Aug 312018
 
 August 31, 2018  Posted by at 7:29 am Finance Tagged with: , , , , , , , , , , , , ,  4 Responses »


Vincent van Gogh Starry night 1889

 

Argentine Peso And Turkish Lira Crash, Put Pressure On Emerging Markets (CNBC)
US, China To Regulate Big Tech Firms ‘Like National Security Companies’ (CNBC)
Trumps Legal Team Preparing Counter Report To Delegitimize Mueller (ZH)
‘Vital’ US Moles in the Kremlin Go Missing! (Stephen Cohen)
Trump Is Right About “Flipping” (FFF)
France Says EU Needs Strategic Relationship With Russia On Defense (R.)
EU Says It Is Willing To Scrap Car Tariffs In US Trade Deal (Pol.eu)
China-Africa Summit To Target Investment Despite Debt Worries (AFP)
As Tesla Shares Fall, Amazon Takes Over As Most Shorted US Stock (R.)
IMF Unwavering On Greek Pension Cuts (K.)
The Three Tribes of Austerity (Varoufakis)
Trade Of Coastal Sand Is Damaging Wildlife, Coastlines Of Poorer Nations (G.)
France’s Ban On Bee-Killing Pesticides Begins Saturday (AFP)
The Ocean Cleanup Is Starting, Aims To Cut Garbage Patch By 90% By 2040 (F.)

 

 

At some point, these things start feeding upon themselves.

Argentine Peso And Turkish Lira Crash, Put Pressure On Emerging Markets (CNBC)

Emerging markets were rattled again, with the Argentine peso, Turkish lira and Indonesian rupiah tumbling overnight. The negative sentiment is set to weigh on other Asian currencies, although they will remain fairly resilient to the impact, analysts say. The peso crashed nearly 12 percent, following a domestic crisis which saw its central bank hike rates to 60 percent in an attempt to shore up its currency. Extending its steep losses this year, the lira fell 2.94 percent to a fourth straight day of declines. In Asia, India’s rupee fell to a new record low against the dollar on Friday — a more than 11 percent fall since the start of the year, and the Indonesian rupiah hit a near three-year low.

“Emerging markets will remain pressured by the Argentine peso and Turkish lira crises,” DBS analysts said in a note Friday morning. The peso is down more than 45% against the greenback this year. “Argentina has hiked rates to a record 60% to address double-digit inflation, but this would exacerbate the recession, and coupled with budget/current account deficits of around 5% of GDP, have increased the risk of for the government to default on its debt,” they added.

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Likely to be pushed hard ahead of mid terms.

US, China To Regulate Big Tech Firms ‘Like National Security Companies’ (CNBC)

The U.S. and China may be at odds on trade, but both are lining up to crack down on big tech, according to an analyst. “I think this is actually wrapped up in the trade issue, which is around national security and tech companies,” Michael Hessel, political economy analyst at Absolute Strategy Research, told CNBC’s “Squawk Box Europe” on Thursday. “There’s a growing push both within China and the U.S. to regulate some of these companies increasingly like national security companies, which could have huge implications for their business model.” President Donald Trump on Tuesday made Google his latest target in a tirade against big tech, saying the firm’s search service is “rigged” against conservatives in favor of left-leaning media.

The president subsequently took another shot at the tech giant on Wednesday, claiming it snubbed twice his State of the Union speeches, while promoting Barack Obama’s during each year of the latter’s presidency. Google later responded to this claim, saying it did promote Trump’s State of the Union address this year, but not in 2017. [..] Absolute Strategy Research’s Hessel did not expand on how he expected either country to clamp down on their respective tech industries. He said that a lack of regulation in the U.S. on tech — while the media industry is more heavily regulated — meant it could be a long-term concern for lawmakers in Washington. “I think the regulation of the tech industry is going to be a huge issue on a three-to-five year view,” Hessel said.

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2nd Special Counsel preparations.

Trumps Legal Team Preparing Counter Report To Delegitimize Mueller (ZH)

President Trump’s lawyers are preparing a rebuttal to any negative report issued by special counsel Robert Mueller following the DOJ’s probe into Russian collusion with the Trump campaign, reports the Daily Beast following an interview with Trump attorney Rudy Giuliani. Part of the rebuttal, says Giuliani, would focus on whether the “initiation of the investigation was…legitimate or not.” “According to Giuliani, the bulk of the report will be divided into two sections. One section will seek to question the legitimacy of the Mueller probe generally by alleging “possible conflicts” of interest by federal law enforcement authorities. The other section will respond to more substantive allegations of Trump campaign collusion with Russian government agents to sway the 2016 election, and obstruction of justice allegations stemming from, among other things, the president’s firing of former FBI director James Comey.” -Daily Beast

The latter section of the rebuttal will focus on Deputy Director Rod Rosenstein’s mandate when he ordered the Mueller’s investigation – though Giuliani admits he has no idea what the final report will consist of. “Since we have to guess what it is, [our report so far] is quite voluminous,” Giuliani said, claiming that he would spend much of this weekend “paring it down” and that he was editing the document created by the “whole team.” “The first half of it is 58 pages, and second half isn’t done yet…It needs an executive summary if it goes over a hundred” -Daily Beast In other words, Mueller has fair warning that the Trump administration intends to fight this tooth and nail.

The Weekly Standard’s Eric Felton offered this last month: “Appellate and constitutional lawyers David B. Rivkin, Jr. and Elizabeth Price Foley recently made a compelling case that the political bias among the FBI agents working on “Crossfire Hurricane” renders illegitimate everything flowing from that investigation. If “Crossfire was politically motivated then its culmination, the appointment of a special counsel, inherited the taint,” Rivkin and Foley wrote in the Wall Street Journal. “All special-counsel activities—investigations, plea deals, subpoenas, reports, indictments and convictions—are fruit of a poisonous tree, byproducts of a violation of due process.” Rivkin and Foley add: “That Mr. Mueller and his staff had nothing to do with Crossfire’s origin offers no cure.” -Weekly Standard

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Another fully crazy story. And yes, if such moles existed, nobody would tell the media.

‘Vital’ US Moles in the Kremlin Go Missing! (Stephen Cohen)

on August 25, the ever-eager New York Times published yet another front-page Russiagate story—one that if true would be sensational, though hardly anyone seemed to notice. According to the Times’ regular Intel leakers, US intelligence agencies, presumably the CIA, has had multiple “informants close to…Putin and in the Kremlin who provided crucial details” about Russiagate for two years. Now, however, “the vital Kremlin informants have largely gone silent.” The Times laces the story with misdeeds questionably attributed to Putin and equally untrustworthy commentators, as well as a mistranslated Putin statement that incorrectly has him saying all “traitors” should be killed. Standard US media fare these days when fact-checkers seem not to be required for Russia coverage. But the sensation of the article is that the US had moles in Putin’s office.

The real novelty of Russiagate is the allegation that a Kremlin leader, Putin, personally gave orders to affect the outcome of an American presidential election. In this regard, Russiagaters have produced even less evidence, only suppositions without facts or much logic. With the Russiagate narrative being frayed by time and fruitless investigations, the “mole in the Kremlin” may have seemed a ploy needed to keep the conspiracy theory moving forward, presumably toward Trump’s removal from office by whatever means. And hence the temptation to play the mole card again, now, as yet more investigations generate smoke but no smoking gun.

The pretext of the Times story is that Putin is preparing an attack on the upcoming November elections, but the once-“vital,” now-silent moles are not providing the “crucial details.” Even if the story is entirely bogus, consider the damage it is doing. Russiagate allegations have already delegitimized a presidential election, and a presidency, in the minds of many Americans. The Times’ updated, expanded version may do the same to congressional elections and the next Congress. If so, there is an “attack on American democracy”—not by Putin or Trump but by whoever godfathered and repeatedly inflated Russiagate.

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Common practice, but in this case questionable.

Trump Is Right About “Flipping” (FFF)

Suppose a federal criminal defendant contacts a prospective witness in a case and offers him $50,000 in return for his “cooperation” in his upcoming trial. The money will be paid as soon as the trial is over. The defendant makes it clear that he wants the witness to “tell the truth” but that his “cooperation” when he testifies at trial would be greatly appreciated. What would happen if federal officials learned about that communication and offer? They would go ballistic. They would immediately secure an indictment for bribery and witness tampering. What if the defendant says, “Oh, no, I wasn’t tampering with the witness. I specifically told him that I wanted him to tell the truth when he took the witness stand. I was just seeking his friendly ‘cooperation’ with my $50,000 offer to him.”?

It wouldn’t make a difference. Federal prosecutors would go after him with a vengeance on bribery and witness-tampering charges. And it is a virtual certainty that they would get a conviction. There is good reason for that. The law recognizes that the money could serve as an inducement for the witness to lie. Even though the defendant tells him to “tell the truth,” the witness knows that the fifty grand is being paid to him to help the defendant get acquitted, especially since it is payable after the trial is over. The temptation to lie, in return for the money, becomes strong, which is why the law prohibits criminal defendants from engaging in this type of practice.

Suppose a federal prosecutor says to a witness, “You are facing life in prison on the charges we have brought against you. But if you ‘cooperate’ with us to get John Doe, we will adjust the charges so that the most the judge can do is send you to jail for only 5 years at most. If you are really ‘cooperative,’ we will recommend that the judge give you the lowest possible sentence, perhaps even probation. Oh, one more thing, we want to make it clear that we do want you to tell the truth.” Do you see the problem? The temptation to please the prosecutor with “cooperation” becomes tremendous. If the witness can help secure a conviction of Doe, he stands to get a much lighter sentence for his successful “cooperation.” The inducement to commit perjury oftentimes takes over, notwithstanding the prosecutor’s admonition to the witness to “tell the truth.”

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Are the UK going to use this to justify Brexit?

France Says EU Needs Strategic Relationship With Russia On Defense (R.)

The European Union needs a strategic relationship with Turkey, including in defense matters, and should modernize its post-Cold War relations with Russia, French President Emmanuel Macron said on Thursday. Macron is a strong advocate for a Europe that is able to defend its strategic interests and financial independence and respond to new global economic and defense situation brought on by Donald Trump’s presidency in the United States. He has sought to improve relations with Russia’s President Vladimir Putin, although his efforts have been complicated by allegations of Russian meddling in elections from the United States to France and a nerve agent attack in Britain.

“It is in our interest for the EU to have a strategic relationship with Turkey as well as with Russia that brings stability, that will in the long term and bring more strength and coherency,” Macron said in a news conference in Helsinki alongside Finnish President Sauli Niinisto. He said the EU’s relations with Russia needed to be “brought up to date”, using the Italian word “aggiornamento”. “I think that on matters like cybersecurity, defense, strategic relationships, we could envisage the outlines of a new relationship between Russia and the EU which is coherent with the direction Europe is headed in,” Macron said.

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Not enough, says Trump.

EU Says It Is Willing To Scrap Car Tariffs In US Trade Deal (Pol.eu)

Brussels is willing to scrap tariffs on all industrial products, including cars, in its trade talks with the United States, EU trade chief Cecilia Malmström said Thursday. “We said that we are ready from the EU side to go to zero tariffs on all industrial goods, of course if the U.S. does the same, so it would be on a reciprocal basis,” Malmström told the European Parliament’s trade committee. “We are willing to bring down even our car tariffs down to zero … if the U.S. does the same,” she said, adding that “it would be good for us economically, and for them.”

Malmström’s comment went beyond what was agreed in July in the joint statement between European Commission President Jean-Claude Juncker and U.S. President Donald Trump, which only mentioned eliminating tariffs, non-tariff barriers and subsidies for “non-auto industrial goods.” [..] The EU’s car tariff of 10 percent is higher than the general U.S. auto tariff of 2.5 percent, but America imposes a 25 percent duty on light trucks and pick-ups. Malmström insisted that the discussions were not about “restarting TTIP” but aiming for “a more limited trade agreement.” “Agriculture would not be in the agreement, nor public procurement as it looks to today,” she said.

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Same as Silk Road: loading countries up with debt. Then take their assets.

China-Africa Summit To Target Investment Despite Debt Worries (AFP)

African leaders will gather in Beijing Monday for a summit focused on economic ties, granting China a feel-good photo opportunity as it comes under increasing fire for its debt-laden approach to aid in the developing world. President Xi Jinping will host leaders from across the continent for the two-day Forum on China-Africa Cooperation, which will include talks on his cherished “Belt and Road” infrastructure programme. The massive scheme, aimed at improving Chinese access to foreign markets and resources, and boosting its influence abroad, has already seen Beijing loan billions of dollars to countries in Asia and Africa for roads, railways, ports and other major building projects.

“The initiative will probably be expanded to include the whole of Africa,” said Cobus van Staden, senior researcher on Africa-China relations at the South African Institute of International Affairs. While some critics have branded the strategy a debt-trap, African leaders have long embraced Chinese investment, helping make Beijing the continent’s largest trading partner for the past decade. At the last three-yearly gathering in Johannesburg in 2015, Xi announced $60 billion of assistance and loans for Africa. This year, China will want to add more African countries to “its ever-expanding list of ‘friendly’ nations”, especially from the north and francophone west, said Adebusuyi Isaac Adeniran, an expert on the relationship at Nigeria’s Obafemi Awolowo University.

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Starting to short all of Big Tech. Buffett calling iPhones underpriced may be seen in that light.

As Tesla Shares Fall, Amazon Takes Over As Most Shorted US Stock (R.)

With Tesla’s shares briefly dipping below the $300 level on Thursday, the electric carmaker ceded its seat as the most shorted U.S. stock to Amazon.com, according to data from financial technology and analytics firm S3 Partners. Tesla short interest in dollars, calculated using the number of shares sold short and the share price, stood at $9.93 billion, on Thursday, just shy of $9.95 billion for Amazon, S3 Partners data showed. Analysts said investors were still shorting Tesla shares, or taking positions that amounted to bets the stock would keep declining. Short-sellers aim to profit by selling borrowed shares, hoping to buy them back later at a lower price.

“While there was some short covering the week after the tweet, there has still not been any significant net Tesla short covering on the Street,” said Ihor Dusaniwsky, head of research at S3 in New York. “Any traders who have closed down their positions to realize some profits have been replaced by new ones looking for continued price weakness,” he said. Tesla shares whipsawed this month after Chief Executive Elon Musk on Aug. 7 tweeted he planned to take the company private, only to abandon the idea by Aug. 24.

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Sovereign nation.

IMF Unwavering On Greek Pension Cuts (K.)

The government’s aim to suspend pension cuts due to come into effect in January is likely to fuel friction in the coming weeks, Kathimerini understands, as the IMF is adamant that the reductions should be made even if they are not required for Greece to meet budget targets. The IMF’s stance is at odds with that of European officials who are more flexible on the issue, as European Economic and Monetary Affairs Commissioner Pierre Moscovici has suggested in a series of recent comments. Indeed, according to sources, the EC’s envoy to Greece, Declan Costello, is working on a compromise that would be acceptable to the government.

The IMF has not publicly declared its position on the Greek pensions issue yet but sources say the Fund has not shifted from its stance in favor of pension cuts despite the more favorable than expected fiscal forecasts, due to fears about the Greek pension system, which remains unsustainable partially due to the country’s aging population. The IMF’s unofficial position, it seems, is that fiscal savings worth 1 percent of GDP – the value of the planned pension cuts – are not required for Greece to achieve a primary surplus of 3.5 percent of GDP but it is preferable that they be carried out and offset by countermeasures than not carried out.

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US Republicans and German social democrats have the same agenda. But the latter have all but vanished.

The Three Tribes of Austerity (Varoufakis)

The first, and best known, “austerian” tribe is motivated by the tendency to view the state as no different from a business or a household that must tighten its belt during bad times. Overlooking the crucial interdependence between a government’s expenditure and (tax) income (from which businesses and households are blissfully free), they make the erroneous intellectual leap from private parsimony to public austerity. Of course, this is no arbitrary error; it is powerfully motivated by an ideological commitment to small government, which in turn veils a more sinister class interest in redistributing risks and losses to the poor.

A second, less recognized, austerian tribe can be found within European social democracy. To take one towering example, when the 2008 crisis erupted, Germany’s finance ministry was in the hands of Peer Steinbrück, a leading member of the Social Democratic Party. Almost immediately, Steinbrück prescribed a dose of austerity as Germany’s optimal response to the Great Recession. Moreover, Steinbrück championed a constitutional amendment that would ban all future German governments from deviating from austerity, no matter how deep the economic downturn. [..] Against a background of failing banks and a mighty recession, he opined that fiscal deficits deny elected politicians “room for maneuver” and rob the electorate of meaningful choices.

The third austerian tribe is American and perhaps the most fascinating of the three. Whereas British Thatcherites and German social democrats practiced austerity in an ill-conceived attempt to eliminate the government’s budget deficit, US Republicans neither genuinely care to limit the federal government’s budget deficit nor believe that they will succeed in doing so. After winning office on a platform proclaiming their loathing of large government and pledging to “cut it down to size,” they proceed to boost the federal budget deficit by enacting large tax cuts for their rich donors. Even though they seem entirely free of the other two tribes’ deficit phobia, their aim – to “starve the beast” (the US social welfare system) – is quintessentially austerian.

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Mindless and braindead.

Trade Of Coastal Sand Is Damaging Wildlife, Coastlines Of Poorer Nations (G.)

The secretive trade of coastal sand to wealthy countries such as China is seriously damaging the wildlife of poorer nations whose resources are being plundered, according to a new study. Sand and gravel are the most extracted groups of materials worldwide after water, with sand used in the concrete and asphalt of global cities. China consumed more sand between 2011 and 2013 than the US did during the entire 20th century. India has more than tripled its annual use of construction sand since 2000. But coastal sand is also being used to make wealthy countries larger via land reclamation projects, and the cost to poorer nations is revealed in a presentation to the Royal Geographical Society’s annual conference.

Research by Melissa Marschke and Laura Schoenberger of the University of Ottawa highlights that the dredging of coastal sand from Cambodia is causing the loss of mangrove swamps, coastal erosion, and damaging local fishing. They also allege that the sheer scale of the multimillion dollar trade of sand must be illegal, given that the volumes permitted for import are being exceeded. Singapore is built on sand: its land area has grown by more than a fifth since its independence in 1965 from 581 sq km to 719 sq km in 2015, according to the researchers. Between 2007 and 2017, Singapore imported more sand from Cambodia than any other country. Sand worth US$752m was imported by Singapore from Cambodia between 2007 and 2016, according to UN data.

Cambodia is not the only place experiencing vast sand extraction. A study recently estimated that 236m cubic metres of sand were extracted from Poyang Lake in China, causing its water levels to drop dramatically. Sand miners have destroyed at least two dozen islands in Indonesia since 2005. The UK obtains about one fifth of its sand from the seabed.

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But the minister who made it possible resigned last week. Watch out.

France’s Ban On Bee-Killing Pesticides Begins Saturday (AFP)

A ban on five neonicotinoid pesticides enters into force in France on Saturday, placing the country at the forefront of a campaign against chemicals blamed for decimating critical populations of crop-pollinating bees. The move has been hailed by beekeepers and environmental activists, but lamented by cereal and sugar beet farmers who claim there are no effective alternatives for protecting their valuable crops against insects. With its ban, France has gone further than the European Union, which voted to outlaw the use of three neonicotinoids — clothianidin, imidacloprid and thiamethoxam — in crop fields. Heavily agriculture-reliant France banned these three neonicotinoids plus thiacloprid and acetamiprid, not only outdoors but in greenhouses too.

These are the only five neonicotinoid pesticides hitherto authorised for use in Europe. Introduced in the mid-1990s, lab-synthesised neonicotinoids are based on the chemical structure of nicotine, and attack the central nervous system of insects. They were meant to be a less harmful substitute to older pesticides, and are now the most widely-used to treat flowering crops, including fruit trees, beets, wheat, canola, and vineyards. In recent years, bees started dying off from “colony collapse disorder,” a mysterious scourge blamed partly on pesticides along with mites, viruses, and fungi, or some combination of these. Scientific studies have since shown that neonicotinoids harm bee reproduction and foraging by diminishing sperm quality and scrambling the insects’ memory and navigation functions.

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Watching with great interest.

The Ocean Cleanup Is Starting, Aims To Cut Garbage Patch By 90% By 2040 (F.)

A massive cleanup of plastic in the seas will begin in the Pacific Ocean, by way of Alameda, California. The Ocean Cleanup, an effort that’s been five years in the making, plans to launch its beta cleanup system, a 600-meter (almost 2,000-foot) long floater that can collect about five tons of ocean plastic per month. It’s a start. The launch date is September 8, and the Great Pacific Garbage Patch being targeted is more than 1,000 nautical miles from the launch point and on the move. The Ocean Cleanup plans to monitor the performance of the beta, called System 001, and have an improved fleet of 60 more units skimming the ocean for plastics in about a year a half. The ultimate goal of the project, founded by Dutch inventor Boyan Slat when he was 18, is to clean up 50% of the patch in five years, with a 90% reduction by 2040.

The organization will take time to learn lessons from System 001, but “we are in a big hurry,” said Lonneke Holierhoek, chief operating officer at The Ocean Cleanup. “We really see the urgency in starting the cleanup because there’s so much harm that could happen with this plastic that’s floating out there.” The total cost of System 001 is about 21 million euros ($24.6 million U.S.), according to a rep for startup. That includes design, development, production, assembly and monitoring during the first year of operation. The company will welcome corporations and philanthropists to sponsor their own cleanup system in coming years, the rep says. These systems will sport a sponsor logo and related app that follows the unit’s course through the gyre and shows how much plastic has been collected.

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Aug 302018
 


Henri Matisse Trivaux pond 1916-17

 

Trump Says ‘No Reason’ For Military Exercises With South Korea (CNBC)
NATO Think Tank Continues Pre-Election Interference (RPI)
Whistleblower Exposes Key Player in FBI Russia Probe: “It Was A Set-Up” (SC)
CNN Lies About Cohen Story, Refuses to Comment (Greenwald)
The Media’s Chronic Misreporting on the Trump/Russia Story (Greenwald)
Russian Oligarch, DOJ And A Clear Case Of Collusion (ZH)
India’s Rupee Falls To An All-Time Low (CNBC)
Trade War Won’t Cause ‘Major’ Hit To China’s Economy – Morgan Stanley (CNBC)
Argentina Asks IMF For Early Release Of Standby Funds (R.)
Pound Sterling Rallies As Raab And Barnier Turn Optimistic On Brexit (Ind.)
EU’s Barnier Says Must Prepare For A ‘No-Deal’ Brexit (R.)
Car Manufacturing In Britain Fell By 11% In July (G.)
1000s Of British Expats Living In Spain Return To UK As Brexit Nears (Exp.)

