Jul 012018
 
 July 1, 2018  Posted by at 8:10 am Finance Tagged with: , , , , , , , , , , , , ,  


Giuseppe Leone Ragusa Sicily 1953

 

US Dollar Hegemony Tripped Up by Chinese Renminbi? Um, No (WS)
Even Eva Peron Would Be Crying… (ZH)
No Chance Of Brexit Deal By October Says EU (Ind.)
VW CEO Says Arrest Of Audi’s Stadler Hard To Comprehend (R.)
Trump Claims Saudi Arabia Has Agreed To Boost Oil Production Amid Turmoil (G.)
Trump Ally Giuliani Says End Is Near For Iran’s Rulers (R.)
The EU Is Killing Our Democratic Spaces Using Copyright As A Trojan Horse (OD)
Angela Merkel Secures Asylum Seeker Return Deals With 14 EU Countries (Ind.)
Hungary, Poland & Czech Republic Deny Sealing Migrant Deal With Merkel (RT)
EU’s New Refugee Policy Under Fire As Children Stuck In Limbo In Niger (G.)
End Of The Bailouts And Onto A Path To A New Bankruptcy (Economides)
Deluge Of Electronic Waste Turning Thailand Into ‘World’s Rubbish Dump’ (G.)
Bayer-Monsanto Partnership Signals Death Knell for Humanity (Bridge)

 

 

Rumors about the demise of the dollar are greatly…

US Dollar Hegemony Tripped Up by Chinese Renminbi? Um, No (WS)

Global central banks are not dumping US-dollar-denominated assets from their foreign exchange reserves. They’re not dumping euro-denominated assets either. And they remain leery of the Chinese renminbi – despite China’s place as the second largest economy in the world and despite all the hoopla of turning the renminbi into a major global reserve currency. This is clear from the IMF’s just released “Currency Composition of Official Foreign Exchange Reserves” (COFER) data for the first quarter 2018. The IMF is very stingy with what it discloses. The COFER data for each individual country – each country’s specific holdings of reserve currencies – is “strictly confidential.” But it does disclose the global allocation of each major currency.

In Q1 2018, total global foreign exchange reserves, including all currencies, rose 6.3% year-over-year, or by $878 billion, to $11.59 trillion, within the upper range of the past three years (from $10.7 trillion in Q4 2016 to $11.8 trillion in Q3, 2014). For reporting purposes, the IMF converts all currency balances into US dollars. This data was for Q1. The dollar bottomed out in the middle of the quarter and has since been rising. US-dollar-denominated assets among foreign exchange reserves continued to dominate in Q1 at $6.5 trillion, or 62.5% of “allocated” reserves (more on this “allocated” in a moment).

[..] The RMB is the thin red sliver in the pie chart below with a share of just 1.39% of allocated foreign exchange reserves. Minuscule as it is, it is the highest share ever, up from 1.2% in Q4 2017. In other words, its inclusion in the SDR basket hasn’t exactly performed miracles as central banks seem to remain leery of it and have not yet displayed any kind of eagerness to hold RMB-denominated assets.

[..] Note the term “allocated” reserves. Not all central banks disclose to the IMF how their overall foreign exchange reserves are allocated by specific currency. But over the years, more and more central banks have disclosed their holdings to the IMF, and the mystery portion has been shrinking. Back in Q4 2014, unallocated reserves – the undisclosed mystery portion – accounted for 41% of total reserves. In Q1, only 10.3% of the reserves remained undisclosed. [..] folks who’ve been eagerly anticipating “the death of the dollar” or similar scenarios will have to be very patient.

Since 1965, the dollar’s share has fluctuated sharply, and the current share of 62.5% remains in the middle of the range. The chart below shows the dollar’s share at year-end for each of the past 52 years, plus for Q1 2018. Note its low point in 1991 with a share of 46%. And note that the Financial Crisis made no visible dent:

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Don’t cry 4-3 Argentina.

Even Eva Peron Would Be Crying… (ZH)

The last 24 hours have not been great for Argentina. First – despite endless jawboning about The IMF bailout and how it will secure the nation’s future and enable reforms, the currency collapsed to a new record low on Friday…

Second – the central bank decided to step in with their newly minted IMF funds and blew over a billion dollars to buy pesos, managing a very modest bounce (but ARS still closed down 3% on the day)

Third – IMF officials spoke with Argentina’s union leaders, warning of the social impact of the ongoing disruptions. IMF spokesman Raphael Anspach confirmed Werner and Cardarelli’s participation in the call, which “reiterated the main elements of the IMF support to the government’s economic plans, including the measures aimed at supporting the most vulnerable in Argentine society.” And union officials told the media that The IMF was not worried about the ongoing collapse: “They are betting on a virtuous behavior by private investors, with the economy falling in the third and fourth quarters of 2018, but rebounding 1.5% in the first quarter of 2019” “They were not worried about the flight of capital”

Fourth, and finally, and perhaps worst of all – Argentina is now out of The World Cup. A nation mourns.

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The British people don’t seem to have a clue what this means.

No Chance Of Brexit Deal By October Says EU (Ind.)

EU negotiators have abandoned all hope that a Brexit deal will be signed with the UK at October’s European Council summit, The Independent has learned. Brussels officials said a complete standstill in talks with Britain means securing settlements on major outstanding issues in the remaining three-and-a-half months is fanciful. They point to the political logjam in Theresa May’s government as the obstacle blocking negotiations, piling pressure on the prime minister to break the deadlock this week. She is set to meet her full cabinet on Friday at Chequers for a meeting that may go late into the night, in a bid to finally thrash out the government’s approach to post-Brexit relations with the EU.

The EU officials were speaking after last week’s European Council summit which saw the bloc focus on tackling immigration from north Africa, while warning Ms May that time to secure a deal is now running out. One Brussels insider said: “There is no hope really for October now. We don’t know exactly what she is asking for yet, so how can there be? “First the UK needs to decide what it wants, then there needs to be a discussion here and even if it is acceptable, there are processes that have to take place first before everyone agrees to move forward.” Another source close to the European Commission told The Independent: “Now we are looking at December as a more likely option, but there are questions about how much time that leaves for the deal to be ratified in time before March.”

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VW owns Audi.

VW CEO Says Arrest Of Audi’s Stadler Hard To Comprehend (R.)

The CEO of Volkswagen, Herbert Diess, told a German newspaper the arrest of Audi head Rupert Stadler was a shock and hard to comprehend. VW has suspended Stadler, head of VW’s most profitable brand, after German authorities arrested him as part of an emissions probe. “It was a massive shock for me. The arrest of a CEO of a major car brand: that’s never happened before,” Diess told Germany newspaper Bild am Sonntag. “The arrest is hard to comprehend. I knew Rupert Stadler as a problem solver,” the newspaper quoted him as saying.

Diess said that for him, Stadler was innocent until proven guilty. Stadler, who has not made any public comment, has not been charged and prosecutors are set to continue questioning him next week. Asked whether he could imagine Stadler returning, Diess said it depended on what facts emerge: “Should the accusations of the state prosecutors prove to be true, then it’s a clear decision.”

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2 millions barrels a day in spare capacity? Don’t think so. He may have to ask Putin to join in.

Trump Claims Saudi Arabia Has Agreed To Boost Oil Production Amid Turmoil (G.)

Donald Trump said on Saturday he had received assurances from King Salman of Saudi Arabia that the kingdom would increase oil production “maybe up to 2,000,000 barrels”, in response to turmoil in Iran and Venezuela. Saudi Arabia acknowledged the call took place, but mentioned no production targets. Trump wrote on Twitter that he had asked the king in a phone call to increase oil production “to make up the difference … Prices to [sic] high! He has agreed!” A little over an hour later, the state-run Saudi Press Agency acknowledged the call, but offered few details. “During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy,” the statement said.

It added that there also was an understanding that oil-producing countries would need “to compensate for any potential shortage of supplies”. It did not elaborate. Oil prices have edged higher as the Trump administration has pushed US allies to end all purchases of oil from Iran. Prices have also risen given ongoing unrest in Venezuela, as well as with fighting in Libya over control of that country’s oil infrastructure. Last week, members of the OPEC cartel led by Saudi Arabia agreed to pump 1m barrels more crude oil per day, a move that should help contain the recent rise in global energy prices. However, summer months in the US usually lead to increased demand for oil, which would push up the price of gasoline in a midterm election year. A gallon of regular gasoline sold on average in the US for $2.85, up from $2.23 a gallon last year.

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But Putin.

Trump Ally Giuliani Says End Is Near For Iran’s Rulers (R.)

U.S. President Donald Trump will suffocate Iran’s “dictatorial ayatollahs”, his close ally Rudy Giuliani said on Saturday, suggesting his move to re-impose sanctions was aimed squarely at regime change. The former New York mayor who is now Trump’s personal lawyer, was addressing a conference of the Paris-based National Council of Resistance of Iran (NCRI), an umbrella bloc of opposition groups in exile that seek an end to Shi’ite Muslim clerical rule in Iran. “I can’t speak for the president, but it sure sounds like he doesn’t think there is much of a chance of a change in behavior unless there is a change in people and philosophy,” Giuliani told Reuters in an interview.

“We are the strongest economy in the world … and if we cut you off then you collapse,” he said, pointing to protests in Iran. In May, Trump withdrew the United States from a 2015 international deal to curb Tehran’s nuclear program in exchange for lifting some sanctions. Trump supporters have spoken at NCRI events in the past, including national security adviser John Bolton, who, before taking his post at the same conference last July, told the group’s members they would be ruling Iran before 2019 and their goal should be regime change. Bolton said in May that the administration’s policy was to make sure Iran never got nuclear weapons and not regime change.

In Tehran, supreme leader Ayatollah Ali Khamenei said Trump would fail in any attempt to turn the Iranian people against the ruling system. “They bring to bear economic pressure to separate the nation from the system … but six U.S. presidents before him (Trump) tried this and had to give up,” Khamenei said on his website.

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From DiEM 25 members: “..a tool to control speech, expression, criticism and increase the surveillance levels imposed on all EU citizens.

The EU Is Killing Our Democratic Spaces Using Copyright As A Trojan Horse (OD)

Europe was one of the regions that connected massively to the Internet. Not only that, it was one of the few adopting literacy and inclusion programs early enough on to unleash the power of connected citizens, showing them how to create new business models and improve education but also how to express themselves, create, organize and protest. But alarmingly, the European Parliament is on the verge of a dramatic change of direction. The EU has recently embarked on a new mission: controlling the Internet through the monopoly of copyright. This attempt to reform and control the Internet has not received half the attention it deserves.

As Julia Reda, MEP for the Pirate Party, has explained, the current project of EU legislation would impose automatic filters that control ANY content that anyone wants to upload. The reason would be the protection of copyright, a monopoly right that primarily benefits large media behemoths, without any possibility of advance verification. You read that right: the EU wants to put in place a global censorship machine, on the basis of unverifiable monopoly rights, mostly held by large media corporations. In DiEM25, we do not see this as just an outdated law, isolated from current politics. Indeed, that is precisely what is most worrying about it.

We cannot see it as unconnected to the big push in Europe by authoritarian leaders wanting to restrict, to truly shrink the spaces of civil society. Increasing censorship online will reduce the ability of citizens to say what they think, filtering content before it is published. This will not only harm speech but increase surveillance and the meting out of punishments for things we say online. This is combined with all the existing online state surveillance already endured by EU citizens, which remains as powerful as ever. With dismay, we are witnessing now an open boycott of the democratic achievement of a connected Europe. The European Parliament Legal Committee has just given the green light to a law that will be a tool to control speech, expression, criticism and increase the surveillance levels imposed on all EU citizens.

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It’s all and only about Save Angela now. Not about the refugees.

Angela Merkel Secures Asylum Seeker Return Deals With 14 EU Countries (Ind.)

Angela Merkel has reportedly secured agreements with 14 European Union countries to rapidly return some asylum seekers arriving in Germany. The chancellor is seeking to end a divide in her coalition government over a migration policy that has attracted ire from immigration hardliners. Ms Merkel has said she also wants to establish “anchor centres” to process migrants at Germany’s borders, the DPA news agency reported on Saturday. The announcements came in a letter Ms Merkel wrote to leaders of her Christian Democratic Union’s Bavaria-only sister party, the Christian Social Union, as well as to her junior coalition government partner, the Social Democrats, after she attended a two-day EU summit in Brussels.

Ms Merkel on Friday came away from an EU summit with agreements from Greece and Spain to take back migrants previously registered in those countries, and an overall agreement by the 28-nation bloc to ease the pressures of migration into Europe. In the eight-page letter obtained Saturday by DPA, the chancellor said that she had also secured agreement with half of the EU nations to return migrants to them if they had first registered in those countries. The countries included Hungary, Poland and the Czech Republic, which have all been harsh critics of Ms Merkel’s welcoming stance to migrants, as well as Belgium, France, Denmark, Estonia, Finland, Lithuania, Latvia, Luxembourg, the Netherlands, Portugal and Sweden.

In addition, the chancellor threw her support behind establishing large collection centres in Germany for migrants as their cases are processed. DPA reported the centres would be used for migrants who attempt to bypass border controls and for those whose cases don’t fall under bilateral return agreements.

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And so she stretches the truth a little here and there. Save Angela.

Hungary, Poland & Czech Republic Deny Sealing Migrant Deal With Merkel (RT)

Three EU countries have denied reaching any final agreement with Germany on the return of migrants to the country of entry, despite Angela Merkel’s claim she’d received “political consent” from 14 EU nations to strike such a deal. “No such deal has been reached,” spokesman for Hungary’s government Zoltan Kovacs said, adding that Budapest has repeatedly rejected German attempts to “return” migrants to their first country of entry into the EU. Similar statements have been produced by Poland and the Czech Republic, which also denied reaching any agreements on the matter. “There are no any new agreements regarding the reception of asylum seekers from EU countries, we confirm (that), like the Czech Republic and Hungary,” Polish Foreign Ministry spokesman Artur Lompart said.

Earlier on Saturday, media reported that, during the EU summit, 14 European countries, including some outspoken opponents of German Chancellor’s ‘open door’ policy, had allegedly “consented on a political level” to make a deal on taking migrants back. The document on the deal has been sent by Merkel to her coalition partners, according to Reuters. “At the moment, Dublin repatriations from Germany succeed in only 15% of cases,” the document says, as quoted by Reuters. “We will sign administrative agreements with various member states… to speed the repatriation process and remove obstacles.”

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But Save Angela.

EU’s New Refugee Policy Under Fire As Children Stuck In Limbo In Niger (G.)

Stop people in Africa, before they get anywhere near the Mediterranean, and sort them into refugees and migrants there, only allowing the refugees to continue to Europe. This was the big idea that came out of last week’s EU migration summit. But campaigners say the predicament of 260 children stuck in limbo in Niger demonstrates that there is no guarantee EU countries would eventually take the refugees, even if African countries agreed to this arrangement. In November, amid horrific tales of Africans being enslaved, imprisoned and tortured in Libya, Niger agreed to act as a halfway house for refugees that UNHCR, the UN’s refugee agency, had identified and could get out.

Evacuated from detention camps in Libya, the unaccompanied minors are among 1,200 people waiting in Niger for resettlement. Mainly aged 14 to 17, they were all in detention, and most are deeply traumatised by the violence they experienced and witnessed there. But so far no country has agreed to take them. “In Europe we have been talking a lot about legal pathways,” said UNHCR’s representative in Niger, Alessandra Morelli. “If we want to combat trafficking, if people in need of international protection, who fit the profile of asylum seekers, get out of that flow, I have to offer an alternative. Otherwise, what are we talking about here? But when I take them out I have no alternative. You see? This is our fight.” About 54,000 refugees and asylum seekers have been identified in Libya, but no more can leave until the 1,200 in Niger have been processed.

[..] One aspect of the migration deal reached on Friday looked to fall apart before it had even begun: four European countries – Austria, France, Germany and Italy – said they would not open “controlled centres” to assess asylum claims of people who had been rescued from the Mediterranean. At the same time they are asking some of the world’s poorest and least secure countries to do what Europe will not.

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“Is there a solution for Greece? Yes, but it is in quite the opposite direction of the EU and IMF plans this far.”

End Of The Bailouts And Onto A Path To A New Bankruptcy (Economides)

Last week’s Eurogroup set up the final conditions for the end of the third Greek bailout program in August. Since 2010, Greece has borrowed 275 billion euros from European Union countries and the IMF. Greece also shed 100 billion euros of private debt in an agreement with the borrowers in 2012. However, present debt is still over 300 billion euros for an economy of officially 185 billion GDP (plus 30% unaccounted illegal income). Thus, debt to gross domestic product remains extremely high. Even though the borrowing is over, the EU and the IMF have imposed new long-term austerity conditions on the Greek economy, including additional sharp pension decreases and the requirement that Greece produces a 3.5% of GDP budget surplus.

To achieve this, the government has imposed skyrocketing taxes including a 24% value-added tax (and plans to increase taxes to those making as little as 6,000 euros a year). Taxes suck out all the extra cash businesses and people have. Investment has plummeted, and consumption is 25% lower than a few years ago. Unemployment is at 23% but this number is misleadingly low because those working only two days a week are considered employed. With huge taxes and a business-unfriendly bureaucracy, Greece is unlikely to attract investment and will not achieve fast growth. Without growth, the country will be unable to pay back its debt in full despite a 10-year postponement of maturities on one-third of its debt granted by the EU last Thursday.

[..] Is there a solution for Greece? Yes, but it is in quite the opposite direction of the EU and IMF plans this far. Greece needs to achieve fast growth, 4-5% per year, for five years, and start paying its debt after that. To achieve high growth, the country needs to abandon the multi-year 3.5% surplus target for the much more reasonable 1.5-2% target. With lower surpluses, lower taxes and less bureaucracy, Greece will be able to attract investment and realize high growth. Once it has achieved high growth and its economy has expanded, only then will Greece start paying its debt, and it will be able to pay its debt in full over time.

Instead, the EU/IMF plan forces the country to create huge surpluses when its economy is hurting, thereby driving it in a downward spiral. Imposing the requirement of large surpluses now is catastrophic and forces Greece to take a path of low or zero growth and misery. Greece will never be able to pay back its debt in full on this path.

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They seem to be waking up. But then it’ll all just go to a poorer place.

Deluge Of Electronic Waste Turning Thailand Into ‘World’s Rubbish Dump’ (G.)

At a deserted factory outside Bangkok, skyscrapers made from vast blocks of crushed printers, Xbox components and TVs tower over black rivers of smashed-up computer screens. This is a tiny fraction of the estimated 50m tonnes of electronic waste created just in the EU every year, a tide of toxic rubbish that is flooding into south-east Asia from the EU, US and Japan. Thailand, with its lax environmental laws, has become a dumping ground for this e-waste over the past six months, but authorities are clamping down, fearful that the country will become the “rubbish dump of the world”. The global implications could be enormous.

A factory visited by the Guardian in Samut Prakan province, south of Bangkok, which was recently shut down in a raid for operating illegally, illustrated the mammoth scale of the problem. Printers made by Dell and HP, Daewoo TVs and Apple computer drives were stacked sky-high next to precarious piles of compressed keyboards, routers and copy machines. Labels showed the waste had mainly come from abroad. For locals, it is unclear why Thailand should be taking this waste. The Samut Prakan factory sits in the middle of hundreds of shrimp farms and there were concerns it was poisoning the landscape, with no environmental protections or oversight in place.

Until the beginning of this year, China was a willing recipient of the world’s electronic waste, which it recycled in vast factories. According to the UN, 70% of all electronic waste was ending up in China. But in January, having calculated that the environmental impact far outweighed the short-term profit, China closed its gates to virtually all foreign rubbish. It has prompted something of a global crisis, not just for e-waste but plastic waste as well. Asian nations such as Thailand, Laos and Cambodia stepped in. Chinese businessmen have set about attempting to open about 100 plastic and e-waste recycling plants across Thailand since January.

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“Like a Hollywood villain falling into a crucible of molten steel only to turn up later in some altered state, Monsanto has been subsumed under the Orwellian-sounding ‘Bayer Crop Science’ division..”

Bayer-Monsanto Partnership Signals Death Knell for Humanity (Bridge)

On what plane of reality is it possible that two of the world’s most morally bankrupt corporations, Bayer and Monsanto, can be permitted to join forces in what promises to be the next stage in the takeover of the world’s agricultural and medicinal supplies? Warning, plot spoiler: There is no Mr. Hyde side in this horror story of epic proportions; it’s all Dr. Jekyll. Like a script from a David Lynch creeper, Bayer AG of poison gas fame has finalized its $66 billion purchase of Monsanto, the agrochemical corporation that should be pleading the Fifth in the dock on Guantanamo Bay instead of enjoying what amounts to corporate asylum and immunity from crimes against humanity. Such are the special privileges that come from being an above-the-law transnational corporation.

Unsurprisingly, the first thing Bayer did after taking on Monsanto, saddled as it is with the extra baggage of ethic improprieties, was to initiate a rebrand campaign. Like a Hollywood villain falling into a crucible of molten steel only to turn up later in some altered state, Monsanto has been subsumed under the Orwellian-sounding ‘Bayer Crop Science’ division, whose motto is: “Science for a better life.” Yet Bayer itself provides little protective cover for Monsanto considering its own patchy history of corporate malfeasance. Far beyond its widely known business of peddling pain relief for headaches, the German-based company played a significant role in the introduction of poison gas on the battlefields of World War I.

Despite a Hague Convention ban on the use of chemical weapons since 1907, Bayer CEO Carl Duisberg, who sat on a special commission set up by the German Ministry of War, knew a business opportunity when he saw one. Duisberg witnessed early tests of poison gas and had nothing but glowing reports on the horrific new weapon: “The enemy won’t even know when an area has been sprayed with it and will remain quietly in place until the consequences occur.” Bayer, which built a department specifically for the research and development of gas agents, went on to develop increasingly lethal chemical weapons, such as phosgene and mustard gas. “This phosgene is the meanest weapon I know,” Duisberg remarked with a stunning disregard for life, as if he were speaking about the latest bug spray. “I strongly recommend that we not let the opportunity of this war pass without also testing gas grenades.”

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Jun 102018
 
 June 10, 2018  Posted by at 8:58 am Finance Tagged with: , , , , , , , , , , , , ,  


Paul Gauguin The Day of the God 1894

 

Is The Existing Banking System Coming To An End? (Ren.)
The Credit Cycle Will Be The EU’s Undoing (Macleod)
China is in Trouble (Mises)
How To Plan For Next Round Of Fed Interest Rate Hikes (Freep)
Trump Open To US Embassy In Pyongyang, North Korea (Axios)
Trump Backs Out Of Joint G7 Communique With Attack On Trudeau (Ind.)
One ‘Rant,’ Rough Talks Sour G7 Mood In Confrontations With Trump (R.)
China’s Xi Calls Out ‘Selfish, Short-Sighted’ Trade Policies (R.)
G7 Leaders Urge Russia To Stop Undermining Democracies (R.)
Iran’s Rouhani Criticizes US For Imposing Its Policies On Others (R.)
The Relationship Between Population And Consumption Is Not Straightforward (G.)
There Are No War Heroes. There Are Only War Victims. (CJ)
Our Plastic Pollution Crisis Is Too Big For Recycling To Fix (Leonard)

 

 

Well, not today. Support is low.

