Sep 152015
 
 September 15, 2015  Posted by at 9:43 am Finance Tagged with: , , , , , , , , , , ,  


John Vachon Rain. Pittsburgh, Pennsylvania Jun 1941

China Stocks Sink Again: Shanghai Down 3.52% (Bloomberg)
China Sells Record FX In August, Shows Pressure After Devaluation (Reuters)
China Spending Surge Means Debts Will Only Get Larger (WSJ)
China Grabs Unused Funds To Spend On New Projects As Growth Slows (Reuters)
Brazil Downgrade Leaves Firms With $270 Billion Debt Hangover (Bloomberg)
Pimco, Fidelity Stung by Collapse of Petrobras’s 100-Year Bond (Bloomberg)
Deutsche Bank To Cut 23,000 Jobs, A Quarter Of Its Workforce (Reuters)
UniCredit, Italy’s Biggest Bank, Plans To Cut Around 10,000 Jobs (Reuters)
‘Syria Is Emptying’ (WaPo)
Refugees Confounded By Merkel’s Decision To Close German Borders (Guardian)
Thousands Of Refugees To Lose Right Of Asylum Under EU Plans (Guardian)
EU Plan To Share 120,000 Refugees Has Fallen Apart (FT)
Border-Free Europe Unravels As Migrant Crisis Hits Record Day (Reuters)
Europe Fortifies Borders as Germany Predicts 1 Million Refugees (Bloomberg)
EU Governments Set To Back New Internment Measures (Guardian)
Hungary Transports Refugees To Austria Before Border Clampdown (Guardian)
Cameron Invents The Humanitarian Offside Rule (Frankie Boyle)
US Officials Cover Up Housing Bubble’s Scummy Residue (David Dayen)
Defining Neoliberalism (Jeremy Smith)
One In Six Americans Go Hungry. We Can’t Succeed On An Empty Stomach (Guardian)

It just keeps going. Nobody in China trusts stocks anymore, because Beijing has failed to restore that trust.

China Stocks Sink Again: Shanghai Down 3.52% (Bloomberg)

China’s stocks slumped for a second day in thin turnover amid concern government measures to support the world’s second-largest equity market and economy are failing. The Shanghai Composite Index dropped 3.5% to 3,005.17 at the close, led by commodity producers and technology companies. About 14 stocks declined for each one that rose on the gauge, while volumes were 36% below the 30-day average. The index completed its biggest two-day loss in three weeks with a decline of 6.1%.

Mainland Chinese equity funds lost 44% of their value at the end of last month compared with July, data showed Monday, as unprecedented state measures to stop a $5 trillion selloff failed to avert redemption. Data this month showed five interest-rate cuts since November and plans to boost state spending have yet to revive an economy weighed down by overcapacity and producer-price deflation. Yuan positions at the central bank and financial institutions fell by the most on record in August, a sign that policy makers stepped up intervention to support the currency.

Read more …

Intervening in all asset markets at the same time…

China Sells Record FX In August, Shows Pressure After Devaluation (Reuters)

China’s central bank and commercial banks sold a net 723.8 billion yuan ($113.69 billion) of foreign exchange in August, by far the largest on record, highlighting how capital outflows intensified in the wake of the yuan’s devaluation last month. The previous largest outflow, in July, totaled 249.1 billion yuan ($39.13 billion). The figures are based on Reuters calculations using central bank data, the latest of which was released on Monday. The figures show the price China is paying to keep its currency from falling further in the face of concerns about the health of the economy and as financial markets anticipate a rise in U.S. interest rates. Shen Jianguang, an economist at Mizuho Securities in Hong Kong, said the figures suggest selling pressure on the yuan remains strong.

“It also shows that the central bank will continue to intervene in the FX market in the coming months as depreciation expectation is still there,” Shen said. Still, traders said the net outflow was within market forecasts. Some had expected a net outflow of $130 billion, said a senior trader at a Chinese commercial bank in Shanghai. This person declined to be identified. “Purchases are likely to fall from September on but uncertainties remain, including the yuan’s own volatility and the dollar’s performance in global markets in line with the Fed’s policy moves,” the trader said. China’s central bank, the People’s Bank of China, surprised global markets on Aug 11 by devaluing the yuan by nearly 3%.

Since the devaluation, China has scrambled to keep the yuan steady, running down its foreign exchange reserves by a record amount in August to stabilize the onshore rate. The central bank has instituted a raft of new policies aimed at discouraging speculation on further yuan depreciation and traders suspect it also intervened in offshore yuan markets. Authorities have also frantically tried to prevent a precipitous slide in equities markets from turning into a market crash with a flurry of policies to prop up prices and restore confidence.

Read more …

It starts to smell of desperation. But then, Xi and Li have nothing to lose but their heads.

China Spending Surge Means Debts Will Only Get Larger (WSJ)

China is falling back on infrastructure spending to stimulate its sputtering economy. The move may support growth, but it is also a setback to getting the country’s debt load under control. Government agencies have publicly confirmed a new willingness to spend on infrastructure in recent weeks. Already in August, infrastructure investment rose 21% from a year earlier, up from 15.8% growth in July, according to calculations by SocGen. That far outpaced total fixed-asset-investment growth, which clocked in at just 9.2%. What is less clear is where the money is coming from. In recent years, much of the infrastructure development has been funded chiefly by off-balance sheet local government financing platforms, which helped get around limits on public borrowing.

This avenue seemed to be cut off by a new budget law in late 2014, which ostensibly banned new borrowing by such financing vehicles. But it quickly became clear that this amounted to a kind of fiscal cliff for the economy. Beijing quietly backtracked, and is now allowing the platforms to keep borrowing for approved projects. Still, China will be eager to keep a lid on borrowing by provinces and towns. An official audit of total local government debt, released earlier this month, found it reached 24 trillion yuan ($3.8 trillion) at the end of 2014, up 34% over 18 months. Beijing doesn’t want to see that pace of growth continue. It is already working hard to clean up the last infrastructure spending boom with its 3.2 trillion yuan program to allow local government-linked high-cost loans to be swapped into lower interest bonds with longer durations.

But this merely reduces financing costs on previous projects. The amount that it frees up for new spending is minimal. So if the central government wants more infrastructure spending, it has to find another way. The plan appears to be to rely on government-controlled policy banks, including China Development Bank and the Agricultural Development Bank. These lenders can access loans directly from the central bank. For fresh funding, they have also issued over 1.8 trillion yuan ($280 billion) of bonds this year, up more than 70% from all of last year, according to Nomura.

Read more …

Something tells me those funds were already in use, for instance as collateral for the shadow banks.

China Grabs Unused Funds To Spend On New Projects As Growth Slows (Reuters)

Chinese authorities have seized up to 1 trillion yuan ($157 billion) from local governments who failed to use their budget allocations, sources said, as Beijing looks for ways to spend its way out of an economic slowdown. The exclusive Reuters report came after China’s stocks fell following data suggesting economic growth was running below the 2015 target level of about 7%, heightening concerns about the health of the world’s second largest economy. “China’s economy faces relatively big downward pressure, so investor sentiment remains weak,” said Gu Yongtao, strategist at Cinda Securities. Two sources close to the government said budget funds repossessed from local governments would be used to pay for other investments.

The huge underspend, linked to officials’ reluctance to splash out on big-ticket projects while authorities crack down on corruption, supports the argument of some economists that Chinese state investment has grown too slowly this year. “In the past, local governments had asked for the money. Money was given, but no one acted,” said one of the two sources. On Monday, China’s powerful economic planner, the National Development and Reform Commission (NDRC), said it had approved feasibility studies for two road projects worth a total of 6.2 billion yuan ($973.65 million). Last week, the NDRC gave the green light for railway, highway and bridge projects worth a combined $23 billion, in a sign authorities are focusing on infrastructure spending rather than deeper reforms to shore up growth in the short term.

Read more …

Brazil is in for a very deep fall.

Brazil Downgrade Leaves Firms With $270 Billion Debt Hangover (Bloomberg)

Brazilian companies that piled on $270 billion in international debt during the boom years are seeing their funding costs rise after the nation’s credit rating was cut to junk. The spread for five-year credit-default swaps to protect against a government default, one benchmark for setting what Brazilian companies must pay for external funding, has jumped 7.5% to 400 basis points since the downgrade, the highest since 2009. Adding to the pain, the dollar surged to a 13-year high, making principal and interest on international borrowing more costly for local firms. “Even very small, unknown companies issued international bonds when Brazil was considered one of the most promising economies after the 2008 financial crisis,” Salvatore Milanese at Pantalica Partners said in Sao Paulo. “Now many of them are facing the consequences.”

Standard & Poor’s last week lowered Brazil’s sovereign credit rating one level to BB+ and said it might cut it further in response to the administration’s inability to shore up fiscal accounts as the economy falters. President Dilma Rousseff has failed to win support for her initiatives amid an investigation into corruption at the state-controlled oil company, some of which allegedly occurred while she was its chairwoman, sending her popularity to a record low and generating calls for her impeachment. Federal, state and municipal governments oversaw only modest increases in external debt during the seven years Brazil had an investment-grade credit rating, increasing it 4.5% from December 2007 to March 2015, to $69 billion, according to central bank data. For banks and non-financial companies, the story is different: They more than doubled their dollar-denominated debt to $154 billion and $114.7 billion, respectively.

Read more …

Because 100-year bonds never looked stupid?

Pimco, Fidelity Stung by Collapse of Petrobras’s 100-Year Bond (Bloomberg)

When Petroleo Brasileiro SA sold 100-year bonds in June, the move was largely seen as a sign the corruption-tainted oil producer had put the worst of its problems behind it. For investors like Pimco, Fidelity and Capital Group – the three biggest holders of the securities – that turned out to be a costly miscalculation. Since the $2.5 billion offering, the bonds have tumbled 15%. That’s four times the average loss for emerging-market company debt. The plunge deepened last week, when the securities sank to a record-low 69.5 cents on the dollar after Petrobras, as the Brazilian company is known, had its credit rating cut to junk by Standard & Poor’s. The world’s most-indebted major oil producer was stripped of its investment grade by Moody’s Investors Service seven months earlier as a widening probe into alleged bribes paid to former executives at the state-controlled oil company caused it to delay reporting earnings.

“Everything was priced for perfection, and sadly, except for soccer players, Brazil seldom achieves perfection,” Russ Dallen, the head trader at Caracas Capital Markets, said from Miami. Pimco didn’t respond to e-mailed requests for comment. Fidelity and Capital Group declined to comment. Petrobras didn’t respond to an e-mail seeking comment on the performance of its bonds. The company has already borrowed enough to finance its projects for the medium term, it said in a statement Sept. 10. Yields on Petrobras’s 6.85% bonds, which mature in 2115, have soared 1.5 percentage points to a record 9.86% since they were issued on June 2, according to data compiled by Bloomberg.

Read more …

Of things to come.

Deutsche Bank To Cut 23,000 Jobs, A Quarter Of Its Workforce (Reuters)

Deutsche Bank aims to cut roughly 23,000 jobs, or about one quarter of total staff, through layoffs mainly in technology activities and by spinning off its PostBank division, financial sources said on Monday. That would bring the group’s workforce down to around 75,000 full-time positions under a reorganization being finalised by new Chief Executive John Cryan, who took control of Germany’s biggest bank in July with the promise to cut costs. Cryan presented preliminary details of the plan to members of the supervisory board at the weekend. Deutsche’s share price has suffered badly under stalled reforms and rising costs on top of fines and settlements that have pushed the bank down to the bottom of the valuation rankings of global investment banks. It has a price-book ratio of around 0.5, according to ThomsonReuters data.

The bank unveiled a broad restructuring plan in April but co-chief executives Anshu Jain and Juergen Fitschen quit shortly afterwards, handing over its execution to Cryan. “This is the first time ever that you had the feeling that somebody is talking straight,” said one of the sources. “But the problem is he has to deliver soon.” Deutsche is mainly reviewing cuts to the parts of its technology and back office operations that process transactions and work orders for staff who deal with clients. A significant number of the roughly 20,000 positions in that area will be reviewed for possible cuts, a financial source said. Back-office jobs in the group’s large investment banking division will be concentrated in London, New York and Frankfurt, the source said.

Read more …

No coincidence.

UniCredit, Italy’s Biggest Bank, Plans To Cut Around 10,000 Jobs (Reuters)

Italy’s biggest bank by assets, is planning to cut around 10,000 jobs, or 7% of its workforce, as it seeks to slash costs and boost profits, a source at the bank told Reuters on Monday. The planned cuts will be concentrated in Italy, Germany and Austria, several sources said, adding that they include 2,700 layoffs in Italy that have already been announced. A UniCredit spokesman declined comment beyond noting that the bank’s CEO Federico Ghizzoni had on Sept. 3 said there were no concrete numbers on potential lay-offs, after a report said it was considering eliminating 10,000 positions in coming years.

Ghizzoni is reworking a five-year strategic plan, unveiled only last year, that will aim to boost revenue and cut costs. The revised plan is expected to be announced in November. “The plans are for 10,000 job cuts,” the bank’s insider said, speaking on condition of anonymity. “They will be mainly in Italy, Austria and Germany.” UniCredit, which has 146,600 employees across 17 countries, is under pressure to boost its profits as low interest rates are expected to keep hurting its earnings in coming years.

Read more …

Why Putin wants to talk to Obama.

‘Syria Is Emptying’ (WaPo)

A new exodus of Syrians is fueling the extraordinary flow of migrants and refugees to Europe as Syria’s four-year-old war becomes the driving force behind the greatest migration of people to the continent since World War II. Syrians account for half of the 381,000 refugees and migrants who have sought asylum in Europe so far this year, which is in turn almost a doubling of the number in 2014 — making Syrians the main component of the influx. The continued surge through Europe prompted Hungary, Austria and Slovakia to tighten border controls Monday, a day after Germany projected that in excess of a million people could arrive by year’s end and began to impose restrictions on those entering the country.

How many more Syrians could be on the way is impossible to know, but as the flow continues, their number is rising. In July, the latest month for which figures are available, 78% of those who washed up on inflatable dinghies on the beaches of Greece were Syrian, according to the U.N. High Commissioner for Refugees. Some were already among the 4 million refugees who have sought sanctuary in neighboring countries, but many also are coming directly from Syria, constituting what Melissa Fleming of the UNHCR called a “new exodus” from the ravaged country. They are bypassing the refugee camps and heading straight for Europe, as the fallout from what President Barack Obama once called “someone else’s civil war” spills far beyond Syria’s borders.

More are on the way. Syrians are piled up on the streets of the Turkish port city of Izmir waiting for a place on one of the flimsy boats that will ferry them across the sea to Greece, and they say they have friends and family following behind. “Everyone I know is leaving,” said Mohammed, 30, who climbed three mountains to make his way across the Turkish border from the city of Aleppo with his pregnant wife, under fire from Turkish border guards. “It is as though all of Syria is emptying.” Analysts say it was inevitable it would come to this, that Syrians would eventually tire of waiting for a war of such exceptional brutality to end. At least 250,000 have been killed in four ferocious years of fighting, by chemical weapons, ballistic missiles and barrel bombings by government warplanes that are the biggest single killer of civilians, according to human rights groups.

Men on both sides die in the endless battles between the government and rebels for towns, villages and military bases that produce no clear victory. The Islamic State kills people in the areas it controls with beheadings and other brutal punishments. The United States is leading a bombing campaign against the Islamic State but has shown scant interest in solving the wider Syrian war, which seems destined only to escalate further with the deepening involvement of Russian troops. “It should surprise no one. Hopelessness abounds,” said Fred Hof, a former State Department official who is now with the Atlantic Council. “Why would any Syrian with an option to leave and the physical ability to do so elect to stay?”

Read more …

“Everybody is coming,” said Iyad, a Syrian student. “They are coming, coming, coming.”

Refugees Confounded By Merkel’s Decision To Close German Borders (Guardian)

Angela Merkel, Germany’s chancellor, has cut a chequered figure this summer: scorned for taking Greece to the wall, and praised for welcoming large numbers of Syrians to Germany. But nowhere and at no time has she been more of an enigma than she was in Vienna’s central station on Monday where crowds of refugees struggled to reconcile how the same “Mama Merkel” had opened Germany’s borders one week, and closed them again barely eight days later – leaving those at the station stranded. “She said she will bring big boats from Turkey to rescue Syrians!” said Maria, a Syrian who fled the bombs of Damascus six weeks ago. “And now why has she closed the border?” asked Maria’s daughter.

For a week, refugees had been able to freely board trains to Germany from Vienna – but Sunday’s developments returned the status quo to how it was in late August. Station staff said on Monday that the rail border had reopened at 7am, less than a day after Germany had stopped all inbound rail services. But the ticket machines would not let people book journeys to German destinations. And while some had managed to get fares from the ticket office, it was unclear to many people whether the border had reopened or not. Pacing around the concourse with her two children, Galbari al-Hussein saw the constant changes in border policy as a cruel game played at the expense of vulnerable refugees.

“We’ve travelled so far, thousands of kilometres, and now they’re closing the borders,” said Hussein, who reached Vienna barely a week after escaping Islamic State territory, hidden in an unfamiliar niqab. “Is it open, is it closed? It’s very unfair.” Among Syrians, there lingered the suspicion that their chances had been spoilt by people hoping to piggyback on the generosity shown by Germany to the victims of the Syrian civil war. “Not everyone here is Syrian,” said Josef, from Damascus, who disclosed his exact address in an attempt to prove his nationality. “People say they are Syrians, but they are from somewhere else. And that’s why this is happening..” [..] As rumours swirled, even non-Syrian refugees couldn’t help but wonder whether they were the real targets of the German border shenanigans. Hany, an Iraqi engineering student, smiled wistfully. “Germany is very good to Syrians,” he said. “It wants all the Syrians to come, but maybe not the Iraqis.”

There was one thing on which everyone could agree. Whatever Germany does or doesn’t do with its border, refugees will still keep fleeing to Europe. “Everybody is coming,” said Iyad, a Syrian student. “They are coming, coming, coming. My brother will leave Syria in two days.” Iyad’s friend Amal nodded in agreement. “The only people who will stay are those who don’t have any money,” said Amal. “People are selling their cars and homes to come here.”

Read more …

How to use a crisis.

Thousands Of Refugees To Lose Right Of Asylum Under EU Plans (Guardian)

European governments are aiming to deny the right of asylum to innumerable refugees by funding and building camps for them in Africa and elsewhere outside the European Union. Under plans endorsed in Brussels on Monday evening, EU interior ministers agreed that once the proposed system of refugee camps outside the union was up and running, asylum claims from people in the camps would be inadmissible in Europe. The emergency meeting of interior ministers was called to grapple with Europe’s worst modern refugee crisis. It broke up in acrimony amid failure to agree on a new system of binding quotas for refugees being shared across the EU and other decisions being deferred until next month.

The lacklustre response to a refugee emergency that is turning into a full-blown European crisis focussed on “Fortress Europe” policies aimed at excluding refugees and shifting the burden of responsibility on to third countries, either of transit or of origin. The ministers called for the establishment of refugee camps in Italy and Greece and for the detention of “irregular migrants” denied asylum and facing deportation but for whom “voluntary return” was not currently “practicable”. The most bruising battle was over whether Europe should adopt a new system of mandatory quotas for sharing refugees. The scheme, proposed by the European commission last week, is strongly supported by Germany which sought to impose the idea on the rejectionists mainly in eastern Europe.

