Jan 042018
 
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Jean-Michel Basquiat Irony of the Negro Policeman 1981

 

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The Automatic Earth and its readers have been supporting refugees and homeless in Greece since June 2015. It has been an at times difficult and at all times expensive endeavor. Not at least because the problems do not just not get solved, they actually get worse. Because the people of Greece and the refugees that land on their shores increasingly find themselves pawns in political games.

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Investors Should ‘Brace For Near-Term Melt-Up – Grantham (MW)
Top Bosses Earn More In 3 Days Than Average Worker In Entire Year (G.)
Security Flaws Put Virtually All Phones, Computers At Risk (R.)
The Microprocessor Security Flaw Explained (BBG)
The CEO of Wells Fargo Might Be in Big, Big Trouble (Dayen)
NYC Apartment Sales Collapse 25% In Q4 As Trump Tax Plan Takes Its Toll (ZH)
Tesla Falls Far Short On Model 3 Deliveries (CNBC)
US Auto Sales Fall for 2nd Year (WS)
UK Thinks EU is Bluffing on No Brexit Deal for Banks (BBG)
UK Opposition Party Grassroots Support Second Brexit Vote (R.)
China Communist Party Paper Bashes Bitcoin (SCMP)
China to Curb Power Supply for Some Bitcoin Miners (BBG)

 

 

Over 50% chance of melt up, with over 90% chance of subsequent melt down of 50% (or more).

Investors Should ‘Brace For Near-Term Melt-Up – Grantham (MW)

Jeremy Grantham, who is credited with calling the 2000 and 2008 downturns, warned investors Wednesday to be prepared for the possibility of a near-term “melt-up” that would likely set the stage for a burst bubble and a stock-market meltdown. In a 13-page note that he emphasized reflected “a very personal view,” the value investor and co-founder and chief investment strategist of Boston-based asset manager GMO compared the present market setup with the run-up to past bubbles, including the 2000 tech boom and the precursor to the 1929 crash. “I recognize on one hand that this is one of the highest-priced markets in U.S. history. On the other hand, as a historian of the great equity bubbles, I also recognize that we are currently showing signs of entering the blow-off or melt-up phase of this very long bull market,” Grantham said.

He terms the current market run-up the “possible/probable bubble of 2018-19.” In the note, Grantham emphasizes that bubble calls shouldn’t necessarily rely on price alone. Instead, he puts emphasis on price acceleration, which captures “the importance of a true psychological event of momentum increasing to a frenzy.” Read the note here. Grantham favorably cited an academic paper published last year that concluded that the strongest indicator of a bubble in U.S. and almost all global markets was price acceleration. As for the S&P 500 SPX, +0.64% Grantham says that “just recently, say the last six months, we have been showing a modest acceleration, the base camp, perhaps, for a final possible assault on the peak.

“Exhibit 4 (shown below) represents our quick effort at showing what level of acceleration it might take to make 2018 (and possibly 2019) look like a classic bubble,” he wrote. “A range of nine to 18 months from today and a price rise to around 3,400 to 3,700 on the S&P 500 would show the same 60% gain over 21 months as the least of the other classic bubble events.” [..] • “A melt-up or end-phase of a bubble within the next six months to two years is likely, i.e., over 50%.” • ”If there is a melt-up, then the odds of a subsequent bubble break or meltdown are very, very high, i.e., over 90%. • “If there is a market decline following a melt-up, it is quite likely to be a decline of some 50%.”

Read more …

‘Fat Cat Thursday’. Bad idea if you want a functioning economy.

Top Bosses Earn More In 3 Days Than Average Worker In Entire Year (G.)

Bosses of top British companies will have made more money by lunchtime on Thursday than the average UK worker will earn in the entire year, according to an independent analysis of the vast gap in pay between chief executives and everyone else. The chief executives of FTSE 100 companies are paid a median average of £3.45m a year, which works out at 120 times the £28,758 collected by full-time UK workers on average. On an hourly basis the bosses will have earned more in less than three working days than the average employee will pick up this year, leading campaigners to dub the day “Fat Cat Thursday”. Frances O’Grady, the TUC general secretary, said it was outrageous that bosses were picking up “salaries that look like telephone numbers” while workers were “suffering the longest pay squeeze since Napoleonic times”.

The analysis by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre shows chief executives of FTSE 100 companies are paid an average of £898 per hour – 256 times what apprentices earn on the minimum wage. Tim Roache, the general secretary of the GMB union, said the pay gap between bosses and workers was “simply obscene”. “Does anyone really think these fat cats deserve 100 times more than the hard-working people who prop up their business empires?” he said. “Workers who have to scrimp and save to feed their families and put a roof over their head – and like most of Britain’s working population will now be feeling the pinch after the festive period?”

Read more …

And it’s not just phones and computers either.

Security Flaws Put Virtually All Phones, Computers At Risk (R.)

One of the bugs is specific to Intel but another affects laptops, desktop computers, smartphones, tablets and internet servers alike. Intel and ARM insisted that the issue was not a design flaw, but it will require users to download a patch and update their operating system to fix. “Phones, PCs, everything are going to have some impact, but it’ll vary from product to product,” Intel CEO Brian Krzanich said in an interview with CNBC Wednesday afternoon. Researchers with Alphabet Inc’s Google Project Zero, in conjunction with academic and industry researchers from several countries, discovered two flaws. The first, called Meltdown, affects Intel chips and lets hackers bypass the hardware barrier between applications run by users and the computer’s memory, potentially letting hackers read a computer’s memory and steal passwords.