 

 

“Trump’s announcement came a day after Secretary of Defense James Mattis said that there were no plans to cancel future exercises with South Korea.”

Trump Says ‘No Reason’ For Military Exercises With South Korea (CNBC)

President Donald Trump on Wednesday indicated that the U.S. will not participate in joint military exercises with South Korea, citing his “warm” relationship with North Korean leader Kim Jong Un, even as U.S. efforts to denuclearize the reclusive dictatorship have stalled. “There is no reason at this time to be spending large amounts of money on joint U.S.-South Korea war games,” Trump said in a string of tweets Wednesday. Trump’s announcement came a day after Secretary of Defense James Mattis said that there were no plans to cancel future exercises with South Korea.

“As you know, we took this step to suspend several of the larger exercises as a good-faith measure coming out of the Singapore summit,” Mattis said Tuesday at the Pentagon. It was his first press briefing in five months, a timeline that has included President Donald Trump’s high-profile meetings with North Korean leader Kim Jong Un and Russian President Vladimir Putin. “We have no plans at this time to suspend any more exercises. We will work very closely, as I said, with the secretary of State and what he needs done,” he added, noting that forces on the Korean Peninsula have continued with small-scale training exercises.

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On the Atlantic Council’s board: Henry Kissinger, Michael Hayden and Michael Chertoff. These are the people ‘advising’ Facebook on content.

NATO Think Tank Continues Pre-Election Interference (RPI)

On August 24 what is in effect the social media warfare division of the Atlantic Council published an article accusing the Russian television and print news outlet RT of running a one-sided attack against the Democratic Party and several leaders thereof ahead of this November’s politically pivotal Senate and House of Representatives elections. (Thirty-five Senate seats and all 435 House seats are being contested.) The Atlantic Council, until recently kept comparatively in the shadows for obvious reasons, is a think tank that has more than any other organization effected the transition of the NATO from a seeming Cold War relic with the break-up of the Warsaw Pact and the dissolution of the Soviet Union in 1991 to the world’s only and history’s first international military network with 70 members and partners on six continents currently.

All thirteen new full member states are in Eastern and Central Europe; four of them border Russia. Three months ago it began collaborating with Facebook to police and censor that and (presumably) soon after other social media companies which in recent decades have become the major sources of information and communication for the seven billion citizens of the planet. No modest undertaking. This is by way of follow up to a Directive on Social Media issued four years ago by NATO’s Supreme Headquarters Allied Powers Europe (SHAPE), the bloc’s military command in Europe (which also oversees activities in Israel and until the activation of U.S. Africa Command ten years ago almost all of Africa).

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Excellent from Sara Carter. I took these snippets to make the point that both Flynn and Papadopoulos feel threatened by Mueller, and can’t afford to defend themselves. That’s how Mueller gets guilty pleas.

Whistleblower Exposes Key Player in FBI Russia Probe: “It Was A Set-Up” (SC)

Halper was not only spying on Page for the FBI in 2016, but he had also made contact in September 2016 with another Trump campaign volunteer, George Papadopoulos. He invited Papadopoulos to London that September, luring him with a $3,000 paycheck to work on a research paper under contract. By this time the young Trump campaign volunteer had already been in contact London-based professor, Josef Mifsud, who had basically informed him that the Russians had damaging material about Democratic presidential candidate Hillary Clinton. Misfud’s role has also come into question by Congress. Eventually, Papadopoulos was swept into Robert Mueller’s Special Counsel investigation and pled guilty to one count of lying to the FBI.

His wife, Simona Papadopoulos, who’s been a vocal advocate for her husband, told SaraACarter.com that essentially he was forced to plead guilty because of threats from Mueller’s team and lack of financial resources. After testifying behind closed doors last month to the House Intelligence Committee, Simona told this outlet that she testified to Congress “as far as George is concerned, he met with individuals following the same pattern of behavior….and all of a sudden (Halper) was asking if he was doing anything with Russians…. This is the case with Halper, who is now proven to be a spy, possibly with (Australian Ambassador) Alexander Downer” who her husband met with in London.

[..] Flynn’s career with Trump ended as quickly as it came. He was forced to resign as Trump’s National Security Advisor 27 days after taking the job. The highly classified conversation between Flynn and former Russian Ambassador Sergey Kislyak was leaked to the Washington Post in January 2017 and he was later questioned by the FBI on that conversation. According to former FBI Director James Comey, the agents who interviewed Flynn did not believe he was lying, but in the end, Flynn pled guilty to one count of lying to Special Counsel Robert Mueller. He had already spent more than $1 million in lawyers fees and sold his home to help with the debt. According to sources, Flynn’s family was being threatened by the Mueller team.

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The sordid tale of Lanny Davis continues.

CNN Lies About Cohen Story, Refuses to Comment (Greenwald)

CNN’s blockbuster July 26 story – that Michael Cohen intended to tell Special Counsel Robert Mueller that he was present when Donald Trump was told in advance about his son’s Trump Tower meeting with various Russians – includes a key statement about its sourcing that credible reporting now suggests was designed to have misled its audience. Yet CNN simply refuses to address the serious ethical and journalistic questions raised about its conduct. The substance of the CNN story itself regarding Cohen – which made headline news all over all the world and which CNN hyped as a “bombshell” – has now been retracted by other news outlets that originally purported to “confirm” CNN’s story.

That’s because the anonymous source for this confirmation, Cohen lawyer Lanny Davis, now admits that, in essence, his “confirmation” was false. As a result, both the Washington Post and the NY Post outed Davis as their anonymous source and then effectively retracted their stories “confirming” parts of CNN’s report. CNN, however, has retracted nothing. All inquiries to the network are directed to a corporate spokesperson, who simply says: “We stand by our story, and are confident in our reporting of it.” A newsletter sent Sunday night from CNN’s two media reporters, Brian Stelter and Oliver Darcy, contained the same corporate language, but addressed none of the questions raised about CNN’s report.

It’s certainly possible that CNN had other sources for this story besides Davis, who now repudiates it. It’s hard to see how CNN’s story could be true given that Davis, Cohen’s own lawyer, explicitly says that Cohen has no information that Trump had prior knowledge of the Trump Tower meeting, that Cohen cannot and will not tell Mueller that this happened, and that Davis’ prior claims about Cohen’s knowledge and intentions are false. Axios reported that Cohen testified under oath to Congress that he has no knowledge that Trump had prior knowledge of the meeting and repeated this to leaders of the Senate Intelligence Committee again after CNN’s report. Davis now says Cohen – rather than intending to tell Mueller he has such information – stands by his long-time claim that he has none.

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From the same Glenn Greenwald article. False claims galore.

The Media’s Chronic Misreporting on the Trump/Russia Story (Greenwald)

The other self-serving tactic media outlets use in situations like this is to claim that their errors are just good faith and rare mistakes, and that those who report on their mistakes are exaggerating their significance. This claim was also prominently featured in the New Yorker’s critique of my work, and is reflexively applied to anyone who has critiqued the dominant media narrative on this story. This tactic is also itself highly deceitful. The reality is that from the start of the Trump/Russia story, the U.S. media has repeatedly and frequently – not rarely and periodically – gotten major stories completely wrong, always in the same direction: exaggerating the threat posed by Russia to the U.S., and concocting evidence of Trump/Russia collusion even when such evidence did not exist.

Last December, I reported on what I call (and still believe) was the U.S. media’s “most humiliating debacle in ages”: a blatantly false and equally hyped CNN story claiming that an unknown person had emailed Donald Trump Jr. access to the WikiLeaks email archive before it was published: a story that MSNBC’s Ken Dilanian purported to “confirm.” That story – predictably and by design – generated huge headlines around the world, and was given breathless coverage on cable news given its obvious significance. In fact, the email in question was sent after WikiLeaks had published that archive to the entire world, rendering the magic-bullet email utterly worthless, not a massive scoop proving collusion.

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Swamp.

Russian Oligarch, DOJ And A Clear Case Of Collusion (ZH)

Steele and twice-demoted DOJ official Bruce Ohr communicated extensively about the Russian Oligarch as recently as February 2016, which included efforts to obtain a Visa for Deripaska to attend an Asia-Pacific Economic Cooperation meeting int he US. Deripaska is now banned from the United States as one of several Russians sanctioned in April in response to alleged 2016 election meddling. Ohr, meanwhile, was demoted twice after the DOJ’s Inspector General discovered that he lied about his involvement with opposition research firm Fusion GPS co-founder Glenn Simpson – who employed Steele. Ohr’s CIA-linked wife, Nellie, was also employed by Fusion as part of the firm’s anti-Trump efforts, and had ongoing communications with the ex-UK spy, Christopher Steele as well. What’s more, Ohr met with Deripaska according to Solomon.

“By 2015, Steele’s work had left him friendly with one of Deripaska’s lawyers, according to my sources. And when Ohr, then the associate deputy attorney general and a longtime acquaintance of Steele, sought help getting to meet Deripaska, Steele obliged. Deripaska, who frequently has appeared alongside Russian President Vladimir Putin at high-profile meetings, never really dealt with Steele, but he followed his lawyer’s recommendations and met with Ohr, my sources say. -The Hill The September 2015 meeting between Ohr, Deripaska and several FBI agents in New York sought the Russian billionaire’s assistance regarding organized crime investigations. That meeting was facilitated by Steele.

To recap: Bruce Ohr = the #4 official at the DOJ, met with a billionaire friend of Vladimir Putin, in a sit-down arranged by Christopher Steele. Steele and the DOJ, meanwhile, were accusing Donald Trump of collusion with Putin – while the Obama administration used Steele’s dodgy dossier to obtain a FISA warrant to spy on Trump campaign aide Carter Page. Talk about actual collusion!

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India’s still largely inward looking, but still, what is imported -oil!-gets much more expensive.

India’s Rupee Falls To An All-Time Low (CNBC)

The Indian rupee fell to a record low on Thursday morning, following a declining trend all year — which economists attributed to rising oil prices, broader emerging market concerns, and strong month-end dollar demand. It slid to 70.8100 against the dollar, after a previous new low just a day before at 70.475. That marked a 10.97 percent decline since the start of the year. “Weakening has accompanied rising investment concerns about emerging markets more broadly, as well as a widening current account deficit, itself largely the result of higher oil prices,” said a Deutsche Bank Wealth Management report on Thursday.

More expensive oil leads to a higher import bill for India, a net importer of oil. Higher oil prices also lead to a widening current account deficit — a measure of the flow of goods, services and investments in and out of the country. Oil prices have been up more than 7 percent since mid-August, DBS Economist Radhika Rao explained in a note following the previous record low on Wednesday. Along with that, end-month dollar demand has also added to the pace of currency sell-off, she said. “Markets get a sense that the authorities are tolerant of a weaker rupee, with little by way of jawboning or verbal intervention,” Rao added.

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I think Beijing is more nervous than this lets on.

Trade War Won’t Cause ‘Major’ Hit To China’s Economy – Morgan Stanley (CNBC)

The Chinese government will continue implementing measures in order to cushion its economy from the impact of the ongoing trade spat with the U.S., a leading China economist said Wednesday. “We are not expecting any major growth correction because we think the potential impact from trade tariffs will be partially cushioned by the policy easing measures taken by the policy makers,” Robin Xing, chief China economist at Morgan Stanley, told CNBC at the Morgan Stanley Technology, Media and Telecom Conference in Beijing. Just last week, the U.S. and China slapped tariffs on $16 billion worth of goods on each other. Both countries also imposed tit-for-tat levies on $34 billion worth of each other’s imports in July.

Market watchers are now keeping their eyes on a fresh round of U.S. tariffs on $200 billion worth of Chinese goods expected later this year. If the U.S. imposes those additional tariffs, the impact could be “amplified” by how connected supply chains in East Asia are to China, Xing said. In fact, the trade war’s disruption to supply chains could cut 0.7 percentage points from China’s growth, he said. That will spur Beijing to take up more meaningful easing measures such as tax cuts and boosts to credit and liquidity in China’s financial system.

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Sure, just sell all your assets.

Argentina Asks IMF For Early Release Of Standby Funds (R.)

Argentina is asking the IMF for early release of funds from the country’s $50 billion standby financing deal, President Mauricio Macri said in a televised address on Wednesday, a move aimed at calming turbulent markets. The country’s currency has weakened 40.79 percent in 2018. Investors are concerned that with high inflation, a weak economy and fallout from a global selloff in emerging markets, Argentina may have problems meeting its dollar debt obligation in 2019. “We have agreed with the IMF to advance all the necessary funds to guarantee compliance with the financial program next year,” Macri said. “This decision aims to eliminate any uncertainty.” The Argentine peso dropped to trade more than 6 percent lower against the dollar on the news.

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Michel Barnier, said the bloc is “prepared to offer a partnership with Britain such as has never been with any other third country..”

Pound Sterling Rallies As Raab And Barnier Turn Optimistic On Brexit (Ind.)

The pound has rallied against the dollar and the euro following bullish Brexit comments from both UK and EU officials. Sterling rose more than 1 per cent against the greenback to hit $1.3006, and was up 0.99 per cent against the euro to €1.1118. Brexit secretary Dominic Raab told the Lords EU committee on Wednesday that he was “confident a deal is within our sights”. He said: “We’re bringing ambition, pragmatism, energy and if, and I expect it will be, and if it is matched, we get a deal.” He said the 17 October deadline for a deal could be pushed back, but added: “I think it is important as we enter the final phase of the negotiations in the lead up to the October council – and the possibility that it may creep beyond that – we want to see some renewed energy.

“We’re bringing the ambition and the substance of our white paper on the future relationship and also I think some pragmatism to try and go the extra mile to get the deal that I think is in both sides interests. We need that to be matched obviously, it’s a negotiation.” Meanwhile the EU’s chief negotiator, Michel Barnier, said the bloc is “prepared to offer a partnership with Britain such as has never been with any other third country”. “That kind of bullishness has been in short supply of late – if it has ever been there at all – and had a hugely rejuvenating effect on the pound,” said Connor Campbell, financial analyst at Spreadex.

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But wait! Keep ’em guessing!

EU’s Barnier Says Must Prepare For A ‘No-Deal’ Brexit (R.)

The European Union’s chief Brexit negotiator Michel Barnier said on Thursday the bloc must prepare for a no-deal Brexit, even if its goal was an orderly exit. The EU needed to be well prepared for everything, Barnier said, telling German broadcaster Deutschlandfunk: “That includes the no-deal scenario.” He said the issue of the Irish border with Northern Ireland was “the most sensitive point” of the negotiations. Of a solution to the issue, he added: “I think that is possible.”

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The industry wants to both cry for help AND look strong.

Car Manufacturing In Britain Fell By 11% In July (G.)

The number of cars built in UK factories slumped by 11% last month compared with a year ago. Just over 121,000 cars left production lines, with a fall of 35% in models built for the UK, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). Car production for export in July fell by 4.2%. Despite the reduction, the sector remains on track to meet 2018 expectations, said the SMMT. Just under 955,500 cars were built in the first seven months of the year, down by 16% for the UK market and 1.2% for export. This marks an improvement on June, when production for the UK plunged 47%, although there was a 6% rise in cars made for export.

Model changes, operational adjustments and preparations for new emissions standards affected output last month, said the SMMT. Its chief executive, Mike Hawes, said: “While the industry is undoubtedly feeling the effects of recent uncertainty in the domestic market, drawing long-term conclusions from monthly snapshots requires a health warning. “The bigger picture is complex and month by month fluctuations are inevitable as manufacturers manage product cycles, operational changes and the delicate balance of supply and demand from market to market. “To ensure future growth, we need political and economic clarity at home, and the continuation of beneficial trading arrangements with the EU and other key markets.”

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Those were the days.

1000s Of British Expats Living In Spain Return To UK As Brexit Nears (Exp.)


Figures show the number of Brits living in Bendorm has fallen from around 5,000 before the 2007 financial crash to 2,825 last year. Almost 5,000 waved adios to Ibiza, Majorca and Menorca over the same period of time and by 2017, 14,981 expats remained on the Balearic islands. Spanish newspaper El Pais reported the total number of British residents in Spain had dropped from 397,892 to 240,785 – a fall of 157,107. It said data from Spain’s National Statistics Institute showed the number of residents from 15 EU-countries in Spain had fallen by a quarter but the number of British expats had fallen 40 percent. Between 2012 and 2017, the number of Britons leaving Spain outnumbered those who arrived. In the previous four years, 40,454 more Britons arrived in Spain than left.

The drop in expats was put down partly to a shake up in municipal enrolment regulations in Spain but many returnees fear Brexit will have a negative impact on their lives abroad while others say life on the continent has become too expensive with the devaluation of the pound. Michelle Ball, who has a shop in La Xara, Alicante having arriving in Valencia as a 14-year-old, said: “Many are returning because life has become incredibly expensive. “My mother has lost €160 a month in her pension since the Brexit referendum because of the devaluation of the pound. “Now her pension is €690. And since the Spanish government made changes a few years back she also has to pay a portion for her medicines. It’s not a lot but it doesn’t help either.”Sterling fell to its lowest against the euro in nearly a year yesterday after Theresa May played down the consequences of a no-deal Brexit.

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Aug 122018
 
 August 12, 2018  Posted by at 1:21 pm Finance Tagged with: , , , , , , , , , , , , ,  4 Responses »


Henri Matisse View of Nôtre Dame 1914

 

Recep Tayyip Erdogan became Prime Minister of Turkey in 2003. His AKP party had won a major election victory in 2002, but Erdogan was banned from political office until his predecessor Gül annulled the ban. Which he had gotten in 1997 for reciting an old poem to which he had added the lines “The mosques are our barracks, the domes our helmets, the minarets our bayonets and the faithful our soldiers….”

The Turkish courts of the time saw this as “an incitement to violence and religious or racial hatred..” and sentenced him to ten months in prison (of which he served four in 1999). The courts saw Erdogan as a threat to the secular Turkish state as defined by Kemal Ataturk, the founder of modern Turkey in the 1920’s. Erdogan is trying to both turn the nation towards Islam and at the same time not appearing to insult Ataturk.

The reality is that many Turks today lean towards a religion-based society, and no longer understand why Ataturk insisted on a secular(ist) state. Which he did after many years of wars and conflicts as a result of religious -and other- struggles. Seeing how Turkey lies in the middle between Christian Europe and the Muslim world, it is not difficult to fathom why the ‘father’ of the country saw secularism as the best if not only option. But that was 90 years ago.

And it doesn’t serve Erdogan’s purposes. If he can appeal to the ‘silent’ religious crowd and gather their support, he has the power. To wit. In 2003, one of his first acts as prime minister was to have Turkey enter George W.’s coalition of the willing to invade Saddam Hussein’s Iraq. As a reward for that, negotiations for Turkey to join the EU started. These are officially still happening, but unofficially they’re dead.

In 2014 Erdogan finally got his dream job: president. Ironically, in order to get the job, Erdogan depended heavily on the movement of scholar and imam Fethullah Gülen, who, despite moving to Pennsylvania in 1999, still had (has?) considerable influence in Turkish society. Two years after becoming president, Erdogan accused Gülen of being the mastermind behind a ‘failed coup’ in 2016, after which tens of thousands of alleged Gülenists were arrested, fired, etc.

 

Fast forward to the past week. Donald Trump imposed tariffs on Turkey, ostensibly because Erdogan refuses to free an American pastor. The result was a god-almighty drop in the Turkish lira. Analysts at Goldman Sachs said if it reached 7:1 vs the USD, it would be game over for Turkish banks. It got to 6.8:1 before falling back to 6.4:1. And without support from China or the IMF, it would indeed appear the game’s up.

With a stronger dollar, investors’ urge to have their money in emerging markets fades away. And with Turkey being the ugliest horse in the EM factory (perhaps after Argentina, but that’s a whole different story), it’s only logical it would be the first emerging market to see foreign investment disappear. It’s the easiest thing in the world, and It looks something like this:

Here, Turkey’s the main outlier. Tyler Durden’s comment: “as JPMorgan showed 2 months ago, Turkey faces a secondary threat in addition to its gaping current account deficit: a massive and growing debt load. If foreign buyers of Turkish debt go on strike, or if Turkey is unable to rollover near-term maturities, watch how quickly the currency crisis transforms into a broad economic collapse.”

 

 

This next graph from the IIF shows how much debt Turkey has, and in which sectors. Not much household debt, which is positive, but a monster non-financial corporate debt, which is definitely not. NOTE: Hungary is no. 2 on this one, but look at the graph above, and you see that while Turkey has a current account DEFICIT and RISING external debt, Hungary has a current account SURPLUS and FALLING external debt. Don’t do the apples and oranges thing! Also note that Argentina’s debt is almost all government (bonds)

Along that same line, I saw Tom Luongo today compare Turkey anno now to Russia in 2014/15, but Moscow’s USD and EUR debt is about 25%, while Turkey’s is at 70%. it’s a very bad comparison. Russia has had sanctions for ages, and it’s and plenty time to adapt its economy to them. They have to hold some USD and Treasury’s, but they’re largely fine. Turkey is not.

 

 

The third graph is useful because it depicts what currencies countries’ non-financial sectors have borrowed in. Again, Turkey is an outlier, this time in its USD exposure.

 

 

And unsurprisingly, we have EU banks exposed to Turkey. What’s wrong with BBVA? What’s wrong with Draghi?

 

 

But this is easy stuff. We know all this, or we could have. Turkey has been splurging on debt at least ever since Erdogan became PM 15 years ago. He bought his popularity to a large extent with large scale infrastructure projects, without letting on the country -and its corporate sector- were financing the projects with money borrowed from abroad (he built a $100 million, 1000-room palace for himself as well).

Where I think it gets really interesting, and I’ve been keeping away a bit from what others have written the past few days, is in what Erdogan knows about this, and how long he’s known how dire the situation is, and what he’s planning to do next. Because if he knows how bad things are, and he has it for a while, he may well have orchestrated the recent fall-out with Trump et al, to use it as a political tool.

What Erdogan needs is someone to blame for his collapsing economy. And also, if he can get it, a bail-out from somewhere anywhere. Problem with the bail-out thing is, no matter what option might be available, and it’s only might be, he will be forced to relinquish a lot of the central control he’s carefully built up through constitution amendments etc.

His -maybe- options are the IMF, Russia and China. The IMF equals America, and even if they feel a loan to Istanbul is better than an outright collapse, they will take his control over the central bank away, and probably much more – austerity on steroids.

