorist attacks on the U.S.

In addition, the agency has made a series of representations in court over the years about how it is complying with its duties. However, the NSA told U.S. District Court Judge Jeffrey White in a filing on Thursday night and another little-noticed submission last year that the agency did not preserve the content of internet communications intercepted between 2001 and 2007 under the program Bush ordered. To make matters worse, backup tapes that might have mitigated the failure were erased in 2009, 2011 and 2016, the NSA said. “The NSA sincerely regrets its failure to prevent the deletion of this data,” NSA’s deputy director of capabilities, identified publicly as “Elizabeth B.,” wrote in a declaration filed in October. “NSA senior management is fully aware of this failure, and the Agency is committed to taking swift action to respond to the loss of this data.”

In the update Thursday, another NSA official said the data were deleted during a broad, housecleaning effort aimed at making space for incoming information. “The NSA’s review to date reveals that this [Presidential Surveillance Program] Internet content data was not specifically targeted for deletion,” wrote the official, identified as “Dr. Mark O,” “but rather the PSP Internet content data matched criteria that were broadly used to delete data of a certain type … in response to mission requirements to free-up space and improve performance of the [redacted] back-up system. The NSA is still investigating how these deletions came about given the preservation obligations extant at the time. The NSA, however, has no reason to believe at this time that PSP Internet content data was specifically targeted for deletion.”

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With Turkey starting an extensive bombing campaign, Syria could explode once again.

Russia Accuses US Of “Carving Out Alternative Government” In Syria (ZH)

Russia’s Foreign Minister Sergey Lavrov has accused the United States of working to carve out “an alternative government” on Syrian soil in statements made at a UN press briefing related to the recent Turkish military build-up poised to assault Syrian Kurdish areas of Northern Syria. Lavrov’s words come after Secretary of State Rex Tillerson pledged in a speech on Wednesday that US military forces would remain in Syria indefinitely until various objectives are met, which include Syrian government transition and the curtailing of Iran’s influence. Lavrov said “It’s a fact that US forces are seriously involved in creating alternative government bodies on vast part of the Syrian territory. And this, of course, absolutely contradicts their own obligations, which they committed to on numerous occasions, including at the UN Security Council, on maintaining the sovereignty and the territorial integrity on Syria.”

The Russian FM further accused the US of contradicting its previous claim that US troops – which number at least 2,000 according to recent Pentagon statements – were only in Syria to fight the Islamic State and not wage a proxy war against the Syrian government and its allies. The prior US policy of regime change in Syria, which began under the Obama administration and intensified under a CIA program, was something many analysts perceived that President Trump had abandoned – consistent with earlier campaign promises. In the summer of last year Trump shut down the CIA program – widely reported to be the agency’s largest covert program – even while boosting support for the Pentagon program to arm and train the predominately Kurdish Syrian Democratic Forces (SDF).

“Rex Tillerson told me many times that the only reason for their presence there [in Syria] is defeating Islamic State (IS, formerly ISIS/ISL). Now they have some much more long-standing plans,” Lavrov said further of the inconsistency in US policy. “We will have to take this into account and look for solutions that won’t allow the destruction of Syrian sovereignty.”

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Bit late, perhaps?

Europe Must Wake Up To Drastic Consequences Of A Hard Brexit (Joris Luyendijk)

Because it is such a riveting clown show with new crazy episodes almost every day, Europeans can be forgiven for ignoring the fact that Brexit is going to hurt them too. But as the date of Britain’s departure comes closer and Theresa May’s government continues its kamikaze policy of demanding the politically unthinkable from the EU, it is time for Europeans to wake and begin preparing for the worst. On Thursday the Dutch government published a report drawn up by the consultancy firm KPMG analysing the consequences of a “no-deal” Brexit in which the UK leaves the EU without an agreement on 29 March 2019.

Here are the practical implications and cold numbers behind the hot-headed rhetoric about no deal with the EU being “better than a bad deal” for Britain: should the UK “crash” out of the EU by late March 2019 the Dutch companies trading with the UK will have to secure a total of no less than 4.2m exporting and 750,000 importing licences. If by this time both states have a functioning customs system in place – a big if for this consistently incompetent UK government – costs for companies are between €80 and €130. That is per licence. The price tag for all this new red tape is €600m for the Dutch side alone. This excludes the costs of new export and import tariffs, VAT and other new “sector-specific” barriers for trading with the UK.

The 35,000 small and medium-sized businesses unused to trading with non-EU countries also face an estimated cost of €20,000-€50,000 to adapt their IT systems. Added to this, warns the report, must be the likely effects of the inevitable economic slowdown, or worse, in Britain. When the country leaves without a deal it must “fall back” on the minimal WTO rules for trade. But financial services and aviation fall outside the WTO regime, meaning that after a British no-deal departure both sectors must stop trading with the EU overnight. Between Amsterdam Schiphol airport and London alone there are currently 60 flights a day – one every 15 minutes.

