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Debt Rattle March 5 2026

Mar 052026
 
 March 5, 2026  Posted by at 10:23 am Finance Tagged with: , , , , , , , , , , ,  80 Responses »


“Flora” (Roman Goddess of Spring), Villa di Arianna, Pompei 1st Century A.D.


• Keir Starmer Takes Cowardice to New Lows (Tim O’Brien)
• Jeffrey Sachs: ‘Trump Is An Utter Disgrace To Our Nation – He Lied To Us’ (ZH)
• Iran Conflict – Oil Disruption Hits Key BRICS Members Hard (CTH)
• Fetterman Chooses Country Over Party After Iran Operation (David Manney)
• Trump: US Insurance for “All Maritime Trade Flowing Through the Gulf”
• US Sub Sinks Iranian Warship, First Such Hit Since WWII (Catherine Salgado)
• Trump Denies Israel ‘Forced His Hand.’ (Salgado)
• NY AG James Orders Hospital to Resume Gender-Transition for Minors (Turley)
• Trump’s 15% Global Tariff Will Take Effect This Week: Bessent (ET)
• Bessent Outlines U.S. Financial/Economic Stabilization Plan (CTH)
• Walz, Ellison Knew About Minnesota Fraud ‘for Years,’ House Report (DS)
• Minnesota Sues Federal Government Over Medicaid Funding Freeze (Aldgra Fredly)
• SCOTUS Decision Highlights Problems with Parents in Blue States (Turley)
• Ukraine Blocks EU Mission To Inspect Russian Oil Pipeline – FT (RT)

 


 

https://twitter.com/ivan_8848/status/2029139145168183437?s=20 https://twitter.com/GreereMedeea/status/2028870849718108499?s=20

 


 

 


 


They sold Britain. It is no longer a Christian nation. Prepare your kids.

• Keir Starmer Takes Cowardice to New Lows (Tim O’Brien)

To borrow a phrase from Foghorn Leghorn, when describing UK Prime Minister Keir Starmer, that boy is softer than a pound of wet leather, and he’s about as sharp as a bowling ball. Whether you agree strategically with the preemptive strikes against Iran by the U.S. and Israel, the reactions of the other developed nations have been a study in intelligence and loyalty on the part of their leaders. My colleague Catherine Salgado addressed this in her piece that focused on the reactions of Spain and Portugal reaction to the strikes: While Spain’s Prime Minister Pedro Sánchez was the most explicitly condemnatory, and forbade use of joint bases for the operation, Croatian Foreign Minister Gordan Radman, French President Emmanuel Macron, Finnish President Alexander Stubb, German Chancellor Friedrich Merz, Irish Taoiseach Micheál Martin, UK Prime Minister Keir Starmer, and the Slovenian government all more or less criticized the United States and Israel.


Times like this, you learn who your friends are and who isn’t bright enough to act in their countries’ best interests. Even if they’re still stinging from President Donald Trump’s tariffs—and in some cases, his public beatdowns—smart leaders know how to rise above all of that in this new context. A quick victory and resolution to the war with Iran can serve the West’s best interests on a number of levels, if handled right. Instead, we have a group of largely beta males who partly fear backlash from the Islamic populations in their countries, along with backlash from the Never Trumpers around the world. Some people will do anything to see Trump fail even if it means defending by default the evil and ruthless regime that has run Iran for the past 46 years.

Keir Starmer stands out as a beta male’s beta male. He exudes cowardice—from that chronic deer-in-the-headlights look of fear, to his voice and its trademark trepidation, to a physical presence best described in one word: gooey. When G. Michael Hopf penned his novel Those Who Remain, it seems that he knew that a day would come when Starmer & Co. would arrive on the world stage when he wrote, “Hard times create strong men, strong men create good times, good times create weak men, weak men create hard times.” This week, we’re at the last phase of that sentence. Weak men like Starmer do create hard times.

If the U.S. and Israel are successful, now that hostilities are under way, the world has a chance to benefit by putting an end to the proxy wars and terrorism Iran has funded and orchestrated for decades, killing thousands of Americans. If Trump does what he said he’ll do, he’ll deal a final blow to Iran’s campaign to possess nuclear arms and the weaponry to strike the West with them. In that scenario, the whole world benefits. If that’s all Trump achieves, it’s a win. Smart world leaders can see that and will want to position themselves to be in Trump’s good graces if he succeeds. Leaders who aren’t too bright, or who act out of fear, will lose if he succeeds. This is Starmer’s “courageous” stand on the matter of deciding not to support the U.S. Speaking in Parliament, he called Trump’s efforts to prevent Iran from having nukes an “unlawful action.”

https://twitter.com/g_gosden/status/2028519334612529596


In his first official statement after the strikes against Iran, Starmer practically ran to the nearest podium and microphone to make it clear that he and his government “played no role in these strikes.”

https://twitter.com/naijaamebonews/status/2027836993275576472


A real man in charge of a country like the UK would either openly support the U.S. in a situation like this or, if he disagreed with it, stay quiet while the situation is most volatile and give his ally a chance to take care of business. Instead, what Starmer did was to make sure the people he fears know that he’s not just distancing himself from the fighting, but running away from it. In doing this, he undermined the U.S, his supposed ally.He made it clear that he did not support any UK involvement in the attacks on Iran. He made it clear that his military would focus on defending itself and British installations.

He decided on Sunday, the day after hostilities started, to give the U.S. permission to use its bases for certain operations. This was a change of course after it was reported that, prior to the operation, the UK had denied America’s request to use British bases in its Operation Epic Fury. In reaction to Starmer, Trump told the news media, “This is not Winston Churchill that we’re dealing with.” He said he was not happy with the Starmer, even though he eventually allowed the U.S. access to the base at Diego Garcia to mount strikes against Iranian missile facilities.

In a 24-hour period, Trump took the opportunity to let the world and Starmer know three times that Starmer’s initial rejection of American requests to use certain facilities had dealt a serious blow to U.S.-UK relations. Trump told the Sun that the “relationship is obviously not what it was,” and then he told the Telegraph that Starmer delayed giving the U.S. permission beyond what would have been reasonable. Trump suspects what everyone does at this point – that Starmer fears the Islamic community and is pandering to it, as he did here.

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Now, now, Jeff!!

• Jeffrey Sachs: ‘Trump Is An Utter Disgrace To Our Nation – He Lied To Us’ (ZH)

Columbia University economics professor Jeffrey D. Sachs appeared on Judge Napolitano’s ‘Judging Freedom’ podcast Monday, where he railed against the US-Israeli attack on Iran and the ‘CIA-led security state,’ calling President Donald Trump a ‘disgrace to our nation’ because ‘he lied to us.’



Sachs, a longtime critic of U.S. foreign policy, described the recent escalation as the continuation of a decades-old strategy he linked to Israeli and U.S. intelligence objectives dating back to 1996. “This is a long-term plan. This is a Mossad CIA plan for American control of the Middle East and Israeli military hegemony in the Middle East that has been underway since 1996,” Sachs said. “This is madness. This is murderous delusion.” The professor pointed to a series of U.S.-backed or U.S.-involved conflicts across the region, from Libya and Sudan to Somalia and the ongoing crisis in Gaza, as evidence of a consistent pattern aimed ultimately at confronting Iran.

“It has involved wars across the Middle East. It has left rivers of blood from Libya to Sudan, Somalia, the genocide in Gaza,” he said, adding that Israeli Prime Minister Benjamin Netanyahu’s goal since the mid-1990s has been “the destruction of Iran.”= Sachs reserved some of his strongest language for Trump, whom he said reversed course on key foreign-policy pledges after taking office. “Trump… is an utter disgrace to our nation. Utter disgrace. He lied to us. Every word about America first… And he did exactly the opposite of what he said,” Sachs stated. The economist also criticized Washington’s approach to diplomacy more broadly, arguing that the United States has abandoned genuine negotiation in favor of coercive tactics. “The United States does not negotiate. It cheats… Now they kill you because if you negotiate, it means you’re weak,” he said.

On the domestic front, Sachs connected the country’s infrastructure challenges to the enormous costs of overseas military engagements.“Why do the roads not work and the bridges not work in the United States?… It’s because we spend trillions of dollars in war,” he said. “China just completed its 50,000th kilometer of fast rail because China doesn’t go to war.” Sachs concluded by expressing deep skepticism about the current state of American governance. “We’re in the hands of gangsters. We’re not in the hands of a constitutional system,” he said, noting that only a handful of lawmakers – citing Sen. Rand Paul (R-Ky.) as one example – have pushed back.

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OK for now.

• Iran Conflict – Oil Disruption Hits Key BRICS Members Hard (CTH)

• First blow, the Trump tariffs hit Beijing hardest. • Second blow, the Beijing tentacle on the Panama Canal is severed. • Third blow, global tariff threats changed the risk dynamic for southeast Asia countries who acted as transnational shippers for China. • Fourth blow, cheap sanctioned oil from Venezuela was cut-off. • Now, the fifth blow; cheap, sanctioned Iranian oil is disrupted.


As noted by Politico: Following USA military strikes, “ships have begun to avoid the Strait of Hormuz off the coast of Iran — a critical shipping lane for Gulf nations to export oil to Asia. China in 2025 received about half of its imported oil from the six Gulf countries that rely on the strait. Other large crude oil producers in the region — including Saudi Arabia, Iraq and the United Arab Emirates — transport almost all their crude exports through the geographic bottleneck.”


It’s not just a factor of oil flow, but also the price that China will ultimately end up having to pay. Beijing was buying oil from Venezuela, Iran and Russia at steep discounts because their purchases were skirting western sanctions. With Iranian oil production now no longer a market option, China will seek to replace their needs with more Russian alternative. However, that diversion means the oil India was purchasing from Russia will come at a higher price, and the refined final product that was exported by India will arrive to the European Union carrying an additional cost. Simultaneously, Vladimir Putin was asked about Russia’s lack of military support to Iran in response to the U.S. military action, to wit the Russian president noted the technical terms of their joint military agreements did not include Russia’s immediate involvement. In shorthand, Russia is busy and is not getting involved.

Russia was/is partially dependent on receiving military supplies from Iran in exchange for oil transfers. The military component is reported to include drones from Iran for use in the Ukraine conflict. Now that exchange profile is shuttered. Taking Iran’s malign influence off the geopolitical chessboard is beginning to surface in major challenges to the BRICS assembly (Brazil, Russia, India, China, South Africa). Russia, China and India are impacted directly. The BRICS nations were skirting western oil sanctions by trading the commodity outside the petrodollar structure. However, President Trump now controls the flow of oil from Venezuela, and his administration controls the currency in which it is sold.

With Iranian oil removed from the non-petro supply chain, the only remaining non-petro oil producer is Russia – who is simultaneously hit with a loss in military hardware support. China may end up as a larger oil customer to Russia, but at what price and in what payment structure. With global oil supplies in a state of flux, and with the USA in control of the oil flow from Venezuela, North America is certainly in the best position for minimal energy disruption. Asia is heavily dependent on oil flows through the Strait of Hormuz, and the majority of Europe has already shut themselves off from Russian oil production, putting themselves in a position of dependency to the global markets. The short-term ramifications of this oil disruption hit China, Southeast Asia, Japan and Europe particularly hard.

“OPEC+ countries affirmed on Sunday that they would boost oil production starting in April by 206,000 barrels daily — a modest increase intended to dampen the war’s effect on prices down the road. The majority of the increase would come from Saudi Arabia and Russia.” {SOURCE}

All of a sudden, this happens: Zelenskyy not to be trusted? “Ukraine is under pressure to let the EU inspect a damaged pipeline carrying Russian oil to Hungary and Slovakia, as the two pro-Kremlin countries accuse Kyiv of overstating the impact of an attack by Moscow — despite what Ukrainian officials say is evidence of extensive destruction,” the report said. According to five diplomats and EU officials who spoke to the FT, even pro- Ukrainian governments within the European Union and the European Commission have also asked Ukraine to permit a delegation to inspect the pipeline. Two sources told the newspaper that European Commission President Ursula von der Leyen requested access for EU experts during her visit to Kyiv on Feb. 24, the fourth anniversary of Russia’s full-scale invasion. The request, according to the sources, was refused.

