Jun 212018
 June 21, 2018  Posted by at 9:05 am Finance Tagged with: , , , , , , , , , ,  

Vincent van Gogh Avenue of Poplars at Sunset 1884


Short-Sellers Sense An Opportunity As China Trade Tensions Brew (R.)
The Greatest Short-Squeeze In History (ZH)
Chinese Investment In The US Drops 90% Amid Political Pressure (CNBC)
China Warns Washington’s ‘Capricious’ Trade Actions Will Hurt US Workers (R.)
China Could Strike Back At Dow-Listed Firms Over Trade: Global Times (R.)
Deutsche Bank Troubles Raise Worries About The Future Of The Eurozone (Polleit)
Greece Expects Substantive Debt Relief Conditions From Eurogroup (R.)
EU Committee Approves New Rules That Could ‘Destroy The Internet As We Know It’
Trump’s Military Drops a Bomb Every 12 Minutes, and No One Talks About It (TD)
Circle Closed: Merkel, Macron Want EU Border States To Deal With Refugees (RT)
Italian Coastguard Ship Carrying 522 Migrants Docks In Sicily (AFP)
I’ve Got Some Things to Say (Romelu Lukaku)



Something’s brewing alright…

Short-Sellers Sense An Opportunity As China Trade Tensions Brew (R.)

Escalating trade tensions between Washington and Beijing may have sent tremors across the U.S. stock market but short-sellers are taking the opportunity to boost bearish bets against U.S. companies exposed to a full-blown trade war. Planemaker Boeing, automaker General Motors, casino operator Las Vegas Sands, package delivery company FedEx and agricultural trader Bunge – companies that could feel the pain from growing trade tensions with China – have drawn a noticeable pickup in shorting activity this month, according to financial analytics firm S3 Partners.

“I think the change in short interest is directly related to the increase in trade tensions,” said Ihor Dusaniwsky, head of research at S3 in New York. Short-sellers aim to profit by selling borrowed shares with the hope of buying them back later at a lower price. On Friday, U.S. President Donald Trump said he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, and Beijing immediately vowed to respond in kind. Tensions escalated further on Monday, after Trump threatened to hit $200 billion of Chinese imports with 10 percent tariffs if Beijing retaliated. Multinationals that rely on China for large parts of their business are seen as particularly at risk from a potential trade war.

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…but who’s going to come up on top, the shorts or the squeezers?

The Greatest Short-Squeeze In History (ZH)

A quick glance at the stock market – particularly big-tech – and once can quickly discern that “something’s up.” Every dip is met by a wall of buying, ramping the market ever higher, and ever more ignorant of the increasingly uncertain world around it.

Why? Simple… it’s a massive, unprecedented short-squeeze…

The “most shorted” stocks in America are up 20% in the last two months, almost incessantly.

While the chart above is ridiculous enough, it turns out that this is actually accelerating and is now the great short-squeeze in the history of the data…

The ‘Relative Strength Index’ of the “most shorted” stocks has never been higher and each time it has reached this level, stocks have fallen hard.

But as a reminder – amid all of this – The Dow is down for the 7th day in a row, its longest losing streak in 18 months.

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Xi needs to keep his foreign reserves at home.

Chinese Investment In The US Drops 90% Amid Political Pressure (CNBC)

Chinese acquisitions and investments in the U.S. fell 92 percent to just $1.8 billion in the first five months of this year, consulting and research firm Rhodium Group said Tuesday. Counting divestitures, net Chinese deal flow to the U.S. during that time was a negative $7.8 billion, the report said. The decline follows a sharp drop in the second half of last year as pressure from both Beijing and the Trump administration curbed a recent surge in cross-border investment. Completed Chinese deals in the U.S. hit a record $46 billion in 2016, and dropped to $29 billion in 2017, according to Rhodium. In a search for investment opportunities, Chinese companies went on an overseas buying spree in 2015 and 2016.

But now, China wants to limit capital flight and excessive leverage. The U.S. is worried about intellectual property protection and has increased scrutiny of deals on the basis of national security. The Trump administration has also threatened restrictions on investment based on a “Section 301” investigation, the same study that led to the latest tariff announcements. As a result, acquisitions worth more than $2 billion in the first five months of this year have fallen apart, Rhodium Group’s Thilo Hanemann said.

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Still negotiating.

China Warns Washington’s ‘Capricious’ Trade Actions Will Hurt US Workers (R.)

China’s commerce ministry on Thursday accused the United States of being “capricious” over bilateral trade issues, and warned that the interests of U.S. workers and farmers ultimately will be hurt by Washington’s penchant for brandishing “big sticks”. Previous trade negotiations with the United States had been constructive, but because the U.S. government is being unpredictable and challenging, Beijing has had to respond in a strong manner, commerce ministry spokesman Gao Feng said in a regular briefing in Beijing.

President Donald Trump threatened on Monday to hit $200 billion of Chinese imports with 10 percent tariffs if Beijing retaliates against his previous announcement to target $50 billion in imports. The United States has alleged that China is stealing U.S. intellectual property, a charge denied by Beijing. Washington’s accusations of forced tech transfers are a distortion of reality, and China is fully prepared to respond with “quantitative” and “qualitative” tools if the U.S. releases a new list of tariffs, Gao said. “It is deeply regrettable that the U.S. has been capricious, escalated the tensions, and provoked a trade war,” he said. “The U.S. is accustomed to holding ‘big sticks’ for negotiations, but this approach does not apply to China.”

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China will have to move.

China Could Strike Back At Dow-Listed Firms Over Trade: Global Times (R.)

China could hit back at U.S. firms listed on the Dow Jones Industrial Average if U.S. President Donald Trump keeps exacerbating tensions with China over trade, state-controlled Chinese tabloid The Global Times said on Thursday. Trump threatened on Monday to hit $200 billion of Chinese imports with 10 percent tariffs if China follows through with retaliation against his previous targeting of $50 billion in imports. The Dow, which counts Boeing, Apple and Nike among its constituents, ended down 0.17 percent on Wednesday. The 30-stock share index has declined 0.25 percent year-to-date.

“If Trump continues to escalate trade tensions with China, we cannot rule out the possibility that China will strike back by adopting a hard-line approach targeting Dow Jones index giants,” the Global Times said in a commentary. The world’s two biggest economies seemed increasingly headed towards open trade conflict after three rounds of high-level talks since early May failed to reach a compromise on U.S. complaints over Chinese trade practices and a $375 billion trade deficit with China. Despite taking steps in self-defense, China will not stray from its path of deepening reform and opening up, said the tabloid, which is run by the People’s Daily.

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Deutsche = derivatives.

Deutsche Bank Troubles Raise Worries About The Future Of The Eurozone (Polleit)

The euro banking sector is huge: In April 2018, its total balance sheet amounted to €30.9 trillion, accounting for 268% of GDP in the euro area. Unfortunately, however, many euro banks are in lousy shape. They suffer from low profitability and carry an estimated total bad loan exposure of around €759 billion, which accounts for roughly 30% of their equity capital. Share price developments suggest that investors have lost quite some confidence in the viability of euro banks’ businesses: While US bank stocks are up 24% since the beginning of 2006, the index for euro-area bank stocks is still down by around 70%. Perhaps most notably, ’Germany’s two largest banks, Deutsche Bank and Commerzbank, have lost 85 and 94%, respectively, of their market capitalization.

With a balance sheet of close to €1.5 trillion in March 2018, Deutsche Bank accounted for around 45% of German GDP. In international comparison, this an enormous, downright frightening dimension. It is mostly the result of the bank still having an extensive (though not profitable) footprint in the international investment banking business. The bank has already started reducing its balance sheet, though. Beware of big banks — this is what we could learn from the latest financial and economic crises 2008/2009. Big banks have the potential to take an entire economy hostage: When they get into trouble, they can drag everything down with them, especially the innocent bystanders – taxpayers and, if and when the central banks decide to bail them out, those holding fiat money and fixed income securities denominated in fiat money.

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Greece Expects Substantive Debt Relief Conditions From Eurogroup (R.)

Greece expects eurozone finance ministers to deliver on promised debt relief this week so that it can at last plan its financial future “like any ordinary country,” the government spokesman said on Wednesday. Ministers in the Eurogroup will meet in Luxembourg on Thursday to consider plans for easing the debt burden, which at 179.8% of annual Greek GDP is proportionately the greatest in the 19-nation euro zone. “We are optimistic that we are on the verge of a solution with substance,” spokesman Dimitris Tzanakopoulos said, adding that this would “have a multiplying effect on the momentum of the Greek economy.” Shut out of debt markets in 2010, Greece is set to exit its international bailout program formally in August.

The Eurogroup will discuss debt relief to ensure Athens can return to market financing after eight years of loans from euro zone governments and the IMF. “The accepted criteria for all sides is that this solution be convincing for markets and embed the creditworthiness of our country – the final act in restoring the credibility of Greece to be able to plan for the next day like any ordinary country,” Tzanakopoulos told a news briefing. The European Stability Mechanism (ESM) holds more than half of the country’s public debt and, as its biggest creditor, is keen to see Greece regain market access sustainably. EU officials have repeatedly said the meeting will be crucial to seal Greece’s financial future.

Decisions will need to be made on the use of about €40 billion that remain unspent under its third, €86 billion bailout programme which expires on Aug. 20. Greece has already received substantial debt relief during the crisis. Private creditors cut the value of their holdings of Greek government bonds by more than half in 2012. As a result Greek debt stock was cut by about €107 billion. Official creditors do not accept such “haircuts” but have eased lending terms which reduced the net present value of the loans granted to Athens, resulting in further budget savings. European creditors will probably grant frontloaded debt relief to Greece by using the funds left over in the third bailout to buy out part of the IMF loans..

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“..a tool for the automated surveillance and control of its users..”

EU Committee Approves New Rules That Could ‘Destroy The Internet As We Know It’

An EU committee has approved two new copyright rules that campaigners warn could destroy the internet as we know it. The two controversial new rules – known as Article 11 and Article 13 – introduce wide-ranging new changes to the way the web works. Article 13 has been criticised by campaigners who claim that it could force internet companies to “ban memes”. It requires that all websites check posts against a database of copyrighted work, and remove those that are flagged. That could mean memes – which often use images taken from films or TV shows – could be removed by websites. The system is also likely to go wrong, campaigners say, pointing to previous examples where automated systems at YouTube have taken down a variety of entirely innocent posts.

Smaller sites might not even be able to maintain such a complicated infrastructure for scanning through posts, and therefore might not be able to continue to function, activists claim. Some companies and sites have already had to shut down as a result of the EU’s new GDPR data rules. It has been opposed by a whole host of internet experts, many of them involved with the creation of the central technologies and services of the internet. An open letter published last week was signed by more than 70 experts, including web creator Tim Berners-Lee, Wikipedia co-founder Jimmy Wales and internet pioneer Vint Cerf. “By requiring Internet platforms to perform automatic filtering all of the content that their users upload, Article 13 takes an unprecedented step towards the transformation of the Internet, from an open platform for sharing and innovation, into a tool for the automated surveillance and control of its users,” that letter read.