The second, called Spectre, affects chips from Intel, AMD and ARM and lets hackers potentially trick otherwise error-free applications into giving up secret information. The researchers said Apple Inc and Microsoft Corp had patches ready for users for desktop computers affected by Meltdown. Microsoft declined to comment and Apple did not immediately return requests for comment. Daniel Gruss, one of the researchers at Graz University of Technology who discovered Meltdown, called it “probably one of the worst CPU bugs ever found” in an interview with Reuters. Gruss said Meltdown was the more serious problem in the short term but could be decisively stopped with software patches. Spectre, the broader bug that applies to nearly all computing devices, is harder for hackers to take advantage of but less easily patched and will be a bigger problem in the long term, he said.

Speaking on CNBC, Intel’s Krzanich said Google researchers told Intel of the flaws “a while ago” and that Intel had been testing fixes that device makers who use its chips will push out next week. Before the problems became public, Google on its blog said Intel and others planned to disclose the issues on Jan. 9. Google said it informed the affected companies about the “Spectre” flaw on June 1, 2017 and reported the “Meltdown” flaw after the first flaw but before July 28, 2017. The flaws were first reported by tech publication The Register. It also reported that the updates to fix the problems could causes Intel chips to operate 5% to 30% more slowly.

Read more …

They all use these features. They’re not actually flaws. That makes it hard to repair.

The Microprocessor Security Flaw Explained (BBG)

The weakness uncovered by Google [..] underscores the potential damage wreaked by vulnerabilities in hardware. Complex components, such as microprocessors, can be harder to fix and take longer to design from scratch if flawed. “It’s a big one and it’s a severe one. This gives an attacker capabilities that bypass the common operating system security controls that we’ve relied on for 20 years,” said Jeff Pollard, an analyst at Forrester Research. “There’s big impact on both the consumer and enterprise.” Intel’s stock remained under pressure even after its statement. “We struggle to believe that Intel won’t face some sort of financial liability,” analysts at Sanford C. Bernstein wrote in a note.

[..] Applying the operating system upgrades designed to remedy the flaw could hamper performance, security experts said. The Register reported that slowdowns could be as much as 30% – something Intel said would occur only in extremely unusual circumstances. Computer slowdowns will vary based on the task being performed and for the average user “should not be significant and will be mitigated over time,” Intel said, adding that it has begun providing software to help limit potential exploits. Intel’s efforts to play down the impact resulted in a war of words with AMD. Intel said it’s working with chipmakers including AMD and ARM Holdings, as well as operating system makers to develop an industrywide approach to resolving the issue. AMD was quick to retort, saying, “there is near-zero risk” to its processors because of differences in the way they are designed and built.

The vulnerability doesn’t just affect PCs. All modern microprocessors, including those that run smartphones, are built to essentially guess what functions they’re likely to be asked to run next. By queuing up possible executions in advance, they’re able to crunch data and run software much faster. The problem in this case is that this predictive loading of instructions allows access to data that’s normally cordoned off securely, Intel Vice President Stephen Smith said on a conference call. That means, in theory, that malicious code could find a way to access information that would otherwise be out of reach, such as passwords. “The techniques used to accelerate processors are common to the industry,” said Ian Batten at the University of Birmingham in the U.K. who specializes in computer security. The fix being proposed will definitely result in slower operating times, but reports of slowdowns of 25% to 30% are “worst-case” scenarios, he said.

Read more …

Foot meet mouth.

The CEO of Wells Fargo Might Be in Big, Big Trouble (Dayen)

Late last year, Congress scrapped Obama-era rules from the Consumer Financial Protection Bureau that would have banned forced-arbitration clauses in financial contracts. This bill, which President Trump quickly signed, was self-evidently bad for consumers at the time—and if anyone needs further proof of how ridiculous and harmful these clauses are, just look at what Wells Fargo has been up to over the past several months. The mega-bank famously issued at least 3.5 million fake accounts without consumer consent, triggering a $185 million fine to state and federal regulators. The bank aimed to demonstrate sales growth to investors and boost the stock price with bogus numbers, but millions of customers got caught up in the exchange, paying unnecessary fees and taking hits to their credit scores. Scores of defrauded customers sued Wells Fargo in a series of class-action lawsuits.

Wells Fargo then tried to defy metaphysical reality: It moved to block one class-action case in Utah by claiming that the arbitration clause in customer contracts on the real accounts they held at the bank also applied to the fake accounts. By this theory, Wells Fargo customers signed away their legal rights when it came to accounts they didn’t even sign. The Utah plaintiffs fought Wells’s motion to compel arbitration, and rejected a $142 million settlement offer from the bank. While the two sides tangled in court, Wells Fargo CEO Tim Sloan appeared before the Senate Banking Committee on October 3. And when Senator Jon Tester (D-MT) asked Sloan point-blank if Wells Fargo was using arbitration clauses from real accounts and applying them to fake accounts, Sloan said, “There were instances [of that] historically. We’re not doing that today.”