As tensions escalated, the EU’s ambassador to Ukraine, Katarina Mathernova, reportedly asked through the presidential office for permission to inspect the damaged pipeline herself or to allow visits by other EU diplomats. Those requests were denied for security reasons, the sources said.”

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John Fetterman thinks for himself. Works for me.

• Fetterman Chooses Country Over Party After Iran Operation (David Manney)

Sen. John Fetterman (D-Pa.) backed the U.S. and Israeli strikes on Iran without hesitation, calling Operation Epic Fury entirely appropriate, and said eliminating Ayatollah Ali Khamenei, the un-alived supreme leader of Iran, removed one of the most dangerous figures in modern history.


President Donald Trump confirmed the mission targeted senior regime leadership gathered in Tehran, with early reports stating roughly 40 to 50 of the top Iranian officials were killed in the attack’s early wave. Fetterman didn’t hedge, asking why anybody would grieve leaders of a regime tied to terror networks and decades of repression. He said that Americans should recognize the strategic impact of removing the head of a government that funds violence across the world.


Fetterman’s stance again puts him at odds with several Democratic colleagues who questioned the legality and timing of the strikes. He described their reactions as bizarre. He pointed to the regime’s record, including the 1988 mass executions of political prisoners that killed an estimated 30,000 dissidents under orders tied to regime leadership, making clear the target wasn’t the Iranian people, just the regime. Vice President JD Vance stated that the administration’s objectives remain preventing Iran from acquiring nuclear weapons. Fetterman said he’d oppose efforts to restrict the president’s authority under the War Powers Resolution.

Because Fetterman’s policy beliefs keep him planted firmly on the left, Fetterman won’t switch parties. But when national security comes into focus, he regularly breaks from progressive orthodoxy and takes a position rooted in deterrence and strength. In a chamber full of Congresscritters using scripted responses, his statements read as uncommon steadiness. Critics raised legal concerns, questioning whether the threshold for immediate military action had been met, while others argued Congress should’ve been consulted before the strike. Raise of hands: who envisions Schiff, Jeffries, and Swalwell would keep their pie holes shut?

Fetterman countered that Iran’s nuclear development and missile expansion represent a continuing threat, even if not tied to a single launch window, saying that waiting for perfect conditions invites greater danger.Israeli Prime Minister Benjamin Netanyahu led his country’s role in the coordinated strike, and Fetterman defended both Netanyahu and Trump against critics who labeled the attack as reckless. Fetterman argued that removing senior regime leadership weakens proxy forces such as Hezbollah. His position exposed a visible split inside his party, particularly among lawmakers who reflexively oppose any military action.

The broader debate now turns on escalation and authority. President Trump said the objective remains stopping Iran’s nuclear ambitions and restoring deterrence in the region. Lawmakers continue to argue over oversight and limits, but Fetterman’s remarks show that support for the strikes crosses party lines, even if only in narrow lanes. The result of Operation Epic Fury and how it will reshape the relations between the U.S. and Iran remains to be seen. What’s clear is that one Democrat senator chose to defend a strike he believes strengthens American and Israeli security, even when doing so separates him from much of his caucus. National security debates test whether lawmakers follow party currents or independent judgment. Fetterman, thankfully, chose judgment.

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This will solve the economy at home. You just wait.

• Trump: US Insurance for “All Maritime Trade Flowing Through the Gulf”

This is a remarkable position for President Trump to take. Optimal Solutions: (President Trump) – “Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf. This will be available to all Shipping Lines.


If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible. No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD. The United States’ ECONOMIC and MILITARY MIGHT is the GREATEST ON EARTH — More actions to come. Thank you for your attention to this matter! President DONALD J. TRUMP“

President Trump will use the full weight of the U.S. military to change behavior in Iran. Not just to change the regime per se’, but to change the behavior of whoever surfaces to represent the interests of the people. The change in behavior is the goal. While this forced shift is underway, the full weight of the USA will also seek to mitigate any collateral economic damage to well behaved economic partners. Forceful action, optimal stewardship.

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“.. the first kill by a U.S. submarine since World War II. “

• US Sub Sinks Iranian Warship, First Such Hit Since WWII (Catherine Salgado)

A United States submarine successfully sank an Iranian regime warship, according to a Wednesday morning update from the secretary of war.The American submarine using a torpedo to sink an Iranian ship is particularly historic because, according to Secretary of War Pete Hegseth, this is the first such sinking of a ship since World War II. And just as the USA demanded unconditional surrender during World War II, Hegseth emphasized, now the U.S. is in it to win it again. The U.S.-Israeli joint Operation Epic Fury continues to claim prizes, including a warship named for the terrorist Iranian Islamic Revolutionary Guard Corps (IRGC) leader (Qasem Soleimani) whom Donald Trump eliminated during his first term and on behalf of whom the likewise assassinated Ayatollah Khamenei repeatedly vowed to assassinate President Donald Trump.


“The Iranian Navy rests at the bottom of the Persian Gulf,” Hegseth confidently announced. “[It’s] combat ineffective, decimated, destroyed, defeated, pick your adjective. In fact, last night, we sunk their prize ship, the ‘Soleimani’.” Soleimani was responsible for the deaths of hundreds of Americans and the wounding of thousands more. Not only is he dead thanks to the first Trump administration, but the second Trump administration even took out the ship named for him. As Hegseth joked, “Looks like POTUS got him twice.”

Hegseth assured America and the world that the Iranian regime’s “navy is not a factor. Pick your adjective, it is no more.” He continued, “In fact, yesterday, in the Indian Ocean, and we’ll play it on the screen there, an American submarine sunk an Iranian warship that thought it was safe in international waters. Instead, it was sunk by a torpedo, quiet death.” That is particularly impressive because it represents the U.S. Navy’s “first sinking of an enemy ship by a torpedo since World War II. Like in that war, back when we were still the War Department, we are fighting to win,” Hegseth declared.

Trump insisted on restoring the name of the War Department to the Defense Department, and from Venezuela to Iran to Ecuador, the U.S. military has been pulling off spectacular operations ever since. What’s in a name? The difference between weakness and strength, it seems. The Iranian regime had assassins in the United States attempting to kill President Trump even before he came to office again, as they seemed to understand that his return to power would spell disaster for them, as it did. But Hegseth noted, “Also, yesterday, the leader of the unit who attempted to assassinate President Trump has been hunted down and killed. Iran tried to kill President Trump, and President Trump got the last laugh.”

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Yeah yeah. Sure.

• Trump Denies Israel ‘Forced His Hand.’ (Salgado)

President Donald Trump and Secretary of War Pete Hegseth summarily demolished the argument from Jew-haters that the Israeli government forced the USA into a joint strike on Iran’s regime. Despite what Tucker Carlson, Candace Owens, Megyn Kelly, and the rest of the Jihad Squad claim, Israel didn’t strong-arm the United States into Operation Epic Fury. The Iranian terrorist regime brought it all upon themselves.The fact is that the late Supreme Leader Ayatollah Ali Khamenei and co. were treating this administration the way they have treated almost every U.S. administration over decades. They defied the U.S., funded the terrorists who attacked our troops and our allies, screamed “death to America” over and over, and demanded we lie down and take it.


But this time, it didn’t turn out the way it usually does. Unlike Barack Obama or Joe Biden, who rewarded Iranian jihad, Donald Trump grew tired of being pushed around. A reporter asked Trump during a press conference if Israel “forced” his hand on the Operation Epic Fury strikes. Trump coolly replied, “No, I might have forced their hand. You see, we were having negotiations with these lunatics, and it was my opinion that they were going to attack first. They were going to attack. If we didn’t do it, they were going to attack first. I felt strongly about that.”

Trump’s first priority and duty is to the American people. Democrats think we should always prioritize foreign terrorists, tyrants, and dictators, and that’s why they’re furious about this. Think of how much American money went to the Ayatollah’s regime through the hands of Democrats. At a certain point, America has to face reality about Islamic dictatorships and acknowledge that Muslim sacred texts have been commanding jihad against non-Muslims for some 1,400 years, and that the endless violence and conflict is not going to stop because of diplomacy. We have been at war with Iran’s regime for half a century, and eventually one government or the other must concede defeat.

Hence Trump observed, “And we have great negotiators, great people, people that do this very successfully, and have done it all their lives — very successful — and based on the way the negotiation was going, I think they were going to attack first. And I didn’t want that to happen.” Trump therefore preempted them with Operation Epic Fury, as Hegseth confirmed. “So if anything, I might have forced Israel’s hand,” Trump added. “But Israel was ready, and we were ready, and we’ve had a — a very, very powerful impact.”

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Letitia, where did we go wrong?

• NY AG James Orders Hospital to Resume Gender-Transition for Minors (Turley)

In a rare and controversial move, New York Attorney General Letitia James has ordered a Manhattan hospital to resume offering gender-transition treatment to transgender youth. NYU Langone had discontinued such treatments after funding threats from the Trump administration. It is now caught between the proverbial rock (HHS) and a hard place (NYAG). Last year, President Donald Trump signed an executive order entitled “Protecting Children from Chemical and Surgical Mutilation,” seeking to restrict gender-transition treatment for people under 19. HHS then threatened hospitals with a cut off of federal Medicaid and Medicare funding for continuing such treatment for children.


Various European countries have also halted certain procedures after countervailing studies suggesting that the risks are too high. England’s National Health Service 2024 report on the subject, known as the Cass Report, found concerning evidence of harm for minors and inconclusive benefits. James threatened “further action” if NYU Langone does not defy the Trump Administration, declaring that the cessation of its Transgender Youth Health Program violates New York anti-discrimination law by “jeopardizing access to medically necessary healthcare for some of the most vulnerable New Yorkers.” NYU Langone had previously declared that it would no longer provide certain gender-transition treatments for patients under the age of 19.

James’s move could trigger a fascinating challenge. In the Feb. 25 letter signed by the attorney general’s health care bureau chief, Darsana Srinivasan, the state said that the federal regulatory change did not affect a “medical institution’s existing duties and obligations under New York law.” That raises an interesting conflict between state and federal regulations.The letter gives the hospital until March 11 to comply and resume these treatments. Effectively, James is ordering the hospital to defy the federal government. However, the hospital, not James or the state, would bear the financial and regulatory consequences.

While James does not state how she will penalize the hospital, the letter is likely sufficient to challenge the move. The question is whether the political costs for the NYU hospital are prohibitive. There is also the question of whether the HHS has standing or interest in challenging the move as a direct threat to federal authority. The problem with a federal challenge is that nothing in the New York threat prevents the federal government from carrying out its intent to cut off funding. Hospitals would have to choose between penalties in New York or loss of funding in Washington. Nevertheless, New York’s move is a direct attack on the enforcement of federal policy by state hospitals.

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The first ever openly gay Treasury Secretary is loyal to a T. He’s also very good at what he does.

• Trump’s 15% Global Tariff Will Take Effect This Week: Bessent (ET)

President Donald Trump’s 15 percent global tariff will take effect sometime this week, Treasury Secretary Scott Bessent said. Following the Supreme Court’s rebuke of the president’s signature economic policy last month, Trump imposed a 10 percent global tariff, invoking Section 122 of the Trade Act of 1974. A day later, Trump pledged to raise the rate to 15 percent. In an interview with CNBC’s “Squawk Box” on March 4, Bessent confirmed that the new rate would be introduced sometime this week and remain in place for 150 days. He also anticipates tariff rates would return to the levels that were in place before the high court’s decision. “It’s my strong belief that the tariff rates will be back to their old rate within five months,” Bessent said.


“They have survived more than 4000 legal challenges. They are more slow moving, but they are more robust.” Bessent’s comments come two days after a U.S. federal appeals court rejected the president’s effort to postpone legal proceedings connected to tariff refunds, sending the battle to a lower court. Estimates suggest the federal government’s tariff refunds could total $175 billion. Fiscal year-to-date, the administration’s tariffs have generated more than $150 billion, according to Treasury data as of March 2. Global energy markets have been highly volatile since the Iran War, with crude oil and natural gas prices rocketing on fears of supply disruptions.