The authors note that copyright is an important part of law, which exists to encourage creators to ensure their work is put out into the world. But the automatic systems being considered by the EU are not the right ways of controlling that, they argue. “We support the consideration of measures that would improve the ability for creators to receive fair remuneration for the use of their works online,” the letter reads. “But we cannot support Article 13, which would mandate Internet platforms to embed an automated infrastructure for monitoring and censorship deep into their networks.”

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They all do it.

Trump’s Military Drops a Bomb Every 12 Minutes, and No One Talks About It (TD)

There was basically a media blackout while Obama was president. You could count on one hand the number of mainstream media reports on the Pentagon’s daily bombing campaigns under Obama. And even when the media did mention it, the underlying sentiment was, “Yeah, but look at how suave Obama is while he’s OK’ing endless destruction. He’s like the Steve McQueen of aerial death.” And let’s take a moment to wipe away the idea that our “advanced weaponry” hits only the bad guys. As David DeGraw put it, “According to the C.I.A.’s own documents, the people on the ‘kill list,’ who were targeted for ‘death-by-drone,’ accounted for only 2% of the deaths caused by the drone strikes.”

Two percent. Really, Pentagon? You got a two on the test? You get five points just for spelling your name right. But those 70,000 bombs dropped by Bush—it was child’s play. DeGraw again: “[Obama] dropped 100,000 bombs in seven countries. He out-bombed Bush by 30,000 bombs and 2 countries.” You have to admit that’s impressively horrific. That puts Obama in a very elite group of Nobel Peace Prize winners who have killed that many innocent civilians. The reunions are mainly just him and Henry Kissinger wearing little hand-drawn name tags and munching on deviled eggs.

However, we now know that Donald Trump’s administration puts all previous presidents to shame. The Pentagon’s numbers show that during George W. Bush’s eight years he averaged 24 bombs dropped per day, which is 8,750 per year. Over the course of Obama’s time in office, his military dropped 34 bombs per day, 12,500 per year. And in Trump’s first year in office, he averaged 121 bombs dropped per day, for an annual total of 44,096. Trump’s military dropped 44,000 bombs in his first year in office. He has basically taken the gloves off the Pentagon, taken the leash off an already rabid dog.

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Why the EU should not be in the hands of people who need to win national elections. Not Brussels either, obviously. This is disastrous.

Circle Closed: Merkel, Macron Want EU Border States To Deal With Refugees (RT)

With no end in sight to the EU refugee crisis, Berlin and Paris look to put the burden of dealing with asylum seekers on the countries where they first register. The seeming return to ‘old rules’ is poised to split Europe further. During their meeting ahead of the EU summit, German Chancellor Angela Merkel and French President Emmanuel Macron pledged to “jointly and resolutely tackle” what they euphemistically called “secondary movements inside the EU.” An elusive wording used in the so-called Meseberg Declaration adopted by the two leaders effectively means one thing: Macron and Merkel want all the newly arrived asylum seekers and migrants to stay in the EU countries where they were first registered while their cases are being processed.

This would leave the EU southern member states to deal with the new arrivals alone. The problem, however, is that the same rules embodied in what is known as the ill-fated EU Dublin Regulation already proved to be dysfunctional at the height of the 2015 refugee crisis. “It is a de-facto return to the Dublin Agreement, which was disavowed by Merkel herself when she opened Germany’s borders for refugees back in 2015,” Evgenia Pimenova, an expert at the International Studies Center of the Moscow State Institute of International Relations (MGIMO), told RT. It seems, however, that the leaders of Europe’s two powerhouses do not have much of a choice in a situation when they face a growing opposition to the old migration policies both at home and at the European level.

This apparent attempt to save face and gain some political points without giving up on their principled stance on immigration issues, however, might lead Berlin and Paris to a situation in which they only sow seeds of further discord in a bloc, which is already beset with political differences. “It is not a revolution” in a field of migration policy, Alain Corvez, a former advisor to the French Defense and Interior Ministries, told RT. “It is only a tactical decision [aimed at dealing] with the current threats” and “pressure” that Merkel and Macron and facing “in their own countries.”

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5Star must be careful with continuing support for Salvini.

Italian Coastguard Ship Carrying 522 Migrants Docks In Sicily (AFP)

An Italian coastguard ship carrying more than 500 migrants, including dozens rescued by the US Navy off Libya last week, arrived Tuesday night at a port in Sicily, days after the new far-right interior minister banned NGO rescue ships from docking in Italy. “Diciotti ship finally lands in Pozzallo taking 522 people to safe port,” the UNHCR Italy tweeted. “They were rescued in multiple operations, 42 of them survived drowning and they need urgent medical care and psychological support,” the UN refugee agency said, adding that it was at the scene along with Italian authorities and humanitarian organisations.

A dozen very dehydrated migrants, including six children, three women and one man, had already been sent to Pozzallo and taken into care by the Italian Red Cross. It is not known whether they were part of the group of 41 migrants rescued from a vessel in distress off Libya last Tuesday by the USNS Trenton, which transferred them to the Diciotti. The crew of the US fast transport ship also spotted 12 bodies in the water but were unable to locate them during a search after the rescue, the US Navy said. A nearby ship from the NGO Sea Watch offered to help provided it could dock with the migrants at an Italian port, which the Italian authorities refused.

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Wonderful story from an unexpected source, the attacker from Manchester United and Belgium. Moving.

I’ve Got Some Things to Say (Romelu Lukaku)

I remember the exact moment I knew we were broke. I can still picture my mum at the refrigerator and the look on her face. I was six years old, and I came home for lunch during our break at school. My mum had the same thing on the menu every single day: Bread and milk. When you’re a kid, you don’t even think about it. But I guess that’s what we could afford. Then this one day I came home, and I walked into the kitchen, and I saw my mum at the refrigerator with the box of milk, like normal. But this time she was mixing something in with it. She was shaking it all up, you know? I didn’t understand what was going on. Then she brought my lunch over to me, and she was smiling like everything was cool. But I realized right away what was going on.

She was mixing water in with the milk. We didn’t have enough money to make it last the whole week. We were broke. Not just poor, but broke. My father had been a pro footballer, but he was at the end of his career and the money was all gone. The first thing to go was the cable TV. No more football. No more Match of the Day. No signal. Then I’d come home at night and the lights would be shut off. No electricity for two, three weeks at a time. Then I’d want to take a bath, and there would be no hot water. My mum would heat up a kettle on the stove, and I’d stand in the shower splashing the warm water on top of my head with a cup.

There were even times when my mum had to “borrow” bread from the bakery down the street. The bakers knew me and my little brother, so they’d let her take a loaf of bread on Monday and pay them back on Friday. I knew we were struggling. But when she was mixing in water with the milk, I realized it was over, you know what I mean? This was our life. I didn’t say a word. I didn’t want her to stress. I just ate my lunch. But I swear to God, I made a promise to myself that day. It was like somebody snapped their fingers and woke me up. I knew exactly what I had to do, and what I was going to do. I couldn’t see my mother living like that. Nah, nah, nah. I couldn’t have that.

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May 202017
 May 20, 2017  Posted by at 9:05 am Finance Tagged with: , , , , , , , , , ,  

Minor White Windowsill Daydreaming Rochester NY 1958


The Housing Moment Investors Dread Is Here (DDMB)
Home Ownership Among Young UK Families Halves In 20 Years (TiM)
A Monster Eating the Nation (Jim Kunstler)
Democrats Are Falling For Fake News About Russia (Vox)
Harvard Study Reveals Extent of Anti-Trump Media Bias (HeatSt.)
Comey’s 2007 Brush With Scandal: Jim’s Loyalty Was More To Chuck Schumer (SD)
Constitutional Crisis In Washington? More Like Attempted Coup (David Goldman)
Brazil Plea-Bargain Testimony Says President Took $4.6 Million In Bribes (R.)
Maduro to Trump: ‘Get Your Dirty Hands Off Venezuela!’ (R.)
Theresa May To Create New, Government Controlled Internet in UK (Ind.)
Arctic Stronghold of World’s Seeds Flooded After Permafrost Melts (G.)
Varoufakis Claims Tsipras Pressured Him To Accept Creditors’ Demands (K.)
‘They Stole My Money’: Greek Dreams Of Retirement Turn Sour (AP)
Teen Refugees Trapped In Greece Turn To Prostitution (Spiegel)



Cracks in the mirage.

The Housing Moment Investors Dread Is Here (DDMB)

Amid the carnage in the auto sector, economists have sought solace in the comforts of home, sweet home. A recent Census release suggests that Millennials, long sidelined, have finally started to tiptoe into the home-buying market. The reception to the data was so effusive that other reports, suggesting housing has reached a much different sort of turning point, were lost in the fray. The good news is that the trend is unequivocal, based purely on supply and demand. The bad news is in the actual message. The May University of Michigan Consumer Sentiment survey showed a six-year low among those who think it’s a good time to buy a house and a 12-year high among those who say it’s a good time to sell. Disparities of this breadth tend to coincide with break points and that’s just where we’ve landed in the cycle.

The beginning of May officially marked the advent of a buyers’ market, defined simply as sellers outnumbering buyers by a wide enough margin to trigger falling prices. Yes, it’s the moment buyers have been waiting for. It is also the moment private equity investors, those who’ve crowded out natural buyers, have been dreading. Three factors determine home sales: interest rates, unemployment and prices. The recent decline in interest rates has provided some semblance of relief; purchase applications have bounced off April’s levels, when they were down four% over last year. April and May are obviously critical to the spring sales season. The low unemployment rate would seem to be a huge plus if it wasn’t for the stress building around thousands of layoff announcements across the retail and auto sectors that won’t find their way into this most lagging of economic indicators for months.

That is not to say those getting pink slips don’t know their fate, which should influence home sales going forward. Price is the one bright spot, with one glaring caveat: Falling home prices tend to be associated with a negative macroeconomic backdrop, which does not bode well for any buyer of, well, anything. Dig into the Federal Reserve’s recently released first quarter Senior Loan Officer Survey and you will see nothing of note on the residential mortgage side – banks reported that both loan demand and lending standards remained unchanged in the first three months of the year. But that is the here and now. Demand and supply in the auto sector, where pricing has been under pressure for some time, looked quite similar to that for houses several months back.

According to the Fed survey, at minus 13.3%, demand for auto loans flat-lined in deeply negative territory, as was the case in last year’s fourth quarter, the worst levels of the current expansion. This data point corroborated the Michigan survey, which showed that those who said it was a good time to buy a car fell to the lowest level since August 2014. Meanwhile, demand for credit card loans slid to minus 10.2% from minus 8.3% in the last three months of last year. In the event you’re detecting a trend, households are sending out distress signals that have just begun to be picked up in housing, even as household debt levels recapture their pre-crisis highs.

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A radical change to an entire society, and one that will take decades to absorb.