He also committed to not forcing arbitration in fake-accounts cases moving forward. When Senator Chris Van Hollen (D-MD) brought up the Utah case, where Wells Fargo had made motions to compel arbitration just two weeks earlier, Sloan said he wasn’t familiar with it. But lawyers in Utah get C-SPAN. The plaintiffs in the case immediately appealed to the judge and argued that, with his remarks before Congress, Sloan had effectively waived Wells Fargo’s right to compel arbitration. Judge Clark Waddoups promptly scheduled a two-day trial for January 22 on the question. He also allowed the plaintiffs to depose Sloan in conjunction with the trial; that deposition is scheduled for Friday.

This put Sloan in a tight spot. Steven Christensen, attorney for the plaintiffs, told me he had only one question for Sloan: Did he state to Congress that Wells Fargo would waive arbitration claims on fake accounts? If Sloan said yes, the Utah case would go forward; if he said no, Christensen would appeal to Congress to hold him in contempt for lying to the Senate Banking Committee.

Read more …

End of an era?!

NYC Apartment Sales Collapse 25% In Q4 As Trump Tax Plan Takes Its Toll (ZH)

Apparently the combination of a massive flood of excess supply in the form of new luxury developments and a Trump tax plan that penalizes people living in expensive cities by capping SALT, mortgage interest and property tax deductions was simply too much for the Manhattan real estate market to ignore in 4Q 2017. As Douglas Elliman points out in their new Q4 2017 Manhattan Market Report, both prices (-9.4%) and volumes (-25.4%) of New York City apartments collapsed sequentially in Q4 as potential buyers took a pause amid the growing uncertainty.

“Sales activity for the Manhattan housing market was at the lowest fourth quarter total in six years. The pace of the fall market noticeably cooled as market participants awaited the housing-related terms of the new federal tax bill. This translated into a decline in year over year closings for the final quarter of the year, although contract volume showed an uptick. There were 2,514 sales to close in the final quarter of the year, down 12.3% from the prior-year quarter. The decline in sales allowed listing inventory to rise after declining year over year for the past few quarters. There were 5,451 listings at the end of the quarter, up 1.1% from the same period a year ago. As a result, the absorption rate, the number of months to sell all inventory at the current rate of sales slowed, rising to 6.5 months from 5.6 months in the year-ago quarter.

Listing discount, the%age difference between the list price at the date of sale and the sales price, was 5.4% up nominally from 5.3% in the prior year quarter as sellers continued to travel farther to meet the buyer on price. Buyers continued to hold firm, forcing sellers to meet them on price. Days on market, the average number of days to sell all apartments that closed during the quarter rose 3.2% to 97 days from 94 days in than the same period last year. New development active listings and resale listings were up 0.7% and 1.2% respectively over the same period. With the nominal rise in supply, there was also a nominal decline in bidding wars, still accounting for 11.7% of all sales in the quarter, down 0.9% from the same period last year.”

 

Read more …

Musk keeps hoping people will forget the last batch of bad data when the newest comes in.

Tesla Falls Far Short On Model 3 Deliveries (CNBC)

Tesla is apparently still deep in the circles of production hell. On Wednesday, the electric car maker released delivery numbers for the fourth quarter of 2017 that fell short of many expectations on Wall Street, and once again pushed back production targets on its highly anticipated Model 3 sedan. Tesla shares fell roughly 2% in after-hours trading. “As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles,” Tesla said in a release. “We intend to achieve the 5,000 per week milestone by the end of Q2.” In 2017, the company had said it planned to reach a production rate of 5,000 cars per week for the Model 3, but later revised back that target to the end of the first quarter.

Now, Tesla expects to reach the target by the end of the second quarter. Tesla said it made “major progress” toward addressing the “production bottlenecks” the company has blamed for falling so far short of its Model 3 targets. The company said that in the last few days of the quarter it reached a production rate that “extrapolates to over 1,000 Model 3’s per week.” CEO Elon Musk had previously said he expected weekly Model 3 production to be “in the thousands” by the end of 2017. Tesla said it delivered 29,870 vehicles in the fourth quarter of 2017, including 1,550 of its anticipated Model 3 sedan. The electric-car maker also delivered 15,200 Model S sedans, and 13,120 Model X SUVs. That represents a 27% increase over the same quarter in 2016 for both models combined, and a 9% increase over Q3 2017, Tesla’s previous best quarter, the company said.

Read more …

The US has enough cars anyway.

US Auto Sales Fall for 2nd Year (WS)

Total new-vehicle sales in the US fell 5.2% year-over-year in December to 1.6 million units. For all of 2017, sales declined by 320,000 vehicles, or 1.8%, to 17.23 million units. It was the first overall decline since the Financial Crisis. Compared to 2015, sales fell by 249,033 vehicles, or 1.4%. These sales are vehicles delivered by dealers to their customers, or delivered by automakers directly to large fleet customers, as reported by Autodata.

For the big three US automakers and some import brands it was the second year in a row of sales declines (two-year percent change from 2015):
GM -2.7%
Ford -1.1%
Fiat Chrysler (FCA) -8.6%
Toyota -2.6%
Hyundai -10.0%
Kia -5.8%
Daimler -1.4%
BMW -12.6%
Mazda -9.3%

The table below shows new-vehicle sales by automaker, sorted by total sales in 2017 (gray column). Automakers with declining sales in 2017 are marked in red. The green column shows the two-year %age change from 2015. Turns out that replacement demand for new vehicles after Hurricane Harvey was strong, but not nearly strong enough to pull out the year for total US auto sales, and what demand there has been will peter out going forward. Car sales plunged 17% year-over-year in December, 10.9% in all of 2017, and 18.1% from 2015. They’ve been left behind by consumers who’re switching to crossovers and SUVs which the industry considers trucks. So truck sales – pickups, SUVs, crossovers, and vans – rose 1.7% in December, 4.3% for the year, and 11.8% compared to 2015.