Is The Existing Banking System Coming To An End? (Ren.)

Today Switzerland is set to hold a referendum to decide whether to ban commercial banks from creating money. The aim of campaigners is to limit financial speculation by forcing banks to hold 100 per cent reserves against their deposits. If the referendum result goes the way of the campaign group, the Vollgeld Initiative and the concept known as the sovereign money initiative comes to fruition, Swiss banks will no longer be able to create money for themselves, rather they will only be allowed to lend money that they have accumulated from savers or other banks. The current fractional reserve banking system works like this: Banks lend money that they don’t actually have and then command interest on the non-existent money.

This is akin to x offering to loan y a sum of say, £100,000 that the former hasn’t got. The way around this conundrum is for x to then lodge the sum with another financial institution who happens to be in on the scam. Y then pays x interest on the money that x has never been in the position to lend in the first place. Consistent with the proposed Swiss model, the idea of limiting all money creation to central banks was first touted in the 1930s and supported by renowned US economist Irving Fisher as a way of preventing asset bubbles and curbing reckless spending. If the Vollgeld Initiative succeeds with its campaign on Sunday, the fractional reserve system will be replaced by a bill which will give the Swiss National Bank (SNB) a monopoly on physical and electronic money creation.

Since the establishment of the SNB in 1891, the bank has had exclusive powers to mint coins and issue Swiss bank notes. But over 90% of money in circulation in Switzerland (and arguably the world) currently exists in the form of electronic cash which is created out of nothing by private banks. In modern market economies central banks control the creation of bank notes and coins but not the creation of all money. The latter occurs when a commercial bank offers a line of credit. Iceland, whose bloated banking system collapsed in 2008, has also touted the abolition of private money creation and an end to a practice in which central banks accept deposits, make loans and investments and hold reserves that are a fraction of their deposit liabilities. Fractional banking means that money is effectively produced from thin air.

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The weakness of the euro. Largely self-induced.

The Credit Cycle Will Be The EU’s Undoing (Macleod)

It is a common misconception that the world has a business cycle: that merely puts the blame on the private sector for periodic booms and busts. The truth is every boom and bust has its origins in central bank monetary policy and fractional reserve banking. A central bank first attempts to stimulate the economy with low interest rates, having injected base money into the economy to rescue the banks from the previous crisis. The central bank continues to suppress interest rates, inflating assets and facilitating the financing of government deficits. This is followed by the expansion of bank credit as banks recognise that trading conditions in the non-financial economy have improved. Price inflation unexpectedly but inevitably increases, and interest rates have to rise.

They rise to the point where earlier malinvestments begin to be liquidated and a loan repayment crisis develops in financial markets. It is fundamentally a credit cycle, not a business one. Central bankers do not, with very few exceptions, understand they are the cause. And the few central bankers who do understand are unable to influence monetary policy by enough to change it. By not understanding that they create the crisis themselves, central bankers believe they can control all financial risks through regulation and intervention, which is why they are always taken by surprise when a credit crisis hits them. For these reasons we know it is only a matter of time before the world faces another credit crisis.

The next one is likely to be unprecedented in its violence, even exceeding that of the last one in 2008/09, because of the scale of additional monetary reflation that has taken place over the last ten years. The further accumulation of debt in the intervening period also means that a smaller increase in price inflation, and therefore a lower height for interest rates will trigger it. My current expectation is that a global debt liquidation and credit crisis is not far away and will occur by the end of Q1 in 2019, perhaps even by the end of this year. The problem is a global one and we know not where it will break. But once it does, the ECB and the euro will possibly face the most violent deflation in modern history, even exceeding the global slump of the 1930s.

We know in advance what the supposed solution will be: monetary hyperinflation to bail out the banks, governments and the indebted. The effects on prices in the Eurozone are unlikely to be as delayed as they have been in the current cycle, partly because of the sheer scale of the issuance of new money and credit required to stabilise the financial system, partly because the euro is subordinate to the dollar as a safe-haven currency, and partly because of its limited history as a medium of exchange.

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An exercise in large numbers.

China is in Trouble (Mises)

While the rulers of China have been able all along to hedge their plans over longer periods than their Western counterparts have, the new legal situation has extended this planning horizon even further.1 In comparison with those of Western economies, China’s countermeasures against the crisis in 2008 were significantly more drastic. While in the US the balance sheet total of the banking system increased by USD 4,000bn in the years after the global financial crisis, the balance sheet of the Chinese banking system expanded by USD 20,000bn in the same period. For reference: This is four times the Japanese GDP.

The following chart shows the expansion of the bank balance sheet total as compared to economic output. Did the Chinese authorities assume excessive risks in fighting the crisis? Neither the fact that China’s bank balance sheets amount to more than 600% of GDP nor the fact that they have doubled in terms of percentage of GDP in the past several years suggests a healthy development.

Our friends from Condor Capital expect NPL ratios to rise in China, which could translate into credit losses of USD 2,700 to 3,500bn for China’s banks, and this is under the assumption of no contagion (!). By comparison, the losses of the global banking system since the financial crisis have been almost moderate at USD 1,500bn The most recent crisis does teach us, however, that the Chinese are prepared to take drastic measures if necessary. China fought the financial crisis by flooding the credit markets: 35% credit growth in one year on the basis of a classic Keynesian spending program is no small matter.

Chinese money not only inflates a property bubble domestically but also around the globe (e.g. in Sydney and Vancouver). Further support for the global property markets is in question, given the measures China has recently launched. Due to financial problems, Chinese groups such as Anbang and HNA will have to swap the role of buyer for that of seller. The IMF has forecast a further doubling of total Chinese debt outstanding from USD 27,000bn in 2016 to USD 54,000bn in 2022. By comparison, in 2016 China’s GDP amounted to USD 11,200bn. This spells debt-induced growth at declining rates of marginal utility. From our point of view, this development – which we can also see in the West – is unsustainable.

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” Say good-bye to super-cheap cash.”

How To Plan For Next Round Of Fed Interest Rate Hikes (Freep)

The easy money officially ends Wednesday, as interest rates, much like summer temps, heat up once again. It’s a “slam-dunk” that the Federal Reserve will increase rates by a quarter point after its meeting this week, according to Mark Zandi, chief economist for Moody’s Analytics. And it’s likely we’re in for two more quarter-point hikes in September and December, he said. “If you are thinking about buying a car or home, sooner is better than later, but I wouldn’t rush into anything, as rates, while rising, are still very low,” Zandi said. The U.S. economy — with a national jobless rate at 3.8% in May, the lowest level in 18 years — has put the Great Recession in 2008-09 in the rear view mirror.

Consumers — as well as business leaders — are formulating strategies to cope with higher rates ahead. The Fed began gradually tightening money with the first quarter-point rate hike in December 2015 — then the first rate hike in nearly a decade. Since then, there have been another five rate hikes. The latest rate hike in March took the Fed’s benchmark rate to a target range of 1.5% to 1.75%. If the Fed raises rates as expected Wednesday, the overnight borrowing cost will be in line with the Fed’s inflation target of 2%. For the first time in almost a decade, the cost of borrowing will no longer be essentially free. Say good-bye to super-cheap cash.

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Carrot for Kim.

Trump Open To US Embassy In Pyongyang, North Korea (Axios)

President Trump is willing to consider establishing official relations with North Korea and even eventually putting an embassy in Pyongyang, according to two sources familiar with preparations for the Singapore summit. “It would all depend what he gets in return,” said a source close to the White House. “Denuclearization would have to be happening.” The sources stressed that this is one of many topics that could be discussed at the summit, and that certainly nothing like that has been decided or is necessarily expected to emerge from Trump’s historic mano a mano with North Korean leader Kim Jong-un.

But the U.S. and North Korean working groups — with engagements in New York, the DMZ and Singapore — have discussed establishing official relations between the two countries that would involve putting a U.S. embassy in Pyongyang. One of the sources, who is familiar with the president’s thinking, said Trump had made it a point not to reject any ideas headed into the summit: “It’s definitely been discussed,” the source said. “His view is: ‘We can discuss that: It’s on the table. Let’s see.’ Of course we would consider it. There’s almost nothing he’ll take off the table going in.” The source said North Korean officials have been wildly inconsistent in the pre-meetings, making it difficult to get any read on how the discussions might go.

The source close to the White House added: “POTUS will consider any idea anyone brings him if it delivers on denuclearization that is irreversible and verifiable. He won’t be played by Kim. But it is not his style to — on the front end — rule out possibilities of what could happen or may happen depending on how negotiations go.”

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Well, it wasn’t dull.

Trump Backs Out Of Joint G7 Communique With Attack On Trudeau (Ind.)

Donald Trump has rejected an agreement signed off by the leaders of countries at the G7 summit in Canada despite earlier having appeared to endorse the joint statement vowing to fight back against protectionism and pledging to follow established trade rules. The joint statement between the leaders of US, France, Germany, the UK, Japan, Italy, and Canada comes after US President Donald Trump refused to back down from his decision to impose international tariffs on goods including steel and aluminium imports as a part of his so-called “America First” strategy.

The communique had been confirmed by Canadian Prime Minster Justin Trudeau, who conceded that Mr Trump’s tough talk on trade showed there was a lot of work to be done between the countries, but nevertheless portrayed the joint statement as a positive step towards international cooperation. However, Mr Trump later tweeted that he had would not now endorse the communique due to “false statements” from the Canadian prime minister. He wrote: “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive tariffs to our US farmers, workers and companies, I have instructed our US reps not to endorse the communique as we look at tariffs on automobiles flooding the US market!”

He added: “PM Justin Trudeau of Canada acted so meek and mild during our G7 meetings only to give a news conference after I left saying that, ‘US tariffs were kind of insulting’ and he ‘will not be pushed around.’ Very dishonest & weak. Our tariffs are in response to his of 270% on dairy!”

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These people see themselves as no.1, because that’s what they are where they come from. Being contradicted is then hard to take.

One ‘Rant,’ Rough Talks Sour G7 Mood In Confrontations With Trump (R.)

Trump gave “a long, frank rant”, the official said, repeating a position he carried through the 2016 U.S. election campaign into the White House that the United States had suffered at the hands of its trading partners, with French President Emmanuel Macron pushing back on the assertion and Japanese Prime Minister Shinzo Abe chiming in. It was a “a long litany of recriminations, somewhat bitter reports that the United States was treated unfairly,” said the French official, who spoke on condition of anonymity. “It was a difficult time, rough, very frank.” The U.S. president did not appear to be listening during some of the trade presentations, another G7 official familiar with the meeting said.

Trump himself told reporters on Saturday that the summit was not contentious and called his relationship with G7 allies a “10”. Despite smiles and jokes for the cameras, the tension among the leaders was clear. At one point, German Chancellor Angela Merkel was seen having a brief, intense one-sided conversation with a stony-faced Trump on Friday. On Saturday, Canadian Prime Minister Justin Trudeau sniped about “stragglers” after Trump was late to a breakfast session on gender equality. Trump left the summit early for Singapore, where he will meet North Korean leader Kim Jong Un next week.

One scene at the very beginning of the gathering of presidents and prime ministers of the biggest industrialized nations set the mood for facing the brash Trump. He arrived at La Malbaie, the scenic luxury resort on the banks of the St. Lawrence River in Quebec, as the four European leaders and the two EU heads were huddled together in a room to coordinate their strategy. The noise of Trump’s helicopter landing was so loud they had to stop talking for a while, in a scene one official compared to the opening from the U.S. television series M.A.S.H. “The EU understands that the only way with Trump is strength,” said one European official. “If you give in now, he will come back tomorrow for more.”

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All policies must benefit China.

China’s Xi Calls Out ‘Selfish, Short-Sighted’ Trade Policies (R.)

Chinese President Xi Jinping, whose country is locked in a high-stakes trade dispute with the United States, on Sunday said China rejects “selfish, shortsighted” trade policies, and called for building an open global economy. Xi did not mention the United States during a speech at a summit meeting of the Shanghai Cooperation Organisation (SCO), a regional security bloc led by China and Russia. “We reject selfish, shortsighted, closed, narrow policies, (we) uphold World Trade Organisation rules, support a multi-lateral trade system, and building an open world economy,” Xi said in a speech in the port city of Qingdao.

The United States and China have threatened tit-for-tat tariffs on goods worth up to $150 billion each, as President Donald Trump has pushed Beijing to open its economy further and address the United States’ large trade deficit with China. Xi spoke hours after Trump said he was backing out of the Group of Seven communique, thwarting what appeared to be a fragile consensus on a trade dispute between Washington and its top allies. “We must … discard Cold War thinking, group confrontation; we object to acts of getting one’s own absolute security at the cost of other countries’ security,” Xi said.

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Skripal and Crimea. It’s all they got.

G7 Leaders Urge Russia To Stop Undermining Democracies (R.)

Leaders of the Group of Seven countries urged Russia on Saturday to stop undermining democracies and said they were ready to step up sanctions against Moscow if necessary. The leaders of the United States, Canada, Japan, France, Germany, Italy and Britain made the strongly worded statement just hours after U.S. President Donald Trump, who is part of the G7, said he wanted Moscow re-invited to the group. “We urge Russia to cease its destabilizing behavior, to undermine democratic systems and its support of the Syrian regime,” the leaders said in a statement at the end of their two-day meeting in La Malbaie, Quebec.

The G7 leaders condemned an attack in Salisbury in Britain on a former Russian spy using a Russian-made military grade nerve agent, saying it was highly likely Moscow was responsible because there was no other plausible explanation. Russia denies having anything to do with the attack. The G7 leaders made a commitment on Friday, without naming Russia, to share information between themselves and work with internet service providers and social media companies to thwart foreign meddling in elections. The Kremlin has denied allegations by the United States and some European countries that Russia interfered in their elections. Earlier on Saturday, Trump told a news conference the issue of Russia’s return to the group was discussed. Russia was a member of the then G8 until it was expelled for annexing Crimea in 2014.

“I think it would be an asset to have Russia back in. I think it would be good for the world. I think it would be good for Russia. I think it would be good for the United States. I think it would be good for all of the countries of the current G7,” Trump said. Italy’s new Prime Minister Giuseppe Conti expressed similar sentiment. But the final communique struck a different note, saying western sanctions against Russia would continue as long as Moscow failed to meet its obligations in Ukraine under the Minsk accord it signed, and could even be stepped up. “We reiterate our condemnation of the illegal annexation of Crimea and reaffirm our enduring support for Ukrainian sovereignty, independence and territorial integrity within its internationally recognized borders,” the G7 statement said.

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World order.

Iran’s Rouhani Criticizes US For Imposing Its Policies On Others (R.)

Iranian President Hassan Rouhani on Sunday said that U.S. efforts to impose its policies on others are a threat to all, after Washington last month said it was withdrawing from the Iran nuclear deal and would reimpose economic sanctions. Rouhani, speaking at a summit of the Chinese and Russian-led security bloc the Shanghai Cooperation Organisation (SCO) in the port city of Qingdao, said he appreciated efforts by Beijing and Moscow to maintain the nuclear deal.

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“One believed in scientific ingenuity as the answer to our problems, the other was convinced that it only deepened the crisis.”

The Relationship Between Population And Consumption Is Not Straightforward (G.)

Charles C Mann is a science journalist, author and historian. His books 1491 and 1493, looking at the Americas before and after Columbus, were widely acclaimed. His new book, The Wizard and the Prophet, examines the highly influential and starkly contrasting environmental visions of Norman Borlaug (the Wizard) and William Vogt (the Prophet). Borlaug (1914-2009) was instrumental in the green revolution that vastly expanded the amount of food humanity has been able to cultivate. Vogt (1902-1968) was a pioneering ecologist who argued that humans had exceeded the Earth’s “carrying capacity” and were heading for cataclysm unless consumption was drastically reduced. One believed in scientific ingenuity as the answer to our problems, the other was convinced that it only deepened the crisis.

What made you frame this story of humanity’s future in terms of these two individuals?

It really started the night my daughter was born 19 years ago. I was standing in the parking lot at three in the morning and it suddenly popped into my head that when Amelia, my daughter, became my age there would be almost 10 billion people in the world. And I believe that centuries from now, when historians look back at the time when you and I have been alive, the big thing that they’ll say happened is that hundreds of millions of people in Asia and Latin America and Africa lifted themselves from destitution to something like the middle class. So not only will there be 10 billion people but all those people will want the same things you and I want – nice homes, nice car, nice clothes, the odd chunk of Toblerone, right?

And so I stood there in the parking lot and thought to myself: how are we meant to do this? I’m a science journalist, so when I was talking to researchers, I’d say: “How are we going to feed everybody, how are we going to get water for everybody, house everybody? What are we going to do about climate change?” After a while I realised that the answers I was getting fell into two broad categories, each of which had a name that kept being associated with it: one was Borlaug, the other Vogt.

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Caitlin Johnstone is a gem. I was thinking next Memorial Day make every American listen to With God On Our Side.

There Are No War Heroes. There Are Only War Victims. (CJ)

The US special operations soldier who was killed in Somalia (one of the “seven countries in five years” famously named in General Wesley Clark’s revelation of the US war machine’s plans for world domination) and the four others who were injured are not heroes. The US servicemen and women who have fought and died in America’s nonstop acts of military expansionism and wars of aggression are not heroes. They are victims. They are victims of a sociopathic power establishment which does not care about them, and never has. If what I just wrote bothered you, it is because you have been conditioned to oppose such ideas by generations of war propaganda.

If you believe that US soldiers are heroes, it means that you believe that they are fighting and dying for a noble cause; for your freedom, for democracy, for the good and the just. It turns the deaths of the fallen into a tragic but noble sacrifice in your eyes, which keeps you from realizing that they have actually been dying for the profit margins of war plutocrats, land and resource assets, and the neoconservative agenda to secure control of the planet. There is nothing heroic about being thrown into the gears of the war machine and having one’s body and mind ripped apart for the advancement of plutocratic interests. But if your rulers can trick you into thinking that dead US soldiers died for something worth dying for, you won’t turn around and lay the blame on the war profiteers and ambitious sociopaths who are truly responsible for their deaths.

So they lie to you. Constantly. People often counter this notion by pointing at World War 2, about which a case for the possibility of heroism in war can indeed be made. But the fact that this argument needs to reach back 73 years to the very brink of living memory in order to find a justifiable US war tells you everything you need to know about the weakness of that argument. Since 1945, when human civilization looked completely different and America itself was still an apartheid state, we have seen the US military spread around the globe, collapse nations, and butcher millions upon millions of people, all at the expense of the lives of US military personnel, and all without just cause. The people whose lives have been used like Kleenex and discarded by the US war machine did not die for a good cause.

They did not die fighting for freedom or democracy. They are not heroes. They are victims. We need to talk about this. The way we can be shamed into silence for saying such things is truly toxic, because it prevents us from addressing the very real problem that the United States starts unjust wars constantly and spends soldiers’ lives like pennies. It probably is nice for the families of war victims to tell themselves comforting stories about how their loved one died fighting to make the world a better place, and normally I’d be happy to let them harbor that personal fantasy without saying anything to disrupt it, but people are dying here.

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Annie Leonard is the boss at Greenpeace USA. And she has it upside down. You don’t ask multinationals if they would pretty please use less plastic. You ban them from using it.

Our Plastic Pollution Crisis Is Too Big For Recycling To Fix (Leonard)

Every minute, every single day, the equivalent of a truckload of plastic enters our oceans. In the name of profit and convenience, corporations are literally choking our planet with a substance that does not just “go away” when we toss it into a bin. Since the 1950s, some 8.3bn tons of plastic have been produced worldwide, and to date, only 9% of that has been recycled. Our oceans bear the brunt of our plastics epidemic – up to 12.7m tons of plastic end up in them every year. Just over a decade ago, I launched the Story of Stuff to help shine a light on the ways we produce, use and dispose of the stuff in our lives. The Story of Stuff is inextricably linked to the story of plastics – the packaging that goes along with those endless purchases.

We buy a soda, sip it for a few minutes, and toss its permanent packaging “away”. We eat potato chips, finish them, then throw their permanent packaging “away”. We buy produce, take it out of the unnecessary plastic wrap, then throw its permanent packaging “away”. The cycle is endless, and it happens countless times every single day. But here’s the catch – there is no “away”. As far as we try to toss a piece of plastic – whether it’s into a recycling bin or not – it does not disappear. Chances are, it ends up polluting our communities, oceans or waterways in some form. For years, we’ve been conned into thinking the problem of plastic packaging can be solved through better individual action. We’re told that if we simply recycle we’re doing our part.

We’re told that if we bring reusable bags to the grocery store, we’re saving the world. We think that if we drink from a reusable bottle, we’re making enough of a difference. But the truth is that we cannot recycle our way out of this mess. [..] We need corporations – those like Coca-Cola, Unilever, Starbucks and Nestlé that continue to churn out throwaway plastic bottles, cups, and straws – to step up and show real accountability for the mess they’ve created. Drink companies produce over 500bn single-use plastic bottles annually; there is no way that we can recycle our way out of a problem of that scale.

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May 222018
 
 May 22, 2018  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Femme au Béret et à la Robe Quadrillée (Marie-Thérèse Walter) 1937

 

‘Who Are You?’ Iran Hits Back At US Demands (AlJ)
Trumpism Folds into Netanyahu-ism, or ‘Neo-Americanism’ (Alastair Crooke)
Swedes Told To Prepare For Conflict In Cold War-Style Booklet (R.)
Baltic States Ask the US for Bigger Military Presence on Their Soil (SCF)
Italy on Verge of Inducing a Fresh European Crisis (Cudmore)
Goldman Sachs: The Fiscal Outlook For The US ‘Is Not Good’ (CNBC)
The US is Shackled by Historic Debt (GT)
US Consumer Debt Set To Reach $4 Trillion By The End Of 2018 (CNBC)
Learning from America’s Forgotten Default (PS)
You Think It’s All About Guns? (Jim Kunstler)
Human Race Just 0.01% Of All Life But Eradicated Most Other Living Things (G.)

 

 

“The era of the US making decisions for the rest of the world is over”. That’s what Russia and China think, too.