Home Ownership Among Young UK Families Halves In 20 Years (TiM)

The number of young family owning their own homes has halved across large parts of the country in the space of a generation, and the struggle to get on the housing ladder is not restricted to the South East. Research by The Resolution Foundation found that 31% of 25 to 34-year-olds surveyed were home owners in 2016, compared to 58% in 1994. Regionally, 30% of those surveyed in West Yorkshire owned homes last year, compared to 61% in 1994. Similarly, in Greater Manchester, home ownership levels fell to 29% from 59% over the same 22-year period. The South West also suffered a decline, to 36% last year from 62% in 1994, while East Anglia fell to 34% from 61% in the same period. The decrease was most pronounced in outer London, where home ownership dropped to 20% in 2016 from 55% in 1994.

Big falls were also recorded in other areas of the South East including Brighton, Southampton, Reading and Milton Keynes, with home ownership in the younger age group bracket declined from to 34% last year from 64% in 1994. The Resolution Foundation argued that such a ‘seismic shift’ in home ownership puts the younger generation in a very different position from that of the older, baby boomer generation, leaving many more young families living in the private rented sector. Lindsay Judge, a senior policy analyst at the Resolution Foundation, said: ‘London house prices always dominate the headlines, but with all eyes on the capital we’re missing the bigger picture. ‘From Bristol to East Anglia and up to West Yorkshire, large swathes of young families across the country simply cannot afford to buy their own home.’This has implications for their living standards in the here and now, but also in the future when their children grow up and they approach retirement without this key asset to draw upon in old age.

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“Why do you suppose nations employ foreign ministers and ambassadors, if not to conduct conversations at the highest level with other national leaders? And might these conversations include matters of great sensitivity, that is, classified information?”

A Monster Eating the Nation (Jim Kunstler)

Is there any question now that the Deep State is preparing to expel President Donald Trump from the body politic like a necrotic organ? The Golden Golem of Greatness has floundered pretty badly on the job, it’s true, but his mighty adversaries in the highly politicized federal agencies want him to fail spectacularly, and fast, and they have a lot of help from the NY Times / WashPo / CNN axis of hysteria, as well as such slippery swamp creatures as Lindsey Graham. There are more problematic layers in this matter than in a Moldavian wedding cake. America has been functionally ungovernable for quite a while, well before Trump arrived on the scene. His predecessor managed to misdirect the nation’s attention from the cumulative dysfunction with sheer charm and supernatural placidity — NoDrama Obama.

But there were a few important things he could have accomplished as chief exec, such as directing his attorney general to prosecute Wall Street crime (or fire the attorney general and replace him with someone willing to do the job). He could have broken up the giant TBTF banks. He could have aggressively sponsored legislation to overcome the Citizens United SOTUS decision (unlimited corporate money in politics) by redefining corporate “citizenship.” Stuff like that. But he let it slide, and the nation slid with him down a greasy chute of political collapse. Which we find embodied in Trump, a sort of tragicomic figure who manages to compound all of his other weaknesses of character with a childish impulsiveness that scares folks. It is debatable whether he has simply been rendered incompetent by the afflictions heaped on by his adversaries, or if he is just plain incompetent in, say, the 25th Amendment way.

I think we’ll find out soon enough, because impeachment is a very long and arduous path out of this dark place. The most curious feature of the current crisis, of course, is the idiotic Russia story that has been the fulcrum for levering Trump out of the White House. This was especially funny the past week with the episode involving Russian Foreign Minister Lavrov and Ambassador Kislyak conferring with Trump in the White House about aviation security around the Middle East. The media and the Lindsey Graham wing of the Deep State acted as if Trump had entertained Focalor and Vepar, the Dukes of Hell, in the oval office. Why do you suppose nations employ foreign ministers and ambassadors, if not to conduct conversations at the highest level with other national leaders? And might these conversations include matters of great sensitivity, that is, classified information? If you doubt that then you have no understanding of geopolitics or history.

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The writer starts off quite right, but then veers off into this incomprehensible stuff: “There are even legitimate reasons to believe that Trump’s campaign worked with Russian hackers to undermine Hillary Clinton. That may or may not turn out to be true, but it is least plausible and somewhat supported by the available evidence.”

Legitimate reasons that may not be true? “Somewhat” supported by evidence? That’s where I stop reading.

Democrats Are Falling For Fake News About Russia (Vox)

President Donald Trump is about to resign as a result of the Russia scandal. Bernie Sanders and Sean Hannity are Russian agents. The Russians have paid off House Oversight Chair Jason Chaffetz to the tune of $10 million, using Trump as a go-between. Paul Ryan is a traitor for refusing to investigate Trump’s Russia ties. Libertarian heroine Ayn Rand was a secret Russian agent charged with discrediting the American conservative movement. These are all claims you can find made on a new and growing sector of the internet that functions as a fake news bubble for liberals, something I’ve dubbed the Russiasphere. The mirror image of Breitbart and InfoWars on the right, it focuses nearly exclusively on real and imagined connections between Trump and Russia. The tone is breathless: full of unnamed intelligence sources, certainty that Trump will soon be imprisoned, and fever dream factual assertions that no reputable media outlet has managed to confirm.

Twitter is the Russiasphere’s native habitat. Louise Mensch, a former right-wing British parliamentarian and romance novelist, spreads the newest, punchiest, and often most unfounded Russia gossip to her 283,000 followers on Twitter. Mensch is backed up by a handful of allies, including former NSA spook John Schindler (226,000 followers) and DC-area photographer Claude Taylor (159,000 followers). There’s also a handful of websites, like Palmer Report, that seem devoted nearly exclusively to spreading bizarre assertions like the theory that Ryan and Sen. Majority Leader Mitch McConnell funneled Russian money to Trump — a story that spread widely among the site’s 70,000 Facebook fans. Beyond the numbers, the unfounded left-wing claims, like those on the right, are already seeping into the mainstream discourse.

In March, the New York Times published an op-ed by Mensch instructing members of Congress as to how they should proceed with the Russia investigation (“I have some relevant experience,” she wrote). Two months prior to that, Mensch had penned a lengthy letter to Vladimir Putin titled “Dear Mr. Putin, Let’s Play Chess” — in which she claims to have discovered that Edward Snowden was part of a years-in-the-making Russian plot to discredit Hillary Clinton. Last Thursday, Sen. Ed Markey (D-MA) was forced to apologize for spreading a false claim that a New York grand jury was investigating Trump and Russia. His sources, according to the Guardian’s Jon Swaine, were Mensch and Palmer:

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First, media exposure was a main factor in winning Trump the election. Now, not so much.

Harvard Study Reveals Extent of Anti-Trump Media Bias (HeatSt.)

A major new study out of Harvard University has revealed the true extent of the mainstream media’s bias against Donald Trump. Academics at the Shorenstein Center on Media, Politics and Public Policy analyzed coverage from Trump’s first 100 days in office across 10 major TV and print outlets. They found that the tone of some outlets was negative in as many as 98% of reports, significantly more hostile than the first 100 days of the three previous administrations:

The academics based their study on seven US outlets and three European ones. In America they analyzed CNN, NBC, CBS, Fox News, the New York Times, the Washington Post and the Wall Street Journal. They also took into account the BBC, the UK’s Financial Times and the German public broadcaster ARD. Every outlet was negative more often than positive. Only Fox News, which features some of Trump’s most enthusiastic supporters and is often given special access to the President, even came close to positivity. Fox was ranked 52% negative and 48% positive. The study also divided news items across topics. On immigration, healthcare, and Russia, more than 85% of reports were negative. On the economy, the proportion was more balanced – 54% negative to 46% positive:

The study highlighted one exception: Trump got overwhelmingly positive coverage for launching a cruise missile attack on Syria. Around 80% of all reports were positive about that.

The picture was very different for other recent administrations. The study found that President Obama’s first 100 days got a good write-up overall – with 59% of reports positive. Bill Clinton and George W Bush got overall negative coverage, it found, but to a much lesser extent than Trump. Clinton’s first 100 days got 40% positivity, while Bush’s got 43%. Trump has repeatedly claimed that his treatment by the media is unprecedented in its hostility. This study suggests that, at least when it comes to recent history, he’s right.

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Comey has a past.

Comey’s 2007 Brush With Scandal: Jim’s Loyalty Was More To Chuck Schumer (SD)

[..] the current episode is not the first time Comey and his associates plotted to oust a sitting Republican official through highly orchestrated political theater and carefully crafted narratives in which Comey is the courageous hero bravely fighting to preserve the rule of law. To understand how Comey came to be FBI director in the first place, and how he operates in the political arena, it is important to review the last scandal in which Comey had a front-row seat: the 2007 U.S. attorney firings and the fight over the 2004 reauthorization of Stellar Wind, a mass National Security Agency (NSA) surveillance program designed to mitigate terrorist threats in the wake of the 9/11 attacks. The pivotal scene in the Comey-crafted narrative, a drama that made Comey famous and likely paved the road to his 2013 appointment by President Barack Obama to run the FBI, occurred in a Beltway hospital room in early 2004.

In Comey’s view, Comey was the last honest man in Washington, the only person standing between a White House that rejected any restraints on its power, and the rule of law protecting Americans from illegal mass surveillance. A former White House counsel and attorney general with extensive first-hand experience dealing with Comey, however, paints a very different picture of what happened in that hospital room, and disputes numerous key details. In this account, Comey’s actions showcase a duplicitous, secretive schemer whose true loyalties were not to the officials to whom he reported, but to partisan Democrats like Senate Minority Leader Chuck Schumer (D-N.Y.). To fully understand and appreciate Jim Comey’s approach to politics, the writings and testimony of Alberto Gonzales, who served as both White House counsel and attorney general during the events in question and is intimately aware of Comey’s history of political maneuvering, is absolutely essential.

Gonzales’s descriptions of his interactions with Comey, included in his 2016 book “True Faith And Allegiance,” are detailed and extensive. While his tone is measured, the language he uses to describe Comey’s actions in 2004 and 2007 leaves little doubt about the former top Bush official’s views on Comey’s character. Gonzales’s opinion is clearly colored by the fact that Comey cravenly used him to jumpstart his own political career by going public with surprise (and questionable) testimony that Gonzales had attempted to take advantage of a deathly ill man in order to ram through authorization of an illegal surveillance program. Bush’s Attorney General John Ashcroft had taken ill and was in the hospital at a pivotal time. The legal authorization of a surveillance program meant to find and root out terrorist threats was days from expiring.

What happened in Ashcroft’s hospital room in March of 2004 later became political fodder for a hearing in which Senate Democrats used Comey to dredge up the 2004 hospital meeting to tar Gonzales’ credibility and suggest he was unfit to continue serving as attorney general. As the 2004 and 2007 sagas show, Comey is clearly no stranger to using the unarguably legal dismissal of government employees as the backdrop for casting himself as the story’s protaganist standing up to the forces of corruption. “[I] told my security detail that I needed to get to George Washington Hospital immediately. They turned on the emergency equipment and drove very quickly to the hospital,” Comey testified. “I got out of the car and ran up — literally ran up the stairs with my security detail.” “I was concerned that, given how ill I knew the attorney general was, that there might be an effort to ask him to overrule me when he was in no condition to do that,” Comey said.