Hungary’s hardline anti-immigration government said it would have no part of the scheme, from which it would benefit, while Thomas de Maizière, the German interior minister, complained that the agenda for the meeting was inadequate. The ministers agreed “in principle” to share 160,000 refugees across at least 22 countries, taking them from Greece, Hungary, and Italy, but delayed a formal decision until next month, made plain the scheme should be voluntary rather than binding and demanded ‘flexibility’. De Maizière, by contrast, called for precise definitions of how refugees would be shared. Luxembourg, chairing the meeting, signalled that there was a sufficient majority to impose the quotas, but that the meeting had balked at forcing a vote.

Read more …

They’ll pull aid funds from whoever won’t comply.

EU Plan To Share 120,000 Refugees Has Fallen Apart (FT)

EU efforts to agree a binding plan to share out 120,000 refugees fell apart after a minority of countries led by Czech Republic and Hungary objected to a heavily watered down proposal. After six hours of argument, member states failed to reach unanimous agreement on the plan, although a majority — including France and Germany — supported the scheme. Countries in favour of the plan will now try to force through a deal with a qualified majority at another meeting in October, setting the stage for a bitter diplomatic fight in the intervening period. Although qualified majority votes are acceptable under EU law, they are rarely used to force through decisions on politically sensitive topics against vocal opposition.

Hungary was supposed to be one of the beneficiaries of the scheme but has opposed it, arguing that it is not a front-line country and that it has only suffered a huge influx of migrants because Greece has failed to manage its borders. Officials also say that it would risk turning the country into a holding pen for migrants who do not want to stay there. French interior minister Bernard Cazeneuve criticised those countries opposed to the measures. “Europe is not Europe a la carte. If Europe wants to surmount this humanitarian challenge, it is necessary that all countries live up to their responsibilities.” The Czech Republic also refused to sign up to the proposals, saying that it would oppose efforts to introduce an automatic relocation scheme. Romania and Slovakia were also against the scheme.

Read more …

7,437 migrants recorded entering Hungary from Serbia yesterday. Times 365 equals 2.7 million.

Border-Free Europe Unravels As Migrant Crisis Hits Record Day (Reuters)

Two decades of frontier-free travel across Europe unraveled on Monday as countries re-established border controls in the face of an unprecedented influx of migrants, which broke the record for the most arrivals by land in a single day. Germany’s surprise decision to restore border controls on Sunday had a swift domino effect, prompting neighbors to impose checks at their own frontiers as thousands of refugees pressed north and west across the continent while Hungary sealed the main informal border crossing point into the European Union. A majority of EU interior ministers, meeting in Brussels, agreed in principle to share out 120,000 asylum seekers on top of some 40,000 distributed on a voluntary basis so far, EU president Juncker said.

But details of the deal, to be formalized on Oct. 8, were vague with several ex-Communist central European states still rejecting mandatory quotas. Austria said it would dispatch its military to help police carry out checks at the border with Hungary after thousands of migrants crossed on foot overnight, filling up emergency accommodation nearby, including tents at the frontier. Thousands more raced across the Balkans to enter Hungary before new rules take effect on Tuesday, which Budapest’s right-wing government says will bring a halt to the illegal flow of migrants across its territory. By 1400 GMT on Monday, police said 7,437 migrants had been recorded entering Hungary from Serbia, beating the previous day’s record of 5,809.

Then helmeted Hungarian police, some on horseback, closed off the main informal crossing point, backed by soldiers as a helicopter circled overhead. A goods wagon covered with razor wire was moved into place to block a railway track used by migrants to enter the EU’s Schengen zone of border-free travel. Hungary later declared the low-level airspace over its border fence closed but allowed a trickle of refugees to enter the country at an official crossing point. As the shockwaves rippled across Europe, Slovakia said it would impose controls on its borders with Hungary and Austria. The Netherlands announced it would make spot checks at its borders. Other EU states from Sweden to Poland said they were monitoring the situation to decide whether controls were needed.

“If Germany carries out border controls, Austria must put strengthened border controls in place,” Vice Chancellor Reinhold Mitterlehner told a joint news conference with Chancellor Werner Faymann. “We are doing that now.” The army would be deployed in a supporting role.

Read more …

How the end begins.

Europe Fortifies Borders as Germany Predicts 1 Million Refugees (Bloomberg)

One day after Germany curbed the freedom of movement in the region by temporarily reinstating border controls, the country’s vice chancellor estimated that as many as 1 million refugees may arrive by the end of the year as other nations moved to fortify their frontiers. The prediction from Sigmar Gabriel, who leads the Social Democrats, underscored how quickly the numbers fleeing to Germany are spiraling upward. The official government estimate, released just a few weeks ago, is for roughly 800,000 in 2015, nearly four times the 2014 figure.

European Union interior and justice ministers will try to bridge a divide over the region’s worst refugee crisis since World War II when they meet Monday in Brussels to hammer out an agreement over binding quotas redistributing 160,000 migrants who have flooded into Hungary, Greece and Italy. Eastern European countries including Poland and the Czech Republic have opposed such measures. Germany, which supports the EU proposal, on Sunday introduced the temporary controls on the southern border with Austria, where thousands of migrants have been crossing into the country. Austria responded Monday by sending 2,200 troops to its frontier with Hungary, while Slovakia reinstated checks along its border with both countries.

“Of course, the idea is not to prolong this, but it’s a short-term measure that should be in place for as short a time as possible,” Felix Braz, the justice minister of Luxembourg, which currently holds the rotating EU presidency — said in an interview. “A lot will depend on what comes out of Brussels this afternoon.” Germany’s move risks creating widespread disruption as governments weigh a further tightening of frontier controls across Europe.

Read more …

EU leaders are a much bigger threat to the union than refugees.

EU Governments Set To Back New Internment Measures (Guardian)

EU governments are expected to back radical new plans for the internment of “irregular migrants”, the creation of large new refugee camps in Italy and Greece and longer-term aims for the funding and building of refugee camps outside the EU to try to stop people coming to Europe. A crunch meeting of EU interior ministers in Brussels, called to grapple with Europe’s largest refugee crisis since the second world war, was also expected to water down demands from the European commission, strongly supported by Germany, for the obligatory sharing of refugees across at least 22 countries. A four-page draft statement, prepared on Monday morning by EU ambassadors before the ministers met, focused on “Fortress Europe” policies amid increasing confusion as a number of countries set up border controls in the Schengen free-travel area that embraces 26 countries.

The draft statement, obtained by the Guardian, said “reception facilities will be organised so as to temporarily accommodate people” in Greece and Italy while they are identified, registered, and finger-printed. Their asylum claims are to be processed quickly and those who fail are to be deported promptly, the ministers say in the draft statement. “It is crucial that robust mechanisms become operational immediately in Italy and Greece to ensure identification, registration and fingerprinting of migrants; to identify persons in need of international protection and support their relocation; and to identify irregular migrants to be returned.” The Europeans are to set up “rapid border intervention teams” to be deployed at “sensitive external borders”. Failed asylum seekers who are expected to try to move to another EU country from Greece or Italy can be interned, the statement says.

“When voluntary return is not practicable and other measures on return are inadequate to prevent secondary movements, detention measures … should be applied.” The European commission demanded last week that at least 22 EU countries accept a new system of quotas for refugees, with 160,000 redistributed from Greece, Italy and Hungary under a binding new system. Germany is insisting on the binding nature of the proposed scheme and its unilateral decision on Sunday to re-establish national border controls within the Schengen area was widely seen as an attempt to force those resisting mandatory quotas to yield. The resistance is strongest in eastern and central Europe.

Read more …

TEXT

Hungary Transports Refugees To Austria Before Border Clampdown (Guardian)

Hungary is transporting thousands of refugees by train and dumping them on the border with Austria, the UN refugee agency has said, as EU states scrambled to follow Germany’s lead and introduce new controls on their borders. Special trains were taking refugees on a four-hour journey from camps in southern Hungary directly to Austria, the UNHCR said. There are signs that Hungary’s prime minister, Viktor Orban, wants to empty refugee camps before a law comes into force on Tuesday criminalising the act of crossing or damaging a newly built border fence. At least three trains carrying 2,000 people left on Sunday from the Hungarian town of Röszke, the UNHCR’s regional representative Erno Simon said. He added: “During the night our colleagues saw police waking people up at the [Hungarian] border collection point.”

Austria said it was sending troops to its border to help with security. The numbers entering from Hungary had reached overwhelming levels, police said, with 14,000 arriving on Sunday and another 7,000 by mid-Monday, and more expected. Austria’s vice-chancellor, Reinhold Mittelehner, said: “If Germany carries out border controls, Austria must put strengthened border controls in place. We are doing that now.” Slovakia said it was introducing checks on its borders with Hungary and Austria and would deploy 220 extra officers. Polandd’s prime minister, Ewa Kopacz, said Warsaw would restore border controls in response to “outside threats”.

On Sunday Berlin announced new controls on its border with Austria and halted train traffic between Austria and Germany. Germany’s interior minister, Thomas de Maizière, said the measures were necessary because record numbers of refugees, many of them from Syria, had stretched the system to breaking point. The measures are likely to remain in place for weeks if not months, German officials have indicated. Police patrols have been set up on road crossings between Austria and Bavaria, leading to four-mile tailbacks on Monday. Similar measures will be rolled out in the federal state of Saxony, on the border with the Czech Republic.

Read more …

“I certainly don’t want to see Islamic State in a war with our troops because – let’s be honest – they are just impressionable young men who have been manipulated into a life of murder by those who teach hate, and Isis isn’t much better.“

Cameron Invents The Humanitarian Offside Rule (Frankie Boyle)

David Cameron visited a refugee camp in Lebanon on Monday. Our prime minister, a man who can normally muster all the moral authority of Roman Polanski’s penis, has discovered his soul. Amazing what a three-week break away from parliament can do. It only took David Cameron six years to finally come out and take a moral stand, and all it took was the death of one toddler. You may call the Tories’ glacial crawl towards respecting human life a political and personal train crash. I call it compassion. In Europe we have the stereotype that Africans view life cheaply, but we’ve spent much of the summer watching van loads of Syrians being washed in by the tide and all we worried about was whether this meant the beach might be closed during the October holidays.

There were Greek kids incorporating human remains into their sandcastles and yet the big story here was that the drinks trolley didn’t make it down the Eurostar. One dog locked in a car on a sunny day – Britain goes apeshit. Seventy-one dead migrants roasted in a truck – oh that reminds me, Bake Off’s on tonight. It seems we are naive about the workings of this modern culture, where people Skype each other masturbating before a first date, and forget that the general populace now don’t believe children are dying unless you show them a closeup picture of a dead child. The Kurdi family were trying to get from Turkey to Kos, so many people said, “Why would they want to leave Turkey? Turkey is nice!”

Turkey is nice if you’re a sunburnt Brit with a taste for overpriced kebabs, cheap jeans and waterslides. It’s not so nice for a member of their oppressed minority who speak a language that’s been banned by law. What we haven’t heard is that children get washed up on the shore at Bodrum every single day. What are Turkish journalists doing? Generally about two to four years’ hard labour. Of course there are many people who say we shouldn’t be helping refugees when there are homeless people here that we can do nothing to help first. Indeed Britain may have entirely forgotten how to be welcoming. We’ll probably welcome refugees by putting the word Syrian in the sidebar of xHamster. We are only taking people from camps – we don’t want refugees already in Europe as they cheated and didn’t wait to shout “What’s the Time Mr Wolf?” We don’t want any refugees who are already close to us, like there’s some kind of humanitarian offside rule.

Read more …

Fraudulent Foreclosure Documents

US Officials Cover Up Housing Bubble’s Scummy Residue (David Dayen)

Every day in America, mortgage companies attempt to foreclose on homeowners using false documents. It’s a byproduct of the mortgage securitization craze during the housing bubble, when loans were sliced and diced so haphazardly that the actual ownership was confused. When the bubble burst, lenders foreclosing on properties needed paperwork to prove their standing, but didn’t have it — leading mortgage industry employees to forge, fabricate and backdate millions of mortgage documents. This foreclosure fraud scandal was exposed in 2010, and acquired a name: “robo-signing.” But while some of the offenders paid fines over the past few years, nobody cleaned up the documents. This rot still exists inside the property records system all over the country, and those in a position of authority appear determined to pretend it doesn’t exist.

In two separate cases, activists have charged that officials and courts are hiding evidence of mortgage document irregularities that, if verified, could stop thousands of foreclosures in their tracks. Officials have delayed disclosure of this evidence, the activists believe, because it would be too messy, and it’s easier to bottle up the evidence than deal with the repercussions. “All they’re doing is making a mockery of our judicial system,” said Bill Paatalo, a private investigator and one of the activists. Like many other anti-foreclosure activists, Paatalo got involved with the issue through a case involving his own property — in Absarokee, Montana. Like many homeowner loans purchased during the housing bubble, Paatalo’s was packaged into a mortgage-backed security.

The process worked like this: The loans were eventually sold into a tax-exempt REMIC (Real Estate Mortgage Investment Conduit) trust; the REMIC trust received monthly mortgage payments from homeowners; and the payments were passed along to investors in the mortgage-backed securities. The trust where Paatalo’s mortgage ended up is known as “WaMu Mortgage Pass-Through Certificates Services 2007-OA3 Trust.” When he faced foreclosure, the trust, as the nominal owner of the mortgage, was the plaintiff. In doing research for his own trial, Paatalo discovered that all “foreign business trusts” established outside of Montana have to register with the Secretary of State in order to transact business, under Title 35-5-201 of the Montana code. Trustees must file an application, along with legal affidavits affirming its trust agreement and identifying all trustees, and pay a $70 filing fee. WaMu Mortgage Pass-Through Certificates Services 2007-OA3 Trust – based in Delaware — didn’t.

Read more …

“Neoliberalism’s ultimate purpose, and its finality, is that of transformation to a single global economy and society governed and disciplined by finance capital.”

Defining Neoliberalism (Jeremy Smith)

In a twitter exchange today, involving Duncan Weldon, Tony Yates, George Magnus, Jo Michell and PRIME’s Ann Pettifor, the question arose (not for the first time!) over the definition of “neoliberalism.” It is often argued that the term has no distinct or discernible meaning, and certainly Wikipedia’s entry for Neoliberalism only adds to confusion. Ann tweeted this: “puzzle over definition of “neoliberalism. Definition elastic? Insult? Help Twitter..” Well I’m not going to try and make my offer via twitter, because I can’t manage a decent definition in the allotted 140 characters. But I am convinced that neoliberalism does have a clear meaning – and offer the following as my contribution to the discussion:

Neoliberalism: The utopian politico-economic system and ideology, under constant and conscious construction by its “priesthood”, under which the interests of society are to be subordinated to the interests of actors in financial markets and the dominance of finance capital, minimally regulated and flowing unfettered across frontiers. Under this system, the role and remit of the state and public sphere, beyond protection and furtherance of those interests and that dominance, are to be reduced to their practical minimum. Neoliberalism’s ultimate purpose, and its finality, is that of transformation to a single global economy and society governed and disciplined by finance capital.

My definition owes much to Karl Polanyi’s approach. In “The Great Transformation” Polanyi wrote:

This paradox [of the need for a strong central executive under laissez-faire] was topped by another. While laissez-faire economy was the product of deliberate state action, subsequent restrictions on laissez-faire started in a spontaneous way. Laissez-faire was planned; planning was not. If ever there was conscious use of the executive in the service of a deliberate government-controlled policy, it was on the part of the Benthamites in the heroic period of laissez-faire. (p.141)

Polanyi also draws attention to the disastrous contribution of “economic liberalism at its height” in the 1920s. He argues (p.142):

The repayment of foreign loans and the return to stable currencies were recognized as the touchstones of rationality in politics; and no private suffering, no infringement of sovereignty was considered too great a sacrifice for the recovery of monetary integrity. The privations of the unemployed made jobless by deflation; the destitution of public servants dismissed without a pittance; even the relinquishment of national rights and the loss of constitutional liberties were judged a fair price to pay for the fulfilment of the requirements of sound budgets and sound currencies, these a priori of economic liberalism.

This nicely captures the consciousness of the creation of globalising “economic liberalism”, as well as – once programmed correctly – the way it rolled out the consequences automatically, via a kind of austerity algorithm. This coincides with what we see today in the way neoliberalism works. And that is why I call it both an ideology (or philosophy if you feel kinder) and a system.

Read more …

We just don’t care.

One In Six Americans Go Hungry. We Can’t Succeed On An Empty Stomach (Guardian)

As millions of kids head back to school this month, some of them are missing summer, but many are excited to once again receive regular meals. Many low-income children are able to get the food they need through the federal nutrition programs such as free school lunches. But, only half of these kids also get a nutritious school breakfast. And 75% of them struggle over the summer to get enough to eat. One child out of every five in the United States is fighting to learn, grow and prosper while combating the gnawing stress of hunger. In fact, kids make up nearly half of all people living in households struggling with hunger. That’s why lawmakers on Capitol Hill are currently working to reauthorize the laws that govern, among other things, whether or not more kids have access to summer meal programs.

Last month, a bipartisan group of six senators introduced the “Hunger Free Summer for Kids Act.” If the policies in this bill make it into law this year, it could mean as many as 6.5 million can get the nutrition they need during the summer holidays. These nutrition laws expire on September 30th, so Congress needs to act quickly. And we need to be doing more. Hunger impacts every American. According to the latest “food insecurity” numbers by the United States Department of Agriculture, 14% of all households struggle to have enough to eat. That’s 48 million of our friends, neighbors and fellow Americans. And that is one in six Americans — not just in the inner city, but in the suburbs, rural areas and every primary and battleground state across the country. These numbers show how many American households struggle to consistently provide all of its family members enough food for an active, healthy lifestyle. It could mean some days the cupboards are completely bare.

It could mean a mother is skipping meals to ensure food for her son at night. It could mean a family is choosing between food and medicine, or food and rent. It does mean there is never enough. Hunger has a devastating effect on the food insecure, but, it is not just those with empty bellies who suffer. Hunger impacts education, health and the economy at large. Children struggling with hunger struggle with schoolwork and tend to have lower test scores and are less likely to graduate. People are not getting the nutrition they need, and are at higher risk for expensive, avoidable health conditions, like diabetes, heart disease and asthma. As a nation, we spend billions on the fall-out from hunger, including avoidable health care costs and the rising cost of poor education outcomes, all while losing productivity in the workplace.