The president calmed down the oil market on March 3. In a Truth Social post, Trump said the White House would offer naval escorts and guarantee political risk insurance for commercial oil and gas tankers traveling through the Strait of Hormuz. The Strait of Hormuz is a vital global chokepoint that handles approximately 20 million barrels of oil and petroleum products per day. It has effectively been shuttered as insurance companies canceled coverage or dramatically raised premiums. But the administration will make additional announcements to help stabilize prices, Bessent said. n“We have a series of announcements that we’re going to be making,” Bessent stated.

“We began yesterday with the announcement that [Development Finance Corporation] will provide the insurance for both the crude carriers and the cargo ships operating in around the Gulf over the weekend.” He shrugged off a possible energy shock as the Middle East conflict intensified, saying that the United States and the global marketplace maintain ample supplies. “This was a well telegraphed geopolitical event. The crude market had already moved substantially over the past two months. The crude markets are very well supplied,” Bessent said. A barrel of West Texas Intermediate—the U.S. benchmark for oil prices—fell by about 0.5 percent in pre-market trading to around $74 on the New York Mercantile Exchange.

Brent—the international benchmark—was little changed at slightly above $81 a barrel on London’s ICE Futures exchange. “Oil prices retreated after news the U.S. will ensure safe passage through the Strait of Hormuz, easing fears of a major global supply shock,” Adam Turnquist, chief technical strategist for LPL Financial, said in a note emailed to The Epoch Times. “Softer oil prices are also helping cool inflation concerns and pull interest rates lower.” Market watchers had warned that the risk of oil prices reaching $100 were high if the narrow waterway were closed for an extended period. U.S. stocks also rebounded midweek, with the leading benchmark averages in the green prior to the opening bell.

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… the 3:00 minute mark of the video

• Bessent Outlines U.S. Financial/Economic Stabilization Plan (CTH)

Treasury Secretary Scott Bessent appears on CNBC to discuss the Trump administration policies that were proactively deployed during Operation Epic Fury. The goal of global financial stabilization is actually part of the strategic planning within the White House, including Treasury, Energy and Interior in alignment with the State Dept., Pentagon and national security agencies. Part of that plan was the announcement for the U.S. to underwrite maritime insurance to ensure a minimal disruption to the global energy markets. Secretary Bessent discusses the insurance facet at the 3:00 minute mark of the video below.
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Wasn’t this Walz figure part of the Kamala cloud posse in the 1800s? Losers cling together, right?

• Walz, Ellison Knew About Minnesota Fraud ‘for Years,’ House Report (DS)

Minnesota Gov. Tim Walz was aware of the widespread welfare fraud in his state “for years” and “repeatedly failed to act,” alleges a congressional report released on Wednesday. Walz and the state’s Attorney General Keith Ellison are set to testify Wednesday about the $9 billion scandal before the House Oversight and Government Reform Committee. The report, which also alleges that Ellison knew of the welfare fraud in Minnesota, draws from interviews with state employees and whistleblowers. “Senior officials in the governor’s office and Attorney General Ellison’s office were aware of credible fraud concerns in Minnesota’s social services programs as early as 2019 within the Department of Human Services (DHS) and by April 2020 within the Department of Education (MDE), despite later public statements by Governor Walz suggesting otherwise,” the report says.


The committee and staff conducted transcribed interviews with nine key current and former Minnesota state officials. The investigation focuses on alleged money laundering and fraud in Minnesota’s social services programs, uncovered by the U.S. Attorney’s Office for the District of Minnesota. The report, titled “The Cost of Doing Nothing,” further alleges retaliation against whistleblowers, including surveillance, and quotes some officials as not acting against suspected fraud out of fear of being labeled a racist. “As a result, potentially billions of American taxpayer dollars were allowed to flow to fraudulent actors, while vulnerable populations were harmed and whistleblowers were ignored, sidelined, and retaliated against,” the House report says.

This led to about $300 million in federal child nutrition funds and potentially $9 billion in Medicaid-related funds lost or placed at significant risk, according to the report. “Testimony obtained by the committee reveals that Governor Tim Walz and Attorney General Keith Ellison were aware of widespread fraud in social service programs, lied about their knowledge of the fraud, and retaliated against employees who dared to raise concerns,” House Oversight Chairman James Comer, R-Ky., said in a statement. The report also alleges whistleblower retaliation against state employees who raised red flags at the Minnesota Department of Human Services.

“Whistleblowers within the DHS have alleged that Governor Walz not only knew about this fraud, but that he retaliated against whistleblowers, ‘spen[ding] millions on surveilling staff and hiring private investigator (sic) or law firms to silence staff,’” the report says. The agency’s then-temporary commissioner confirmed to investigators that the agency “used outside entities” to investigate its own staff, according to the report. “Instead of protecting vulnerable Americans, they handed over billions in taxpayer dollars to fraudsters and threw their own state employees under the bus,” Comer added. “Governor Walz and Attorney General Ellison are appearing before the committee because the American people deserve clear answers about how this rampant fraud was allowed to flourish under their watch.”

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“The state accused the government of weaponizing the Medicaid program as ‘political punishment.’”

• Minnesota Sues Federal Government Over Medicaid Funding Freeze (Aldgra Fredly)

Minnesota filed a lawsuit on March 2 to block the federal government from withholding $243 million in Medicaid funds, saying the freeze could lead to potential cuts in medical services for low-income individuals. The Centers for Medicare and Medicaid Services (CMS) last month temporarily deferred $259 million in Medicaid funds to Minnesota over alleged fraud in the state’s program, according to the court filing. The lawsuit, filed by Minnesota Attorney General Keith Ellison and the state’s Human Services Department, asked the court to block the withholding of $243 million of those funds that were tied to 14 services the government identified as “high-risk” and subject to “noncompliance action.”


“These cuts are the latest in a long series of efforts to go around the law to punish Minnesotans — but just as we fought back and won when they illegally tried to cut funding for childcare, hungry families, and our schools, we are suing them again today to make them follow the law,” Ellison said in a statement. The suit called the funding freeze unlawful, alleging that the government used the program as “political punishment” against the state, citing its previous attempts to withhold other funding from the state, including funds tied to the Supplemental Nutrition Assistance Program (SNAP). According to the lawsuit, the federal government announced in January that it would freeze more than $2 billion in annual Medicaid funding to Minnesota over allegations of noncompliance.

The state appealed but said the federal government has not clarified the alleged conduct it deemed noncompliant or how Minnesota can remedy the issue. n “Impatient that it cannot withhold the $2 billion until Minnesota is provided a hearing and other due process, the administration ‘deferred’ $243 million from the state on February 25, 2026,” it stated.The lawsuit is seeking a temporary restraining order to block the funding freeze, saying the withholding of funds would affect more than 1 million Minnesota residents enrolled in Medicaid.

“Unless the deferral is quickly reversed, the state will be irreparably harmed. The administration has already stated that the deferral will recur every quarter, crippling the state budget,” it stated. The lawsuit names the Department of Health and Human Services and the Centers for Medicare and Medicaid Services, as well as Dr. Mehmet Oz, in his official capacity as CMS administrator, and Robert F. Kennedy Jr., in his official capacity as health secretary.

Read more …

Problems? You suck!

• SCOTUS Decision Highlights Problems with Parents in Blue States (Turley)

In the law, the concept of In loco parentis refers to those who act in the place of parents. The problem is when that authority is taken rather than granted. It is a growing problem in blue states as parents push back on Democratic measures stripping them of notice or consent over their children in public schools. In the last few months, Democrats have been buoyed by protests over immigration enforcement. Many politicians have fueled a wave of rage sweeping major cities before the midterm elections, denouncing law enforcement as “Gestapo” and “Nazis.”


However, a Supreme Court decision this week may lay bare an even greater threat to Democratic aspirations over parental rights. For many parents, blue states are attacking the most fundamental right of citizens in raising their own children. This week, the Supreme Court granted an emergency appeal filed on behalf of Catholic parents in California. The order in Mirabelli v. Bonta proved a decisive victory for parental rights and an equally notable defeat for California democrats.

The action, filed by the Thomas More Society, challenged a policy under a state law, signed by Gov. Gavin Newsom in 2024, that prevented teachers from notifying parents of their children’s gender identity changes. The law was heralded as a protection against the “outing” of transgender students. Some of us have been following the litigation since the original filing and heralded the decision of District Court Judge Roger Benitez, who wrote a powerful opinion in support of the rights of all parents. However, the United States Court of Appeals for the Ninth Circuit stayed his injunction.In issuing the order on its “shadow docket,” the Court delivered a key win for parental rights that many of us have been seeking for years.

Blue state legislators and educators have been waging a war on parental rights, particularly in the area of transgender policies. Recently, in Michigan, parents sued to defend their rights after the Rockford Public School District refused to inform them of gender identity changes in their children. Last year, I wrote about a startling decision in Foote v. Feliciano in which the United States Court of Appeals for the First Circuit ruled against Massachusetts parents Marissa Silvestri and Stephen Foote seeking such notice. As in the California case, they learned that school administrators did not inform them that their 11-year-old child had self-declared as “genderqueer” and that teachers and staff were using a new name and new pronouns for the student.

The First Circuit dismissed the right of parents over their own children in the case, holding that “as per our understanding of Supreme Court precedent, our pluralistic society assigns those curricular and administrative decisions to the expertise of school officials, charged with the responsibility of educating children.” Foote was a chilling decision that reflected the view of state officials that parents give up their rights over their children when enrolling them in public schools. That view was evident in the comment of State Rep. Lee Snodgrass (D-Wis.), who once tweeted: “If parents want to ‘have a say’ in their child’s education, they should home school or pay for private school tuition out of their family budget.” [..]

Read more …

4 years of nothing.

• Ukraine Blocks EU Mission To Inspect Russian Oil Pipeline – FT (RT)

Ukraine has rejected a proposed EU mission to inspect the Soviet-era pipeline that transports Russian oil through Ukrainian territory to Central Europe, the Financial Times reported on Tuesday, citing diplomats and officials. Hungary and Slovakia have accused Ukraine of deliberately blocking the flow through the Druzhba pipeline, while Ukraine said the infrastructure was damaged by Russian strikes in January. The EU is pressuring Ukraine to restore the operation of the Soviet-era pipeline that transports Russian oil through Ukrainian territory to Central Europe, the Financial Times reported on Tuesday, citing diplomats and officials.


Hungary and Slovakia have accused Ukraine of deliberately blocking the flow through the Druzhba pipeline, while Ukraine claimed the infrastructure was damaged by Russian strikes in January. According to FT, some pro-Ukrainian EU member states and the European Commission are now asking Kiev to allow a visit to demonstrate that it is working to restore oil flows. Last week, European Commission President Ursula von der Leyen and European Council President Antonio Costa personally requested access to the pipeline for inspection but were denied, FT said.One of the newspaper’s sources argued that by blocking the inspection, Ukraine scored an “own goal” and gave Hungary an excuse to veto the planned $106 billion emergency loan for Ukraine and the EU’s 20th round of sanctions against Russia.

In a post on X on Tuesday, Hungarian Prime Minister Viktor Orban said he had sent a letter to von der Leyen calling for enforcement of the EU-Ukraine Association Agreement, which “obliges Ukraine to allow oil shipments to Hungary.” “As confirmed by recently published satellite evidence, there is no technical or operational reason preventing the pipeline from reverting to normal operations immediately,” Orban stated. nmOrban said that Hungary and Slovakia had proposed dispatching a “fact-finding mission” to inspect the pipeline, but their “efforts were rejected.”

In August, Hungary imposed sanctions on Ukraine’s top drone commander Robert Brovdi after attacks on sections of the Druzhba pipeline in Russia. Ukrainian leader Vladimir Zelensky has called on Hungary to stop purchasing energy from Russia. Reuters reported on Tuesday that some EU members, including France and Germany, oppose the idea of granting Ukraine fast-tracked accession to the bloc, citing “rampant corruption.”

Read more …

 

 

 

 

https://twitter.com/Juliedonuts/status/2029187803414671858?s=20 https://twitter.com/AstronomyVibes/status/2029110904508547240?s=20

 

 

 

 

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Bankruptcy For Moderna, Definitely Pfizer

Feb 232022
 
 February 23, 2022  Posted by at 12:36 pm Finance Tagged with: , , , , , , , , , , ,  57 Responses »


Caravaggio The raising of Lazarus 1609

 

 

Justus R. Hope, MD, at Desert Review has a long article up on the views of former Blackrock exec, hedge funder, investment adviser Edward Dowd, along with a neverending list of podcasts. To which I will add a few at the bottom of this article. We’ve seen a few Dowd videos lately, but nothing like this. He should be on Joe Rogan ASAP.