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It’s a politics and media crisis.

Constitutional Crisis In Washington? More Like Attempted Coup (David Goldman)

This is NOT a Constitutional crisis, contrary to press hype, but an attempted coup, as a senior Republican statesman told a private briefing this week. As Prof. Jonathan Turley of George Washington University wrote yesterday at TheHill.Com, the much-ballyhooed Comey memo is “pretty thin soup” as far as obstruction of justice is concerned. “Encouraging leniency or advocating for an associate may be improper,” Prof. Turley added, but it doesn’t come close to the legal threshold for impeachment, especially because no criminal proceedings were underway or even contemplated against Gen. Flynn. What exactly is going on? The Democrats never accepted the Trump election victory, and neither did the McCain wing of the Republican Party, which was humiliated and sidelined by Trump. The Wall Street Journal editorial page published a signed op-ed yesterday claiming that Trump’s alleged leak of covert intelligence to Russian Foreign Minister Lavrov showed his unfitness for office.

Presidents and Cabinet members leak secret intelligence frequently, but whether they are held to account for it is a political matter. Obama and his then Defense Secretary Leon Panetta leaked the fact that Seal Team 6 had killed Osama bin Laden as well as the fact that a Pakistani physician had tipped the US off to his whereabouts, life-threatening leaks for which Obama was given a free pass. The object of all of this, said the Republican statesman, is to persuade a sufficient number of Republican congressman and senators to abandon Trump and declare him “unfit” for office. Nothing quite like this ever has happened in American politics. Trump will NOT be caught in an impeachable offense, but his detractors will NOT give up–so a prolonged “cold civil war” (Prof. Angelo Codevilla’s phrase) is likely to paralyze policy-making in Washington for some time. That can’t be good for the stock market.

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He shouldn’t last the weekend.

Brazil Plea-Bargain Testimony Says President Took $4.6 Million In Bribes (R.)

Brazil’s top court released plea-bargain testimony on Friday accusing President Michel Temer and his two predecessors of receiving millions of dollars in bribes, the most damaging development yet in a historic political corruption probe. The testimony made public by the Supreme Court is from executives of the world’s largest meatpacking company, and raises serious doubts about whether Temer can maintain his grip on the presidency. The scandals that have engulfed Brazil’s political class and many business elites reduce the chances that Temer, a conservative who took office after leftist former President Dilma Rousseff was impeached last year, can push through economic reforms crucial for Latin America’s biggest country to recover from its worst recession on record.

The Supreme Court on Thursday said it approved an investigation of Temer for corruption and obstruction of justice. Calls for his resignation intensified, including an editorial in the O Globo newspaper, which is normally criticized by leftists for backing conservative politicians. “This is easily the worst moment in Brazil since we returned to democracy,” said Claudio Couto, a political scientist at the Getulio Vargas Foundation, a top university, calling the claims “the mother of all plea bargains.” “This testimony is hitting everyone, all the major political players and, most importantly, a sitting president,” he added.

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How is it possible that in no western media reports on Venezuela the CIA is ever mentioned? Think they left when Chavez died? Think the country implodes like this all by itself?

Maduro to Trump: ‘Get Your Dirty Hands Off Venezuela!’ (R.)

Venezuelan President Nicolas Maduro blasted Donald Trump on Friday after a fresh round of U.S. sanctions and strong condemnation of his socialist government from the U.S. leader. “Enough meddling … Go home, Donald Trump. Get out of Venezuela,” Maduro thundered in a speech carried on live TV. “Get your dirty hands out of here.” The Trump administration imposed sanctions on the chief judge and seven other members of Venezuela’s Supreme Court on Thursday as punishment for annulling the opposition-led Congress in a series of rulings this year. The new sanctions package was aimed at stepping up pressure on Maduro and his loyalists following a crackdown on street protests and efforts to consolidate his rule of the South American oil-producing country. At the White House on Thursday, Trump expressed dismay at how once-booming Venezuela was now mired in poverty, saying “it’s been unbelievably poorly run” and calling the humanitarian situation “a disgrace to humanity.”

Maduro had initially urged the world to give Trump a chance after he was elected in November but his government unleashed its strongest condemnation to date of the Republican president. “President Trump’s aggressions against the Venezuelan people, its government and its institutions have surpassed all limits,” said a government statement that accused Washington of seeking to destabilize Venezuela and foment foreign intervention. The statement also accused Washington of financing the Venezuelan opposition while ignoring problems at home like income inequality and rights violations. “The extreme positions of a government just starting off only confirmed the discriminatory, racist, xenophobic, and genocidal nature of U.S. elites against humanity and its own people, which has now been heightened by this new administration which asserts white Anglo-Saxon supremacy,” the statement said.

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Classic. Using fear, of terrorism, of pornography, etc., to clamp down on everyone’s freedom, according to a certain party’s views. No privacy for you, guys. Use your votes wisely.

Theresa May To Create New, Government Controlled Internet in UK (Ind.)

Theresa May is planning to introduce huge regulations on the way the internet works, allowing the government to decide what is said online. Particular focus has been drawn to the end of the manifesto, which makes clear that the Tories want to introduce huge changes to the way the internet works. “Some people say that it is not for government to regulate when it comes to technology and the internet,” it states. “We disagree.” Senior Tories confirmed to BuzzFeed News that the phrasing indicates that the government intends to introduce huge restrictions on what people can post, share and publish online. The plans will allow Britain to become “the global leader in the regulation of the use of personal data and the internet”, the manifesto claims.

It comes just soon after the Investigatory Powers Act came into law. That legislation allowed the government to force internet companies to keep records on their customers’ browsing histories, as well as giving ministers the power to break apps like WhatsApp so that messages can be read. The manifesto makes reference to those increased powers, saying that the government will work even harder to ensure there is no “safe space for terrorists to be able to communicate online”. That is apparently a reference in part to its work to encourage technology companies to build backdoors into their encrypted messaging services – which gives the government the ability to read terrorists’ messages, but also weakens the security of everyone else’s messages, technology companies have warned.

The government now appears to be launching a similarly radical change in the way that social networks and internet companies work. While much of the internet is currently controlled by private businesses like Google and Facebook, Theresa May intends to allow government to decide what is and isn’t published, the manifesto suggests.

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They never thought about this?

Arctic Stronghold of World’s Seeds Flooded After Permafrost Melts (G.)

It was designed as an impregnable deep-freeze to protect the world’s most precious seeds from any global disaster and ensure humanity’s food supply forever. But the Global Seed Vault, buried in a mountain deep inside the Arctic circle, has been breached after global warming produced extraordinary temperatures over the winter, sending meltwater gushing into the entrance tunnel. The vault is on the Norwegian island of Spitsbergen and contains almost a million packets of seeds, each a variety of an important food crop. When it was opened in 2008, the deep permafrost through which the vault was sunk was expected to provide “failsafe” protection against “the challenge of natural or man-made disasters”. But soaring temperatures in the Arctic at the end of the world’s hottest ever recorded year led to melting and heavy rain, when light snow should have been falling.

“It was not in our plans to think that the permafrost would not be there and that it would experience extreme weather like that,” said Hege Njaa Aschim, from the Norwegian government, which owns the vault. “A lot of water went into the start of the tunnel and then it froze to ice, so it was like a glacier when you went in,” she told the Guardian. Fortunately, the meltwater did not reach the vault itself, the ice has been hacked out, and the precious seeds remain safe for now at the required storage temperature of -18C. But the breach has questioned the ability of the vault to survive as a lifeline for humanity if catastrophe strikes. “It was supposed to [operate] without the help of humans, but now we are watching the seed vault 24 hours a day,” Aschim said. “We must see what we can do to minimise all the risks and make sure the seed bank can take care of itself.”

The vault’s managers are now waiting to see if the extreme heat of this winter was a one-off or will be repeated or even exceeded as climate change heats the planet. The end of 2016 saw average temperatures over 7C above normal on Spitsbergen, pushing the permafrost above melting point. “The question is whether this is just happening now, or will it escalate?” said Aschim. The Svalbard archipelago, of which Spitsbergen is part, has warmed rapidly in recent decades, according to Ketil Isaksen, from Norway’s Meteorological Institute. “The Arctic and especially Svalbard warms up faster than the rest of the world. The climate is changing dramatically and we are all amazed at how quickly it is going,” Isaksen told Norwegian newspaper Dagbladet.

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I don’t know if they still talk.

Varoufakis Claims Tsipras Pressured Him To Accept Creditors’ Demands (K.)

Former finance minister Yanis Varoufakis on Friday hit out at Prime Minister Alexis Tsipras, claiming that the premier had tried to scare him into yielding to creditors’ demands. “In the summer of 2015 Alexis Tsipras told me that I should fear a new Goudi,” Varoufakis told VICE magazine, referring to a military coup that took place in Greece in 1909 amid simmering social tensions. The former minister, who has launched his own party, DiEM25, said the alleged statement struck him as a threat aimed at forcing him to agree with Tsipras’s decision to give in to creditors. In a Skai TV interview last week, Varoufakis said Greece “will become Kosovo, a protectorate run by an employee of the European Union.”

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Greece’s problem is public debt, not private debt. The people did not cause the crisis, they only pay for it.

‘They Stole My Money’: Greek Dreams Of Retirement Turn Sour (AP)

It was supposed to be a time to look forward to. After decades of work, retirement was for many meant to provide a chance to slow down and enjoy life. A holiday, an evening out with old friends, the odd fishing trip. Instead, many Greek pensioners say they are struggling to get by. The government has repeatedly cuts old age benefits as part of the country’s three international bailouts and many retirees now say they are at breaking point financially. Some have unemployed children they try to help on shrinking pensions, others are seeing rising taxes eat into lifetime savings. A new austerity bill approved in parliament early Friday cuts their pensions even further, putting their plight in focus.

Greece once had a generous pension system – too generous to be sustainable, especially with an aging population. Retirement was possible from as early as the age of 55 after 30 years of work. Many had extra perks: public sector employees could retire as early as 52. Some women with young children could retire with a reduced pension at 50. But the financial crisis left Greece reliant on international creditors, who pushed for economic change – not least to pensions. The standard retirement age is now 67. Many early retirement provisions have been abolished. Including pensions, incomes have dropped 40% over the last seven years of crisis. Here is a look at the problem through the stories of four pensioners.

Mina Griva, 78, widow and former factory worker Griva’s husband, who worked in a steel plant in Greece, died eight years ago. Her initial widow’s pension of €998 ($1,110) and a €300 supplementary pension have been cut to €560 and €150 respectively. “They’ve destroyed us,” said Griva, who now helps out daily at a municipal care center for the elderly. “Pensioners are crying.” A mother of five, she uses her pension to help her son, who’s been unemployed for five years. She moved out of her small Athens apartment to give it to him, and lives in a single room on the last floor of the building. Now, she avidly watches political talk shows on TV to figure out how much further her pension will drop.