Read more …

Feb 162015
 
 February 16, 2015  Posted by at 10:40 am Finance Tagged with: , , , , , , , , ,  


DPC “Steamer loading grain from floating elevator, New Orleans 1906

The USA – All Systems Go? (Steve Keen)
‘China Must Guarantee Minimum 6.5% Annual GDP Growth In 5 Year Plan’ (Reuters)
Greece And Ukraine Are The Hot Spots Of A New War For Supremacy (Salon)
The Great War of the American Empire or Great War II (Michael S. Rozeff)
Greece Sticks To No-Austerity Pledge (Reuters)
Austerity Is ‘Complete Horsesh*t’ (Alternet)
Greek Postwar Alliances Show Europe Has More to Lose Than Money (Bloomberg)
Greeks Show Support for Tsipras on Eve of Brussels Talks (Bloomberg)
Greece, Creditors Extend Talks on Eve of Eurogroup Meeting (Bloomberg)
Greece May Win Compromise Offer From EU Bailout Fund (WSJ)
Syriza Leader Confident Ahead Of Eurozone Crunch Talks In Brussels (Guardian)
Greek Euro Exit Risk Signals Inadequate ECB QE Safeguards (Bloomberg)
US And Greece Helping To Save The Euro (CNBC)
Shoot Bank Of America Now – The Case For Super Glass-Steagall (David Stockman)
Low-Pay Britain, Where Working Families Have To Rent A Fridge (Guardian)
How Kids Company Feeds Britain’s Hungry Children (Observer)
Rolls-Royce Accused In Petrobras Scandal (FT)
Famous Soviet Football Champ Refuses To Fight For Kiev In East Ukraine (RT)
Why I’m Not Breaking Up with America This Valentine’s Day (John Whitehead)
Online Bank Robbers Steal as Much as $1 Billion (Bloomberg)
Spy Agencies Fund Climate Research In Hunt For Weather Weapon (Guardian)
12 Likely Causes Of The Apocalypse, As Seen By Scientists (RT)

“..the country with the bigger deficit would have the bigger problem. And conventional belief would expect this to be state-oriented France, rather than the free-enterprise-oriented USA. Guess again..”

The USA – All Systems Go? (Steve Keen)

The contrast today between Europe—the subject of my first few posts on Forbes—and the USA could not be more extreme. The crisis, when it began in 2007/08, was seen initially as a purely American phenomenon—and by some, proof that the deregulated American (and more generally, the Anglo-Saxon) model of capitalism had failed, while Europe’s more collectivist version was still going strong. One of the most voluble putting that argument was then French President Nicolas Sarkozy, who asserted that the crisis proved that the American deregulated version of finance was kaput: “A page has been turned,” he said, on the “Anglo Saxon” financial model. “Even our Anglo-Saxon friends are now convinced that we must have reasonable rules.” Well that was then. Now, it’s the European system—and its very peculiar rules—that are looking decidedly poor, while the USA seems to be powering ahead.

A simple comparison of unemployment rates tells that story well. The US unemployment rate, which briefly exceeded France’s at the depth of the crisis in 2009-2010, is now falling rapidly, while France’s rate has stagnated, and is in excess of the worst that the USA experienced during the crisis. So does the resurgence of the USA and Europe’s stagnation make the opposite point to the one Sarkozy reached in such haste? Is the deregulated US model really the superior one, in that while it succumbed to crisis, its recovery was that much more robust that rule-bound Europe? I am sure that many commentators will reach that conclusion in the next few years. But I think they will prove to be as misguided—or rather as wrongly focused—as was Sarkozy.

There’s a cliché in statistics that “correlation isn’t causation”. I’ve often seen this used to simply dismiss an argument that the interjector doesn’t like, but its spirit applies here: people often draw inferences from the correlation of two factors—American model, recovery; European model, stagnation—when there’s actually a third causal factor at work that is the real explanation. [..] part of the reason for the divergence is that the EU’s policy of austerity—which began in mid-2010—has made the crisis much worse. On that front, the conventional wisdom—as enshrined in the European “Growth and Stability Pact”—is that the country with the bigger deficit would have the bigger problem. And conventional belief would expect this to be state-oriented France, rather than the free-enterprise-oriented USA. Guess again.

Read more …

While the printing press is stuttering.

‘China Must Guarantee Minimum 6.5% Annual GDP Growth In 5 Year Plan’ (Reuters)

China needs to guarantee a “bottom line” of 6.5% annual economic growth for its 13th five-year-plan, a state newspaper quoted the director of the National Development and Reform Commission (NDRC) Department of Planning, Xu Lin as saying. That would mark the lowest annual growth rate since 1990. The comments by Xu, made on Feb. 14 at the “50 Forum Annual Meeting” – a gathering of Chinese economists – is also an acknowledgment that China is switching to a more sustainable pace of growth from the double-digit rates of the recent past. If this year’s GDP growth is 7%, then the “bottom line” for annual GDP growth in the 13th five-year-plan needs to be at least 6.5%, the China Securities Journal quoted Xu as saying.

China’s economy grew at 7.4% in 2014, its slowest pace in 24 years, dragged down by cooling property prices, slowing inflation and deteriorating domestic and foreign demand. Beijing is set to unveil China’s 13th five-year-plan after the National People’s Congress in March. The plan is an important document that outlines national priorities and sets targets for economic and social development. The International Monetary Fund said last year that China should set a less ambitious growth target of 6.5-7% in 2015 and refrain from stimulus measures unless the economy threatens to slow sharply from that level. China also needs to prioritize the systemic reform of property rights, taxation, banking, finance and rule of law, among other national priorities, Xu said.

Read more …

“There is something tragically irrational driving both of these crises. The genesis of each, at least nominally, is the question of whether markets serve society or it is the other way around.”

Greece And Ukraine Are The Hot Spots Of A New War For Supremacy (Salon)

Europe’s confrontation with Greece, the West’s with Russia as the Ukraine crisis runs nearly out of control: Why is it more useful by the week to think of these together? They are both very large, moments of history. There is this. They both reach critical moments this week, as if in concert. The outcomes in each case will be consequential for all of us. As noted with alarm last week, most Americans have by now surrendered to a blitz of propaganda wherein Russia and its leadership are cast as Siberian beasts, accepting as truth tales the National Enquirer would be embarrassed to run. In Europe, Greeks and Spaniards show us up, indeed, as a supine, spiritless people incapable of response or any resistance to the onslaught. There is this, too.

At writing, Yanis Varoufakis, Greece’s imaginative new finance minister, has just made his first formal effort to present European counterparts with new ideas to get foreign debts of €240 billion off the books and the Greek economy back in motion. These ideas can work. Even creditor institutions acknowledge that Greece cannot pay its debts as they are now structured. But at a session in Brussels Wednesday, the European Union’s arms remained folded. Also at writing, the Poroshenko government in Ukraine appears to have recommitted to a cease-fire signed last September in Minsk and promptly broken. It is not surprising given Kiev’s very evident desperation on all fronts. But neither would it be if Poroshenko once again reneges. There is a sensible solution on the table now, but these are not people who have so far been given to one.

There is something tragically irrational driving both of these crises. The genesis of each, at least nominally, is the question of whether markets serve society or it is the other way around. Economic conflict, then, has been transformed into humanitarian disasters. This is what Greece and Ukraine have most fundamentally in common. It is in search of a logical explanation of the illogic at work in these two crises that something else, something larger, emerges to bring them into a coherent whole. Washington has so many wars going now, none declared, one can hardly keep the list current. But the most sustained and havoc-wreaking of them is unreported. This is the war for neoliberal supremacy across the planet. Greece and Ukraine are best viewed as two hot fronts in this war, a sort of World War III none of us ever imagined.

Read more …

“Upon close inspection, all of these rationales fall apart. None is satisfactory. The interventions are too widespread, too long-lasting and too unsuccessful at what they supposedly accomplish..”

The Great War of the American Empire or Great War II (Michael S. Rozeff)

The Great War of the American Empire began 25 years ago. It began on August 2, 1990 with the Gulf War against Iraq and continues to the present. Earlier wars involving Israel and America sowed the seeds of this Great War. So did American involvements in Iran, the 1977-1979 Islamic Revolution in Iran, and the Iran-Iraq War (1980-1988). Even earlier American actions also set the stage, such as the recognition of Israel, the protection of Saudi Arabia as an oil supplier, the 1949 CIA involvement in the coup in Syria, and the American involvement in Lebanon in 1958. Poor (hostile) relations between the U.S. and Libya (1979-1986) also contributed to a major sub-war in what has turned out to be the Great War of the American Empire.

The inception of Great War II may, if one likes, be moved back to 1988 and 1989 without objection because those years also saw the American Empire coming into its own in the invasion of Panama to dislodge Noriega, operations in South America associated with the war on drugs, and an operation in the Philippines to protect the Aquino government. Turmoil in the Soviet Union was already being reflected in a more military-oriented foreign policy of the U.S. Following the Gulf War, the U.S. government engages America and Americans non-stop in one substantial military operation or war after another. In the 1990s, these include Iraq no-fly zones, Somalia, Bosnia, Macedonia, Haiti, Zaire, Sierra Leone, Central African Republic, Liberia, Albania, Afghanistan, Sudan, and Serbia.

In the 2000s, the Empire begins wars in Afghanistan, Iraq, and Libya, and gets into serious military engagements in Yemen, Pakistan, and Syria. It has numerous other smaller military missions in Uganda, Jordan, Turkey, Chad, Mali, and Somalia. Some of these sub-wars and situations of involvement wax and wane and wax again. The latest occasion of American Empire intervention is Ukraine where, among other things, the U.S. military is slated to be training Ukrainian soldiers. Terror and terrorism are invoked to rationalize some operations. Vague threats to national security are mentioned for others. Protection of Americans and American interests sometimes is made into a rationale. Terrorism and drugs are sometimes linked, and sometimes drug interdiction alone is used to justify an action that becomes part of the Great War of the American Empire.

On several occasions, war has been justified because of purported ethnic cleansing or supposed mass killings directed by or threatened by a government. Upon close inspection, all of these rationales fall apart. None is satisfactory. The interventions are too widespread, too long-lasting and too unsuccessful at what they supposedly accomplish to lend support to any of the common justifications. Is “good” being done when it involves endless killing, frequently of innocent bystanders, that elicits more and more anti-American sentiment from those on the receiving end who see Americans as invaders? Has the Great War II accomplished even one of its supposed objectives?

Read more …

“Any new bailout program might require several national parliamentary ratifications and could also bring Germany’s Constitutional Court into play.”

Greece Sticks To No-Austerity Pledge (Reuters)

Greek government spokesman Gabriel Sakellaridis showed no sign that Greece was backing off on its core demand. “The Greek government is determined to stick to its commitment towards the public … and not continue a program that has the characteristics of the previous bailout agreement,” he told Greece’s Skai television. He later said: “The Greek people have made it clear that their dignity is non-negotiable. We are continuing the negotiations with the popular mandate in our hearts and in our minds.” Some of the problems facing the Eurogroup are semantic. The Greeks, for example, will not countenance anything that smacks of an “extension” to the old bailout, preferring something new called a “bridge” agreement.

This is political. Tsipras rode into power on a wave of anti-austerity and anti-bailout anger last month and would have a hard time explaining a row-back so soon. Thousands of Greeks massed outside parliament in Athens on Sunday to back his strategy. But even a cosmetic change of labels could have practical consequences. An “extension” may not require many national ratifications unless it involves additional financial commitments from euro zone governments. Any new bailout program, on the other hand, might require several national parliamentary ratifications and could also bring Germany’s Constitutional Court into play. Among those requiring a parliamentary vote on a new bailout are Germany, Slovakia, Estonia and Finland, all identified by one veteran of EU meetings as part of a hard core of opponents to Greece’s plan.

The Eurogroup’s main debate with Greece’s “no austerity” stance will revolve around the funding of a bridge program, Greece’s request to reduce the ‘primary’ budget surpluses, excluding interest payments, that it is required to reach, and privatizations and labor reform. Greece said on Saturday that it was reviewing a €1.2 billion deal for Germany’s Fraport to run 14 regional airports, one of the biggest privatization deals since Greece’s debt crisis began in 2009. It has also pulled the plug on the privatization of the ports of Piraeus and Thessaloniki. On the question of liberalizing labor markets, government spokesman Sakellaridis remained tough: “We will discuss it with workers and with pensioners. Whatever we do, we will do through dialogue. We will not legislate at the sole behest of outside factors.”

Read more …

” Europe’s been expanding up to the borders of Russia and there’s a country called Ukraine, and, essentially, that means that Europe is writing a put option, which Ukraine has now decided to cash in. Which is why, basically, Europe’s now on the hook for all the crap that is Ukraine. That’s a put option contract.”

Austerity Is ‘Complete Horsesh*t’ (Alternet)

What is it about austerity that you take personally?

Part of it is because what I think the financial crisis is best seen as — and we’re still dealing with the aftermath of it, whether we like it or not — is that there’s a class-specific put option. Let me explain what I mean by this: A put option is a contract that’s very common in finance where essentially someone is selling insurance and the other person is taking the income for payments. At some point, they get to basically cash in the put. One way to think about this is, Europe’s been expanding up to the borders of Russia and there’s a country called Ukraine, and, essentially, that means that Europe is writing a put option, which Ukraine has now decided to cash in. Which is why, basically, Europe’s now on the hook for all the crap that is Ukraine. That’s a put option contract.

What has this got to do with the financial crisis and why do I feel passionately about it? Well, remember all those banks that got bailed [out]? In order to get bailed out you need to have assets, and my liabilities are the bank’s assets. The bank doesn’t give a damn about my condo because they’ve got an income stream coming from the mortgage. The assets and liabilities of the bank and the private sector sum up to zero, so when you bail that out, what you’re doing is you’re bailing out the private sector’s assets, which basically means the top 20% – if not about the top 10%, the top 1% – of the income distribution.

How do you pay for those bailouts? You pay for those bailouts with cuts. And who are the people that use government services? Well, it’s not the top 20% or above of the income distribution, it’s the bottom 70% and below. That’s what I mean by a class-specific put option. The people at the top get their assets bailed; the government says, Oh my God, look at all that spending! It’s out of control! We need to cut policemen and fire brigades and healthcare and various public services.

Read more …

Strategic considerations may expose EU’s bluff.

Greek Postwar Alliances Show Europe Has More to Lose Than Money (Bloomberg)

As Prime Minister Alexis Tsipras focuses on the economic arguments for a new bailout deal for Greece, the country’s strategic importance to the European Union may do as much to persuade Germany to grant him concessions. With war in Syria to the east, the failure of the Libyan state to the south and a nascent cease-fire in Ukraine to the north adding to the perennial tensions between Israel and its neighbors, the value of Greece as a NATO member and its ports on the eastern Mediterranean is rising. “One would be justified to ask whether Europe, the U.S. and NATO could afford the creation of a security vacuum and a black hole in a critical region,” Thanos Dokos, director of the Hellenic Foundation for European and Foreign Policy said. “That may not be “an acceptable loss for an EU with any ambitions to play a meaningful global and regional role,” he said.

The diplomatic effort that persuaded Russia to halt the violence in Ukraine was punctuated by Tsipras’s own, far more amicable exchanges with President Vladimir Putin. It signaled to German Chancellor Angela Merkel that European powers have more than just 195 billion euros ($223 billion) of bailout funds at stake in its standoff with Greece. The country, among a handful that complies with the North Atlantic Treaty Organization’s defense spending recommendations, has more than 200 fighter jets and 1,000 tanks. NATO facilities include a military base in Crete that was used during the airstrikes on Libya in 2011. That role may be Tsipras’s strongest weapon in negotiations with the rest of the euro area, according to Dimitris Kourkoulas, a former deputy foreign minister. “This is probably the last bargaining card Tsipras has,” Kourkoulas said.

Western powers recognized Greece’s strategic importance during and after World War II. The country’s resistance to Italy under Benito Mussolini scored the first allied ground victories against the axis powers and is marked annually by a national holiday in Greece on Oct. 28. The U.S. and Britain then intervened in the civil war to help defeat the communists as the rest of eastern Europe fell under the influence of the Soviet Union. The Greeks joined NATO in 1952, three years before the Federal Republic of Germany and at the same time as Turkey. In 1981, Greece became the 10th member of the EU, joining before countries like Spain and Austria, and adopted the euro two decades later.

Read more …

An important signal going into the new talks.

Greeks Show Support for Tsipras on Eve of Brussels Talks (Bloomberg)

Thousands of Greeks gathered in central Athens Sunday in support of Prime Minister Alexis Tsipras’s government, as officials prepared for a crunch meeting with creditors aimed at breaking an impasse over financing Europe’s most indebted state.
Police said more than 20,000 people assembled in front of the Greek Parliament as of about 8 p.m. in Athens, with more expected to join during the evening. The show of support was directed at a government delegation led by Finance Minister Yanis Varoufakis that will return to Brussels early Monday to try and negotiate a bridge agreement with euro-area peers that allows time and financing to discuss Greece’s post-bailout era. Greek stocks and bonds rose on Friday as officials on both sides signaled a willingness to compromise.

With Greece’s current bailout running out at the end of February, discussions continued at technical level into the weekend to prepare the ground for the Brussels meeting of finance chiefs. “We’re looking at difficult negotiations on Monday,” Tsipras was cited as saying in a weekend interview with Germany’s Stern magazine. “Nevertheless, I’m full of confidence.” Talks took place on Saturday between officials from Greece’s finance and foreign ministries and technical delegations from the Troika. The focus was on identifying common ground and those areas of divergence rather than on negotiating, according to Greek and EU officials. Varoufakis said that both sides have agreed on many issues already, according to an interview with Kathimerini newspaper published on Saturday.

It still isn’t certain that a final agreement will be reached Monday, the Greek official said. Tsipras’s Syriza party was elected Jan. 25 on a platform of ending austerity, a partial debt writedown and no more audits by the troika of the commission, the ECB and the IMF. It is seeking a bridge agreement for the next six months that will replace its current bailout, which it blames for the country’s economic hardship, and secure the country’s financing needs to give officials time to discuss “a new deal” with the euro area, Tsipras said last week. The government is “determined to abide by its commitment to the Greek people and its fresh mandate to end austerity,” government spokesman Gabriel Sakellaridis told Skai TV Sunday.

Read more …

“We need time rather than money to put into effect our reform plan,” [..] “I promise you, within six months Greece will then be a different country.”

Greece, Creditors Extend Talks on Eve of Eurogroup Meeting (Bloomberg)

Greek officials and the country’s creditors extended discussions through the weekend, as they raced to make progress ahead of the meeting of euro-area finance ministers in Brussels on Monday. While negotiators sought an agreement, government leaders back home reiterated their markers. For Greece, that means no discussions to continue its current bailout program, government spokesman Gabriel Sakellaridis told Skai TV this morning. French Foreign Minister Laurent Fabius, meantime, said that even as officials hold talks over Greece’s debt load, they aren’t willing to write it off. The government is “determined to abide with its commitment to the Greek people and its fresh mandate” for ending austerity,’’ Sakellaridis said.

Meetings dragged on in Athens, where the government held preparative discussions, and Brussels, where officials from Greece’s Finance and Foreign Ministries held “technical” talks with the EU, IMF and ECB, with the goal of laying the groundwork for a successor program. Greek Prime Minister Alexis Tsipras said it’s too early to say if there’s a deal in the making. Since coming to power in an election last month, Tsipras has maintained his pledge to help Greeks by reversing the austerity imposed under the country’s bailout. That’s led to clashes with other European governments. Germany, the biggest country contributor to bailouts, has led calls for Greece to stick to its political promises regardless of any change in government, while France and Italy have been more sympathetic to Greece’s efforts to secure bridge financing while it works out a longer-term plan.