The entire thing is so complete, devastating, shocking, that I don’t know what else to do than give you some quotes. It very much feels like the end of mRNA, and of the FDA in its present shape, because they -the government itself- are deeply complicit in outright investor fraud. Wall Street (“multiple brokerage houses”) is finding this out, Moderna stock is already down 70%, and that’s just the start.

mRNA vaccines are killing and maiming people: “..no matter the effort, one cannot hide the bodies – and “the bodies are piling up.”

Good luck with your vaxx mandates.

 

 

Pfizer & Moderna Investors Run for the Exits

Wall Street investors are dumping their Moderna and Pfizer stock faster than the world can drop the mandates. Moderna is down 70 percent from its high, while Pfizer is off 19 percent. Former Blackrock Executive and investment adviser Edward Dowd calls for Moderna to go to zero and Pfizer to end under ten dollars per share.

How is this possible given that Pfizer now enjoys record earnings per share and a market capitalization of some $270 billion, making it the 29th largest corporation globally? With nothing but profits in sight for the Pharmaceutical giant, what could be the problem?

[..] For the skeptics, consider that Pfizer stock lost $20 billion in market capitalization on February 8, 2022, when their record earnings fell short of more optimistic expectations. Also consider that Moderna’s stock is down some 70 percent from its high of $484 on August 9, 2021, wiping out almost $ 140 billion in investment. Dowd predicts Moderna will drop to zero with bankruptcy as fraud related to concealing the COVID vaccine dangers surfaces, and he predicts Pfizer will become a sub-ten-dollar stock. Dowd explains that the smart money has already left Moderna and will soon be exiting Pfizer.

Dowd foresees an avalanche of lawsuits coming as the insurance industry continues to uncover the legions of mounting deaths coming from the complications of the mRNA COVID-19 vaccines. Dowd teamed up with an insurance industry analyst and researched the life insurance claims. They found that since OneAmerica shocked the world by announcing a 40% rise in non-COVID deaths in younger working-class employees, multiple other insurance companies worldwide have seen the same thing – massive rises in non-COVID deaths. And the evidence inescapably points to the vaccines as the cause.

Meanwhile, the funeral company stocks have outperformed the S&P. “Funeral Home companies are growth stocks. They had a great year in 2021 compared to 2020, and they outperformed the S&P 500. The peer group of Funeral Home stocks was up 40 plus percent while the S&P was up 26 percent – and they started accelerating price-wise in 2021 during the roll-out of the vaccines – You don’t need to be a rocket scientist to connect the dots here.”

Other insurance companies have reported the same or worse death numbers as OneAmerica. For example, “Unum Insurance is up 36%, Lincoln National plus 57%, Prudential plus 41%, Reinsurance Group of America plus 21%, Hartford plus 32%, Met Life plus 24%, and Aegon – which is a Dutch insurer – saw in their US arm plus 57% in the 4th quarter – in the 3rd quarter they saw a 258% increase in death claims.”

 

“They raised (mortality) expectations 300,000 for 2022 over 2021 due to COVID plus ‘indirect COVID,’ which I think we know what that’s code for… They (Aegon) did a $1.4 billion reinsurance deal with Wilton Reinsurance…what they were reinsuring were high face amount individual policies from 1 million to 10 million… (So) I think there is an asymmetric information situation going on in the insurance industry where some people have figured out something’s going on. They are off-loading their risk – they are not going to say what it is as they don’t want that information to get out as they unload the risk.”.

“Someone is going to be the bag holder here.” And Dowd is confident it won’t be the insurance industry. A court in France has already held that a life insurance company cannot be held liable for a death because of the mRNA vaccine. But that does not explain how mRNA manufacturers can be held responsible for an emergency product they were told was liability-free. Aren’t the vaccine manufacturers immunized from lawsuits? After all, they were granted EUA, the specialized Emergency Use Authorization, which means they cannot be held legally accountable for deaths or adverse effects stemming from the experimental vaccines.

The idea is that no company – upon government request – should have to pay for unforeseen complications resulting from an emergency product that they released to the world out of their goodness of the hearts, with the best of intentions. Right? Wrong – not when your company accomplishes this through deceit, also known as fraud. Fraud undoes all these protections. If a company or person intentionally deceives another to profit, we have fraud. If Pfizer’s data showed increased all-cause mortality and hid this to motivate people to take the vaccine while claiming it was safe, then fraud exists.

Under common law, the required elements to prove fraud amount to: #1. A materially false statement or purposeful failure to state or release material facts which non-disclosure makes other statements misleading. #2. The false statement is made to induce Plaintiff to act. #3. The Plaintiff relied upon the false statement, and the injury resulted from this reliance. #4. Damages include a punitive award as a punishment that serves as a public example to discourage any future similar fraud. Punitive damages are generally proportional to the Defendant’s assets.

 

Dowd has been researching the COVID-19 vaccines and what he considers obvious evidence of knowing concealment of the actual risks of death – and he points to the Herculean efforts of Pfizer with FDA in withholding their data despite legal challenges to release it. He likens the FDA today to the rating agencies during the Mortgage Crisis. “FDA is the trusted third party, just like the rating agencies were. And a lot of doctors in this country, a lot of local governments are placing their trust in the FDA which gets 50 percent of its budget from large cap pharma. It wasn’t any one person…I think they overlooked things…An all-cause mortality end-point should have stopped this thing in its tracks – and it didn’t.”

There were more deaths in the vaxxed group than in the unvaxxed. Dowd assumes fraud based upon the FDA backing Pfizer in not releasing their data. He believes this is a knowing attempt to conceal the deaths. “When one party enters into a contract…and fraud was occurring when they entered into that contract, and the other party did not know that – the contract is void and null. There’s no indemnity if this can be proven, and I think it will be.” “Pfizer got blanket immunity with EUA. If fraud occurred, to my mind and what I’m seeing from their refusal to release the data – if there is fraud and it comes out – and we need whistleblowers – and it’s looking more apparent that this product is deadly – fraud eviscerates all contracts – that’s case law. So you go down the daisy chain, and that’s liability – that’s bankruptcy for Moderna, definitely Pfizer.”

Dowd remarks that no matter the effort, one cannot hide the bodies – and “the bodies are piling up.” He notes that the deaths skyrocketed after the vaccine rollout when they should have dropped. And the deaths are what distinguished the 2021-2022 vaccine scandal as far worse than what happened with Enron. “People are dying and being maimed. This is a fraud that goes beyond the pale…We have the VAERS data…We have the DoD leak…And now we have the insurance company results and the funeral home results…We don’t need to think too hard about this…Deaths should have gone down after the vaccines rolled out. This is the most egregious fraud in history of the nation – and it’s global…Pfizer’s involved, and they committed fraud,” Dowd explained.

[..] Dowd emphasized that he is not short on Pfizer or Moderna stock. He explained that he does not profit from their share prices dropping. He also points out that his predictions are not the cause of the steep declines as these occurred before he came out with this analysis. “Let me make a point here. The mainstream media may ignore this. Wall Street is not.”

[..] Edward Dowd cautions those who continue to slumber, “If you are long these two stocks, you are long mandates, you are long government control, and you are long the selling of your freedoms.” Let us get everyone on board the freedom train.

 

 

More Dowd.

Multiple Brokerage Houses Now Investigate MRNA Jabs

EXCLUSIVE: Wall Street Taps Pfizer Whistleblower to Help Probe Alarming Details of Fraud During VAX Clinical Trials; Former Blackrock’s Edward Dowd Drops More Bombs as ***MULTIPLE*** Brokerage Houses Now Investigate MRNA Jabs



 

 

 

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America Can’t Afford to Rebuild

Sep 092017
 
 September 9, 2017  Posted by at 1:21 pm Finance Tagged with: , , , , , , , , , ,  8 Responses »


Adolphe Yvon Genius of America c1870

 

A number of people have argued over the past few days that Hurricane Harvey will NOT boost the US housing market. As if any such argument would or should be required. Hurricane Irma will not provide any such boost either. News about the ‘resurrection’ of New Orleans post-Katrina has pretty much dried up, but we know scores of people there never returned, in most cases because they couldn’t afford to.

And Katrina took place 12 years ago, well before the financial crisis. How do you think this will play out today? Houston is a rich city, but that doesn’t mean it’s full of rich people only. Most homeowners in the city and its surroundings have no flood insurance; they can’t afford it. But they still lost everything. So how will they rebuild?

Sure, the US has a National Flood Insurance Program, but who’s covered by it? Besides, the Program was already $24 billion in debt by 2014 largely due to hurricanes Katrina and Sandy. With total costs of Harvey estimated at $200 billion or more, and Irma threating to cause far more damage than that, where’s the money going to come from?

It took an actual fight just to push the first few billion dollars in emergency aid for Houston through Congress, with four Texan representatives voting against of all people. Who then will vote for half a trillion or so in aid? And even if they do, where would it come from?

 

 

Trump’s plans for an infrastructure fund were never going to be an easy sell in Washington, and every single penny he might have gotten for it would now have to go towards repairing existing roads and bridges, not updating them -necessary as that may be-, let alone new construction.

Towns, cities, states, they’re all maxed out as things are, with hugely underfunded pension obligations and crumbling infrastructure of their own. They’re going to come calling on the feds, but Washington is hitting its debt ceiling. All the numbers are stacked against any serious efforts at rebuilding whatever Harvey and Irma have blown to pieces or drowned.

As for individual Americans, two-thirds of them don’t have enough money to pay for a $500 emergency, let alone to rebuild a home. Most will have a very hard time lending from banks as well, because A) they’re already neck-deep in debt, and B) because the banks will get whacked too by Harvey and Irma. For one thing, people won’t pay the mortgage on a home they can’t afford to repair. Companies will go under. You get the picture.

There are thousands of graphs that tell the story of how American debt, government, financial and non-financial, household, has gutted the country. Let’s stick with some recent ones provided by Lance Roberts. Here’s how Americans have maintained the illusion of their standard of living. Lance’s comment:

This is why during the 80’s and 90’s, as the ease of credit permeated its way through the system, the standard of living seemingly rose in America even while economic growth rate slowed along with incomes. Therefore, as the gap between the “desired” living standard and disposable income expanded it led to a decrease in the personal savings rates and increase in leverage. It is a simple function of math. But the following chart shows why this has likely come to the inevitable conclusion, and why tax cuts and reforms are unlikely to spur higher rates of economic growth.

 

 

There’s no meat left on that bone. There isn’t even a bone left. There’s only a debt-ridden mirage of a bone. If you’re looking to define the country in bumper-sticker terms, that’s it. A debt-ridden mirage. Which can only wait until it’s relieved of its suffering. Irma may well do that. A second graph shows the relentless and pitiless consequences of building your society, your lives, your nation, on debt.

 

 

It may not look all that dramatic, but look again. Those are long-term trendlines, and they can’t just simply be reversed. And as debt grows, the economy deteriorates. It’s a double trendline, it’s as self-reinforcing as the way a hurricane forms.

 

Back to Harvey and Irma. Even with so many people uninsured, the insurance industry will still take a major hit on what actually is insured. The re-insurance field, Munich RE, Swiss RE et al, is also in deep trouble. Expect premiums to go through the ceiling. As your roof blows off.

We can go on listing all the reasons why, but fact is America is in no position to rebuild. Which is a direct consequence of the fact that the entire nation has been built on credit for decades now. Which in turn makes it extremely vulnerable and fragile. Please do understand that mechanism. Every single inch of the country is in debt. America has been able to build on debt, but it can’t rebuild on it too, precisely because of that.

There is no resilience and no redundancy left, there is no way to shift sufficient funds from one place to the other (the funds don’t exist). And the grand credit experiment is on its last legs, even with ultra low rates. Washington either can’t or won’t -depending on what affiliation representatives have- add another trillion+ dollars to its tally, state capitals are already reeling from their debt levels, and individuals, since they have much less access to creative accounting than politicians, can just forget about it all.