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“The richest 10% spent more on wine per week (£9.40) than the poorest 10% spent on water..”

UK Banks Turn Off Lending Taps To Households (G.)

There is little for the average household to cheer these days as inflation crushes paltry earnings increases. Inflation is running at 3% while wage rises can manage no more than 2.5%. Worse for the average household, the banks are beginning to turn off the lending taps that have allowed them to boost their incomes with cheap debt. Things were better in the year to April 2017, according to the number crunchers at the Office for National Statistics, who have lifted the lid on Britain’s spending habits in their annual family spending report. It shows that average weekly household spending clawed its way back from the depths of the 2009 recession to exceed the pre-crisis level for the first time.

This slice of good news, albeit five or six years later than many economists thought it would happen, disguises how the better off have thrived compared to those on the bottom rung of the income ladder. For instance the richest 10% spent more on wine per week (£9.40) than the poorest 10% spent on water (£7.30). In the same vein, the richest 10% spent £59.40 on “furniture and furnishings, carpets and other floor coverings” to almost match how much the poorest 10% spent on rent (£62.70). Challenging the idea that the poorest waste their money on booze and cigarettes, the survey found that the richest 10% devote twice as much of the weekly shop (£17.50) to “alcoholic drinks, tobacco and narcotics” as the poorest. But it is the new rich, the 65- to 74-year-olds that really catch the eye.

Their spending might not match that of the top 10%, yet it significantly powers ahead of anything the average 20-something can muster on areas like entertainment and recreation. The figures show that people in the 10 years from their 65th birthday go on a spending binge that means devoting nearly a fifth of their total expenditure on recreation and culture, double the 10% spent by the under-30s. This is the final salary pension bonanza that can only be described as a once in a generation spending boost. The same applies to those of all ages on below average incomes. They increased their spending by a startling 7% on the previous year, far more than the 1% increase across the richest half of households. Unfortunately they managed this largely by running down savings and taking on extra debt.

As banks, under instruction from the financial regulator, rein in their lending, debt-fuelled spending should be considered a one-off boon, just like the final salary payout. However, that seems unlikely. Banks remain dependent for profit on lending.

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Another bunch of lies that will go unpunished.

The Carillion Whitewash (Coppola)

The Carillion whitewash has begun. Carillion’s interim CEO, Keith Cochrane, is spinning the line that had banks not pulled funding, its collapse could have been averted. And the Financial Times has released details of a letter Carillion sent to the Government at the beginning of January, in which it asked for short-term advances to tide it over while it underwent restructuring. Labour MP Pat McFadden has written to the Treasury Secretary asking whether it would have been more cost-effective for the U.K. Government to support Carillion, rather than allowing it to collapse. This looks to me like a campaign to deflect blame from Carillion’s management to its lenders and customers. We are being led to believe that it wasn’t insolvent, it was just illiquid, and depriving it of short-term funds caused a completely unnecessary collapse.

Deliciously, the bank Cochrane principally accuses of precipitating Carillion’s collapse by depriving it of funds is RBS, which was rescued at taxpayer expense in the 2008 financial crisis. Something tells me Cochrane’s fingering of RBS is no accident. For a bailed-out bank to refuse to provide a major Government contractor with short-term funds looks at best ungrateful and at worst insulting. Of course, RBS is itself a past master at playing the “we’re not insolvent, we are just illiquid” game. On the day that RBS failed, in September 2008, RBS’s CEO, Fred Goodwin, insisted that the bank was solvent. “We don’t have a capital problem,” he said. “We have a liquidity problem. All we need is short-term cash”.* But in fact, RBS was deeply insolvent. Rescuing it cost the U.K. Government £45bn, and RBS has lost a further £58bn since. Nearly ten years after the crisis, it is still in majority public ownership.

The similarity to RBS’s collapse is striking. Less than a week after Carillion’s failure, we now know that it is deeply insolvent. A couple of days after it filed for compulsory liquidation, Carillion’s unsecured bonds were trading at only 2.4% of par: This is an extraordinary writedown. It implies that bondholders expect to get back almost none of their investment. And this is senior unsecured debt, not subordinated debt or equity. The holders of anything more junior have already been wiped.

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All of a sudden everyone wakes up at the same time. But why have supermarkets and Coca Cola never done anything about it? And what are the odds they will once the atttention dies down?

Hundreds Of UK MPs Call On Supermarkets To Scrap Plastic Packaging (G.)