Griva left Greece in 1964 and worked for 15 years in Germany, initially as a cleaner in a cheese factory and later working an ironing press in a clothing factory. Times were tough in Greece then, and she worked double eight-hour shifts to send money home to her family. She saved, and eventually had enough to secure homes for her children, and a small apartment for herself. She thought she was securing her family’s future. “We left here to build something,” said Griva. Instead, the austerity measures ate into their lives, with new property taxes, layoffs and income cuts. “Now you can’t even buy a bread ring for your grandchildren,” she said. “I don’t know where this will go. Things are very, very hard.”

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Damn you, Brussels. Damn you, Merkel, Rutte, Hollande, Cameron, Renzi. You created this.

Teen Refugees Trapped In Greece Turn To Prostitution (Spiegel)

Mohammed is approached by a middle-aged man wearing greasy beige pants, a blue shirt and a blue baseball cap. Although the man speaks Greek, the 17-year-old boy from Afghanistan knows exactly what he wants. “No,” Mohammad repeatedly says in English, his voice cracking and his eyes filling with tears. But the man keeps pushing. “Come with me. I will give you food, pay you.” The man only stops when he realizes he is being watched. He then grudgingly walks away and sits down on a nearby bench. From there, he starts scouring the field again, searching for another boy. It was broad daylight on a sunny Tuesday morning on Victoria Square in the heart of Athens. The square has been a meeting place and a makeshift home for thousands of migrants since the refugee crisis hit Greece two years ago – and now it is increasingly becoming a prostitution hub for underage refugees.

Mohammad hasn’t gone that far yet, but he says it is only a matter of time until he goes home with a man. He has just 30 euros left in his pocket, and he is quickly losing hope. “When this money runs out, I fear I will have no other choice but do what the others are doing. Have sex with these older men. What should I do? I have no place to stay, nothing to eat. Should I just die in the park?” he says, finally bursting into tears. Mohammed says he lost his parents in an attack in Afghanistan. He has been in Athens for a month, he says, after fleeing his home alone and reaching the Greek island of Lesbos last February, where he registered as a minor. He then claimed to be an adult to escape the violence in the island’s notorious Moria camp. Since then, despite looking very much like a teenager, with pimples, a small stature and thin voice, he has been turned away from shelters for minors.

When night comes, Mohammad rolls himself up in a blanket on a corner of the square. His only possession is a yellow envelope that he guards closely. Inside, he keeps his refugee registration papers and a single-page CV. According to Mohammad’s papers, he applied for asylum in Lesbos in November 2016. The date set for his interview is January 4, 2018. It is mostly boys from Afghanistan, Pakistan and Syria – who either came alone or were separated from their families along their perilous journey to Europe – who are now waiting for their refugee claims to be processed in Greece. In the meantime, the authorities are supposed to look after them, but there are only 53 shelters with 1,272 spots. Of the approximately 2,000 registered minors, about 800 are housed in large camps, are in police custody or are homeless.

[..] Everyone – the authorities, the NGO workers, the police – know what is going on. But nobody seems willing or able to do anything about it. And this despite the fact that the adult clients are breaking the law, despite the fact that various institutions have devoted themselves to protecting young refugees. But prostitution is booming because the system is failing. Because Greece doesn’t have the resources to take care of underage refugees. Because the processing of asylum applications is chaotic and authorities from one agency don’t know what authorities from other agencies are doing. And because the boys need to file criminal complaints before their clients can be prosecuted.

Read more …

Dec 282014
 December 28, 2014  Posted by at 11:15 pm Finance Tagged with: , , , , , , ,  

Unknown GMC truck Associated Oil fuel tanker, San Francisco 1935

America has managed to construct an entirely one-dimensional political system. There’s no discernible difference left between left and right, other than in spin language pre-cooked for the sole purpose of faking the concept of elections. There’s very right and ultra right. America is living proof that once money is allowed into politics, the accumulation of it, and of the power it can buy, will and eventually must fully control a democratic system, which in the process, of necessity, suffocates and dies a painful death.

What once was a proud American democracy has been turned into a circus that rolls into town every four years, filled with clowns that pretend to fight each other with over the top grotesque contraptions, but sleep in the same bed once the show is over and the audience has gone home.

In Europe that process has not yet been completed, but with the inception of the EU it is well on its way. It is a predictable process, in that the concentration of power, and of money, is irreversible as long as it’s allowed to continue its course, and the system succeeds in making people believe they still have a say in their own lives. As long as that belief is in place, it’s just an ongoing – relatively – slow corrosion that sets in and then takes its time, but never stops.

Control of the media is an obvious key element of this process, and surprisingly easy to obtain; you’d be inclined to think people would fight harder for their access to real life information. They don’t. As I said two days ago in 2014: The Year Propaganda Came Of Age, that’s what the Ukraine situation has taught me. It’s shown me how far ahead we are, not just stateside, but all over Europe as well, in living up to George Orwell’s visions. As far as I’m concerned, if Eric Blair had named his book 2014, he’d have been dead on. 2014 was the year, much more than 1984. But I don’t blame him: how was he supposed to oversee that in 1948?

Ukraine was the epitomy: no questions asked, just neverending tons of innuendo written and spoken, and a case for which to date no proof has been provided has been firmly decided in the public mind. No due process, no innocent until proven guilty, not proper defense. Everybody has the right to a lawyer, but not in international politics. Or, apparently, in the eyes of western media and citizens.

Only today, Angela Merkel once again said something to the extent that Putin must get the Donbass ‘rebels’ to stop the fighting, while she knows full well they can’t and won’t, because they risk being ethnically cleansed if they would. 4500 of them were already killed by what was supposed to be their own government.

But the German people, like all other European peoples, swallow this nonsense whole. The only counterweight comes from German businesses that lose too much money in the sanctions that make no proper sense. And if the pressure from that side gets strong enough she’ll cave in, slowly, provided she can avoid losing face. That might be the biggest risk to US regime change plans in the new year.

And those plans deserve and need to be thwarted. As do the Troika schemes to throw Europe’s Mediterrenean region ever deeper into misery, austerity and ultimately debt slavery. The EU is a one dimensional one way street into a deep dark night, construction of which is overseen by people who work for their own personal interests, not that of their people. A nice idea gone terribly astray. Let’s make sure we finish it off in 2015, and give the Greeks and Italians back their honor and their dignity. And let’s keep our own dignity in the process.

As for the US, I got to tell you, I don’t know. Obama has been a miserable failure, perhaps because he was just trying to save his skin all along, or because he was like this all along, but he sure never brought much change. Or belief. Waiting in the wings we got Hillary Clinton and Jeb Bush, but they’re the exact same person. They’ll sell their grandmas for cheap if they think it’ll help them along.

America needs people who believe in something other than money or power, but anyone who’d try would be swept off the Christmas table with the other food scraps in no time, and be devoured by the dogs. I got some flack for saying on my Facebook page that the Ron Paul Institute published the propaganda article I mentioned before, but girl, Ron Paul is all you have left, like him or not.

Dr. Paul is the only one I know in America who has raised his voice against the US involvement in Ukraine, the only one in the entire west even, other than those of us in the blogosphere, or the alternative media if you will. And that’s insane. That’s utterly insane. We should not allow for our voices to be silenced the way they are, not just like Ron Paul, but worse than him. We don’t deserve to be marginalized anymore than Dr. Paul does; we’re smarter than the lot of them.

I guess that is what I think those of us who haven’t died yet should set out to do in 2015. Do what we’ve been doing, and do more of it. As Andy Warhol said: the only thing that counts is work. Big dreams or goals go only so far. They mean little if you don’t put in the work. And for this ‘alternative press’ we have going, from Zero Hedge all the way down to the Automatic Earth, with all the great people in between and around it, what matters is the work. No letting up; we have the same responsibility the illegal press had in Amsterdam and Paris in the 1940s – even if we can’t stand in the shadows of their courage -: to make sure people get information that does not stem from the matrix.

An article in the Guardian today said that 2014 was The Year The Internet Came Of Age. I think I’ll stick with my 2014: The Year Propaganda Came Of Age, but the combination of the two leads to interesting questions. Like: what role has the internet played in the rise of the propaganda that led to almost none of our so-called higher-educated people asking any questions about what really happened in Ukraine, or about so many other situations the ever more concentrated powers that rule us are involved in.

First of all, obviously, the financial world. Hardly anybody may understand what that is doing to us, to the world we live in, to the people we love and those who don’t know but we should still be holding out for (those underground press guys in WWII were risking their lives for people they didn’t know). Between us, we do understand a whole lot of what’s happening. We have no choice – or at least I don’t – but to keep going at it every single day and get it out there, and hope that a few more people every day will pick up on it. Not to make money for themselves – that’s the very disease that got us where we are -, but to be more human, and to try and lead a way forward. For now the internet allows us to do that. Let’s make the best of it while we can.

Jul 132014
 July 13, 2014  Posted by at 3:40 pm Finance Tagged with: , , , ,  

G. G. Bain Jewish Farmers Exhibit, East Broadway, NY 1909

Today looks like a good day to do a shout out and promo for our dear friends Kirsten and Serenity in Melbourne, Oz, who were responsible for the impeccable organization of the tour of Australia Nicole and I did in 2012. So we have living proof that they know how to organize something once they pour their hearts into it, which bodes well for the new project they’re busy setting up.

The Open Food Network focuses on building and facilitating an interactive platform to connect farmers and eaters that are dedicated to good, honest and local food, with full transparency. Of course there are many initiatives out there, from farmers markets to organic food stores, but many people still have problems getting access to good food.

Besides, most ‘fresh’ food is bought in giant supermarket chains, transported over large distances, and subject to centralized control, from Monsanto at seed level, ConAgra as super-producer, to WalMart as super-retailer. And we should not want centralized control, especially not of our basic necessities; that has never been a good idea and it never will be. If we can get the Monsanto’s and WalMarts of this world out of our lives, and at the same time improve the quality of our food, that can only be a good thing.

And if that still doesn’t swing it for you, just think of all the local jobs that will be created if we all buy local food as much as we can. Don’t forget that a dollar spent inside your community is worth 3-4 times more than one spent outside of it. And no, WalMart, and the entire supply chain it stands for, is not your community.

The Open Food Network aims to use the internet to provide a way of organizing all this, community by community. Check it out. Here’s their blurb:

Open Food Network – Building a Better Food System

The Open Food Network is an open, online marketplace that makes it easy to find, buy, sell and move sustainable local food. It gives farmers and food hubs easier and fairer ways to distribute food, while opening up the supply chain so eaters can see what’s going on. It’s good for farmers, good for eaters and good for the food hubs, local businesses and communities that want real food.

We are proudly open source and not for profit – creating software with and for the global fair food movement. Contribute now to get this platform launched for use by farmers and food hubs in Australia, with the software available for use all around the world! We know that OFN has the potential to really disrupt our food systems – in a good way. But we need you to get on board now and help make it happen.

How will OFN help fix the food system?

Lots of people are working to break the stranglehold that supermarkets and large agribusiness have over our food system. We’ve spent 3 years talking with many farmers, producers, eaters and local enterprises (like food hubs, independent retailers and co-ops) about how we can work together to take back control of our food. The Open Food Network is our response. By turning the existing food system on its head, the Open Food Network provides efficient ways for buyers (hubs) to connect with many smaller sellers (producers) and distribute food into their communities.