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They’re not.

UK Thinks EU is Bluffing on No Brexit Deal for Banks (BBG)

Prime Minister Theresa May believes Michel Barnier is bluffing when he says there will be no special deal for financial services, officials said, as the U.K. prepares to negotiate its post-Brexit ties with the European Union. Two senior officials familiar with the matter privately think the EU’s chief Brexit negotiator is faking a hard-line stance in ruling out a deal that would allow banks to continue operating freely across the bloc. Talks have yet to start on Britain’s future trade agreement with the EU but Barnier said last month there was no chance of a deal that replicated the easy access that U.K.-based financial services currently enjoy to the single market. The U.K. officials said the French former commissioner was simply setting out an opening position that did not have backing from the 27 other EU member countries.

They said banks based in London will be fine because businesses operating in the EU will need to maintain access to finance after Brexit. The fate of London’s financial district is urgent for May, who last month agreed to pay a £39 billion ($53 billion) bill to start talks on the nuts and bolts of a transition. With Britain’s departure from the bloc just 14 months away, businesses are counting on a two-year adjustment period. [..] Last month, May said U.K. financial services should be optimistic about Britain’s trade talks, which are due to start in March. She cited Polish Prime Minister Mateusz Morawiecki and Italian Prime Minister Paolo Gentiloni as evidence that other EU leaders are open to Britain carving out a custom-made trading relationship with the bloc that covers services. Yet Barnier insists the U.K. will not be offered anything more than a Canada-style deal, which keeps tariffs to a minimum on goods but does not include trade in services.

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Big 2018 story. But it can’t be spoken out loud.

UK Opposition Party Grassroots Support Second Brexit Vote (R.)

Eight out of 10 grassroots members of Britain’s opposition Labour Party want a referendum on the terms of the country’s exit from the European Union, according to a survey published on Thursday. That is at odds with Labour leader Jeremy Corbyn’s official policy which calls for parliament, not the public, to have the final say on the terms of the deal. It indicates a strong desire among the party’s rank and file members for a chance to demand a rethink on Brexit, or even overturn the outcome of the June 2016 vote to leave the EU. Eighteen months after voting 52 to 48% to withdraw from the EU, Britons remain deeply divided over leaving a bloc which has defined much of the country’s laws, trade policy and international outlook over more than four decades of membership. Theresa May’s Conservative minority government has dismissed the idea of a second referendum.

But ministers have already been forced to give parliament a greater say in the Brexit process than they initially wanted to after members of May’s own party rebelled on the issue in December. Thursday’s survey of attitudes within Britain’s main political parties showed 49% of Labour members definitely wanted a second referendum on the exit deal and a further 29% said they were more in favor of the idea than against it. The poll of more than 4,000 members of political parties was conducted shortly after last June’s national election as part of a three-year academic project by the Mile End Institute at Queen Mary University of London to discover more about people who belong to political parties. It showed even higher demand for a second vote on Brexit among members of the Liberal Democrats and the Scottish National Party. By contrast, only 14% of Conservative Party members wanted a referendum on the exit deal.

Read more …

Bitcoin is a bad fit in a super-centralized society

China Communist Party Paper Bashes Bitcoin (SCMP)

China’s ruling Communist Party mouthpiece lashed out at bitcoin on Wednesday, labelling the volatile cryptocurrency a bubble and a modern-day tulip mania. A People’s Daily commentary written under the name “Wei Liang” said it was an established fact that bitcoin was a bubble. “Irrespective of whether it is assessed on price or value, bitcoin is flooded with froth,” it said. “Its so-called advantages – scarcity, authenticity, strong liquidity, transparency and decentralisation – are only covers for speculation and cannot support its volatile price.” It said bitcoin’s bubbles were created by a combination of hype, mystery, decentralisation and possible insider trading, suggesting that a small group of bitcoin owners were speculating on its price and manipulating general investors.

The commentary compared bitcoin to the seventeenth century mania in which prices for tulip bulbs skyrocketed and then collapsed. It also said there would be more “bubble breaking” in bitcoin after governments around the world tightened regulation. The central government sees bitcoin as a source of risk. It banned domestic cryptocurrency exchanges last year after failing to regulate the fast growth of initial coin offerings, the virtual currency equivalent of an initial public offering. [..] Bitcoin investors are on alert to see whether Beijing will take further action against cryptocurrencies, such as shutting down bitcoin “mines”, the energy-hungry operations that create bitcoin by solving mathematical problems using vast banks of computers.

Read more …

Easy to trace.

China to Curb Power Supply for Some Bitcoin Miners (BBG)

China plans to limit power use by some bitcoin miners, people familiar with the matter said, a potential challenge to an industry whose energy-intensive computer networks enable transactions in the cryptocurrency. The People’s Bank of China outlined the plan Wednesday at a closed-door meeting, according to the people, who asked not to be identified because it wasn’t public. They didn’t detail how authorities plan to enact the curbs. Chinese officials are concerned that bitcoin miners have taken advantage of low power prices in some areas and affected normal electricity use in some cases, the people said. Local officials have been asked to investigate the high consumption associated with the industry, they said. The curbs will also involve other regulators such as the National Development and Reform Commission, which oversees the power supply.