Two hundred cross-party MPs are calling on heads of the major supermarkets to eliminate plastic packaging from their products by 2023. The MPs, who are from seven political parties, have written to Tesco, Sainsbury’s, Morrisons, Asda, Waitrose, Aldi, Lidl, Budgens and Marks & Spencer urging them to scrap plastic packaging. They wrote after the Guardian revealed this week the major supermarkets in the UK create more than 800,000 tonnes of plastic packaging waste – well over half the household plastic waste – each year. Six of the major supermarkets refused to reveal the amount of plastic packaging they put on to the market, saying the information was commercially sensitive. Analysis by Eunomia environmental consultants used figures provided by Aldi and the Co-op – the only chains to release public figures on their plastic tonnage – and the market share of each supermarket to estimate how much plastic packaging the chains produce each year.

This week, Iceland announced it would stop plastic packaging on its own brand products by 2023. Catherine West, Labour MP for Hornsey and Wood Green, who is behind the letter, said: “Vast amounts of plastic are ‘used’ for merely a few seconds before being discarded. “We have a moral duty to tackle this disposable culture. As such, I welcome the recent announcement from Iceland supermarkets … and I’m delighted that MPs from all parties are supporting my call for other retailers to follow suit.” Waitrose announced on Friday it would no longer use black plastic for its meat, fish, fruit and vegetables by the end of this year, and that all Waitrose products would be free of black plastic by the end of 2019. Black plastic cannot be recycled under current UK systems.

Each year it is estimated that more than 300m tonnes of plastic are produced globally. The Guardian revealed recently that plastic production is set to soar over the next 10 years. On Friday Coca-Cola announced a new goal to collect and recycle the equivalent of 100% of the packaging it sells globally by 2030. Coca-Cola said: “Given the size and scope of this challenge, we expect to invest in new packaging innovations and local collection and recycling systems, as well as consumer education and awareness programs.”

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Good to know your history. Society would be at least as helpless now as 100 years ago, Better medicine, but also 100 times more mobility. And that’s what kills.

The Untreatable: The Centenary of Spanish Flu (LRB)

This year marks the centenary of Spanish flu, the most deadly pandemic in human history. It is estimated that five hundred million people contracted it – a third of the global population in 1918 – and that between fifty and a hundred million of them died. Asians were thirty times more likely to die than Europeans. The pandemic had some influence on the lives of everyone alive today. Donald Trump’s grandfather Friedrich died from it in New York City. He was 49. His early death meant that his fortune passed to his son Fred, who used it to start a New York property empire. My wife’s great-grandmother died from it in Verona; her grandfather, aged eight, had to leave school and find work to support the family. Emilio died in 2011 aged 101.

When I told a friend, the writer Andrew Greig, that I was writing this piece, he told me that his father, born in 1899, came down with Spanish flu while on leave from the war in France. ‘His convalescence delayed his return to the front, where his battalion was all but wiped out,’ Andrew said. ‘He always insisted Spanish flu saved his life, and without it, I suppose I wouldn’t be alive either.’ Laura Spinney’s book attempts to collate what is known about the pandemic, and takes a stab at examining its legacy: ‘The flu resculpted human populations more radically than anything since the Black Death,’ she writes. ‘It influenced the course of the First World War and, arguably, contributed to the second. It pushed India closer to independence, South Africa closer to apartheid, and Switzerland to the brink of civil war. It ushered in universal healthcare and alternative medicine, our love of fresh air and our passion for sport.’

The majority of deaths came in the three months between September and December 1918. The war probably didn’t spawn it, but certainly helped it spread: the US lost more soldiers to flu than to the war in part because so many of them spent weeks coughing together in barracks and transports on their way to Europe. Britain and Italy suffered between two and three times more deaths from the war than from the flu, while Germany’s war deaths outnumbered flu deaths six to one. Spinney quotes historians who claim that flu struck Germany harder than Britain or France; Erich Ludendorff was convinced it had robbed Germany of victory. The spread of Spanish flu was quickened by the railway and steamer lines that girdled the planet, starkly illuminating global inequalities in security, nutrition and access to medical care.

In India 6% of the population died; in Fiji 5%; in Tonga 10%. In Western Samoa, for reasons that aren’t entirely clear, more than 20% of the population died. Even harder hit were the Alaskan Inuit, with a death rate between 25 and 50%: in some small Alaskan communities everybody died. Koreans and Japanese were infected at the same rate, but the Koreans, subject to chronic malnutrition, were twice as likely to die. In the US, Italian immigrants died at twice the background rate (the Italian neighbourhoods of New York had a density of five hundred per acre, ten to a room), while black populations were the least affected. ‘As far as the “Flu” is concerned the whites have the whole big show to themselves,’ J. Franklin Johnson wrote to the Baltimore Afro-American.