Russia might want to assist, if only to get Turkey away from NATO, which Putin sees as a growing threat now it keeps approaching his borders ever more. Greece is presently in an angry spat with Moscow because the latter is trying to frustrate the Macedonia name deal that the US has been encouraging, which would lead to Macedonia NATO membership, and even more NATO troops right on Russian borders.

But Putin hasn’t forgotten Erdogan shooting down a Russian jet fighter in 2015, and you can bet he will avenge that ‘incident’. He’s at best ambivalent about supporting Erdogan, but he recognizes the potential advantages. Then again, he also recognizes the pluses of letting Turkey slide into a position where Erdogan will be forced out and the secular state reinstated. Russia doesn’t want more Muslim states on its borders anymore than it wants more NATO. Suffice it to say Putin’s watching closely. And he’s got his moves ready.

China sees things differently; it can of course appreciate the potential of Turkey as a strategic gem, if only for its Belt and Road Initiative, but Beijing can also see the potential problems. It’s easier -and much cheaper- to buy up Greek assets for that same purpose -and for pennies on the dollar- now that the EU and US have forced the country’s economy to slide into third world territory. Still if Erdogan gets desperate enough, XI may yet jump in. But Erdogan will not be an independent actor anymore, in his own country. Xi does not dole out Christmas gifts.

 

On Saturday, Erdogan -again- summoned Turks to bring home their foreign funds and to change all dollars and euros and bonds for lira. That may seem strange -and it probably is- because the first reaction is for people to do the exact opposite as long as the lira is plunging. But it appeals to that same religious sentiment that he has founded his entire political power on. Without it, he’s done anyway.

His approach now is to blame someone else for Turkey’s economic problems. Which is nonsense for anyone who has the valid details, but remember, his gutting of the press after the alleged ‘coup’ two years ago has left precious little information available to the Turkish people.

Erdogan has said he will look for other friends than the US. As detailed above, that will not be easy unless he’s prepared to give up substantial amounts of his power. He’s not prepared for that. It’s much easier for him, let alone advantageous, to claim there’s an economic war against Turkey being leveled. And he wouldn’t even be 100% wrong.

Thing is, to prevent the latest escalation, all he would have had to do was to release an American pastor. The fact that he didn’t is perhaps more telling than anything in all this. He’s looking for someone, come country, some organization perhaps, to present as an enemy to the Turkish people.

Since I’ve spent a lot of time in Athens in the past few years, I wouldn’t be surprised if Turkey, whose jetfighters’ violations of Greek air space have become so routine not even the Greek press tries to keep track, would invade, and claim ownership of, some Greek islands in the Aegean Sea, even if they’re just some uninhabited rocks, to whip up nationalist sentiment back home.

Recep Tayyip has long seen this coming. His economy is collapsing, his currency is collapsing, so he’ll focus on what’s left: Turkey’s strategic position on the map, its NATO membership, the negotiations for EU membership, and most of all the support of the Muslim contingent in Turkey that solidifies his power.

I don’t really want to make any historical comparisons, they appear obvious enough. Suffice it to say this ain’t over by a long shot, and it could lead to big trouble.

And don’t let’s forget that Turkey presently hosts millions of Syrian refugees. Erdogan can just buy a bunch of dinghies (he can still afford that) and cause absolute chaos in Greece and the EU.

Who’s going to be buying lira’s on Monday?

 

 

Aug 052018
 


Claude Monet Hollowed Cliff near Étretat 1883

 

The Real Threat To The Fed’s Independence Is Wall Street, Not Trump (WM)
The Trillion-Dollar Question: Can The Tech Giants Keep Growing? (G.)
Light It Up (Kunstler)
IMF Option Looms Larger For Turkey Amid Row With US (AL M.)
Beware the Slippery Slope of Facebook Censorship (Matt Taibbi)
Why Theresa May Must Stop The Brexit Clock (O.)
UK Trade Minister Fox Says EU Is Pushing Britain To No-Deal Brexit (R.)
Separating Children From Their Parents Puts UK Government To Shame, Too (O.)
Britain’s Economics Students Are Dangerously Poorly Educated (G.)
How Reality Is Being Redefined (Slog)
Greece’s Unemployment Highest in Developed World (GR)
Greece: An Economy That Has Shrunk So Much It Looks War-Torn (WaPo)

 

 

But we’ve given them all the power…

The Real Threat To The Fed’s Independence Is Wall Street, Not Trump (WM)

[..] the real threat to the Fed’s independence isn’t coming from Trump—it’s coming from Wall Street. The Fed’s structural flaws have led to regulatory capture, which compromises its ability to set monetary and regulatory policy in a manner that isn’t tilted to favor those at the very top of the economic ladder. Trump may have broken a norm by commenting on monetary policy, but the Fed’s status quo is unaccountable, opaque decision-making shaped by deep conflicts of interest with the very financial institutions the Fed is ostensibly supposed to supervise. Consider, for instance, the abrupt resignation in March of David Cote from the New York Fed’s board of directors—a move that came as a shock to many Fed watchers.

Cote was one of just a couple people responsible for choosing the next president of the New York Fed, the most powerful economic policymaking position in the country that Trump doesn’t control. Yet before the search for New York Fed President Bill Dudley’s successor had formally concluded, Cote left the board to pursue “new business opportunities that could affect his eligibility to serve”—later revealed to be helping Goldman Sachs undertake an ambitious corporate acquisition strategy. The New York Fed claims that Cote and his fellow board members had already decided on former San Francisco Fed President John Williams to succeed Dudley by the time that Cote announced his resignation, but that means that Cote was simultaneously negotiating a new gig at Goldman Sachs while selecting one of Goldman’s top regulators.

The entire ordeal served as an unsettling reminder of the cozy relationship between the Federal Reserve and the biggest behemoth on Wall Street. Prior to being selected as New York Fed president in 2009, Dudley was Goldman Sachs’s chief economist. In 2008, Goldman Sachs Director Stephen Friedman chaired the New York Fed’s board of the directors at the same moment that it was reviewing Goldman’s application to become a bank holding company. In 2014, leaked tapes exposed New York Fed regulators pressuring one of their examiners to back off of a finding that would have imperiled Goldman Sachs’s ability to engage in a deal with Banco Santander. And in 2015, the Fed chose three consecutive men with strong ties to Goldman Sachs to be new Federal Reserve Bank presidents.

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Only if we let them.

The Trillion-Dollar Question: Can The Tech Giants Keep Growing? (G.)

It has been a tumultuous couple of weeks for America’s high-flying technology stocks, even by their own unique standards. Their shares have been soaring since the start of the year, despite being buffeted by trade war fears as President Trump talked of limiting Chinese investments in the US and restricting American technology imports to China. But now there are signs that cracks may be starting to appear in some of the biggest firms in the sector. Facebook suffered the biggest ever one-day drop in a company’s market value – losing more than £90bn – after its growth slowed in the wake of the Cambridge Analytica scandal. Twitter lost 20%, or $5bn, as it reported a surprise fall in active monthly users, while streaming service Netflix missed its targets for subscriber numbers.

On the other hand, electric car specialist Tesla managed to head in the right direction despite making a $717m second-quarter loss, as its controversial chief executive, Elon Musk, regained investor confidence after apologising for previous outbursts. That was in marked contrast to a conference call for the company’s previous set of figures, when he accused a Wall Street analyst of “boring bonehead questions” and ignored queries from investors. But the pick of the bunch remains Apple, which beat Amazon and Google to reach the landmark $1 trillion valuation on Thursday.

Despite the recent rollercoaster ride, the five key tech stocks, known as the “Faangs” – Facebook, Amazon, Apple, Netflix, and Alphabet-owned Google – have reached breathtaking heights. The total value of the five companies amounts to a staggering 19% of total US GDP. But their surge in value has prompted fears of a re-run of the dotcom boom of the late 1990s, when technology businesses dominated the stock market before coming crashing to earth. Russ Mould at investment group AJ Bell says: “That [19%] compares to the 15.5% of US GDP reached by the five biggest companies by value at the US stock market’s peak in the fourth quarter of 1999, just before the technology, media and telecoms bubble burst and that particular mania came to grief.”

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“That’s my theory about what Russia is up to. If you have a better one, let’s hear it?”

Light It Up (Kunstler)

The Guardians of the Galaxy at National Public Radio were beside themselves Wednesday night reporting that “the lights are blinking red for a 2018 election attack by Russia.” Well, isn’t that an interesting set-up? In effect, NPR is preparing its listeners in advance to reject and dispute the coming midterm election if they’re not happy with the results. Thus continues America’s institutional self-sabotage, with the help of a news media that’s become the errand boy of the Deep State.

What do I mean by the Deep State? The vested permanent bureaucracy of Washington DC, and especially its vastly overgrown and redundant “Intel Community,” which has achieved critical mass to take on a life of its own within the larger government, makes up its own rules of conduct, not necessarily within the rule of law, and devotes too much of its budget and influence defending its own prerogatives rather than the interests of the nation.

Personally, I doubt that President Putin of Russia is dumb enough to allow, let alone direct, his intel services to lift a finger “meddling” in the coming US midterm election, with this American intel behemoth vacuuming every digital electron on earth into the NSA’s bottomless maw of intercepted secrets. Mr. Putin must have also observed by now that the US Intel Community is capable of generating mass public hallucinations, to the beat of war-drums, and determined not to give it anything to work with. That’s my theory about what Russia is up to. If you have a better one, let’s hear it?

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Turkey double-crossed the US in a prisoner swap deal. Bad idea of course. Erdogan wants Gulen, but this is not the way.

IMF Option Looms Larger For Turkey Amid Row With US (AL M.)

While the climate of uncertainty is discouraging investments, inflation is eroding real incomes and curbing domestic consumption. As a result, the shrinking demand is bearing on economic growth, which has relied largely on the domestic market. The Turkish economy, which grew 7.4% in 2017, is expected to slow in the third quarter before beginning to contract.

The growing uncertainties are discouraging also the inflow of hot money from abroad, which Turkey desperately needs. Moreover, existing foreign investors have been fleeing the Turkish stock market, albeit slowly — a trend that contributes to sustaining the high prices of foreign exchange, especially the dollar. Accordingly, Turkey’s risk premium — reflected in credit default swaps (CDS) — is on the rise. Turkey’s CDS, which had stood at 166 basis points Feb. 1 and 199 basis points May 1, hit a record high of 334 basis points on the evening of Aug. 1 — up from 321 points in the morning. The increasing risk premium means that Turkey will now face higher interest rates when it tries to borrow from foreign creditors.

The country’s external financing needs for the next 12 months amount to $230 billion, including $180 billion to roll over external debts and $50 billion to cover its gaping current account deficit. Hence, the question of how the required funds will be secured and at what cost is crucial. The tensions with Washington came amid this already serious crunch, exacerbating the woes of Erdogan’s regime. The row over Brunson had flared last week, as both President Donald Trump and Vice President Mike Pence threatened sanctions unless Ankara took “immediate action” to release the pastor, who is being held on what Washington sees as bogus charges of espionage and collaboration with terrorist groups.

The warnings had an immediate economic effect, pushing up Turkey’s risk premium, as pundits sought to predict the scope of the upcoming sanctions. Some suggested that Washington’s hardening stance would bear on the flow of foreign capital to Turkey and the support it might seek from the IMF, while others saw trouble looming over Halkbank, the Turkish public lender embroiled in a scheme to evade US sanctions against Iran. Ultimately, Washington announced sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul under the 2016 Magnitsky Act, which targets individuals and entities involved in human rights abuses. According to Bloomberg, this “could be just the start of what would look like a US assault on Turkey’s vulnerable economy,” including a potentially hefty fine on Halkbank.

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There’s Mark Warner again, the guy who with Comey screwed up the Assange deal with the DOJ.

Beware the Slippery Slope of Facebook Censorship (Matt Taibbi)

You may have seen a story this week detailing how Facebook shut down a series of accounts. As noted by Politico, Facebook claimed these accounts “sought to inflame social and political tensions in the United States, and said their activity was similar — and in some cases connected — to that of Russian accounts during the 2016 election.” Similar? What does “similar” mean? The death-pit for civil liberties is usually found in a combination of fringe/unpopular people or ideas and a national security emergency. This is where we are with this unsettling new confab of Facebook, Congress and the Trump administration.

Read this jarring quote from Sen. Mark Warner (D-VA) about the shutting down of the “inauthentic” accounts: “Today’s disclosure is further evidence that the Kremlin continues to exploit platforms like Facebook to sow division and spread disinformation… I also expect Facebook, along with other platform companies, will continue to identify Russian troll activity and to work with Congress…” This was in a story in which Facebook stated that it did not know the source of all the pages. They might be Russian, or they might just be Warner’s idea of “sowing division.” Are we comfortable with that range of possibilities?

[..] Facebook was “helped” in its efforts to wipe out these dangerous memes by the Atlantic Council, on whose board you’ll find confidence-inspiring names like Henry Kissinger, former CIA chief Michael Hayden, former acting CIA head Michael Morell and former Bush-era Homeland Security chief Michael Chertoff. (The latter is the guy who used to bring you the insane color-coded terror threat level system.) These people now have their hands on what is essentially a direct lever over nationwide news distribution. It’s hard to understate the potential mischief that lurks behind this union of Internet platforms and would-be government censors. As noted in Rolling Stone earlier this year, 70 percent of Americans get their news from just two sources, Facebook and Google. As that number rises, the power of just a few people to decide what information does and does not reach the public will amplify significantly.

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Makes sense. But too much of the whole thing doesn’t.

Why Theresa May Must Stop The Brexit Clock (O.)

May’s cabinet colleagues, fanning out across the continent like Patton’s Third Army to advance her Chequers compromise, do not appear to have fared any better. Especially embarrassing are the efforts of Jeremy Hunt, the new foreign secretary. He gravely warned puzzled Europeans last week that Britain was heading for “no-deal by accident” by pushing itself off a cliff. The UK would not “blink first”, he added. Perhaps Hunt thinks he is Clint Eastwood. It matters not. On Brexit, this government has its eyes tight shut. It is blind to the consequences – and the waiting chasm. Blinking does not come into it. What part of the EU’s unchanging position on the principles governing Britain’s future relationship with Europe does May’s government not understand?

For two years or more, Barnier, the chief negotiator, firmly backed by 27 governments, has been telling London there can be no compromise and no fudge that weakens the integrity of the single market, pan-European customs and legal regulations and Europe’s borders. Yet May’s Chequers plan, seeking exceptional (and unworkable) arrangements, blithely ignores all that. In case the European public did not appreciate what was at stake, or was taken in by chauvinistic Tory claims of EU vindictiveness and dogmatism, Barnier published an op-ed in 20 European newspapers last week. Amid Brexit’s baffling complexities, his concision and clarity were refreshing. He explained the EU’s justified fears about the impact of Brexit on Europe and why it cannot reasonably be expected to bow to May’s demands for special treatment:

“The UK knows well the benefits of the single market. It has contributed to shaping our rules over the last 45 years. And yet some UK proposals would undermine our single market, which is one of the EU’s biggest achievements. The UK wants to keep free movement of goods between us, but not of people and services. And it proposes to apply EU customs rules without being part of the EU’s legal order. The UK wants to take back sovereignty and control of its own laws, which we respect, but it cannot ask the EU to lose control of its borders and laws,” Barnier wrote.

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Oh, yeah, they’re going to blame it on the EU.

UK Trade Minister Fox Says EU Is Pushing Britain To No-Deal Brexit (R.)

British trade minister Liam Fox said “intransigence” from the European Union was pushing Britain toward a no-deal Brexit, in an interview published on Saturday by the Sunday Times. With less than eight months until Britain quits the EU, the government has yet to agree a divorce deal with Brussels and has stepped up planning for the possibility of leaving the bloc without any formal agreement. Fox, a prominent Brexit supporter in Prime Minister Theresa May’s cabinet, put the odds of Britain leaving the European Union without agreeing a deal over their future relationship at 60-40. “I think the intransigence of the commission is pushing us toward no deal,” Fox told the Sunday Times after a trade mission in Japan.

“We have set out the basis in which a deal can happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic wellbeing of the people of Europe then it’s a bureaucrats’ Brexit — not a people’s Brexit — (and) then there is only going to be one outcome.” It was up to the EU whether it wanted to put “ideological purity” ahead of the real economy, Fox said. If Britain fails to agree the terms of its divorce with the EU and leaves without even a transition agreement to smooth its exit, it would revert to trading under World Trade Organization rules in March 2019.

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All sociopaths do it. They are defined by their lack of empathy.

Separating Children From Their Parents Puts UK Government To Shame, Too (O.)

Donald Trump’s policy of forcibly separating immigrant parents and children at the US border has been greeted with shock and abhorrence. Around the world, people have listened to audio of young children sobbing for their parents while federal agents crack jokes and heard the stories of children locked up in cages in the richest country in the world. Even the prime minister broke with her usual timidity about Trump’s transgressions to call his family separation policy “deeply disturbing”. What hypocrisy. Less noticed – although no less inhumane – is the British government’s policy of separating parents from their young children as part of immigration detention, all conducted on Theresa May’s watch, first as home secretary, then as prime minister.

Charities such as Bail for Immigration Detainees (BID) have for years been raising the cases of children, many of whom are British citizens, taken into care because their parents have been detained, or even deported, without them. In recent months, a long list of cruelties meted out in the name of the government’s “hostile environment” policy has come to the public’s attention: people who’ve lived in Britain legally for decades, paying their taxes, suddenly denied life-saving NHS care; young people who’ve grown up in Britain facing many thousands of pounds in fees and a multi-year slog to get permanent residency; children raised in care facing the risk of deportation as an adult to a country they don’t know. Any sense of basic justice or human compassion seems to have eluded the Home Office.

But separating tiny children from their parents is cruelty of a whole different order. Today, we report on the case of Kishi, a young mother who dropped her two-year-old off at nursery in order to attend an appointment at an immigration reporting centre. There, she was restrained by immigration security officials and taken to an immigration removals centre. No arrangements were made for her toddler, who was put into emergency foster care when no one came to pick her up, and Kishi was not told where her daughter was for two days. It was another month before she saw her. Kishi and her child are not alone. BID says more than 300 children were removed from their parents in the last 12 months, an increase of 16% on the previous year. Many of those will have been taken into care as a result. The Home Office does not keep records on this; perhaps because it contravenes its own guidance, which says children must not be separated from their parents for immigration purposes if it means they will be taken into care.

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Sometimes I think in Britain it’s not only the economists.

Britain’s Economics Students Are Dangerously Poorly Educated (G.)

This month, the pressure group Rethinking Economics said Britain’s universities were failing to equip economics students with the skills that businesses and the government say they need. Following extensive interviews with employers, including organisations such as the Bank of England, it found that universities were producing “a cohort of economic practitioners who struggle to provide innovative ideas to overcome economic challenges or use economic tools on real-world problems”. Moreover, the group said, “when political decisions are backed by economics reasoning, as they so often are, economists are unable to communicate ideas to the public, resulting in a large democratic deficit.”

You could easily level that criticism at the economists forecasting the impact of AI. What are people supposed to think when those who study the field come up with such wildly varying predictions? More importantly, what will politicians think they should do? Nothing, probably, given the confusion. The Rethinking group is concerned that university departments only train, rather than educate, huge numbers of graduates for econometrics jobs across the banking, insurance and consulting sectors. In our increasingly student-led system, these young people don’t want to mess around with history or modules on inequality. They are on a mission to make money for themselves in the private sector.

If they were diverted into discussions of economic history, they might find out we are about to repeat the mistakes of the past and trigger another financial crisis. Even more inhibiting, their course might show that higher inequality dampens workers’ incentives to increase productivity, and might prompt them to ask why young economists in the City are paid colossal amounts of money to analyse bond yields or forecast oil prices. Pay them less, share the money around, and productivity might improve. Failing that, let a robot do their job.

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John put something like dictatorship in the title. Bit much.

How Reality Is Being Redefined (Slog)

The last burgeoning growth sector on the Planet is the pursuit of redefinition. The idea is first to confuse, then create a climate of acceptance, and finally do away with every form of liberty that stands in the way of power. Both Capital and Labour are actively following the same road. It will be the end of the road for citizen freedom unless they’re both stopped. John Williams at Shadowstats.com reckons that the real unemployment rate in the US is 21.4%. Unimpressed by the US State’s insane assumption that all those no longer able to claim unemployment welfare “have found a job”, Mr Williams provides further fuel for my longstanding thesis that no real recovery can occur – if more and more mass-market consumers work fewer and fewer hours for less and less money or have no job at all – because their personal disposable income is disappearing out of sight. The term ‘in employment’ has been redefined.

When he arrived at the UK Treasury as Chancellor, George Osborne immediately gave notice that he’d be switching from the higher RPI measure of inflation (then at 5.2%) to the lower CPI at 4.5%. That doesn’t sound like much, but one has to remember two things: first, that is a 14% difference in levels that makes inflation look much lower; and second, over time the different impression given is huge: from 1996 to 2011, under the RPI system prices rose 53.6%….but using the CPI method, it only came to 35.6%. Significantly, the CPI system excludes financial services costs and government charges to the consumer. Just fancy that. So the term ‘inflation’ has been redefined.

Within two years of taking office, the Conservative-led coalition’s leader David Cameron started claiming that “the Government’s long-term economic plan is working to create more jobs”. Government Party Political Broadcasts showed the statistics, and yes, it certainly looked that way. But “a job” to most people over the last half century meant 38-40 hours a week with a month’s notice. When analysed, these new jobs were averaging 20 hours a week, often at unsocial hours and frequently on no contracts at all. They typically demand, for example, that the “employee” be ready to come into the workplace without notice. When using the weasel term ‘job’, Cameron was comparing meat and two veg with bread and dripping. So the term ‘job’ has been redefined.

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One thing: people earning a low income ‘rate’ is much higher than 10.6%, and up by much more than 2% in 10 years. Lost in translation?

Greece’s Unemployment Highest in Developed World (GR)

Greece tops all countries in the developed world in unemployment according to the Organization for Economic Cooperation and Development’s (OECD) Employment Outlook 2018. Greece has suffered a dramatic spike in unemployment, with the 2017 total climbing to 21.7% of the working population, more than double the 2006 figure.

Large increases in unemployment and an underutilized workforce were accompanied by falling output, very high debt, a serious GDP deficit and deflation, the report says. Along with its impact on employment levels, the financial crisis caused a reduction in wage growth in a lot of countries, leading to a drop in living standards for many.

The proportion of working-age people earning the “low-income” rate jumped to 10.6%, up from 9.56% a decade earlier. Although Korea, Mexico, and Chile have seen a decrease in the number of low-income households, most of the countries hit hardest by the euro crisis, such as Greece, Italy, Spain and Slovenia, have suffered a 2% rise.