‘Who Are You?’ Iran Hits Back At US Demands (AlJ)

Iranian President Hassan Rouhani has said the world would “not accept” US unilateralism just hours after Washington laid out a series of tough demands to be included in a potential new nuclear treaty with Iran. In remarks carried by Iran’s ILNA news agency on Monday, Rouhani said the era of the United States making decisions for the rest of the world was “over”. “Countries are independent … We will continue our path with the support of our nation,” Rouhani said. “Who are you to decide for Iran and the world?”

[..] In announcing the new US strategy towards Iran, Secretary of State Mike Pompeo on Monday warned that Washington “will apply unprecedented financial pressure on the Iranian regime” unless it complied with a list of 12 conditions, which must be met before any new deal can be reached. The demands include giving the International Atomic Energy Agency (IAEA) a full account of the country’s former nuclear military programme, withdrawing its forces from Syria and ending what Pompeo described as Iran’s “threatening behaviour” towards its neighbours.

Also responding to Pompeo, Iranian Foreign Minister Mohammed Javad Zarif accused the US of a “regression to old habits”, saying Washington’s diplomatic efforts were a “sham”. “It repeats the same wrong choices and will thus reap the same ill rewards. Iran, meanwhile, is working with partners for post-US JCPOA solutions,” Zarif said in a tweet on Monday.

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Regime change always leads to chaos.

Trumpism Folds into Netanyahu-ism, or ‘Neo-Americanism’ (Alastair Crooke)

The 8 May US Presidential declaration (on exiting JCPOA) requires of us fundamentally to revise our understanding of Trumpism. At the outset to his term of office, Trumpism was widely understood to be based on three key pillars: That the costs incurred by the US in upholding the full panoply of Empire (i.e. policing the American, rules-based, global order) were just too onerous and unfair (especially in the provision of the defence umbrella) – and that others must be coerced into sharing its cost. Secondly, that American jobs had been, as it were, stolen from America, and would have to be recovered through forced changes to the terms of trade. And thirdly, that these changes would be effected, through applying the tactics of the Art of the Deal.

That seemed, at least, to be clear, (if not necessarily a wholly feasible blueprint). But mostly we thought that the Art of the Deal was about threatening, blustering, and hiking leverage on ‘whatever the counterparty’ – raising tensions to explosive levels – before, at the very eleventh hour, at the very climax of crisis, offering ‘the deal’. And that was the point (then): Yes, Trump would toss verbal grenades intended to upend conventional expectations, take actions to force an issue – but the objective (as generally understood), was to get a deal: One that would tilt towards America’s mercantile and political interests, but a deal, nonetheless.

Maybe we misread Trump’s build-up of America’s already super-sized military. It seemed that it was about potential leverage: something to be offered (in terms of an umbrella to compliant states), or withdrawn from those who would not put their hand in their pocket deeply enough. But everything changed with Trump’s 8 May statement. It was not just an American ‘exit’ that was mooted, it was full court financial war that was declared against Iran (with ‘terms of surrender’ couched in terms of regime change, and total submission to the US). But this is no longer about how to reach a ‘fairer’, better deal for the US; how to make it more money. Rather the financial system was to be leveraged to destroy another state’s currency and economy. The US military are being super-sized further, to be used: to be able to rain down ‘fire and fury’ on non-compliant states.

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Sweden is no longer an independent country.

Swedes Told To Prepare For Conflict In Cold War-Style Booklet (R.)

Sweden will send out instructions to its citizens next week on how to cope with an outbreak of war, as the country faces an assertive Russia across the Baltic Sea. The 20-page pamphlet titled “If Crisis or War Comes” gives advice on getting clean water, spotting propaganda and finding a bomb shelter, in the first public awareness campaign of its kind since the days of the Cold War. It also tells Swedes they have a duty to act if their country is threatened. “If Sweden is attacked by another country, we will never give up,” the booklet says. “All information to the effect that resistance is to cease is false.” The leaflet’s publisher, the Swedish Civil Contingencies Agency, did not spell out where an attack might come from.

“Even if Sweden is safer than most countries, threats do exist,” agency head Dan Eliasson told journalists. But Sweden and other countries in the region have been on high alert since Russia’s annexation of Ukraine’s Crimea peninsula in March, 2014. They have also accused Russia of repeated violations of their airspace – assertions that Moscow has either dismissed or not responded to. The Kremlin has in the past insisted that it does not interfere in the domestic affairs of other countries and has accused Western powers of stoking “Russophobia”. Stockholm has repeatedly cited Russian aggression as the reason for a series of security measures including the reintroduction of conscription this year and the stationing of troops on the Baltic island of Gotland.

The Swedish government decided to start increasing military spending from 2016, reversing years of declines. The booklet on its way to Sweden’s 4.8 million households warns that supplies of food, medicine and gasoline could run short during a crisis. It also lists oat milk, tins of Bolognese sauce and salmon balls as examples of food that people should store in case of an emergency along with tortillas and sardines. The publication describes what an air raid warning sounds like in the first such publication handed out since 1961. Sweden has not been at war with anyone for more than 200 years, not since its war with Norway in 1814. It was officially neutral during World War Two.

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NATO.

Baltic States Ask the US for Bigger Military Presence on Their Soil (SCF)

The foreign ministers (FMs) of the Baltic states have wound up their May 16-18 visit to Washington. They asked National Security Adviser John Bolton to reinforce the NATO battalions that have been deployed to their countries with air and naval units. They also want their air-defense capability enhanced. Lithuanian FM Linas Linkevicius emphasized that it’s not just the numbers that are important, but also training exercises, visits, the distribution of equipment, and the establishment of new military facilities. [..] NATO is ratcheting up tensions by holding an increasing number of large-scale exercises right on Russia’s borders. This greatly elevates the risk of inadvertent escalation. For instance, three major exercises are scheduled to be held in the Baltic region this summer.

On June 3-15, the Saber Strike exercise organized by the US Army Europe will encompass the three Baltic states and Poland, involving over 18,000 troops from 19 countries. About 3,000 American soldiers and over 1,500 combat vehicles will travel from Germany to Latvia and Lithuania. Public roads will be used to move heavy equipment. On June 12-13, the soldiers of the US 2nd Cavalry Regiment will construct a bridge in order to cross the Neman River in Lithuania (in the Kaunas district). Their main mission is to ensure that the forces are ready to rapidly advance, not to merely defend their positions. Eight thousand American airborne troops will land in Latvia during the Swift Response exercise, in order to train alongside Lithuanian and Polish troops.

Namejs 2018 will be held from August 20 to September 2 and will involve over 9,200 Latvian forces, including the military, police, border guards, volunteer reservists, and other state institutions. They will be joined by 650 troops from the US, Lithuania, Estonia, Poland, and the Czech Republic. All these large-scale intensive training activities will take place in the background of the planning for Trident Juncture 2018, the largest NATO exercise involving about 40,000 troops, 70 ships, and about 130 aircraft from over 30 nations, which will be deployed to central and northern Norway in October for the live portion of the event. A command post phase will be conducted in Italy. Norway does not have a shoreline in the Baltic Sea but it is a member of the Council of the Baltic Sea States.

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“..while the policy platform doesn’t explicitly state an intention to leave the euro, the new government plan, if instituted as is, makes that the inevitable end-game…”

Italy on Verge of Inducing a Fresh European Crisis (Cudmore)

It may be time to move on from rising Treasury yields and trade wars. An Italian-led euro crisis is on the verge of becoming the dominant theme for markets. It turns out that the euro break-up trade isn’t dead — it’s just been hibernating and is likely to return with a vengeance in the months ahead if the populists get their way. Their proposed economic policies make no attempt at debt sustainability. Italy already has the largest absolute debt pile in the EU and the second-largest, after Greece, as a percentage of GDP, at 132%. The coalition’s plan sends the signal that it has no intention of ever paying back its debt. Things could spiral quickly because its fiscal promises will send BTP yields much higher, adding to refinancing costs and making the budgetary situation worse.

That creates a dilemma for the EU. Either fund Italy’s largesse at the expense of every other member country, or kick Italy out of the euro. The first option isn’t sustainable. This isn’t a relatively containable problem like Greece. Italy’s economy is almost ten times the size of Greece’s and the third-largest in the euro zone. The PIIGS — Portugal, Italy, Ireland, Greece and Spain — were only ever a problem as a group because of concerns that the contagion would infect Italy. And this isn’t just a sovereign debt problem. Italy’s banks have by far the most non-performing loans in the euro zone, more than a quarter of the total. A section of the plan makes it harder for banks to repossess collateral, further deteriorating the value of those loans.

So while the policy platform doesn’t explicitly state an intention to leave the euro, the new government plan, if instituted as is, makes that the inevitable end-game. Fortunately, the Italian constitution forbids an excessive budget deficit, so may act as a limiting force. However, the concern is whether they can circumvent those restrictions by selecting favorable economic projections. The proposal already seems to be stealthily planning for euro departure with a plan to issue short-term debt contracts to pay back arrears. As my colleague Ferdinando Giugliano suggested on Friday, that’s the first step toward a parallel currency. So Italy’s prospective rulers seem to be fully aware of the end-game and are already planning for it. Investors will soon need to catch up.

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“..debt could equal GDP within a decade..”

Goldman Sachs: The Fiscal Outlook For The US ‘Is Not Good’ (CNBC)

The fiscal outlook for the United States “is not good,” according to Goldman Sachs, and could pose a threat to the country’s economic security during the next recession. According to forecasts from the bank’s chief economist, the federal deficit will increase from $825 billion (or 4.1% of GDP) to $1.25 trillion (5.5% of GDP) by 2021. And by 2028, the bank expects the number to balloon to $2.05 trillion (7% of GDP). “An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further,” Jan Hatzius — Goldman’s chief economist — wrote Sunday. “While we do not believe that the U.S. faces a risk to its ability to borrow or repay, the rising debt level could nevertheless have three consequences long before debt sustainability becomes a major obstacle.”

Legislators passed a package of corporate and individual tax cuts in December, a two-year budget deal in February and a massive spending bill in March that boosted government expenditures on both domestic and military programs. In light of the big spending and easier tax burden, the Congressional Budget Office – Capitol Hill’s nonpartisan financial scorekeeper – in April projected that debt could equal GDP within a decade if Congress extends the tax cuts, a level not seen since World War II. Economic growth should jump above 3% in 2018 thanks to the stimuli, the CBO said, but the acceleration will likely prove brief, and debt held by the public will soar to $28.7 trillion by the end of fiscal 2028.

That could create a precarious situation for Congress if the economy faces an economic downturn in the near term, Hatzius wrote, hampering legislators’ ability provide additional fiscal stimulus. “Lawmakers might hesitate to approve fiscal stimulus in the next downturn in light of the already substantial budget deficit,” the economist said. “While we would expect some additional loosening of fiscal policy during the next downturn, there is a good chance in our view that it would be less aggressive than it was in the last few recessions.”

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“Is the Federal Reserve playing politics?”

The US is Shackled by Historic Debt (GT)

Do you feel as if you’re drowning in debt? It’s worse than you think. The U.S. government reached a new milestone when our country’s debt topped $21 trillion for the first time. The national debt grows by an average of $17,000 every second – more than some people earn in an entire year. That’s only an average, and During the past eight months, the national debt grew by $52,000 per second. And the trend toward bigger and higher spending is only getting worse. The ratio of national debt to GDP is at 105%, larger than the economy as a whole. In 1981, the national debt comprised a mere 31% of GDP. We are not moving in the right direction. The Treasury Department has plans to borrow $1 trillion this year, an 84% jump from last year.

When individuals borrow, they can use the money wisely to increase their wealth. That’s what happens when people make good investments. What does the government do with all this money? While some of it may be put to good use, the National Science Foundation’s spending $856,000 on having mountain lions run on treadmills can’t be termed prudent spending. Nor can the $2 billion spent on former President Obama’s healthcare website. In 2017, Brooklyn, NY spent $2 million on a 400 square feet restroom in a public park. Flushing money down the toilet?

Why is the government raising interest rates at a time consumer prices and wages are rising only marginally? During Obama’s administration, prices rose 14.6%, and the Federal Reserve kept interest rates low. Inflation is up by a mere 2.2% since Trump took office, and interests rates keep rising. Is the Federal Reserve playing politics? While the rate of inflation was somewhat higher during the Obama years, the Federal Reserve didn’t get aggressive in handling the problem until Trump came to office. If it’s politics, what game is being played?

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“Americans owe more than 26% of their annual income to this debt.”

US Consumer Debt Set To Reach $4 Trillion By The End Of 2018 (CNBC)

Americans are in a borrowing mood, and their total tab for consumer debt could reach a record $4 trillion by the end of 2018. That’s according to LendingTree, a loan comparison website, which analyzed data from the Federal Reserve on nonmortgage debts including credit cards, and auto, personal and student loans. Americans owe more than 26% of their annual income to this debt. That’s up from 22% in 2010. It’s also higher than debt levels during the mid-2000s when credit availability soared.

Debts on auto loans and credit cards are climbing by more than 7% annually, while housing debt is rising at a little more than 2%. Consumer credit has been rising by 5% to 6% for about two years. LendingTree projects total consumer debt will top $4 trillion by the end of 2018.

That kind of growth is not surprising, according to LendingTree chief economist Tendayi Kapfidze, and is in keeping with the growth of consumer debt that has been happening since 2012. At these levels, consumers are spending about 10% of their income paying these debts each month, Kapfidze said. From 2000 to 2008, that averaged about 12% to 13%, he said. Still, credit card delinquency rates, which are at 2.4%, are low.

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We’ve seen this movie before.

Learning from America’s Forgotten Default (PS)

One of the most pervasive myths about the United States is that the federal government has never defaulted on its debts. Every time the debt ceiling is debated in Congress, politicians and journalists dust off a common trope: the US doesn’t stiff its creditors. There’s just one problem: it’s not true. There was a time, decades ago, when the US behaved more like a “banana republic” than an advanced economy, restructuring debts unilaterally and retroactively. And, while few people remember this critical period in economic history, it holds valuable lessons for leaders today.

In April 1933, in an effort to help the US escape the Great Depression, President Franklin Roosevelt announced plans to take the US off the gold standard and devalue the dollar. But this would not be as easy as FDR calculated. Most debt contracts at the time included a “gold clause,” which stated that the debtor must pay in “gold coin” or “gold equivalent.” These clauses were introduced during the Civil War as a way to protect investors against a possible inflationary surge. For FDR, however, the gold clause was an obstacle to devaluation. If the currency were devalued without addressing the contractual issue, the dollar value of debts would automatically increase to offset the weaker exchange rate, resulting in massive bankruptcies and huge increases in public debt.

To solve this problem, Congress passed a joint resolution on June 5, 1933, annulling all gold clauses in past and future contracts. The door was opened for devaluation – and for a political fight. Republicans were dismayed that the country’s reputation was being put at risk, while the Roosevelt administration argued that the resolution didn’t amount to “a repudiation of contracts.” On January 30, 1934, the dollar was officially devalued. The price of gold went from $20.67 an ounce – a price in effect since 1834 – to $35 an ounce. Not surprisingly, those holding securities protected by the gold clause claimed that the abrogation was unconstitutional. Lawsuits were filed, and four of them eventually reached the Supreme Court; in January 1935, justices heard two cases that referred to private debts, and two concerning government obligations.

The underlying question in each case was essentially the same: did Congress have the authority to alter contracts retroactively? On February 18, 1935, the Supreme Court announced its decisions. In each case, justices ruled 5-4 in favor of the government – and against investors seeking compensation. According to the majority opinion, the Roosevelt administration could invoke “necessity” as a justification for annulling contracts if it would help free the economy from the Great Depression.

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“..a bewildering clown culture wrapped in a Potemkin economy..”

You Think It’s All About Guns? (Jim Kunstler)

Is it possible that we Americans only pretend not to notice the conditions that produce an epidemic of school shootings, or is the public just too dumbed-down to connect the dots? Look at the schools themselves. We called them “facilities” because they hardly qualify as buildings: sprawling, one-story, tilt-up, flat-roofed boxes isolated among the parking lagoons out on the six-lane highway strip, disconnected from anything civic, isolated archipelagoes where inchoate teenage emotion festers and rules while the few adults on the scene are regarded as impotent clowns representing a bewildering clown culture wrapped in a Potemkin economy that has nothing to offer young people except a lifetime of debt and “bullshit jobs” — to borrow a phrase from David Graeber.

The world of teens has been exquisitely engineered to steal every opportunity for colonizing the chemical reward centers of their brains to provoke endorphin hits, especially the cell-phone realm of social media, which is almost entirely about status competition, much of which revolves around the wild hormonal promptings of teen sexual development — at the same time they are bombarded with commercial messages designed to prey on their fantasies, longings, and perceived inadequacies. All of this produces immersive and incessant melodrama along with untold grievance, envy, frustration, confusion, and rage. And, of course, where the cell-phone universe leaves off, the world of video games begins, so that boys (especially) get to act-out in “play” the extermination of their competitors and foes.

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The planet is dying.

Human Race Just 0.01% Of All Life But Eradicated Most Other Living Things (G.)

Humankind is revealed as simultaneously insignificant and utterly dominant in the grand scheme of life on Earth by a groundbreaking new assessment of all life on the planet. The world’s 7.6 billion people represent just 0.01% of all living things, according to the study. Yet since the dawn of civilisation, humanity has caused the loss of 83% of all wild mammals and half of plants, while livestock kept by humans abounds. The new work is the first comprehensive estimate of the weight of every class of living creature and overturns some long-held assumptions. Bacteria are indeed a major life form – 13% of everything – but plants overshadow everything, representing 82% of all living matter. All other creatures, from insects to fungi, to fish and animals, make up just 5% of the world’s biomass.

Another surprise is that the teeming life revealed in the oceans by the recent BBC television series Blue Planet II turns out to represent just 1% of all biomass. The vast majority of life is land-based and a large chunk – an eighth – is bacteria buried deep below the surface. “I was shocked to find there wasn’t already a comprehensive, holistic estimate of all the different components of biomass,” said Prof Ron Milo, at the Weizmann Institute of Science in Israel, who led the work, published in the Proceedings of the National Academy of Sciences. “I would hope this gives people a perspective on the very dominant role that humanity now plays on Earth,” he said, adding that he now chooses to eat less meat due to the huge environmental impact of livestock.

[..] The transformation of the planet by human activity has led scientists to the brink of declaring a new geological era – the Anthropocene. One suggested marker for this change are the bones of the domestic chicken, now ubiquitous across the globe. The new work reveals that farmed poultry today makes up 70% of all birds on the planet, with just 30% being wild. The picture is even more stark for mammals – 60% of all mammals on Earth are livestock, mostly cattle and pigs, 36% are human and just 4% are wild animals.

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May 202018
 
 May 20, 2018  Posted by at 10:13 am Finance Tagged with: , , , , , , , , , , , ,  


Roman Vishniac Isaac Street, Krakow 1930s

 

Stefan Halper: The FBI Informant Who Monitored the Trump Campaign (GG)
IG Horowitz Finds FBI, DOJ Broke Law In Clinton Probe (ZH)
China Agrees To Bolster Purchases Of US Goods (CNBC)
With Iran Sanctions Trump Made Europeans Look Like The Fools They Are (RT)
Europe, China, Russia Discussing New Deal For Iran (R.)
Now Facebook Serves NATO’s Agenda (McDonald)
Hedge Funds Bet On Big Turnaround By Italy’s Mid-Tier Banks (R.)
Companies Are Now Paying Off Their Employees’ Student Loans (CNBC)
What Happens In An Internet Minute In 2018? (WEF)
Drunk People Are Better at Creative Problem Solving (HBR)

 

 

Why not just call him a spy?

Stefan Halper: The FBI Informant Who Monitored the Trump Campaign (GG)

An extremely strange episode that has engulfed official Washington over the last two weeks came to a truly bizarre conclusion on Friday night. And it revolves around a long-time, highly sketchy CIA operative, Stefan Halper. Four decades ago, Halper was responsible for a long-forgotten spying scandal involving the 1980 election, in which the Reagan campaign – using CIA officials managed by Halper, reportedly under the direction of former CIA Director and then-Vice-Presidential candidate George H.W. Bush – got caught running a spying operation from inside the Carter administration. The plot involved CIA operatives passing classified information about Carter’s foreign policy to Reagan campaign officials in order to ensure the Reagan campaign knew of any foreign policy decisions that Carter was considering.

Over the past several weeks, House Republicans have been claiming that the FBI during the 2016 election used an operative to spy on the Trump campaign, and they triggered outrage within the FBI by trying to learn his identity. The controversy escalated when President Trump joined the fray on Friday morning. “Reports are there was indeed at least one FBI representative implanted, for political purposes, into my campaign for president,” Trump tweeted, adding: “It took place very early on, and long before the phony Russia Hoax became a “hot” Fake News story. If true – all time biggest political scandal!”

In response, the DOJ and the FBI’s various media spokespeople did not deny the core accusation, but quibbled with the language (the FBI used an “informant,” not a “spy”), and then began using increasingly strident language to warn that exposing his name would jeopardize his life and those of others, and also put American national security at grave risk. On May 8, the Washington Post described the informant as “a top-secret intelligence source” and cited DOJ officials as arguing that disclosure of his name “could risk lives by potentially exposing the source, a U.S. citizen who has provided intelligence to the CIA and FBI.”

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Excellent from Zero Hedge. Things are going to change. Read the whole thing.

IG Horowitz Finds FBI, DOJ Broke Law In Clinton Probe (ZH)

As we reported on Thursday, a long-awaited report by the Department of Justice’s internal watchdog into the Hillary Clinton email investigation has moved into its final phase, as the DOJ notified multiple subjects mentioned in the document that they can privately review it by week’s end, and will have a “few days” to craft any response to criticism contained within the report, according to the Wall Street Journal. “Those invited to review the report were told they would have to sign nondisclosure agreements in order to read it, people familiar with the matter said. They are expected to have a few days to craft a response to any criticism in the report, which will then be incorporated in the final version to be released in coming weeks.” -WSJ

Now, journalist Paul Sperry reports that “IG Horowitz has found “reasonable grounds” for believing there has been a violation of federal criminal law in the FBI/DOJ’s handling of the Clinton investigation/s and has referred his findings of potential criminal misconduct to Huber for possible criminal prosecution.” Sperry also noted on Twitter that the FBI and DOJ had been targeting former National Security Advisor Mike Flynn before his December 2016 phone call with Russian Ambassador Sergey Kislyak, stemming from photos of Flynn at a December 2015 Moscow event with Vladimir Putin (and Jill Stein). As we reported in March, Attorney General Jeff Sessions appointed John Huber – Utah’s top federal prosecutor, to be paired with IG Horowitz to investigate the multitude of accusations of FBI misconduct surrounding the 2016 U.S. presidential election.