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Jun 222017
 
 June 22, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


Paul Klee Analysis of Various Perversities 1922

 

The Little Putsch That Could Beget a Great Big Coup (Stockman)
US Should Mind Its Own Business; It Shouldn’t Be In Syria (Ron Paul)
US Is A “Second Tier” Country (ZH)
America Grows Older And More Ethnically Diverse (BBG)
The Wheels Come Off Uber (Yves Smith)
Oil Prices ‘Like A Falling Knife’ (CNBC)
The Rise of a Prince Ends Doubts Over Saudi Arabia’s Direction (BBG)
Canada’s Housing Bubble Will Burst (BBG)
Rehousing Of Grenfell Tower Families In Luxury Block Gets Mixed Response (G.)
China NPL Prices Up 30% as New Gold Rush Gets Under Way (BBG)
Strong Interest, Low Price For NPLs of Greece’s Eurobank (K.)
Greeks Skeptical About Benefits, Prospects of EU (K.)
Greek Tourism Minister Says Arrivals Will Top 30 Million This Year (K.)

 

 

Davis is getting upset. He’s offering a free copy of his Trump book to every American at the link.

The Little Putsch That Could Beget a Great Big Coup (Stockman)

Let’s start with two obvious points about the whole Russia fiasco… Namely, there is no “there, there.” First off, the president has the power to declassify secret documents at will. But in this instance he could also do that without compromising intelligence community (IC) “sources and methods” in the slightest. That’s because after Edward Snowden’s revelations in 2013, the whole world was put on notice — and most especially Washington’s adversaries — that it collects every single electronic digit that passes through the worldwide web and related communications grids. Washington essentially has universal and omniscient SIGINT (signals intelligence). Acknowledging that fact by publishing the Russia-Trump intercepts would provide new knowledge to exactly no one. Nor would it jeopardize the lives of any American spy or agent (HUMINT).

It would just document the unconstitutional interference in the election process that had been committed by the U.S. intelligence agencies and political operatives in the Obama White House. That pales compared to whatever noise comes out of Langley (CIA) and Ft. Meade (NSA). And I do mean noise. Yes, I can hear the boxes on the CNN screen harrumphing that declassifying the “evidence” would amount to obstruction of justice! That is, since Trump’s “crime” is a given (i.e. his occupancy of the Oval Office), anything that gets in the way of his conviction and removal therefrom amounts to “obstruction.” Given that he is up against a Deep State/Democratic/Neoconservative/mainstream media prosecution, the Donald has no chance of survival short of an aggressive offensive of the type I just described. But that’s not happening because the man is clueless about what he is doing in the White House.

And he’s being advised by a cacophonous coterie of amateurs and nincompoops. So he has no action plan except to impulsively reach for his Twitter account. That became more than evident — and more than pathetic, too — when he tweeted out an attack on his own Deputy Attorney General, Rod Rosenstein. At least Nixon fired Elliot Richardson (his Attorney General) and Bill Ruckelshaus (Deputy AG): “I am being investigated for firing the FBI Director by the man who told me to fire the FBI Director! Witch Hunt.” Alone with his Twitter account, clueless advisors and pulsating rage, the Donald is instead laying the groundwork for his own demise. Were this not the White House, this would normally be the point at which they send in the men in white coats with a straight jacket.

[..] Even Senator John Thune, an ostensible Swamp-hating conservative, had nothing but praise for Special Counsel Robert Mueller, that he would fairly and thoroughly get to the bottom of the matter. No he won’t! Mueller is a card-carrying member of the Deep State who was there at the founding of today’s surveillance monster as FBI Director following 9/11. Since the whole $75 billion apparatus that eventually emerged was based on an exaggerated threat of global Islamic terrorism, Russia had to be demonized into order to keep the game going — a transition that Mueller fully subscribed to.

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“One thing that I am concerned about – because I’ve seen it happen so often over the years, are false flags.”

US Should Mind Its Own Business; It Shouldn’t Be In Syria (Ron Paul)

RT: Australia halted its cooperation. How significant is this development? Why did they do it? Ron Paul: I think that is good. Maybe wise enough, I wish we could do the same thing – just come home. It just makes no sense; there’s a mess over there. So many people are involved, the neighborhood ought to take care of it, and we have gone too far away from our home. It has been going on for too long, and it all started when Obama in 2011 said: “Assad has to go.” And now as the conditions deteriorate …it looks like Assad and his allies are winning, and the US don’t want them to take Raqqa. This just goes on and on. I think it is really still the same thing that Obama set up – “Get rid of Assad” and there is a lot of frustration because Assad is still around and now it is getting very dangerous, it is dangerous on both sides.

One thing that I am concerned about – because I’ve seen it happen so often over the years, are false flags. Some accidents happen. Even if it is an honest accident or it is deliberate by one side or the other to blame somebody. And before they stop and think about it, then there is more escalation. When our planes are flying over there and into airspace where we shouldn’t be, and we are setting up boundaries and say “don’t cross these lines or you will be crossing our territory.” We have no right to do this. We should mind our own business; we shouldn’t be over there, when we go over there and decide that we are going to take over, it is an act of aggression, and I am positively opposed to that. And I think most Americans are too if they get all the information they need.