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Thank you Brussels and Berlin.

Greece: An Economy That Has Shrunk So Much It Looks War-Torn (WaPo)

The point is that this kind of economic collapse is usually the symptom of a broader state collapse. Which is why it almost never happens in rich countries. That’s clear enough if you look at the late Angus Maddison’s historical GDP per capita numbers. Going back to 1900, there have been only three general times when European economies have shrunk over a 10-year period as much as Greece’s has since 2008: after World War I, after World War II and after the fall of communism. Most of the exceptions to this involve other wars – in particular, the Balkan wars of the 1910s, the Spanish Civil War, the Greek Civil War and the Yugoslav wars of the 1990s — but there is one that largely took place during peacetime. That was Weimar Germany’s hyperinflation.

It’s worth pointing out what isn’t here: the Great Depression. That wasn’t quite as bad in Europe as it was in the United States — at its nadir in 1933, the U.S. 10-year decline was actually comparable to Greece’s today — partly due to the fact that most European countries were quicker to leave the gold standard when things did start to get more dire. That allowed them to inject enough monetary stimulus into their economies to jump-start almost immediate recoveries. The problem, of course, is that it’s a lot harder for Greece to do the equivalent of that right now. The gold standard and the euro are similar in that they are both fixed-exchange rate systems that can get countries into trouble if they are hit by a big enough shock that their economy “needs” a cheaper currency than it has under the system.

But they’re different in that it’s a lot simpler to say your currency won’t be worth as much gold as it used to than to replace all of your currency with a new one. So instead of stimulus, Greece has gotten austerity — and a lot of it. Under the terms of its just-about-to-be-completed bailout agreement, Greece is actually supposed to keep running primary budget surpluses of at least 2.2 percent of GDP until 2060. That’s right: four more decades of austerity. It’s no wonder, then, that Greece’s economy might not get back to where it was in 2008 until 2030. This is what Europe calls a success: an economy that has shrunk so much it looks war-torn.

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Jul 202018
 
 July 20, 2018  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , ,  5 Responses »


Edward Hopper Western Motel 1957

 

Possible Hand-Over Of Julian Assange To The UK May Be Imminent (Vos)
Spanish Court Drops International Warrant For Carles Puigdemont (G.)
Trump Lays Into The Fed, Says ‘Not Thrilled’ About Interest Rate Hikes (CNBC)
Trump Plans To Formally Invite Putin To US Later This Year (G.)
American Cold War Experts: “The Real Threat Is Russophobia” (ZH)
No-Deal Brexit Would Harm EU Countries As Well As UK, Warns IMF (G.)
Theresa May: I Will Never Accept EU’s Ideas On Irish Brexit Border (G.)
Android Antitrust Fine Will Demolish Google Profit (MW)
IMF Raps Greece Over Its Bid To Reintroduce Labor Negotiations (K.)

 

 

Darkness and shame.

Possible Hand-Over Of Julian Assange To The UK May Be Imminent (Vos)

What happens in a world without Julian Assange? It seems we may be in the unthinkable position of facing such a reality, after WikiLeaks Tweeted regarding the recent statement of Margarita Simonyan, RT’s Editor-in-chief. Her message read (In English): “My sources tell me that Julian Assange will be handed over to the UK in the next weeks or days. Like never before I wish that my sources are wrong’.’ An exceptionally brief article published by Russian Insider documented Simonyan’s foreboding Tweet, indicating that her statement seemed especially serious in light of the quality of her sources.

Russian media is hardly the first source of dire warnings regarding Assange’s safety in recent weeks. Just days ago, the World Socialist Website related: “The London Times reported July 15 on secret talks between the British and Ecuadorian governments. They are apparently intending to expel WikiLeaks editor Julian Assange from the Ecuadorian embassy in London, where he has enjoyed political asylum for six years. The article said the talks were “an attempt to remove Assange from the embassy,” and they were being run at the highest levels of government. The Secretary of State for Foreign Affairs, Sir Alan Duncan, is personally involved.” These reports also follow a chilling article penned by award-winning journalist Chris Hedges, who wrote:

“The failure on the part of establishment media to defend Julian Assange, who has been trapped in the Ecuadorean Embassy in London since 2012, has been denied communication with the outside world since March and appears to be facing imminent expulsion and arrest, is astonishing. The extradition of the publisher—the maniacal goal of the U.S. government—would set a legal precedent that would criminalize any journalistic oversight or investigation of the corporate state. It would turn leaks and whistleblowing into treason. It would shroud in total secrecy the actions of the ruling global elites.”

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What should happen for Julian too.

Spanish Court Drops International Warrant For Carles Puigdemont (G.)

A Spanish judge has dropped the international arrest warrants issued for the former Catalan president Carles Puigdemont and five other pro-sovereignty politicians over their roles in last year’s illegal referendum and subsequent unilateral declaration of independence. The supreme court judge Pablo Llarena announced the decision a week after a German court said it would extradite Puigdemont only over alleged misuse of public funds rather than the more serious charge of rebellion. The dropping of the international warrant means Puigdemont and his former colleagues – currently in Belgium, Scotland and Switzerland – no longer face extradition proceedings.

But domestic warrants remain in force, meaning the six will be arrested should they return to Spain. In his ruling, published on Thursday, Llarena hit out at the court in Schleswig-Holstein, accusing it of “a lack of commitment” over acts that could have “broken Spain’s constitutional order”. The German court’s refusal to extradite Puigdemont on the rebellion charge – which prosecutors had argued could be equated to “high treason” in the German penal code – meant the deposed president could not be tried for the offence if sent back to Spain.

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More crazy reactions. Comparing Trump to Erdogan?!

Trump Lays Into The Fed, Says ‘Not Thrilled’ About Interest Rate Hikes (CNBC)

In a stinging and historically rare criticism, President Donald Trump expressed frustration with the Federal Reserve and said the central bank could disrupt the economic recovery. Presidents rarely intercede when it comes to the Fed, which sets the benchmark interest rate that flows through to many types of consumer debt. Fed officials, including Chairman Jerome Powell, have raised interest rates twice this year and have pointed to two more before the end of 2018. Trump, in an interview with CNBC, said he does not approve, even though he said he “put a very good man in” at the Fed in Powell.

“I’m not thrilled,” he told CNBC’s Joe Kernen in an interview to air in full Friday at 6 a.m. ET on “Squawk Box.” “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.” “But I don’t like all of this work that goes into doing what we’re doing.” Markets reacted to Trump’s comments, with stocks, the dollar and Treasury yields all falling.

Fed officials did not comment on the president’s remarks. The White House, in a statement after the interview excerpt aired on CNBC, emphasized that Trump did not mean to influence the Fed’s decision-making process. “Of course the President respects the independence of the Fed. As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions ” the statement said. “The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments.”

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Keep talking.

Trump Plans To Formally Invite Putin To US Later This Year (G.)

Donald Trump has asked his administration to formally invite Russian president Vladimir Putin to visit Washington later this year, the White House announced on Thursday. Sarah Sanders, the White House press secretary, said Trump asked his national security adviser John Bolton to extend the invitation to Putin for a “working level” dialogue between the two leaders. The invitation comes as the White House has faced a tumultuous week in the aftermath of Trump’s controversial summit with Putin in Helsinki. Trump was roundly criticized from Democrats and Republicans in Washington for siding with the Kremlin over the judgments of US intelligence on whether Russia interfered in the 2016 presidential election.

It took the president several attempts to walk back his comments, amplifying the fallout from his joint appearance with Putin. Trump was nonetheless unfazed by the backlash, deeming the summit a “great success” in a tweet earlier on Thursday while saying he looked forward to a second meeting with Putin. “The Summit with Russia was a great success, except with the real enemy of the people, the Fake News Media,” Trump wrote. “I look forward to our second meeting so that we can start implementing some of the many things discussed, including stopping terrorism, security for Israel, nuclear … proliferation, cyber attacks, trade, Ukraine, Middle East peace, North Korea and more. There are many answers, some easy and some hard, to these problems…but they can ALL be solved!”

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“Russophobia is running amok in this country.”

American Cold War Experts: “The Real Threat Is Russophobia” (ZH)

And now for expert analysis that runs refreshingly contrary to the week’s Trump-Putin mass hysteria over the Helsinki summit, we find ourselves surprised to feature an unusually honest Vice segment on HBO: These American scholars say the real threat to the U.S. is Russophobia. “If he [President Trump] means what he said he was right. It would be great to cooperate with Russia — I would go farther, it’s imperative… We are eyeball to eyeball in a new Cold War with Russia,” begins Stephen F. Cohen, considered among the world’s foremost Russian academic experts, while sitting beside John Mearsheimer in this latest Vice interview, who nods his head in approval.

Both have long been a thorn in the side of the McCarthyite commentariat which alleges Russian collusion behind every decision of the Trump administration. Mearsheimer, a longtime International Security Policy program director at the University of Chicago, questions the now largely cemented narrative created by those who have least understanding of the history of US-Russia relations: “Why won’t people engage in a legitimate debate with people like Steve and me? And I believe the reason they won’t is they would lose the debate – I’m fully confident of that.”

As the American public has from the time of Trump’s election endured endless obtrusive and cacophonous media noise with no real smoking gun (as Former Director of National Intelligence James Clapper famously admitted a year ago) to back the charges of collusion — what CNN’s Van Jones early on admitted was “just a big nothing burger” — the voices of a small cadre of real Russian experts rarely breaks through to a mass audience. “There is an unwillingness to engage in debate on this issue, like I have never seen before,” Mearsheimer tells Vice. And Cohen adds: “We’ve demonized Putin and we’ve Putinized Russia so we demonize Russia. Russophobia is running amok in this country. I’ve seen these things from the inside. I’ve re-thought and re-thought how we got to the edge of war with Russia, where we haven’t been since Cuba in 1962. And I have concluded, and I would be happy to debate my opponents… It is 95 percent our own doing.”

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Getting bored of this yet?

No-Deal Brexit Would Harm EU Countries As Well As UK, Warns IMF (G.)

Britain crashing out of the EU without a deal would inflict significant economic pain across Europe, leaving the region without any winners, the International Monetary Fund has warned. As the new Brexit secretary, Dominic Raab warned Europe to prepare for a no-deal exit, the IMF said such an outcome would hurt the UK most but would also have damaging economic consequences for Ireland and other EU nations. In its annual health check for the euro area, the Washington-based fund said economic growth across the 27 remaining EU states would fall by as much as 1.5% by 2030, if Britain falls back on WTO rules for its trading relationship with the EU after leaving next year.

While economic output for the UK would drop by more than twice that amount – wiping out almost 4% of GDP – Ireland would suffer by almost as much as a result of its strong ties to Britain and shared border. The Netherlands, Denmark and Belgium, with similar close proximity and trading links, would also lose around 1% of GDP. Smaller nations with deep financial links to the City of London, such as Malta, Cyprus and Luxembourg, would also be negatively affected by a hard Brexit, the fund warned. The IMF said the long-run impact from a hard Brexit would be spread across the EU as a result of the economic and financial ties spanning the region, which have grown closer by about 40% over the past quarter century. The UK ranks among the EU’s three largest trading partners, accounting for 13% of trade in goods and services. There are also complex supply chain links between companies across the bloc.

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So no Brexit then?

Theresa May: I Will Never Accept EU’s Ideas On Irish Brexit Border (G.)

Theresa May is to tell the European Union it is time to drop what she feels is their inflexible view on an Irish border solution and “evolve” their position to break the impasse in Brexit talks. In a speech in Belfast on Friday she is expected to brand the bloc’s calls for regulatory alignment north and south of the border as a “backstop” solution in the event of no deal as “unworkable”, and repeat her assertion that a border down the Irish Sea is unacceptable to any British prime minister. “The economic and constitutional dislocation of a formal ‘third country’ customs border within our own country is something I will never accept, and I believe no British prime minister could ever accept,” she will say.

May will tell an audience of business leaders and politicians that the EU proposal is in breach of the Belfast Agreement because it would create a barrier between Northern Ireland and Great Britain and leave the people of Northern Ireland “without their own voice” in trade negotiations. “It is not something the House of Commons will accept,” she is due to say. The EU’s other 27 states will have a chance to examine and respond to the white paper when its General Council of ministers meets in Brussels on Friday morning. They will also receive an update on negotiations from the European Commission’s chief negotiator, Michel Barnier.

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They’ll force people to pay for the software now.

Android Antitrust Fine Will Demolish Google Profit (MW)

When Alphabet Inc. reports earnings Monday, the European Union’s $5.07 billion Android antitrust fine will ruin the company’s profit. Alphabet stock was relatively flat Wednesday, when the fine formally was announced, and Google has said it plans to appeal the fine. However, the company disclosed in an SEC filing that it will account for the fine in its second-quarter report, due Monday after the bell. In terms of what it will cost the company in cash, the fine is not tax-deductible and worth roughly 75% of the company’s expected second-quarter net income of $6.72 billion, which will drastically lower per-share earnings as well.

Since analyst estimates largely do not include the fine as of yet, Alphabet’s earnings are likely to miss published expectations on the bottom line by a significant amount. The question that remains beyond the fine itself is how Google, in the long-term, will respond to the ruling, which prevents the search giant from effectively forcing mobile phone makers and telecom companies to pre-install its search engine and Chrome web browser, among other Google mobile apps, in exchange for use of the Android OS. The ruling is set to go into effect in 90 days, though an appeal would delay implementation.

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How to spell sovereignty. When were countries growing fastest? When they had strong unions.

IMF Raps Greece Over Its Bid To Reintroduce Labor Negotiations (K.)

The International Monetary Fund on Thursday issued a clear warning to the Greek government against its plans to reintroduce collective labor negotiations, saying that such a move would put the competitiveness of the Greek economy at risk. The IMF’s observation, included in its Article IV report that is not only about the Greek economy but concerns eurozone financial policies in general, comes almost a month before the party the government intends to stage for the end of the bailout program. The IMF intervention is particularly important for two additional reasons: first because it concerns a key dimension of the post-bailout government narrative, and second because the IMF is not an independent observer, as its technical experts will be conducting a considerable number of visits to Greece in the context of the post-program surveillance, and will prepare two assessment reports on the Greek economy every year.

There is also a third and possibly more important factor that adds to the significance of the IMF recommendation: It may be just a taste of the attitude the Fund will adopt toward Greece should the government implement its plans to increase the minimum salary. This may actually be an intervention with a preventative character. The government has already legislated the return from August – after the program ends – of two main principles in collective labor negotiations: the provision for the extension of collective contracts and the principle of the more favorable regulation.

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Jul 172018
 
 July 17, 2018  Posted by at 8:39 am Finance Tagged with: , , , , , , , , , , ,  4 Responses »


René Magritte The human condition 1935

 

IMF Warns Trump Trade War Could Cost Global Economy $430 Billion (G.)
Detente Bad, Cold War Good (Murray)
Mueller’s Latest Indictment Contradicts Evidence In The Public Domain (Carter)
Has Mueller Caught the Hackers? (RN/NC)
Putin Rejects UK’s ‘Ungrounded Accusations’ Over Novichok Poisoning (AFP)
Vote Leave Fined For Breaking Electoral Law (BBC)
May Narrowly Heads Off Defeat After Caving In To Brexit Hardliners (G.)
Brexit Is Like The Python That Swallowed An Alligator (Ind.)
Theresa May Told Her Chequers Deal Is ‘Dead In The Water’ (Ind.)
IRS To Revoke 362,000 Passports From US Citizens (Black)
Going Cashless Is Discriminatory (G.)
Netflix Stock Slammed As Subscriber Growth And Revenue Fall Short (MW)
Airbnb Warned It Breaches EU Rules Over Pricing Policy (G.)
High Housing Costs Prompt Thousands of Greeks To Disclaim Inheritance (K.)

 

 

US “as the focus of global retaliation”..

IMF Warns Trump Trade War Could Cost Global Economy $430 Billion (G.)

Rising trade tensions between the United States and the rest of the world could cost the global economy $430bn, with America “especially vulnerable” to an escalating tariff war, the International Monetary Fund has warned. Delivering a sharp rebuke for Donald Trump, the Washington-based organisation said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide. Although all economies would suffer from further escalation, the US would find itself “as the focus of global retaliation” with a relatively higher share of its exports taxed in global markets. “It is therefore especially vulnerable,” the fund said.

Trump raised the stakes in his mounting trade dispute with China last week by proposing 10% tariffs on $200bn of Chinese goods entering the country, on top of $34bn of tariffs that were officially imposed on Beijing at the beginning of the month. The Chinese government, which hit back at the first wave of US tariffs with similar measures, was quick to warn of further retaliation on Monday.[..] Issuing its latest World Economic Outlook report on Monday amid the rising tensions, the IMF said there were greater risks emerging for the global economy since its last assessment in the spring. Although world growth remains strong, the expansion is “becoming less even, and risks to the outlook are mounting”, it said.

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So much vitriol these days. Craig Murray is one of many to tone it down.

Detente Bad, Cold War Good (Murray)

The entire “liberal” media and political establishment of the Western world reveals its militarist, authoritarian soul today with the screaming and hysterical attacks on the very prospect of detente with Russia. Peace apparently is a terrible thing; a renewed arms race, with quite literally trillions of dollars pumped into the military industrial complex and hundreds of thousands dying in proxy wars, is apparently the “liberal” stance. Political memories are short, but just 15 years after Iraq was destroyed and the chain reaction sent most of the Arab world back to the dark ages, it is now “treason” to question the word of the Western intelligence agencies, which deliberately and knowingly produced a fabric of lies on Iraqi WMD to justify that destruction.

It would be more rational for it to be treason for leaders to blindly accept the word of the intelligence services. This is especially true on “Russia hacking the election” when, after three years of crazed accusations and millions of man hours by lawyers and CIA and FBI investigators, they are yet to produce any substantive evidence of accusations which are plainly nuts in the first place. This ridiculous circus has found a few facebook ads and indicted one Russian for every 100,000 man hours worked, for unspecified or minor actions which had no possible bearing on the election result.

There are in fact genuine acts of election rigging to investigate. In particular, the multiple actions of the DNC and Democratic Party establishment to rig the Primary against Bernie Sanders do have some very real documentary evidence to substantiate them, and that evidence is even public. Yet those real acts of election rigging are ignored and instead the huge investigation is focused on catching those who revealed Hillary’s election rigging. This gets even more absurd – the investigation then quite deliberately does not focus on catching whoever leaked Hillary’s election rigging, but instead seeks to prove that the Russians hacked Hillary’s election-rigging, which I can assure you they did not. Meanwhile, those of us who might help them with the truth if they were actually interested, are not questioned at all.

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Excellent point by point take-down of the entire indictment.

Mueller’s Latest Indictment Contradicts Evidence In The Public Domain (Carter)

Mueller’s indictment leaves us with the premise that a supposed GRU officer working in league with other GRU officers, acquiring Podesta’s attachments and, just three days after Julian Assange announces leaks are coming in relation to Hillary Clinton, releases deliberately tainted files that serve to pin the blame on Russians, that only really hurt Trump, that ultimately undermined leaks and that provided fabricated evidence. Evidence that, for whatever reason, supported several claims made by CrowdStrike executives published in a legacy media article the previous day.

Guccifer 2.0 repeatedly tried to associate his efforts with WikiLeaks (from the day he appeared) – an organization for whistleblowers to be able to leak files anonymously. Something a hacker willing to publish leaks on his own blog would have had no need for, especially not if he was connected to a site that published leaks already (that is, DCLeaks.com). What we know about Guccifer 2.0 and his multi-layered efforts to be seen as Russian destroy the notion that he was anyone operating on the side of the Russian state.

Ultimately, the indictment produces a lot of new claims, many in keeping with what we know or have heard, however, it presents no evidence to support what it has introduced and an indictment by itself is not evidence, points that have already been noted by Consortium News, Moon of Alabama, Mark McCarty and others. They have also picked up on the timing of the indictment, which seems to have become a theme for Mueller’s indictments in particular. This latest example comes immediately following Rosenstein and Strzok being grilled and receiving negative press as well as immediately before Trump’s summit with Putin. Exactly how much of the indictment is bogus, I can’t know for sure, but definitely, some of it is, especially those parts that relate to the Guccifer 2.0 persona “being on Russia’s side” in all of this.

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The whole WMD presentation lost Mueller his right to be believed at face value.

Has Mueller Caught the Hackers? (RN/NC)

AARON MATE: Right. So, then let me ask you, Michael, this question, this belief that Putin personally ordered this interference campaign against the U.S. The strongest evidence to bolster it that I’ve seen was this Washington Post report in June 2017, I believe, that said that the U.S. had a mole inside Putin’s inner circle who reported that he personally instructed this operation to happen. Doesn’t that strike you as odd, that, well A, that the U.S. could penetrate Putin’s inner circle at that high level, and B, if they did, that they’d be willing to disclose that in a media report, thereby potentially compromising this incredibly sensitive source of information?

MICHAEL ISIKOFF: Now, you read Russian Roulette and you read about the secret source they had inside the Kremlin in 2014, who was warning the U.S. government that this is exactly what Putin’s government was up to. And this is what they were planning. And I know exactly. I know, we know a lot more about that secret source than we put in the book. This was something that was vetted very carefully. But it is not at all unusual that American spy agencies would seek to cultivate and develop sources who can provide insight into what Putin’s up to, and in these cases they clearly did.

AARON MATE: Someone claims they did. I just find it shocking that they would publicly reveal that, something that high level.

MICHAEL ISIKOFF: Well, so what’s your suggestion? That they invented the source, or what’s your-?

AARON MATE: My suggestion is it’s quite possible that, given the legacy of U.S. intelligence officials inventing intelligence to fix, to comport with political imperatives whatever they are, whether it’s the Iraq War, whether it’s allegations against any number of official U.S. enemies, that that may have happened here. And I’m just urging skepticism in the absence of evidence that we obviously disagree on whether it has been presented yet.

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Doesn’t look like we will ever see proof.

Putin Rejects UK’s ‘Ungrounded Accusations’ Over Novichok Poisoning (AFP)

Vladimir Putin has accused Britain of making baseless allegations against Russia over the former Soviet spy and three other people poisoned, one fatally, with the novichok nerve agent in Salisbury. Asked in a Fox News interview about the British government’s assertion that Moscow was behind the novichok attack on the former spy Sergei Skripal, Putin said London had not provided any evidence to back up the claim. “We would like to get documentary evidence but nobody gives it to us,” Putin, speaking through a translator, told the US network after a summit with Donald Trump in Finland.