The announcement came one day after Inspector General Michael Horowitz confirmed that he will also be investigating allegations of FBI FISA abuse. While Huber’s appointment fell short of the second special counsel demanded by Congressional investigators and concerned citizens alike, his appointment and subsequent pairing with Horowitz is notable – as many have pointed out that the Inspector General is significantly limited in his abilities to investigate. Rep. Bob Goodlatte (R-VA) noted in March “the IG’s office does not have authority to compel witness interviews, including from past employees, so its investigation will be limited in scope in comparison to a Special Counsel investigation,” Sessions’ pairing of Horowitz with Huber keeps the investigation under the DOJ’s roof and out of the hands of an independent investigator.

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You’ll need to put meat on that bone.

China Agrees To Bolster Purchases Of US Goods (CNBC)

China and the U.S. have mutually agreed to “substantially reduce” the yawning trade imbalance between the two countries, a joint statement read on Saturday, in a move that will involve the Chinese boosting more of what they buy from American producers. Amid fears of a global trade war and rising tensions between the world’s two largest economies, both China and the U.S. have entered bilateral talks to bolster cooperation. In a statement issued by the White House, both parties forged a “consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China.”

Just a day ago, both countries were sharply at odds over a claim, made by White House Economic Advisor Larry Kudlow, that China would move to cut its trade deficit with the U.S. by $200 billion annually. That characterization was disputed by Chinese officials. Left unclear was exactly how much the Chinese would boost its purchases of U.S. goods. The Wall Street Journal reported on Saturday that China’s delegation rebuffed American demands to commit to an exact deficit reduction figure, and the two sides bickered all night over the statement’s language. The trade imbalance has long been a thorny and intractable topic in the Sino-US relationship.

Commerce Department data recently showed that imbalance between what China buys from the U.S. and vice versa hit a record in 2017 at over $375 billion. However, President Donald Trump has staked a resolution of the dispute on his personal relationship with Chinese President Xi Jinping. This week, Kudlow stated that China was “meeting many” Trump administration demands to cut its U.S. surplus. The statement released on Saturday struck a conciliatory tone. “To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services. This will help support growth and employment in the United States,” it read.

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John Laughland: “..the constitutional charter of the EU subordinates it to NATO, which the USA dominates legally and structurally ..”

With Iran Sanctions Trump Made Europeans Look Like The Fools They Are (RT)

First, the links between the EU and the US are not only very long-standing, they are also set in stone. NATO and the EU are in reality Siamese twins, two bodies born at the same time which are joined at the hip. The first European community was created with overt and covert US support in 1950 in order to militarize Western Europe and to prepare it to fight a land war against the Soviet Union; NATO acquired its integrated command structure a few months later and its Supreme Commander is always an American.

Today the two organizations are legally inseparable because the consolidated Treaty on European Union, in the form adopted at Lisbon in 2009, states that EU foreign policy “shall respect” the obligations of NATO member states and that it shall “be compatible” with NATO policy. In other words, the constitutional charter of the EU subordinates it to NATO, which the USA dominates legally and structurally. In such circumstances, European states can only liberate themselves from US hegemony, as Donald Tusk said they should, by leaving the EU. It is obvious that they are not prepared to do that.

Second, EU leaders have burned their own bridges with other potential partners, especially Russia. Angela Merkel traveled to Russia on Friday but only a few weeks ago more than half of the EU member states expelled scores of Russian diplomats and encouraged non-EU European states like Ukraine and Montenegro to do the same, in retaliation for the poisoning in Salisbury of Sergei and Julia Skripal.

How is Mrs Merkel going to convince Mr Putin to join her in keeping Iran’s nuclear program under control if she officially thinks that Mr Putin is guilty of secretly stockpiling and using chemical weapons for assassinations in the West? Only a few weeks later, in mid-April, Britain and France, together with the US, attacked Syria on the basis that its army had used chemical weapons at Douma with Russian backing. If they try to turn on the charm now in Sochi or in Moscow, do they really expect the Russians can take them seriously?

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It might yet work.

Europe, China, Russia Discussing New Deal For Iran (R.)

Diplomats from Europe, China and Russia are discussing a new accord to offer Iran financial aid to curb its ballistic missile development and meddling in the region, in the hope of salvaging its 2015 nuclear deal, a German newspaper reported on Sunday. The officials will meet in Vienna in the coming week under the leadership of senior European Union diplomat Helga Schmid to discuss next steps after the May 8 decision by U.S. President Donald Trump to pull out of a 2015 nuclear accord with Iran, the Welt am Sonntag newspaper said, citing senior EU sources. Germany, France, Britain, Russia and China would participate in the meeting, but the United States would not, it said. It was not immediately clear if Iran – which has resisted calls to curb its ballistic missile program in the past – would take part.

Under the 2015 deal, Iran agreed to curb its nuclear program in return for the lifting of most Western sanctions. One of the main complaints of the Trump administration was that the accord did not cover Iran’s missile program or its support for armed groups in the Middle East which the West considers terrorists. Concluding a new agreement that would maintain the nuclear provisions and curb ballistic missile development efforts and Tehran’s activities in the region could help convince Trump to lift sanctions against Iran, the paper said. “We have to get away from the name ‘Vienna nuclear agreement’ and add in a few additional elements. Only that will convince President Trump to agree and lift sanctions again,” the paper quoted a senior EU diplomat as saying.

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CIA, military, they all want in.

Now Facebook Serves NATO’s Agenda (McDonald)

Facebook has engaged a think tank funded by weapons manufacturers, branches of the US military and Middle-Eastern monarchies to safeguard the democratic process. It’s akin to hiring arsonists to run the fire brigade.
If Facebook truly wanted to “protect democracy and elections worldwide,” it would build a broad coalition of experts and activists from a wide and disparate range of the countries it serves. Instead, the American social media giant has outsourced the task to NATO’s propaganda wing. For the uninitiated, the Atlantic Council serves as the American-led alliance’s chief advocacy group. And its methods are rather simple: it grants stipends and faux academic titles to various activists that align with NATO’s agenda.

Thus, lobbyists become “fellows” and “experts,” while the enterprise constructs a neutral sheen, which is rarely (if ever) challenged by Western media outlets – often reliant on its employees for easy comment and free op-eds. While that has always been ethically questionable, Facebook’s latest move, given its effective monopoly position, is far more sinister. Because it is now tied to a “think tank” which has proposed terrorist attacks in Russia and has demanded Russian-funded news outlets be forced to register as “foreign agents” in the United States. Make no mistake: this is a dream scenario for NATO and those who depend on it for their livelihoods and status. Because the Atlantic Council is now perfectly positioned to be the tail wagging the Facebook dog in the information space.

On Thursday, the social network announced how it was “excited to launch a new partnership with the Atlantic Council, which has a stellar reputation looking at innovative solutions to hard problems.” It then added that “experts” from the Atlantic Council’s Digital Forensic Research Lab (DFRL) will liaise closely with Facebook’s “security, policy and product teams” to offer “real-time insights and updates on emerging threats and disinformation campaigns from around the world.” Now, this sort of talk would be fine if Facebook had assembled a diverse group, comprised of stakeholders from a wide range of democracies. But, by selecting a clearly biased actor to police “misinformation and foreign interference” during “elections and other highly sensitive moments” and also work to “help educate citizens as well as civil society,” Mark Zuckerberg’s team has essentially made their company a tool of the US military agenda.

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Wonder what the new government will do to this.

Hedge Funds Bet On Big Turnaround By Italy’s Mid-Tier Banks (R.)

Major hedge funds have picked Italian mid-tier banks as one of Europe’s few remaining recovery plays, betting they will shed billions of euros in bad loans. Europe’s 2010-2012 debt crisis left Italy’s banks with among the euro zone’s biggest hangovers, some 285 billion euros ($338 billion) of soured debt on their balance sheets. But when Credito Valtellinese sold new shares in a February rights issue for eight times its market value, they were lapped up by hedge funds in the United States and Britain. Now the mid-sized Italian bank counts Algebris Chief Investment Officer Davide Serra, Toscafund Asset Management and a hedge fund run by Eurizon Capital SGR among its biggest investors, Thomson Reuters data shows.

So far the bet seems to be paying off as Italy’s bank shares have risen 15% year-to-date against a fall of 1% for European banks, while Credito Valtellinese stock has risen 7.5% since the rights issue completion. Although the price-to-book ratio of Italian banks has improved since Rome announced a state bailout fund in 2016, it trades around 8% below the European sector average. Even the possible formation of a new government comprising two anti-establishment parties has not put off many of the funds contacted by Reuters, some of whom invested in Greek government bonds on a similar bet, who said the investment stacked up despite the vagaries of Italian politics.

Italy’s bad loans are a legacy of the recession that followed the debt crisis and with small and medium-sized businesses heavily dependent on bank lending, the soured loans have long been a drag on the third biggest euro zone economy. But pressure from regulators has begun to have an impact and the ratio of gross impaired loans to total loans has fallen to 14.5% from 17.3% a year ago, Bank of Italy data shows ..

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But move away from paying for the education.

Companies Are Now Paying Off Their Employees’ Student Loans (CNBC)

Student loan assistance, which started as a niche offering by a handful of companies, is finding its way into the mainstream menu of workplace benefits. “This is certainly emerging as a new and very important benefit,” said David Pratt, a professor at Albany Law School who studies employee benefits. This year, Fidelity began to offer businesses a way to contribute to their workers’ education debt. Since then, more than two dozen companies have signed up and it expects that number to double by the year’s finish. “This is going to grow rapidly over time,” said Asha Srikantiah, vice president of workplace emerging products at Fidelity. “We’re seeing so many more people who have debt and who are overwhelmed by that.”

Indeed, 7 in 10 college graduates have student loan debt. The average person leaves school $30,000 in arrears, while nearly 20% owe more than $100,000. Americans are now more burdened by education loans than they are by credit card or auto debt. [..] one of the factors likely contributing to the nation’s swelling student loan debt is that the number of employers helping their workers with their original education costs is shrinking. Company contributions to undergraduate education expenses dropped to 53% in 2017, from 61% in 2013, according to the Society for Human Resource Management. During that same time period, graduate school assistance at work also fell, to 50% from about 60%.

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100 trillion emails per year.

What Happens In An Internet Minute In 2018? (WEF)

In your everyday life, a minute might not seem like much. But when it comes to the vast scale of the internet, a minute of time goes much further than you ever could have imagined. That’s because the internet has a degree of scale that our linear human brains are unaccustomed to operating on. Today’s infographic is from Lori Lewis and Chadd Callahan of Cumulus Media, and it shows the activity taking place on various platforms such as Facebook or Google in each 60 second span. It really helps put an internet minute in perspective.

The numbers for these services are so enormous that they can only be shown using the 60 second time scale. Any bigger, and our brains can’t even process these massive quantities in any useful capacity. Here are just a few key numbers scaled to a monthly basis, for fun: • 42,033,600,000 Facebook logins • 159,840,000,000 Google searches • 1,641,600,000,000 WhatsApp messages sent • 8,078,400,000,000 emails sent On an annualized basis, the data becomes even more ridiculous, with something close to 100 trillion emails sent.

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The world’s biggest problems are solved in bars.

Drunk People Are Better at Creative Problem Solving (HBR)

Professor Andrew Jarosz of Mississippi State University and colleagues served vodka-cranberry cocktails to 20 male subjects until their blood alcohol levels neared legal intoxication and then gave each a series of word association problems to solve. Not only did those who imbibed give more correct answers than a sober control group performing the same task, but they also arrived at solutions more quickly. The conclusion: drunk people are better at creative problem solving.

JAROSZ: You often hear of great writers, artists, and composers who claim that alcohol enhanced their creativity, or people who say their ideas are better after a few drinks. We wanted to see if we could find evidence to back that up, and though this was a small experiment, we did. We gave participants 15 questions from a creative problem-solving assessment called the Remote Associates Test, or RAT—for example, “What word relates to these three: ‘duck,’ ‘dollar,’ ‘fold’?”; the answer to which is “bill.” We found that the tipsy people solved two to three more problems than folks who stayed sober. They also submitted their answers more quickly within the one-minute-per-question time limit, which is maybe even more surprising.

HBR: So alcohol doesn’t slow us down mentally after all? It still does, but we think that creative problem solving is one area in which a key effect of drunkenness—loss of focus—is a good thing. In an exercise like the RAT, it’s important not to fixate on your first thought, and alcohol seems to help that seemingly irrelevant stuff slip in. When we asked participants how much they relied on strategic thinking versus sudden insights to solve the problems, the intoxicated people reported solving via insight on 10% more problems than their sober counterparts did.

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May 192018
 
 May 19, 2018  Posted by at 8:51 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh Landscape with Couple Walking and Crescent Moon 1890

 

Train Crash Preview (Mauldin)
Bear Market Repo’s (Roberts)
Mushrooming Matrix of Scandals (Jim Kunstler)
Italy’s New Parallel Currency Plan (ZH)
Italy’s Populist Coalition Government Poses New Threat To Eurozone (Ind.)
Trump Drives Wedge Between Germany and France (Spiegel)
Putin Seeks Common Cause With Merkel Over Trump (R.)
EU Considers Iran Central Bank Transfers To Beat US Sanctions (R.)
Common Fungal Infections Becoming Incurable (Ind.)

 

 

Mauldin sees a Jubilee in your future.

Train Crash Preview (Mauldin)

Unemployment may approach the high teens by the end of the decade and GDP growth will be minimal at best. What do you call that condition? Certainly not business as usual. Long before that happens, the Federal Reserve will have engaged in massive quantitative easing. There’s a lot of misunderstanding about QE, so let me clarify something important. Quantitative easing is not about “printing money.” It is buying debt with excess bank reserves and keeping that debt on the Fed’s balance sheet as an asset. The Bank of Japan is an example. They did not put currency (yen) into the market. That’s how Japan still flirts with deflation and its currency has gotten stronger. QE is the opposite of printing money, though there is a relationship. That’s one reason central bankers like it.

As this recession unfolds, we will see the Fed and other developed world central banks abandon their plans to reverse QE programs. I think the Federal Reserve’s balance sheet assets could approach $20 trillion later in the next decade. Not a typo—I really mean $20 trillion, roughly quintuple what they did after 2008. They won’t need to worry about the deflation that usually accompanies such deep recessions (dare we say depression?) because the Treasury will be injecting lots of high-powered money into the economy via deficit spending. But since we have never been in this territory before, I must say this is only my guess.

If that’s what they do, will it work? No. The world simply has too much debt, much of it (perhaps most) unpayable. At some point, the major central banks of the world and their governments will do the unthinkable and agree to “reset” the debt. How? It doesn’t matter how, they just will. They’ll make the debt disappear via something like an Old Testament Jubilee. I know that’s stunning, but it’s really the only possible solution to the global debt problem. Pundits and economists will insist “it can’t be done” right up to the moment it happens—probably planned in secret and announced suddenly. Jaws will drop, and net lenders will lose.

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“A 50% decline wipes out 100% of the previous gain. ”

Bear Market Repo’s (Roberts)

An interesting email hit my desk this morning: “The stock market goes up 80% of the time, so why worry about the declines?” Like a “bull” – rising markets tend to be steady, strong and durable. Conversely, “bear” markets are fast “mauling”events that leave you deeply wounded at best and dead at worst. Yes, the majority of the time the markets are “bullish.” It’s the “math” that ultimately gets you during a “bear” market. The real devastation caused by “bear market” declines are generally misunderstood because they tend to be related in terms of percentages. For example: “Over the last 36-months, the market rose by 100%, but has recently dropped by 50%.”

See, nothing to worry as an investor would still be ahead by 50%, right? Nope. A 50% decline wipes out 100% of the previous gain. This is why looking at things in terms of percentages is so misleading. A better way to examine bull and bear markets is in terms of points gained or lost. Notice that in many cases going back to 1900, a large chunk of the previous gains were wiped out by the subsequent decline. (A function of valuations and mean reversions.) Recently Upfina posted a great chart on “Bear Market Repo’s” which illustrates this point very well. To wit:

“Many confuse bear markets with being black swan events that cannot be predicted, however, this is a faulty approach to investing. The economy, market, and nature itself move in cycles. Neither a bear market nor a bull market last forever and are actually the result of one another. That is to say, a bear market is the author of a bull market and a bull market is an author of a bear market. Low valuations lead to increased demand, and high valuations lead to less demand.”

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“I won’t be completely satisfied until the editors of The New York Times have to answer to charges of sedition in a court of law.”

Mushrooming Matrix of Scandals (Jim Kunstler)

[..] a great deal is already known about the misdeeds surrounding Hillary and her supporters, including Mr. Obama and his inner circle, and some of those incriminating particulars have been officially certified — for example, the firing of FBI Deputy Director Andrew McCabe on recommendations of the Agency’s own ethics committee, with overtones of criminal culpability. There is also little ambiguity left about the origin of the infamous Steele Dossier. It’s an established fact that it was bought-and-paid-for by the Democratic National Committee, which is to say the Hillary campaign, and that many of the dramatis personae involved lied about it under oath.

Many other suspicious loose ends remain to be tied. Those not driven insane by Trumpophobia are probably unsatisfied with the story of what Attorney General Loretta Lynch was doing, exactly, with former President Bill Clinton during that Phoenix airport tête-à-tête a few days before FBI Director Jim Comey exonerated Mr. Clinton’s wife in the email server “matter.” One can see where this tangled tale is tending: to the sacred chamber known as the grand jury. Probably several grand juries. That will lead to years of entertaining courtroom antics at the same time that the USA’s financial condition fatefully unravels.

That event might finally produce the effect that all the exertions of the so-called Deep State have failed to achieve so far: the discrediting of Donald Trump. Alas, the literal discrediting of the USA and its hallowed institutions — including the US dollar — may be a much more momentous thing than the fall of Trump. Personally, I won’t be completely satisfied until the editors of The New York Times have to answer to charges of sedition in a court of law.

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The EU will not like this.

Italy’s New Parallel Currency Plan (ZH)

In 2009/10, squeezed by insolvency, a lack of liquidity, and Federal limitations, the California government began to issue a ‘parallel currency’ in IOUs in lieu of payment on everything from supplies to contracted services and health-care costs, so it can actually preserve cash to make payments to its generous debtors. Now, eight years later, despite all the talk of ‘recovery’ and ‘global synchronous growth’ and ‘normalization’, Italy’s newly-formed coalition of The League and Five Star (which some have likened to Trumpian ‘nationalist’ Republicans merging with Bernie leftists) have put forward a plan that, among other things, includes the introduction of a parallel currency for Italy – ‘mini-BOTs’. The chart below, created by analysts at Nomura, shows where both stand on key policy issues, highlighting both their similarities and their differences as they prepare to govern together.

It is the Italian euroskepticism that dominates market concerns. Investors were initially spooked by a section where the nascent coalition floated plans to ask for €250 billion in debt forgiveness for the country. But, as Credit Suisse argued, “A markedly Eurosceptic prime minister… as well as concrete support for the introduction of a parallel currency (so-called Mini-BOTs’), would be major negatives, in our view.” So what are ‘Mini-BOTs’? In order to settle bills with suppliers or creditors the state might consider “instruments such as mini-government notes” which may also be used in turn to repay tax arrears, says the government program agreed by the two parties’ representatives and leaders. Earlier this year, outgoing Economy Minister Pier Carlo Padoan described the proposal as “a plan to circulate a disguised parallel currency”.

It is this section of the Five Star-League Accord that raised eyebrows… “Something must be done to resolve the problem of the public administration debts to taxpayers.” Claudio Borghi, the League’s economic chief who helped write the government plan, told la Verita newspaper that the new securities “could be spent anywhere, to buy anything”. Mike Shedlock previously noted that ‘Mini-Bots’ are a parallel currency based on future tax receipts, similar to the plans proposed by Yanis Varoufakis in Greece. The minibot was in the Lega’s election manifesto. Five Star is far less radical on the eurozone, having dropped the idea of a referendum, but also seeks changes that are incompatible with the the EU fiscal rules. A parallel currency stands a much greater chance of success in Italy, and it would go some way to solving the government’s fiscal dilemmas. The open question is whether it would constitute a slippery slope towards euro exit.

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Hard to find a headline on this, let alone an article, that does not mention ‘populist’.

Italy’s Populist Coalition Government Poses New Threat To Eurozone (Ind.)

Two Italian, populist, eurosceptic parties have reached an agreement to form a government of the eurozone’s third largest economy, setting up the single currency bloc for a possible new crisis. March’s national elections in Italy delivered a hung parliament, but also left the virulently anti-immigrant Lega Nord and the radical anti-establishment Five Star Movement as the two parties with the most seats. After a week of intense wrangling, the leaders of the two parties – which have sharply divergent outlooks in a host of areas – announced on Friday that they had agreed upon a common programme.

“This government contract binds two political forces that are and remain alternative, to respect and achieve what they promised to citizens,” said the Five Star leader Luigi Di Maio. Both parties ran on electoral platforms that threatened conflict with the eurozone and the EU, in areas ranging from busting national budget deficit rules, to clamping down on immigration to lifting sanctions on Russia. The two parties will stage informal ballots of their supporters on the programme over the next three days, meaning the coalition could take office early next week. Italian 10-year borrowing costs spiked above 7% in 2011 and 2012, threatening a fiscal crisis for Rome, as traders panicked that the the single currency could be on the verge of splitting apart.

They have since come down dramatically as the European Central Bank has been heavily buying up the country’s sovereign bonds as part of its money printing programme, with the country’s borrowing costs hitting a low of 1.051% in 2016. On Friday 10-year bond yields, which move in the opposite direction to prices, on Friday rose to 2.2%, the highest since October 2017, although the markets still seem generally unperturbed by the prospect of a Five Star-Lega Nord coalition. The common programme, published online on Friday, promises a universal basic income of €780 per person per month, which it says should be part funded by the EU. It wants “limited deficit spending” to boost GDP growth and a review of the EU’s fiscal rules. Sanctions on Russia should be lifted immediately, its says.

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Macron as Napoleon.

Trump Drives Wedge Between Germany and France (Spiegel)

The French president has recognized the opportunity that opposition to the U.S. sanctions presents. It provides him with a perfect chance to prove to the French people why they really need Europe. He believes that only Europe can stand up to the deal-breaking Americans. In Berlin, meanwhile, the focus is on “realpolitik” — the notion that there isn’t much Europe can do to oppose Trump. Officials in the German capital believe that the U.S. president will play hardball when it comes to Iran. What really appears to be the problem, however, is a lack of political will. When push comes to shove, the Iran deal is likely less important to Altmaier than the dispute over the Trump administration’s threat of punitive tariffs on steel and aluminum imports from Europe.