Not that all of this is necessarily bad: why would people be encouraged to build or buy homes in flood- and hurricane prone areas in the first place? Why is that government policy? Why is it accepted? Yes, developers and banks love it, because it makes them a quick buck, and then some, and the Fed loves it because it keeps adding to the money supply, but it has turned America into a de facto debt colony.

If you want to know what will happen to Houston and whatever part of Florida gets hit worst, think New Orleans/Katrina, but squared or cubed -thanks to the 2007/8 crisis.

 

 

Debt Rattle August 31 2017

Aug 312017
 
 August 31, 2017  Posted by at 8:25 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


Prohibition sale June 24 1920

 

• Hurricane Harvey the Costliest Natural Disaster in US History (H.)
• “No Way To Prevent Imminent Explosion” At Texas Chemical Plant (ZH)
• Texans To Be Hit With New Insurance Law (Ind.)
• A Decade of G7 Central Bank Collusion – And Counting… (Nomi Prins)
• It’s Time For Your Reminder That Most Commodities Are Priced In US Dollars (BI)
• A Universal Basic Income Would Grow The Economy (Vox)
• The Promise of Fiscal Money (Varoufakis)
• America and China’s Codependency Trap (Stephen Roach)
• Financial Firms Fear Turmoil Over Fraught US Debt Ceiling Talks (R.)
• Weird Things Are Happening With Gold (Rickards)
• ‘More Europe’ Won’t Solve Europe’s Fiscal Quandary (BBG)
• Victory For Assad Increasingly Likely As World Loses Interest In Syria (G.)
• ‘Our Society Is Broken’: Canada’s First Nations Suicide Epidemic (G.)

 

 

$160 billion and counting.

• Hurricane Harvey the Costliest Natural Disaster in US History (H.)

Hurricane Harvey is predicted to be the costliest natural disaster in the history of the U.S., with a damage cost exceeding Hurricanes Sandy and Katrina. AccuWeather predicts that the damage cost will hit $160 billion. AccuWeather, a private weather firm, notes that the storm’s cost represents 0.8% of the national GDP, which is now at $19 trillion. “Business leaders and the Federal Reserve, major banks, insurance companies, etc. should begin to factor in the negative impact this catastrophe will have on business, corporate earnings and employment. The disaster is just beginning in certain areas,” AccuWeather founder Dr. Joel N. Myers said in a statement.

“Parts of Houston, the United States’ fourth largest city will be uninhabitable for weeks and possibly months due to water damage, mold, disease-ridden water and all that will follow this 1,000-year flood.” Before Harvey, the costliest hurricane to hit the U.S. was Hurricane Katrina, which caused $108 billion in damage along the Gulf Coast in 2005. The second-costliest was Hurricane Sandy, which caused $75 billion in damage in 2012. Hurricane Ike, the last storm to make landfall in Texas before Harvey, caused $37.5 billion in damage in 2008. [..] The Associated Press reports that 80% of Harvey’s victims do not have flood insurance. Thousands of families will have to take on more debt or spend much more to fix their homes. Others will sell their property to move out.

Robert Hunter, director of insurance at the Consumer Federation of America, estimated that flood damage alone cost at least $35 billion. Hunter explained to the AP that if you don’t have flood insurance, you can apply for federal disaster benefits. However, these are low interest loans that will add more debt. Homeowners insurance covers water damage caused by wind damage, but not if the water comes through the floor or walls, the AP explains. “Homeowners with water damage can get paid through their homeowners insurance but only if wind blows out a window or sends a roof aloft first, allowing the water in,” the AP notes. “If the water rushes through the floorboard or walls, you’re not covered.”

Read more …

There have been scores of chemicals released into the air already in the area.

• “No Way To Prevent Imminent Explosion” At Texas Chemical Plant (ZH)

[..] in a potentially disastrous outcome from the Harvey flooding, a chemical plant in Crosby, Texas belonging to French industrial giant Arkema, has announced it is evacuating workers due to the risk of an explosion, after primary power was knocked out and flooding swamped its backup generators. The French company said the situation at the plant “has become serious” and said that it is working with the Department of Homeland Security and the State of Texas to set up a command post in a suitable location near our site. The plant, which produces explosive organic peroxides and ammonia, was hit by more than 40 inches of rain and has been heavily flooded, running without electricity since Sunday. The plant was closed since Friday but has had a skeleton staff of about a dozen in place.

Following the flood surge, the plant’s back-up generators also failed. The threat emerged once the company could no longer maintain refrigeration for chemicals located on site, which have to be stored at low temperatures. The plant lost cooling when backup generators were flooded and then workers transferred products from the warehouses into diesel-powered refrigerated containers. On Tuesday afternoon, the company released a statement which admitted that “refrigeration on some of our back-up product storage containers has been compromised due to extremely high water, which is unprecedented in the Crosby area. We are monitoring the temperature of each refrigeration container remotely.” It then warned that “while we do not believe there is any imminent danger, the potential for a chemical reaction leading to a fire and/or explosion within the site confines is real.”

One day later, and with the torrential rains finally over, has the situation at the giant peroxide chemical plant stabilized? Unfortunately, according to Reuters, the answer is no. Speaking to reporters on Wednesday afternoon, Richard Rowe, the chief executive of Arkema’s American operations said that “the company has no way of preventing chemicals from catching fire or exploding at its heavily flooded plant.” Rowe added that the company now expects chemicals on site to catch fire or explode within the next six days. Since the plant remains flooded by about six feet of water, “the company has no way to prevent” this worst-case outcome. Anticipating the worst, the company earlier evacuated all remaining workers, while Harris County ordered the evacuation of residents in a 1.5-mile radius of the plant that makes organic chemicals.

Read more …

Insult. Injury.

• Texans To Be Hit With New Insurance Law (Ind.)

The embattled populations of southeastern Texas, may soon encounter a new obstacle in their quests to rebuild their lives after Harvey when a new state insurance law that makes it harder for consumers to receive full claims goes into effect Friday. The new law decreases the chances that an insurance company will be forced to pay claim delay penalties and plaintiff attorneys’ fees related to weather-involved claims — a protection that may discourage struggling households from pursuing legal action even if they think the insurance companies are offering less of a payout than they should. Under the new regulations, insurance companies will enjoy greater freedoms to push back on insurance claims, and the first wave of such claimants are likely to be coming from areas impacted by Harvey.

Residents reeling from Harvey now have until just Friday to assess the damages to their homes that may still be under water, and to notify their insurance company of nay damages if they want to avoid navigating that new law. After Friday, new legal restrictions will be in place that make things more difficult for consumers, and interest rates imposed on insurance companies to deter late payments will be cut nearly in half. “Without this law, and as the law currently is until Friday, I think insurance companies would be more responsive to claims,” Kir Pittard, a Dallas attorney, wrote on Facebook of the new law. “After Friday, there won’t be the incentive because the penalty for delays have been reduced.” To put it bluntly, a lot of residents in the impact area of Harvey may face a long battle ahead to replace the roofs torn off their homes from high winds, activists say.

“Insurance companies already had a lot of power, and the bill gives them a lot more power. As we know, too often insurance companies wrongfully withhold payments, they delay payments, they deny claims,” Ware Wendell, the executive director of consumer watchdog group Texas Watch, told The Independent. “So, we’re very concerned that people are going to have blue tarps on their homes instead of roofs.”

Read more …

Nomi sees central banks the same way I do.

• A Decade of G7 Central Bank Collusion – And Counting… (Nomi Prins)

Since late 2007, the Federal Reserve has embarked on grand-scale collusion with other G-7 central banks to manufacture a massive amount of money. The scope and degree of this collusion are historically unprecedented and by admission of the perpetrators, unconventional in approach, and – depending on the speech – ineffective. Central bank efforts to provide liquidity to the private banking system have been delivered amidst a plethora of grandiose phrases like “unlimited” and “by all means necessary.” Central bankers have played a game with no defined goalposts, no clock rundown, no max scores, and no true end in sight. At the Fed’s instigation, central bankers built policy on the fly. Their science experiment morphed into something even Dr. Frankenstein couldn’t have imagined.

Confidence in the Fed and the U.S. dollar (as well as in other major central banks globally) has dropped considerably, even as this exercise remains in motion, and even though central bankers have tactiltly admitted that their money creation scheme was largely a bust, though not in any one official statement. On July 31, 2017, Stanley Fischer, vice chairman of the Fed, delivered a speech in Rio de Janeiro, Brazil. There, he addressed the phenomenon of low interest rates worldwide. Fischer admitted that “the effects of quantitative easing in the United States and abroad” are suppressing rates. He also said there was “a heightened demand for safe assets affecting yields on advanced-economy government securities.” (Actually, there’s been heighted demand for junky assets, as well, which has manifested in a bi-polarity of saver vs. speculator preference.)

What Fischer meant was that investors are realizing that low rates since 2008 haven’t fueled real growth, just asset bubbles. Remember, Fischer is the Fed’s No. 2 man. He was also a professor to former Fed Chair Ben Bernanke and current European Central Bank President Mario Draghi. Both have considered him to be a major influence in their economic outlook. The “Big Three” central banks – the Fed, the European Central Bank and the Bank of Japan – have collectively held rates at a zero% on average since the global financial crisis began. For nearly a decade, central banks have been batting about tens of trillions of dollars to do so. They have fueled bubbles. They have amassed assets on their books worth nearly $14 trillion. That’s money not serving any productive, real-economy purpose – because it happens to be in lock-down.

Read more …

When the reserve currency sinks, strange things can happen.

• It’s Time For Your Reminder That Most Commodities Are Priced In US Dollars (BI)

The commodity rally since June has been impressive, and it could be tied to weakness in the US dollar. Those sharp increases — ranging between 15-40% — have had Morgan Stanley strategists slightly puzzled. On one hand, bulk commodities such as iron ore and coal have benefited from steady increases in demand. “Similarly, restocking in zinc and nickel markets have helped lift prices of those trades,” the analysts said. However, they added that fundamentals alone can’t explain the rise in the prices of copper, aluminium and lead. That suggests some of the price action is being driven by an external factor: the recent weakness in the US dollar. The analysts noted that this is the second commodity rally within the last year that’s been directly connected to the US dollar.

But the first one was the other way round — commodities staged a 4-week rally in the wake of the US election last November, when the US dollar was also rising. So why the difference? According to Price and Bates, it’s because the outlook for inflation has now largely reversed. “Post-election, markets positioned for new inflation risk, on the promise of a US infra-build story,” they said. But infrastructure reform is yet to get off the ground amid political gridlock in Washington, and US inflation remains stuck below the Federal Reserve’s target rate of 2-3%. Currency markets have reacted by driving the US dollar lower throughout most of 2017. So it follows that commodities priced in US dollars have benefited from a fall in the greenback while overall commodity-demand remains unchanged.

Read more …

Try it in a smaller country first?!

• A Universal Basic Income Would Grow The Economy (Vox)

A universal basic income could make the US economy trillions of dollars larger, permanently, according to a new study by the left-leaning Roosevelt Institute. Basic income, a proposal in which every American would be given a basic stipend from the government no strings attached, is often brought up as a potential solution to widespread automation reducing demand for labor in the future. But in the meantime, its critics typically allege that it is far too expensive to be practical, or else that it would spur millions of Americans to drop out of the labor force, wrecking the economy and depriving the government of a tax base for funding the plan. The Roosevelt study, written by Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy, comes to a dramatically different conclusion.

And it does so using some notably rosy assumptions about the effects of large-scale increases to government spending, taxes, and deficits, assumptions that other analysts would dispute vociferously. Their paper analyzes three different models for a universal basic income: • A full universal basic income, in which every adult gets $1,000 a month ($12,000 a year) • A partial basic income, in which every adult gets $500 a month ($6,000 a year) • A child allowance, in which every child gets $250 a month ($3,000 a year) They find that enacting any of these policies by growing the federal debt — that is, without raising taxes to pay for it — would substantially grow the economy. The effect fades away within eight years, but GDP is left permanently higher. The big, $12,000 per year per adult policy, they find, would permanently grow the economy by 12.56 to 13.10% — or about $2.5 trillion come 2025.