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“..the US received its lowest marks in the categories of “tolerance and inclusion” and “health and wellness.“

US Is A “Second Tier” Country (ZH)

Most Americans’ idea of happiness involves lounging by the water or on a beach somewhere. But it turns out, human happiness can flourish even in freezing climates far from the equator. To wit, the Social Progress Imperative, a US-based nonprofit, released the results of its annual Social Progress Index report, which purports to rank countries based on the overall wellbeing of their citizens. Four Scandinavian countries – Denmark, Finland, Iceland and Norway claimed the top spots, while the US placed 18th out of 128, leaving it in what the SPI defines as the “second-tier” of countries based on citizens’ wellbeing, according to Bloomberg. Luckily, being “second-tier” doesn’t seem that bad, according to a definition found in the report. “Second-tier countries demonstrate “high social progress” on core issues, such as nutrition, water, and sanitation.

However, they lag the first-tier, “very high social progress” nations when it comes to social unity and civic issues. That more or less reflects the U.S. performance. (There are six tiers in the study.)” “We want to measure a country’s health and wellness achieved, not how much effort is expended, nor how much the country spends on healthcare,” the report states. In a nod to the controversy surrounding President Donald Trump’s anti-immigrant rhetoric, as well as his efforts to repeal and replace Obamacare, the report noted that the US received its lowest marks in the categories of “tolerance and inclusion” and “health and wellness.” America’s “tolerance” score has been sliding since 2014, around the time that several high-profile shootings of unarmed black men ignited the “Black Lives Matter” movement, sparking a national conversation about the prevalence of racism in US society.

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Just very slowly.

America Grows Older And More Ethnically Diverse (BBG)

The United States is growing older and more ethnically diverse, a trend that could put strains on government programs from Medicare to education, the Census Bureau reported Thursday. Every ethnic and racial group grew between 2015 and 2016, but the number of whites increased at the slowest rate — less than one hundredth of 1% or 5,000 people, the Census estimate shows. That’s a fraction of the rates of growth for non-white Hispanics, Asians and people who said they are multi-racial, according to the government’s annual estimates of population. President Donald Trump’s core support in the racially divisive 2016 election came from white voters, and polls showed that it was especially strong among those who said they felt left behind in an increasingly racially diverse country.

In fact, the Census Bureau projects whites will remain in the majority in the U.S. until after 2040. “Even then, (whites) will still represent the nation’s largest plurality of people, and even then they will still inherit the structural advantages and legacies that benefit people on the basis of having white skin,” said Justin Gest, author of “The New Minority,” a book about the 2016 election. The Census Bureau reported that the median age of Americans — the age at which half are older and half are younger — rose nationally from just over 35 years to nearly 38 years in the years between 2000 and 2016, driven by the aging of the “baby boom” generation. The number of residents age 65 and older grew from 35 million to 49.2 million during those 16 years, jumping from 12% of the total population to 15%.

That’s a costly leap for taxpayers as those residents move to Medicare, government health care for seniors and younger people with disabilities, which accounted for $1 out of every $7 in federal spending last year, according to the Kaiser Family Foundation. By 2027, it will cost $1 out of every $6 of federal money spent. Net Medicare spending is expected to nearly double over the next decade, from $592 billion to $1.2 trillion, the KFF reported.

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Excellent take-down from Yves.

The Wheels Come Off Uber (Yves Smith)

Not surprisingly, the financial press has been all ago about the drama of Travis Kalanick’s forced departure from Uber’s CEO position yesterday, and has focused on getting salacious insider details of his ouster. That means journalists largely ignored what ought to be the real story, which is whether Uber has any future. I anticipate that Hubert Horan will offer a longer-form treatment of this topic. Hubert had already documented, in considerable detail in his ten-part series, how Uber has no conceivable path to profitability. Its business model has been based on a massive internal contradiction: using a ginormous war chest to try to achieve a near-monopoly position in a low-margin, mature business that is fragmented geographically and locally.

Monopolies and oligopolies are sustainable only when certain factors are operative: the ability to attain a superior cost position through scale economies, which include network effects, or barriers to entry, such as regulations, very high skill levels, or high minimum investment requirements. Neither of these apply in the local car ride business. Even if Uber were able to drive literally every competing cab operator in the world out of business due to its ability to continue its predatory pricing, once Uber raised prices to a level where it achieved profits, new entrants (or revived old entrants) would come in. Uber will thus never be able to charge the premium prices (in excess of the level for a traditional taxi operator to be profitable) for the very long period necessary for Uber to merely be able to recoup the billions of dollars it has burned, mainly in subsidizing the cost of rides, let alone to achieve an adequate return on capital.