He wants to prevent the dispute from boiling into a full-fledged trade war that would spread to the heart of the German economy — the automobile industry. As a major exporter, America’s punitive tariffs would hit Germany much harder than they would France. “The U.S. can’t be the world’s economic police,” French Economy Minister Bruno Le Maire said earlier this month. Le Maire and French Foreign Minister Jean-Yves Le Drian called a demonstrative joint press conference inside the monumental Finance and Economics Ministry in Paris looking like they were ready go toe-to-toe with Washington. Le Drian spoke of “our determination to fight to ensure that the decisions taken by the United States don’t have any repercussions on French businesses.” Le Maire added: “All of Europe is faced with the challenge of asserting its economic sovereignty.”

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My guess is the pipeline will be built.

Putin Seeks Common Cause With Merkel Over Trump (R.)

Russian President Vladimir Putin said at a meeting with German Chancellor Angela Merkel on Friday that he would stand up to any attempts by U.S. President Donald Trump to block a Russian-German gas pipeline project. Berlin and Moscow have been at loggerheads since Russia’s annexation of Crimea four years ago, but they share a common interest in the Nordstream 2 pipeline project, which will allow Russia to export more natural gas to northern Europe. A U.S. government official this week said Washington had concerns about the project, and that companies involved in Russian pipeline projects faced a higher risk of being hit with U.S. sanctions.

“Donald is not just the U.S. president, he’s also a good, tough entrepreneur,” Putin said at a news conference, alongside Merkel, after the two leaders had talks in the Russian Black Sea resort of Sochi. “He’s promoting the interests of his business, to ensure the sales of liquefied natural gas on the European market,” Putin said. “I understand the U.S. president. He’s defending the interests of his business, he wants to push his product on the European market. But it depends on us, how we build our relations with our partners, it will depend on our partners in Europe.” “We believe it (the pipeline) is beneficial for us, we will fight for it.”

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A bridge too far for Juncker?

EU Considers Iran Central Bank Transfers To Beat US Sanctions (R.)

The European Commission is proposing that EU governments make direct money transfers to Iran’s central bank to avoid U.S. penalties, an EU official said, in what would be the most forthright challenge to Washington’s newly reimposed sanctions. The step, which would seek to bypass the U.S. financial system, would allow European companies to repay Iran for oil exports and repatriate Iranian funds in Europe, a senior EU official said, although the details were still to be worked out. The European Union, once Iran’s biggest oil importer, is determined to save the nuclear accord, that U.S. President Donald Trump abandoned on May 8, by keeping money flowing to Tehran as long as the Islamic Republic complies with the 2015 deal to prevent it from developing an atomic weapon.

“Commission President Jean-Claude Juncker has proposed this to member states. We now need to work out how we can facilitate oil payments and repatriate Iranian funds in the European Union to Iran’s central bank,” said the EU official, who is directly involved in the discussions. The U.S. Treasury announced on Tuesday more sanctions on officials of the Iranian central bank, including Governor Valiollah Seif. But the EU official said the bloc believes that does not sanction the central bank itself.

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We use so many chemicals so much, we’ll end up eradicating ourselves. No caution, no precautionary principle.

Common Fungal Infections Becoming Incurable (Ind.)

Common fungal infections are “becoming incurable” with global mortality exceeding that for malaria or breast cancer because of drug-resistant strains which “terrify” doctors and threaten the food chain, a new report has warned. Writing in a special “resistance” edition of the journal Science, researchers from Imperial College London and Exeter University have shown how crops, animals and people are all threatened by nearly omnipresent fungi. “Fungal infections on human health are currently spiralling, and the global mortality for fungal diseases now exceeds that for malaria or breast cancer,” the report notes.

While the problem of bacteria becoming resistant to commonly used antibiotics has been widely reported on, and likened to the “apocalypse” by medical leaders, the risks of disease-causing fungi have received far less recognition. Fungicides share a problem with antibiotics in that the organisms they aim to kill are becoming resistant to treatments faster than they can be developed, and there are growing numbers of people vulnerable to infection. “We’ve got increasing numbers of immunosuppressed patients, that’s what fungi love to parasitise,” Matthew Fisher, professor of fungal disease epidemiology at Imperial, told The Independent.

“Half a million people a year probably die from fungal meningitis in Africa, which wouldn’t affect them if they didn’t have Aids. “Similarly in the UK we have transplant patients as well, as soon as you whack them on immunosuppressants they start coming down with fungal infections.” “Transplant doctors are absolutely terrified of these fungal infections,” he added, and the same issues arise in cancer patients, or people whose immune systems are destroyed by disease or age – leaving them unable to fight off infection on their own.

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May 112018
 
 May 11, 2018  Posted by at 8:33 am Finance Tagged with: , , , , , , , , , , ,  


Pablo Picasso La lecture 1932

 

‘Everything’ in Argentina is 20% to 30% Overvalued – Lacalle (BI)
About That FBI ‘Source’ (Strassel)
The Art of Breaking a Deal (Escobar)
China Walks A Fine Line In Iran (Dorsey)
Capitalism Is Collectivist (CA)
Karl Marx Sacrificed Logic On The Altar Of His Desire For Revolution (Keen)
Theresa May Turns Brexit Into Role-Reversal Game (G.)
Third of British Homeowners Priced Out Of Their Own Property (Ind.)
Greece Sees Spike In Waivers Of Inheritance (K.)
The Answer To Life, The Universe And Everything Might Be 73. Or 67 (G.)
Palm Oil Producers Are Wiping Out Orangutans (G.)

 

 

“Obviously the economy will shrink, but it shrinks to reality..”

‘Everything’ in Argentina is 20% to 30% Overvalued – Lacalle (BI)

“Everything” in Argentina is 20% to 30% overvalued, making a financial crisis inevitable, Daniel Lacalle, an economist and fund manager, told Business Insider. A financial crisis has been building in Argentina for years but was hidden by an inflationary bubble which politicians refused to address because they wanted to “avoid the pain,” said Lacalle, chief economist at Tressis SV and a fund manager at Adriza International Opportunities. “Argentina was an accident waiting to happen… Right now GDP [in Argentina] is a fabrication… a complete invention. Obviously the economy will shrink, but it shrinks to reality. It needs to face reality,” he said.

The Argentine peso has been struggling against an increasingly strong dollar. Two interest rate hikes in 24 hours failed to prevent the fall of the currency’s value and the country is seeking billions from the International Monetary Fund, according to reports. The news shocked Argentines who are still traumatized by the last IMF loan which coincided with austerity and the financial crisis in 2001 that caused social and economic chaos. The next crisis could already be underway. “The crisis is already happening. You have seen prices go through the roof, discontent, the economy is not growing as it was supposed to grow,” said Lacalle.

He added that the problems have been building for years but were disguised by a “massive bubble” which came from an “extreme inflow of cheap dollars” during the end of QE and helpful “tailwind” conditions. The tailwind has now reversed thanks to an increasingly strong dollar and the prospect of an interest rate rise from the US Federal Reserve. The result is a crisis which interest rate rises have failed to stave off. It was disguised by politicians who wanted to “avoid the pain of facing the problems, so they tried to indebt their way out of it,” Lacalle said.

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Planting a spy in a political campaign may cause a problem or two.

About That FBI ‘Source’ (Strassel)

Did the bureau engage in outright spying against the 2016 Trump campaign? The Department of Justice lost its latest battle with Congress Thursday when it allowed House Intelligence Committee members to view classified documents about a top-secret intelligence source that was part of the FBI’s investigation of the Trump campaign. Even without official confirmation of that source’s name, the news so far holds some stunning implications. Among them is that the Justice Department and Federal Bureau of Investigation outright hid critical information from a congressional investigation. In a Thursday press conference, Speaker Paul Ryan bluntly noted that Intelligence Chairman Devin Nunes’s request for details on this secret source was “wholly appropriate,” “completely within the scope” of the committee’s long-running FBI investigation, and “something that probably should have been answered a while ago.”

Translation: The department knew full well it should have turned this material over to congressional investigators last year, but instead deliberately concealed it. House investigators nonetheless sniffed out a name, and Mr. Nunes in recent weeks issued a letter and a subpoena demanding more details. Deputy Attorney General Rod Rosenstein’s response was to double down—accusing the House of “extortion” and delivering a speech in which he claimed that “declining to open the FBI’s files to review” is a constitutional “duty.” Justice asked the White House to back its stonewall. And it even began spinning that daddy of all superspook arguments—that revealing any detail about this particular asset could result in “loss of human lives.” This is desperation, and it strongly suggests that whatever is in these files is going to prove very uncomfortable to the FBI.

The bureau already has some explaining to do. Thanks to the Washington Post’s unnamed law-enforcement leakers, we know Mr. Nunes’s request deals with a “top secret intelligence source” of the FBI and CIA, who is a U.S. citizen and who was involved in the Russia collusion probe. When government agencies refer to sources, they mean people who appear to be average citizens but use their profession or contacts to spy for the agency. Ergo, we might take this to mean that the FBI secretly had a person on the payroll who used his or her non-FBI credentials to interact in some capacity with the Trump campaign. This would amount to spying, and it is hugely disconcerting.

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“Trump has reshuffled the Grand Chessboard. Persians, though, happen to know a thing or two about chess.”

The Art of Breaking a Deal (Escobar)

To cut to the chase, the US decision to leave the JCPOA will not open the path to an Iranian nuclear weapon. Supreme Leader Ayatollah Khamenei, who has the last word, repeatedly stressed these are un-Islamic. It will not open the path toward regime change. On the contrary, Iran hardliners, clerical and otherwise, are already capitalizing on their interpretation from the beginning – Washington cannot be trusted. And it will not open the path toward all-out war. It’s no secret every Pentagon war-gaming exercise against Iran turned out nightmarish. This included the fact that the Gulf Cooperation Council, or GCC, could be put out of the oil business within hours, with dire consequences for the global economy.

President Hassan Rouhani, in his cool, calm, collected response, emphasized Iran will remain committed to the JCPOA. Immediately before the announcement, he had already said: “It is possible that we will face some problems for two or three months, but we will pass through this.” Responding to Trump, Rouhani stressed: “From now on, this is an agreement between Iran and five countries … from now on the P5+1 has lost its 1… we have to wait and see how the others react. “If we come to the conclusion that with cooperation with the five countries we can keep what we wanted despite Israeli and American efforts, Barjam [the Iranian description of the JCPOA] can survive.”

Clearly, a titanic internal struggle is already underway, revolving around whether the Rouhani administration – which is actively working to diversify the economy – will be able to face the onslaught by the hard-liners. They have always characterized the JCPOA as a betrayal of Iran’s national interest. [..] So, Trump has reshuffled the Grand Chessboard. Persians, though, happen to know a thing or two about chess.

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China will not turn its back on Iran. Neither will Russia.

China Walks A Fine Line In Iran (Dorsey)

Chinese businessman Sheng Kuan Li didn’t worry about sanctions when he decided in 2010 to invest $200 million in a steel mill in Iran that started producing ingots and billet within months of the lifting of punitive measures against the Islamic republic as part of 2015 international nuclear agreement with Iran. With no operations in the United States, Mr. Li was not concerned about being targeted by the US Treasury. Mr. Li, moreover, circumvented financial restrictions on Iran by funding his investment through what he called a “private transfer,” a money swap that was based on trust and avoided regular banking channels. In doing so, Mr. Li was following standard Chinese practice of evading the sanctions regime by using alternative routes or establishing alternative institutions that were in effect immune.

To be able to continue to purchase Iranian oil while sanctions were in place, China, for example, established the Bank of Kunlun to handle Chinese payments. The Chinese experience in circumventing the earlier sanctions will come in handy with Beijing rejecting US President Donald J. Trump’s renewed effort to isolate Iran and force it to make further concessions on its nuclear and ballistic missiles programs as well as the Islamic republic’s regional role in the Middle East by walking away from the 2015 agreement and reintroducing punitive economic measures. Chinese foreign ministry spokesman Geng Shuang said in response to Mr. Trump’s announcement that the People’s Republic was committed to the deal and would “maintain communication with all parties and continue to protect and execute the agreement fully.”

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How can you maintain individualism rules when you see how people interact with social media?

Capitalism Is Collectivist (CA)

One of the central tenets of late-20th century consumer capitalism is the sanctity of the individual. Margaret Thatcher declared that “There’s no such thing as society, there are individual men and women.” Ayn Rand’s philosophy glamorized anti-social übermenschen who stand against everyone else. Friedrich von Hayek thought mild social welfare policy could be compared to Nazi fascism because they are both “collectivist.” Libertarians promote “individual freedom” with a level of brand discipline that would make Apple proud.

It’s easy to swallow this idea at face value, agreeing that market fundamentalists really do value the inviolability of the individual, while the left believes instead in the collective and the community. After all, market zealots don’t merely try to dismantle policies that benefit the common good. They attack the idea that there can be a common good to begin with. Because leftists talk about social welfare, and supporters of markets put the Individual at the center of their framework, one can forgive those who are seduced by this rhetoric. But it is only rhetoric. In fact, today’s economy is a collectivist enterprise, insofar as collectivism elevates the good of the aggregate and the organization over that of individual human beings.

Get past the well-crafted agitprop, and we see that corporate capitalism is all about subsuming the particular will of an individual to that of the institution. The institutions vary: a monopolistic corporation, a nonprofit charity, an arm of government, the police. But in each, the individual is actually helpless and powerless, with the needs, wants, and will of the larger entity taking priority. Amazon workers work for Amazon: They don’t set the rules of their own workplace, that’s done from above. They don’t own the company, they don’t get to say what it does. And Amazon in particular is a pioneer in sacrificing the sanctity (and dignity) of the individual to the company. The employees serve the corporation, rather than the other way around.

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Steve on Marx’s crucial mistake.

Karl Marx Sacrificed Logic On The Altar Of His Desire For Revolution (Keen)

With both use-value and exchange-value quantitative, there will be a difference between these two “intrinsically incommensurable magnitudes” (Capital I. Ch. 19) that is the source of surplus. Marx’s best statement of this in relation to labor was in Capital I itself: “The daily cost of maintaining it [Labour], and its daily expenditure in work, are two totally different things. The former determines the exchange-value of the labour power, the latter is its use-value. The fact that half a [working] day’s labour is necessary to keep the labourer alive during 24 hours, does not in any way prevent him from working a whole day… The seller of labour power, like the seller of any other commodity, realises its exchange value, and parts with its use-value.”

He thus had a far more satisfying, positive proof as to why Labour was a source of surplus. But was it the only source? What about machinery as well? In the Grundrisse, when he was still enthralled by his new methodology, he applied it correctly to machinery: “It also has to be postulated (which was not done above) that the use-value of the machine [is] significantly greater than its value; i.e. that its devaluation in the service of production is not proportional to its increasing effect on production.” But Gadzooks! This means that machinery can be a source of surplus as well. And if so, then an increasing “organic composition of capital” has no implications for the levels of surplus and profit: they could go up just as well as go down when production became less labour-intensive.

The “Tendency for the Rate of Profit to Fall” disappears. Socialism is no longer inevitable. Marx’s reaction to this shock discovery was to employ verbal gymnastics until such a time that he could fool himself that he had reconciled the two approaches. He then set about fooling everyone else, and finally declared emphatically—and falsely—that: “However useful a given kind of raw material, or a machine, or other means of production may be, though it may cost £150… yet it cannot, under any circumstances, add to the value of the product more than £150”. With this false statement swallowed by Marx’s followers, the belief in the inevitability of socialism continued. Accidents of history led to his Russia’s Bolshevik followers attempting to impose socialism on feudal Russia, and the rest is a very unfortunate history.

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What despair looks like.

Theresa May Turns Brexit Into Role-Reversal Game (G.)

Theresa May has ordered Brexiters to study her “customs partnership” model, and remainers to go over the leavers’ “maximum facilitation” proposal, in a bid to thrash out a compromise between the two sides. Boris Johnson and Philip Hammond – apparently regarded as the “ultras” of leave and remain, respectively – have been sitting out of the cabinet working groups. May’s “customs partnership” will be examined by Brexiters Liam Fox and Michael Gove, teamed with remainer and Cabinet Office minister David Lidington. “Max-fac” will be workshopped by remainers Greg Clark, the business secretary, and Karen Bradley, the Northern Ireland secretary, along with Brexit secretary David Davis, a leaver.

The ministers have until Tuesday to examine their options, but entrenched positions mean a breakthrough is not expected. One cabinet minister told the Guardian it is partly about May wanting to “kick any decisions down the road for as long as she can”. It certainly looks that way, after Andrea Leadsom, the leader of the Commons, announced government business for the next fortnight – minus the EU withdrawal bill, which needs to come back from the Lords but is peppered with amendments that have enraged Brexiters. Labour accused the government of “subverting democracy” with the delay.

Sir John Major, meanwhile, has hit out at Brexiters’ failure to grasp that leaving the customs union would mean a hard border in Ireland and damaging consequences for peace there. The Conservative former PM, speaking at the Irish embassy in London, said without a customs union, border checks would be required by law, especially for food, animals and animal feed. “If so, a physical border seems unavoidable,” he said.

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How bubbles implode. Slowly at first.

Third of British Homeowners Priced Out Of Their Own Property (Ind.)

More than one in three UK homeowners wouldn’t be able to afford their home if it were listed on the property market at today’s value says new research, as the latest data confirms prices stutter upwards. The Halifax House Price Index, a leading measure of the state of the property market, this week released figures showing prices in the last three months were 2.2% higher than in the same period last year, with the average property now coming in at £220,962. The figures support separate findings that suggest that a significant proportion of those who have owned their own home even for a few years would already be priced out of the market if they were to attempt the purchase again, despite historically low mortgage interest rates.

More than one in three of the 3,000 property owners surveyed by MyJobQuote said their home’s value had increased to the point that they would be unable to afford it at the current value – an average of £50,000 more than their original purchase price – or that changes to their financial circumstances would now make it impossible. However, the Halifax data suggests that a downward price trend that had been contained in geographical pockets until recently is becoming more widespread. While the annual figures still show a reasonable increase, month by month, prices are currently dropping nationally by an average of more than 3%. At a time when the property market traditionally enters a stronger summer buying season, the latest data, which follows a 1.6% increase in average prices in March, suggests a rocky state of affairs.

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Properties become unused and useless. There is no reason for this to happen. Scorched Earth.

Greece Sees Spike In Waivers Of Inheritance (K.)

The exhaustion of Greeks’ taxpaying capacity and the difficulties in meeting day-to-day expenses are leading to more and more citizens waiving inheritances, especially when they concern real estate assets. Legal sources say that the phenomenon no longer only concerns people waiving inheritances due to the debts of the deceased (which they would have to pay), but has spread to those wishing to avoid the payment of the inheritance tax and the Single Property Tax (ENFIA), as well as expenses related to property maintenance. According to the latest data available, in 2017 such waivers amounted to 130,000, while the definitive data will be issued soon, according to Justice Ministry sources.

That figure is quite impressive, given that it is almost three times the number of inheritance waivers in 2016 (54,422), and is up by 333 percent on the 2013 figure. This means that the state takes ownership of properties that cannot be utilized, as the fate of those assets remains unknown given that the state’s auction programs are fairly limited. For instance, in the first half of this month, the state will auction just three properties, after 15 assets went under the hammer over the previous fortnight but without any success. It also remains unknown how many assets have come under state ownership as a result of confiscations and property concessions.

What is certain is that all these properties are assets that will drop in value, which will make it even more difficult to find buyers for them in the future. Every beneficiary has the right to waive an inheritance, except for the state. The deadline for waiving an inheritance is four months after the day a will is published. If there is no will, the four-month period starts on the day the person dies. However, if the deceased lived abroad or the heir has their main residence in another country, then the deadline for waiving an inheritance extends to 12 months. The acceptance or waiver has to concern the entire inheritance, not parts of it.

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“..the universe is getting bigger quicker than it should be..”

The Answer To Life, The Universe And Everything Might Be 73. Or 67 (G.)

A crisis of cosmic proportions is brewing: the universe is expanding 9% faster than it ought to be and scientists are not sure why. The latest, most precise, estimate of the universe’s current rate of expansion – a value known as the Hubble constant – comes from , which is conducting the most detailed ever three-dimensional survey of the Milky Way. The data has allowed the rate of expansion to be pinned down to a supposed accuracy of a couple of percent. However, this newest estimate stands in stark contradiction with an independent measure of the Hubble constant based on observations of ancient light that was released shortly after the Big Bang. In short, the universe is getting bigger quicker than it should be.

The mismatch is significant and problematic because the Hubble constant is widely regarded as the most fundamental number in cosmology. “The fact the universe is expanding is really one of the most powerful ways we have to determine the composition of the universe, the age of the universe and the fate of the universe,” said Professor Adam Riess, at the Space Telescope Science Institute in Baltimore, Maryland, who led the latest analysis. “The Hubble constant quantifies all that into one number.” In an expanding universe, the further away a star or galaxy is, the quicker it is receding. Hubble’s constant – proposed by Edwin Hubble in the 1920s – reveals by how much.

So one approach to measuring it is by observing the redshifts of bright supernovae, whose light is stretched as the very space it is travelling through expands. A challenge, though, is pinpointing the exact distance of these stars. [..] The new data puts the Hubble constant at 73, which translates to galaxies moving away from us 73km per second faster for each additional megaparsec of distance between us and them (a megaparsec is about 3.3m light-years). However, a separate estimate of Hubble comes from observations of the Cosmic Microwave Background, relic radiation that allows scientists to calculate how quickly the universe was expanding 300,000 years after the big bang.

“The cosmic microwave background is the light that is the furthest away from us that we can see,” said Riess. “It’s been travelling for 13.7bn years… and it’s telling us how fast the universe was expanding when the universe was a baby.” Scientists then use the cosmic equivalent of a child growth chart (a computational model that roughly describes the age and contents of the universe and the laws of physics) to predict how fast the universe should be expanding today. This gives a Hubble value of 67.

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Mass extinction and mass insanity.

Palm Oil Producers Are Wiping Out Orangutans (G.)

These extraordinary creatures are our closest relatives, sharing 97% of our DNA. Their similarity to us is astonishing. They are intelligent, inquisitive, smile and show empathy. They even laugh when tickled, like us, when most other animals have evolved to be ticklish only in an itchy, irritating sort of way as a protective reflex. Encountering orangutans in the wild is like nothing else I’ve experienced. They once thrived in Indonesia’s lush, green rainforests but over the last 50 years they have been forced from their home and killed. In the last 16 years alone, 100,000 Bornean orangutans have been lost. All three species – Bornean, Sumatran and the Tapanuli, a species discovered only last year – are now on the critically endangered list.

The reason? It started in the 1960s as forests were logged for timber, but now it’s palm oil. Global demand for palm oil has increased six-fold since 1990. It’s in half of all packaged products on supermarket shelves and to avoid it completely would be incredibly tricky. Although palm oil in food can no longer be described simply as vegetable oil and must be clearly labelled (thanks to an EU directive in 2014), there is no such law for products such as soap, shampoo and other cosmetics. The supermarket Iceland’s decision to ditch palm oil from all of its own-brand products was, it says, a response to the palm oil industry’s catastrophic failure to halt deforestation and deal with the problem.