“It’s the same thing with the accusations of meddling in the election process in America,” he added in reference to claims that Russia interfered in the 2016 US presidential election which was won by Trump. Putin suggested the case could be driven by domestic issues in Britain, saying: “Nobody wants to look into these.” “We just see the ungrounded accusations – why is it done this way? Why should our relationship be made worse by this?” The former Russian double agent Skripal and his daughter Yulia collapsed in Salisbury on 4 March after being exposed to novichok. Both have since recovered. On 30 June Charlie Rowley and his partner Dawn Sturgess fell ill not far from the Skripal attack after being exposed to the same nerve agent. Sturgess died on 8 July.

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Referred to the police. What are they going to do with this? At what point does the whole vote get nullified?

Vote Leave Fined For Breaking Electoral Law (BBC)

Brexit campaign group Vote Leave has been fined £61,000 and referred to the police after an Electoral Commission probe said it broke electoral law. The investigation found “significant evidence of joint working” between the group and another organisation – BeLeave – leading to it exceeding its spending limit by almost £500,000. Vote Leave also returned an “incomplete and inaccurate spending report”, with almost £234,501 reported incorrectly, and invoices missing for £12,849.99 of spending, the watchdog said. BeLeave founder Darren Grimes has also been fined and referred to the police for breaking the group’s spending limit by more than £665,000 and wrongly reporting the spending as his own.

Veterans for Britain were also found to have inaccurately reported a donation it received from Vote Leave and has been fined £250. Bob Posner, from the Electoral Commission, said: “The Electoral Commission has followed the evidence and conducted a thorough investigation into spending and campaigning carried out by Vote Leave and BeLeave. “We found substantial evidence that the two groups worked to a common plan, did not declare their joint working and did not adhere to the legal spending limits. These are serious breaches of the laws put in place by Parliament to ensure fairness and transparency at elections and referendums.”

He added: “Vote Leave has resisted our investigation from the start, including contesting our right as the statutory regulator to open the investigation. It has refused to cooperate, refused our requests to put forward a representative for interview, and forced us to use our legal powers to compel it to provide evidence. “Nevertheless, the evidence we have found is clear and substantial, and can now be seen in our report.”

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Like a full-time contortionist.

May Narrowly Heads Off Defeat After Caving In To Brexit Hardliners (G.)

Theresa May has narrowly seen off a Commons rebellion from Conservative remainers unhappy that she had caved in to hardline Brexiters by accepting their amendments to the customs bill. The government majority was reduced to just three votes on the two most controversial amendments after leading Tory remainer Anna Soubry complained that the prime minister had lost control of events by making concessions to the rightwing European Research Group of MPs. The most important of the four amendments from the ERG, chaired by Jacob Rees-Mogg, had been designed to frustrate May’s compromise proposals over customs arrangements and had initially been opposed by the government, until Downing Street made a sudden U-turn in the afternoon.

No 10 then concluded that all four amendments were “consistent with the Brexit white paper”, a decision that so incensed Tory remainers they vowed to vote against the amendments in Monday night’s Commons debate. One junior minister, Guto Bebb, resigned rather than support the ERG customs union amendment, which narrowly passed by 305 to 302. A total of 14 Tory remainers voted against the government, while three Labour MPs and former Labour MP Kelvin Hopkins voted the other way. A second ERG amendment, preventing the UK joining in with the EU’s VAT regime post-Brexit, passed 303 to 300.

A frustrated Soubry had told the Commons: “The only reason that the government has accepted these amendments is because it is frightened of somewhere in the region of 40 members of parliament – the hard, no-deal Brexiteers, who should have been seen off a long time ago and should be seen off.”

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Nice metaphor.

Brexit Is Like The Python That Swallowed An Alligator (Ind.)

About a year ago, I described the passage of Brexit through parliament as being like that regularly reappearing photograph of a Burmese python that tried to swallow a six-foot alligator whole and accidentally exploded. The alligator suffocated, the python’s head got blown off. That much is not contested. But apart from that, no one knows quite what happened in the hours before an amateur photographer chanced upon it. We must presume the alligator struggled til the last, and that is the stage of Brexit at which we have now arrived. Parliament embraced Brexit of its own free will, but now it cannot handle the monster coming down its oesophagus. And the monster itself does not want to die.

More than a year on from triggering Article 50, the point at which the teeth of the two beast’s teeth first touched, Theresa May had hoped she had found a way of easing its passage that might keep both alive. The so-called “Chequers deal”, which is not a deal at all but an agreed position among the cabinet, detonated the cabinet within moments of it being agreed to. None of which engages with the fact that the European Union was highly likely to reject the agreement anyway. David Davis has quit. Boris Johnson has quit. Justine Greening, the former education secretary who quit in January, has said the only way forward is a second referendum with three choices on the ballot paper (hard Brexit, no Brexit, or the least damaging Brexit the government can manage to get).

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No there there.

Theresa May Told Her Chequers Deal Is ‘Dead In The Water’ (Ind.)

Theresa May has faced taunts that her Chequers deal is “dead in the water” after caving in to a series of changes to customs rules demanded by pro-hard Brexit Tories. Plans for the UK to collect duties for the EU – which lie at the heart of the prime minister’s hopes for a deal with Brussels – will only go forward if the EU in turn agrees to collect them for the UK. There appears to be no prospect of the EU bowing to such a request, apparently throwing the hard-fought Chequers proposals up in the air after just 10 days. In the Commons, Ms May was accused of “dancing to the tune of the European Research Group” – the 60-80 strong organisation of Brexiteer MPs led by Jacob Rees-Mogg.

“By capitulating to their proposals on the Customs and [the] Trade Bill she is accepting that the Chequers deal is now dead in the water,” said Labour MP Stephen Kinnock. Ms May insisted he was “absolutely wrong”, telling MPs: “I would not have gone through all the work that I did to ensure that we reached that agreement only to see it changed in some way through these bills. They do not change that Chequers agreement.” Nevertheless, the Brexit white paper – published only four days ago – appeared to rule out a requirement for the EU to agree reciprocal arrangements. It said the two sides would have to “agree a mechanism for the remittance of relevant tariff revenue”, but added: “The UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

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Disturbing.

IRS To Revoke 362,000 Passports From US Citizens (Black)

About two and a half years ago, I told you about a particularly nasty piece of legislation that President Obama quietly signed into law towards the end of his administration. They called it the “FAST Act”, which stood for Fixing America’s Surface Transportation. Yet despite $300 billion earmarked for infrastructure repairs, they didn’t manage to fix very much of America’s surface transportation. The legislation did, however, have two major effects: 1) The FAST Act authorized the US government to plunder excess capital from the Federal Reserve… which is about as stupid as thing as anyone could possibly do. The Federal Reserve is America’s central bank; they control the value and fate of the US dollar… which is still the most dominant currency in the world.

You’d think that having some excess cash on the Federal Reserve’s balance sheet would be viewed as wise and conservative. But not Congress. These guys are so broke, they’ll grab every penny they can get. Even from their own central bank. So they buried a provision into the FAST Act demanding that the Federal Reserve hand over any excess capital to the Treasury Department at the end of every calendar year. They started doing that almost immediately, in December 2015. And in 2016. And in 2017. This is one of the reasons why, to this day, the Federal Reserve is borderline insolvent… which hardly inspires confidence. Now, I could go on for quite some time about what an idiotic idea this was. But believe it or not, there was an even worse section of the FAST Act– one they only started implementing recently:

2) Section 32101 of the FAST Act required the US State Department to revoke or deny the passport of any taxpayer that the IRS deems to have “seriously delinquent tax debt.” They define seriously delinquent tax debt as owing $50,000 or more. Well, it took them a couple of years, but the IRS has finally started enforcing this law. Earlier this month the IRS acknowledged that they had sent at least 362,000 names to the State Department to start revoking or denying passports. And that’s just the beginning. The IRS is sending these names out ‘in batches’, so there will be many more to follow. They hope to be finished by the end of the year.

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Washington DC, capital of cash.

Going Cashless Is Discriminatory (G.)

Mobile payments. Credit cards. Digital currencies. Going cashless seems to be a worldwide trend. In Belgium, it is illegal to buy real estate with cash. Some banks in Australia have eliminated cash from their branches. Sweden has seen its use of cash drop to less than 2% of all transactions, and the number could be heading even lower in the next few years. However, one city in the US is resisting that trend: Washington DC. In the nation’s capital cash is still king, and a new bill introduced this week wants to keep it that way. The Cashless Retailers Prohibition Act of 2018 would make it illegal for restaurants and retailers not to accept cash or charge a different price to customers depending on the type of payment they use.

City councilmember David Grasso, and five other councilmembers who co-introduced the bill, are responding to the recent tide of retailers in their city and around the country – like the salad chain Sweetgreen – who are no longer accepting cash. These retailers, which mostly serve upscale customers, say that going cashless speeds up transactions, improves customer service and makes for more accurate accounting. They also argue that having less cash lying around also minimizes the risk of crime and contributes to a safer environment for both their customers and employees.

But to some, not accepting cash is discriminatory. A report last year by the Washington City Paper found that 27% of people in the US would have trouble using only a credit card to purchase products, and that the percentage in Washington DC is even higher. “I’m concerned with more and more restaurants, businesses and shops going cashless because you’re systematically excluding a group of people who are already disadvantaged and disenfranchised,” Linnea Lassiter, an analyst at the DC Fiscal Policy Institute, told the paper. “And now they can’t have access to this restaurant?”

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When growth slows…

Netflix Stock Slammed As Subscriber Growth And Revenue Fall Short (MW)

Netflix posted weaker-than-expected second-quarter revenue and subscriber numbers Monday afternoon, sending its stock into a sharp dive during after-hours trading. Netflix shares fell about 14% in the extended session after the Los Gatos, Calif-based company announced it added 5.2 million streaming users in the second quarter, a substantial drop from the 6.2 million estimate the company provided in April. The company added 4.47 million international subscribers and 670,000 domestic subscribers, missing its April estimates of 5.9 million and 1.2 million.

The company reported a profit of $384 million, or 85 cents a share, topping the FactSet consensus of 79 cents a share and up from $66 million, or 15 cents a share, in the same quarter a year ago. Revenue rose to $3.91 billion from $2.79 billion the year before, just below the FactSet consensus of $3.94 billion. In a letter to shareholders, Netflix said the company had a “strong but not stellar” quarter, acknowledging the company had “over-forecasted” both domestic and global net subscriber additions and “acquisition growth was lower than we projected.”

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Doesn’t feel like the EU actually identifies the danger to society.

Airbnb Warned It Breaches EU Rules Over Pricing Policy (G.)

Airbnb has been found in breach of EU law and given until the end of the summer to ditch a range of practices, including that of belatedly applying additional fees to the prices it promotes online. The accommodation service has been accused by the European commission and national regulators of failing its customers and making the mistake of many global digital firms of “forgetting its responsibilities”. Vera Jourova, the commissioner for justice and consumers, told reporters in Brussels that the company had until the end of August to show it was reforming its ways or it could expect national regulators across Europe to launch coordinated action.

The commissioner said the prices displayed to those using the Airbnb website fail to reflect the fees and charges later passed on to the consumer, including cleaning costs. The site did not clearly identify if the offer of accommodation was being made by amateur hosts or professionals. The issue is important because the level of consumer rights differ according to the status of the owner, as do the health and safety requirements. The commissioner said Airbnb’s terms and conditions were unclear. She also said the company should put an end to its policy of seeking to tackle legal complaints made by its clients in courts outside the country where the complainant resides.

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Maybe the government can make a deal with Airbnb.

High Housing Costs Prompt Thousands of Greeks To Disclaim Inheritance (K.)

Thousands of properties are coming into the state’s possession not because they’re bogged down in debt, but simply because the people who inherit them are opting to give up the titles. According to real estate experts, more than 135,000 inheritances were disclaimed in 2017, because the beneficiaries were unable to pay the inheritance tax or they found the future financial demands of the property unbearable. The slump in the real estate market, in combination with the fact that many properties are suffering from neglect, meanwhile, are making it even harder for those who may be hoping to find a buyer before accepting their inheritance.

“Property has become a burden,” says Babis Haralambopoulos, a certified valuer, scientific consultant to Solum Property Solutions and former president of the Hellenic Valuation Institute. “Since the start of the crisis, residential properties have shed an average of 45 percent of their value, while there’s a trend toward stabilization right now.” Meanwhile, recent data from Eurostat showed that Greece had the highest housing costs as a percentage of disposable income among the European Union’s member-states. In 2016, the proportion of Greek households that spent more than 40 percent of their disposable income on housing costs came to 40.5 percent, which is almost four times the EU average of 11.1 percent.

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Jun 272018
 
 June 27, 2018  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , , ,  6 Responses »


Édouard Vuillard In bed 1891

 

Judge Orders Families Reunited Within 30 Days (AP)
17 US States Sue Trump Administration Over Family Separation (Ind.)
Democrats See Major Upset As Socialist Beats Top-Ranking US Congressman (G.)
How Long Can The Federal Reserve Stave Off the Inevitable? — PCR
Market Drop Prompts Trump To Offer China A Trade War “Olive Branch” (ZH)
US Asset Prices Divorced From Economic Reality More Than Ever (GMM)
IMF Sounds The Alarm Over Junk Bonds (ZH)
France And Germany Will Block May’s Single Market Plan, Says Spain (G.)
Merkel Calls For Direct Deals Between Countries To Fix Migration Crisis (R.)
Misuse Of Opioids Is A ‘Global Epidemic’ -UN (G.)
One Football Pitch Of Forest Lost Every Second In 2017 (G.)
‘There Is No Oak Left’: Are Britain’s Trees Disappearing? (G.)
‘Green Gold’: Pakistan Plants Hundreds Of Millions Of Trees (AFP)

 

 

Reason. The mother and child reunion is only a motion away.

Judge Orders Families Reunited Within 30 Days (AP)

A judge in California has ordered U.S. border authorities to reunite separated families within 30 days. If the children are younger than 5, they must be reunified within 14 days of the order, issued Tuesday. U.S. District Judge Dana Sabraw in San Diego issued the order in a lawsuit by the American Civil Liberties Union. The lawsuit involves a 7-year-old girl who was separated from her Congolese mother and a 14-year-old boy who was separated from his Brazilian mother.

Sabraw also issued a nationwide injunction on future family separations, unless the parent is deemed unfit. More than 2,000 children have been separated from their parents in recent weeks and placed in government-contracted shelters. President Donald Trump last week issued an executive order to stop the separation of families and said parents and children will instead be detained together.

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The ruling above seems to cover this?

17 US States Sue Trump Administration Over Family Separation (Ind.)

Seventeen US states and Washington DC are suing Donald Trump’s administration over its family separation policy at the US border. The lawsuit was filed by 18 Democratic Attorneys General and attempts to force the administration to reunite the approximately 2,000 separated children with their families. California Attorney General Xavier Becerra said in a statement that the policy to detain children away from parents was a “heartless political manoeuvre”. Though Mr Trump signed an executive order last week declaring that families would no longer be separated upon illegal entry into the US, the lawsuit stated the executive order is “so vague and equivocal that it is unclear when or if any changes will actually be made”.

The order did not reverse or end the underlying “zero tolerance” policy announced by US Attorney General Jeff Sessions was not ended. Families can also now be indefinitely detained and the policy still makes seeking asylum in the US a crime. Per US immigration law, people wanting the protected status must enter the US before applying for it. It stated that “family unity” will be maintained “where appropriate and consistent with law and available resources”. “Child internment camps in America…the Trump Administration has hit a new low. President Trump’s indifference towards the human rights of the children and parents who have been ripped away from one another is chilling,” Mr Becerra said.

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The choice of headlines I’ve seen for this looks weird. Someone tweeted a list of corporations that donate to Crowley. Needed a dozen tweets to cover them. Ocasio beat the system. But watch out: the system has now woken up. They never expected to lose. The big guns will now step in. Next up: Cynthia Nixon vs Cuomo. If she can pull that off, we’re in business.

Democrats See Major Upset As Socialist Beats Top-Ranking US Congressman (G.)

Joe Crowley, a 10-term Democrat pegged as his party’s next leader in Congress, lost his party’s New York congressional primary to a 28-year-old socialist, in one of the biggest upsets in recent American political history. With 98% reporting, Alexandria Ocasio-Cortez had 57.5% and Crowley had 42.5%, in a majority minority district that included parts of Queens and the Bronx Ocasio-Cortez, a Puerto-Rican American and former Bernie Sanders volunteer, defeated Crowley in his re-election bid Tuesday night, after hitting the incumbent on his ties to Wall Street and accusing him of being out of touch with his increasingly diverse district.

Crowley, head of the Queens county Democratic party and the fourth-ranking Democrat in the House of Representatives, was considered to be Nancy Pelosi’s likely successor as House speaker if she stepped down. [..] Ocasio-Cortez ran a grassroots campaign and made a surprise visit to the Mexican border on the eve of the election to emphasize her call to abolish the Immigration and Customs Enforcement agency (ICE). In contrast, Crowley was unwilling to go that far, simply calling the agency “fascist”.

Crowley had expressed confidence about the race in private conversations and as one national Democratic strategist told the Guardian: “The Crowley team did not raise red flags or ask allies for help with his primary.” Prior to 2018, Crowley had not even faced a primary since 2004, years before his opponent was even eligible to vote. He had raised over $3m for his campaign, 10 times the amount his opponent had.

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Tariffs on US companies?

How Long Can The Federal Reserve Stave Off the Inevitable? — PCR

When are America’s global corporations and Wall Street going to sit down with President Trump and explain to him that his trade war is not with China but with them? The biggest chunk of America’s trade deficit with China is the offshored production of America’s global corporations. When the corporations bring the products that they produce in China to the US consumer market, the products are classified as imports from China. Six years ago when I was writing The Failure of Laissez Faire Capitalism, I concluded on the evidence that half of US imports from China consist of the offshored production of US corporations. Offshoring is a substantial benefit to US corporations because of much lower labor and compliance costs.

Profits, executive bonuses, and shareholders’ capital gains receive a large boost from offshoring. The costs of these benefits for a few fall on the many—the former American employees who formerly had a middle class income and expectations for their children. In my book, I cited evidence that during the first decade of the 21st century “the US lost 54,621 factories, and manufacturing employment fell by 5 million employees. Over the decade, the number of larger factories (those employing 1,000 or more employees) declined by 40 percent. US factories employing 500-1,000 workers declined by 44 percent; those employing between 250-500 workers declined by 37 percent, and those employing between 100-250 workers shrunk by 30 percent.

These losses are net of new start-ups. Not all the losses are due to offshoring. Some are the result of business failures” (p. 100). In other words, to put it in the most simple and clear terms, millions of Americans lost their middle class jobs not because China played unfairly, but because American corporations betrayed the American people and exported their jobs. “Making America great again” means dealing with these corporations, not with China. When Trump learns this, assuming anyone will tell him, will he back off China and take on the American global corporations?

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Mnuchin wants less agressive policies.

Market Drop Prompts Trump To Offer China A Trade War “Olive Branch” (ZH)

One day after the market tanked followed media reports that the Trump administration would pursue new initiatives to limit Chinese investments in US tech industries, on Tuesday the president suggested that he will ease off demands for such new restrictions, and will rely instead on a 1988 law being updated by Congress that authorizes the government to review foreign investments for national security problems. Speaking to reporters at the White House, Trump said that “we have the greatest technology in the world, people come and steal it. We have to protect that and that can be done through CFIUS,” or the Committee on Foreign Investment in the U.S., which traditionally has screened foreign investments to see whether they endanger national security.

Trump also said that the recent WSJ article reporting that the administration was planning two further initiatives, in addition to CFIUS, to prevent Beijing from obtaining advanced U.S. technology, “a bad leak…probably just made up.” Why is this stated policy important? Because according to the WSJ it would represent a potential “olive branch” for Trump in the escalating trade war with China, and a signal that the US is willing to break the tit-for-tat escalation: If Mr. Trump’s decision holds through June 30, when the new policies are scheduled to be announced, it would represent a significant backing away from threats the president has made against China and a possible olive branch to Beijing before the July 6 impositon of tariffs on $34 billion of Chinese goods.

Meanwhile, lawmakers who have worked on a CFIUS reform bill have also been arguing in administration meetings that additional investment restrictions weren’t necessary given changes being made to CFIUS. Separately, the report notes that relying mainly on CFIUS — if that is the final decision — would be a big victory for Treasury Secretary Steven Mnuchin, National Economic Council Director Larry Kudlow and others who have tried to tamp down the burgeoning trade battle with China.

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Obese tails.

US Asset Prices Divorced From Economic Reality More Than Ever (GMM)

You would never know it listening to the market cheerleaders but asset prices, both real and financial, are, once again, at extreme valuation levels relative to the trend economy. The valuation reality coupled with the prevailing, but false, “don’t worry” market narrative sets us up for another major financial crisis. A third major crisis in 20 years? These are only supposed to happen once in every 100 or 1,000 or 10,000 years, so say the rocket scientists. Blame it on fat obese tails. The chart below illustrates that household net worth, as measured by real and financial assets minus liabilities, which just hit a record high at around $102 trillion, is, once again, totally divorced from the economy.

Note that one of the reasons why the highest level U.S. policymakers missed the last financial crisis is because they were too focused on this indicator, which also hit a record high in Q3 2007. They failed, or chose not to see, the massive leverage as the root cause driving up assets prices. Their error was twofold: 1) not fully recognizing or believing the risk of asymmetric mark-to-market, where asset prices are variable, while liabilities remain fixed, and 2) not understanding the economy had morphed into a giant asset-driven feedback loop, where the wealth effect drives growth (both consumption and investment confidence), which drives asset prices, which drives the wealth effect. Wash, rinse, repeat.

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Well, how timely.

IMF Sounds The Alarm Over Junk Bonds (ZH)

Ever since the start of 2018, an odd divergence has emerged in credit markets, where Investment Grade bonds have seen their spreads leak progressively wider, hitting levels not seen in 2 years, while the bid for higher yielding, and much more risky, junk bond debt has been seemingly relentless, with high yield spreads near all time lows. To be sure, many reasons have been offered, with Bank of America suggesting that IG weakness is “due to supply pressures in an environment of reduced demand that began in March and extended through last week, plus the Italian situation, which is about systemic risks running through the global IG financial system.”

Meanwhile, it believes the strength in HY is mostly due to the lack of supply of higher yielding paper. Whatever the suggested reasons, however, the underlying causes are two: an environment of artificially low interest rates created by central banks, and unyielding, pardon the pun, investor euphoria. In other words: a multi-year credit boom. And while the Fed’s “macroprudential regulation team” appears to have zero problems with what is going on in the world of junk bonds, the IMF has sounded the alarm on the troubling developments in junk bond land in particular, and capital markets in general.