In the face of opposition, the Greek government has already watered down its position on the debt, ditching a pre-election pledge for a writedown in its nominal value. Greece has more than €320 billion euros in debt outstanding, about 175% of GDP, mostly in the form of bailout loans from the euro area and the IMF. Frustration over the insurmountable pile of debt – even after the world’s biggest-ever restructuring in 2012 – and the dismal economic state helped Tsipras and his anti-austerity Syriza party topple former PM Samaras’s New Democracy in last month’s elections. “We’re looking at difficult negotiations on Monday,” Tsipras told Germany’s Stern magazine. “Nevertheless, I’m full of confidence.” [..] “We need time rather than money to put into effect our reform plan,” Tspiras said after convening a meeting of his cabinet in Athens Friday night, Stern reported. “I promise you, within six months Greece will then be a different country.”

Read more …

“An exit from the eurozone would be “the most expensive solution both for Greece and for the euro area..”

Greece May Win Compromise Offer From EU Bailout Fund (WSJ)

A Greek exit from the eurozone would be the worst of all options for everybody involved, the head of the European bailout fund said in a televised interview aired Sunday, signaling willingness to compromise over some conditions that have been linked to the country’s existing bailouts. The comments come a day before a crucial meeting of eurozone finance ministers in Brussels, where officials will aim to lay the foundation of a financing deal for struggling Greece, whose existing bailout expires at the end of February. An exit from the eurozone would be “the most expensive solution both for Greece and for the euro area,” said Klaus Regling, the head of the European Stability Mechanism, in a transcript of an interview with German broadcaster Phoenix. “That’s why we try to prevent precisely this.”

Greece’s new leftist government wants to end the austerity course and reduce the country’s debt burden, and is refusing to complete the existing bailout program. Instead of extending its current program, Athens wants a bridge arrangement to keep it afloat until September while it negotiates less onerous terms for long-term assistance. “That a newly elected government has different priorities than the previous government is understandable and nothing new,” said Mr. Regling. “We have for instance seen this too when the government in Ireland changed in the middle of the [bailout] program. It was also possible there to change individual measures but the main direction was kept in place.”

He stressed that countries must embrace reforms to help generate more economic growth in the medium term. “The European Central Bank’s monetary measures can of course be supportive and have an effect,” he said. “With its recent decisions, the ECB has done the maximum to buy time. Now it’s up to the governments.”

Read more …

“If our so-called partners insist, in any way, on extending the existing programme, that is to say the sinful memorandum because that is what they mean by the programme, there can be no agreement,”

Syriza Leader Confident Ahead Of Eurozone Crunch Talks In Brussels (Guardian)

Greece’s new prime minister Alexis Tsipras is “full of confidence” his country can secure a deal to ditch strict austerity measures while still satisfying Athens’ international creditors, despite warning that crunch talks in Brussels today would be “difficult”. As a key deadline approaches for Greece to either agree to stick to its existing bailout programme or reach a compromise with its lenders, eurozone finance ministers meet again on Monday in an attempt to hammer out an agreement. The new leftist Greek government is arguing for an end to relentless cuts imposed as a condition of the country’s rescue funding and wants more time to prove that a more pro-growth approach will work better. But it faces opposition from other eurozone countries, most notably Germany, which have pushed for the strict terms of Greece’s €240bn bailout programme to stay in place.

Talks in Brussels last week made no headway in resolving the standoff. But Tsipras also faces growing criticism from hard-left militants in his own party for appearing to row back on some pre-election pledges to ditch austerity measures. Asked about the Brussels talks, the 40-year-old prime minister told German news magazine Stern: “I expect difficult negotiations on Monday. But I am full of confidence. “I am in favour of a solution where everyone wins. I want a win-win solution. I want to save Greece from tragedy and Europe from a split.” “I promise you: Greece will, in six months’ time, be a completely different country,” he said. His finance minister Yanis Varoufakis told Greek newspaper Kathimerini at the weekend that a deal between Athens and the eurozone will be found, even if that may well be at the last minute.

But Tsipras not only has to persuade Berlin that debt-stricken Athens will keep along the path of reform, but assure his own hard-left militants that red lines will not be crossed in any compromise. There was mounting disquiet at the weekend that Varoufakis had gone too far by saying the new government was willing to implement 70% of the hated memorandum outlining Greece’s bailout accords. Firing a warning shot over the government’s bows, the energy minister Panagiotis Lafazanis, who represents Syriza’s radical wing, said there could be no solution if foreign lenders insisted on Athens adopting the “sinful memorandum”. “If our so-called partners insist, in any way, on extending the existing programme, that is to say the sinful memorandum because that is what they mean by the programme, there can be no agreement,” he told the state news agency ANA-MPA on Sunday.

Read more …

“Should a nation build up liabilities and then leave the currency union, the remaining members may have to share the bill.”

Greek Euro Exit Risk Signals Inadequate ECB QE Safeguards (Bloomberg)

Mario Draghi’s assurance that the European Central Bank has ring-fenced the risks of its bond-buying program has a caveat. While the ECB president says the euro area’s 19 national central banks will buy and hold their own country’s debt, the money they create – at least €1.1 trillion – can flow freely across borders through the region’s Target2 payment system. Should a nation build up liabilities and then leave the currency union, the remaining members may have to share the bill. The risks have been thrown more sharply into focus by the standoff between European governments and a newly elected Greek administration, which has prompted a deposit flight and put the country’s future in the euro in doubt.

As ECB officials join politicians gathering in Brussels on Monday to seek a solution to the crisis, Greece ultimately threatens to expose the weakness of measures to address legal constraints and public concern over central-bank stimulus. “There’s a political signal that comes out of the suspension of risk sharing: there’s no willingness in the ECB to build up fiscal risks via the back door if politicians aren’t,” said Nick Matthews at Nomura in London. “At the same time, asset purchases will create reserves that permeate through the Target2 system. The question of what happens if a country exits hasn’t been addressed.” Whatever happens in Brussels on Monday, Draghi and his Governing Council will meet in Frankfurt on Wednesday to nail down the details of quantitative easing.

Before buying starts in March, policy makers must sign off on the legal act and decide on key elements such as how assets will be bought and how to calculate self-imposed limits. ECB-style QE will be more complicated than programs by the Federal Reserve and Bank of England because it’ll happen in a currency union that isn’t backed by a fiscal union, with debt mutualization and central-bank financing of governments banned. That makes Target2, the Eurosystem’s financial plumbing, a potential indicator of where risks are building up.
When a lender in one country settles an obligation with a counterparty in another, the assets and liabilities are registered on the central-bank balance sheets. Those balances are aggregated each business day at the ECB, the Eurosystem’s hub, and reflected in Target2.

All five bailout countries are running negative Target2 balances, as are six others including Italy and France, according to data compiled by Germany’s Osnabrueck University. Greece had liabilities of 49 billion euros at the end of last year. The biggest creditor is Germany, which saw claims on the ECB jump to 515 billion euros at the end of January from 461 billion euros the previous month.

Read more …

“Is the euro zone just a branch office of the Federal Republic of Germany?”

US And Greece Helping To Save The Euro (CNBC)

Greece’s pleas to stop the “fiscal waterboarding” of its devastated economy are substantively no different from President Obama’s repeated warnings to Germany to stop bleeding the euro area economy with excessive fiscal austerity. Sadly, the president’s reportedly more than a dozen phone calls to the German Chancellor Merkel in 2011 and 2012 urging supportive economic policies in the euro area fell on deaf ears. These calls were not just brushed aside; they were plainly ridiculed as Chancellor Merkel kept telling the media that “it made no sense to be adding new debt to old debt.” But – worrying about one-fifth of U.S. exports going to Europe – Washington kept trying.

The former U.S. Treasury Secretary Timothy F. Geithner went as far as visiting his German counterpart Wolfgang Schaeuble at his summer retreat on a North Sea island on July 30, 2012 to talk about relief to euro area economies. That’s where Geithner was in for a big shock. He writes in his book “Stress Test: Reflections on Financial Crises” that he was “frightened” by the German talk of Greece leaving (i.e., being pushed out of) the monetary union. President Obama, he says, was “deeply worried” about Berlin’s designs. In the end, Geithner had to settle for his host’s assurances that everything was going to plan, and that the heavily indebted euro area countries were making progress on their structural reforms.

Indeed they were: At the time of that meeting, the Greek economy was sinking at a rate of 6.9%, followed by economic downturns of 3.5% in Portugal, 2.4% in Italy, 1.6% in Spain and a continuing economic stagnation in France. These five countries represent 53.1% of the euro area economy, but Germany would not relent in its firm insistence on fiscal retrenchment. For the German Chancellor, these countries’ plight was just a case of self-inflicted wounds because “they did not respect the budget rules and failed to supervise their banks.” That message played well with domestic audience in the run-up to German elections in September 2013. Obviously, it was important to be seen as a stern guardian of German finances bent on protecting taxpayers from southern spendthrifts and fiscal miscreants.

That policy exasperated so much Jean-Claude Juncker to push him into an unheard of attack on German leadership. Currently serving as the president of the European Commission (EU’s executive body), Mr. Juncker was Luxembourg’s prime minister and the chairman of the Eurogroup (a forum of the euro area finance ministers) when he aired his concerns on July 29, 2012. Here is what he said: “… how can Germany have the luxury of playing domestic politics on the back of the euro? If all other 16 euro area countries did the same thing, what would remain of our common project? Is the euro zone just a branch office of the Federal Republic of Germany?”

Read more …

“In this case, the abuse consisted of BAC funded and enabled tax avoidance schemes with respect to stock dividends – arrangements which happen to be illegal in the US.”

Shoot Bank Of America Now – The Case For Super Glass-Steagall (David Stockman)

The mainstream narrative about “recovery” from the financial crisis is a giant con job. And nowhere does the mendacity run deeper than in the “banks are fixed” meme—an insidious cover story that has been concocted by the crony capitalist cabals that thrive at the intersection of Wall Street and Washington. So this morning comes yet another expose in the Wall Street Journal about the depredations of Bank of America (BAC). Not surprisingly, at the center of this latest malefaction is still another set of schemes to grossly abuse the deposit insurance safety net and enlist the American taxpayer in the risky business of financing high-rolling London hedge funds. In this case, the abuse consisted of BAC funded and enabled tax avoidance schemes with respect to stock dividends – arrangements which happen to be illegal in the US.

No matter. BAC simply arranged for them to be executed for clients in London where they apparently are kosher, but with funds from BAC’s US insured banking entity called BANA, which most definitely was not kosher at all. As to the narrow offense involved – that is, the use of insured deposits to cheat the tax man – the one honest official to come out of Washington’s 2008-2009 bank bailout spree, former FDIC head Sheila Bair, had this to say: “I don’t think it’s an appropriate use.. Activities with a substantial reputational risk… should not be done inside a bank. You have explicit government backing inside a bank. There is taxpayer risk there.” She is right, and apparently in response to prodding by its regulator, BAC has now ended the practice, albeit after booking billions in what amounted to pure profits from these illicit trades.

But that doesn’t end the matter. This latest abuse by BAC’s London operation is, in fact, just the tip of the iceberg – the symptom of an unreformed banking regime that is rotten to the core and that remains a clear and present danger to financial stability and true economic recovery. And not by coincidence there stands at the very epicenter of that untoward regime a $2 trillion financial conglomerate that is a virtual cesspool of malfeasance, customer abuse, operational incompetence, legal and regulatory failure, downright criminality and complete and total lack of accountability at the Board and top executive level. In short, BAC’s six-year CEO, Brian Moynihan, is guilty of such chronic malfeasance and serial management failure that outside the cushy cocoon of TBTF he would have been fired long ago.

Read more …

“In 2012 one in five children lived in a home that was cold or damp; one in 10 lacked a necessary clothing item, such as a warm winter coat; and one in 20 households couldn’t afford to feed their kids properly.”

Low-Pay Britain, Where Working Families Have To Rent A Fridge (Guardian)

There’s a minor domestic crisis in any family when the fridge-freezer breaks down. Wasted food; no fresh milk; pools of water on the kitchen floor. But for some households, the demise of the washing machine, the tumble dryer or the telly is more than a hiccup – it throws up a major financial challenge. That’s where firms like BrightHouse come in: pop into one of its 291 stores, and instead of having to find several hundred pounds up front, you can replace a busted appliance for a much more manageable £10-£15 a week. Except there’s a sting in the tail. When MPs on the all-party parliamentary group on debt and personal finance looked into these “rent-to-own” retailers, of which BrightHouse is the leader, they found that by the time delivery charges, insurance and servicing are loaded on, consumers who can ill afford it end up paying several times over.

One fridge-freezer with a five-year service plan, which sells for £644 at middle-class favourite John Lewis, ended up costing £1,716. They have now asked the regulator, the Financial Conduct Authority, to investigate. But, like disgraced payday lender Wonga, BrightHouse’s appeal is a sharp reminder of the precariousness of many families’ lives. Perhaps BrightHouse’s customers should have read the small print. But signing up to a usurious loan deal because of the temptingly low upfront payment is hardly a rare mistake in today’s credit-fuelled economy. Many rent-to-own customers – half of whom receive benefits, and who have on average £19 a week spare for one-off costs – have little or no alternative. According to Breadline Britain, a salutary new book from poverty researchers Stewart Lansley and Joanna Mack, a growing proportion of families are unable to afford the things – such as a working fridge – that most of us would define as essential.

In 2012, their large-scale research project found, one in five children lived in a home that was cold or damp; one in 10 lacked a necessary clothing item, such as a warm winter coat; and one in 20 households couldn’t afford to feed their kids properly. These children’s chances are hobbled long before they reach the school gates – and in many cases their parents are not in the dole queue, but juggling jobs. Many of the adults suffering this kind of “deprivation poverty” – more than half, in fact – are in work. Yet these are the people who have been on the receiving end of a pernicious rhetorical onslaught since 2010. In the Tory lexicon, they are the “troubled families” whose behaviour blights their neighbourhoods: the “skivers”, rather than “strivers”; the people whose blinds are down when their “hardworking” neighbours drag themselves out to work in the morning.

Read more …

No rich western society should ever be allowed to stoop this low: “Normal. It’s like… don’t know… it’s normal.”

How Kids Company Feeds Britain’s Hungry Children (Observer)

Kids Company is a rare children’s charity in that the people it feeds and looks after are self-referring. Children come to them by themselves, and later they bring others who are also in need. “Between 2011 and 2012 we saw a 233% increase in these self-referrals,” Guinness says. As a result they launched the Plate Pledge, a fundraising drive built around the £2 cost of a meal. While they get some funding from central government they get none from the boroughs of Lambeth or Southwark whose kids they look after, and still have to raise more than £24m a year to keep services running. The Plate Pledge has meant they have been able to serve another half a million meals. “But we’re not meeting demand,” Guinness says.

Not that anyone is clear what that demand actually is, because it’s hard to get definite numbers. “We tried to get real hard figures on child food poverty when we were researching our report into school food,” says Henry Dimbleby, founder of the Leon healthy fast-food chain, who co-authored the recent School Food Plan. “We found it impossible to do so.” It requires getting deep inside the private domain, into the tight weft and weave of the home and that is a very secretive and emotionally charged place. A team from Reading University recently conducted interviews with children who came to Kids Company, which painted a dismal portrait of need. One child, asked how they deal with hunger, said, with a brutal logic, “I just want to sleep cos… when I [go] to bed hungry and sleep, I’m not hungry.”

Another child, asked how common she found cupboards empty when she got home from school, just shrugged. It was, she said, “Normal. It’s like… don’t know… it’s normal.” Guinness is dismissive of the idea that it’s impossible to get data on these experiences. He has an email from a Department of Health official who admits that, while they do undertake nutrition surveys of the population, they don’t analyse the lowest income groups because “the sample size is too small”. Guinness knows from the demand they are seeing that the sample cannot be too small. I ask him, slightly desperately, if there is any sunlight in this story. “Yes, of course. When you feed a child, when you provide a family-like environment, they thrive. They turn in to fine young people. And it doesn’t cost much.”

Read more …

Expect many more to follow.

Rolls-Royce Accused In Petrobras Scandal (FT)

Rolls-Royce has been accused of involvement in a multibillion-dollar bribery and kickback scheme at Petrobras, Brazil’s state-controlled oil producer, as more foreign companies are dragged into the country’s largest corruption scandal. The British engineering company, which makes gas turbines for Petrobras oil platforms, allegedly paid bribes via an agent in exchange for a $100 million contract as part of a scheme in operation during much of the past decade, according to testimony from a former Petrobras executive. Pedro Barusco, the Petrobras veteran who has emerged as one of the investigation’s key informants, told police he personally received at least $200,000 from Rolls-Royce — only part of the bribes he alleged were paid to a ring of politicians and other executives at the oil company.

The admission was buried in more than 600 pages of documents released by Brazil’s federal court system this month, detailing the testimonies of Mr Barusco who struck a plea bargain in November. Responding to Mr Barusco’s accusations, Rolls-Royce said: “We want to make it crystal clear that we will not tolerate improper business conduct of any sort and will take all necessary action to ensure compliance.” The accusations come as Rolls-Royce also faces a Serious Fraud Office investigation in the UK over allegations of bribery and corruption in China and Indonesia. They also come as the company is undergoing a painful restructuring, revealing its first fall in underlying sales in a decade and predicting a bigger than expected fall in profits in 2015.

Read more …

Kiev is losing on all fronts except the IMF and EU/US.

Famous Soviet Football Champ Refuses To Fight For Kiev In East Ukraine (RT)

Soviet football legend Aleksandr Zavarov said he will not fight in the eastern Ukraine conflict, after reports surfaced that a draft notice bearing the 53-year-old’s name was delivered to the Football Federation of Ukraine (FFU) last week. Zavarov, who was born in Lugansk, has categorically refused to comply with the notice. “I will say one thing, I will never fight where my family and kids live, where my parents are buried,” the assistant coach for the Ukraine national team said. “I just want peace.” In 1986, Zavarov was named the best football player in the USSR, and is widely considered to be one of the best players in Soviet history. The FFU received a conscription notice for 89 members of the organization, Ukrainian sports papers reported last week.

FFU representative Pavel Ternovoy confirmed the reports to R-Sport agency. “I can confirm that many members of the Football Federation of Ukraine received draft notices. Alexandr Zavarov and Yuriy Syvukha were among them,” he said. Yuriy Syvukha is a former goalkeeper and current assistant coach for the Ukraine national team. Ternovoy said that each conscript will have to decide for himself how to respond to his notice. “There is a war going on right now. Every citizen should understand what’s going on. What those who got the notices will do is entirely up to them,” he said. In January, Ukraine began a multi-stage military draft in the hope of enlisting 100,000 new recruits.

Reserve servicemen between the ages of 25 and 60 are eligible under the new guidelines. However, a Ukraine army spokesperson admitted late last month that the new draft has faced some problems as potential conscripts attempt to dodge the wave of mobilization. “The fourth wave of mobilization is problematic,” Vladimir Talalay said. “The biggest difficulties are seen in Sumy, Kharkov, Cherkassy, Ternopol, Zakarpatye, and other regions.” Almost 7,500 Ukrainians are already facing criminal charges for evading military service. Russian President Vladimir Putin has said that Ukrainian draft dodgers are welcome in Russia. He has promised to legalize longer stays in the Russian Federation for those facing conscription.