And that’s before you get to the fact that systematically much higher prices would mean fewer fares. The developments of the last few months mean Uber’s decay path is sure to accelerate. I’ve been following the business press for over 30 years. I can’t think of a single case where even an established, profitable business with an established franchise has had so many top level positions vacant, and for such bad reasons. As reader vidimi quipped, “With no CEO, CFO, COO, and CIO, uber is coming very close to becoming a self-driving company.” And that’s not even a full list. World-class communications expert Rachel Whetstone, who is recognized as a key force in rebuilding the Tories’ brand in the UK, quit in April.

The heads of engineering departed for failing to disclose a previous sexual investigation; the head of product and growth was forced out over a sexual impropriety at a company function. And in a scandal that will have a much longer tail, Uber’s former head of its Waymo driverless car unit, Anthony Levandowski, has had his case involving alleged theft of intellectual property from Google referred to the Department of Justice. Kalanick was deeply involved in Levandowski sudden exodus. It seems implausible that Kalanick didn’t know Levandowski was making off with Google files. If the case does lead to a criminal prosecution, it is hard to see how Kalanick could escape scrutiny as a potential criminal co-conspirator.

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Just in case you were wondering why King Salman named a new crown prince…

Oil Prices ‘Like A Falling Knife’ (CNBC)

Oil prices could be poised to fall below $40 a barrel before too long, according to an analyst at Energy Aspects, as the commodity appeared set to post its largest price slide in the first half of the year for the past two decades. “This is like a falling knife right now, I genuinely haven’t seen sentiment this bad ever,” Amrita Sen, the co-founder and chief oil analyst at Energy Aspects, told CNBC on Wednesday. “We have had clients emailing saying they have been trading this for 20 or 30 years and they have never seen something like this,” she added. Oil prices have tumbled more than 20% his year, marking its worst performance for the first six months of the year since 1997 and putting the commodity in bear market territory.

The ongoing decline in prices appears to have stemmed from investors discounting evidence of robust compliance by OPEC and non-OPEC producers with a deal to curtail a global supply overhang. Prices took a fresh leg lower in the previous session – dipping 2% – as new signs of rising output from Nigeria and Libya, the two OPEC members exempt from a deal to cut production. Output from the 14-member exporter group ticked higher in May due to rising production in Nigeria, Libya and Iraq, raising concerns about OPEC’s effort to shrink global stockpiles of crude oil. OPEC and other producers have committed to keeping 1.8 million barrels a day off the market through March. Libya’s oil production rose more than 50,000 barrels per day to 885,000 bpd. Meanwhile, exports of Nigeria’s benchmark Bonny Light crude oil are set to rise by 62,000 barrels per day in August.

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Absolutely. He’s the War Prince.

The Rise of a Prince Ends Doubts Over Saudi Arabia’s Direction (BBG)

With the anointment of Prince Mohammed bin Salman as heir to the Saudi throne, any doubts over the continuation of policies that have shaken up the Middle East have gone. Western diplomats already referred to the 31-year-old as “Mr. Everything,” because of his control over most aspects of domestic, foreign and defense affairs. His elevation ends a behind-the-scenes struggle for power and answers the question of what would happen to his plans for Saudi Arabia when King Salman, now 81, dies or steps aside. The most ambitious of these, Vision 2030, seeks to recalibrate the economy to end the country’s near-total dependence on oil revenue. But internationally, there are also ramifications. Last month, the prince again raised the stakes in the regional rivalry with Iran, saying that dialog was “impossible” as they fight a proxy war in Yemen.

He also led a multi-nation effort to isolate neighboring Qatar, causing a rift among fellow members of the Gulf Cooperation Council. That also looks set to turn into another long and potentially fruitless test of wills as Iran and Turkey come to Qatar’s aid. “The switch offers him the legitimacy and consensus of becoming the next king and that will validate his vision, his plans and his policies,” said Sami Nader, head of the Beirut-based Levant Institute for Strategic Affairs. “There were a lot of question marks about the future of Saudi Arabia and the transition. Now this debate has ended.” Widely known as MBS, he was made crown prince just after dawn in Riyadh, displacing his older cousin, Mohammed bin Nayef, who was also stripped of his post as interior minister in charge of domestic security forces and counter-terrorism policy.

The move was neither a shock nor a coup, and it means he could be running the kingdom for decades to come. What’s more, his tough approach to the intractable problems of the Middle East would appear to mesh well with U.S. President Donald Trump, who visited Saudi Arabia last month. Trump called the new crown prince Wednesday to offer congratulations on his elevation, the White House said in a statement. Trump and the prince “committed to close cooperation to advance our shared goals of security, stability, and prosperity across the Middle East and beyond,” according to the statement. The problem is what comes next. On Tuesday, the U.S. Department of State questioned Saudi Arabia’s justification at striking out at Qatar by cutting it off from diplomatic and transport links.