In its The Chart of the Week, the IMF Blog shows the impact of a bad credit boom – one which the fund defines as followed by slower economic growth or even a recession – on economic growth in the years that follow. But first, it ask a basic question: what makes for a bad boom? The IMF’s answer: it is fueled by excessive optimism among investors. When the economy is doing well and everybody seems to be making money, some investors assume that the good times will never end. They take on more risk than they can reasonably expect to handle.

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Really, guys, you should send her packing. The damage accelerates.

France And Germany Will Block May’s Single Market Plan, Says Spain (G.)

Theresa May’s plan to protect British industry by keeping the UK in a single market for goods without respecting the free movement of people after Brexit will be rejected by an “angry” France and Germany, despite some sympathy within the EU to Downing Street’s cause, Spain’s foreign minister has said. The new Spanish government would also block such a political fix, Josep Borrell told the Guardian, ahead of both a summit of leaders in Brussels and a summer tour by the prime minister of EU capitals during which May hopes to convince leaders of her economic case. Of those member states who might see value in a deal on single market access for goods without free movement, Borrell said: “They will not win the battle. They have not enough power. Germany will say no, France will say no, Spain will say no.”

The government has been rocked by a series of warnings from industry, from Airbus to BMW, that companies will move out of the UK unless preferential access to the single market can be secured in the negotiations. Ministers have openly squabbled over how seriously they should take the threats. The business secretary, Greg Clark, urged his cabinet colleagues to “listen with respect” and the health secretary, Jeremy Hunt, called Airbus’s warnings “completely inappropriate”. The prime minister is expected to publish a white paper on the UK’s vision of the future relationship, including a proposal for regulatory alignment on goods, for the benefit of UK industry and European-wide supply chains, shortly after a meeting of the cabinet at Chequers, the prime minister’s country retreat, on 6 July.

UBS survey of 600 companies spells out Brexit “dividend”:
– 35% of companies plan to reduce UK investment post-Brexit
– 41% plan to move a large amount of capacity out of UK
– 42% plan to shift capacity to euro zone

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Too late. No unity.

Merkel Calls For Direct Deals Between Countries To Fix Migration Crisis (R.)

German Chancellor Angela Merkel said she will seek direct deals with separate EU states on migration, conceding the bloc had so far failed to find a joint solution to the issue threatening her government. Sixteen EU leaders met for emergency talks in Brussels hoping to get a deal for the full summit of all 28 states on 28 to 29 June. Ms Merkel said the meeting produced “a lot of goodwill” to resolve differences, but was clear smaller agreements may produce better results. “There will be bilateral and trilateral agreements, how can we help each other, not always wait for all 28 members,” she said.

Since Mediterranean arrivals spiked in 2015, when more than a million refugees and migrants reached the bloc, EU leaders have been at odds over how to handle them. The feud has weakened their unity and undermined Europe’s Schengen free-travel area. Wealthy Germany is where the newly-arrived mostly end up and Merkel is under pressure to curb the numbers. Her coalition partner is pushing for firmer action that could break her government. The talks were “frank and open,” but “we don’t have any concrete consequences or conclusions,” Spanish Prime Minister Pedro Sanchez said. French President Emmanuel Macron offered his backing for Ms Merkel’s proposal , saying the solution should be “European” but it could just be several states together.

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But the profits!

Misuse Of Opioids Is A ‘Global Epidemic’ -UN (G.)

The misuse of pharmaceutical opioids is fast becoming a “global epidemic”, with the largest quantities being seized in African countries for the second year in a row, according to a UN report. While huge attention has been paid to the opioid crisis in the US – where the misuse of prescription drugs like fentanyl dominates – figures released by the United Nations Office on Drugs and Crime has revealed seizures in Africa of opioids now account for 87% of the global total. Unlike in the US, the seizures – concentrated in west, central and north Africa – have largely consisted of the drug tramadol, followed by codeine.

The figures were disclosed in the latest UN world drug report, which noted that opioids were the most harmful global drug trend, accounting for 76% of deaths where drug-use disorders were implicated. The report said that while fentanyl and its analogues remain a problem in North America, tramadol – used to treat moderate and moderate-to-severe pain – has become a growing concern in parts of Africa and Asia. The report added that the global seizure of pharmaceutical opioids in 2016 was 87 tonnes, roughly the same as the quantities of heroin impounded that year.

The figures on pharmaceutical opioids were rivalled by global cocaine manufacture, which the agency said had reached the highest level ever reported in 2016, with an estimated 1,410 tonnes produced. Most of the world’s cocaine comes from Colombia, but the report also showed Africa and Asia emerging as cocaine trafficking and consumption hubs. From 2016-17, global opium production also jumped by 65% to 10,500 tonnes, the highest estimate recorded by the agency since it started monitoring global opium production nearly 20 years ago.

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They convert greenhouse gases into oxygen.

One Football Pitch Of Forest Lost Every Second In 2017 (G.)

The world lost more than one football pitch of forest every second in 2017, according to new data from a global satellite survey, adding up to an area equivalent to the whole of Italy over the year. The scale of tree destruction, much of it done illegally, poses a grave threat to tackling both climate change and the massive global decline in wildlife. The loss in 2017 recorded by Global Forest Watch was 29.4m hectares, the second highest recorded since the monitoring began in 2001. Global tree cover losses have doubled since 2003, while deforestation in crucial tropical rainforest has doubled since 2008. A falling trend in Brazil has been reversed amid political instability and forest destruction has soared in Colombia.

In other key nations, the Democratic Republic of Congo’s vast forests suffered record losses. However, in Indonesia, deforestation dropped 60% in 2017, helped by fewer forest fires and government action. Forest losses are a huge contributor to the carbon emissions driving global warming, about the same as total emissions from the US, which is the world’s second biggest polluter. Deforestation destroys wildlife habitat and is a key reason for populations of wildlife having plunged by half in the last 40 years, starting a sixth mass extinction.

“The main reason tropical forests are disappearing is not a mystery – vast areas continue to be cleared for soy, beef, palm oil, timber, and other globally traded commodities,” said Frances Seymour at the World Resources Institute, which produces Global Forest Watch with its partners. “Much of this clearing is illegal and linked to corruption.” Just 2% of the funding for climate action goes towards forest and land protection, Seymour said, despite the protection of forests having the potential to provide a third of the global emissions cuts needed by 2030. “This is truly an urgent issue that should be getting more attention,” she said. “We are trying to put out a house fire with a teaspoon.”

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No, trees are not an industrial resource. They are so much more.

‘There Is No Oak Left’: Are Britain’s Trees Disappearing? (G.)

England is running out of oak. The last of the trees planted by the Victorians are now being harvested, and in the intervening century so few have been grown – and fewer still grown in the right conditions for making timber – that imports, mostly from the US and Europe, are the only answer. “We are now using the oaks our ancestors planted, and there has been no oak coming up to replace it,” says Mike Tustin, chartered forester at John Clegg and Co, the woodland arm of estate agents Strutt and Parker. “There is no oak left in England. There just is no more.” Earlier this month, the government appointed the first “tree champion”, who will spearhead its plans to grow 11 million new trees, and conserve existing forests and urban trees.

Sir William Worsley, currently chairman of the National Forest Company, has been given the task of overseeing trees in England and Wales, including England’s iconic national tree, and ensuring that trees are not felled unnecessarily. Worsley is a former chief of the Country Land and Business Association, which represents landowners and rural businesses. Trees were once fundamental to the British economy, from the days of Magna Carta, a large section of which concerned forestry rights, to the “Hearts of Oak” centuries of the empire-building Royal Navy, up to more recent times when millions of homes were needed, and the Forestry Commission was set up immediately after the First World War to grow the material to make them, while providing jobs for returning soldiers.

Today, forestry is a tiny business and only about 13% of the UK is covered in forest, a vast improvement on the 5% after the First World War, but far less than the European average of more than 30%.

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That’s the spirit.

‘Green Gold’: Pakistan Plants Hundreds Of Millions Of Trees (AFP)

The change is drastic: around the region of Heroshah, previously arid hills are now covered with forest as far as the horizon. In northwestern Pakistan, hundreds of millions of trees have been planted to fight deforestation. In 2015 and 2016 some 16,000 labourers planted more than 900,000 fast-growing eucalyptus trees at regular, geometric intervals in Heroshah – and the titanic task is just a fraction of the effort across the province of Khyber Pakhtunkhwa. “Before it was completely burnt land. Now they have green gold in their hands,” commented forest manager Pervaiz Manan as he displayed pictures of the site previously, when only sparse blades of tall grass interrupted the monotonous landscape.

The new trees will reinvigorate the area’s scenic beauty, act as a control against erosion, help mitigate climate change, decrease the chances of floods and increase the chances of precipitation, says Manan, who oversaw the revegetation of Heroshah. Residents also see them as an economic boost – which, officials hope, will deter them from cutting the new growth down to use as firewood in a region where electricity can be sparse. “Now our hills are useful, our fields became useful,” says driver Ajbir Shah. “It is a huge benefit for us.” Further north, in Khyber Pakhtunkhwa’s Swat, many of the high valleys were denuded by the Pakistani Taliban during their reign from 2006 to 2009.

Now they are covered in pine saplings. “You can’t walk without stepping on a seedling,” smiles Yusufa Khan, another forest department worker. The Heroshah and Swat plantations are part of the “Billion Tree Tsunami”, a provincial government programme that has seen a total of 300 million trees of 42 different species planted across Khyber Pakhtunkhwa.

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Jun 222018
 
 June 22, 2018  Posted by at 8:08 am Finance Tagged with: , , , , , , , , , , , , ,  14 Responses »


Wassily Kandinsky Yellow-Red-Blue 1925

 

Could China’s Next Target Be the US Housing Market? (Forsyth)
Next Central Bank Puts QE Unwind on the Calendar (WS)
Eurogroup Deal For Greece Clinched After Marathon Session (K.)
IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)
Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)
Greek GDP Is Low, But Food Prices Are High (K.)
EU Is Getting Ready For No-Deal Brexit – Juncker (G.)
Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)
Energy Is The Primary Driver Of The Economy (EI)
Italy To Pick Up Migrants, Impound German Charity Ship (R.)
People Donate Millions To Help Separated Families (AP)
2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)
Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)
India Is Facing Its Worst-Ever Water Crisis (ZH)

 

 

They can’t really sell Treasuries. MBS, though…

Could China’s Next Target Be the US Housing Market? (Forsyth)

While so much attention is focused on foreign purchases of Treasuries, the big action has been in U.S. agencies, most of which consist of mortgage-backed securities from government-sponsored Ginnie Mae, Fannie Mae, and Freddie Mac. In April, overseas investors bought $20 billion of agencies, bringing their 12-month total to $186 billion, or over $100 billion more than Treasuries. Asia accounted for $160 billion of those purchases, including $24 billion from China. U.S. corporations also get key support for their borrowing habit from abroad. Foreign investors bought $128 billion of corporate bonds in the latest 12 months, although just $1.6 billion in April. As for equities, overseas investors bought $82 billion ($6 billion in the latest month).

The numbers show that, even more than Uncle Sam, U.S. home borrowers depend on the kindness of strangers. China could retreat from bolstering the American housing market merely not reinvesting the monthly MBS interest and principal payments, resulting in a stealth tightening of mortgage credit. The housing market is already in the doldrums, as May’s weaker-than-expected existing home sales at an annual rate of 5.43 million, 100,000 less than forecast and below April’s 5.45 million annual pace. That disappointing home sales pace comes with unemployment at just 3.8%. But with single-family home prices up 5.2% from a year ago, home sales are sluggish. A further push up in mortgage rates, already at seven-year highs, would further crimp this key sector of the U.S. economy.

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Do we see nerves there?

Next Central Bank Puts QE Unwind on the Calendar (WS)

Markets were surprised today when the Bank of England took a “hawkish” turn and announced that three out of nine members of its Monetary Policy Committee – including influential Chief Economist Andrew Haldane, who’d been considered dovish – voted to raise the Bank Rate to 0.75%, thus dissenting from the majority who kept it at 0.5%. This dissension, particularly by Haldane, communicated to the markets that a rate hike at the next meeting in August is likely. The beaten-down UK pound jumped. But less prominent was the announcement about the QE unwind. Like other central banks, the BoE heavily engaged in QE and maintains a balance sheet of £435 billion ($577 billion) of British government bonds and £10 billion ($13 billion) in UK corporate bonds that it had acquired during the Brexit kerfuffle.

Before it starts shedding assets on its balance sheet, however, the BoE wants to raise the Bank Rate enough to where it can cut it “materially” if needed, “reflecting the Committee’s preference to use Bank Rate as the primary instrument for monetary policy,” as it said. In this, it parallels the Fed. The Fed started its QE unwind in October 2017, after it had already raised its target range for the federal funds rate four times. The BoE’s previous guidance was that the QE unwind would start when the Bank Rate is “around 2%.” Back in the day when this guidance was given, NIRP had broken out all over Europe, and pundits assumed that the BoE would never be able to raise its rate to anywhere near 2%, and so the QE unwind could never happen.

Today the BoE moved down its guidance about the beginning of the QE unwind to a time when the Bank Rate is “around 1.5%.” The Fed’s target range is already between 1.75% and 2.0%. The Fed leads, other central banks follow. And by August 2, the BoE’s Bank Rate may be at 0.75%. From that point forward, the QE unwind may only be three rate hikes away.

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Many headlines talk about debt relief. But that’s not what this is. It’s just another bunch of loan extensions and a €15 billion new loan. There will be many more years of austerity and creditor oversight. No, the bailout has not been completed.

Eurogroup Deal For Greece Clinched After Marathon Session (K.)

After several hours of negotiations, Greek officials and representatives of the country’s international creditors reached an agreement on securing the sustainability of the country’s debt in the early hours of Friday. Greece is to receive a loan tranche of 15 billion euros (3.3 billion euros of which would be used to pay off part of the country’s debt to the ECB and IMF), European officials said. Greece will also get a 10-year extension for the repayment of its European Financial Stability Facility (EFSF) loans and an additional grace period of 10 years on interest payments. The extension of the repayment period of the EFSF loans and the size of the final bailout tranche had been a sticking points in the talks.

These two issues were the focus of several trilateral meetings between Greek Foreign Minister Euclid Tsakalotos and his French and German counterparts, Bruno Le Maire and Olaf Scholz. At a press conference announcing the details of the deal, European Economic and Financial Affairs Commissioner Pierre Moscovici spoke of a “historical moment for Greece” and said a new chapter was beginning for the country. He expressed “great satisfaction” in seeing Greece emerge from eight years of financial support.

“Tonight’s Eurogroup agreement achieves what we have been calling for, a credible, upfront set of measures, which will meaningfully lighten Greece’s debt burden, allow the country to stand on its own two feet, and reassure all partners and investors,” he said. Eurogroup President Mario Centeno struck a similar note. “This is it,” he said. “After eight long years, the Greek bailout has been completed.”

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The IMF has caved on debt relief. Even though it knows it must be accorded.

IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)

The IMF welcomed on Friday a deal on debt relief for Greece reached by Athens’ euro zone creditors saying it will improve debt sustainability in the medium term, but maintained reservations on the long term. Euro zone finance ministers earlier on Friday offered Greece a 10-year deferral and maturities extension on a large part of past loans as well as 15 billion euros in new credit to ensure Athens can stand on its own feet after it exits its third bailout in August. “The additional debt relief measures announced today will mitigate Greece medium-term financing risks and improve medium term debt prospects,” the IMF managing director Christine Lagarde told a news conference.

But she added that the fund will not join the expiring 86-billion-euro bailout as the time “has run out”, and maintained “reservations” on the long term sustainability of the Greek debt, which runs until 2060. The fund will begin assessing the sustainability of the Greek debt “as early as next week”, Lagarde said, adding that the fund will remain engaged in Greece and will participate to the monitoring of the Greek economic performance and reforms after the end of the program.

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“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece..”

Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)

Germany has earned around 2.9 billion euros in profit from interest rate since the first bailout for Greece in 2010. This is the official response of the Federal Government to a request submitted by the Green party in Berlin. The profit was transmitted to the central Bundesbank and from there to the federal budget. The revenues came mainly due to purchases of Greek government bonds under the so-called Securities Markets Program (SMP) of the European Central Bank (ECB). Previous agreements between the government in Athens and the eurozone states foresaw that other states will pay out the profits from this program to Greece if Athens would meet all the austerity and reform requirements.

However, according to Berlin’s response, only in 2013 and 2014 such funds have been transferred to the Greek State and the ESM. The money to the euro bailout landed on a seggregated account. As the Federal Government announced, the Bundesbank achieved by 2017 about 3.4 billion euros in interest gains from the SMP purchases. In 2013, approximately 527 million euros were transferred back to Greece and around 387 million to the ESM in 2014. Therefore, the overall profit is 2.5 billion euros. In addition, there are interest profits of 400 million euros from a loan from the state bank KfW.

“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece,” said Greens household expert Sven Christian Kindler said and demanded a debt relief for Greece. “It can not be that the federal government with billions of revenues from the Greek interest the German budget recapitalize,” Kindler criticized. “Greece has saved hard and kept its commitments, now the Eurogroup must keep its promise,” he stressed.

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And here’s why the Greek recovery story is simply falsehood.

Greek GDP Is Low, But Food Prices Are High (K.)

Greeks may be among the poorest citizens in the European Union, but that does not mean low prices for basic products and services in this country. According to figures published on Wednesday by Eurostat, Greece was the 17th most expensive country among the 28 EU member-states last year, with the general price level standing at 84 percent of the EU average. However, in the most basic category – food – price levels in Greece stood above the bloc’s average, having a significant negative impact on living standards. Eurostat figures had shown on Tuesday that the per capita GDP in Greece in 2017 amounted to just 67 percent of the EU average, while real private consumption stood 23 percent below the EU mean rate.

A key role in food prices remaining at such high levels – in spite of the decade-long crisis – has been played by a succession of hikes in the value-added tax: From a 9 percent rate on food imposed in 2009, many food products now bear a VAT rate of 24 percent, making Greece the 13th most expensive country for food across the bloc. High indirect taxes also explain the particularly high prices in tobacco and alcoholic beverages in Greece, which make this country the 12th most expensive in the EU in this category.

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A hard Brexit will be very unpretty. Airbus talked today about moving 14,000 jobs out of the UK. And they won’t be the last.

EU Is Getting Ready For No-Deal Brexit – Juncker (G.)

The EU needs to be realistic about the dangerous state of the Brexit negotiations and is preparing to deploy its trillion-pound budget to cushion the bloc from the prospect of a no-deal scenario, the European commission president has warned. With the two sides still far apart on the “hardest issues”, just days from a crunch leaders’ summit in Brussels, Jean-Claude Juncker told the Irish parliament on Thursday he was stepping up preparations for a breakdown in talks, and even drafting plans aimed at keeping the peace in Northern Ireland. The problem of avoiding a hard border with the Republic – said by the Irish taoiseach, Leo Varadkar, to be akin to a “riddle wrapped in an enigma” – is threatening to thwart all attempts to make progress on a wider deal.

With Theresa May refusing to countenance what Juncker described as the bloc’s “bespoke and workable solution”, of the Northern Ireland effectively staying in the customs union and single market, it was crucial for the 27 EU member states to prepare for the worst outcome, the commission president said. Juncker told Irish MPs and senators in a joint session of parliament in Dublin: “With pragmatism comes realism. As the clock to Brexit ticks down, we must prepare for every eventuality, including no deal. This is neither a desired nor a likely outcome. But it is not an impossible one. And we are getting ready just in case.

“We will use all the tools at our disposal, which could have a cushioning impact. The new long-term budget for our union from 2021 onwards has an in-built flexibility that could allow us to redirect funds if the situation arose. “We will also earmark €120m (£105m) for a new peace programme which has done so much in breaking down barriers between communities in Northern Ireland and the border counties.”

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More things coming to an end in Britain.

Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)

The United Kingdom, widely considered to be the birthplace of the modern incarnation of the public-private partnership (PPP), in which private firms are contracted to complete and manage public projects, could be one of the first countries to jettison the model. The collapse in January of 200-year old UK infrastructure group Carillion, whose outsized role in delivering public services earned it the moniker “the company that runs Britain,” has fueled concerns that other big outsourcing groups could soon follow in its doomed footsteps. Last week the CEO of Interserve, another large outsourcing group, revealed that the government has given the firm a red rating as a strategic supplier, meaning it has “significant material concerns” about the company’s finances.

Fears are growing that Carillion was not a one-off episode but rather the swan song of a deeply flawed and dying business model. Those fears were hardly assuaged by the release this week of a damning parliamentary report into the UK government’s practice of outsourcing public projects through so-called Private Finance Initiatives (PFIs). PFI deals were invented in 1992 by the Conservative government and then enthusiastically rolled out by the subsequent Labour government. The schemes usually involved large-scale public buildings such as new schools and hospitals which were previously funded by the UK Treasury. Under PFI they were put out to tender with bids invited from developers who put up the investment to build new schools, hospitals or other schemes and then leased them back.

[..] The Treasury’s incapacity to measure the actual benefits of PFI should be of grave concern to British taxpayers given that the interest rate of private-sector debt — these projects are debt financed — can be as much as 2 to 3.75 percentage points higher than the cost of government borrowing. Even if the government doesn’t enter into any new PFI-type deals, it will pay private companies £199 billion, including interest, between April 2017 until the 2040s for existing deals, in addition to some £110 billion already paid. That’s for 700 projects worth around £60 billion. British taxpayers could clearly “get a much better deal,” the report concludes.

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John Lounsbury posted this talk by Steve from late 2016 again. And why not? Economics denies the role of energy…

Energy Is The Primary Driver Of The Economy (EI)

Economic theory has failed to incorporate the role of energy in production for two centuries since the Physiocrats, according to Prof. Steve Keen. In this video he derives a production function that includes energy in an essential manner. It implies that economic growth has been driven by the increase in the energy throughput capabilities of machinery. Prof. Keen argues that all economic gain can be traced to the use of energy which we receive at no cost from the sun. Capital and labor participate in the economy only by use of this energy.

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The Dutch play a strange role in this.

Italy To Pick Up Migrants, Impound German Charity Ship (R.)

Italy appeared to relent on Thursday after at first refusing to accept 226 migrants on board a German charity rescue ship, saying later in the day it would take them in but would impound the vessel. Anti-immigrant interior minister Matteo Salvini initially said the Dutch-flagged ship Lifeline should take the people it plucked from the Mediterranean to the Netherlands and not Italy. But transport minister Danilo Toninelli, who oversees the coastguard, later said it was unsafe for the 32-metre vessel to travel such a great distance with so many people on board. “We will assume the humanitarian generosity and responsibility to save these people and take them onto Italian coastguard ships,” Toninelli said in a video posted on Facebook.