Read more …

“.ot only do we put up with a laundry list of tyrannies that make King George III’s catalogue of abuses look like child’s play, but most actually persist in turning a blind eye to them..”

Why I’m Not Breaking Up with America This Valentine’s Day (John Whitehead)

Almost every week I get an email from an American expatriate living outside the country who commiserates about the deplorable state of our freedoms in the United States, expounds on his great fortune in living outside the continental U.S., and urges me to leave the country before all hell breaks loose and my wife and children are tortured, raped, brutalized and killed. Without fail, this gentleman concludes every piece of correspondence by questioning my sanity in not shipping my grandchildren off to some far-flung locale to live their lives free of fear, police brutality, and surveillance. I must confess that when faced with unmistakable warning signs that the country I grew up in is no more, I have my own moments of doubt.

After all, why would anyone put up with a government that brazenly steals, cheats, sneaks, spies and lies, not to mention alienates, antagonizes, criminalizes and terrorizes its own citizens and then justifies it in the name of safety, security and the greater good? Why would anyone put up with militarized police officers who shoot first and ask questions later, act as if their word is law, and operate as if they are above the law? Why would anyone put up with government officials, it doesn’t matter whether they’re elected or appointed, who live an elitist lifestyle while setting themselves apart from the populace, operate outside the rule of law, and act as if they’re beyond reproach and immune from being held accountable?

Unfortunately, not only do we put up with a laundry list of tyrannies that make King George III’s catalogue of abuses look like child’s play, but most actually persist in turning a blind eye to them, acting as if what they don’t see or acknowledge can’t hurt them. The sad reality, as I make clear in my book A Government of Wolves: The Emerging American Police State, is that life in America is no bed of roses. Nor are there any signs that things will get better anytime soon, at least not for “we the people,” those of us who belong to the so-called “unwashed masses”—the working class stiffs, the hoi polloi, the plebeians, the rabble, the riffraff, the herd, the peons and the proletariats.

Read more …

And that’s just the one(s) we actually hear about. Most will never be told.

Online Bank Robbers Steal as Much as $1 Billion (Bloomberg)

A hacker group has stolen as much as $1 billion from banks and other financial companies worldwide since 2013 in an “unprecedented cyber-robbery,” according to computer security firm Kaspersky Lab. The gang targeted as many as 100 banks, e-payment systems and other financial institutions in 30 countries including the U.S, China and European nations, stealing as much as $10 million in each raid, Kaspersky Lab, Russia’s largest maker of antivirus software, said in a report. The Carbanak gang members came from Russia, China, Ukraine and other parts of Europe, and they are still active, it said The criminals infected bank employees’ computers with Carbanak malware, which then spread to internal networks and enabled video surveillance of staff.

That let fraudsters mimic employee activity to transfer and steal money, according to Kaspersky Lab, which said it has been working with Interpol, Europol and other authorities to uncover the plot. “These bank heists were surprising because it made no difference to the criminals what software the banks were using,” said Sergey Golovanov, principal security researcher at Kaspersky Lab’s global research and analysis team. “It was a very slick and professional cyber-robbery.”

Criminals also used access to banks’ networks to seize control of ATMs and order them to dispense cash at certain times to henchmen, Kaspersky Lab said. In some cases the gang inflated the balance of certain accounts and pocketed the extra funds without arousing immediate suspicion, according to the report. U.S. President Barack Obama convened a national summit on Friday to encourage cooperation between federal and private security specialists to combat hackers and data breaches. The event included executives and security officials from companies such as Microsoft, Google, Yahoo! and Facebook and followed hacks at companies including Sony and JPMorgan last year.

Read more …

‘We are working for the CIA and we’d like to know if some other country was controlling our climate, would we be able to detect it?’ Meaning: could we control their climate?

Spy Agencies Fund Climate Research In Hunt For Weather Weapon (Guardian)

A senior US scientist has expressed concern that the intelligence services are funding climate change research to learn if new technologies could be used as potential weapons. Alan Robock, a climate scientist at Rutgers University in New Jersey, has called on secretive government agencies to be open about their interest in radical work that explores how to alter the world’s climate. Robock, who has contributed to reports for the intergovernmental panel on climate change (IPCC), uses computer models to study how stratospheric aerosols could cool the planet in the way massive volcanic eruptions do. But he was worried about who would control such climate-altering technologies should they prove effective, he told the American Association for the Advancement of Science in San Jose.

Last week, the National Academy of Sciences published a two-volume report on different approaches to tackling climate change. One focused on means to remove carbon dioxide from the atmosphere, the other on ways to change clouds or the Earth’s surface to make them reflect more sunlight out to space. The report concluded that while small-scale research projects were needed, the technologies were so far from being ready that reducing carbon emissions remained the most viable approach to curbing the worst extremes of climate change. A report by the Royal Society in 2009 made similar recommendations. The $600,000 report was part-funded by the US intelligence services, but Robock said the CIA and other agencies had not fully explained their interest in the work.

“The CIA was a major funder of the National Academies report so that makes me really worried who is going to be in control,” he said. Other funders included Nasa, the US Department of Energy, and the National Oceanic and Atmospheric Administration. The CIA established the Center on Climate Change and National Security in 2009, a decision that drew fierce criticism from some Republicans who viewed it as a distraction from more pressing terrorist concerns. The centre was closed down in 2012, but the agency said it would continue to monitor the humanitarian consequences of climate change and the impact on US economic security, albeit not from a dedicated office. Robock said he became suspicious about the intelligence agencies’ involvement in climate change science after receiving a call from two men who claimed to be CIA consultants three years ago. “They said: ‘We are working for the CIA and we’d like to know if some other country was controlling our climate, would we be able to detect it?’

Read more …

People’s favorite topics.

12 Likely Causes Of The Apocalypse, As Seen By Scientists (RT)

Filmmakers, authors, and media have widely speculated about how human life on Earth will end. Now scientists have come up with the first serious assessment, presenting 12 possible causes of the Apocalypse. Scientists from Oxford University’s Future of Humanity Institute and the Global Challenges Foundation have compiled the first research on the topic, drawing a list of 12 possible ways that human civilization might end. The idea of the study is not quite new. However, due to its treatment in popular culture, the possibility of the world’s infinite end provokes relatively little political or academic interest, making a serious discussion harder, according to researchers. “We were surprised to find that no one else had compiled a list of global risks with impacts that, for all practical purposes, can be called infinite,” said co-author Dennis Pamlin of the Global Challenges Foundation. “We don’t want to be accused of scaremongering but we want to get policy makers talking.”

Below is the list of threats, ranked from least to most probable.
• Asteroid impact Probability: 0.00013%
• Super-volcano eruption Probability: 0.00003%
• Global pandemic Probability: 0.0001%
• Nuclear war Probability: 0.005%
• Extreme climate change Probability: 0.01%
• Synthetic biology Probability: 0.01%
• Nanotechnology Probability: 0.01%
• Unknown consequences Probability: 0.1%
• Ecological collapse Probability: N/A
• Global system collapse Probability: N/A
• Future bad governance Probability: N/A

And lastly, the most probable of all the mentioned causes of the Apocalypse is…
• Artificial Intelligence Probability: 0-10%

Read more …

Dec 282014
 
 December 28, 2014  Posted by at 12:28 pm Finance Tagged with: , , , , , , , ,  


DPC Cuyahoga River, Lift Bridge and Superior Avenue viaduct, Cleveland, Ohio 1912

Pope Francis Climate Change Encyclical To Anger Deniers, US Churches (Observer)
Hungry Britain: Millions Struggle To Feed Themselves, Face Malnourishment (Ind.)
Decline in Oil Could Cost OPEC $257 Billion in 2015 (Daily Finance)
US Oil-Producing States See Budgets, Jobs at Risk as Price Falls (NY Times)
China’s 3.5% Trade Growth in 2014 Falling Far Short Of 7.5% Target (Reuters)
Japan Approves $29 Billion Stimulus Plan, Impact In Doubt (Reuters)
Japan Approves $29 Billion Spending Package to Boost Economy
The Keynesian End Game Crystalizes In Japan’s Monetary Madness (Stockman)
How Central Banks Saved The World (Stocks) In 2014 (Zero Hedge)
Now Whitehall’s Crazy Eco Zealots Want To Ban Your Gas Cooker (Daily Mail)
Mexico Withdraws $3.4 Billion From Pemex as Oil Revenue Shrinks (Bloomberg)
Greece Faces New ‘Catastrophe’ As PM Battles To Avert Snap Elections (Observer)
Challenging UK Party Games Ahead As Greece Threatens 2nd Debt Crisis (Observer)
You Can Put The Next Crash On Your 2016 Calendar Now (Paul B. Farrell)
2014: The Year The Internet Came Of Age (Guardian)
China Needs Millions of Brides ASAP (Bloomberg)
Rising Oceans Force Bangladeshi Farmers Inland for New Jobs (Bloomberg)
Siberian Dog Allowed To Stay In Hospital Where Owner Died 1 Year Ago (RT)

A Papal Encyclical is a big deal.

Pope Francis Climate Change Encyclical To Anger Deniers, US Churches (Observer)

He has been called the “superman pope”, and it would be hard to deny that Pope Francis has had a good December. Cited by President Barack Obama as a key player in the thawing relations between the US and Cuba, the Argentinian pontiff followed that by lecturing his cardinals on the need to clean up Vatican politics. But can Francis achieve a feat that has so far eluded secular powers and inspire decisive action on climate change? It looks as if he will give it a go. In 2015, the pope will issue a lengthy message on the subject to the world’s 1.2 billion Catholics, give an address to the UN general assembly and call a summit of the world’s main religions. The reason for such frenetic activity, says Bishop Marcelo Sorondo, chancellor of the Vatican’s Pontifical Academy of Sciences, is the pope’s wish to directly influence next year’s crucial UN climate meeting in Paris, when countries will try to conclude 20 years of fraught negotiations with a universal commitment to reduce emissions.

“Our academics supported the pope’s initiative to influence next year’s crucial decisions,” Sorondo told Cafod, the Catholic development agency, at a meeting in London. “The idea is to convene a meeting with leaders of the main religions to make all people aware of the state of our climate and the tragedy of social exclusion.” Following a visit in March to Tacloban, the Philippine city devastated in 2012 by typhoon Haiyan, the pope will publish a rare encyclical on climate change and human ecology. Urging all Catholics to take action on moral and scientific grounds, the document will be sent to the world’s 5,000 Catholic bishops and 400,000 priests, who will distribute it to parishioners. According to Vatican insiders, Francis will meet other faith leaders and lobby politicians at the general assembly in New York in September, when countries will sign up to new anti-poverty and environmental goals.

In recent months, the pope has argued for a radical new financial and economic system to avoid human inequality and ecological devastation. In October he told a meeting of Latin American and Asian landless peasants and other social movements: “An economic system centred on the god of money needs to plunder nature to sustain the frenetic rhythm of consumption that is inherent to it. “The system continues unchanged, since what dominates are the dynamics of an economy and a finance that are lacking in ethics. It is no longer man who commands, but money. Cash commands. “The monopolising of lands, deforestation, the appropriation of water, inadequate agro-toxics are some of the evils that tear man from the land of his birth. Climate change, the loss of biodiversity and deforestation are already showing their devastating effects in the great cataclysms we witness,” he said.

Read more …

Dickens never died.

Hungry Britain: Millions Struggle To Feed Themselves, Face Malnourishment (Ind.)

Millions of the poorest people in Britain are struggling to get enough food to maintain their body weight, according to official figures published this month. The Government’s Family Food report reveals that the poorest 10% of the population – some 6.4 million people – ate an average of 1,997 calories a day last year, compared with the average guideline figure of about 2,080 calories. This data covers all age groups. One expert said the figures were a “powerful marker” that there is a problem with food poverty in Britain and it was clear there were “substantial numbers of people who are going hungry and eating a pretty miserable diet”. The use of food banks in the UK has surged in recent years. The Trussell Trust, a charity which runs more than 400 food banks, said it had given three days worth of food, and support, to more than 492,600 people between April and September this year, up 38% on the same period in 2013.

Based on an annual survey of 6,000 UK households, the Family Food report said the population as a whole was consuming 5% more calories than required. Tables of figures attached to the report reveal the average calorie consumption for the poorest 10%, but the report itself did not highlight this. Chris Goodall, an award-winning author who writes about energy, discovered the figures while investigating human use of food resources. “The data absolutely shocked me. What it shows is for the first time since the Second World War, if you are poor you cannot afford to eat sufficient calories,” he said. He also highlights a widening consumption gap between rich and poor. In 2001/2, there was little difference, with the richest 10th consuming a total of 2,420 calories daily, about 4% more than the poorest. But in 2013, the richest group consumed 2,294 calories, about 15% more than the poorest. The report, published by the Department for Environment, Food & Rural Affairs, also found that the poorest people spent 22% more on food in 2013 than in 2007 but received 6.7% less.

Read more …

2012 revenues: $900 billion. 2015: $446 billion.

Decline in Oil Could Cost OPEC $257 Billion in 2015 (Daily Finance)

Falling oil prices are giving a huge boost to the U.S. economy just in time for the holidays, and the reprieve from high gas prices doesn’t look like it will stop anytime soon. But elsewhere around the world, the drop in oil might not be looked upon so kindly. Most of OPEC’s 12 member countries rely on oil as a major source of revenue, not only supporting their domestic economies but also balancing national budgets. The amount of potential revenue they’ve lost as crude oil prices have fallen is staggering. If you’re a country like Saudi Arabia, Kuwait or Iraq, which rely on oil as a major revenue source, the drop in oil prices can impact your country dramatically. The U.S. Energy Information Administration just estimated that next year’s OPEC oil export revenue (excluding Iran) will drop an incredible $257 billion to $446 billion. That’s off its peak of nearly $900 billion in 2012.

The chart above shows the scale of OPEC’s potential revenue drop and the chart below shows who has the most at stake. Interestingly, Saudi Arabia is leading the charge against cutting OPEC’s production, which is keeping oil prices low, despite having the most money at stake. The reason may be a long-term need for greater market share in the oil market.

Read more …

“Nothing is off the table at this point.”

US Oil-Producing States See Budgets, Jobs at Risk as Price Falls (NY Times)

States dependent on oil and gas revenue are bracing for layoffs, slashing agency budgets and growing increasingly anxious about the ripple effect that falling oil prices may have on their local economies. The concerns are cutting across traditional oil states like Texas, Louisiana, Oklahoma and Alaska as well as those like North Dakota that are benefiting from the nation’s latest energy boom. “The crunch is coming,” said Gunnar Knapp, a professor of economics and the director of the Institute of Social and Economic Research at the University of Alaska Anchorage. Experts and elected officials say an extended downturn in oil prices seems unlikely to create the economic disasters that accompanied the 1980s oil bust, because energy-producing states that were left reeling for years have diversified their economies. The effects on the states are nothing like the crises facing big oil-exporting nations like Russia, Iran and Venezuela.

But here in Houston, which proudly bills itself as the energy capital of the world, Hercules Offshore announced it would lay off about 300 employees who work on the company’s rigs in the Gulf of Mexico at the end of the month. Texas already lost 2,300 oil and gas jobs in October and November, according to preliminary data released last week by the federal Bureau of Labor Statistics. On the same day, Fitch Ratings warned that home prices in Texas “may be unsustainable” as the price of oil continues to plummet. The American benchmark for crude oil, known as West Texas Intermediate, was $54.73 per barrel on Friday, having fallen from more than $100 a barrel in June. In Louisiana, the drop in oil prices had a hand in increasing the state’s projected 2015-16 budget shortfall to $1.4 billion and prompting cuts that eliminated 162 vacant positions in state government, reduced contracts across the state and froze expenses for items like travel and supplies at all state agencies. Another round of reductions is expected as soon as January.

And in Alaska – where about 90% of state government is funded by oil, allowing residents to pay no state sales or income taxes – the drop in oil prices has worsened the budget deficit and could force a 50% cut in capital spending for bridges and roads. Moody’s, the credit rating service, recently lowered Alaska’s credit outlook from stable to negative. States that have become accustomed to the benefits of energy production — budgets fattened by oil and gas taxes, ample jobs and healthy rainy-day funds — are now nervously eyeing the changed landscape and wondering how much they will lose from falling prices that have been an unexpected present to drivers across the country this holiday season. The price of natural gas is falling, too. “Our approach to the 2016 budget includes a full review of every activity in every agency’s budget and the cost associated with them,” said Kristy Nichols, the chief budget adviser to Gov. Bobby Jindal of Louisiana. “Nothing is off the table at this point.”

Read more …

“.. according to a report on the Ministry of Commerce’s website that was subsequently revised to remove the numbers.”

China’s 3.5% Trade Growth in 2014 Falling Far Short Of 7.5% Target (Reuters)

China’s trade will grow 3.5% in 2014, implying the country will fall short of a current 7.5% official growth target, according to a report on the Ministry of Commerce’s website that was subsequently revised to remove the numbers. The initial version of the report published on the website on Saturday, which quoted Minister of Commerce Gao Hucheng, was replaced with a new version that had identical wording but with all the numbers and percentages removed. The Commerce Ministry did not answer calls requesting comment on the reason for the change. China’s trade figures have repeatedly fallen short of expectations in the second half of this year, providing more evidence that China’s economy may be facing a sharper slowdown. Foreign direct investment will amount to $120 billion for the year, the earlier version of Ministry of Commerce report said, in line with official forecasts.

The earlier version of the report also said outward non-financial investment from China could also come in around the same level. That would mark the first time outward flows have pulled even with inward investment flows in China, and would imply a major surge in outward investment in December given that the current accumulated level stands slightly below $90 billion. The earlier version of the report also predicted that retail sales growth would come in at 12% for 2014, in line with the current average growth rate. In a separate report, the Chinese Academy of Social Sciences predicted that real estate prices in Chinese cities would continue to slide in 2015, with third- and fourth-tier cities hit hardest. But it said the market would have a soft landing as local governments take action to provide further policy support to the market.

Read more …

“.. the government will avoid fresh debt issuance and fund the package with unspent money from previous budgets and tax revenues that have exceeded budget forecasts due to economic recovery ..”

Japan Approves $29 Billion Stimulus Plan, Impact In Doubt (Reuters)

Japan’s government approved on Saturday stimulus spending worth $29 billion aimed at helping the country’s lagging regions and households with subsidies, merchandise vouchers and other steps, but analysts are skeptical about how much it can spur growth. The package, worth 3.5 trillion yen ($29.12 billion) was unveiled two weeks after a massive election victory by Prime Minister Shinzo Abe’s ruling coalition gave him a fresh mandate to push through his “Abenomics” stimulus policies. The government said it expects the stimulus plan to boost Japan’s GDP by 0.7%. Given Japan’s dire public finances, the government will avoid fresh debt issuance and fund the package with unspent money from previous budgets and tax revenues that have exceeded budget forecasts due to economic recovery.

With nationwide local elections planned in April which Abe’s ruling bloc must win to cement his grip on power, the package centers on subsidies to regional governments to carry out steps to stimulate private consumption and support small firms. Of the total, 1.8 trillion yen will be spent on measures such as distributing coupons to buy merchandise, providing low-income households with subsidies for fuel purchases, supporting funding at small firms and reviving regional economies. The remaining 1.7 trillion yen will be used for disaster-prevention and rebuilding disaster-hit areas including those affected by the March 2011 tsunami. Tokyo will also seek to bolster the housing market by lowering the mortgage rates offered by a governmental home-loan agency. “It’s better than doing nothing, but I don’t think this stimulus will have a big impact on boosting the economy,” said Masaki Kuwahara, a senior economist at Nomura Securities.