Even the Roundtable on Sustainable Palm Oil (RSPO) – the industry body charged with ensuring registered companies trade only in oil that has not come from deforestation – is failing spectacularly. Just over a week ago, Greenpeace exposed massive rainforest destruction in Papua allegedly caused by palm oil companies that are subsidiaries of a current RSPO member. Buying from them were big multinationals including Unilever, Nestlé, Pepsico and Mars. The companies concerned have responded by saying they are taking Greenpeace’s claims seriously and taking appropriate action. But if Greenpeace’s assertions are correct, no company can claim the palm oil it uses is 100% “sustainable”.

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May 102018
 
 May 10, 2018  Posted by at 6:38 pm Finance Tagged with: , , , , , , , ,  


James McNeill Whistler Nocturne in Black and Gold, the Falling Rocket 1875

 

 

Dr. D again. And wait, that deal was never even -legally- signed?

 

 

Dr. D: I know the U.S. hasn’t followed the law in 100 years, but let’s review the Iran Deal. A “Deal” with a foreign nation is supposed to be, for 200 years has been, and legally must be, a “Treaty”. Treaties under U.S. law are unique, as they are NOT to be brokered by the Congress and are a point of contention if Congressmen get involved, as you can imagine special deals and/or information leaks could damage the negotiating position.

This is one of the few things Congress doesn’t do. However, the deal, brokered by the President, is presented to the Senate and only the Senate, which is supposed to be the older, more stable house, and once upon a time when Americans were adults and the Senate was chosen by the State governments, this was true. Even with a Democratic election of Senators representing the people and not the States, (which is what the House is supposed to be) it’s the best we have.

So when Obama arranged the Iran “Deal”, he knew and did so against 220 years of history exclusively BECAUSE he knew the Senate would never approve an honest-to-God, legal “Treaty.” Worse, it was part of the reason the “Deal” was effectively secret, not overseen by anyone, and even John Kerry when asked what was in it said, “I don’t know.” You don’t know??? You’re the Secretary of State presumably brokering the deal. Who’s above you in the food chain that you’re not allowed to know? That was an interesting disclosure that the media – of course – never followed up on.

He also said, as the deal was never signed, it was “not legally binding.” Okay, yes, if the Senate does not approve it, making it therefore a “Treaty”, then it’s just a gentleman’s handshake verbal agreement and not binding. So…Iran therefore did NOT agree to stop weapons development, and certainly as proven did not agree to continue to use the U.S. petrodollar.

On the other hand, Obama DID send pallets of cash on 3 jumbo jets, and the U.S. prisoners were not released until those planes touched down. So Iran can legally reverse their weapons development, while you’re not going to get that cash back. That sounds like a terrible, terrible deal, a no-deal deal no one read and no one signed. And they’re upset this is cancelled? Why? What’s in it? Can we finally know now? Nope.

My personal theory is that since General Wesley Clark’s reveal that they planned 7 MENA wars, and named them in order back in 2001 and were to culminate in attacking Iran by 2013, they were years behind schedule on this world-domination murder-death play. In order to keep Iran in a holding pattern, still lacking viable nuclear weapons, they had to pay them billions and billions. Iran for their part knew they would win Syria anyway, so they were happy to play along and get a few billion dollars. And a lot of those billions Obama “gave” to Iran were Iran’s money anyway.

What? Yes, the U.S. confiscated and “froze” (actually stole and used) Iran’s western assets in 1979, and by law Iran was almost certainly owed this money plus interest. Then if I’m any judge of world politics, the negotiating parties — U.S., France, Germany, Iran, took these pallets of unmarked bills and used them for slush fund payouts among the various power factions, and about $50 ended up with the people.

This proved to be true, as Iran immediately ignored the U.S., moved into Syria, dumped the dollar, traded in Euros, and arguably continued weapons (missile) development. …But like I said, the important part got through: free cash payoffs, untraceable, back to the “right” people: the “Deep States” of the U.S., Iran, France, etc. You can see this in Macron and Merkel’s top priority and panic to force this deal to continue. And why? Isn’t that money gone? A one-time thing? Hmmm.

Back to the present, the nation is all agog about “ending” the Iran deal. You mean the deal we didn’t have? The one that was neither signed nor (generally) followed? How can Trump end it? He can end it because it was never a deal, it was a side-agreement by a specific President, THAT’S WHY WE HAVE TREATIES. So that they are in law, hard to negate, and much more stable. In fact, the Senate told Iran this outright: “if you sign this, you know that as soon as Obama is out of office, we’ll just reverse it.”

That wasn’t exactly a threat, it was simply a fact. If you don’t enlist the Senate and 220 year-old legal processes, you effectively have nothing but a wink and a smile. Then, yes, it is easy to undo as the wind blows. Now why the Senate and Congress didn’t stop this wink, withhold funds, or impeach the President for subverting law and Congressional authority is another matter: the only thing here is that there was no legal agreement, widely reported by all parties in the public media, so what is Trump really cancelling? Something that never existed except in the news?

We have law for a reason and this is what happens when you don’t follow it, but after not following it for 100 or more years, everyone forgets. This ain’t rocket science, folks. You want an Iran deal? Pass one.

 

 

May 102018
 
 May 10, 2018  Posted by at 9:24 am Finance Tagged with: , , , , , , , , , , , ,  


Paul Gauguin Road in Tahiti 1891

 

Beware of the Coming Economic Debt Bomb (Tanous)
Argentina Looks To Be Headed For Another Economic Storm (CNBC)
At Last, A Reason To Celebrate: House Prices Are Falling (G.)
RBS Reaches $4.9 Billion Deal To Settle US Mortgage Bond Probe (R.)
The Deep State First (Stockman)
Turkey Detains Dozens Of Air Force Personnel Over Gulen Links (R.)
Did Putin Green-Light Tonight’s Massive Israeli Strikes On Syria? (ZH)
Trump Welcomes Home Three Americans Released By North Korea (G.)
Democrats’ Lead Is Slipping In Generic Ballot Poll (Hill)
Is Capitalism a Threat to Democracy?
Bullshit Jobs: Why They Exist And Why You Might Have One (Vox)

 

 

“..over half of all personal income taxes will be required just to service the national debt.”

Beware of the Coming Economic Debt Bomb (Tanous)

In 2009, the year President Obama took office, the national debt held by the public was $7.27 trillion. At the end of fiscal 2016, that had soared to approximately $14 trillion. Given that our marketable debt doubled from 2009 to 2016, it’s remarkable that the annual cost of the interest on the debt rose far less, from $185 billion to $223 billion. The long march of rising rates that began recently is a dramatic reversal after nearly 40-years of declining interest rates. The new trend portends a return to more historic rates. You may be asking: what are the historic rates? We calculate that the average rate paid on the federal debt over the last 30 years was close to 5%. The Congressional Budget Office (CBO) has just raised its estimate that debt held by the public will rise to $17.8 trillion in 2020.

Some economists believe that the figure will be much higher. For our exercise though, let’s stick with the CBO estimate. We are postulating that the interest rate on our national debt may return to the long-term, 30-year average of 5%. Note, too, that Treasury debt rolls over every 3 to 4 years so the maturing bonds at low interest rates will be refinanced at the then current higher rates. Let’s do the math together. Take the CBO estimate of debt held by the public of $17.8 trillion in 2020, a 5% average interest on that amount comes to annual debt service of $891 billion, an unfathomable amount. (In 2017, interest on the debt held by the public was $458.5 billion, itself a scary number.)

In its current report, the CBO added: “It also reflects significant growth in interest costs, which are projected to grow more quickly than any other major component of the budget.” Here’s the danger: • According to CBO, individual income taxes produced $1.6 trillion in revenue in fiscal year 2017. • Under this 2020 scenario, over half of all personal income taxes will be required just to service the national debt. • Annual debt service in 2020 will exceed our newly increased defense budget of $700 billion in FY 2018. • Annual debt service would exceed our Social Security obligations.

Read more …

[The IMF] “..admitted shortly after the intervention that its support to keep the peso’s peg against the dollar prolonged the crisis in the country.”

Argentina Looks To Be Headed For Another Economic Storm (CNBC)

Argentina has started talks with the IMF seeking financial rescue once again, as inflation soars and the currency sinks. Buenos Aires looks to be going through another economic nightmare, with prices rising rapidly while the Argentine peso drops. The central bank announced last week another increase in rates to 40% — as the 12-month inflation rate hit 25.4%, above its 15% target. At the same time, since the start of the year, the peso is down by more than 20% against the U.S. dollar. [..] Asking for help from the Fund is a contentious issue for the country. Back in 2001, Argentina defaulted on $132 billion of foreign debt. The Washington-based institution, which was helping the country at the time, admitted shortly after the intervention that its support to keep the peso’s peg against the dollar prolonged the crisis in the country.

Following Macri’s announcement Tuesday, several people protested against a new IMF intervention, still traumatized by the economic collapse at the start of the century, Reuters reported. “The IMF has a terrible reputation among Argentinians, and so this is a big political gamble for the government,” Fiona Mackie, regional director for Latin America at the Economist Intelligence Unit, told CNBC via email. “At present, though, (the government) clearly sees the need to regain the confidence of markets as more pressing, and is hoping that its program of adjustment gets back on track in time for the presidential election late next year,” she added.

Read more …

“The Germans are right. Ever-rising house prices are a curse. They are bad for social mobility. They are bad for young people. And they are bad for the economy. ”

At Last, A Reason To Celebrate: House Prices Are Falling (G.)

The housing market is dead. Britain’s biggest mortgage lender, the Halifax, says that prices fell in April by 3.1%, the biggest monthly drop in almost eight years. Newspapers bury this disastrous news way back in their editions for fear that it will spread gloom and despondency. We need to wean ourselves off this way of thinking. Falling house prices are not disastrous, and only in a country with such a perverted relationship with bricks and mortar could they be seen as such. In Germany, they scratch their heads in bemusement when they hear Britons boast of how the value of their house has soared. The Germans are right. Ever-rising house prices are a curse. They are bad for social mobility. They are bad for young people. And they are bad for the economy.

The billions that are spent pushing up property prices could be more productively invested elsewhere. Imagine for a second that the next time you went to the train station the rail operating company had unexpectedly cut fares by 5%. Or that when doing your weekly shop you discovered that the supermarket had slashed your normal bill by £10. Would you think this was an unwelcome development? Daft question. Of course you would be happy, because your money would go further. Conversely, you would be less than chuffed to find more of your pay being spent on getting to work or putting food on the table. That’s why there are no headlines in the papers screaming “Boom-boom Britain: joy for commuters as rail fares rise by 10% for third year in a row”, or “Good news for families as supermarkets add £10 a week to the average shop”.

The papers stand up for their readers when they think they are being gouged by train companies and supermarkets. They stick up for buyers rather than sellers. But different rules apply to property. If the average house price had risen rather than fallen by £7,000 in April, that would have been front-page news and hailed as a sign that all was well with the economy. The papers tend to side with owner-occupiers rather than the buyers of property getting the rough end of the deal. This fetishisation of rising house prices is relatively recent. For the first 25 years after the second world war, a combination of mass housebuilding and strict controls on credit meant that the cost of property rose only modestly.

But since 1970, financial deregulation, much lower levels of housebuilding and a tax system heavily weighted in favour of owner-occupation have meant demand for housing in parts of the country has tended to outstrip supply. There have been four big house-price booms – the early 1970s, the late 80s, the mid 00s and the mid 10s. None of them have ended well.

Read more …

No criminal charges.

RBS Reaches $4.9 Billion Deal To Settle US Mortgage Bond Probe (R.)

The British state-backed bank said that $3.46 billion of the proposed civil settlement will be covered by existing provisions and the bank will take a $1.44 billion incremental charge in 2018’s second quarter to cover the rest. The accord would resolve a major issue that has weighed on the company’s share price and complicated the UK government’s plan to sell down its more than 70 percent stake in the bank. RBS Chief Executive Ross McEwan called the deal a “milestone.” “Removing the uncertainty over the scale of this settlement means that the investment case for this bank is much clearer,” he said in a statement.

The U.S. Attorney’s Office in Massachusetts, which led the probe, confirmed it had reached an agreement in principle with RBS that would resolve potential civil claims related to mortgage-backed securities that were issued from 2005 to 2008. “Further details remain to be negotiated, however, before a formal agreement can be reached,” the office said. The implosion of markets for risky residential mortgage-backed securities and related derivatives contributed to the 2008 global financial crisis and prompted a series of investigations by authorities including the Justice Department. The U.S. Attorney’s Office in Massachusetts had also been conducting a criminal investigation into RBS and former employees who were involved in structuring and selling the securities.

But the settlement that RBS and the office disclosed on Thursday was only civil in nature, signaling no criminal charges were likely to result. RBS previously agreed in July 2017 to pay $5.5 billion to resolve a lawsuit by the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, claiming it misled the U.S. mortgage giants into buying mortgage-backed securities. It resolved similar claims by the National Credit Union Administration related to mortgage-backed securities RBS sold to credit unions that later failed for $1.1 billion in 2016.

Read more …

“The mere threat of a military attack from the White House is madness because it arises from blatant lies that have absolutely nothing to do with US national security..”

The Deep State First (Stockman)

At his so-called Cabinet meeting this morning, the Donald basically threatened Iran with annihilation if it does what 15 other signatories to the nuclear non-proliferation treaty (NPT) do every day: Namely, increase production of industrial grade nuclear fuel (3.5%-5.0% purity) at its enrichment plant at Natanz—which, in any event, is crawling with IAEA inspectors. Moreover, it really doesn’t matter whether Trump was play-acting in the style of Art of the Deal or that the JPAOC could be improved. The mere threat of a military attack from the White House is madness because it arises from blatant lies that have absolutely nothing to do with US national security. Nor, for that matter, the security of any other country in the region, including Saudi Arabia and Israel.

The real purpose of the Donald’s missile-rattling is nothing more than helping Bibi Netanyahu keep his coalition of right wing religious and settler parties (Likud, United Torah Judaism, Shas, Kulanu and the Jewish Home) together, thereby maintaining his slim 61-vote majority in the 120-seat Knesset. Netanyahu’s malefic political glue is the utterly false claim that Iran is an “existential threat” to Israel because it is hell-bent on getting the bomb. But that’s where the whopper comes in. It amounts to the ridiculous postulate that Iran is so fiendishly evil that if it is involved in the nuclear fuel cycle in any way, shape or form – presumably even just operating a uranium mine – it is only a matter of months before it will have a bomb.

As a matter of record, of course, Netanyahu has been saying this since the early 1990s and he has always been wrong because there were never any facts or logic to support his blatant fear-mongering.

Read more …

Madman,

Turkey Detains Dozens Of Air Force Personnel Over Gulen Links (R.)

Turkish police detained 65 suspects on Thursday in an operation targeting air force personnel accused of links to the U.S.-based preacher whom Ankara says orchestrated an attempted coup in 2016, state-run Anadolu news agency said. Prosecutors issued arrest warrants for a total 96 people, of which 91 were from the air force, and police were still seeking the remaining suspects in an operation focused on the western city of Izmir and spread across 15 provinces, it said. The suspects were said to have ties to the cleric Fethullah Gulen, whose network is accused of being behind the failed putsch in July 2016, during which 250 people were killed. Gulen has denied involvement.

In a separate operation, an Ankara prosecutor on Thursday issued detention warrants for 93 employees of a private tutoring center that was previously closed down on suspicion of links to Gulen’s network, Anadolu said. Turkish authorities have detained 160,000 people and dismissed nearly the same number of civil servants since the failed military intervention, the U.N. human rights office said in March. Among those detained, more than 50,000 have been formally charged and kept in jail during their trials.

Read more …

Hmmm…

Did Putin Green-Light Tonight’s Massive Israeli Strikes On Syria? (ZH)

Just off a 10-hour visit with Russian President Vladimir Putin in Moscow, and less than a day after Trump pulled out of the Iran nuclear deal, Israeli Prime Minister Benjamin Netanyahu said on Wednesday he doesn’t expect Russia to act against Israeli forces as they continue exchanging fire with Syria. It appears the meeting wrapped up at the very moments a major escalation began along the Golan Heights, with both Syria and Israel trading blame for an initial attack which quickly escalated into Israeli cruise missile launches and shelling on targets in southern Syria and notably, on Damascus itself. The question remains, did Putin give Netanyahu the green light for tonight’s events?

If it wasn’t clear over the past weeks and months of unprovoked Israeli strikes on Syria—ostensibly to roll back Iranian troop presence—then it should be very clear by now that Syria, Israel, and Iran are now in a state of war and all signs point to a continued intensification of the conflict. And crucially, there’s currently no sign that Russia came to the aid of its close ally as rockets rained down on Damascus overnight. Russia has routinely looked the other way while Israel has conducted, by its own admission, over one hundred major strikes on Syria—most of which have come after Russian intervention on behalf of Assad in 2015. As Reuters reported late in the day Wednesday, Netanyahu told reporters just before departing Moscow: “Given what is happening in Syria at this very moment, there is a need to ensure the continuation of military coordination between the Russian military and the Israel Defence Forces.”

The Russians and Israelis coordinate their actions through a direct military hotline intended to avoid accidental clashes which could lead to escalation between the two countries. A reportedly “upbeat” Netanyahu further said, “”In previous meetings, given statements that were putatively attributed to – or were made by – the Russian side, it was meant to have limited our freedom of action or harm other interests and that didn’t happen, and I have no basis to think that this time will be different.” Thus it appears Israel may have been given a green light by Putin to engage targets in Syria, however, at this point it is unclear what limitations or restrictions Putin may have issued, if any at all.

Read more …

Victory.

Trump Welcomes Home Three Americans Released By North Korea (G.)

Three Americans released by North Korea have landed in the US under cover of darkness, with Donald Trump waiting on the tarmac to greet their plane. The three men emerged from a US government plane, flashing peace signs high above their heads. A huge US flag hung between two fire trucks served as a backdrop against the night sky. “I want to thank Kim Jong-un,” Trump said. “I think he wants to do something and bring that country into the real world.” “We didn’t think this was going to happen, and it did. It was very important to all of us,” he said, referring to the prisoner release. “The true honour will be if we have a victory in getting rid of nuclear weapons.” The US secretary of state, Mike Pompeo, flew to Pyongyang for a surprise one-day visit on Wednesday, when he met the North Korean leader and secured the release of the three men.

Read more …

What do Democrats stand for?

Democrats’ Lead Is Slipping In Generic Ballot Poll (Hill)

The lead held by Democrats over Republicans on generic ballot polls ahead of the 2018 midterm elections is beginning to slip, a new CNN poll suggests. Overall, 31% of respondents in a poll released Wednesday told CNN that they believe the country would be better off with Democrats in control of Congress, while 30% said Republicans should hold the reins. However, the largest proportion of respondents, at 34%, said it makes no difference to them who is in charge. Among registered voters asked whether they would vote Democratic or Republican in their congressional district if the elections were held today, Democrats had a three-point advantage, at 44% to 41%, which is within the poll’s margin of error.

Democrats have seen a steady decline in their advantage over Republicans in recent months, according to CNN polling, falling from a 16-point advantage in February to a 6-point one in March, to just a 3-point lead this week, roughly six months away from the midterm elections. An ABC News/Washington Post poll similarly found last month that Democrats’ lead over Republicans among registered voters was only 4 points, at 47% to 43%, down from a 12-point lead the poll found Democrats held in January. Democrats still have an edge in enthusiasm, according to CNN. Among respondents who said they are excited to vote in November, more plan to vote Democratic than Republican, at 53% to 41%.

But enthusiasm does seem to be growing among GOP voters. According to the CNN poll, 44% of Republican and Republican-leaning registered voters said they were “very enthusiastic” about voting, which is a jump from 36% in March. [..] President Trump’s own job approval has increased recently, with his approval rating at 41% in the CNN poll and his approval over his handling of the economy at 52%.

Read more …

On Polanyi.

Is Capitalism a Threat to Democracy?

In a sweeping, angry new book, “Can Democracy Survive Global Capitalism?” (Norton), the journalist, editor, and Brandeis professor Robert Kuttner champions Polanyi as a neglected prophet. Like Polanyi, he believes that free markets can be crueller than citizens will tolerate, inflicting a distress that he thinks is making us newly vulnerable to the fascist solution. In Kuttner’s description, however, today’s political impasse is different from that of the nineteen-thirties. It is being caused not by a stalemate between leftist governments and a reactionary business sector but by leftists in government who have reneged on their principles.

Since the demise of the Soviet Union, Kuttner contends, America’s Democrats, Britain’s Labour Party, and many of Europe’s social democrats have consistently tacked rightward, relinquishing concern for ordinary workers and embracing the power of markets; they have sided with corporations and investors so many times that, by now, workers no longer feel represented by them. When strongmen arrived promising jobs and a shared sense of purpose, working-class voters were ready for the message.

[..] Polanyi starts “The Great Transformation” by giving capitalism its due. For all but eighteen months of the century prior to the First World War, he writes, a web of international trade and investment kept peace among Europe’s great powers. Money crossed borders easily, thanks to the gold standard, a promise by each nation’s central bank to sell gold at a fixed price in its own currency. This both harmonized trade between countries and stabilized relative currency values. If a nation started to sell more goods than it bought, gold streamed in, expanding the money supply, heating up the economy, and raising prices high enough to discourage foreign buyers—at which point, in a correction so smooth it almost seemed natural, exports sank back down to pre-boom levels.

The trouble was that the system could be gratuitously cruel. If a country went into a recession or its currency weakened, the only remedy was to attract foreign money by forcing prices down, cutting government spending, or raising interest rates—which, in effect, meant throwing people out of work. “No private suffering, no restriction of sovereignty, was deemed too great a sacrifice for the recovery of monetary integrity,” Polanyi wrote. The system was sustainable politically only as long as those whose lives it ruined didn’t have a say. But, in the late nineteenth and early twentieth centuries, the right to vote spread. In the twenties and thirties, governments began trying to protect citizens’ jobs from shifts in international prices by raising tariffs, so that, in the system’s final years, it hardened national borders instead of opening them, and engendered what Polanyi called a “new crustacean type of nation,” which turned away from international trade, making first one world war, and then another, inevitable.

Read more …

More Graeber. Most jobs are bullshit.