While the proposed restrictions are unlikely to have a noticeable effect on transaction speeds, they highlight global concerns over the growing energy consumption of bitcoin miners. The industry now uses as much electricity as 3.4 million U.S. households, according to the Digiconomist Bitcoin Energy Consumption Index. China is home to many of the world’s largest miners, some of whom have set up around hydroelectric facilities in Sichuan and Yunnan provinces. “This may have contributed to bitcoin coming off its daily highs,” said Craig Erlam, senior market analyst at online trading firm Oanda in London. “Electricity usage certainly appears to be a significant challenge for the cryptocurrency in the years ahead.” Bitcoin, which surged 15-fold last year, pared gains on Wednesday and traded around $14,900 on Thursday.

Read more …

Jan 072017
 
 January 7, 2017  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
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Arthur Rothstein Highway marker in Polk County, Florida 1937

Here Is The US Intel Report Accusing Putin Of Helping Trump Win (ZH)
A Case Study in the Creation of False News (Paul Craig Roberts)
Obama Set For Pardon Frenzy As He Leaves Office (AFP)
Worst. Recovery. Ever. (ZH)
How Many Bombs Did the United States Drop in 2016? (CFR)
Le Pen Says Brexit Isn’t a Disaster and France Should Be Next (BBG)
Economics Is Driven By Ideology, Not Science (Pettifor)
The Labor Market: The End Of The Innocence? (DiMartino Booth)
Canadian Woman Arrested In Turkey For Saying Erdogan Jails Journalists (CBC)
Giant Iceberg Poised To Break Off From Larsen C Antarctic Shelf (G.)

 

 

I’m so tired of this. No, ‘trust us’ is not good enough anymore. That is why Trump won, because it’s no longer enough to say ‘because we say so’. People don’t trust CIA et al. And you can’t turn that back on its head and demand trust now. You lost! I get so frustrated they even locked up my Facebook account again. There’s always people who want to complain about those who don’t toe lines.

Here Is The US Intel Report Accusing Putin Of Helping Trump Win (ZH)

The farce is complete. One week after a joint FBI/DHS report was released, supposedly meant to prove beyond a reasonable doubt that Russia intervened in the US presidential election, and thus served as a diplomatic basis for Obama’s expulsion of 35 diplomats, yet which merely confirmed that a Ukrainian piece of malware which could be purchased by anyone, was responsible for spoofing various email accounts including that of the DNC and John Podesta, moments ago US intelligence agencies released a more “authoritative”, 25-page report, titled “Assessing Russian Activities and Intentions in Recent US Elections”, and which not surprisingly only serves to validate the media narrative, by concluding that Russian President Vladimir Putin ‘ordered’ an effort to influence U.S. presidential election.

Specifically, the report concludes the following: “We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the US presidential election. Russia’s goals were to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian Government developed a clear preference for President-elect Trump.” What proof is there? Sadly, again, none. However, as the intelligence agencies state, “We have high confidence in these judgments”… just like they had high confidence that Iraq had weapons of mass destruction. And while the report is severely lacking in any evidence, it is rich in judgments, such as the following:

“We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the US presidential election. Russia’s goals were to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian Government developed a clear preference for President-elect Trump. We have high confidence in these judgments. “We also assess Putin and the Russian Government aspired to help President-elect Trump’s election chances when possible by discrediting Secretary Clinton and publicly contrasting her unfavorably to him. All three agencies agree with this judgment.”

At this point a quick detour, because the intel agencies responsible for drafting the report then explain how “confident” they are: “CIA and FBI have high confidence in this judgment; NSA has moderate confidence.” What do these distinctions mean? High confidence generally indicates judgments based on high-quality information, and/or the nature of the issue makes it possible to render a solid judgment. However, high confidence judgments still carry a risk of being wrong. Moderate confidence generally means credibly sourced and plausible information, but not of sufficient quality or corroboration to warrant a higher level of confidence. In other words, while not carrying the infamous DHS disclaimer according to which last week’s entire joint FBI/DHS report is likely garbage, the US intel agencies admit they may well be “wrong.”

Read more …

“Trump is supposed to side with the CIA which is trying to destroy him.”

A Case Study in the Creation of False News (Paul Craig Roberts)

For many weeks we have witnessed the extraordinary attack by the CIA and its assets in Congress and the media on Donald Trump’s election. In an unprecedented effort to delegitimize Trump’s election as the product of Russian interference in the election, the CIA, media, senators and representatives have consistently made wild accusations for which they have no evidence. The CIA’s message to Trump is clear: Get in line with our agenda, or we are going to mess you over. It is clear that the CIA is warring against Trump. But the CIA’s media assets have turned the facts on their head and are blaming Trump for having a negative view of the CIA. Consider the January 4 Wall Street Journal article by Damian Paletta and Julian E. Barnes, which begins: “President-elect Donald Trump, a harsh critic of U.S. intelligence agencies . . .”