GOOD for Farmers and Producers: There is currently a big gap for farmers between selling through “the big guys” or doing everything themselves to distribute directly to eaters e.g. setting up and running their own online store, farm gate sales and farmers’ markets. For many farmers, these are not enough and take time away from the important work of growing our food. Farmers need scalable, sustainable systems for distributing their food.

OFN makes it easier for farmers to sell directly and possible for them to work together and with others (like food hubs) to streamline marketing and distribution, while maintaining full transparency and control. With the OFN, farmers have the freedom to set prices, choose who they trade with, when, how often and under what terms.

GOOD for Eaters: It’s time to reconnect with our food! We’re ready to abandon the supermarkets and get good, honest produce from people we know. But sometimes it’s hard work to shop and eat locally. OFN makes it easy to access locally grown food direct from the grower or transparently through hubs. Just go online, find what’s near you and shop . . It’s like an online shopping centre, full of local food!

GOOD for Communities and Food Hubs: “Middle men” matter . . the problem is when there are only two! We want every community to have many different ways to get sustainable, local food. Local food enterprises – like buying groups, co-ops or larger scale wholesalers, retailers (and everything in between) can make this possible. OFN provides simple online ordering and shopping tools that make it easy to set up a hub and start moving food – while keeping the farmers and prices transparent all the way through. It removes admin barriers to small and medium sized food hubs working with local farmers

The OFN provides an ultra-flexible system for food hubs, enabling communities to set up what they need. Food hubs using OFN have complete freedom over:

• Your customers – whether they are households, buying groups, institutions, food service etc
• Your mark-ups and fees – OFN has a flexible fee structure so you can set it up how you want it, easy, transparent, independent
• Who you work with – OFN supports diverse networks, partnerships and social enterprises, with relationships and flexible fee structures

The Open Food Network:

• is an online marketplace that farmers and local hubs can use to distribute food
• makes it easier to find, buy, sell and move sustainable local food
• is software that helps organise the trade and distribution of locally grown food
• lets you manage your ordering, scheduling, payment and delivery cycles
• lets eaters order locally grown food from their chosen hub
• puts eaters in touch with the people who grow their food
• lets farmers list their own produce, set their prices and tell their own stories
• basic trading is free for farmers and eaters to use
• is proudly open source and not for profit

Tipping Point Goal: $25,000
Total Funding Goal: $100,000

Tipping Point Goal: We’ve done the numbers and – together with grant funds and some blood, sweat and tears – an additional $25,000 will get the software to the point where we can launch an ‘open beta’ OFN service in Australia (open to anyone in Australia to use for profiles and basic trading). The money will go towards designers, engineers, developers and testers. This is our tipping point goal. If we raise this amount, the campaign will be a success and we’ll get your pledged donation. If not, we won’t get anything. Please help us at least make our tipping point which will get the basic OFN into the hands of all the farmers and communities that need it!

Total Funding Goal: Additional funds raised up to $100K will build the features we need for a full beta public launch in March 2015. Amazing volunteers, our own money, and seed grants from VicHealth and Sustainable Table have enabled us to get this far. And we’ve been able to provide enough features to do working trials with our fabulous hub partners in Australia and abroad. But there’s so much more that could be done.

We understand what is needed. If we raise more money, we can build more of it. Word is spreading and there are food hubs, networks and developers around the world who are keen to get on board. We want to help that happen . . so … Funds raised over $5,000 in any individual country will support a mini-pilot with partners in that country. It would be amazing to raise enough funds to build features AND set-up local chapters internationally.

ECB Interest Rates Too Low For Germany, Says Bundesbank Chief (Reuters)

The European Central Bank’s interest rates are too low for Germany, Bundesbank chief Jens Weidmann said on Saturday, adding that ECB monetary policy should remain expansive for no longer than absolutely necessary. Speaking at a Bundesbank open day for the public, Weidmann noted that many savers in Germany were irritated by low interest rates but said these were aimed at supporting investment and consumption. The ECB cut interest rates to record lows last month as part of a package of measures to breathe life into a sluggish euro zone economy, where inflation is running far below the central bank’s target and there is a dearth of credit to smaller firms. The German economy, Europe’s largest, has been outperforming other countries in the bloc, however.

“It is clear that monetary policy, when seen from a German viewpoint, is too expansive for Germany, too loose,” Weidmann told a crowd at the start of the open day. “If we pursued our own monetary policy, which we don’t, it would look different.” “But we are in a currency union,” he said. “That means that in our monetary policy decisions, we must orientate ourselves to the whole currency union.” Repeating a warning he has made previously about the risks of leaving policy loose for too long, Weidmann added: “This phase of low interest rates, this phase of expansive monetary policy, should not last longer than is absolutely necessary.” Bundesbank Vice President Claudia Buch said property prices were overvalued in some big city areas in Germany by up to 20-25%, but that there was no acute risk of a price bubble forming.

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CalPERS Ex-CEO Guilty Plea Explains Why Bankers Make So Much Money (Forbes)

The ex-CEO of CalPERS, Fred Buenrostro, has just pleaded guilty to accepting doucers, cash bribes and fees for placing investment business with a specific firm. The economic point that this helps us elucidate is why bankers and fund managers make such vast incomes normally. It’s a concept called “efficiency wages”. Essentially, when stripped right down, if people are handling or responsible for a large amount of money then pay them very well. So that it’s not actually worth their trying to do anything naughty, the risk of losing that high income is greater than what they can gain by being naughty. Here’s the actual announcement of Buenrostro’s plea:

Buenrostro is the former Chief Executive Officer (CEO) of the California Public Employee Retirement System (CalPERS). In pleading guilty, Buenrostro admitted to conspiring with Alfred J. Villalobos, founder and operator of ARVCO Capital Research LLC (ARVCO). Buenrostro acknowledged in court today that he understood that Villalobos operated ARVCO as a placement agent that solicited investments by public pension funds into private equity funds. Buenrostro also admitted that he understood that ARVCO was typically paid an agreed-upon fee based on the percentage of the total dollar amount invested by the public pension fund.

To put it simply (and do note that Villalobos has not been found guilty of anything at all as yet and is thus innocent of all charges) there’s a layer of agents, or introducers, in the fund management industry. A pension fund, say, is looking around for where to invest, various fund management firms are looking for people to invest and those who introduce one to the other will get a (small) slice of the amount invested. The accusation is that Buenrostro favoured Villalobos in such allocations and then received various parcels of cash, had his wedding paid for etc. as a result. Again, note that Buenrostro has pleaded guilty, Villalobos is innocent. So far so grubby: but this gives us an insight into why pay is so darn high right across the fund management and financial industry. Simply because these people are handling such vast amounts of money. There’s therefore obviously a temptation to make off with some of that vast river of cash that flows through such offices.

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80% Of The Light In Space Is Missing (RT)

Scientists now believe that a tremendous amount of light that would otherwise be illuminating our universe is mysteriously absent. How much light exactly? According to new research conducted by a team of international scientists and funded in part by NASA, the National Science Foundation and the Ahmanson Foundation, around 80 percent of the universe’s light is nowhere to be found. “It’s as if you’re in a big, brightly lit room, but you look around and see only a few 40-watt lightbulbs,” astronomer Juna Kollmeier – a Carnegie Institution for Science professor and the lead author of the new study on missing light said in a statement this week. “Where is all that light coming from? It’s missing from our census.”

Kollmeier and company have published their research in the latest edition of The Astrophysical Journal Letters, and there they explain further why they have reason to believe that the universe is missing around 400 percent of its light. Along with Benjamin Oppenheimer and Charles Danforth of CU-Boulder’s Center for Astrophysics and Space Astronomy, Kollmeier reported that the amount of light that should be emitted from ionized tendrils of hydrogen in the universe is only a fraction of what it should be. “Something is amiss in the universe,” they write. “There appears to be an enormous deficit of ultraviolet light in the cosmic budget.”

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Ebola Spreads to Sierra Leone Capital Freetown as Deaths Rise (Bloomberg)

The worst outbreak of Ebola moved to Sierra Leone’s capital of Freetown where an Egyptian was found with the city’s first confirmed case of the disease. The unidentified Egyptian national had traveled from Kenema, the largest city in the nation’s Eastern Province, and checked into a clinic east of Freetown, Sidie Yahya Tunis, director of Information, Communication and Technology at the Ministry of Health and Sanitation, said by phone today. The person was moved back to the Ebola center in Kenema, he said. “The Ebola disease usually spreads to other places when suspected or confirmed cases in one community move to another, they abandon treatment centers to stay with relatives or they seek treatment outside the Ebola centers,” Tunis said.

There have been 99 Ebola deaths in Sierra Leone out of 315 laboratory-confirmed cases, the ministry said in an e-mailed statement today. The ministry said yesterday that 92 people had died out of 305 cases. Cases of the hemorrhagic fever have killed more than 540 people in Guinea, Sierra Leone and Liberia in an outbreak that according to the World Health Organization may last another three to four months. The toll is greater than the 280 people killed in 1976, when the virus was first identified near the Ebola River in what is now the Democratic Republic of Congo. The rapid spread of the virus is largely due to people moving across borders as well as cultural practices that are contrary to public health guidelines, such as people touching the body of a deceased relative before the funeral.

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The Wall Street GDP Forecast “Escape Velocity” Scam (Stockman)

There is nothing more predictable than the bevy of Wall Street economists who come charging out of the blocks early each year proclaiming that money printing by the Fed will finally work its magic, and that real GDP growth will hit “escape velocity”. But this year the markdowns have come fast and furious. After the disaster of Q1 and the limp data reported for Q2 to-date, the revised consensus outlook for 2014 at 1.7% is already below the tepid actual results of the last three years. So much for the year when “screaming” growth was certain to happen. The graph below is all the proof that is needed to demonstrate that Wall Street has become a pure Fed enabled casino. If honest “price discovery” was actually functioning, the stock market would not be at nosebleed heights, capitalizing hockey sticks that never materialize. Instead, it would be discounting a badly impaired economy that is stuck in a sub-2% rebound—and one that is dangerously at risk owing to the third and greatest financial bubble the Fed has created during this century.

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More Incoming Q2 Data: No Escape Velocity (Alhambra)

The wholesale inventory estimates seem to have raised more than a bit of optimism. I think that is highly misplaced for both GDP and the economy. On the GDP calculation side, there needs to be another huge gain in inventory to be “highly supportive” due to the second derivative nature of the estimate. As for the economy, even on a seasonally-adjusted basis, wholesalers are taking a dimmer view of holding inventory. The mainstream narrative, which has been copied almost word for word across the media, is here:

U.S. wholesale inventories rose in May, reinforcing the view that economic growth should surge in the second quarter following a weak first three months of the year.

This flips around what is actually taking place, as sales are lagging not surging. Whether you take it in the form of seasonally-adjusted or raw nominal data, there is nothing to suggest the pace of sales is appreciably better than the first quarter. If anything, the sales pattern continues to lag what would actually be consistent with sustainable growth. In fact, wholesale sales in May were only slightly better on a year-over-year basis than January and February.