Bullshit Jobs: Why They Exist And Why You Might Have One (Vox)

Corporate lawyers. Most corporate lawyers secretly believe that if there were no longer any corporate lawyers, the world would probably be a better place. The same is true of public relations consultants, telemarketers, brand managers, and countless administrative specialists who are paid to sit around, answer phones, and pretend to be useful. A lot of bullshit jobs are just manufactured middle-management positions with no real utility in the world, but they exist anyway in order to justify the careers of the people performing them. But if they went away tomorrow, it would make no difference at all. And that’s how you know a job is bullshit: If we suddenly eliminated teachers or garbage collectors or construction workers or law enforcement or whatever, it would really matter. We’d notice the absence.

But if bullshit jobs go away, we’re no worse off. [..] We’re all taught that people want something for nothing, which makes it easy to shame poor people and denigrate the welfare system, because everyone is lazy at heart and just wants to mooch off other people. But the truth is that a lot of people are being handed a lot of money to do nothing. This is true for most of these middle-management positions I’m talking about, and the people doing these jobs are completely unhappy because they know their work is bullshit. I think most people really do want to believe that they’re contributing to the world in some way, and if you deny that to them, they go crazy or become quietly miserable.

[..] You expect this outcome with a Soviet-style system, where you have to have full employment so you make up jobs whether a need exists or not. But this shouldn’t happen in a free market system. I think one of the reasons is there’s huge political pressure to create jobs coming from all directions. We accept the idea that rich people are job creators, and the more jobs we have, the better. It doesn’t matter if those jobs do something useful; we just assume that more jobs is better no matter what. We’ve created a whole class of flunkies that essentially exist to improve the lives of actual rich people. Rich people throw money at people who are paid to sit around, add to their glory, and learn to see the world from the perspective of the executive class.

Read more …

May 092018
 


Edgar Degas Two laundresses 1876

 

Fed Chair Powell To Emerging Markets: You Are On Your Own (ZH)
Argentina Seeks IMF Aid ‘To Avoid Crisis’ (BBC)
Europe On Collision Course With US Over Iran Deal (AFP)
Mnuchin: Revoking Boeing, Airbus Licenses To Sell Jets To Iran (R.)
Pompeo, In North Korea, To Return With Detained Americans (R.)
Central Banks Rigged The Cost Of Money And The State Of The Markets (Prins)
US Student Debt Just Hit $1.5 Trillion (MW)
The State of the American Debt Slaves, Q1 2018 (WS)
UK PM May Suffers Upper House Defeat Over Plans To Leave EU Single Market (R.)
UK Retailers Suffer Sharpest Sales Drop For 22 Years In April (G.)
Sharp Drop In UK Retail Job Vacancies As High Street Crisis Deepens (Ind.)
Cynthia Nixon: Marijuana Industry Could Be ‘A Form Of Reparations’ (Hill)
Record Drop In Greek Savings Last Year (K.)
Debt Repayment Feasible if Greece ‘Implements Reforms’ – Regling (AMNA)
British Diplomats: Saving The Rainforest Could Hurt Fighter Jet Sales (UE)

 

 

As the dollar keeps rising.

Fed Chair Powell To Emerging Markets: You Are On Your Own (ZH)

Over the weekend, when commenting on the ongoing rout in emerging markets, Bloomberg published an article titled “Rattled Emerging Markets Say: It’s Over to You, Central Bankers.” Well, overnight the most important central banker of all, Fed Chair Jay Powell responded to these pleas to “do something”, and it wasn’t what EMs – or those used to being bailed out by the Fed – wanted to hear. As Powell explained, speaking at a conference sponsored by the IMF and Swiss National Bank in Zurich, the Fed’s gradual push towards higher interest rates shouldn’t be blamed for any roiling of emerging market economies – which are well placed to navigate the tightening of U.S. monetary policy. In other words, with the Fed’s monetary policy painfully transparent, Powell’s message to EM’s was simple: “you’re on your own.”

Arguing that the Fed’s decision-making isn’t the major determinant of flows of capital into developing economies (which, of course, it is especially as the Fed gradually reverses the biggest monetary experiment in history) Powell said the influence of the Fed on global financial conditions should not be overstated, despite Bernanke taking the blame five years ago for the so-called taper tantrum. “There is good reason to think that the normalization of monetary policy in advanced economies should continue to prove manageable for EMEs,” Powell said, adding that “markets should not be surprised by our actions if the economy evolves in line with expectations.”

[..] Meanwhile, as the Fed refuses to change course, other policy makers have been forced to step in to counter the sharp, sudden capital outflows, with Argentina’s central bank abruptly raising rates three times, to 40% to halt a sell-off in the peso. Russia has also put the brakes on further monetary easing. Turkey, which is a unique basket case in that Erdogan is expressly prohibiting the central bank from doing the one thing it should to ease the ongoing panic, i.e., raise rates, is seeking to bring down its current account deficit. Overnight, we learned that Indonesia was burning reserves to prop up its currency.

Meanwhile, also overnight, JPM CEO Jamie Dimon said it’s possible U.S. growth and inflation prove fast enough to prompt the Fed to raise interest rates more than many anticipate, and it would be wise to prepare for benchmark yields to climb to 4%. Such a scenario would be a disaster for EMs: “A sustained move higher would pressure local currencies and lure away foreign investors. The IMF warned last month that risks to global financial stability have increased over the past six months.” “Central banks may have to respond with interest rate hikes if the sell-off intensifies,” said Chua Hak Bin, a senior economist at Maybank Kim Eng Research in Singapore. Those most vulnerable include Ukraine, China, Argentina, South Africa and Turkey according to the Institute for International Finance.

Read more …

IMF demand: austerity. Back to the hoovervilles.

Argentina Seeks IMF Aid ‘To Avoid Crisis’ (BBC)

Argentina is to start talks about a financing deal with the International Monetary Fund (IMF) on Wednesday amid reports it is seeking $30bn (£22bn). Finance minister Nicolas Dujovne is due to fly to the IMF’s Washington offices. After recent turmoil that saw interest rates hit 40%, President Mauricio Macri said IMF aid would “strengthen growth” and help avoid crises of the past. The talks come 17 years after Argentina defaulted on its debts and 12 years since it severed ties with IMF. Mr Macri said in an address to the nation on Tuesday: “Just a few minutes ago I spoke with (IMF) director Christine Lagarde, and she confirmed we would start working on an agreement.”

“This will allow us to strengthen our program of growth and development, giving us greater support to face this new global scenario and avoid crises like the ones we have had in our history,” he said. Local media and Bloomberg reported that Argentina was seeking $30bn, although the government declined to comment. The peso has lost a quarter of its value in the past year amid President Macri’s pro-market reforms. Last week the central bank raised interest rates from 33.25% to 40%. Many people still blame IMF austerity requirements for policies that led to a financial and economic meltdown in 2001 to 2002 that left millions of middle class Argentines in poverty. Argentina eventually defaulted on its debts. And although its last IMF loan was paid down in 2006, the country severed ties with the Washington-based body.

Read more …

“US sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” tweeted the US ambassador in Berlin, Richard Grenell.

Europe On Collision Course With US Over Iran Deal (AFP)

Donald Trump’s decision to pull out of the landmark 2015 deal curbing Iran’s nuclear programme is a bitter pill to swallow for European leaders and risks a creating a major transatlantic rift. French President Emmanuel Macron, who has spent the past year cultivating the closest ties with Trump among EU leaders, made saving the Iran deal one of his priorities during his state visit to Washington last month. German Chancellor Angela Merkel had also travelled to the US in late April and she worked closely with Macron and British Prime Minister Theresa May right up to the last minute.

In a joint statement issued shortly after Trump walked away from 2015 accord, they said they noted the decision with “regret and concern” but they said they would continue to uphold their commitments. “Our governments remain committed to ensuring the agreement is upheld, and will work with all the remaining parties to the deal to ensure this remains the case,” they said. They noted that this included the “economic benefits to the Iranian people that are linked to the agreement,” which means European firms would in theory continue to invest and operate there. This would appear to set the three countries, all signatories along with Russia, China and the EU, on a direct collision course with Washington.

European leaders have clashed with the White House already on issues ranging from climate change to trade and Trump’s decision to move the US embassy in Israel to Jerusalem. Trump’s hawkish National Security Advisor John Bolton said that European firms would have a “wind down” period to cancel any investments made in Iran under the terms of the accord. “US sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” tweeted the US ambassador in Berlin, Richard Grenell. Under the 2015 deal, Iran was meant to benefit from increased trade and contracts with foreign firms in exchange for accepting curbs on its nuclear activity and stringent monitoring.

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Airbus? But it’s European. Oh: “All the deals are dependent on U.S. licenses because of the heavy use of American parts in commercial planes.”

Mnuchin: Revoking Boeing, Airbus Licenses To Sell Jets To Iran (R.)

Licenses for Boeing Co and Airbus to sell passenger jets to Iran will be revoked, U.S. Treasury Secretary Steven Mnuchin said on Tuesday after President Donald Trump pulled the United States out of the 2015 Iran nuclear agreement. Trump said he would reimpose U.S. economic sanctions on Iran, which were lifted under the agreement he had harshly criticized. The pact, worked out by the United States, five other world powers and Iran, lifted sanctions in exchange for Tehran limiting its nuclear program. It was designed to prevent Iran from obtaining a nuclear bomb. IranAir had ordered 200 passenger aircraft – 100 from Airbus SE, 80 from Boeing and 20 from Franco-Italian turboprop maker ATR.

All the deals are dependent on U.S. licenses because of the heavy use of American parts in commercial planes. Boeing agreed in December 2016 to sell 80 aircraft, worth $17 billion at list prices, to IranAir under an agreement between Tehran and major world powers to reopen trade in exchange for curbs on Iran’s nuclear activities. The U.S. Treasury Department, which controls licensing of exports, said the United States would no longer allow the export of commercial passenger aircraft, parts and services to Iran after a 90-day period. “The Boeing and (Airbus) licenses will be revoked,” Mnuchin told reporters at the Treasury. “Under the original deal, there were waivers for commercial aircraft, parts and services and the existing licenses will be revoked.”

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Are they going to say they were well treated?

Pompeo, In North Korea, To Return With Detained Americans (R.)

U.S. Secretary of State Mike Pompeo is expected to return from North Korea with three American detainees, as well as details of an upcoming summit between leader Kim Jong Un and U.S. President Donald Trump, a South Korean official said on Wednesday. Pompeo arrived in Pyongyang on Wednesday from Japan and headed to the Koryo Hotel in the North Korean capital for meetings, a U.S. media pool report said. Trump earlier broke the news of Pompeo’s second visit to North Korea in less than six weeks and said the two countries had agreed on a date and location for the summit, although he stopped short of providing details. An official at South Korea’s presidential Blue House said Pompeo was expected to finalize the date of the summit and secure the release of the three American detainees.

While Trump said it would be a “great thing” if the American detainees were freed, Pompeo told reporters en route to Pyongyang he had not received such a commitment but hoped North Korea would “do the right thing”. “We’ll talk about it again today,” he said. “I think it’d be a great gesture if they would choose to do so.” The pending U.S.-North Korea summit has sparked a flurry of diplomacy, with Japan, South Korea and China holding a high-level meeting on Wednesday. Chinese Premier Li Keqiang said concerned parties should seize the opportunity to promote denuclearization of the Korean peninsula, the official Xinhua news agency reported.

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More Nomi.

Central Banks Rigged The Cost Of Money And The State Of The Markets (Prins)

Nomi Prins: The word “collusion” has come to be associated with Russia, Trump and the US election. My book is about something entirely different, much more global: the collusion (or coordination) that the US central bank (the Federal Reserve) forged with other major countries to fabricate an abundance of money in the wake of the 2008 financial crisis to support the US financial system at first, and banks and select companies and markets worldwide, as well, since. The Fed conjured up this money to provide liquidity for Wall Street banks. The policy was then exported to the major central banks who acted as a lender and supplier of last resort to the world.

Some of the most notable central banks include the European Central Bank (ECB), the Bank of Japan and the Bank of England. Collusion is about these powerful institutions’ relationships with each other. The book dives into how central banks rigged the cost of money and the state of the markets, and ultimately created more inequality and instability as a result. They did all of this in order to subsidize private banks at the expense of people everywhere. The book reveals the people in charge of these strategies, their elite gatherings and public and private communications. It uncovers how their policies rerouted economies, geopolitics, trade wars and elections.

How do central banks relate to the world’s markets? Central banks have several functions from an official standpoint. The first is to regulate the smooth and orderly operation of private banks or public banks within a particular country or region (the ECB is responsible for many countries in Europe). The other function they are tasked with is setting interest rates (the cost of borrowing money) so that there’s adequate economic balance between full employment and a select inflation rate. The idea is that if the cost of money is cheap enough, private banks will lend to the general population and businesses. The ultimate goal is that the money can be used to expand enterprise, hire people and develop a strong economic posture.

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What cannot be repaid will not be.

US Student Debt Just Hit $1.5 Trillion (MW)

America’s student loan problem just surpassed a depressing milestone. Outstanding student debt reached $1.521 trillion in the first quarter of 2018, according to the Federal Reserve, hitting $1.5 trillion for the first time. Though the marker is somewhat arbitrary, it offers a reminder of how quickly student debt has grown—jumping from about $600 billion 10 years ago to more than $1.5 trillion today—and that the factors fueling the increase aren’t likely to disappear any time soon. “People pay attention to milestones,” said Mark Kantrowitz, a financial aid expert. When student debt surpassed $1 trillion in 2012, “it definitely caused a shift in coverage of student loans in the news media,” he said.

In theory, that helps raise awareness of the issue for student advocates, lawmakers and, in particular, borrowers when considering what college to attend. But Kantrowitz added, “What’s more important is the impact on individual borrowers.” And they are feeling it. College graduates leave school with about $37,000 in debt on average, according to Kantrowitz’s data, a sum that can be bearable for many, given that the average starting salary for a new college graduate last year hovered around $50,000. But a large share—as many as one in six college graduates, Kantrowitz estimates—will leave school with debt that exceeds their income. That will make it challenging for those borrowers to pay off their loans on a standard 10-year repayment plan, he said.

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Now let’s throw in some rate hikes, see what happens.

The State of the American Debt Slaves, Q1 2018 (WS)

Total consumer credit rose 5.1% in the first quarter, compared to a year earlier, or by $184 billion, to $3.824 trillion (not seasonally adjusted), according to the Federal Reserve. This includes credit-card debt, auto loans, and student loans, but not mortgage-related debt. That 5.1% year-over-year increase isn’t setting any records – in 2011, year-over-year increases ran over 11%. But it does show that Americans are dealing with the economy and their joys and woes the American way: by piling on debt faster than the overall economy is growing. The chart below shows the progression of consumer debt since 2006. In line with seasonal patterns for first quarters, consumer credit (not seasonally adjusted) edged down from Q4, as the spending binge of the holiday shopping season turned into hangover, an annual American ritual:

Note how the dip after the Financial Crisis – when consumers deleveraged mostly by defaulting on those debts – didn’t last long. Over the 10 years since Q1 2008, consumer debt has now surged 47%. Over the same period, the consumer price index has increased 16.9%: Auto loans and leases for new and used vehicles rose by 3.8% from a year ago, or by $41 billion, to $1.118 trillion. It was one of the smaller increases since the Great Recession: The peak year-over-year jumps occurred at the peak of the new vehicle sales boom in the US in Q3 2015 ($87 billion or 9%). However, the still standing records were set in Q1 and Q2 2001 near the end of the recession, with each quarter adding around $93 billion, or 16%, year-over-year.

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It really makes no difference; the EU will say no anyway to all plans acceptable to the UK.

UK PM May Suffers Upper House Defeat Over Plans To Leave EU Single Market (R.)

Britain’s upper house of parliament on Tuesday inflicted another embarrassing defeat on Prime Minister Theresa May’s government on Tuesday, challenging her plan to leave the European Union’s single market after Brexit. May, who has struggled to unite the government behind her vision of Brexit, has said Britain will also leave the European Union’s single market and customs union after it quits the bloc next March. That stance has widened divisions not only within her own Conservative Party but also across both houses of parliament, which like Britons at large, remain deeply split over the best way to leave the EU after more than four decades of membership.

By a vote of 245 to 218, the unelected upper chamber, the House of Lords, supported an amendment to her Brexit blueprint, the EU withdrawal bill, requiring ministers to negotiate continued membership of the European Economic Area, meaning that it would remain in the single market. “The time has come over Brexit, really, for economic reality and common sense to prevail over political dogma and wishful thinking,” said Peter Mandelson, a member of the House of Lords from the main opposition Labour Party, who backed the amendment.

His comments drew criticism from pro-Brexit peers, including Conservative member Michael Forsyth who described the amendment as part of an attempt by “a number of people in this house who wish to reverse the decision of the British people”. Those proposing the amendment deny the charge. This is the 13th time in recent weeks that the government has been defeated in the House of Lords on the draft legislation that will formally terminate Britain’s EU membership.

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Must have been the weather.

UK Retailers Suffer Sharpest Sales Drop For 22 Years In April (G.)

Britain’s retailers suffered the sharpest drop in business in more than two decades last month as bad weather, the squeeze on household budgets and the timing of Easter led to a hefty cut in consumer spending. In the latest evidence of the slowdown in the economy since the turn of the year, the latest health check from the British Retail Consortium (BRC) and KPMG found that sales were down by 3.1% in April, the biggest decline since the survey was launched in 1995. Spending on non-food items has been particularly hard hit over the last three months, and retailers are braced for tough trading conditions to continue for the rest of the year even though wages have now started to rise more quickly than prices.

Retailers have been hit hard by a combination of problems on top of the squeeze on spending, including higher labour costs as a result of increases in the minimum wage, the shift to online shopping and rapidly changing spending patterns. Toys R Us and the electricals retailer Maplin collapsed in February and a number of retailers, including House of Fraser, New Look, Carpetright and Poundworld, are all pursuing agreements with their landlords to cut their rents and close stores. The industry had been expecting that year-on-year comparisons would look poor for April, but the BRC’s chief executive, Helen Dickinson, said the problem ran deeper.

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Pickers and packers.

Sharp Drop In UK Retail Job Vacancies As High Street Crisis Deepens (Ind.)

Wages rose in April amid strong demand for candidates, but the number of retail vacancies dropped sharply as the crisis on the high street worsened, a recruitment industry survey has found. Growth of overall job vacancies picked up to a three-month high in April, the Recruitment and Employment Confederation said. Demand for permanent staff increased in the “vast majority” of job categories during the month, with the notable exception of retail, the REC said. The study of 400 recruitment consultancies found that engineering and IT saw the steepest increases in vacancies. REC director of policy Tom Hadley said the high-profile struggles of many retailers indicated it was a good time for staff to consider how they could transfer their skills into other roles, such as in the technology sector or as pickers and packers in distribution centres. “Helping people make career transitions will become increasingly important in this fast-changing business and employment landscape,” he said.

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Smart.

“..In New York in 2017, 86% of fifth-degree marijuana arrests were of people of color, while only 9% of those arrested were white..”

Cynthia Nixon: Marijuana Industry Could Be ‘A Form Of Reparations’ (Hill)

New York gubernatorial candidate and actress Cynthia Nixon on Saturday expanded on her calls for marijuana legalization, saying that the industry could provide a form of “reparations” for communities of color. Nixon, who expressed her support for legalizing marijuana earlier this year, told Forbes that she views marijuana as a racial justice issue. “We’re incarcerating people of color in such staggering numbers,” she said. She expressed support for what is known as an “equity” program, which would prioritize giving marijuana business licenses to people who have received marijuana convictions in the past. “Now that cannabis is exploding as an industry, we have to make sure that those communities that have been harmed and devastated by marijuana arrests get the first shot at this industry,” she told Forbes.

“We [must] prioritize them in terms of licenses. It’s a form of reparations.” In New York in 2017, 86% of fifth-degree marijuana arrests were of people of color, while only 9% of those arrested were white, despite data showing that black and white people are about equally likely to use marijuana. “Arresting people — particularly people of color — for cannabis is the crown jewel in the racist war on drugs and we must pluck it down,” she said. “We must expunge people’s records; we must get people out of prison.” “The use of marijuana has been effectively legal for white people for a really long time,” she told Forbes. “It’s time that we legalize it for everybody else.”

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Everything keeps going down. It’s guaranteed.

Record Drop In Greek Savings Last Year (K.)

Household savings shrank by 32.5 billion euros in total in the period from 2011 to 2017, as families increasingly resorted to dipping into their deposits after finding that disposable incomes are no longer enough to cover their outgoings. Last year the drop in savings reached an historic high of 8.3 billion euros in current prices, according to an analysis by Eurobank. In addition, households have resorted to liquidating assets such as properties, deposits, shares and bonds, among other investments. Notably consumption shrank by almost a quarter from 2008 to 2017, falling from 163.3 billion euros to 123.3 billion last year, which was the sixth in a row with negative savings for Greek households; this means that disposable income was less than consumption.

Eurobank data showed that the wealth of the country’s households has been in constant decline since 2011, falling at an average rate of 6.6 billion euros per year, which is transformed from various forms of savings into consumption. The report by Eurobank’s analysis department highlighted that the economic recession, the stagnation in investments and the major fiscal adjustment Greece experienced from 2009 to 2017 have compressed households’ saving capacity, both in terms of incomes and their obligations to the state through taxes and social security contributions.

The figures reveal that Greek households’ net annual savings amounted to 11.4 billion euros in 2009, or 7% of their gross disposable income, while last year the balance was negative by 8.3 billion, or 6.7% of households’ gross disposable income. Shrinking private consumption has had a direct impact on investments: In 2009 investments had amounted to 18.3% of GDP and were 31.8% funded by domestic consumption and the rest from borrowing. In 2017 the investment rate slipped to 11.6% of GDP, with domestic consumption accounting for 91.1%.

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Delusional or lying to our faces?

Debt Repayment Feasible if Greece ‘Implements Reforms’ – Regling (AMNA)

“If the government in Athens implements all the remaining reforms decisively, Greece can successfully emerge from the ESM program in August 2018,” Klaus Regling, president of the European Stability Mechanism, has said. The ESM chief spoke at en event held in Aachen, Germany on the occasion of the awarding of the 60th International Charlemagne Prize to French President Emmanuel Macron. Regling expressed confidence that Greece could repay its loans, provided the maturity times are sufficiently extended and the obligations do not exceed 15-20% of the country’s economic performance. The ESM chief said that if the latest report on Greece’s bailout program is positive, there will be a final disbursement from the ESM, and then decisions will be made on possible further debt relief.

He argued that there was absolutely no alternative to the establishment of the rescue mechanism, without which, as he said, Greece, Portugal and Ireland would have probably come out of Economic and Monetary Union under “chaotic conditions,” while at the same time other countries such as Germany, would have problems. Regling also stressed that ESM interest rates are clearly below the level that countries would have to pay in the markets, and that is why they save a lot of money. In the case of Greece, “we estimate that ESM loans lead to savings of almost €10 billion [$11.8 billion] each year for the Greek budget”, he said and stressed that this is happening costing nothing to the European taxpayer.