It would also, they find, increase the%age of Americans with jobs by about 2%, and expand the labor force to the tune of 4.5 to 4.7 million people. They also model the impact of the plan if it’s paid for with taxes. That amounts to large-scale income redistribution, which, the authors argue, would stimulate the economy, because lower-income people are likelier to spend their money in the near-term than rich people are. Thus, they find that a full $12,000 a year per adult basic income, paid for with progressive income taxes, would grow the economy by about 2.62% ($515 billion) and expand the labor force by about 1.1 million people.

These are extremely contentious estimates, borne of controversial assumptions about the way the economy works and the effects that a basic income would have on it. Many, if not most, economic modelers would come to very different conclusions: that a basic income discourages work, that raising taxes to pay for it could have profound negative economic impacts, and that not paying for it and exploding the deficit is a recipe for fiscal and economic ruin. But the authors argue that the economic model they’re using, run by the Bard College Levy Economics Institute, uses more realistic assumptions than alternative models, and is particularly well-suited for predicting a UBI’s impact.

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Part of Yanis’ plans for Greece. A parallel system.

• The Promise of Fiscal Money (Varoufakis)

any attempt to bring treasuries and central banks back under one roof would expose politicians to accusations of trying to get their grubby hands on the levers of monetary policy. But another response to the new reality is available: Leave central banks alone, but give governments a greater say in domestic money creation – and, indeed, greater independence from the central bank – by establishing a parallel payments system based on fiscal money or, more precisely, money backed by future taxes. How would fiscal money work? For starters, it would “live” on the tax authority’s digital platform, using the existing tax file numbers of individuals and companies. Anyone with a tax file number (TFN) in some country receives a free account linked to their TFN.

Individuals and firms will then be able to add credit to their TFN-linked account by transferring money from their normal bank account, in the same way that they do today to pay their taxes. And they will do so well in advance of tax payments because the state guarantees to extinguish in, say, a year €1,080 of the tax owed for every €1,000 transferred today – an effective annual interest rate of 8% payable to those willing to pay their taxes a year early. In practice, once, say, €1,000 has been transferred to one’s TFN-linked account, a personal identification number (the familiar PIN) is issued, which can be used either to transfer the €1,000 credit to someone else’s TFN-linked account or to pay taxes in the future. These time-stamped future tax euros, or fiscal euros, can be held for a year until maturity or be used to make payments to other taxpayers.

Smartphone apps and even government-issued cards (doubling as, say, social security ID) will make the transactions easy, fast, and virtually indistinguishable from other transactions involving central bank money. In this closed payments system, as fiscal money approaches maturity, taxpayers not in possession of that vintage will fuel rising demand for it. To ensure the system’s viability, the Treasury would control the total supply of fiscal money, using the effective interest rate to guarantee that the nominal value of the total supply never exceeds a%age of national income, or of aggregate taxes, agreed by the legislature. To ensure full transparency, and thus trust, a blockchain algorithm, designed and supervised by an independent national authority, could settle transactions in fiscal money.

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Is it low savings or high debt levels?

• America and China’s Codependency Trap (Stephen Roach)

Caught up in the bluster of the US accusations being leveled at China, little attention is being paid to the potential consequences of Chinese retaliation. Three economic consequences stand out. First, imposing tariffs on imports of Chinese goods and services would be the functional equivalent of a tax hike on American consumers. Chinese producers’ unit labor costs are less than one fifth those of America’s other major foreign suppliers. By diverting US demand away from Chinese trade, the costs of imported goods would undoubtedly rise sharply. The possibility of higher import prices and potential spillover effects on underlying inflation would hit middle-class US workers, who have faced more than three decades of real wage stagnation, especially hard.

Second, trade actions against China could lead to higher US interest rates. Foreigners currently own about 30% of all US Treasury securities, with the latest official data putting Chinese ownership at $1.15 trillion in June 2017 – fully 19% of total foreign holdings and slightly higher than Japan’s $1.09 trillion. In the event of new US tariffs, it seems reasonable to expect China to respond by reducing such purchases, reinforcing a strategy of asset diversification away from US dollar-based assets that has been under way for the past three years. In an era of still-large US budget deficits – likely to go even higher in the aftermath of Trump administration tax cuts and spending initiatives – the lack of demand for Treasuries by the largest foreign owner could well put upward pressure on borrowing costs.

Third, with growth in US domestic demand still depressed, American companies need to rely more on external demand. Yet the Trump administration seems all but oblivious to this component of the growth calculus. It is threatening trade sanctions not only against China – America’s third-largest and fastest-growing major export market – but also against NAFTA partners Canada and Mexico (America’s largest and second-largest export markets, respectively). As the reactive pathology of codependency would suggest, none of these countries can be expected to acquiesce to such measures without curtailing US access to their markets – a counter-response that could severely undermine the manufacturing revival that seems so central to the Trump presidency’s promise to “Make America Great Again.”

In the end, China’s economic leverage over America is largely the result of low US domestic saving. In the first quarter of 2017, the so-called net national saving rate – the combined depreciation-adjusted saving of businesses, households, and the government sector – stood at just 1.9% of national income, well below the longer-term average of 6.3% that prevailed over the final three decades of the twentieth century. Lacking in saving and wanting to consume and grow, the US must import surplus saving from abroad to close the gap, forcing it to run massive current-account and trade deficits with countries like China to attract the foreign capital.

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“..the now-notorious 2011 standoff led S&P Global Ratings to downgrade U.S. sovereign debt for the first time. The episode wiped $2.4 trillion off U.S. stocks.”

• Financial Firms Fear Turmoil Over Fraught US Debt Ceiling Talks (R.)

Financial firms are sounding alarm bells and dusting off contingency plans over fears an increasingly dysfunctional U.S. Congress may fail to reach a deal to raise the country’s debt limit. Several lobbyists, representing dozens of bankers, investors and credit rating agencies, told Reuters they are worried that dynamics at play in Washington – a bitterly divided Republican party and unpredictable President Donald Trump – could rule out a deal before an October deadline. Policymakers have vowed to provide disaster relief to areas affected by Hurricane Harvey, boosting hopes the debt limit battle could be included in an agreement on a legislative package.

But the acrimonious atmosphere following Trump’s remarks about the Charlottesville protests this month, which cost him key backers in the business community and raised worries about his ability to broker a deal, still lingers. The debt ceiling is a legal cap on how much money the government can borrow to fund its budget deficits and meet debt obligations. Failure to raise it from the current $19.8 trillion could lead to default, sending shockwaves across global markets. “The stakes here are incredibly high. The economic impact associated with debt default is so immense,” said Rob Nichols, president and CEO of the American Bankers Association (ABA), one of the country’s key financial lobby groups. “We’re monitoring this extremely closely and we will mobilize as needed throughout September.”

While leading lawmakers and the administration have pledged it will get done, some corners of financial markets are already on edge. After all, Goldman Sachs estimated that failure to lift the cap would force a government spending cut equal to between 3 and 4% of U.S. gross domestic product, which would have crippling economic consequences. Moreover, previous debt limit negotiations went down to the wire, and the now-notorious 2011 standoff led S&P Global Ratings to downgrade U.S. sovereign debt for the first time. The episode wiped $2.4 trillion off U.S. stocks.

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“U.S. gold is currently officially valued at $42.22 per ounce on the Treasury’s books versus a market price of $1,285 per ounce”

• Weird Things Are Happening With Gold (Rickards)

The first strange gold story involves Germany… The Deutsche Bundesbank, the central bank of Germany, announced that it had completed the repatriation of gold to Frankfurt from foreign vaults. The German story is the completion of a process that began in 2013. That’s when the Deutsche Bundesbank first requested a return of some of the German gold from vaults in Paris, in London and at the Federal Reserve Bank of New York. Those gold transfers have now been completed. This is a topic I first raised in the introduction to Currency Wars in 2011. I suggested that in extremis, the U.S. might freeze or confiscate foreign gold stored on U.S. soil using powers under the International Emergency Economic Powers Act, the Trading With the Enemy Act or the USA Patriot Act.

This then became a political issue in Europe with agitation for repatriation in the Netherlands, Germany and Austria. Europeans wanted to get gold out of the U.S. and safely back to their own national vaults. The German transfer was completed ahead of schedule; the original completion date was 2020. But the German central bank does not actually want the gold back because there is no well-developed gold-leasing market in Frankfurt and no experience leasing gold under German law. German gold in New York or London was available for leasing under New York or U.K. law as part of global price-manipulation schemes. Moving gold to Frankfurt reduces the floating supply available for leasing, making it more difficult to keep the manipulation going.

Why did Germany do it? The driving force both in 2013 (date of announcement) and 2017 (date of completion) is that both years are election years in Germany. Angela Merkel’s position as chancellor of Germany is up for a vote on Sept. 24, 2017. She may need a coalition to stay in power, and there’s a small nationalist party in Germany that agitates for gold repatriation. Merkel stage-managed this gold repatriation with the Deutsche Bundesbank both in 2013 and this week to appease that small nationalist party and keep them in the coalition. That’s why the repatriation was completed three years early. She needs the votes now.

The truly weird gold story comes from the United States… Secretary of the Treasury Steve Mnuchin and Senate Majority Leader Mitch McConnell just paid a visit to Fort Knox to see the U.S. gold supply. Mnuchin is only the third Treasury secretary in history ever to visit Fort Knox and this was the first official visit from Washington since 1974. The U.S. government likes to ignore gold and not draw attention to it. Official visits to Fort Knox give gold some monetary credence that central banks would prefer it does not have. Why an impromptu visit by Mnuchin and McConnell? Why now? The answer may lie in the fact that the Treasury is running out of cash and could be broke by Sept. 29 if Congress does not increase the debt ceiling by then. But the Treasury could get $355 billion in cash from thin air without increasing the debt simply by revaluing U.S. gold to a market price. (U.S. gold is currently officially valued at $42.22 per ounce on the Treasury’s books versus a market price of $1,285 per ounce.)

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Naked power plays.

• ‘More Europe’ Won’t Solve Europe’s Fiscal Quandary (BBG)

To a certain cast of people, the solution to every problem in Europe is “more Europe” – even, or especially, those problems that have been caused by Europe. The economic crisis that began a decade ago has exposed many flaws in the European economic model. The solution? Some are calling for a euro-zone budget and a euro-zone finance minister. France’s new president, Emmanuel Macron, is dedicated to the idea. Berlin has signaled conditional support. And Brussels is always happy to accrue more power. The idea makes superficial sense: Monetary union, most people now accept, doesn’t really work without fiscal union. The European Central Bank is constantly under pressure to loosen monetary policy to help the weakest euro members, and to keep it tight to help the strongest. But currency is a blunt instrument.

The “more Europe” thinking is that if the EU had a large budget, it could redistribute wealth to more directly help struggling members. (This is what happens in the U.S.) A powerful finance minister would oversee member countries to keep deficits and debts down and prevent debt crises. Except that that doesn’t make much sense: As Martin Sandbu points out, the U.S. federal budget, hovering at around 20% of GDP, isn’t enough to act as much of a macro-economic stabilizer, and nobody contemplates an EU budget of even that scale in the foreseeable future. Regardless, the so-called debt crises in the euro zone were not ultimately caused by deficits and debts as such, but by monetary phenomena. The euro made Mediterranean countries uncompetitive, leading to slow growth and debt and deficits, and the interest on those debts spiked only when the implicit euro-zone-wide guarantee on those debts was called into question by Germany.

What of Germany, which is essential to any EU reform effort? Germany historically, and Angela Merkel especially, has always been keen on more European integration – but also doesn’t want to pay for it. German Finance Minister Wolfgang Schaeuble has favored the idea of an EU budget – with a little-noticed but all-important asterisk. EU countries’ access to a European macroeconomic stabilization fund would be conditioned on “the bailout fund having more say over national debt and budgets,” he told the German Bild newspaper. In other words, Germany would be happy to pay a little something toward a macro-economic stabilization fund in exchange for having practical control over the budgets of all the euro-zone countries.

The commitment to pay into the fund is probably not daunting, because the budgetary orthodoxy rules Germany would come up with would be unattainable, and the money would probably never be spent. In other words, Macron and the “more Europe” camp are willing to hand Germany control over the euro zone’s finances, in exchange for … well, perhaps nothing. It’s an offer that Merkel can’t refuse.