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Slowing Customer Traffic Worries U.S. Retailers (WSJ)

American retailers may have more than a weather problem. Family Dollar said fewer shoppers came into its stores in the three months through May 31, pushing sales down 1.8%, excluding newly opened or closed stores. In a move to win back traffic, the dollar chain said it would begin carrying beer and wine nationally next year, adding to the tobacco, frozen food and other consumables that now make up 73% of sales. “Our results continue to reflect the economic challenges facing our core customer and an intense competitive environment,” Chief Executive Howard Levine said. The discounter’s message echoed that of Container Store whose shares fell sharply midweek after its chief executive told investors that the company and its fellow store chains are in a “retail funk.” “We’ve come to realize it’s more than just weather,” Container Store CEO Kip Tindell said. Falling traffic led to the first drop in quarterly sales at the company in more than three years.

Investors flocked to the seller of bins, boxes and shelves when it went public last November, and shares more than doubled on opening day to close at $36.20. But so far this year, shares have dropped nearly 44%, as Container Store has succumbed to some of the pressures weighing on retail broadly. Results at retailers haven’t been uniformly bad this spring. But there are enough negatives to shake earlier hopes that shoppers would whip out their wallets and resume shopping after the long, tough winter. The mixed showing continues to cloud the optimism arising from stronger job growth and rising consumer confidence. The unemployment rate dropped to 6.1% in June, marking the best stretch of job growth in almost a decade. But five years into the economic expansion, big chains like Wal-Mart and Kroger remain divided over whether consumers are indeed bouncing back.

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Something Seems Off About The US Economy (BI)

Over a three-week span starting next Monday, 72% of the S&P 500’s members will report earnings, but some of the early indications about this earnings season, especially from companies highly exposed to the U.S. consumer, have not been encouraging. On Tuesday afternoon, two companies that are all about consumer spending, Bob Evans and The Container Store, reported earnings that were disappointing. But even more discouraging were the comments from company executives. Bob Evans, which wrapped up its fiscal year 2014 in its most recent quarter, said its results were impacted by severe weather (an oft heard refrain during the first quarter), as well as high food costs. In the upcoming year, the company’s CFO, Mark Hood, said, “consumer confidence continues to be adversely impacted by ongoing macroeconomic headwinds, including health care costs and unemployment which disproportionately affects lower- and middle- income consumers.”

Also on Tuesday afternoon, Container Store CEO Kip Tindell said in the company’s earnings release that, “Consistent with so many of our fellow retailer, we are experiencing a retail ‘funk.'” Wednesday evening, Lumber Liquidators, a specialty hardwood flooring retailer, said that the consumer demand it experienced following the tough winter didn’t carry into May and June. CEO Robert Lynch said, “The improvement in customer demand we experienced beginning in mid-March did not carry into May, and June weakened further. Our reduced customer traffic has coincided with certain weak macroeconomic trends related to residential remodeling, including existing home sales, which have generally been lower in 2014 than the corresponding periods in 2013.”

Thursday morning saw more downbeat commentary from a retailer, this time Family Dollar. Following the company’s report, which saw that same store sales fell 1.8% during the quarter, CEO Howard Levine said, “Our results continue to reflect the economic challenges facing our core customer and an intense competitive environment.” And then yesterday afternoon, Gap topped off the week of discouraging retail commentary by reporting June same-store sales that fell 2% year-over-year. According to data from Bloomberg, sales were expected increase 0.8%. Gap’s management, however, was light on additional color. This rash of discouraging retail data, however, makes the broader U.S. economic picture seem murky.

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US Stocks Will Be ‘Very Disappointing’ For 10 Years (MarketWatch)

U.S. stocks are overvalued – and have been for months. That is what six well-known measures of valuation show. While that doesn’t mean a bear market is imminent, there is a high probability that investment returns over the next decade will be below average, according to Yale University economics professor and Nobel laureate Robert Shiller. Investors shouldn’t expect that what has worked for them over the past five years will continue to work in the future. One way to gauge the market’s valuation is to compare it to past bull-market peaks. There have been 35 since 1900, according to Ned Davis Research, a quantitative-research firm. Five of these six valuation ratios show the market is more overvalued today than it was at between 82% and 89% of those peaks. They are:

• The cyclically adjusted price/earnings ratio championed by Shiller, calculated by dividing the S&P 500 by its average inflation-adjusted earnings per share over the past decade.
• The dividend yield, which is the%age of a company’s stock price represented by its total annual dividends.
• The price/sales ratio, calculated by dividing a company’s stock price by its per-share sales.
• The price/book ratio, calculated by dividing a company’s stock price by its per-share book value, an accounting measure of net worth.
• The Q ratio, calculated by dividing a company’s market capitalization by the replacement cost of its assets.

It is noteworthy that there is such agreement among these ratios even though each calculates the market’s valuation in a profoundly different way. The sixth data point — the traditional price/earnings ratio, which focuses on trailing or projected 12-month earnings — is the one that paints the least-bearish picture. Still, it shows the market to be more overvalued than it was at 69% of those past market peaks. Shiller argues that the P/E doesn’t have as good a forecasting record as his cyclically adjusted variant. Some investors are ignoring the warning signs from these valuation ratios, since the bull market has continued higher even though the measures have told much the same story for some time.

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Well, that seals it.

Economists Don’t Expect US Recession (CNBC)

Although economists have trimmed their estimates for second-quarter U.S. gross domestic product (GDP) growth, they don’t believe the economy will hit a recession this year or next. The National Association for Business Economics’ Outlook survey of 50 economist, taken just days after the release of the June jobs report, also found economists believe the Federal Reserve will hike rates earlier than previously expected. The panelists’ median forecast for annual second-quarter 2014 real GDP growth is 3%, down from the 3.5% median forecast when the full Outlook survey was last released in June. But in a positive sign, economists said the probability of the U.S. economy entering a recession in 2014 or 2015 is extremely low, with 60% of panelist saying the odds were less than 10%. “Notwithstanding the difficult start to the year, opinion is widespread that the economy is on solid footing,” said Timothy Gill, Outlook survey chair.

The minutes from the Fed’s latest policy meeting did not indicate did not indicate that the central bank intends raise interest rates ahead of schedule. But with unemployment and inflation getting closer to the Fed’s target levels, analyst are predicting that rate hikes could come sooner rather than later. More than half of those surveyed forecast the Fed will next increase its federal funds rate target in the first half of 2015, with a plurality of almost 37% expecting a hike during the second quarter of next year. Another 36% said they expect an initial rate hike in the second half of next year. The results are nearly reversed from the June survey, when 33% expected a rate increase in the first half of 2015 and 53% expected a hike in the second half.

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Fed Presidents Differ on Timetable for Raising Interest Rate (Bloomberg)

Federal Reserve presidents disagreed today on whether a decline in the U.S. unemployment rate to the lowest level in almost six years warrants advancing the timing for an interest-rate increase. Philadelphia Fed President Charles Plosser said the Fed risks losing credibility by waiting too long to raise rates, and economic data are already suggesting a need to tighten policy. Chicago’s Charles Evans and Atlanta’s Dennis Lockhart countered that low inflation and labor-market slack will allow the central bank to wait until the second half of 2015 or 2016.

Plosser, speaking in a Bloomberg Television interview with Michael McKee in Jackson Hole, Wyoming, said “we are closer than a lot of people might think” to the first interest-rate increase since 2006. If the Fed waits too long, he said, “we’ll lose credibility. We may lose control of inflation.” Fed officials are approaching their goals for full employment and price stability faster than they had forecast, sharpening the debate over the timing of a rate increase. St. Louis Fed President James Bullard warned this week that inflation will rise above the Fed’s target late next year. “Monetary policy ought to be reacting to the data,” Plosser, 65, said. “We are on a path that says low for long and we have no plans to raise interest rates anytime soon, yet as the data keeps telling us, we ought to be raising rates.”

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Fed Fears Risks Posed By Exit Tools; Plan Almost Done (Reuters)

Federal Reserve officials are cautiously nearing completion of a new plan for managing interest rates, concerned that some of the new tools they are likely to rely on could pose unintended risks in a crisis. The central bank has devoted extensive debate to the matter over the past two months and officials “have made a lot of progress” on a strategy to return monetary policy to a more normal footing after years of coping with crisis, Chicago Federal Reserve Bank President Charles Evans said on the sidelines of an economic conference here. However, the sheer magnitude of the amounts of money used to combat the crisis – $2.6 trillion sitting at the Fed as bank reserves and $4.2 trillion held by the Fed in various securities – may complicate the U.S. central bank’s ability to control its target interest rate once the decision is made that it should be raised. A decision to begin increasing interest rates is expected in the middle of next year.

In recent weeks, the Fed has neared consensus that its workhorse tool will be the interest it pays banks on excess reserves on deposit at the Fed – giving the central bank a direct way to encourage banks to either take money out of circulation and leave it at the Fed, or lend it elsewhere. Another tool would have a similar impact but apply more broadly, using overnight repurchase agreements that would let money market funds and other institutions as well as banks essentially make short-term deposits at the Fed. The worry is that if financial conditions tighten, those large funds of money would flee to the repo facility as a safe haven, depriving the economy of credit and making a potential crisis even worse. “The broad concern is whether we want to facilitate what could be a period of financial stress by providing in a large or unlimited way that refuge, and whether that would tend to exacerbate a financially stressful situation,” said Atlanta Fed President Dennis Lockhart.

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Market Will Crash, Just Don’t Know Catalyst: Marc Faber (CNBC)

The market is setting up for a big decline that could be as bad as the crash of 1987, according to Marc Faber, known as “Dr. Doom.” He just isn’t sure exactly what will set it off. “The problem with crashes, you never know beforehand precisely what is the catalyst,” the publisher of the Gloom, Boom & Doom report told CNBC’s “Closing Bell.” It could come from the credit market, equities being perceived as too expensive or a geopolitical event, he added. His comments came a day after he told “Futures Now” that the asset bubble has begun to burst. “I think it’s a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already,” Faber said Tuesday.

He’s calling for a 30 percent decline in the S&P 500. “I think that the global economy does not support the current valuations,” he said Wednesday. Corporations “have had record profits, largely because they are buying back their own shares and so the number of shares is diminishing where revenue growth is basically flat.” In fact, he said the bond market, which is more sophisticated than the stock market, does not believe in a strong economic recovery and neither does he. Faber has been calling for a major correction for years. So far, the market hasn’t followed his theory, but he said that could be setting it up for an even bigger fall. “Since 2012, I said it would be healthy for the markets to have a meaningful correction, but it could be that we are in a year like ’87 when we go straight up and then we don’t have a correction but a more significant crash,” he said.