Read more …

Shopping vouchers?

Japan Approves $29 Billion Spending Package to Boost Economy

Japan’s government approved a 3.5 trillion yen ($29 billion) fiscal stimulus package to boost the economy after April’s sales tax hike caused consumption to slump. The measures include shopping vouchers, subsidized heating fuel for the poor and low interest loans for small businesses hurt by rising input costs, and will boost gross domestic product by 0.7%, the government estimates. The spending will be paid for with tax revenue and unspent funds and won’t need new bond issuance, Economy Minister Akira Amari said today in Tokyo. Unexpected falls in output and retail sales in November underscore the continued weakness in the economy. With little sign of a rebound in domestic demand, getting growth back on a recovery track is a priority for Prime Minister Shinzo Abe.

“This will support private consumption and boost regional economies, so that the virtuous economic cycle spreads to all corners of the nation,” Abe said in Tokyo after the decision. About 1.7 trillion yen will be spent on public works in areas damaged by natural disasters and to improve disaster preparedness, with 600 billion yen for revitalizing regional economies and 1.2 trillion yen to support people and small businesses hurt by the current economic situation, according to documents released by the Cabinet Office. The package is part of an extra budget for the fiscal year through March which will be adopted by the cabinet on Jan. 9, Finance Minister Taro Aso said in Tokyo today. The budget then needs to be approved by parliament, which is controlled by the ruling coalition.

Abe last month delayed the planned further hike in the sales tax by 18 months after data showed the economy fell into recession. GDP shrank an annualized 1.9% last quarter, more than initially estimated, after a 6.7% contraction in the three months from April, when the levy was raised for the first time since 1997. The postponement fueled concern about the government’s effort to rein in the world’s heaviest debt and prompted Moody’s Investors Service to cut its credit rating on Japan.

Read more …

“Japan’s work force of 80 million will drop to 40 million by 2060.”

The Keynesian End Game Crystalizes In Japan’s Monetary Madness (Stockman)

If the BOJ’s mad money printers were treated as monetary pariahs by the rest of the world, it would at least imply that a modicum of sanity remains on the planet. But just the opposite is the case. Establishment institutions like the IMF, the US treasury and the other major central banks urge them on, while the Keynesian arson squad led by Professor Krugman actually faults Japan for being too tepid with its “stimulus”. Now comes several new data points that absolutely confirm Japan is a financial mad house – even as its policy model is embraced by mainstream officials and analysts peering from a distance. Front and center is the newly reported fact from the Cabinet Office that Japan’s household savings rate plunged to minus 1.3% in the most recent fiscal year, thereby entering negative territory for the first time since records were started in 1955.

Indeed, Japan had been heralded as a nation of savers only a generation ago. During the era before it’s plunge into bubble finance in the late 1980s, households routinely saved 15-25% of income. But after nearly three decades of Keynesian policies, Japan has now stumbled into an insuperable demographic/financial trap; and one that is unusually transparent and rigidly delineated, to boot. Since Japan famously and doggedly refuses to accept immigrants, its long-term demographics are rigidly baked into the cake. Accordingly, anyone who will make a difference over the next several decades has already been born, counted, factored and attrited into the projections.

Japan’s work force of 80 million will thus drop to 40 million by 2060. At the same time, its current 30 million retirees will continue to rise, meaning that its retiree rolls will ultimately exceed the number of workers. Given those daunting facts, it follows that on the eve of its demographic bust Japan needs high savings and generous interest rates to augment retirement nest eggs; a strong exchange rate to attract foreign capital to help absorb its staggering $12 trillion of public debt, which already stands at a world leading 230% of GDP; and rising real incomes in order to shoulder the heavy taxation that is unavoidably necessary to close its fiscal gap and contain its mushrooming public debt.

With its debilitating Keynesian fiscal and monetary policies now re-upped on steroids under Abenomics, however, it goes without saying that nearly the opposite conditions prevail. Most notably, no household or institution anywhere in Japan can earn anything on liquid savings. The money market rate which determines deposit money yields was driven from a “high” of 100 basis points (as ridiculous as that sounds) at the time of the financial crisis to 10 basis points today, which is to say, nothing. But what is even more astounding is that the yield on the 10-year JGB dipped to an all-time low of 0.31% in recent trading. Given the militant insistence of the BOJ that it will hit its 2% inflation target come hell or high water, it is accurate to say that the official policy of Abenomics is to cause holders of the government’s long-term debt to loose their shirts.

Read more …

“Escape velocity”. Hadn’t heard that in while.

How Central Banks Saved The World (Stocks) In 2014 (Zero Hedge)

2014 was awash with potentially status quo destabilizing ‘realities’ to the “we’re back on track and world economic growth is about to reach escape velocity” meme… but time after time, the well-conditioned ‘investor’ was rescued… here’s how… Because – fun-durr-mentals.

Read more …

Love the picture.

Now Whitehall’s Crazy Eco Zealots Want To Ban Your Gas Cooker (Daily Mail)

As many as 14 million households slid their turkey into a gas oven yesterday, then waited for a succulent, browned and delicious meal to emerge. But such a familiar festive scene will be a thing of the past just a few years down the line, if the Government has its way. As for turning up the thermostat to ensure our gas boiler keeps our home snug and warm on a chilly festive morning – that simple action too, is under threat, even though some 90% of all homes in Britain are heated by gas. Householders across the country will be horrified to learn that, over the next decade or two, the Government plans to phase out all our gas-fired cookers and heating systems – forcing us to replace them at a cost of untold billions. Official documents reveal the Government is seriously contemplating that, within 25 years or so, gas will be all but banned — along with petrol and diesel.

The intention is that not only our cooking and heating but much else, including our cars and most of the vehicles on Britain’s roads, will have to be powered by electricity. The Government admits this astonishingly ambitious plan will be the most far-reaching energy revolution since electricity itself was discovered. But it is not being planned because our gas and oil supplies will have run out – or even because of any looming shortage. On the contrary, the world is now facing a glut of gas and oil, thanks in part to the ‘shale gas revolution’ led by the U.S., a country which almost overnight, has become the world’s largest natural gas producer as a result of a process called fracking – where water and sand are fired at high pressure into shale rock to release the oil and gas inside. This has led to plummeting prices, and prompted many industries to switch to gas.

Yet our own rulers want to abandon it. Astonishingly, the plan to change the way we cook our food and heat our homes is being instigated by the Government as the only way by which we can meet a statutory requirement under the Climate Change Act. This particular piece of legislative folly was pushed through Parliament six years ago by Ed Miliband, as our first ever Secretary of State for Energy and Climate Change, and decreed that Britain must cut its emissions of carbon dioxide from fossil fuels by a staggering 80% within 35 years. When this Act passed almost unanimously through Parliament in 2008, not a single MP, let alone Mr Miliband, had the faintest idea how we could actually meet such an improbable target.

Read more …

Got to admire the spin: “.. to “make management of public-sector finances more efficient ..”

Mexico Withdraws $3.4 Billion From Pemex as Oil Revenue Shrinks (Bloomberg)

Mexico’s Finance Ministry took out 50 billion pesos ($3.4 billion) from the state oil company Petroleos Mexicanos, according to a statement sent to the Mexican Stock Exchange. The payment this month was meant to “make management of public-sector finances more efficient,” according to the filing from the oil company, known as Pemex. The withdrawal marks a departure from the government’s usual methods of obtaining revenue from Pemex, which include taxes and royalties.

Pemex typically provides about a third of the federal budget, and its contributions dropped this year as the oil company faced production declines and falling crude prices. During the first 11 months of 2014, taxes paid by Mexico City-based Pemex declined by about 260 billion pesos, or 22%, from the same period of 2013, according to records. The withdrawal shows “a near addiction to Pemex’s revenue by the ministry,” Fluvio Ruiz, a board member of the oil company’s petrochemical unit, said in a phone interview. He said he had no prior knowledge of the disclosure through his role at the company.

Read more …

I don’t think he still believes in it.

Greece Faces New ‘Catastrophe’ As PM Battles To Avert Snap Elections (Observer)

Greece’s embattled prime minister, Antonis Samaras, issued an eleventh-hour appeal to parliamentarians on Saturday in an attempt to avert snap elections that would almost certainly plunge the eurozone into renewed crisis. In an impassioned plea, he urged MPs to rid the country of “menacing clouds” gathering over it by supporting the government’s presidential candidate when they gather for the final round of a three-stage vote on Monday. Failure would automatically trigger elections that radical leftists would be likely to win. The ballot has therefore electrified Greece, rattled markets and unnerved Europe. “I am once again appealing to all MPs, of all parties, to vote for the president of the republic,” Samaras told state television. “If we don’t elect a president the responsibility will hang heavily over those who don’t vote for [him]. They will be remembered by everyone, especially history.”

Samaras’s high-stakes gamble of calling the poll two months early has brought him face-to-face with the spectre of losing power if he fails to convince 12 MPs to back Stavros Dimas, his choice for the presidential post. A former European commissioner, Dimas received 168 ballots in a second round of voting last week – well short of the 200 required. On Monday he must amass 180 to be elected. Following a Christmas of frantic behind-the-scenes politicking, the prime minister warned of the perils of taking the debt-stricken country down the road of “absurd adventure” if deputies failed to endorse Dimas. “People do not want early elections… We gave sweat and blood in recent years to keep Greece standing upright.”

Read more …

Understatement of the day/week/month/year: “With so much cheap money sloshing around the global markets, a second financial crisis cannot be ruled out.”

Challenging UK Party Games Ahead As Greece Threatens 2nd Debt Crisis (Observer)

Europe. Emerging markets. Earnings. Equality. And the election. Look out, because 2015 is going to be the year of the five Es. In the UK, it will be the election that dominates the economic and business scene, particularly in the first half of the year and for much longer if the result is inconclusive. The prospect of a minority government living from hand to mouth would certainly unsettle the markets. But the election result will be influenced by the four other Es, starting with Europe, where the first crunch moment comes tomorrow in Greece with the third and final chance for the government of Antonis Samaras to get its choice of a new president through parliament. If he fails to secure 180 votes, there will be a snap election that the anti-austerity Syriza party is currently favourite to win. That would prompt fears of a fresh leg to Europe’s debt crisis, which began in Greece more than six years ago. This is something Europe can ill afford. The eurozone economy is barely growing; the German locomotive is slowing; and falling oil prices bring with them the threat of deflation.

The issue for the European Central Bank in 2015 is whether to take the plunge with a quantitative easing programme, something the Germans have resisted up until now. Berlin’s hardline stance has, however, softened in recent months as the situation in Russia – the key emerging market to watch – has deteriorated. Europe’s trade links with Russia are not all that important, but there are two big concerns. The first is of heightened geopolitical risk. Russia is being squeezed by western sanctions and now faces the inevitability of a deep recession in 2015. This might make Vladimir Putin more willing to come to terms over Ukraine, but it might not. The second risk is that the collapse of the rouble puts intolerable strain on Russian companies and Russian banks, with corporate losses ricocheting through the entire global financial system through the sort of highly leveraged derivatives trades that caused the 2007 meltdown. With so much cheap money sloshing around the global markets, a second financial crisis cannot be ruled out.

The third E is equality, brought to prominence in the past year not just by the bestselling book Capital by the French economist Thomas Piketty, but by evidence from the IMF and the Organisation for Economic Co-operation and Development that inequality is bad for growth. Standing trickle-down economics on its head, the OECD said recently that UK growth in the two decades from 1990 to 2010 would have been nine percentage points higher had it not been for widening inequality. Given that the trend towards greater inequality has been evident for the past three decades, it is worth asking why it has become a political issue now. The answer is simple. In the years leading up to the financial crisis, incomes were rising across the board. People on low and middle incomes didn’t mind all that much that the bankers and hedge fund owners were earning stratospheric sums when their own pay packets were going up.

Read more …

Think it’ll take that long?

You Can Put The Next Crash On Your 2016 Calendar Now (Paul B. Farrell)

With the recent budget bill, the too-big-to-fail banks were handed even more of what they’ve wanted: a further delay of the Volcker Rule, which could effectively kill it, and, worse, a rollback of Dodd-Frank provisions that protected taxpayers against abusive gambling in the shadowy global derivatives casino using Main Street depositors’ money. It’s as if we’re back to 1999, when the banks got Congress to erase the Glass-Steagall Act, which for 80 years protected Main Street by separating retail banks and investment banking. Now the banks are back to their speculation and gambling, exposing the economy to great risk, just as they were before the 1929 crash. As MarketWatch’s David Weidner put it, Yellen’s Fed looks to have forgotten that banks caused the Great Recession: that hellish era that was set off by the Bear Stearns, Lehman, Countrywide, AIG, Merrill, Freddie, Sallie and the other disasters.

Now Yellen’s Fed and our too-big-to-fail banks and their mainly Republican co-conspirators have set another big trap. A huge trap. As Stephen Roach, former chairman of Morgan Stanley Asia, wrote for Project Syndicate, Yellen’s Federal Reserve “is headed down a familiar — and highly dangerous — path.” “Steeped in denial of its past mistakes, the Fed is pursuing the same incremental approach that helped set the stage for the financial crisis of 2008-2009. The consequences,” writes Roach, “could be similarly catastrophic.” The next crash is due in 2016, around the presidential election. Why? Yellen’s brain is trapped in the same myopic capitalist dogma that blinded Greenspan for 18 years, forcing him to confess he “really didn’t get it till very late,” long after the $10 trillion market loss was a reality.

Same with Yellen. It will happen again. Losses bigger than 2000 and 2008 combined. Think I’m kidding? Bet against this at your peril. Jeremy Grantham’s already on record predicting that “around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse.” That could translate to the DJIA crashing – which on Friday posted the week’s (and history’s) second close above the 18,000 level – to around 10,000. The Dow crashing all the way back down to 10,000? Wow. Unimaginable. No wonder our brains tune out. Instead, we prefer the happy talk that will just keep coming out of Wall Street and Washington till 2016. We’ll keep denying reality … till it’s too late, and another $10 trillion loss is in the books.

Read more …

So the question is: did the internet facilitate the rise in propaganda?

2014: The Year The Internet Came Of Age (Guardian)

The best we can say about 2014 is that it was the year when we finally began to have a glimmer of what the internet might mean for society. Not the internet that we fantasised about in the early years, but the network as it has evolved from an exotic curiosity into the mundane underpinning of our lives – a general-purpose technology or GPT. And, in a way, the timescale is about right. The internet that we use today was switched on in January 1983, but it didn’t really become a mainstream medium until the web began to explode in 1993. So we’re about 21 years into the revolution. And what we know from the history of other GPTs is that it generally takes at least two decades before they form the unremarked-upon backdrops to everyday life.

In 1999, Andy Grove, then the CEO of Intel, the dominant chip-maker of the time, made a famous prediction. In five years’ time, he said, “companies that aren’t internet companies won’t be companies at all”. He was widely ridiculed for this pronouncement at the time. But in fact he was just being prescient. What he was trying to communicate was that the internet would one day become like the telephone or mains electricity – something that we take for granted. Grove’s point was that companies that boasted that they “were now on the internet” in 2004 would already be regarded as ridiculous. And so indeed they were.

Could we live without the net? Answer: on an individual level possibly, but on a societal level no – simply because so many of the services on which industrialised societies depend now rely on internet connectivity. In that sense, the network has become the nervous system of the planet. This is why it now makes no more sense to argue about whether the internet is good or bad than to debate whether oxygen or water are desirable. We’ve got it and we’re stuck with it. Which means that we’re also stuck with its downsides. While offline crime has decreased dramatically – car-related theft has reduced by 79% since 1995 and burglary by 67%, for example, what’s happened is that much serious crime has now moved online, where its scale is staggering, even if the official statistics do not count it.

The same goes for industrial espionage (at which the Chinese are currently the world champions) and counter-espionage and counter-terrorism (at which the NSA and GCHQ currently top the international league tables). And we’re just getting started on cyberwarfare. So here we are at the end of 2014, finally wising up to what we’ve got ourselves into: an internet that provides us with much that we love and value and would be hard put to do without. But an internet that is also dangerous, untrustworthy and comprehensively monitored. The question for 2015 and beyond is whether we can have more of the former and less of the latter. Happy New Year!

Read more …

A problem still in its infancy.

China Needs Millions of Brides ASAP (Bloomberg)

In the villages outside of Handan, China, a bachelor looking to marry a local girl needs to have as much as $64,000 – the price tag for a suitable home and obligatory gifts. That’s a bit out of the price range of many of the farmers who live in the area. So in recent years, according to the Beijing News, local men have been turning to a Vietnamese marriage broker, paying as much as $18,500 for an imported wife, complete with a money-back guarantee in case the bride fled. But that fairy tale soon fell apart. On the morning of November 21, sometime after breakfast, as many as 100 of Handan’s imported Vietnamese wives – together with the broker – disappeared without a trace. It was a peculiarly Chinese instance of fraud. The victims are a local subset of a fast-growing underclass: millions of poor, mostly rural men, who can’t meet familial and social expectations that a man marry and start a family because of the country’s skewed demographics.

In January, the director of China’s National Bureau of Statistics announced that China is home to 33.8 million more men than women out of a population exceeding 1.3 billion. China’s vast population of unmarried men is sure to pose an array of challenges for China, and perhaps its neighbors, for decades to come. What’s already clear is that fraudulent mail-order wives are only the start of a much larger problem. The immediate cause of China’s gender imbalance is a long-standing cultural preference for boys. In China’s patrilineal culture, they’re expected to carry on the family name, as well as serve as a social security policy for aging parents. In the 1970s, China’s so-called One Child policy transformed this preference into an imperative that parents fulfilled via sex selective abortions (made possible by the widespread availability of ultrasounds). As a result, millions of girls never made it onto China’s population rolls.

In 2013, for example, the government reported 117.6 boys were born for every 100 girls. (The natural rate is 103 to 106 boys to every 100 girls.) In the countryside, the ratio can run much higher — Mara Hvistendahl, in her 2011 book, Unnatural Selection, reports on a town where ratios run as high as 150 to 100. Long-term, such imbalances can create an excess of males that might reach 20% of the overall male population by 2020, according to one estimate. Of course, social expectations aren’t just confined to boys. In China, daughters are expected to marry up – and in a country where men far outnumber women, the opportunities to do so are excellent, especially in the cities to which so many of China’s rural women move. The result is that bride prices – essentially dowries paid to the families of daughters – are rising, especially in the countryside. One 2011 study on bride prices found that they’d increased seventy-fold between the 1960s and 1990s in just one representative, rural hamlet.

Read more …

Very real. Not some theory.