The two presstitutes set up their false news story by putting the shoe on the other foot. It is Trump who is the harsh critic rather than the victim of the CIA’s harsh accusations. Set up this way, the story continues: “White House officials have been increasingly frustrated by Mr. Trump’s confrontations with intelligence officials. ‘It’s appalling,” the official said. “No president has ever taken on the CIA and come out looking good.’” Now that the story is Trump taking on the CIA and not the CIA taking on Trump, the case can be built against Trump: Analysts accustomed to more cohesion with the White House are “jarred” by Trump’s skepticism of the CIA’s assessment that Putin got him elected. Trump is supposed to respond to the allegation by saying: I am not legitimate. Here take back the presidency.

WikiLeaks’ Assange has stated unequivocally that there was no hack. The information came to WikiLeaks as a leak, which suggests that it came from inside the Democratic National Committee. That Trump sees it this way means, according to one unidentified official that “It’s pretty horrifying to me that he’s siding with Assange over the intelligence agencies.” You see, Trump is supposed to side with the CIA which is trying to destroy him. Has the CIA shot itself in both feet? How can the agency control policy by manipulating the information fed to the President when the President does not trust the agency?

Read more …

Leonard Peltier has been in jail for 40 years for a set-up. Forget about Snowden and Chelsea. Not going to happen.

Obama Set For Pardon Frenzy As He Leaves Office (AFP)

A Rastafarian prophet, a former Taliban captive and thousands of minor drug traffickers have one thing in common: Their names have been submitted to President Barack Obama for clemency before he leaves office in two weeks. Some US presidents have used this regal power of leniency in a pointed way near the end of their term in office. On the last day of his term in 2001, Democratic president Bill Clinton granted pardon in a highly controversial move to late fugitive trader Marc Rich, whose ex-wife had been a major donor to Democrats. Sixteen years later, Obama is fielding pressure from all sides to grant unlikely pardons or commutations of sentences to people whose supporters say have been unjustly sentenced or sought out by the justice system.

Among them is Bowe Bergdahl, a US Army sergeant held captive for five years by the Taliban before his release in a prisoner swap, who is due to be court-martialed for desertion. Leonard Peltier, a Native American activist convicted for the 1975 deaths of two FBI agents in what his supporters say was a setup, is also hoping to enjoy Obama’s good graces. Then there’s Edward Snowden, who made the shattering revelation in 2013 of a global communications and internet surveillance system set up by the United States. The 33-year-old, a refugee in Russia, is backed by numerous celebrities like actress Susan Sarandon and singer Peter Gabriel, as well as Amnesty International and the American Civil Liberties Union. If Obama fails to pardon Snowden, his supporters say he may face the death penalty under the incoming administration of Republican Donald Trump, who has called him a “terrible traitor.”

In another leak case, Chelsea Manning is serving a 35-year sentence in solitary confinement for handing 700,000 sensitive military and diplomatic documents to WikiLeaks, some of them classified. Activists say her sentence is excessive and point to the psychological frailty of the transgender soldier who has already made two suicide attempts. Even though the White House has dismissed a possible pardon for Snowden and Manning, their supporters are still hoping for a final magnanimous gesture from a president about to leave the constraints of his high office on January 20.

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We know.

Worst. Recovery. Ever. (ZH)

As the champagne glasses clink in Washington over a record-breaking streak of job growth on record (as the percent of the population employed slumped), and the fastest wage growth since the start of the recovery (for managers), we just wanted to remind a few blinkered media types that Obama’s “recovery” has officially been the worst recovery in US history (despite adding almost $10 trillion to the national debt)… When ‘fake news’ and ‘peddling fiction’ meet fact… Not quite as rosy an economic handover to Trump as The White House would like everyone to believe.

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Peace, man!

How Many Bombs Did the United States Drop in 2016? (CFR)

As President Obama enters the final weeks of his presidency, there will be ample assessments of his foreign military approach, which has focused on reducing U.S. ground combat troops (with the notable exception of the Afghanistan surge), supporting local security partners, and authorizing the expansive use of air power. Whether this strategy “works”—i.e. reduces the threat posed by extremists operating from those countries and improves overall security and governance on the ground—is highly contested. Yet, for better or worse, these are the central tenets of the Obama doctrine.

In President Obama’s last year in office, the United States dropped 26,171 bombs in seven countries. This estimate is undoubtedly low, considering reliable data is only available for airstrikes in Pakistan, Yemen, Somalia, and Libya, and a single “strike,” according to the Pentagon’s definition, can involve multiple bombs or munitions. In 2016, the United States dropped 3,027 more bombs—and in one more country, Libya—than in 2015.

Most (24,287) were dropped in Iraq and Syria. This number is based on the percentage of total coalition airstrikes carried out in 2016 by the United States in Operation Inherent Resolve (OIR), the counter-Islamic State campaign. The Pentagon publishes a running count of bombs dropped by the United States and its partners, and we found data for 2016 using OIR public strike releases and this handy tool.* Using this data, we found that in 2016, the United States conducted about 79% (5,904) of the coalition airstrikes in Iraq and Syria, which together total 7,473. Of the total 30,743 bombs that the coalition dropped, then, the United States dropped 24,287 (79% of 30,743).

To determine how many U.S. bombs were dropped on each Iraq and Syria, we looked at the percentage of total U.S. OIR airstrikes conducted in each country. They were nearly evenly split, with 49.8% (or 2,941 airstrikes) carried out in Iraq, and 50.2% (or 2,963 airstrikes) in Syria. Therefore, the number of bombs dropped were also nearly the same in the two countries (12,095 in Iraq; 12,192 in Syria). Last year, the United States conducted approximately 67% of airstrikes in Iraq in 2016, and 96% of those in Syria.