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6.8 Magnitude Earthquake Strikes Off Fukushima Coast (RT)

A 6.8 magnitude earthquake hit off the coast of Japan, with its epicenter located some 129 kilometers from the city of Namie in Fukishima prefecture, US Geological Survey reported. The quake was centered at a depth of about 10km, according to the Japan Meteorological Agency (JMA). Tsunami advisories have been issued for the Fukushima prefecture, as well as for nearby Iwate and Miyagi prefectures. There were no reports of abnormalities at Fukushima-1 nuclear plant following the quake, TEPCO reported.

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Portuguese Bank Crisis Is The Tip Of The Iceberg (MarketWatch)

The Portuguese crisis over Banco Espirito Santo should be a reality check for European markets. Espirito Santo is just the excuse – real problems lie far deeper. The European Central Bank has been playing with fire, with junk bonds ultimately funded by German taxpayers. Investors are waking up and smelling smoke, and at some point they will get singed. Three companies are involved in the Espirito Santo mess. Banco Espirito Santo is the largest publicly traded commercial bank in Portugal. Its controlling shareholder, Espirito Santo Financial Group, owns 25% of its shares. The privately held parent company, Espirito Santo International, owns 49% of Espirito Santo Financial Group (and therefore part of Banco Espirito Santo). It is this parent company that is likely to default on its payments. Even if Espirito Santo International defaulted, Banco Espirito Santo does not necessarily have to go under, but it might.

The problem is that Banco Espirito Santo is a weak institution irrespective of its parent holding companies, dabbling in risky assets in emerging markets that saner banks would not touch. Its risk management department needs a major shakeup. For instance, the bank has invested in Angola, setting up a subsidiary known as Banco Espirito Santo Angola (BESA). BESA has relied on Banco Espirito Santo for its funding, with loans in Angola amounting to 220% of deposits. Bad loans have exploded in Angola in recent years, rising by 84% from 2010 to 2013. BESA’s assets include €6 billion worth of loans payable, and Banco Espirito Santo has a 55% stake in the bank.

The government of Angola, a former Portuguese colony, has given the bank a “personal guarantee” amounting to 70% of the bank’s loans. There is doubt about whether the bank can retain solvency in the event of a crisis, even with the guarantee. An anti-corruption organization in the country, Maka Angola, has claimed that the reason for the guarantee was several hundred million dollars’ worth of loans given to powerful figures in the Angolan regime. However, the authenticity of these claims is unclear. There is also trouble closer to home for Banco Espirito Santo: It has lent over €1 billion to its various parent companies. Should Espirito Santo International default, Banco Espirito Santo will fall below the capital ratio mandates set by Basel III at the same time that the European Central Bank prepares to do stress tests.

Shares in Banco Espirito Santo were suspended from trading yesterday by the Portuguese government after they fell 17%. Prior to that, Espirito Santo Financial Group pulled its own shares from trading due to “ongoing material difficulties” at Espirito Santo International. The catalyst for the sell-off appears to have occurred July 9 when Espirito Santo International delayed repayment on short-term debt owed to customers of its Swiss bank. That was not the first time Espirito Santo International has been in trouble. In December, it sold €6 billion of debt to Espirito Santo Financial Group, exposing investors to even more losses should the company fail, in what the Wall Street Journal called “financial gymnastics.” In May, Espirito Santo Financial Group released an audit of Espirito Santo International, revealing that there were several irregularities on its balance sheet, making its outlook more negative that previously thought.

The debt of Banco Espirito Santo is government-guaranteed, leading to good ratings but also potential moral hazards. Given the size of the conglomerate, it is possible that one or more of the companies will require a bailout if things deteriorate. The Bank of Portugal has said it believes Banco Espirito Santo is not at risk, despite the problems at its parent companies. It also said explicitly that it had €6 billion on hand to rescue the banking sector if necessary.

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Piggy Banks Being Raided Signal Swedish Housing Dilemma (Bloomberg)

Increasing numbers of Swedes are turning to family and friends for help in buying a home, side stepping government efforts to cool soaring housing prices and growth in private debt. Swedes who received non-bank assistance to fund mortgages rose to 52% in the period from 2012 to 2014, the highest level since at least the 1970s and up from 25% in the early 2000s, according to data last month from state-owned mortgage lender SBAB. The rising numbers seeking help to buy a home are a sign that Sweden is struggling to find answers to rising personal debt even after the government capped mortgages at 85% of a property’s value in 2010 to slow house-price growth. Prior to that, first-time buyers could often get a loan covering 100% of the purchase price.

“The big problem for policy makers is the high household indebtedness,” said Bengt Hansson, an analyst at Sweden’s National Board of Housing, Building and Planning, in an interview last month. “It’s obvious by now that the loan-to-value cap hasn’t been sufficient to solve the debt problem and a stronger amortization culture is long overdue.” The lack of rental housing and the difficulty of being able to afford a first home have left many young adults struggling to start their own lives. Almost a quarter of Swedes 18 to 34 were living with their parents in 2012, compared with 19% a decade ago, according to Eurostat. “The combination of the mortgage cap and price gains have resulted in more people needing help with the down payment,” Tor Borg, chief economist at SBAB, said in an interview last month. “This is a big problem for the young in particular.”

That development looks unlikely to change, as policy makers contemplate further measures to stem debt growth. The financial regulator, which has twice raised the risk weights banks must apply to their mortgage assets, has said it would consider lowering the mortgage cap further if problems persist and the government is now preparing to force amortization. Low rates over the past years and a limited housing supply have fueled a surge in home prices and pushed debt levels to records in the $550 billion economy.

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Bulgaria To Allow Its Fourth-Biggest Bank To Collapse (Reuters)

Bulgaria is to allow its fourth-biggest lender to collapse and will hive off its healthy activities into a separate bank as it moves to clear up the mess from the country’s worst financial scandal since the 1990s. The central bank said it was removing Corporate Commercial Bank’s (Corpbank) license and alerting prosecutors to the possibility that its main shareholder stole money from the bank just before the central bank took over its operations. The scandal broke last month when Corpbank clients unnerved by media reports accusing top shareholder Tsvetan Vassilev of shady business deals dashed to withdraw their savings. The bank run spread quickly to another lender and saw Sofia announce a protective $2.3 billion credit line, a reminder that parts of Europe’s financial system are still far from secure despite progress from the worst days of the financial crisis.

“The results of the review of Corporate Commercial Bank speak, to put it mildly, about actions incompatible with the law and good banking practices,” the central bank said in a statement as it published the results of an audit. It said much of the documentation to back up 3.5 billion levs ($2.43 billion) out of Corpbank’s total 5.4-billion-lev loan portfolio was missing. The documents were, it believed, “most likely destroyed in the days before the central bank sent administrators there.” A significant part of the loan portfolio was linked to parties related to Corpbank’s main shareholder, the central bank said. Central bank administrators found Vassilev had withdrawn 205 million levs from the bank via a third party just before the state took control. Prosecutors would need to determine whether that withdrawal amounted to theft, the central bank said.

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Allianz CEO: “Euro Crisis Is Not Over” (Bloomberg)

When asking Allianz SE’s chief investment officer about the euro area’s sovereign debt woes, be prepared for an emphatic response. “The fundamental problems are not solved and everybody knows it,” Maximilian Zimmerer said at Bloomberg LP’s London office. The “euro crisis is not over,” he said. While extraordinary stimulus from the European Central Bank has encouraged investors to pile into the region’s government bonds this year, that’s not a sufficient remedy for Zimmerer, who oversees 556 billion euros ($757 billion) at Europe’s largest insurer. Countries are still building up their debt piles, and that’s storing up trouble for the future, he said. As Zimmerer was speaking, investors were getting a reminder of the volatility that was rife through the sovereign debt crisis that started in 2009, as sliding stocks and bonds of Portuguese financial institutions rippled across the region’s markets.

“There is only one country where the debt level last year was lower than 2012 and this is a signal the debt crisis can’t be over, only a recognition of the debt crisis has changed,” Zimmerer said on July 9. “If the debt levels are not going down in the end we will have a problem, that is for sure.” Euro-area governments are still grappling to get their debt under control in the wake of the region’s financial-market turmoil, which left five countries needing international aid and triggered the biggest restructuring in history in Greece. Only Germany reduced its debt-to-gross-domestic-product ratio last year, according to data published by the European Union’s statistics office in Luxembourg in April. Allianz is reducing holdings of euro-area government debt to avoid low interest rates after the bond-market rally incited by the ECB, Zimmerer said. The Munich-based insurer is planning to move cash from fixed income into “real assets” such as infrastructure and real estate, he said.

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Las Vegas Drought Drains Lake Mead to Lowest Since 1937 (Bloomberg)

Lake Mead, the man-made reservoir that supplies 90% of the water for 2 million people in the Las Vegas area, has been reduced by drought to the lowest level since it was filled in 1937, according to the federal government. The lake, now at 39% of capacity, has been dropping since 2012, according to U.S. Bureau of Reclamation data, as much of the western U.S. has suffered the most serious drought in decades. The shortfall is endangering water supplies to the residents and 43 million annual visitors to the driest metropolitan area in the country. Lake Mead, created by Hoover Dam in 1936 and 1937, holds mountain snowmelt from the Colorado River for farms, homes and businesses predominately in southern Nevada, southern California and most of Arizona. No metropolitan area depends on the lake more than Las Vegas, which lacks groundwater or other local sources.

“This is significant because it’s a resource used by three states,” said Rose Davis, a spokeswoman for the bureau, which manages the supply. “We all have to keep an eye on it because it’s the major water source for three areas. It concerns us all very much.” The lake’s surface, which reached a record high of 1,225 feet above sea level in July 1983, is now at about 1,083 feet, according to the bureau. If the level drops below 1,050 feet, one of the two intakes that feed water to Las Vegas will become inoperable. At 50 feet lower, the other would fail. Since 2008, contractors have been boring through rock to create a third conduit to draw water from as low as 860 feet. About 55% of Nevada, already the nation’s driest state, is under “extreme” or “exceptional” drought conditions, the worst grades on the U.S. Drought Monitor, a federal website. Portions of California, New Mexico and Colorado also are in the “exceptional” category, according to the monitor.

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1001 Blistering Future Summers (Climate Central)

If it feels hot to you now in the dog days of this summer, imagine a time when summertime Boston starts feeling like Miami and even Montana sizzles. Thanks to climate change, that day is coming by the end of the century, making it harder to avoid simmering temperatures. Summers in most of the U.S. are already warmer than they were in the 1970s. And climate models tell us that summers are going to keep getting hotter as greenhouse gas emissions continue. What will this warming feel like? Our new analysis of future summers illustrates just how dramatic warming is going to be by the end of this century if current emissions trends continue unabated.

For our Blistering Future Summers interactive we have projected summer high temperatures for the end of this century for 1,001 cities, and then showed which city in the U.S. — or elsewhere in the world, if we couldn’t find one here — is experiencing those temperatures today. We’ve highlighted several striking examples on the interactive, but make sure to explore and find how much hotter summers will likely be in your city. By the end of the century, assuming the current emissions trends, Boston’s average summer high temperatures will be more than 10°F hotter than they are now, making it feel as balmy as North Miami Beach is today. Summers in Helena, Mont., will warm by nearly 12°F, making it feel like Riverside, Calif.

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