Rising Oceans Force Bangladeshi Farmers Inland for New Jobs (Bloomberg)

About seven years ago, Gaur Mondol noticed he couldn’t grow as much rice on his land as salty water seeped in from the Passur River, which stretches from his home in Bangladesh’s interior all the way to the Indian Ocean. Now the rice paddies are completely inundated, leaving the land barren. To find work, he must walk for miles each day to other villages. His annual income has fallen by half to 36,000 taka ($460). He makes about $4 a day if he’s lucky, and most of that goes to buy food for his family of four. “I’m always worried that my house will be washed away someday,” Mondol said from his home in Mongla sub-district, pointing to a river-side tamarind tree with water swirling around its exposed roots. “My family is constantly under threat as the river creeps in.” Rising sea levels are one of the biggest threats to the $150-billion economy over the next half a century, with farmers like Mondol already facing the consequences.

Bangladesh, which needs to grow at 8% pace to pull people out of poverty, stands to lose about 2% of gross domestic product each year by 2050, according to the Asian Development Bank. “The sea-level rise and extreme climate events are the two ways that salinity intrudes into the freshwater system,” Mahfuzuddin Ahmed, an adviser in the ADB’s regional and sustainable development department, said by phone from Manila. “The implication for food security is quite big.” Bangladesh is one of the world’s most densely populated countries, with half the U.S. population crammed into an area the size of New York state. About 50% of its citizens are directly dependent on agriculture for their livelihoods, a quarter live in the coastal zone, and 21% of these lands are affected by an excess of salinity.

The proportion of arable land has fallen 7.3% between 2000-2010, faster than South Asia’s 2% decline, with geography playing a large role. Bangladesh is nestled at a point where tidal waves from the Indian Ocean flow into the Bay of Bengal. While these create the Sundarbans mangroves, home to the endangered Bengal tiger, winds and currents cause saline water to mix with upstream rivers. Global weather changes worsen this. Bangladesh’s average peak-summer temperature in May has climbed to 28.1 degrees Celsius (83 Fahrenheit) in 1990-2009 from 26.9 in 1900-1930, and could rise to 31.5 degrees in 2080-2099, World Bank data show. Average June rainfall has dropped to 467.1 millimeter from 517.5 in that time.

Read more …

Wonderful.

Siberian Dog Allowed To Stay In Hospital Where Owner Died 1 Year Ago (RT)

The holiday spirit is alive and well in a hospital in Siberia, where Masha, Russia’s own ‘Hachiko’ dog was given permanent residence status. For a whole year the loyal pet kept ‘dogging’ the hospital, waiting for her owner who had passed away. Despite a number of attempts to have Masha adopted, the heartbroken pooch kept running away and coming back to the Novosibirsk District Hospital Number One, where she last saw her owner in December, 2013. “Masha will always stay here, because she is waiting for her owner. I think that even if we took her to his grave, she wouldn’t believe it. She’s waiting for him alive, not dead,” nurse Alla Vorontsova told the Siberian Times.

The dog’s heartbreaking story has gathered quite a bit of attention in Russia and even abroad, after it went viral in the media. The sad dachshund was adopted a number of times, but all unsuccessfully. “People in Russia tried to adopt her three times, but she always came back. I also heard that a number of foreigners wanted to adopt her too, but it is impossible – she doesn’t want to leave the hospital. And besides, we love her and she loves us. How could she live somewhere far away? She would just pine away,” Vorontsova said. For a year, hospital workers fed and walked Masha, and now they have finally managed to make it official; Masha has her own cozy spot inside the building.

“Here all the patients come to her, stroke her and give something tasty, especially the older people. She warms their hearts,” the nurse added. Masha’s elderly owner was admitted to the hospital and his dog was his sole visitor there. Masha’s loyalty earned her the media nickname Hachiko – in reference to the famous story of a Japanese Akita dog. Agricultural science professor Hidesaburo Ueno got Hachiko in 1924. The dog would greet the owner at the station every day. After Ueno passed away, Hachiko kept returning to the train station for 10 years, waiting for him to come back. The amazing story turned the pet into a national hero and later inspired a Hollywood movie, ‘Hachiko: A Dog’s Tale,’ starring Richard Gere.

Read more …

Dec 072014
 
 December 7, 2014  Posted by at 11:53 am Finance Tagged with: , , , , , , , , ,  


Arthur Rothstein Accident on US 40 between Hagerstown and Cumberland, Maryland Nov 1936

OPEC And American Shale Keep The Oil Price Spiralling Downwards (Guardian)
Oil Poised to Extend Drop After Hitting Five-Year Low (Bloomberg)
Fossil Fuel Companies “The Sub-Prime Assets Of The Future” (Telegraph)
Osborne Oversees Biggest Fossil Fuel Boom Since North Sea Oil (Guardian)
Delinquent US Car Loans Up 27% From Last Year (NY Times)
Goldman Needs Volcker Delay to Avoid Private-Equity Losses (Bloomberg)
Wells Fargo Breaks Citigroup’s 2001 Record for Bank Value (Bloomberg)
Russia Braces For An Economic Winter (Observer)
Why A Moscow Meltdown Could Spread Around The Globe (Observer)
Clashes At Greek Protests To Mark Police Shooting (BBC)
Angry Families Of MH17 Crash Victims Seek UN Investigation (Reuters)
Ukraine’s Made-in-USA Finance Minister (Robert Parry)
Prosecutor Freezes Accounts Of Former Vatican Bank Heads (Reuters)
Australian Banks Seen Needing $25 Billion After Inquiry (Bloomberg)
Minimum Viable Sociopathy (Dmitry Orlov)
Archbishop Calls For £150 Million State-Backed Food Bank System (Daily Mail)
Hunger in UK Shocks Me More Than Africa (Archbishop Of Canterbury)
Has Modern Art Exhausted Its Power To Shock? (BBC)
California’s ‘Hot Drought’ Ranks Worst in at Least 1,200 Years (Bloomberg)

” .. the Chicago Mercantile Exchange reported a huge increase in the number of investors hedging on crude hitting $40.

OPEC And American Shale Keep The Oil Price Spiralling Downwards (Guardian)

Oil prices were back near five-year lows – below $70 per barrel – at the end of last week as commodity traders, analysts and governments struggled to come up with new forecasts for 2015. The benchmark, Brent blend, had recovered from a major drop in the aftermath of last month’s meeting of the oil producers’ cartel, Opec. However, it was back down at $69.17 on Friday as the market bet on a prolonged low in prices. Igor Sechin, Russia’s most senior oil official, warned that Opec’s unwillingness to cut production could push oil down to $60, while the Chicago Mercantile Exchange reported a huge increase in the number of investors hedging on crude hitting $40. Forecasting the future price of oil has always been fraught.

There were few warnings in the first half of the year that prices were set to plunge by 40% from a June high of $115. Analysts at Citi are now expecting Brent to average $80 over the next 12 months, while their counterparts at Natixis believe it could fall as low as $74 – and that the US benchmark, West Texas Intermediate, will slump below $70. Standard Chartered described Opec’s decision to keep the production target unchanged as “extremely negative for oil prices for 2015” and has cut next year’s Brent price forecast by $16 a barrel to $85. The reasons for the cuts are faltering growth in demand as the global economy continues to stutter, plus soaring production from the shale fields of Texas and Pennsylvania.

Lower prices have also been supported by a relatively benign geopolitical environment, because energy supplies have not been endangered by the Russian stand-off with the west over Ukraine or Islamic State’s advances in Syria. A divided Opec is now hoping that falling prices will be devastating for higher-cost US frackers, forcing them to shut down output and gradually bring balance to the wider oil markets. But according to Paul Stevens, oil expert at Chatham House, a similar strategy in the late 1980s did not encourage North Sea and other producers to halt production and the price continued to slide downwards.

Read more …

“We’re way oversold in both Brent and WTI, not to mention the products, and the market’s not responding ..”

Oil Poised to Extend Drop After Hitting Five-Year Low (Bloomberg)

West Texas Intermediate and Brent crudes are poised to decline from the lowest closing levels in more than five years after shrugging off a sign that the market has dropped too fast. The 14-day relative strength index (BCOM) for WTI slipped to 27.0364 yesterday, according to data compiled by Bloomberg. Investors typically start buying contracts when the reading is below 30. The 14-day RSI for Brent slipped to 23.6843. The move highlights the extent of the bear market in the face of technical support. “We’re way oversold in both Brent and WTI, not to mention the products, and the market’s not responding,” Bob Yawger, director of the futures division at Mizuho Securities said by phone yesterday. “A market that ignores these bullish signals is heading much lower.”

Futures fell 1.5% in New York and 0.8% in London yesterday. State-run Saudi Arabian Oil extended its discount for Arab Light sales to Asia next month to $2 a barrel below a regional benchmark, according to a company statement Dec. 4. That’s the lowest in at least 14 years. The slide in prices accelerated as the dollar surged to a five-year high, curbing the appeal of commodities as a store of value. WTI for January delivery dropped 97 cents to $65.84 a barrel on the New York Mercantile Exchange yesterday. It was the lowest settlement since July 29, 2009. Prices are down 33% this year.

Read more …

There’s a lot of uncertainty about how and to what extent climate agreements will result in stranded assets. Investment in fossil fuels carries a lot of risk, for yet another reason.

Fossil Fuel Companies “The Sub-Prime Assets Of The Future” (Telegraph)

Investing in fossil fuels is becoming increasingly risky because global action to tackle climate change will curb demand, forcing companies to leave unprofitable reserves in the ground, Ed Davey, the energy secretary, has warned. Financial authorities must examine the risks posed by coal, oil and gas companies to prevent pension funds investing in what could become “the sub-prime assets of the future”, Mr Davey said. The comments are Mr Davey’s first intervention into the debate over the “carbon bubble”, the theory that the world’s existing fossil fuel reserves are overvalued because the majority must be left unburned in the ground if extremes of global warming are to be avoided.

Mr Davey told the Telegraph: “One has got to worry about the investments for pensioners. “If pension funds are investing in companies or banks have on their balance sheets huge amounts of assets in fossil fuels, and those assets don’t give the return that people expect – because of changes in technology where low-carbon becomes cheaper or because of the world having to take action against carbon emissions – one has got to protect those pensioners and those investments.”

Keeping global warming within 2C (3.6F), the level scientists say is necessary to prevent catastrophic climate change, will require the world to slash its carbon dioxide emissions, phasing out the unabated burning of fossil fuels for electricity. UN talks are ongoing in Lima this week with the aim of achieving a global emission reduction agreement next year. Mr Davey singled out coal – the dirtiest of the fossil fuels – as “the short-term biggest worry by a long way” as countries including China commit to cap their coal use. “Investing in new coal mines is going to get very risky,” he said.

Read more …

The timing is exquisite.

Osborne Oversees Biggest Fossil Fuel Boom Since North Sea Oil (Guardian)

George Osborne has sparked the biggest boom in UK fossil fuel investment since the North Sea oil and gas industry was founded in the 1970s. Analysis of new Treasury data also shows investment in clean energy has plummeted this year and is now exceeded by fossil fuels, while road and airport building is soaring. After years of coalition infighting over green energy, the stark shift marks a major victory for the chancellor. But it conflicts with David Cameron’s recent statement that climate change is “a threat to our national security and to economic prosperity” and his 2010 pledge to the lead the “greenest government ever”. UK ministers are currently at UN climate talks in Peru arguing for strong action against global warming.

In Wednesday’s autumn statement, Osborne added £430m to the billions in tax breaks he has granted the fossil fuel sector since 2012. Taxpayers will also now fund seismic exploration to help companies find more oil and gas and will pay £31m for shale gas research drilling plus another £5m to “ensure the public is better engaged” with fracking. Osborne said the North Sea tax breaks “demonstrate our commitment to the tens of thousands of jobs that depend on this great British industry”. Joan Walley MP, who heads parliament’s environmental audit committee, said: “Taxpayers should not be propping up the fossil fuel industry in the 21st century.

Tax breaks should be used to support firms that come up with innovative clean energy solutions, not to keep us drilling for the fossil energy fuelling climate change.” Matthew Spencer, the director of the thinktank Green Alliance, whose experts performed the new analysis, accused Osborne of political manoeuvring before the general election. “A series of short-term tactical decisions have reversed what was a very encouraging picture for UK infrastructure. These stark figures show that you can’t focus on oil extraction and road building and expect to deliver a cleaner, leaner economy.”

Read more …

But all is well?!

Delinquent US Car Loans Up 27% From Last Year (NY Times)

An increasing number of borrowers are falling behind on their car payments, even as the total amount of outstanding debt reaches new heights, according to the latest report by Experian, the credit and research firm. In a presentation on Wednesday, Experian said the balance of loans that were 60 days delinquent increased 27%, to roughly $4 billion, in the third quarter from the same period a year ago. Signs of trouble in the market come after a significant increase in lending to people with damaged credit and limited financial means. Analysts have warned that a loosening of underwriting standards for subprime auto loans could cause widespread losses in the financial system because much of the debt has been securitized and bought by investors around the globe. Some of the highest delinquency rates in the quarter are concentrated across the South in Mississippi, South Carolina and Alabama. North Dakota had the lowest delinquency rate.

Finance companies, which tend to focus more on subprime customers than traditional banks, had the largest increases in delinquencies in the third quarter. As the delinquencies have mounted, so has the regulatory scrutiny. Subprime auto lenders have faced an onslaught of scrutiny from regulators and prosecutors, worried that the high-cost loans take advantage of some of the nation’s most vulnerable borrowers. The examinations have touched on virtually every player in the broader subprime auto lending ecosystem from used car dealers to lenders. In the latest chapter, the American Honda Finance Corporation, a lending unit of the automaker, disclosed on Tuesday that the company was bracing for an enforcement action from the Justice Department and the Consumer Financial Protection Bureau over concerns that it gives more costly loans to minority borrowers. The authorities, the company said in a regulatory filing on Tuesday, notified the lender last month about the looming action.

Read more …

Here’s betting they’ll get it.

Goldman Needs Volcker Delay to Avoid Private-Equity Losses (Bloomberg)

Goldman Sachs has $7 billion invested in private equity that it might have to sell at a loss. For Morgan Stanley, it’s $2.5 billion. The big sums explain why Wall Street has been lobbying regulators to delay a July deadline for complying with the Volcker Rule, which restricts banks from investing in private equity as part of a ban on making market bets with their own capital. Banks argue that if they dump holdings quickly, they will have to accept discount prices. Analysts and lawyers for the financial industry say Wall Street’s concerns have begun to make headway with the Federal Reserve, which plans to decide on an extension soon. “There’s considerable pressure the Fed is feeling in that they don’t want institutions to have a bloodbath trying to divest funds,” said Kevin Petrasic, a partner at Paul Hastings in Washington. “The Fed has been indicating flexibility.”

The Volcker deadline underscores the tension regulators face between enforcing rules meant to curb risk-taking and responding to banks’ complaints that many Dodd-Frank Act reforms aren’t workable. The Fed is deciding what to do after lawmakers lambasted it at congressional hearings last month for weak oversight of Wall Street. Before the 2008 financial crisis, banks purchased shares in thousands of private-equity and venture-capital funds. The money invested was used to buy stakes in private companies, meaning it’s locked up for years until the businesses are sold. When Congress included the Volcker Rule in the 2010 Dodd-Frank law, it realized banks might have difficulty dumping holdings. As a result, lawmakers authorized the Fed to put the deadline off for several years. Banks want an extension until 2022, which would allow them to keep their private-equity investments until they expire. Fed General Counsel Scott Alvarez told a conference of banking lawyers last month that the central bank will make a decision soon.

Read more …

Hardly a recovery, if there’s one at all, but banks are worth more than before the crisis. This is us. This is what we do.

Wells Fargo Breaks Citigroup’s 2001 Record for Bank Value (Bloomberg)

Wells Fargo finished trading yesterday as the most valuable U.S. bank ever, surpassing Citigroup’s 2001 record. Wells Fargo closed with a market capitalization of $285.5 billion, based on 5.19 billion shares outstanding on Oct. 31, according to data compiled by Bloomberg. That beats the previous record set by Citigroup on Feb. 5, 2001, when its value reached $283.4 billion, the data show. Wells Fargo, which counts Warren Buffett’s Berkshire Hathaway as its largest shareholder, doubled its size in 2008 by outmaneuvering New York-based Citigroup to purchase Wachovia Corp. Chief Executive Officer John Stumpf made one of out every four U.S. mortgages last year and now oversees the most U.S. bank branches.

“Our focus is on doing what is right for our customers every day, and we are pleased our investors place their confidence in Wells Fargo,” Ancel Martinez, a bank spokesman, said in a statement. Wells Fargo rose 1% to $55.03 in New York, and the stock’s 21% gain this year tops the 7.7% advance for the KBW Bank Index of 24 U.S. lenders. Berkshire’s stake in the San Francisco-based bank is valued at more than $25 billion, according to data compiled by Bloomberg.

Read more …

Russia will act when it’s had enough of this.

Russia Braces For An Economic Winter (Observer)

A website that was going viral on Russian social networks last week shows the rouble-dollar exchange rate, the rouble-euro exchange rate and the price of Brent crude changing in real time against a backdrop of slowly breaking waves, as soothing music plays in the background. “Russian zen: meaningless and merciless”, reads the bottom of the page Zenrus.ru. It is a play on a famous quote that Russian revolt is “meaningless and merciless.” A zen-like calm is probably hard to come by for those watching the exchange rate and the price of oil: the rouble fell to new all-time lows of more than 54 to the dollar last week after the Opec oil producers’ group decided not to reduce production, which would have bolstered sinking oil prices. Russia is especially vulnerable to those prices, since energy exports make up half of its budget, and on Monday its currency recorded its largest single-day decline since the Russian financial crisis of 1998.

In all, the rouble has sunk by more than 40% this year as Russia has been buffeted by sanctions over its role in the Ukraine crisis and steep falls in the oil price. By the end of the week Brent was hovering below $70 a barrel, down from more than $105 at the start of the year. The picture of Russia’s economic future is grim, despite the rosy outlook President Vladimir Putin tried to put on it in his annual address to the federal assembly on Thursday. Inflation has been rising, and recession next year is all but certain. On Tuesday, the economic development ministry reduced its GDP growth forecast for 2015 from 1.2% to –0.8%. State-owned banks have sought help from the government after the Ukraine sanctions cut them off from the western financial industry and its cheaper credit.

According to Vladimir Tikhomirov, an economist at Russian bank BKF, the two main factors responsible for Russia’s economic woes – sanctions and a low oil price – probably won’t change any time soon. “Oil has a stronger effect on the economy than sanctions, and the oil price and sanctions are speeding up macroeconomic processes that were already there,” Tikhomirov says. “The economy was slowing down due to structural difficulties even when oil prices were high. I think that next year there won’t be new sanctions but the current sanctions will remain; I think next year the oil price will be around $80 a barrel; and I think that the economy will shrink.”

Read more …

Merkel herself has said it would be a bad thing if Russia goes into a financial crisis.

Why A Moscow Meltdown Could Spread Around The Globe (Observer)

Russia matters. It mattered in 1998 when the shock waves from its debt default reverberated around the world. And it would matter again should the plunging oil price lead to economic collapse. That’s despite the fact that Russia is a massive land mass with a relatively small economy. It accounts for only 3% of global GDP and it is dominated by an energy sector that is responsible for 70% of exports. To an extent, the structure of Russia’s economy should mitigate contagion risks. Lacking a modern manufacturing sector, it is not vital for global supply chains and, in theory, any other energy producer could make good the disruption to oil and gas supplies in the event of a deep and damaging recession. But there are at least five ways in which a crisis for Russia could spread. Russia’s immediate problems have been caused by the sharp drop in the price of crude and it is not the only one to be suffering. Venezuela and Iran are finding it hard to cope with oil down at $70 a barrel. If Russia goes, it will be a case of: who’s next?