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No, it’s not ideal. But at least all-out chaos like in Libya has been prevented.

• Victory For Assad Increasingly Likely As World Loses Interest In Syria (G.)

In recent months, as supplies of aid, money and weapons to Syria’s opposition have dwindled, it had clung to the hope that ongoing international political support would prevent an outright victory for Bashar al-Assad and his backers. Not any more. An announcement earlier this week by Jordan – one of the opposition’s most robust supporters – that “bilateral ties with Damascus are going in the right direction” has, for many, marked a death knell for the opposition cause. Within the ranks of the political opposition, and regional allies, the statement was the opening act of something that all had dreaded: normalisation with a bitter foe. And without anything much to show for it.

Emphasising his words, Jordanian government spokesman Mohammad al-Momani said: “This is a very important message that everyone should hear.” And indeed, the about-face in Amman was quickly noted in Ankara, Doha, and Riyadh, where – after seven and a-half years of war – states that were committed to toppling the Syrian leader are now resigned to him staying. Returning from a summit in the Saudi capital last week, opposition leaders say they were told directly by the foreign minister, Adel al-Jubeir, that Riyadh was disengaging. “The Saudis don’t care about Syria anymore,” said a senior western diplomat. “It’s all Qatar for them. Syria is lost.”

In Britain too, rhetoric that had demanded Assad leave the Presidential Palace, as a first step towards peace, has been replaced by what Whitehall calls “pragmatic realism”. The foreign secretary, Boris Johnson, last week couched Assad’s departure as “not a precondition. But part of a transition.” Rex Tillerson, the US secretary of state, has openly delegated finding a solution to Syria to Russia. Donald Trump, meanwhile, has pledged to close a CIA-run programme, which had sent weapons from Jordan and Turkey to vetted Syrian rebel groups for much of the past four years. Washington has adopted a secondary role in twin, ailing, peace processes in Geneva and Astana and has focused its energies on fighting Isis, not Assad.

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How long ago is it that Justin vowed to fix this? “.. more than 100 reserves still lack housing, electricity or running water “

• ‘Our Society Is Broken’: Canada’s First Nations Suicide Epidemic (G.)

The suicide epidemic affecting First Nations communities across Canada has been a national crisis for decades, but it attracted international headlines after three indigenous communities were moved to declare a state of emergency in response to a series of deaths. In the spring of 2016, Attawapiskat First Nation reserve in Ontario declared a state of emergency after 11 young people tried to commit suicide in one night – adding to the estimated 100 attempts made over 10 months among this community of 2,000 people. Not long after, it was revealed that six people, including a 14-year-old girl, had killed themselves over a period of three months in the Pimicikamak Cree Nation community of northern Manitoba. In the aftermath, more than 150 youths in this remote community of 6,000 were put on suicide watch.

Then in June this year, another First Nations reserve in Ontario lost three 12-year-old girls who had reportedly agreed a suicide pact. This string of tragic events has seen media and government turn the spotlight on an issue too often ignored in Canada. Across the country, suicide and self-inflicted injury is the leading cause of death for First Nations people below the age of 44. Studies show young indigenous males are 10 times more likely to kill themselves than their non-indigenous male counterparts, while young indigenous females are 21 times more likely than young non-indigenous females. [..] The government has been criticised for its lack of support and funding for First Nations communities, which total 1.4 million people – just under 4.3% of Canada’s population. “We call that injustice,” says Roderick McCormick, an expert in indigenous health and suicide at Thompson Rivers University in Kamloops BC.

He suggests a complex web of severe poverty plus lack of education and basic necessities underpins the rise in suicides among indigenous youths. “In terms of educational opportunities, healthcare and child welfare, the government is doing an injustice by not adequately funding our communities,” McCormick says. “When these remote reserves compare themselves to other communities across Canada, there is a huge gap that has become really evident.” Recent research has found more than 100 reserves still lack housing, electricity or running water – with almost 90 of them being advised to boil their drinking water. Another study by the Canadian Centre for Policy Alternatives found that 60% of children on these reserves are living in poverty. “The communities I represent are living in abject poverty,” Wilson says. “My people are the poorest in this country, and that’s not right.”

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Debt Rattle August 28 2017

Aug 282017
 
 August 28, 2017  Posted by at 9:01 am Finance Tagged with: , , , , , , , , ,  5 Responses »


Lou Reed New York City 1966

 

• Harvey’s Cost Reaches Catastrophe: Only 15% Of Homes Have Flood Insurance (BBG)
• Gasoline Surges, Oil Holds Near $48 as Harvey Shuts Refineries (BBG)
• Mammoth Flood Disaster in Houston: More Rain Yet to Come (WU)
• The Coming Collapse Of China’s Ponzi Scheme Economy (SCMP)
• What’s Driving The Growth In US ‘Shadow Banking’ (CBR)
• Volatility Makes a Comeback (Rickards)
• YouTube “Economically Censors” Ron Paul (ZH)
• Should The Rich Be Taxed More? (G.)
• The West’s Wealth Is Based On Slavery. Reparations Should Be Paid (G.)
• Danone Sends 5,000 Cows to Siberia in Quest for Cheaper Milk (BBG)

 

 

The real tragedy takes place below the surface. Sort of literally. Much more rain to come.

• Harvey’s Cost Reaches Catastrophe: Only 15% Of Homes Have Flood Insurance (BBG)

Hurricane Harvey’s second act across southern Texas is turning into an economic catastrophe – with damages likely to stretch into tens of billions of dollars and an unusually large share of victims lacking adequate insurance, according to early estimates. Harvey’s cost could mount to $24 billion when including the impact of relentless flooding on the labor force, power grid, transportation and other elements that support the region’s energy sector, Chuck Watson, a disaster modeler with Enki Research, said by phone on Sunday. That would place it among the top eight hurricanes to ever strike the U.S. “A historic event is currently unfolding in Texas,” Aon wrote in an alert to clients. “It will take weeks until the full scope and magnitude of the damage is realized,” and already it’s clear that “an abnormally high portion of economic damage caused by flooding will not be covered,” the insurance broker said.

[..] Most people with flood insurance buy policies backed by the federal government’s National Flood Insurance Program. As of April, less than one-sixth of homes in Houston’s Harris County had federal coverage, according to Aon. That would leave more than 1 million homes unprotected in the county. Coverage rates are similar in neighboring areas. Many cars also will be totaled. “A lot of these people are going to be in very serious financial situations,” said Loretta Worters, a spokeswoman for the Insurance Information Institute. “Most people who are living in these areas do not have flood insurance. They may be able to collect some grants from the government, but there are not a lot, usually they’re very limited. There are no-interest to low-interest loans, but you have to pay them back.”

The federal program itself is already struggling with $25 billion of debt. The existing program is set to expire on Sept. 30 and is up for review in Congress, which ends its recess Sept. 5. Costs still will likely soar for insurance companies and their reinsurers, biting into earnings. As Harvey bore down on the coastline Friday, William Blair, a securities firm that tracks the industry, said the storm could theoretically inflict $25 billion of insured losses if it landed as a “large category 3 hurricane.” Policyholder-owned State Farm Mutual Automobile Insurance has the largest share in the market for home coverage in Texas, followed by Allstate, which is publicly traded. William Blair estimated that, in that scenario, Allstate could incur $500 million of pretax catastrophe losses, shaving 89 cents off of earnings per share.

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Most shutdowns so far are precautionary. But…

• Gasoline Surges, Oil Holds Near $48 as Harvey Shuts Refineries (BBG)

Gasoline surged to the highest in two years and oil was steady as flooding from Tropical Storm Harvey inundated refining centers along the Texas coast, shutting more than 10% of U.S. fuel-making capacity. Motor fuel prices rose as much as 6.8%, while oil held gains near $48 a barrel. Harvey, the strongest storm to hit the U.S. since 2004, made landfall as a hurricane Friday, flooding cities and shutting plants able to process some 2.26 million barrels of oil a day. Pipelines were closed, potentially stranding some crude in West Texas and starving New York Harbor of gasoline. Gasoline prices are going to continue to rise this week as we expect another three days of rain in the Houston area,” Andy Lipow, president of consultant Lipow Oil in Houston, said by phone.

“With pipeline operators beginning to shut down their crude oil and refined product infrastructure, I expect to see further curtailment of refinery operations. A spike in gasoline and diesel prices will drag up crude oil prices.” Oil has traded this month in the tightest range since February as investors weigh rising global supply against output cuts by members of OPEC and its allies. As Harvey led to widespread flooding, Shell shut its Deer Park plant, while Magellan Midstream suspended its inbound and outbound refined products and crude pipeline transportation services in the Houston area. Gasoline for September delivery climbed as much as 11.33 cents to $1.7799 a gallon on the New York Mercantile Exchange, the highest intraday price for a front-month contract since July 2015.

It traded at $1.7621 at 12:36 p.m. in Hong Kong. West Texas Intermediate oil for October delivery fell 16 cents to $47.71 a barrel after advancing 0.9% on Friday. Brent crude’s premium to WTI widened to the largest in two years with the global benchmark trading at as much as $4.96 above the U.S. marker. Brent for October settlement gained 18 cents, or 0.3%, to $52.59 a barrel on the London-based ICE Futures Europe exchange.

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Waether Underground is probably the best source.

• Mammoth Flood Disaster in Houston: More Rain Yet to Come (WU)

Harvey’s winds are expected to remain modest, and it could become a tropical depression at any point, but winds are not the problem here. The NOAA/NWS National Hurricane Center now predicts that Harvey will inch its way into the Gulf of Mexico—though just barely—by Monday night, then arc northeast and make a second landfall just west of Houston on Wednesday. The 12Z GFS and 00Z European model runs agree on a general northward motion for Harvey across eastern Texas, beginning around midweek. At this point it may make little difference whether Harvey stays just inland or moves just offshore, since rainbands would continue to be funneled toward Houston either way. The fine-scale particulars of this outlook may shift over time, but the overall message is consistent: Harvey will be a devastating rainmaking presence in southeast Texas for days to come.

Harvey’s circulation is located in a near-ideal spot for funneling vast amounts of moisture from the Gulf of Mexico toward the upper Texas coast. Here, converging winds at low levels have been concentrating the moisture into north-south-oriented bands of intense thunderstorms with torrential rain. Since Harvey is barely moving, these bands are creeping only slowly eastward as individual cells race north along them—a “training” set-up that is common in major flood events. Mesoscale models, our best guidance for short-term, small-scale behavior of thunderstorms, show little sign of relief for southeast Texas anytime soon. Convection-resolving mesoscale models, which have a tight enough resolution to depict individual thunderstorms, are an invaluable tool in situations like this. The mesoscale nested NAM model predicts that 20” – 30” of additional rainfall is likely through Tuesday across the Houston metro area, with even larger totals at some points.

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Hmm. But what if China manages to unload all its overcapacity on the Belt Road, and makes other countries pay?

• The Coming Collapse Of China’s Ponzi Scheme Economy (SCMP)

Friends who have a greater interest than I do in reading the tea leaves in Beijing tell me that the emphasis in relations with Hong Kong from now on will be on one country rather than two systems. I think this phrases things the wrong way. The one country bit was never in issue. What they actually mean to say is that Beijing’s system of state command of the economy will become dominant and Hong Kong’s more freewheeling system will fade away. I don’t think it will happen. In my view human society is so dynamic that no command system can last long in charge of an economy. Attempts at this particular form of hubris inevitably end in either war or financial crisis. For the Soviet Union it was financial crisis. I think the same fate awaits Beijing.

Consider crude steel production, a test-tube example of how command economies get it wrong. In the mainland this stood in June at an all time monthly record of 73 million tonnes, five times the total production in all of Europe. Steel was recently targeted for a reduction in capacity but then a regime of easy money intended to help the industry overcome a difficult period of contraction instead stimulated production. It has happened across the mainland’s rust belt industries. Why is so much steel needed? Simple. It is needed to build more steel mills so as to build more shipyards, ports, railways and bridges so that more ships can be built to carry more iron ore to more ports and thence along more rails and bridges to more steel mills so as to build more shipyards, ports, railways …

What we have here, in short, is a giant Ponzi scheme. In a Ponzi scheme you pay out the winnings of the first entrants with what others later pay into it. As long as it keeps growing everything is fine. When it stops growing it collapses. In this case you justify production with demand based purely on more production. As long as you keep pushing production up everything looks fine. At its peak in 2014 China turned out 30 times more cement than the United States, and the latest production figures are only a smidgen less than 2014’s.