The bombing campaign in Yemen aimed at destroying the rebel Houthi forces that Saudi Arabia sees as proxies for Iran, meanwhile, appears to have no end in sight. Two years later, it has become bogged down, bloody and increasingly unpopular. “On the foreign policy side he’s also embroiled Saudi Arabia in Yemen and Qatar without an exit strategy,” said James Dorsey at Singapore’s Nanyang Technological University. These aren’t changes of direction for Saudi Arabia, but “what he has done is to stretch up a notch and put some very sharp edges on it, and at this point those are backfiring.”

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Any Canadian with a substantial mortgage who’s not actively trying to sell right now…..

Canada’s Housing Bubble Will Burst (BBG)

Canadian home sales fell the most in five years last month. That didn’t stop an increase in prices, which were up 18% nationwide from a year earlier. When you consider that most houses are leveraged assets, this represents huge gains for homeowners. While leverage can help boost performance on the way up, it becomes very dangerous on the way down. Leverage can turn even the best investments into poor ones when things go wrong, as losses are amplified. Equity can get wiped out pretty quickly on an overleveraged asset. Canadian real estate has been on fire for years. The housing price data there has made the U.S. real estate market during the boom of the mid-2000s look mild. The Federal Reserve Bank of Dallas puts out a global housing price index for more than 20 countries every quarter. Using this data, I looked at the real house price index data for Canada and compared it with the same data in the U.S. going back to 1975. Here’s this relationship from 1975 through the end of 2005:

Although there were some divergences in the early and late 1980s, both housing markets essentially ended up in the same place after 30 years. Now let’s add in the most recent data to see how things have unfolded since:

An enormous divergence occurred in 2006, when U.S. housing prices really began to soften, while Canadian price barely skipped a beat. This makes any differences in the past look like blips. The rise in Canadian real estate prices has been relentless. The U.S. housing market peaked in late 2006. Since then, based on this index, U.S. housing prices are still down almost 13% from their peak through the end of 2016. In that same time frame, Canadian housing prices are up 56%. From the 2006 peak, it took until late 2012 for real estate in the U.S. to bottom. We’ve since witnessed a 19% recovery from what was a 27% decline nationwide, on average. While the U.S. real estate downturn lasted almost six years, Canada’s housing market experienced just a 7% drawdown that lasted less than a year. And house prices in Canada reclaimed those losses in about a year and a half. Canadian housing has also outpaced its neighbors to the south since the 2012 bottom in U.S. real estate, with a 30% gain in that time.

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You can’t even blame these people. It’s the whole crazy idea of cities and governments blowing housing bubbles on purpose, that’s what’s wrong here.

Rehousing Of Grenfell Tower Families In Luxury Block Gets Mixed Response (G.)

Two miles south of the charred skeleton of Grenfell Tower is a large complex of sleek new apartments that some of those displaced by last week’s inferno will soon be able to call home. Kensington Row’s manicured lawns, clipped trees and burbling fountains are a haven from the rumbling traffic of two busy London thoroughfares, and its spacious, air-conditioned foyers a relief from June’s oppressive heatwave. Four unfinished blocks house the 68 flats purchased by the Corporation of London for families who lost their homes in Grenfell Tower. Workmen had been instructed not to talk to the media, but one said there was now a rush to complete the building work. “It’s a brilliant idea,” he said of the resettlement plan. Among those exercising dogs and small children, the views were more mixed. “It’s so unfair,” said Maria, who was reading the news in the Evening Standard with two neighbours.

She bought her flat two years ago for a sum she was unwilling to disclose. “We paid a lot of money to live here, and we worked hard for it. Now these people are going to come along, and they won’t even be paying the service charge.” Nick, who pays £2,500 a month rent for a one-bedroom flat in the complex, also expressed doubts about the plan. “Who are the real tenants of Grenfell Tower?” he asked. “It seems as though a lot of flats there were sublet. Now the people whose names are on the tenancies will get rehoused here, and then they’ll rent the flats out on the private market. And the people who were actually living unofficially in the tower at the time of the fire won’t get rehoused. “I’m very sad that people have lost their homes, but there are a lot of people here who have bought flats and will now see the values drop. It will degrade things. And it opens up a can of worms in the housing market.”

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When your bad debt is in a bubble, I guess you got it made?! Or should that be: you should be afraid?

China NPL Prices Up 30% as New Gold Rush Gets Under Way (BBG)

Bad loans are rapidly becoming the latest hot commodity in China as more domestic and foreign investors rush into the market and bid up prices. Non-performing loan prices have risen more than 30% this year, according to distressed investor Belos Capital Asia. The average selling price of NPLs has climbed to around 50 cents on the dollar in the past two years, from 30 cents, said Victor Jong, a partner in the deals and business recovery services unit of PricewaterhouseCoopers in Shanghai. Such a high level is “very rare” in international markets, Jong said. “There are just too many buyers grabbing a limited supply of NPLs,” said Hanson Wong, CEO of Belos Capital in Hong Kong. “At these prices, it’s pretty hard for these NPLs to be profitable.” Distressed investors are increasing as Chinese authorities encourage market-oriented ways to resolve lenders’ mounting piles of non-performing debt amid slowing economic growth.