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Quick, Carney, cause chaos, or Le Pen will win…

Le Pen Says Brexit Isn’t a Disaster and France Should Be Next (BBG)

French presidential candidate Marine Le Pen said the U.K. economy is weathering Brexit, giving her confidence to seek an immediate renegotiation of France’s relationship with the European Union if elected. “Brexit has not been a disaster,” Le Pen said at a meeting with English-language reporters in Paris on Friday. “The economic signals are good.” National Front leader Le Pen, who polls suggest will reach the presidential runoff in May, said she would seek talks with France’s EU partners “the day after my election” and put the result to a national referendum. She said the goal is to take back what she called “the four sovereignties”: control of borders, economic policy, money and legislation. France should dump the euro and return to a national currency, though the exchange rate could be linked to some sort of European currency mechanism, Le Pen said.

“I’ll give six months to these talks, and if at the end we have won back our sovereignty, I will tell the French to vote to stay in this Europe of nations and liberty,” she said. “If we don’t, I’ll suggest that they vote to leave.” Polls suggest Le Pen would finish second in the first round of France’s presidential elections on April 23, and lose a May 7 runoff to center-right candidate Francois Fillon. An Elabe poll released Thursday showed independent Emmanuel Macron gaining on Le Pen, taking second place in some hypothetical matchups. Le Pen, whose party received a $8.5 million loan from a Russian bank in 2014, said she doesn’t fear Russian meddling in France’s election. That follows U.S. intelligence findings that Russian officials directed hacking attacks to help elect Trump, whom she said she supports because his anti-globalist views were better for France.

“Every time big corporations, big finance don’t get what they want, they say it’s a conspiracy of the Russians,” she said. “It makes one laugh.” While the U.S. shouldn’t lecture anyone given its history of spying on allies, improved ties between Russia and the U.S. are in France’s interest, especially if they can cooperate on combating Islamic militants, Le Pen said. “I think that Mr. Trump and Putin can repair ties, and I hope so,” she said. “We don’t want to see an increase in tensions between the U.S. and Russia for a very selfish reason: we are in the middle.”

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Should we let economists ‘heal’ their own field, or is it too late for that?

Economics Is Driven By Ideology, Not Science (Pettifor)

As someone who correctly predicted the financial crisis (first in 2003 and later in a 2006 book) I support Andy Haldane’s assertion that the economics profession is “to some degree in crisis”. He is not the first to argue this. The retiring head of the UK Treasury admitted in 2016 that economists failed to spot the build-up of risk before 2007 and were guilty of what he called “a monumental collective intellectual error”. It is a collective intellectual failure that I believe has played a key role in the rise of political populism. The Bank of England’s chief economist was also right to compare the challenges facing economists to the famous “Michael Fish” moment, where everyone was assured that a hurricane wouldn’t hit before it did, bringing with it much devastation, in 1987.

Meteorologists have since transformed their field and improved forecasts. But that is not true of the economics profession. The dominant economic model of financial liberalisation, monetary policy dominance and fiscal austerity remains intact. In their defence, economists can’t be faulted for getting forecasts wrong. Political events such as Brexit are not easy to predict. But unlike economists, meteorologists have a deep understanding of the major forces shaping outcomes in their fields, even when they get precise forecasts wrong. Mainstream economists, by contrast, lack that deep understanding of the economic forces driving outcomes. The reason is not hard to understand. The field of meteorology is not underpinned by policy or by an agenda. Economics, by contrast, is dogged by ideology.

It is ideology, not science, that leads economists to wrongly assert that the market in money is like the market in widgets, and must not be regulated or tampered with by governments. That financial flows across borders must be “free”, regardless of whether they cause instability. That bankers are simply intermediaries between savers and borrowers – and do not create credit out of thin air. That monetary and fiscal policies that serve the finance sector with bailouts are tolerable, while those that serve the poor must be resisted. That the reasoning that informs the micro-economy can be extrapolated to reach conclusions about the macro-economy. In other words, the fallacy that the budgets of households (the micro-economy) can be aggregated and compared to the budgets of governments (the macro-economy).

Unsurprisingly, these flawed theories and models are a great comfort to financial elites – which is why so many economists are hired and funded by big banks, corporations and the wealthy. And it explains why their words and ideas are repeated by the media outlets that faithfully serve the status quo or “the establishment”. Very little has been done to transform the dominant economic model of financial and trade liberalisation or to limit economists’ almost religious belief in the efficiency of markets and hostility to public intervention.

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“Let me take a long last look, before we say goodbye..”

The Labor Market: The End Of The Innocence? (DiMartino Booth)

One of the first of life’s lessons we all learned is that we need not rush life; it will do that for us and in the end against our will. The inspiration for this wisdom could well have sprung from Ecclesiastes wherein we read these peaceful words: To every thing there is a season, and a time to every purpose under the heaven. Co-writers Don Henley and Bruce Hornsby embraced the spirit of this message as the 1980’s were coming to a close. You must agree 1989’s The End of the Innocence, that haunting and mournful ballad, was just the coda needed to move on to the last decade of the last century. “Let me take a long last look, before we say goodbye,” the song asks of the listener who can’t help themselves but to listen.