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What do you think? A good sign? It isn’t in China….

• What’s Driving The Growth In US ‘Shadow Banking’ (CBR)

In the wake of the 2007–10 financial crisis, there’s been sizeable growth of “shadow banking”— companies without banking charters entering lines of business traditionally associated with deposit-taking banks. Hedge funds that make direct loans to midsize businesses, online mortgage originators, peer-to-peer lending platforms, and payday lenders have all been on the rise. What’s behind this? According to Chicago Booth’s Gregor Matvos, Booth PhD candidate Greg Buchak, Columbia’s Tomasz Piskorski, and Stanford’s Amit Seru, much of the growth is due to regulations that have pushed banks out of traditional lending businesses. The researchers also attribute some growth to online technology that has lowered the barrier to entry in markets where lenders once needed networks of physical branches to have any hope of building business.

The researchers focus on the US residential lending market, the largest consumer loan market in the country—and the market that drew the most attention from regulators after 2008. Between 2007 and 2015, shadow banks nearly tripled their market share, from 14% to 38%. They gained the most in the Federal Housing Administration (FHA) mortgage market, which serves lower-quality borrowers and is where shadow banks’ share rose from 20% to 75%. Traditional banks retreated from sectors of the mortgage market where the regulatory burden grew the most, the researchers note. Traditional banks have been particularly hindered by rules that increased monitoring of balance-sheet holdings and constrained what banks could hold in their own accounts.

Their retreat helped shadow banking succeed in the riskier FHA market and in more-traditional, conforming mortgages. The researchers also separated shadow banks into those that did and didn’t originate loans online. During the study period, lenders that originated loans online (fintech lenders) saw market share rise from 4% to 13%—but that remains less than half of the shadow-banking sector.

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Super spikes.

• Volatility Makes a Comeback (Rickards)

Volatility has languished near all-time lows for months on end. That’s about to change. For almost a year, one of the most profitable trading strategies has been to sell volatility. Since the election of Donald Trump stocks have been a one-way bet. They almost always go up, and have hit record highs day after day. The strategy of selling volatility has been so profitable that promoters tout it to investors as a source of “steady, low-risk income.” Nothing could be further from the truth. Yes, sellers of volatility have made steady profits the past year. But the strategy is extremely risky and you could lose all of your profits in a single bad day. Think of this strategy as betting your life’s savings on red at a roulette table. If the wheel comes up red, you double your money. But if you keep playing eventually the wheel will come up black and you’ll lose everything.

That’s what it’s like to sell volatility. It feels good for a while, but eventually a black swan appears like the black number on the roulette wheel, and the sellers get wiped out. I focus on the shocks and unexpected events that others don’t see. Right now looks like one of those highly favorable windows when the purchase of volatility is the right move. You could collect huge winnings as the short sellers scramble to cover their bets before they are wiped out completely. The chart below shows a 20-year history of volatility spikes. You can observe long periods of relatively low volatility such as 2004 to 2007, and 2013 to mid-2015, but these are inevitably followed by volatility super-spikes. During these super-spikes the sellers of volatility are crushed, sometimes to the point of bankruptcy because they can’t cover their bets.

The period from mid-2015 to late 2016 saw some brief volatility spikes associated with the Chinese devaluation (August and December 2015), Brexit (June 23, 2016) and the election of Donald Trump (Nov. 8, 2016). But, none of these spikes reached the super-spike levels of 2008 – 2012. In short, we have been on a volatility holiday. Volatility is historically low and has remained so for an unusually long period of time. The sellers of volatility have been collecting “steady income,” yet this is really just a winning streak at the volatility casino. The wheel of fortune is about to turn and luck is about to run out for the sellers. It will soon be time for the buyers of volatility to collect their winnings, big time.

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Sliding scales. One step before large tech is declared utility?!

• YouTube “Economically Censors” Ron Paul (ZH)

Former US Congressman Ron Paul has joined a growing list of independent political journalists and commentators who’re being economically punished by YouTube despite producing videos that routinely receive hundreds of thousands of views. In a tweet published Saturday, Wikileaks founder Julian Assange tweeted a screenshot of Paul’s “Liberty Report” page showing that his videos had been labeled “not suitable” for all advertisers by YouTube’s content arbiters. Assange claims that Paul was being punished for speaking out about President Donald Trump’s decision to increase the number of US troops in Afghanistan, after Paul published a video on the subject earlier this week. The notion that YouTube would want to economically punish a former US Congressman for sharing his views on US foreign policy – a topic that he is unequivocally qualified to speak about – is absurd.

Furthermore, the “review requested” marking on one of Paul’s videos reveals that they were initially flagged by users before YouTube’s moderators confirmed that the videos were unsuitable for a broad audience. Other political commentators who’ve been censored by YouTube include Paul Joseph Watson and Tim Black – both ostensibly for sharing political views that differ from the mainstream neo-liberal ideology favored by the Silicon Valley elite. Last week, Google – another Alphabet Inc. company – briefly banned Salil Mehta, an adjunct professor at Columbia and Georgetown who teaches probability and data science, from using its service, freezing his accounts without providing an explanation. He was later allowed to return to the service. Conservative journalist Lauren Southern spoke out about YouTube’s drive to stifle politically divergent journalists and commentators during an interview with the Daily Caller.

“I think it would be insane to suggest there’s not an active effort to censor conservative and independent views,” said Southern. “Considering most of Silicon Valley participate in the censorship of alleged ‘hate speech,’ diversity hiring and inclusivity committees. Their entire model is based around a far left outline. There’s no merit hiring, there’s no support of free speech and there certainly is not an equal representation of political views at these companies.” Of course, Google isn’t the only Silicon Valley company that’s enamored with censorship. Facebook has promised to eradicate “fake news,” which, by its definition, includes political content that falls outside of the mainstream. Still, economically punishing a former US Congressman and medical doctor is a new low in Silicon Valley’s campaign to stamp out dissent.

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The most prosperous times of our societies coincide with the highest tax levels for the rich.

• Should The Rich Be Taxed More? (G.)

The past four decades have been extremely kind to those at the top. They have seen their incomes grow faster than the rest of the population and hold a far bigger share of wealth in the form of property and financial investments than the rest of the population. Over the years a bigger slice of national income has gone to capital at the expense of labour, and the rich have been the beneficiaries of that, because they are more likely to own shares and expensive houses. The trend has been particularly strong in the US, where labour’s share of income has fallen from a recent peak of 57% at the end of Bill Clinton’s presidency to 53% by 2015. The Gini coefficient – a measure of inequality – has been steadily rising since 1970 and is now at levels normally seen in developing rather than advanced economies.

Hatgioannides, Karanassou and Sala seek to take account of these profound changes in the distribution of income and wealth. They do so by dividing the average income tax rate of a particular slice of the US population by the%age of national income commanded by that same group and by their share of wealth. They then look at whether by this measure – the fiscal inequality coefficient – the US tax system has become more or less progressive over time. The findings show quite clearly that it has become less progressive. In terms of income, the poorest 99% of the US population paid nine times as much income tax as the richest 1%, both when John F Kennedy was president in the early 1960s and when Ronald Reagan beat Jimmy Carter in the 1980 race for the White House. By 2014, they paid 21 times as much.

Similarly, the bottom 99.9% in the US paid 28 times as much tax as the elite 0.1% in the early 1960s and the early 1980s, but by 2014 they were paying 76 times as much. The same trend applies – although it is not pronounced – when income tax is divided by the share of wealth. The bottom 99% paid 22 times as much income tax as the wealthiest 1% in 1980 but were paying 47 times as much in 2014. The bottom 99.9% paid 58 times as much income tax as the top 0.1% before the onset of Reaganomics; by 2014 they were paying 175 times as much. [..] As the authors note, since 1980, economic policy making has been dominated by the idea that deregulation, less generous welfare and tax cuts will stimulate higher investment, higher productivity, higher growth and higher living standards for all. None of this has occurred and, what’s more, the social mobility in the decades after the second world war has been thrown into reverse. The great American dream – the notion that anybody can strike it rich – is dead.

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They won’t be.

• The West’s Wealth Is Based On Slavery. Reparations Should Be Paid (G.)

Malcolm X explained that “if you stick a knife in my back nine inches and pull it out six inches, that’s not progress. If you pull it all the way out, that’s not progress. The progress comes from healing the wound that the blow made”. Instead of attempting to fix the damage, we are completely unable to progress on issues of equality because countries such as Britain “won’t even admit the knife is there”. It is the height of delusion to think that the impact of slavery ended with emancipation, or that empire was absolved by the charade of independence being bestowed on the former colonies.

[..]It is not just governments that owe a debt; some of the biggest institutions and corporations built their wealth on slavery. Lloyds of London is one of Britain’s most successful companies and its roots lie in insuring the merchant trade in the 17th century. The fact that this was the slave trade has already led to civil action being taken by African Americans in New York. The church, many of the biggest banks, much of the ironworks industry and port cities gorged themselves on the profits from human flesh. It is clear that it would be just to pay reparations, and it is also possible to calculate the amount that Britain and other nations owe. A lot of work has been done in the United States to determine the damages owed to African Americans. The figure owed comes to far more than the “forty acres and a mule” that were promised to some African Americans who fought in the civil war.

The latest calculations from researchers estimates that for unpaid labour, taking into account interest and inflation, African Americans are owed anywhere between $5.9tn and $14.2tn. It would not be prohibitively complicated to work out the debts owed by the western powers, or the companies that enriched themselves off exploitation. The obviousness of the issue is such that a federation of Caribbean countries (Caricom) is now demanding reparations, as is the Movement for Black Lives in America and Pan-Afrikan Reparations Coalition in Europe. In many ways the calls for reparatory justice do not take go far enough. Caricom includes a demand to cancel third world debt, and the Movement for Black Lives for free tuition for African Americans.

Both of these are examples of removing the knife from our backs, rather than healing the wound. Third world debt was an unjust mechanism for maintaining colonial economic control and; allowing free access to a deeply problematic school system will not eradicate the impacts of centuries of oppression. In order to have racial justice we need to hit the reset button and have the west account for the wealth stolen and devastation caused. Nothing short of a massive transfer of wealth from the developed to the underdeveloped world, and to the descendants of slavery and colonialism in the west, can heal the deep wounds inflicted.

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Cows to Qatar, cown to SIberia: the new backpackers?!

• Danone Sends 5,000 Cows to Siberia in Quest for Cheaper Milk (BBG)

President Vladimir Putin’s ban on European Union cheese imports has driven up milk prices in Russia by so much that French yogurt maker Danone is transporting almost 5,000 cows to a farm in Siberia to ensure it has an affordable supply. The Holstein cows are traveling as many as 2,800 miles (4,500 kilometers) in trucks from the Netherlands and Germany, boosting the herd on a farm near the city of Tyumen, according to Charlie Cappetti, head of Danone’s Russian unit. That should protect the company from the increase in raw milk prices, which are up 14% this year, he said. “Milk prices have been going up steadily,” Cappetti said in an interview in Moscow. “That puts products such as yogurt under pressure.” While the French dairy company doesn’t normally invest in agriculture, it made an exception for Russia.

After Putin’s ban on dairy imports took hold in 2014, demand for milk surged as local cheesemakers rushed to replace French camembert and Italian pecorino. That has exacerbated the inflationary effects of the ruble’s weakness. Danone invested in the 60-hectare (150-acre) farm with local producer Damate, Cappetti said. The first cows started to provide milk for Danone in May, and a final shipment of cattle is due to arrive in September. “We hope that Russian milk inflation will slow down next year,” the executive said. The difference between supply and demand is narrowing as new milk is coming to the market, including from the Siberian farm. While easing milk inflation may help the Russian dairy market rebound in volume terms, Danone isn’t expecting a fast economic recovery in the country, according to Cappetti. Sales in Russia have been growing in line with inflation in the first half and should rise in 2018, he said.

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