A jump in valuations of real estate, which often act as underlying assets for secured loans, has boosted the debt’s recovery prospects. Combined with a surge in money supply, this has lifted bad-loan prices even in some less-developed regions of China, according to domestic distressed debt investor Bald Eagle Asset Management. Foreign investors including Oaktree Capital, Lone Star, Goldman Sachs and PAG have bought China NPLs in the current cycle that began in 2014, according to a March report from PwC. Non-performing loans at the country’s lenders jumped 61% in the past two years to 1.58 trillion yuan ($231 billion) at the end of March. In the previous NPL cleanup in China, between 2001 and 2008, secured debt was typically sold at 20 cents on the dollar, and unsecured creditors got back only 5 cents, said Wang Yingyi, a partner at Bald Eagle in Beijing.

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Looks like Greece should try China’s bad debt recipe.

Strong Interest, Low Price For NPLs of Greece’s Eurobank (K.)

The loans portfolio put up for sale by Eurobank is attracting strong investment interest but low offers as the lender begins the process for the transfer of nonperforming loans. This is a portfolio valued at €2.8 billion which has attracted the interest of about 20 investment funds in the data room, illustrating the strong leverage the NPL market commands, partly due to the banks’ commitment to reducing their bad loans by 40% by the end of 2019. The portfolio that Eurobank is selling includes debt from consumer loans and credit cards that have gone unpaid for years, most for at least a decade – i.e. since before the financial crisis broke.

Eurobank has made all the necessary moves for the collection of part of the €2.8 billion, without getting a great response. Therefore the prices in the market are expected to be particularly low for the portfolio, with estimates speaking of just 5% of the original value. Market professionals note that Eurobank’s effort to recover part of the dues just before the opening of the portfolio’s sale, offering debtors a haircut of up to 95% without any significant results, means that the price will likely drop below 5% too.

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Greeks are still stuck in the mindset of being proud to be deemed worthy of being a full member of the EU. So much so that they can’t see they’re not.

Greeks Skeptical About Benefits, Prospects of EU (K.)

As the European Union’s cohesion faces being sorely test by the upcoming Brexit negotiations and other challenges, Greeks appear increasingly skeptical about the benefits and prospects of the EU, according to a new study by London-based international policy institute Chatham House and research company Kantar. 74% of Greeks are worried about the outlook for the EU, according to the survey which was carried out on a sample of 1,000 people in 10 European countries: Britain, Belgium, Germany, Greece, Spain, France, Italy, Austria, Hungary and Poland.

The Greek figure was almost double the research average of 38%. Greeks were also significantly more downbeat than their counterparts, with 60% declaring themselves to be pessimistic compared to a research average of 40%. An even larger proportion of Greeks, 80%, said they believed more members of the bloc would follow Britain’s lead and decide to break away from the Union in the next 10 years. Predictably, following seven years of belt-tightening imposed by foreign creditors, a significant proportion of Greeks (67%) said that austerity was the EU’s biggest failure. 73% of Greeks believe that the decision of Britain to leave the EU will weaken the Union.

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A debt colony AND a tourist colony. With most of the best assets sold off to foreigners.

BTW, both Greeks and tourists would be much better off if Greece had its own currency and could lower daily prices.

Greek Tourism Minister Says Arrivals Will Top 30 Million This Year (K.)

The tourism sector is showing genuine signs of growth this year that suggest it will be the main driver of the Greek recovery, as it will help state revenues, the private economy, the country’s current accounts and employment. The government is for the first time speaking of 30 million arrivals in 2017. Bank of Greece data show that in the first four months of the year travel receipts increased by 2.4% or 23 million euros year-on-year, reaching 997 million euros. This increase was thanks to the 3.2% rise in arrivals and not average spending per trip, which posted a 0.8% decline. This means the 4.8% drop in travel receipts during the first quarter was offset in April, when arrivals rose 12% and receipts 11.3% annually. This positive picture is expected to have continued in May.

Retail sector representatives are looking forward to cashing in on the increase in arrivals, to offset the losses resulting from Greek households’ ever shrinking disposable incomes. Based on the bookings picture, turnover in retail commerce could rise by up to 5% this year. Addressing a conference organized by the Panhellenic Exporters Federation, Tourism Minister Elena Kountoura said that the data of the first five months point to an increase in arrivals, revenues, nights stayed and occupancy rates. They also show an increase in bookings for the summer ranging between 15 and 70%, depending on area, which led to her conclusion that Greece will have more then 30 million tourists this year after welcoming 28 million in 2016 and 26 million in 2015. The growth in tourism is also reflected in employment and commerce. The number of unemployed registered last month dropped by 56,820 people from April to 913,518, mainly thanks to the rise in seasonal employment in tourism and commerce.

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