Second, Russia still has close economic links with eastern Europe, so a collapse would have serious consequences for countries such as Poland and an already imploding Ukraine. Western Europe, too, would be affected if for any reason gas supplies through Russia’s pipeline were cut off. Third, confidence would be hit. Germany’s weak economic performance since the spring can, in part, be attributed to the gloomier economic mood. The slowdown in the rest of the eurozone has probably had a bigger impact on German activity but the tension between Moscow and Kiev has certainly not helped. Russia might be enough to tip Germany into recession, which in turn would be enough to ensure that the European Central Bank began a quantitative easing programme.

Fourth, nobody is quite sure how Vladimir Putin, pictured, would respond to the most challenging economic circumstances since 1998. Any confidence effects from an economic crisis would be exacerbated by the knowledge that Russia is controlled by a president able to make felt his country’s still considerable geo-political and military clout. Finally, the assumption is that financial market exposure to Russia is relatively limited given that overseas banks had $209bn (£134bn) of loans to Russia when sanctions were imposed in March. On the face of it, western investors do not look all that vulnerable and have had time to get their money out. But that was also the assumption in 1998, when Barclays had to set aside £250m to cover its Russian losses. Financial trades are now so complex and leveraged, it is impossible to know for sure how big losses might be this time.

Read more …

Is Greece set to explode again?

Clashes At Greek Protests To Mark Police Shooting (BBC)

Clashes have erupted in the capital of Greece during protests marking six years since police shot dead an unarmed teenager. At least 5,000 demonstrators marched in Athens on Saturday. Some attacked shops and hurled petrol bombs at riot police. Police officers used tear gas and a water cannon to disperse protesters. The demonstrators had been marking the anniversary of 15-year-old Alexis Grigoropoulos’ death. He was shot by an officer who has since been jailed. Mr Grigoropoulos’ killing on 6 December 2008 sparked violent riots across Greece, with cars being set alight and shops looted in a number of cities. Clashes have also broken out on previous anniversaries of his death. On Saturday, anti-establishment protesters attacked banks and damaged shops and bus stops.

At one point, demonstrators looted a clothes shop and set fire to the merchandise in the street, the Associated Press news agency reported. According to Reuters, police said they detained close to 100 protesters. Clashes primarily took place in Athen’s Exarchia neighbourhood, but violence was also reported in Thessaloniki, in northern Greece. No injuries were reported in either city. Protesters have also been expressing support for Nikos Romanos, a friend of Mr Grigoropoulos who witnessed his death. Romanos, 21, has been jailed for attempted bank robbery. He is currently on hunger strike, demanding study leave after he was accepted onto a university course.

Read more …

WHile the government can’t stop blabbing about respect for vistims and their families, the familes themselves say: “The Netherlands “has completely botched” the fact-finding investigation and the legal framework of the case..” “There is no coordination, there is no leadership whatsoever (by) Holland.”

Angry Families Of MH17 Crash Victims Seek UN Investigation (Reuters)

Relatives of MH17 crash victims, angered by what they see as Dutch mishandling of inquiries into the disaster, want a special U.N. envoy to launch an international investigation. A letter sent to Prime Minister Mark Rutte on Friday, a copy of which was seen by Reuters, said Dutch officials had failed to build a case. They asked that inquiries by the Safety Board and prosecution service be handed over to the United Nations. Rutte should “request the U.N. to appoint a special envoy to take over,” said the letter written by Van der Goen Attorneys. Malaysia Airlines flight MH17 was downed on July 17 over eastern Ukraine, killing all 298 passengers and crew, two-thirds of them Dutch. Experts say the most likely cause was a ground-to-air missile fired from territory held by pro-Russian separatists. The Dutch launched the largest criminal investigation in their history after the crash. This week, trucks are carrying pieces of the plane home, but much of the wreckage still lies in Ukrainian fields.

Dutch investigators, leading a case involving 11 countries, have not concluded how the plane was shot down or identified suspects. The Netherlands “has completely botched” the fact-finding investigation and the legal framework of the case, said the letter, sent on behalf of 20 relatives from Belgium, Germany, the Netherlands and the United States. Dutch prosecutors have been unable to access the crash site, in a war zone disputed by Ukrainian troops and Russian-backed rebels, or not met international requirements to secure evidence, the letter said. “Nobody knows who is doing what,” said Bob van der Goen, a spokesman for the law firm. “There is no coordination, there is no leadership whatsoever (by) Holland.” Rutte said on Friday the Dutch teams were returning to the Netherlands. “We have done everything we could. In view of the safety situation and the weather, we cannot do anything more right now,” he said. An international inquiry is the only way to identify who shot down the plane and ensure they are brought to court, the letter said.

Read more …

What a story, the recent – foreign – additions to the Kiev government.

Ukraine’s Made-in-USA Finance Minister (Robert Parry)

Ukraine’s new Finance Minister Natalie Jaresko, a former U.S. State Department officer who was granted Ukrainian citizenship only this week, headed a U.S. government-funded investment project for Ukraine that involved substantial insider dealings, including $1 million-plus fees to a management company that she also controlled. Jaresko served as president and chief executive officer of Western NIS Enterprise Fund (WNISEF), which was created by the U.S. Agency for International Development (U.S. AID) with $150 million to spur business activity in Ukraine. She also was cofounder and managing partner of Horizon Capital which managed WNISEF’s investments at a rate of 2 to 2.5% of committed capital, fees exceeding $1 million in recent years, according to WNISEF’s 2012 annual report.

The growth of that insider dealing at the U.S.-taxpayer-funded WNISEF is further underscored by the number of paragraphs committed to listing the “related party transactions,” i.e., potential conflicts of interest, between an early annual report from 2003 and the one a decade later. In the 2003 report, the “related party transactions” were summed up in two paragraphs, with the major item a $189,700 payment to a struggling computer management company where WNISEF had an investment. In the 2012 report, the section on “related party transactions” covered some two pages and included not only the management fees to Jaresko’s Horizon Capital ($1,037,603 in 2011 and $1,023,689 in 2012) but also WNISEF’s co-investments in projects with the Emerging Europe Growth Fund [EEGF], where Jaresko was founding partner and chief executive officer.

Jaresko’s Horizon Capital also managed EEGF. From 2007 to 2011, WNISEF co-invested $4.25 million with EEGF in Kerameya LLC, a Ukrainian brick manufacturer, and WNISEF sold EEGF 15.63% of Moldova’s Fincombank for $5 million, the report said. It also listed extensive exchanges of personnel and equipment between WNISEF and Horizon Capital. Though it’s difficult for an outsider to ascertain the relative merits of these insider deals, they could reflect negatively on Jaresko’s role as Ukraine’s new finance minister given the country’s reputation for corruption and cronyism, a principal argument for the U.S.-backed “regime change” that ousted elected President Viktor Yanukovych last February.

Read more …

Small fish.

Prosecutor Freezes Accounts Of Former Vatican Bank Heads (Reuters)

The Vatican’s top prosecutor has frozen €16 million in bank accounts owned by two former Vatican bank managers and a lawyer as part of an investigation into the sale of Vatican-owned real estate in the 2000s, according to the freezing order and other legal documents. Prosecutor Gian Piero Milano said he suspected the three men, former bank president Angelo Caloia, ex-director general Lelio Scaletti, and lawyer Gabriele Liuzzo, of embezzling money while managing the sale of 29 buildings sold by the Vatican bank to mainly Italian buyers between 2001 and 2008, according to a copy of the freezing order reviewed by Reuters. The money in the three men’s bank accounts “stems from embezzlement they were engaged in,” Milano said in the October 27 sequester order.

Milano’s investigation follows an audit of the Vatican bank by non-Vatican financial consultants commissioned last year by the bank’s current management. The Vatican bank earlier this year also filed a legal complaint against the three men. The men have not been charged. The Vatican spokesman on Saturday issued a statement confirming the freezing but gave no names, amounts or other details. The Vatican bank said in a separate statement that it had pressed charges against the three as part of its “commitment to transparency and zero tolerance, including with regard to matters that relate to a more distant past”. The bank statement also gave no details, citing “the ongoing judicial enquiry”.

Read more …

For starters.

Australian Banks Seen Needing $25 Billion After Inquiry (Bloomberg)

Commonwealth Bank of Australia and its three main competitors may need as much as A$30 billion ($25 billion) after a government-commissioned inquiry called for “unquestionably strong” capital levels, analysts said. The shortfall is based on lenders needing to boost levels to within the top quartile of their global peers and set aside additional funds against potential losses on home mortgages, as recommended by the Financial Systems Inquiry report released today in Sydney by Treasurer Joe Hockey. Australia’s major lenders hold about 10% to 11.6% of their assets as Tier 1 capital compared with at least 12.2% at the world’s safest banks, the government’s first inquiry into the financial system since 1997 said. Given banks’ reliance on overseas investors for debt funding, the financial system must be robust, the report said,

“The onus on capital is in line with global changes and Australia has to fall in line,” John Buonaccorsi, a Sydney-based analyst at CIMB Group Holdings Bhd. said in a phone interview after the report was released. “I don’t expect a straight capital raising yet.” Australia’s largest banks are initially more likely to resort to dividend reinvestment plans, where investors swap all or part of their dividend for new shares, and limiting increases in payout ratios, he added. Buonaccorsi expects a shortfall between A$25 billion and A$30 billion. Omkar Joshi, who helps oversee A$1 billion as an investment analyst at Watermark Funds Management, estimated a A$15 billion to A$20 billion gap. Their predictions were based on an average mortgage risk weight of 25% to 30% and systemically important bank buffer of 2%.

Read more …

“.. if the progress of our lives starts looking too much like a random walk, then we tend to start asking ourselves difficult questions, like “What’s it all about?” and drinking too much. And that causes our walk to get even closer to random. ”

Minimum Viable Sociopathy (Dmitry Orlov)

If you simply wander aimlessly through life, breathing oxygen and eating and excreting organic matter, then you will still get somewhere. Statistically, a blind-drunk sailor who walks out of a bar will, on average, while stumbling along on his way to nowhere in particular, cover the distance of √n steps for every n steps he takes. This is known as a random walk, or Brownian motion, which is fine for molecules at anything above 0ºK, and perhaps for drunken sailors too, but most of us sentient beings want our lives to have a bit of meaning. And if the progress of our lives starts looking too much like a random walk, then we tend to start asking ourselves difficult questions, like “What’s it all about?” and drinking too much. And that causes our walk to get even closer to random. And therein lies a great danger, because this sort of downward spiral inevitably ends with somebody else telling you “What’s it all about” and what it is you have to do, supposedly for your own good, though it hardly ever is.

There is also the opposite danger. If you keep your eyes fixed on your goal and make a concerted effort to make n steps of progress in its direction for every n steps you take, then you will quickly happen upon a wall with a gate in it, and a guard at that gate will demand to see your permit, degree, qualification or certificate before letting you pass through that gate. And the process of you getting that permit, degree, qualification or certificate will end with somebody else telling you what your goal ought to be. The goal is, universally, to accumulate things: dollars or stripes on your uniform or publications and citations, or earwax. Details don’t matter, but what matters is that these things never have much of anything at all to do with your original goal.

Read more …

We need more people like Welby.

Archbishop Calls For £150 Million State-Backed Food Bank System (Daily Mail)

A new row over food banks erupted last night after a report backed by the Archbishop of Canterbury called for a £150 million state-backed system to combat hunger in Britain. The Most Reverend Justin Welby appeared to be on course for a clash with David Cameron after calling on the Prime Minister to reverse his decision not to take European funds to boost UK food banks. Writing in today’s Mail on Sunday, Archbishop Welby makes a powerful call for more help to prevent families going hungry. The Archbishop is to launch a Parliamentary report in Westminster tomorrow, and calls on the Government to take ‘quick action’ to implement its recommendations in full. Separately, this newspaper has obtained details of the report’s radical proposals, which call for:

  1. A new publicly funded body, Feeding Britain, involving eight Cabinet Ministers, to work towards a ‘hunger free Britain’.
  2. Bigger food banks, called Food Banks Plus, to distribute more free food and advise people how to claim benefits and make ends meet.
  3. A rise in the minimum wage and the provision free school meals during school holidays for children from poor families.
  4. New measures to make it harder to strip people of benefits for breaking welfare rules – including soccer style ‘yellow cards’ instead of instant bans.
  5. Action to make supermarkets give more food to the poor.

The report by the All-Party Parliamentary Inquiry into Hunger in Britain comes amid an intense debate over welfare and poverty. Experts claimed that Chancellor George Osborne’s Autumn Statement last week would mean massive cuts in welfare in the coming years. Praising food bank volunteers who have rescued the poor from hunger, the Welby-backed report says they have achieved the ‘equivalent to a social Dunkirk.’ Notably, it adds: ‘This extraordinary achievement has been done without the assistance of central government. If the Prime Minister wants to meet his Big Society it is here.’

Read more …

The growing poverty in Britain is indeed a disgrace.

Hunger in UK Shocks Me More Than Africa (Archbishop Of Canterbury)

In one corner of a refugee camp in the Democratic Republic of Congo was a large marquee. Inside were children, all ill. They had been separated from family, friends, those who looked after them. Perhaps, mostly having disabilities, they had been abandoned in the panic of the militia attack that drove them from their homes. Now they were hungry. It was deeply shocking but, tragically, expected. A few weeks later in England, I was talking to some people – a mum, dad and one child – in a food bank. They were ashamed to be there. The dad talked miserably. He said they had each been skipping a day’s meals once a week in order to have more for the child, but then they needed new tyres for the car so they could get to work at night, and just could not make ends meet. So they had to come to a food bank.They were treated with respect, love even, by the volunteers from local churches. But they were hungry, and ashamed to be hungry. I found their plight more shocking. It was less serious, but it was here.

And they weren’t careless with what they had – they were just up against it. It shocked me that being up against it at the wrong time brought them to this stage. There are many like them. But we can do something about it. Two weeks ago, people in churches up and down the land listened to the passage in St Matthew’s Gospel where Jesus describes who will enter the Kingdom of Heaven. When Christ returns, He will say: ‘Come, you that are blessed by my Father, inherit the kingdom… for I was hungry and you gave me food, I was thirsty and you gave me something to drink.’ The good people are surprised, they don’t remember helping anyone so powerful, and think He has mixed them up with someone else. Jesus tells them: ‘Just as you did it to one of the least of these… you did it to me.’ Those who did not give food to the hungry or a drink to the thirsty find out God has taken their lack of kindness into account too.

Read more …

Art reflects society before society reflects upon itself.

Has Modern Art Exhausted Its Power To Shock? (BBC)

Modern art’s desire to shock and to defy cliche has become a cliche in itself, and spawned a culture of fakery, argues Roger Scruton. “To thine own self be true,” says Shakespeare’s Polonius, “and thou canst be false to no man.” Live in truth, urged Vaclav Havel. “Let the lie come into the world,” wrote Solzhenitsyn, “but not through me.” How seriously should we take these pronouncements, and how do we obey them? There are two kinds of untruth – lying and faking. The person who is lying says what he or she does not believe. The person who is faking says what he believes, though only for the time being and for the purpose in hand. Anyone can lie. It suffices to say something with the intention to deceive. Faking, however, is an achievement. To fake things you have to take people in, yourself included. The liar can pretend to be shocked when his lies are exposed, but his pretence is part of the lie. The fake really is shocked when he is exposed, since he has created around himself a community of trust, of which he himself is a member.

In all ages people have lied in order to escape the consequences of their actions, and the first step in moral education is to teach children not to tell fibs. But faking is a cultural phenomenon, more prominent in some periods than in others. There is very little faking in the society described by Homer, for example, or in that described by Chaucer. By the time of Shakespeare, however, poets and playwrights are beginning to take a strong interest in this new human type. In Shakespeare’s King Lear the wicked sisters Goneril and Regan belong to a world of fake emotion, persuading themselves and their father that they feel the deepest love, when in fact they are entirely heartless. But they don’t really know themselves to be heartless – if they did, they could not behave so brazenly. The tragedy of King Lear begins when the real people – Kent, Cordelia, Edgar, Gloucester – are driven out by the fakes.

The fake is a person who has rebuilt himself, with a view to occupying another social position than the one that would be natural to him. Such is Molière’s Tartuffe, the religious impostor who takes control of a household through a display of scheming piety. Like Shakespeare, Moliere perceives that faking goes to the very heart of the person engaged in it. Tartuffe is not simply a hypocrite, who pretends to ideals that he does not believe in. He is a fabricated person, who believes in his own ideals since he is just as illusory as they are. Tartuffe’s faking is a matter of sanctimonious religion. With the decline of religion during the 19th Century there came about a new kind of faking. The romantic poets and painters turned their backs on religion and sought salvation through art. They believed in the genius of the artist, endowed with a special capacity to transcend the human condition in creative ways, breaking all the rules in order to achieve a new order of experience. Art became an avenue to the transcendental, the gateway to a higher kind of knowledge.

Read more …

At least.

California’s ‘Hot Drought’ Ranks Worst in at Least 1,200 Years (Bloomberg)

Record rains fell in California this week. They’re not enough to change the course of what scientists are now calling the region’s worst drought in at least 1,200 years. Just how bad has California’s drought been? Modern measurements already showed it’s been drier than the 1930s dustbowl, worse than the historic droughts of the 1970s and 1980s. That’s not all. New research going back further than the Viking conquests in Europe still can’t find a drought as bad as this one. To go back that far, scientists consulted one of the longest records available: tree rings.

Tighter rings mean drier years, and by working with California’s exceptionally old trees, researchers from University of Minnesota and Woods Hole Oceanographic Institute were able to reconstruct a chronology of drought in southern and central California. They identified 37 droughts that lasted three years or more, going back to the year 800. None were as extreme as the conditions we’re seeing now. One of the oddities of this drought is that conditions aren’t just driven by a lack of rainfall. There have been plenty of droughts in the past with less precipitation. (The drought of 1527 to 1529, for example, was killer.) What makes this drought exceptional is the heat. Extreme heat.

Higher temperatures increase evaporation and help deplete reservoirs and groundwater. The California heat this year is like nothing ever seen in modern temperature records. The chart above shows average year-to-date temperatures in the state from January through October for each year since 1895. California’s drought has withered pastures and forced farmers to uproot orchards and fallow farmland. It may cost the state $2.2 billion this year, with 17,100 jobs lost and 428,000 acres of land left unplanted. Tensions are still running high between farmers and salmon fishers, who rely on the same waters. Young salmon even qualified for migration assistance this year – via tanker truck – when river levels were too low to make the swim. The effects of prolonged drought are cumulative. Maps from the U.S. Drought Monitor below show the worsening of conditions over the last three years.

More than half of the state remains in “exceptional drought” (crimson). It’s a distinction marked by crop and pasture losses and water shortages that fall within the top two percentiles. Record rainfalls recorded across the state this week — including in San Francisco and Los Angeles — did little to overcome the state’s moisture deficit, the National Drought Mitigation Center reported yesterday.

Read more …