Earlier this month Salvini pledged to no longer let charity ships bring rescued migrants in Italy, leaving the Gibraltar-flagged Aquarius stranded at sea for days with more than 600 migrants until Spain offered them safe haven. The Dutch government denied responsibility for the vessel, something Toninelli said Italy would investigate. The Italian coastguard would escort Lifeline “to an Italian port to conduct the probe” and impound the ship, he said. Also on Thursday, the German charity Sea Eye which operates another Dutch-flagged ship, the Seefuchs, said in a statement it was ending its sea rescue mission after the Dutch government told them that it was no longer responsible for the vessel.

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Please make sure it’s spent well.

People Donate Millions To Help Separated Families (AP)

In an outpouring of concern prompted by images and audio of children crying for their parents, hundreds of thousands of people worldwide are donating to nonprofit organizations to help families being separated at the U.S.-Mexico border. Among those that have generated the most attention is a fundraiser on Facebook started by a Silicon Valley couple, who say they felt compelled to help after they saw a photograph of a Honduran toddler sobbing as her mother was searched by a U.S. border patrol agent. The fundraiser started by David and Charlotte Willner had collected nearly $14 million by Wednesday afternoon.

The Willners, who have a 2-year-old daughter, set up the “Reunite an immigrant parent with their child” fundraiser on Saturday hoping to collect $1,500 — enough for one detained immigrant parent to post bond — but money began pouring in and within days people had donated $5 million to help immigrant families separated under the Trump administration’s “zero-tolerance” policy that criminally prosecutes all adults caught crossing the border illegally. “What started out as a hope to help one person get reunited with their family has turned into a movement that will help countless people,” the couple said in a statement released by a spokeswoman Wednesday. The couple, who were early employees at Facebook, declined to be interviewed.

“Regardless of political party, so many of us are distraught over children being separated from their parents at the border.” The money collected from more than 300,000 people in the United States and around the world will be given to the Refugee and Immigrant Center for Education and Legal Services, or RAICES, a Texas nonprofit that that offers free and low-cost legal services to immigrants.

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South Korean President Moon Jae-in doesn’t sit still.

2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)

North and South Korean officials are meeting to arrange the first reunions in three years between families divided by the 1950-53 Korean War. Friday’s meeting at the North’s Diamond Mountain resort comes as the rivals take reconciliation steps amid a diplomatic push to resolve the North Korean nuclear crisis. Seoul’s Unification Ministry said the meeting will discuss ways to carry out an agreement on the reunions made at a summit between North Korean leader Kim Jong Un and South Korean President Moon Jae-in. The two summits between Kim and Moon have opened various channels of peace talks between the Koreas, including military talks for reducing tensions across their tense border and sports talks for fielding combined teams at the upcoming Asian Games in Indonesia.

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Even if we don’t shoot them, we find other ways to kill them off.

Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)

High levels of tourism can lead to a dramatic reduction in the number of cheetahs able to raise their young to independence, new research has found. A study in Kenya’s Maasai Mara savannah found that in areas with a high density of tourist vehicles, the average number of cubs a mother cheetah raised to independence was just 0.2 cubs per litter – less than a tenth of the 2.3 cubs per litter expected in areas with low tourism. Dr Femke Broekhuis, a researcher at Oxford University and the author of the study, surveyed cheetahs in the reserve between 2013 and 2017 to assess how the frequency of tourist vehicles affected the number of cheetah cubs that survived to adulthood.

“During the study there was no hard evidence of direct mortality caused by tourists,” such as vehicles accidentally running over cubs, Broekhuis said. “It is therefore possible that tourists have an indirect effect on cub survival by changing a cheetah’s behaviour, increasing a cheetah’s stress levels or by minimising food consumption.” Broekhuis said she has seen as many as 30 vehicles around a single cheetah at the same time. “The most vehicles that we recorded at a cheetah sighting was 64 vehicles over a two-hour period,” she said.

Too many tourist vehicles can reduce a cheetah’s hunting success rate, the study suggests, and even if the hunt is successful, the disturbance from tourists could cause a female to abandon her kill, making her less likely to be able to provide for her young. Broekhuis said it was “crucial that strict wildlife viewing guidelines are implemented and adhered to,” and suggested limiting the number of vehicles around a cheetah to five and not allowing them to get any closer than 30 metres.

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The shape of things to come.

India Is Facing Its Worst-Ever Water Crisis (ZH)

India is facing its worst-ever water crisis, with some 600 million people facing acute water shortage, a government think-tank says. The Niti Aayog report, which draws on data from 24 of India’s 29 states, says the crisis is “only going to get worse” in the years ahead. Around 200,000 Indians die every year because they have no access to clean water, according to the report. And as The BBC reports, many end up relying on private water suppliers or tankers paid for the by the government. Winding queues of people waiting to collect water from tankers or public taps is a common sight in Indian slums. Indian cities and towns regularly run out water in the summer because they lack the infrastructure to deliver piped water to every home.

• 600 million people face high-to-extreme water stress. • 75% of households do not have drinking water on premise. 84% rural households do not have piped water access. • 70% of our water is contaminated; India is currently ranked 120 among 122 countries in the water quality index. India faces more than one problem – all compounding the nation’s crisis: Droughts are becoming more frequent, creating severe problems for India’s rain-dependent farmers (~53% of agriculture in India is rainfed17). When water is available, it is likely to be contaminated (up to 70% of our water supply), resulting in nearly 200,000 deaths each year.

Interstate disagreements are on the rise, with seven major disputes currently raging, pointing to the fact that limited frameworks and institutions are in place for national water governance. And that means massive problems lie ahead… 40% of the Indian population will have no access to drinking water by 2030 with 21 cities running out of groundwater by 2020 – affecting 100 million people which will cut 6% from GDP by 2050. What remains alarming is that the states that are ranked the lowest – such as Uttar Pradesh and Haryana in the north or Bihar and Jharkhand in the east – are also home to nearly half of India’s population as well the bulk of its agricultural produce.

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Jun 082018
 


B-25s fly past erupting Vesuvius, Italy 1944

 

Why Bringing Assange Home Would Be The Best Possible Thing For Australia (CJ)
Julian Assange Gets Embassy Visit From Australian Officials (ITV)
Ben Bernanke: US Economy To Go Off The Cliff In 2020 (ZH)
The Return Of King Dollar Could Create A Feeding Frenzy For US Stocks (MW)
Trouble Brewing in Emerging Markets (Rickards)
Deutsche Bank’s Junk Bond Firesale (ZH)
China Trade Surplus Falls, But US Gap Widens (MW)
Argentina Clinches $50 Billion IMF Financing Deal (R.)
Welcome To The Post-Westphalian World (Escobar)
Turkey Suspends Migrant Deal With Greece (R.)
Mediterranean A ‘Sea Of Plastic’ (AFP)
All UK Mussels Contain Plastic And Other Contaminants (Ind.)

 

 

Caitlin Johnstone: “A beautiful continent where the Aboriginal Dreamtime has been paved over with suburbs and shopping centers.”

Why Bringing Assange Home Would Be The Best Possible Thing For Australia (CJ)

Well I’ll be damned, it’s about time. According to a new report by the Sydney Morning Herald, officials from Australia’s High Commission have just been spotted leaving the Ecuadorian embassy in London, accompanied by Julian Assange’s lawyer Jennifer Robinson. Robinson confirmed that a meeting had taken place, but declined to say what it was about “given the delicate diplomatic situation.” So, forgive me if I squee a bit. I am aware how subservient Australia has historically been to US interests, I am aware that those US interests entail the arrest of Assange and the destruction of WikiLeaks, and I am aware that things don’t often work out against the interests of the US-centralized empire. But there is a glimmer of hope now, coming from a direction we’ve never seen before. A certain southerly direction.

If the Australian government stepped in to protect one of its own journalists from being persecuted by the powerful empire that has dragged us into war after war and turned us into an asset of the US war/intelligence machine… well, as an Australian it makes me tear up just thinking about it. It has been absolutely humiliating watching my beloved country being degraded and exploited by the sociopathic agendas of America’s ruling elites, up to and including the imprisonment and isolation of one of our own, all because he helped share authentic, truthful documents exposing the depraved behaviors of those same ruling elites. I have had very few reasons to feel anything remotely resembling patriotism lately. If Australia brought Assange home, this would change.

We Australians do not have a very clear sense of ourselves; if we did we would never have stood for Assange’s persecution in the first place. We tend to form our national identity in terms of negatives, by the fact that we are not British and are not American, without any clear image about what we are. A bunch of white prisoners got thrown onto a gigantic island rich with ancient indigenous culture, we killed most of the continent’s inhabitants and degraded and exploited the survivors [..] That’s pretty much our entire nation right now. A beautiful continent where the Aboriginal Dreamtime has been paved over with suburbs and shopping centers.

[..] Bringing Julian Assange home could be the first step to giving ourselves a bright, shining image of who we are and what we stand for. At the moment, Australia is a lifeless vassal state hooked up to the US power establishment with our every orifice and resource being used to feed the corporatist empire. Anesthetized to the eyeballs and in a state of total submission, the return of Julian might just be the little spark we need to get the old ticker pumping for itself again. Finally standing up for ourselves, for what’s right, and for the things that Julian stands for might just be the very thing we need as a nation to discover who we really are again.

Bring him home. It’s time.

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It must have been so strange for him. How can he trust these people?

Julian Assange Gets Embassy Visit From Australian Officials (ITV)

WikiLeaks founder Julian Assange has been visited by officials from the Australian High Commission. Two officials went to the Ecuadorian Embassy in London where Mr Assange has been living for almost six years. His internet and phone connections were cut off by the Ecuadorian government six weeks ago and he was denied visitors. The Australian-born campaigner fears being extradited to the US if he leaves the embassy and being questioned about the activities of WikiLeaks. It is believed to be the first time officials from the Australian High Commission in London have visited him.

Jennifer Robinson, a member of Mr Assange’s legal team, said: “I can confirm we met with Australian government representatives in the embassy today. “Julian Assange is in a very serious situation, detained without charge for seven-and-a-half years. “He remains in the embassy because of the risk of extradition to the US. “That risk is undeniable after numerous statements by Trump administration officials, including the Director of the CIA and the US attorney-general. “Given the delicate diplomatic situation we cannot comment further at this time.”

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He probably doesn’t get the irony in contradicting himself.

Ben Bernanke: US Economy To Go Off The Cliff In 2020 (ZH)

Speaking at the American Enterprise Institute, Bernanke echoed Bridgewater’s biggest concern about the sugar high facing the US economy for the next 18 months, saying that the stimulative impact from Trump’s $1+ trillion fiscal stimulus “makes the Fed’s job more difficult all around” because it’s happening at a time of very low unemployment; it also means that the more supercharged the economy gets thanks to the fiscal stimulus, the greater the fall will be when the hangover hits. “What you are getting is a stimulus at the very wrong moment,” Bernanke said Thursday during a policy discussion at the American Enterprise Institute, a Washington think tank. “The economy is already at full employment.”

Stealing further from the Bridgewater note, Bernanke said that while the stimulus “is going to hit the economy in a big way this year and next year and then in 2020 Wile E. Coyote is going to go off the cliff, and it’s going to look down” just when the US economy collides head on with what Bridgewater called “an unsustainable set of conditions.” The irony here is delightful: after all it was Ben Bernanke who consistently blamed Congress for not doing enough to jumpstart the economy during his time in office – a core topic of his 2015 memoir “The Courage to Act: A Memoir of a Crisis and Its Aftermath”; it is the same Bernanke who three years later is now blaming the President and Congress for doing too much. Here is the NYT on the very topic:

“Congress is largely responsible for the incomplete recovery from the 2008 financial crisis, Ben S. Bernanke, the former Federal Reserve chairman, writes in a memoir published on Monday. Mr. Bernanke, who left the Fed in January 2014 after eight years as chairman, says the Fed’s response to the crisis was bold and effective but insufficient. “I often said that monetary policy was not a panacea — we needed Congress to do its part,” he says. “After the crisis calmed, that help was not forthcoming.” And now that Congress has more than done its part, Bernanke predicts collapse in under 2 years.

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It’s starting to feel that way.

The Return Of King Dollar Could Create A Feeding Frenzy For US Stocks (MW)

While Wall Street stocks may well be on their way to fresh highs, the dollar has been taking hits from all comers. That buck weakness is largely due to speculation the ECB may be nearing its own quantitative-easing unwind. The dollar is also sagging a bit as investors fret about the upcoming G-7 and Trump-Kim Jong Un meetings next week. But try to imagine a not-so-distant future, where King Dollar sits on the Iron Throne, while the world burns in chaos. That’s the vision laid out in our call of the day from Santiago Capital CEO Brent Johnson, who predicts the dollar will go “much, much higher” over the next one to two years. That in turn should trigger a global currency crisis and drive investors into U.S. stocks, he argues.

“What it means is we haven’t seen the blowoff top yet. I think equities are going a lot higher. This isn’t a Polyanna view — I’m not saying to go out and buy equities because things are good. I’m saying buy equities because things are bad,” says Johnson in a recent interview with Real Vision . Johnson sees big blowback from the Fed’s unwinding of quantitative easing, already underway and well ahead of the rest of the world’s central banks. That will leave fewer dollars sloshing around the global financial system, even as the world still has a big need for them. He estimates demand for the buck tops $1 trillion a year, just to pay interest on dollar-based debt.

As the Fed tightens and injects less liquidity into the system, it will cause the dollar to go higher and higher, driving more investors toward the buck and then U.S. stocks as well. And a super strong dollar will just cause chaos elsewhere, as other currencies crumble. Just ask emerging-market central bankers how hot it’s getting in the kitchen right now. In Johnson’s opinion, global financial trade revolves around the dollar, which is why it matters so much if it decides to take off in a big way. “And when that money flows into the dollar, it eventually goes into U.S. assets, and I think it is going to push equities to all-time highs,” he says.

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“The U.S. will need to borrow over $3 trillion of new money in the next three years in addition to rolling over the existing $21 trillion in U.S. Treasury debt.”

Trouble Brewing in Emerging Markets (Rickards)

Hot money has been heading out of stocks and moving in the direction of government bonds, where higher risk-adjusted returns await. With this market backdrop in mind, what are the prospects for emerging markets in the months ahead? Outflows from EM stocks have just begun and are set to accelerate dramatically in the months ahead. This could lead to a full-blown emerging-market debt crisis with some potential to morph into a global liquidity crisis of the kind last seen in 2008, possibly worse. Some of the main drivers of this outflow from EMs are:

• China has begun cracking down on excessive leverage, zombie companies and shadow banking. The result will be a slowdown in growth in the world’s second- largest economy as the Communist Party tries to bring a credit bubble in for a soft landing. If they fail, the result will be worse than a slowdown; it could be a made- in-China credit crisis

• President Trump has launched a trade war. Major U.S. trading partners such as China, Canada and Mexico are in the cross hairs. Retaliation by those trading partners will be quick in coming. This trade war is another head wind for world growth and will put added stress on EM exports to developed economies

• The U.S. budget deficit is out of control. The U.S. will need to borrow over $3 trillion of new money in the next three years in addition to rolling over the existing $21 trillion in U.S. Treasury debt. The Federal Reserve is no longer monetizing this debt and is actually reducing its holdings of U.S. Treasuries by shrinking the base money supply and deleveraging its balance sheet. This debt will find buyers at progressively higher interest rates. Since central banks are no longer buyers, private parties will have to buy this debt. Those private buyers will have to sell stocks in developed and emerging markets to have the liquidity to buy government bonds

This is an extremely potent combination. Slower growth in China, a global trade war and an epic portfolio rebalancing from stocks to government bonds will sink U.S. and emerging-market stocks. The best case will be a 30% drawdown in stocks. The worst case will be a new global liquidity crisis that makes 2008 look like a warm-up for the main event.

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The most desperate bank in the world.

Deutsche Bank’s Junk Bond Firesale (ZH)

Deutsche Bank is seeking to sell its portfolio of non-investment grade energy loans, worth about $3 billion, according to people with knowledge of the matter.

The potential firesale comes as Deutsche’s short-dated CDS (counterparty risk) is soaring..

And comes as European HY Energy debt is weakening notably and US HY Energy is as good as it gets… Bloomberg reports that Deutsche is planning to sell the loan book as a whole and has marketed it to North American and European peers, said one of the people. The portfolio is expected to sell for par value, said the people, who asked not to be identified because they weren’t authorized to speak publicly; good luck with that! The bank’s energy business is expected to wrap up on June 30, one of the people said. The bank has been an active lender in the energy space in the past year, participating in the financing of companies including Peabody Energy Corp. and Coronado Australian Holdings Pty., according to data compiled by Bloomberg.

So to summarize: Moody’s is warning that when the economy weakens we will see an avalanche of defaults like we haven’t seen before; Corporate debt-to-GDP and investor risk appetite is reminding a lot of veterans of previous credit peaks; and now the most desperate bank in the world is offering its whole junk energy debt book in a firesale… just as high yield issuance starts to slump. All of which raises more than a single hair on the back of our previous lives in credit necks… and reminds us of this…

Thank you all for coming in a little early this morning. I know yesterday was pretty bad and I wish I could say that today is gonna be less so, but that isn’t gonna be the case. Now I’m supposed to read this statement to you all here, but why don’t you just read it on your own time and I’ll just tell you what the fuck is going on here. I’ve been here all night… meeting with the Executive Committee. And the decision has been made to unwind a considerable position of the firm’s holdings in several key asset classes. The crux of it is… in the firms thinking, the party’s over as of this morning. “For those of you who’ve never been through this before, this is what the beginning of a fire sale looks like.” – Sam Rogers, Margin Call

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“Concerns about more tariffs ahead likely caused some companies to front-load shipments..”

China Trade Surplus Falls, But US Gap Widens (MW)

China’s trade surplus narrowed in May on strong imports, through the gap with the U.S. widened–in part, some economists said, because of concerns that trade tensions could worsen in the months ahead. China reported a trade surplus of $24.92 billion last month, according to customs data released Friday, narrower than April’s $28.78 billion and the $32.6 billion forecast in a poll of economists. Imports were up 26% from a year earlier–driven by rising oil prices and bigger purchases of factory inputs, some economists said–accelerating from April’s 21.5% and beating forecasts. The higher-than-expected figure came after Beijing pledged to its trading partners to increase purchases and narrow trade gaps.

Stripping out price effects, Julian Evans-Pritchard, an economist with Capital Economics, estimated that import volumes in May were still up a seasonally adjusted 5.2% from April, reversing most of the decline since the start of 2018. The increase suggests that industrial activity remains strong following the easing of wintertime pollution controls, he said. Washington and Beijing have skirmished over trade this year, increasing tariffs on some products and threatening to do so on tens of billions of dollars in other goods. Beijing in recent weeks extended an olive branch, announcing plans to increase purchases from abroad and reduce tariffs on automobiles and some consumer products ranging from food and cosmetics.

Even so, China’s trade surplus with the U.S. in May was up 11% from April, at $24.58 billion, according to Friday’s data. Concerns about more tariffs ahead likely caused some companies to front-load shipments, said Liu Xuezhi, an economist with Bank of Communications.

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Shackles.

Argentina Clinches $50 Billion IMF Financing Deal (R.)

Argentina and the International Monetary Fund said on Thursday they reached an agreement for a three-year, $50 billion standby lending arrangement, which the government said it sought to provide a safety net and avoid the frequent crises of the country’s past. Argentina requested IMF assistance on May 8 after its peso currency weakened sharply in an investor exodus from emerging markets. As part of the deal, which is subject to IMF board approval, the government pledged to speed up plans to reduce the fiscal deficit even as authorities now foresee lower growth and higher inflation in the coming years.

The deal marks a turning point for Argentina, which for years shunned the IMF after a devastating 2001-2002 economic crisis that many Argentines blamed on IMF-imposed austerity measures. President Mauricio Macri’s turn to the lender has led to protests in the country. “There is no magic, the IMF can help but Argentines need to resolve our own problems,” Treasury Minister Nicolas Dujovne said at a news conference. Dujovne said he expected the IMF’s board to approve the deal during a June 20 meeting. After that, he said he expects an immediate disbursement of 30% of the funding, or about $15 billion. Argentina will seek to reduce its fiscal deficit to 1.3% of GDP in 2019, down from 2.2% previously, Dujovne said. The deal calls for fiscal balance in 2020 and a fiscal surplus of 0.5% of GDP in 2020.

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Overview of all initiatives to move away from western dominance.

Welcome To The Post-Westphalian World (Escobar)

In his latest, avowedly “provocative” slim volume, Has the West Lost It? former Singaporean ambassador to the UN and current Professor in the Practice of Public Policy at the National University, Kishore Mahbubani frames the key question: “Viewed against the backdrop of the past 1,800 years, the recent period of Western relative over-performance against other civilizations is a major historical aberration. All such aberrations come to a natural end, and that is happening now.” It is enlightening to remember that at the Shangri-la Dialogue two years ago, Professor Xiang Lanxin, director of the Centre of One Belt and One Road Studies at the China National Institute for SCO International Exchange and Judicial Cooperation, described BRI as an avenue to a ‘post-Westphalian world.’

That’s where we are now. Western elites cannot but worry when central banks in China, Russia, India and Turkey actively increase their physical gold stash; when Moscow and Beijing discuss launching a gold-backed currency system to replace the US dollar; when the IMF warns that the debt burden of the global economy has reached $237 trillion; when the Bank for International Settlements (BIS) warns that, on top of that there is also an ungraspable $750 trillion in additional debt outstanding in derivatives. Mahbubani states the obvious: “The era of Western domination is coming to an end.” Western elites, he adds, “should lift their sights from their domestic civil wars and focus on the larger global challenges. Instead, they are, in various ways, accelerating their irrelevance and disintegration.”

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The Greek court system works.

Turkey Suspends Migrant Deal With Greece (R.)

Turkey has suspended its migrant readmission deal with Greece, Foreign Minister Mevlut Cavusoglu was quoted as saying by state-run Anadolu agency, days after Greece released from prison four Turkish soldiers who fled there after a 2016 attempted coup. The four soldiers were released on Monday after an order extending their custody expired. A decision on their asylum applications is still pending. “We have a bilateral readmission agreement. We have suspended that readmission agreement,” Cavusoglu was quoted as saying, adding that a separate migrant deal between the EU and Turkey would continue. Under the bilateral deal signed in 2001, 1,209 foreign nationals have been deported to Turkey from Greece in the last two years, data from the Greek citizens’ protection ministry showed.