Many veteran investors, those who don’t need to be reminded about the Reagan era because they were there, may be feeling a bit more wistful as they peer over the horizon. They have lived through extraordinary economic times and maybe even recall the early 1970’s, the last time initial jobless claims were at their current historically low levels. They know, in other words, this can’t go on forever, that we are nearing the end of our own innocence. Federal Reserve Chair Janet Yellen has been adamant that economic cycles can’t die of old age. At the end of this month, we can proclaim to be living through the third longest expansion in postwar times. The parlor game occupying those on the Street these days entails devising scenarios that can push us into the second, or dare we dream, longest expansion of all.

The Wall Street Journal perfectly captures the infectious optimism, the yearning to keep that dream alive, by asking this in a headline: How Low Can the Unemployment Rate Go? Rather than keep you in suspense, the article’s answer is as follows: “Assuming the economy adds around 200,000 jobs a month in 2017 and the labor-force participation rate stays relatively constant, the unemployment rate would fall to 3.9% by the end of the year, according to a model maintained by the Federal Reserve Bank of Atlanta.” If we do get there, a big if, we are sure to be staring down the barrel of appreciably higher interest rates and a flat, if not by then, inverted yield curve. The only precedent is, you guessed it, that which occurred in 2000, when the unemployment rate hit 3.6% as the longest cycle of all time was finally flaming out. Economics 101 teaches one tenet above all – that the unemployment rate is the most lagging within the data universe.

A recent visit with Dr. Gates, that steel-eyed sleuth, corroborated this maxim. “The unemployment rate is the single, most visible economic indicator for households. It’s easy to understand, black and white. Up is bad, down is good,” Gates observed. “If we keep getting downside surprises, it will feed even more consumer optimism. That happens late in the cycle.” What goes hand in hand with these late cycles guideposts? Since you asked, that optimism Gates cites tends to correlate with households overreaching their paychecks, which is exactly what we’re seeing. When adjusted for inflation, credit card borrowing is up 4.5% over last year, a full two percentage points above wage income, which is up 2.5% over the same period. That’s a new high for the current cycle. At 2.9%, inflation-adjusted spending is also running ahead of wage income.

These data are validated by separate data that shows state withholding tax collections are way off last year’s figures. “Vulnerabilities in household demand don’t happen overnight; they take time to rise to the surface,” Gates cautioned. “Households aren’t overstretched yet, but they’re getting there. Just like corporations substitute debt for profits late in the cycle, households also are starting to do just as they ride the wave of Trump optimism. Eventually this will run its course.”

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So is Canada going to stand up to him?

Canadian Woman Arrested In Turkey For Saying Erdogan Jails Journalists (CBC)

A Canadian woman has been arrested in Turkey for allegedly insulting the country’s president in comments posted on Facebook, her Turkish lawyer said Thursday. Ece Heper, 50, was arrested in the city of Kars in northeastern Turkey, and charged on Dec. 30, Sertac Celikkaleli told The Canadian Press. Heper, a dual Canadian-Turkish citizen, had been in the country since mid-November, according to her friends. “She is intense and opinionated, for sure,” Birgitta Pavic said from her Toronto home. “But everything is intense over there right now, especially criticizing the government.” At issue, her friends and lawyer said, are several recent Facebook posts about Turkish President Recep Tayyip Erdogan.

In one posted on Dec. 28, Heper accused Erdogan of jailing journalists who suggest there is evidence Turkey is supporting the Islamic State of Iraq and the Levant, known as ISIS or ISIL. Global Affairs Canada said they are aware of a Canadian citizen detained in Turkey and are providing consular assistance, but wouldn’t divulge further information, citing privacy laws. Heper has a log home in Norwood, Ont., about 150 kilometres northeast of Toronto, Pavic said, where she lives with five dogs she rescued from Turkey “that are like her children.” Her parents are dead and she is estranged from her brother, Pavic said, so her friends are taking up the cause to help her out.

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We’re just going to watch it happen, ain’t we? That’s all we’re capable of.

Giant Iceberg Poised To Break Off From Larsen C Antarctic Shelf (G.)

A giant iceberg, with an area equivalent to Trinidad and Tobago, is poised to break off from the Antarctic shelf. A thread of just 20km of ice is now preventing the 5,000 sq km mass from floating away, following the sudden expansion last month of a rift that has been steadily growing for more than a decade. The iceberg, which is positioned on the most northern major ice shelf in Antarctica, known as Larsen C, is predicted to be one of the largest 10 break-offs ever recorded. Professor Adrian Luckman, a scientist at Swansea University and leader of the UK’s Midas project, said in a statement: “After a few months of steady, incremental advance since the last event, the rift grew suddenly by a further 18km during the second half of December 2016. Only a final 20km of ice now connects an iceberg one quarter the size of Wales to its parent ice shelf.”

The separation of the iceberg “will fundamentally change the landscape of the Antarctic Peninsula” and could trigger a wider break-up of the Larsen C ice shelf, he added. “If it doesn’t go in the next few months, I’ll be amazed,” Luckman told BBC News. Ice shelves are vast expanses of ice floating on the sea, several hundred metres thick, at the edge of glaciers. Scientists fear the loss of ice shelves will destabilise the frozen continent’s inland glaciers. And while the splitting off of the iceberg would not contribute to rising sea levels, the loss of glacial ice would. Martin O’Leary, also of Swansea University, said: “It just makes the whole shelf less stable. If it were to collapse there would be nothing holding the glaciers up and they would start to flow quite quickly indeed.”

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