Cavusoglu was quoted as saying that he believed the Greek government wanted to resolve the issue about the soldiers but that Greek judges were under pressure from the West. “The Greek government wants to resolve this issue. But we also see there is serious pressure on Greece from the West. Especially on Greek judges,” Cavusoglu was quoted as saying. The eight soldiers fled to Greece following the July 2016 failed coup in Turkey. Ankara has demanded they be handed over, accusing them of involvement in the abortive coup. Greek courts have rejected the extradition request and the soldiers have denied wrongdoing and say they fear for their lives. In May, Greece’s top administrative court rejected an appeal by the Greek government against an administrative decision by an asylum board to grant asylum to one of the Turkish soldiers.

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Worst offender? Turkey.

Mediterranean A ‘Sea Of Plastic’ (AFP)

The Mediterranean could become a “sea of plastic”, the WWF warned on Friday (June 8) in a report calling for measures to clean up one of the world’s worst affected bodies of water. The WWF said the Mediterranean had record levels of “micro-plastics,” the tiny pieces of plastic less than 5mm in size which can be found increasingly in the food chain, posing a threat to human health. “The concentration of micro-plastics is nearly four times higher” in the Mediterranean compared with open seas elsewhere in the world, said the report, “Out of the Plastic Trap: Saving the Mediterranean from Plastic Pollution.” The problem, as all over the world, is simply that plastics have become an essential part of our daily lives while recycling only accounts for a third of the waste in Europe.

Plastic represents 95 per cent of the waste floating in the Mediterranean and on its beaches, with most coming from Turkey and Spain, followed by Italy, Egypt and France, the report said. To tackle the problem, there has to be an international agreement to reduce the dumping of plastic waste and to help clear up the mess at sea, the WWF said. All countries around the Mediterranean should boost recycling, ban single-use plastics such as bags and bottles, and phase out the use of micro plastics in detergents or cosmetics by 2025. The plastics industry itself should develop recyclable and compostable products made out of renewable raw materials, not chemicals derived from oil.

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Bon appetit.

All UK Mussels Contain Plastic And Other Contaminants (Ind.)

All mussels sampled from UK coastlines and supermarkets were found to contain tiny shards of plastic and other debris in a new study. The scientists behind the report said microplastic consumption by people eating seafood in Britain was likely “common and widespread”. Though they were less certain about the resulting impact on human health, the research team emphasised the importance of further studies to determine any potential harm as a result of people eating plastic. In samples of wild mussels from eight coastal locations around the UK and eight unnamed supermarkets, 100 per cent were found to contain microplastics or other debris such as cotton and rayon.

Every 100 grams of mussels eaten contains an estimated 70 pieces of debris, according to the researchers, whose study is published in the journal Environmental Pollution. Mussels feed by filtering seawater through their bodies, meaning they ingest small particles of plastic and other materials as well as their food. There was more debris in the wild mussels, which were sampled from Edinburgh, Filey, Hastings, Brighton, Plymouth, Cardiff and Wallasey, than in the farmed mussels bought in shops. But mussels from the supermarkets, which came from various places around the world, had more particles in them if they had been cooked or frozen than if they were freshly caught, the study found.

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May 312018
 


Vincent van Gogh The sower 1888

 

Liquidity Crisis Coming: Here, There, Everywhere (Mish)
The Trump Effect Is Keeping Bull Market Alive – Robert Shiller (CNBC)
Global Growth Too Dependent On Cheap Borrowing – OECD (G.)
The Euro Has To Be Abandoned If Europe Is To Be Saved (Syll)
Italy Crisis: Workers Are Paying For Decisions Made Nearly 30 Years Ago (Clark)
Italy Crisis Dents Greek Hopes Of Returning To Bond Markets (G.)
Eurozone, IMF Seek Last-Minute Deal On Greek Debt Relief At G7 This Week (R.)
Fed Proposes Changes To Rule Limiting Risky Trading On Wall Street (AP)
US To Hit EU With Steel And Aluminum Tariffs (G.)
Abe Slams US Vehicle Tariff Hikes As ‘Unacceptable’ (JT)
George Osborne’s London Evening Standard Sells Its Editorial Independence (OD)
Bayer Wins US Nod For Monsanto Deal To Create Agrochemical Giant (R.)
The British Countryside Is Being Killed By Herbicides And Insecticides (G.)

 

 

Nuts all around.

Liquidity Crisis Coming: Here, There, Everywhere (Mish)

The problem is global. Central bank actions explain most of what you need to know. Italian bonds provide a good example. Despite the recent, massive selloff in Italian bonds, 10-year Italian bonds still trade at roughly the same yield as US 10-year bonds. Is there no default risk? No eurozone exit risk? Of course there is. But those bonds trade where they do because the ECB is engaged in QE to a far greater extent than the the Fed ever did. How nuts is that? 88% of the S&P is with Vanguard, BlackRock, and State Street. How nuts is that? Close to $7 trillion in bonds trade with a negative yield. The figure was close to $10 trillion at one point. How nuts is that?

According to LCD, covenant-lite loan now account for a record 75% of the roughly $970 billion in outstanding U.S leveraged loans. Covenant-lite agreements vary, but they allow things like paying interest with more debt rather than cash or skipping repayments entirely for periods of time. How nuts is that? This is totally nuts, across the board. Puplava calls it “mindless”. I suspect he would be the first to admit that he seriously understated the concern. My “totally nuts” position is also too mild, but I also struggle for the precise words. A global liquidity crisis looms. It is entirely central-bank sponsored. Just don’t expect me, Puplava, or anyone else to tell you precisely when the crisis will hit. But it will. And when it does, don’t fool yourself into believing that you can necessarily escape in time.

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How to keep everything overpriced.

The Trump Effect Is Keeping Bull Market Alive – Robert Shiller (CNBC)

Nobel Prize-winning economist Robert Shiller hasn’t been the most optimistic voice on Wall Street, but he isn’t writing off the bull market. His chief reason: President Donald Trump’s pro-business influence. “There is a sort of optimism about the markets under Trump, and that’s continuing. I don’t see a reason for it about to change,” the Yale professor said Tuesday on CNBC’s “Trading Nation.” “There’s something about how the world is reacting to the president. Something about his self-confidence which is gradually lifting our spirits.” Shiller believes the momentum is so powerful, it’s essentially propping up a bull market that is getting long in the tooth.

“We’ve seen an overpriced stock market. We’ve seen concerns about that for years now,” he said. Shiller acknowledged it’s definitely possible the U.S. stock market could generate gains this year, but he warned the Trump effect “is not a very reliable thing.” So, he said the best strategy is to diversify abroad in this environment. “If you have been overexposed to the United States in your portfolio, this is a time to reconsider that,” Shiller said. “Not to pull out, but to balance things … Europe is cheaper than the U.S..”

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These clowns really believe this: “self-sustaining growth”.

Global Growth Too Dependent On Cheap Borrowing – OECD (G.)

Unemployment will drop to its lowest level since 1980 across the world’s richest nations, but global growth remains dependent on cheap borrowing and government spending, the Organisation for Economic Cooperation & Development (OECD) has warned in its latest global economy health check. The rise of tit-for-tat protectionist trade barriers, the return of volatile financial markets, and soaring oil prices also spell trouble for the global economy as it heads towards the 10-year anniversary of the 2008 banking collapse, the OECD said.

“The economic expansion is set to continue for the coming two years, and the short-term growth outlook is more favourable than it has been for many years,” said Angel Gurría, secretary general of the OECD, the Paris based thinktank for the world’s 35 richest nations, including the US, Britain, Brazil, Mexico and Russia. “However, the current recovery is still being supported by very accommodative monetary policy, and increasingly by fiscal easing. This suggests that strong, self-sustaining growth has not yet been attained.” Central banks in Britain, the eurozone, Japan and the US have kept interest rates low and pumped funds into their economies via quantitative easing to maintain investment and promote growth. Governments have eased back on austerity measures, allowing more state funds for infrastructure projects and welfare payments, especially pensions.

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In the end, people want to keep sovereignty. Which has largely been sold off by their leaders.

The Euro Has To Be Abandoned If Europe Is To Be Saved (Syll)

The euro has taken away the possibility for national governments to manage their economies in a meaningful way – and in Italy, just as in Greece a couple of years ago, the people have had to pay the true costs of its concomitant misguided austerity policies. The unfolding of the repeated economic crises in euroland during the last decade has shown beyond any doubts that the euro is not only an economic project but just as much a political one. What the neoliberal revolution during the 1980s and 1990s didn’t manage to accomplish, the euro shall now force on us.

But do the peoples of Europe really want to deprive themselves of economic autonomy, enforce lower wages and slash social welfare at the slightest sign of economic distress? Is increasing income inequality and a federal Uberstate really the stuff that our dreams are made of? I doubt it. History ought to act as a deterrent. During the 1930s our economies didn’t come out of the depression until the folly of that time, the gold standard, was thrown on the dustbin of history. The euro will hopefully soon join it.

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Countries will be forced to leave.

Italy Crisis: Workers Are Paying For Decisions Made Nearly 30 Years Ago (Clark)

You could say that Italy’s current problems – indeed all of Europe’s economic woes – go back to the early 1990s, when wrong-headed decisions were made by the European elite and enshrined in the Maastricht Treaty – which workers have been paying for ever since. Cuts in public spending have increased unemployment, which in turn has increased the deficit, which has led to more cuts, and so on and so on. Italy‘s National Debt is now 132% of its GDP. Although growth rates are now positive, its average annual rate of growth from 1999-2016 was zero. With 31.7% youth unemployment, La Dolce Vita and Ryan Paris’s catchy song, is a long distance memory.

The tragedy is that it was all so predictable. One man who warned what Europe was letting itself in for in the rush to squeeze as many countries as possible into the Eurozone, was the late Labour politician Peter Shore, the UK’s secretary of state for economic affairs from 1967-69 and trade minister from 1974-6. In the early-to-mid 1990s I was teaching economics in Switzerland and was in correspondence with Shore. He very kindly sent me copies of parliamentary debates where he had railed against the Maastricht Treaty and its imposition of a financial strait-jacket on EEC/EU members – regardless of the state of their economies.

Shore told the House of Commons on March 24, 1993: “The most astonishing omission from the treaty is the fact that it never faces the issue of the counter-recession policy, about which it contains not a word. One lesson that we should have learned from the disasters of the inter-war years was that tendency to go too high in a boom, and too low in recession and slump. “Why is that aspect not written into the protocol? Why does it not say that we must recognise those counter-cyclical problems, and will certainly do so if unemployment grows by X per cent? Instead of having merely 3% and 60% for borrowing and debt, why not have 3, 4 or 5% of the level of unemployment or the fall in GDP?”

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“Events in Italy are changing everything.”

Italy Crisis Dents Greek Hopes Of Returning To Bond Markets (G.)

Greece is watching the unfolding crisis in Italy with growing nervousness. Events in Rome are eliciting a sense of deja vu in Athens, the capital long on the frontline of the eurozone crisis. And nerves are being rattled. “We want a stable, democratic and pro-European Italy,” the country’s foreign minister, Nikos Kotzias, told reporters. “We are worried that if there is instability and it has an impact on the financial situation, this could create problems for us.” The turmoil in Italy could not come at a worse time for Greece. After almost a decade of exclusion from international markets, the debt-stricken nation had set its sights on returning to much-needed normality this summer.

Hopes had been high that when it emerged from its third multi-billion EU-funded bailout programme, Athens would regain market access. But on Wednesday government officials, bankers and analysts were decidedly downbeat. All agreed that with political uncertainty raging across the Ionian Sea, and global investors jittery, the prospect of Greece tapping markets any time soon was beginning to resemble a pipe dream. With soaring bond yields – interest rates on government borrowing – it was out of the question the country could afford the interest rates that would allow it to assume the mantle of post-bailout normality.

“What is happening in Italy worries us immensely,” a senior Bank of Greece official said. “The bond markets have gone mad in southern Europe. With such yields it is totally prohibitive that Greece could return to them when the programme ends.” [..] Italy’s financial turmoil has put hopes of “a clean exit,” on the back burner. “The government’s narrative of clean breaks, and going it alone, is over for now,” a well-placed official conceded. “Events in Italy are changing everything.”

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With Italy on the horizon? It amkes little difference, nobody wants to reduce the principal of the debt. And that is what is needed.

Eurozone, IMF Seek Last-Minute Deal On Greek Debt Relief At G7 This Week (R.)

Euro zone policy-makers will seek last-minute backing this week from the IMF for their debt-relief offer to Greece, to ensure it is credible with markets and draws investors back to Greece after it exits its bailout. The talks are to take place on the sidelines of a meeting of in Canada of finance ministers and central bankers from the world’s top seven economies, the G7, in June, officials involved in the negotiations said. The bailout ends on Aug. 20. “This thing has to be done now,” one senior official involved in the talks said. If no deal is agreed by next Monday, the official said, the IMF would most likely not take part in the bailout at all.

After three successive bailouts since Athens lost market access in 2010, euro zone governments are now Greece’s main creditors, with total loans of €230 billion so far. The IMF took part in the first two bailouts, but has refused to join in the third, which began in 2015. It says the euro zone must agree on how to make Greek debt, now at 179% of GDP, sustainable. Euro zone finance ministers have argued they can only give such details towards the end of the three-year bailout. So the IMF has remained only an observer over the past three years. [..] The IMF and the euro zone agree there should be no “haircut” – a reduction in the principal of the debt – but only an extension of maturities and grace periods.

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I smell bailouts.

Fed Proposes Changes To Rule Limiting Risky Trading On Wall Street (AP)

The Federal Reserve is proposing to ease a rule aimed at defusing the kind of risk-taking on Wall Street that helped trigger the 2008 financial meltdown. The Fed under new leadership on Wednesday unveiled proposed changes to the Volcker Rule, which bars banks’ risky trading bets for their own profit with depositors’ money. The high-risk activity is known as proprietary trading. The proposed changes would match the strictest applications of the rule to banks that do the most trading – 18 banks with at least $10bn in trading assets and liabilities. They account for 95% of all US bank trading and include some foreign banks with US operations, Fed officials said.

Less stringent requirements would apply to banks that do less trading. The idea is to make it easier for banks to comply with the Volcker Rule without sacrificing the banks’ safety and soundness, the officials said. “The proposal will address some of the uncertainty and complexity that now make it difficult for firms to know how best to comply, and for supervisors to know that they are in compliance,” Fed chair Jerome Powell said at a meeting of the Fed governors. “Our goal is to replace overly complex and inefficient requirements with a more streamlined set of requirements.”

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The EU is not about to give in.

US To Hit EU With Steel And Aluminum Tariffs (G.)

The Trump administration is reportedly planning to impose import tariffs on European steel and aluminum after finding no satisfaction in its effort to win trading concessions on the issue. An announcement dropping the EU from an exemption to global tariffs of 25% on imported steel, and 10% on aluminum, could come on Thursday, according to the Wall Street Journal. The move is likely to bring retaliatory action from European Union trade regulators who have warned they will target American products as motorcycles, jeans and bourbon if additional US tariffs are imposed.

Signs of increasing friction between the US and Europe over trade came early Wednesday when Wilbur Ross, the US commerce secretary, drew a sharp line with the EU over Chinese trade negotiations, telling counterparts at a trade development panel in Paris that Europe is using tariffs as an “excuse” to refuse trade negotiations. “China are paying their tariffs,” Ross told the panel. “China hasn’t used that as an excuse not to negotiate … It’s only the EU that is insisting we can’t negotiate if there are tariffs,” he added. Ross’s comments were made in response to EU criticism of import tariffs the Trump administration imposed on dozens of trade partners in March. On Tuesday, the White House added $50bn in new tariffs despite telling China the trade dispute was “on hold” while negotiations continued.

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Make Detroit great again.

Abe Slams US Vehicle Tariff Hikes As ‘Unacceptable’ (JT)

Prime Minister Shinzo Abe on Wednesday condemned U.S. President Donald Trump’s reported move to impose tariffs of up to 25% on imported vehicles as unwarranted and offensive. “If the U.S. slaps Japan, its ally, with tariffs like this, that would be incomprehensible and unacceptable,” Abe told the head of the Democratic Party for the People, Yuichiro Tamaki, during a debate between party leaders in the Diet. The Trump administration recently launched a Section 232 national security probe into whether vehicle and parts imports are harming the U.S.’s domestic auto industry — a step that could provide Trump with the legal basis to institute tariffs.

The move followed yet another surprise announcement by the Trump administration in March that Japan, unlike Washington’s other key allies and partners, wouldn’t be excluded from steel and aluminium tariffs. Tamaki said the hike, if realized, would “deal a severe blow to Japan’s economy.” “Did you get an advance notice on this measure?” Tamaki asked Abe. “You yourself often claim that Japan and the U.S. are 100% together. If there had been no heads-up from the U.S. side on this matter, I’d have to suspect that we may not be seen as their ally.” Abe dodged Tamaki’s question, but stressed he had explained to Trump in their past conversations that Japanese automobile makers are “vastly contributing” to the U.S. economy by creating jobs.

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Why am I not surprised?

George Osborne’s London Evening Standard Sells Its Editorial Independence (OD)

London’s Evening Standard newspaper, edited by the former chancellor George Osborne, has agreed a £3 million deal with six leading commercial companies, including Google and Uber, promising them “money-can’t-buy” positive news and “favourable” comment coverage, openDemocracy can reveal. The project, called London 2020, is being directed by Osborne. It effectively sweeps away the conventional ethical divide between news and advertising inside the Standard – and is set to include “favourable” news coverage of the firms involved, with readers unable to differentiate between “news” that is paid-for and other commercially-branded content.

Leading companies, most operating global businesses, were given detailed sales presentations by Evening Standard executives at the newspaper’s west London offices in an effort to sign them up to the lucrative deal. Among those that have paid half a million pounds each to be involved are international taxi-app firm Uber, which is facing an imminent court appeal against the decision to cancel its licence to operate in London. The Evening Standard has previously come under fire for not declaring Osborne’s £650,000-a-year part time job with the fund managers BlackRock, who hold a £500m stake in Uber.

The global tech giant, Google, still recovering from reputational damage over its low UK tax bills and criticism over its close relationship to the Cameron-Osborne government, has also signed up. Some companies, including Starbucks, walked away from the Evening Standard’s pitch, rejecting the offer of paying to boost their reputations through tailored news and comment. London 2020 is scheduled to start on June 5. Unbranded news stories, expected to be written by staff reporters – but paid for by the new commercial “partners” as part of the 2020 deal – have already been planned for inclusion in the paper’s news pages within a week of the project’s launch.

The London Evening Standard has a circulation of close to 900,000 and distributes more copies within a two-mile radius of Westminster than the Times does across the UK nationally. Many London commuters, who pick up their free copy of the Standard at underground and rail stations, will be unaware that they will be reading paid-for news coverage that is part of a wider commercial deal. An increasing number of British newspapers often carry “native advertising”, essentially paid-for commercials designed to look like independent editorial articles.

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It is a sad day.

Bayer Wins US Nod For Monsanto Deal To Create Agrochemical Giant (R.)

Bayer won U.S. approval for its planned takeover of Monsanto after agreeing to sell about $9 billion in assets, clearing a major hurdle for the $62.5 billion deal that will create by far the largest seeds and pesticides maker. Makan Delrahim, who heads the U.S. Justice Department’s (DoJ) Antitrust Division, said the asset sales agreed to by Bayer were the “largest ever divestiture ever required by the United States.” A Bayer spokesman said the planned sale of businesses with 2.2 billion euros ($2.54 billion) in sales to BASF already agreed to address antitrust concerns, mainly in Europe, were not materially different from the DoJ’s demands. “Receipt of the DOJ’s approval brings us close to our goal of creating a leading company in agriculture,” Bayer CEO Werner Baumann said in a statement.

Bayer’s move to combine its crop chemicals business, the world’s second-largest after Syngenta, with Monsanto’s industry-leading seeds business, is the latest in a series of major agrochemicals tie-ups. U.S. chemicals giants Dow Chemical and DuPont merged in September 2017 and are now in the process of splitting into three units. In other consolidation in the sector, China’s state-owned ChemChina purchased Syngenta and two huge Canadian fertilizer producers merged to form a new company, now called Nutrien. Bayer committed to selling its entire cotton, canola, soybean and vegetable seeds businesses and digital farming business, as well its Liberty herbicide, which competes with Monsanto’s Roundup.

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As the industry that produces them gets bigger.

The British Countryside Is Being Killed By Herbicides And Insecticides (G.)

In June 2011 I took a long drive up the A1, the Great North Road. At Scotch Corner I turned for Barnard Castle. The villages were well kept, the countryside was green, the fields dotted with sheep. Everything was normal. Or so I thought. Beyond Barnard Castle I took a narrow lane into part of Upper Teesdale and suddenly colours exploded along the roadside. I stopped the car and jumped out. There was a bed of orchids, hundreds of them, and behind that, billowing banks of violet, scarlet, white, yellow and cornflower blue. I had seen alpine meadows, but this took my breath away. Further into the dale I found a footpath that led me down beside a shady brook. There were more orchids of a different species and a grass snake hunting frogs in a pool.

Out in the open again, there was the haunting cry of curlews overhead, then redshanks, plovers and snipe. I spent two days up there, talking to environmentalists and farmers involved in the upland hay meadow project for the North Pennines area of outstanding natural beauty (AONB). The landowners were being paid to restrict the use of fertiliser, not employ herbicides, and stop grazing after mid-May. Together with some seeding programmes and careful monitoring, the meadows had become magnificent. When I drove back home, I came down to a countryside where the only flowers were dandelions, watched over by crows. The monotonous green of the rye grass was unbroken. Compared to what I had just experienced, it felt like a desert. I felt cheated. My entire adult life had been spent admiring a shoddy and simplified reproduction, a poor impersonation of a much-loved friend.

[..] Seven years on, the statistics for the British countryside are heartbreaking. Over a quarter of all British birds are under threat, eight species are almost extinct. Three-quarters of all flying insects have disappeared since 1945, including a staggering 60 different moths. Orchid ranges have shrunk by half; two species are gone. The State of Nature 2016 report described Britain as being “among the most nature-depleted countries in the world”. [..] 40% of all species are in moderate or steep decline. Over a quarter of the hedgehog population has disappeared in a decade. Toads are down 68% in 30 years, water voles are no longer found in 94% of the places where they once lived. Likewise mountain hares are in steep decline, as are rabbits. Even that great survivor, the fox, has lost over 40% of its population.

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