“These savings are an expression of the solidarity shown by the member states of the euro zone,” he said, and referred to “great efforts” that Greece is making to fulfill the strict reform conditions. “Overall, Greece now has impressive adaptation efforts behind it. The budget deficit at the start of the 2009 crisis was above 15% of GDP. For two years, the country has been generating a budget surplus. Such a success is only possible with profound reforms,” Regling noted and said that if Greece implements all reforms, eurozone finance ministers would give Greece further debt relief, namely longer repayment times.

Finally, explaining the reasons why Greece remains in a program while the other countries have completed their own, referred to the country as a “special case” for three reasons: “Firstly, the Greek economy has had problems that are deeper rooted than for other countries in a program. Secondly, the country suffered from a much weaker public administration than the other eurozone member states. “And thirdly, the Greek government in the first half of 2015 went in the wrong direction with then finance minister (Yanis Varoufakis): major reforms were revoked and an effort was made to stop the agreed reform program. “As a result, the Greek economy had fallen into a recession. Grexit suddenly became a realistic scenario. The Bank of Greece estimates that this wrong move cost Greece €86 billion.”

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How we think.

British Diplomats: Saving The Rainforest Could Hurt Fighter Jet Sales (UE)

British government officials warned a proposed EU ban on palm oil in biofuels could harm UK defence sales to Malaysia, specifically Typhoon fighter jets, according to government emails obtained by Unearthed. The correspondence reveals that the British high commission in Kuala Lumpur even expected Malaysian Prime Minister Najib Razak to lobby Theresa May personally on the issue at last month’s Commonwealth Heads of Government meeting. In the event, Razak did not attend the meeting in London, a Number 10 spokeswoman told Unearthed. Correspondence between the Ministry of Defence, the Department for Environment, Food and Rural Affairs and the British high commission reveals British officials were concerned that EU moves to ban palm oil in biofuels could result in Malaysian trade reprisals against the UK.

MEPs voted in January to phase out the use of palm oil in biofuels, citing environmental concerns. The move sparked a furious response from the governments of Indonesia and Malaysia, which produce most of the world’s palm oil. The debate over palm oil is playing a significant role in the run-up to Malaysia’s general election, which will be held tomorrow. On the morning of 5 February, an official at the British high commission in Malaysia sent an email warning that the EU decision was “a big issue for Malaysia and, if not handled correctly, has the potential to impact on bilateral trade, particularly defence sales (Typhoon)”.

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May 082018
 


Franco Fontana Praga 1967

 

Emerging Market Currencies Feel The Heat As US Economy Brightens (SCMP)
Two-Thirds Of Americans Believe It’s A Good Time To Buy A Home (MW)
Obamacare Premiums May Soar As Much As 91% Next Year (ZH)
Which Hunt? (Jim Kunstler)
The Donald’s Fabulous Fiscal Folly, Wall Street’s Wile E. Coyote (Stockman)
Trump To Unveil Iran Decision Tuesday; Europeans Move His Way (R.)
State Dept.: Giuliani Doesn’t Speak For US On Foreign Policy (AP)
Are You in a BS Job? In Academe, You’re Hardly Alone (David Graeber)
Theresa May Faces Renewed Turmoil Over Brexit Options (G.)
Shocks From Australian Banks’ Inquiry May Squeeze A Nation (R.)
“Creating Wealth” Through Debt (Michael Hudson)
Australia Pledges Millions To Help Save The Koala (AFP)
Glyphosate-Based Weedkillers Much More Toxic Than Their Active Ingredient (G.)

 

 

Feels like someone is trying not to let the US dollar rise too fast.

Emerging Market Currencies Feel The Heat As US Economy Brightens (SCMP)

A stream of broadly upbeat US economic data is opening up fissures in the foreign exchange markets. Market participants are recognising that the balance of risk is changing. Emerging markets, which have enjoyed substantive capital inflows, will not be immune to this process, and certain currencies are already feeling the heat. Emerging markets were major beneficiaries of inward capital flows last year, as evidenced in data from the Bank for International Settlements on 30 April. Overall “foreign currency credit continued to grow during 2017, with US dollar credit rising by 8% to US$11.4 trillion and euro credit by 10% to €3 trillion (US$3.57 trillion),” the bank wrote. US dollar credit to emerging market economies rose by 10% to US$3.67 trillion in the year to end-2017, it added.

This US-dollar dominance is critical, as the main currency moving into any markets, not just emerging markers, will also be the main mover out of them. [..] It seems an age ago now but, in June 2017, Argentina could issue a US dollar-denominated 100-year government bond receiving US$9.75 billion of orders for a US$2.75 billion issue with a coupon of 7.125%. Foreign investors had a taste for Argentina but now want out. Last Friday, with inflation in Argentina in April at 25.4%, the local central bank had to raise its benchmark interest rate to 40% in an attempt to arrest the pace of the peso’s decline. It had fallen 7.83% versus the US dollar on Thursday alone.

Friday also saw the Turkish lira hit a record low against the US dollar, beset by 11% year-on-year inflation and, among other factors, investor concerns that Turkey’s central bank could come under political pressure not to tighten monetary policy as far as they might. [..] Markets can behave like predators, pursuing what they perceive as the weakest prey first. Argentina and Turkey are currently filling that not-to-be-envied role in the wider emerging markets space. But they probably won’t be the last. Billions of US dollars of capital have flowed into emerging markets in recent years but the tide may be turning. It would be easy to just characterise Argentina and Turkey as special cases but that would be naive.

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Oh, sure. Never better.

Two-Thirds Of Americans Believe It’s A Good Time To Buy A Home (MW)

House prices are soaring and, despite warnings from some analysts, most Americans believe they will continue to soar. A majority of U.S. adults (64%) continue to believe home prices in their local area will increase over the next year, a survey released Monday by polling firm Gallup concluded. That’s up 9 percentage points over the past two years and is the highest percentage since before the housing market crash and Great Recession in the mid-2000s. The level of optimism is edging closer to the 70% of adults in 2005 who said prices would continue rising. That, of course, was less than one year before the peak of the housing market bubble in early 2006, which was largely fueled by a wave of subprime lending. (Roughly one-quarter of respondents in both 2005 and 2018 said they believed house prices would remain the same.)

In 2009, during the depths of the Great Recession, only 22% of Americans believed house prices would rise. But optimism about the housing market has made a slow recovery—along with the market itself—in the intervening years. Today, only 10% in the Gallup survey believe prices will fall. That compares to 5% who felt similarly pessimistic in 2005, just two years before the crash. Opinions vary between the West and East coasts, and renters and homeowners. Some 70% of homeowners see prices continuing to rise versus 59% of renters. Only 59% of Western residents see prices increasing, compared to a range of 65% to 68% in the other parts of the U.S. (The median sale price of a home in California is more than double that in the rest of the country.)

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About that house you were planning to buy…

Obamacare Premiums May Soar As Much As 91% Next Year (ZH)

Residents of Maryland and Virginia face double-digit percentage increases in premiums for individual Obamacare plans in 2019, according to rate requests made by insurers. The largest hikes are being sought by CareFirst, which is seeking a 64% increase in Virginia, and a whopping 91% increase in Maryland for its PPO. Other insurers are following suit in the two states, with Kaiser requesting hikes of 32% and 37% respectively, followed by CareFirst’s HMO offering. “In Maryland, CareFirst wants to raise rates by 91% on a plan covering 15,000 people, Insurance Commissioner Al Redmer Jr. said. If approved, premiums for a 40-year-old could reach $1,334 a month.” -Bloomberg

That’s over $16,000 per year for an individual plan in a state with an average personal income of $59,524. “We have folks in Maryland that are struggling, that are trying to do the right thing, and they’re paying more for their health insurance than they are for their mortgage,” Redmer said on a call with reporters. “Maryland is seeking permission from the federal government to create a reinsurance program that would use $975 million in state and federal funds over five years to lower rates. That would help only temporarily, Redmer said.” -Bloomberg “I believe we’ve been in a death spiral for a year or two,” he said, adding that a permanent solution requires Congress to fix the Affordable Care Act.

Virginia and Maryland are the first two states in which 2019 rate requests – which are subject to regulatory approval and may change – have been made public, however increases are anticipated across the country as insurers adjust to the post-ACA battle. Final premium increases will need to be approved ahead of the November 1 open-enrollment period. The hikes are being blamed in part by the expectation that the elimination of the Obamacare stipulation forcing all Americans to have health coverage would leave insurers with a smaller pool of sicker clients.

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“..the collusion of multiple intelligence agencies with social media companies and what used to be the respectable organs of the news..”

Which Hunt? (Jim Kunstler)

It was refreshing to read the response of Federal Judge T. S. Ellis III to a squad of prosecutors from Robert Mueller’s office who came into his Alexandria, Virginia, court to open the case against Paul Manafort, erstwhile Trump campaign manager, for money-laundering shenanigans dating as far back as 2005. Said response by the judge being: “You don’t really care about Mr. Manafort’s bank fraud. You really care about getting information that Mr. Manafort can give you that would reflect on Mr. Trump and lead to his prosecution or impeachment or whatever.”

Judge Ellis’s concise summation was like a spring zephyr clearing out a long winter’s fog of unreality in our national politics — the idea that Mueller’s mission has been anything but the Deep State’s ongoing crusade to nullify the 2016 election. In the meantime of the past year, Mueller has been additionally burdened by obvious misconduct in the FBI and its parent agency, the Department of Justice, which makes Mueller himself look like the instrument of a cover-up, or at least a massive organized distraction from the misdeeds of the Deep State itself.

I was never a Trump supporter or voter, but it seems to me he deserves to succeed or fail as President on his own merits (or lack of). It’s much more disturbing to me to see the runaway train that federal prosecution has turned into, along with orchestrated intrigues of FBI and DOJ officials at the highest level. These are of a piece with the creeping surveillance of all Americans, and the collusion of multiple intelligence agencies with social media companies and what used to be the respectable organs of the news, especially The New York Times, The Washington Post, and CNN — all of which are behaving like Grand Inquisitors in a medieval religious hysteria.

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Stockman does a Trump: “Simple Steve Mnuchin”.

The Donald’s Fabulous Fiscal Folly, Wall Street’s Wile E. Coyote (Stockman)

There has never been a more fiscally clueless team at the top than the Donald and his dimwitted Treasury secretary, Simple Steve Mnuchin. After reading the latter’s recent claim that financing Uncle Sam’s impending trillion dollar deficits will be a breeze, we now understand how he sat on the Board of Sears for 10-years and never noticed that the company was going bankrupt. In any event, fixing to borrow upwards of $1.2 trillion in FY 2019, Simple Steve apparently didn’t get the memo about the Fed’s unfolding QT campaign and the fact that it will be draining cash from the bond pits at a $600 billion annual rate by October. After all, no one who can do third-grade math would expect that the bond market can “easily handle” what will in effect be $1.8 trillion of homeless USTs:

“U.S. Treasury Secretary Steven Mnuchin said he’s unconcerned about the bond market’s ability to absorb rising government debt after his department said it borrowed a record amount for the first quarter. ‘It’s a very large, robust market — it’s the most liquid market in the world, and there is a lot of supply,” he said… ‘But I think the market can easily handle it.’ Then again, Simple Steve is apparently not alone in his fog of incomprehension. Even if you did get the memo—like most of the Wall Street day traders—you might still be under the delusion that the Fed is your friend and that when push comes to shove, it will put QT on ice in order to forestall any unpleasant hissy-fitting in the casino.

That is, it’s allegedly still safe to buy the dips or play the swing trade between the 50-DMA and 200-DMA because the Powell Put undergirds the latter. So never fear dear punters: At about 2615 on the S&P 500 (the current 200-DMA), the Eccles Building cavalry will ride to the rescue. That would appear to be the meaning of the chart below—except it isn’t. What it really says is that after nine years of buying the dips successfully, Wall Street has essentially deputized its own cavalry. [..] there is in our judgment 15-20% of downside before the Fed relents, but by that point it will be too late.

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China and Russia stand behind Iran.

Trump To Unveil Iran Decision Tuesday; Europeans Move His Way (R.)

President Donald Trump will announce on Tuesday whether he will withdraw from the Iran nuclear deal and a senior U.S. official said it was unclear if efforts by European allies to address Trump’s concerns would be enough to save the pact. Trump has repeatedly threatened to withdraw from the deal, which eased economic sanctions on Iran in exchange for Tehran limiting its nuclear program, unless France, Germany and Britain – which also signed the agreement – fix what he has called its flaws. The senior U.S. official said the European allies had moved significantly in Trump’s direction on what he sees as the defects – the failure to address Iran’s ballistic missile program, the terms under which international inspectors visit suspected Iranian sites, and “sunset” clauses under which some terms expire.

The official did not know, however, if the Europeans had done enough to convince Trump to remain in the deal. “The big question in my mind is does he think the Europeans have moved far enough so that we can all be unified and announce a deal? That’s one option,” said the official. “Or (does he conclude) the Europeans have not moved far enough and we say they’ve got to move more?” European diplomats said privately they expected Trump to effectively withdraw from the agreement, which was struck by six major powers – Britain, China, France, Germany, Russia and the United States – and Iran in July 2015.

[..] Under the deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), the United States committed to easing a series of U.S. sanctions on Iran and it has done so under a string of “waivers” that effectively suspend them. Under U.S. law, Trump has until Saturday to decide whether to reintroduce U.S. sanctions related to Iran’s central bank and Iranian oil exports. The reimposition of sanctions would dissuade foreign companies from doing business with Iran because they could be subject to U.S. penalties.

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The Rudy show. There won’t be a sequel.

State Dept.: Giuliani Doesn’t Speak For US On Foreign Policy (AP)

The Trump administration sought to distance itself Monday from Rudy Giuliani’s dramatic public statements about Iran and North Korea, saying that President Donald Trump’s new lawyer does not speak for the president on matters of foreign policy. Since joining Trump’s legal team last month and becoming its public face, Giuliani has raised eyebrows for a series of startling assertions not only about his legal strategy and the special counsel investigation, but also about global affairs and Trump’s policies. That spurred widespread confusion over whether the former New York mayor, now on Trump’s payroll, was disclosing information he’d been told by the president, stating U.S. government policy or merely describing his own impression of events.

“He speaks for himself and not on behalf of the administration on foreign policy,” State Department spokeswoman Heather Nauert said Monday. It was the clearest sign to date that Trump’s administration is seeking to draw a line between itself and Giuliani on matters of government policy, even as he continues to act as his spokesman on matters related to special counsel Robert Mueller’s Russia probe. It comes as Trump prepares for a series of high-stakes moments in the coming weeks on Iran, North Korea and the Mideast conflict — the type of delicate and potentially explosive regions where events can easily be upended by an errant remark by an emissary of the U.S. president. Giuliani’s perplexing and sometimes conflicting remarks have increasingly become a cause of consternation for Trump’s aides.

Asked last week whether Giuliani’s portfolio included foreign policy, White House spokeswoman Sarah Huckabee Sanders said simply, “Not that I’m aware of.” [..] Giuliani’s remarks have been watched with equal concern at the State Department, the Pentagon and other national security agencies, starting last week when he said on television that North Korea would release three Americans detained in the country. “We got Kim Jong Un impressed enough to be releasing three prisoners today,” Giuliani told Fox News. Although Trump has hinted that such a move could be coming, there has been no formal announcement by the U.S. government, which is in detailed talks with North Korea at the moment to plan a historic summit between Kim and Trump. The detainees have not yet been released as predicted by Giuliani.

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Bullshitization.

Are You in a BS Job? In Academe, You’re Hardly Alone (David Graeber)

For a number of years now, I have been conducting research on forms of employment seen as utterly pointless by those who perform them. The proportion of these jobs is startlingly high. Surveys in Britain and Holland reveal that 37 to 40% of all workers there are convinced that their jobs make no meaningful contribution to the world. And there seems every reason to believe that numbers in other wealthy countries are much the same. There would appear to be whole industries — telemarketing, corporate law, financial or management consulting, lobbying — in which almost everyone involved finds the enterprise a waste of time, and believes that if their jobs disappeared it would either make no difference or make the world a better place.

Generally speaking, we should trust people’s instincts in such matters. (Some of them might be wrong, but no one else is in a position to know better.) If one includes the work of those who unwittingly perform real labor in support of all this — for instance, the cleaners, guards, and mechanics who maintain the office buildings where people perform bullshit jobs — it’s clear that 50% of all work could be eliminated with no downside. (I am assuming here that provision is made such that those whose jobs were eliminated continue to be supported.) If nothing else, this would have immediate salutary effects on carbon emissions, not to mention overall social happiness and well-being.

Even this estimate probably understates the extent of the problem, because it doesn’t address the creeping bullshitization of real jobs. According to a 2016 survey, American office workers reported that they spent four out of eight hours doing their actual jobs; the rest of the time was spent in email, useless meetings, and pointless administrative tasks. The trend has much less effect on obviously useful occupations, like those of tailors, steamfitters, and chefs, or obviously beneficial ones, like designers and musicians, so one might argue that most of the jobs affected are largely pointless anyway; but the phenomenon has clearly damaged a number of indisputably useful fields of endeavor. Nurses nowadays often have to spend at least half of their time on paperwork, and primary- and secondary-school teachers complain of galloping bureaucratization.

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Nice going, Boris: “..the foreign secretary dismissed May’s customs partnership proposal as “crazy” “

Theresa May Faces Renewed Turmoil Over Brexit Options (G.)

Theresa May is facing renewed cross-party pressure to accept membership of the European Economic Area (EEA) or risk defeat in the Commons. Peers vote on Tuesday night on a series of amendments as officials work to try to find a deal on May’s preferred option of a customs relationship with Europe that is acceptable to Brexiters and remainers in her cabinet, as well as MPs and EU negotiators. The policy paper rejected by the inner cabinet on the Brexit subcommittee last week has been withdrawn for further work and will not be discussed at this week’s regular meeting.

A Downing Street source said: “It was agreed on Wednesday that more work needed to be done to flesh out the general principles agreed – no hard border and as frictionless trade as possible. “We realise the urgency. But as Greg Clark [the business secretary] said on Sunday, it is a crucial question to get right.” The prime minister also came under pressure from Boris Johnson, who is currently in Washington trying to persuade Donald Trump to stick with the Iran nuclear deal. In an interview with the Daily Mail, the foreign secretary dismissed May’s customs partnership proposal as “crazy” and said it would create massive bureaucracy. The scheme involves the UK levying border tariffs on imports on behalf of the EU and refunding them where the imported goods stay in Britain.

Johnson also condemned any system that prevented the UK from establishing its own trade policy and negotiating deals with non-EU countries, which is also the principle objection of Conservatives led by Jacob Rees-Mogg in the European Research Group. Meanwhile, the Irish government is concerned that many MPs and peers still believe that Dublin will back down at the last minute on the hard border. One parliamentarian who visited Westminster recently said he was surprised by how confident MPs were that there could be a frictionless border between north and south without a customs union. “Both May’s proposals for maximum facilitation and a customs partnership have been rejected by [the EU negotiator] Michel Barnier as magical thinking,” he said.

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Horse. Barn.

Shocks From Australian Banks’ Inquiry May Squeeze A Nation (R.)

Australia and New Zealand Banking Group last week said that in the wake of the Royal Commission, which has uncovered wide-spread examples of careless and at times fraudulent lending practices, it would likely be harder for customers to borrow money. And National Australia Bank said net interest margins on its all-important mortgage book were falling; while Westpac told Reuters it had recently increased scrutiny of borrowers’ living expenses, including asking them to disclose such items as gym memberships and pet insurance, when making loan assessments. The inquiry has come at a time when there was already a push for increased controls on lending and new capital requirements.

Those had helped spark a wave of divestments of cash-intensive wealth management, insurance and financial planning arms. Borrowers have begun to feel the squeeze, according to Sydney real estate agent Peter Wong, as banks dig through credit histories and ask borrowers for bigger deposits. “The residential sector has become very, very cautious and so, obviously, they’re making sure that they dot their i’s and cross their t’s, and before it wasn’t like that,” said Wong, who runs an agency in inner-city Chinatown. “I’ve got property on the market and I’ve had it on for over three months whereas previously, being a popular area, people would buy fairly quickly.”

Australia has an oligopoly banking system – Commonwealth Bank of Australia sits alongside Westpac, NAB and ANZ making up the so-called “Big Four” – which collectively dominate property, investment and business lending, giving Australians limited options when seeking credit.

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Hudson warns China not to become the west.

“Creating Wealth” Through Debt (Michael Hudson)

Western capitalism has not turned out the way that Marx expected. He was optimistic in forecasting that industrial capitalists would gain control of government to free economies from unnecessary costs of production in the form of rent and interest that increase the cost of living (and hence, the break-even wage level). Along with most other economists of his day, he expected rentier income and the ownership of land, natural resources and banking to be taken out of the hands of the hereditary aristocracies that had held them since Europe’s feudal epoch. Socialism was seen as the logical extension of classical political economy, whose main policy was to abolish rent paid to landlords and interest paid to banks and bondholders.

A century ago there was an almost universal belief in mixed economies. Governments were expected to tax away land rent and natural resource rent, regulate monopolies to bring prices in line with actual cost value, and create basic infrastructure with money created by their own treasury or central bank. Socializing land rent was the core of Physiocracy and the economics of Adam Smith, whose logic was refined by Alfred Marshall, Simon Patten and other bourgeois economists of the late 19th century. That was the path that European and American capitalism seemed to be following in the decades leading up to World War I. That logic sought to use the government to support industry instead of the landlord and financial classes.

China is progressing along this “mixed economy” road to socialism, but Western economies are suffering from a resurgence of the pre-capitalist rentier classes. Their slogan of “small government” means a shift in planning to finance, real estate and monopolies. This economic philosophy is reversing the logic of industrial capitalism, replacing public investment and subsidy with privatization and rent extraction. The Western economies’ tax shift favoring finance and real estate is a case in point. It reverses John Stuart Mill’s “Ricardian socialism” based on public collection of the land’s rental value and the “unearned increment” of rising land prices.

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A new threatened species every single day. So far this week: mountain gorillas, right whales and koalas.

Australia Pledges Millions To Help Save The Koala (AFP)

Australia unveiled on Monday a US$34 million plan to help bring its koala population back from the brink, following a rapid decline in the furry marsupial’s fortunes. The Australian Koala Foundation estimates there may be as few as 43,000 koalas left in the wild, down from a population believed to number more than 10 million prior to European settlement of the continent in 1788. “Koalas are a national treasure,” said Gladys Berejiklian, premier of New South Wales state, in announcing her government’s conservation plan. “It would be such a shame if this nationally iconic marsupial did not have its future secured.”

Habitat loss, dog attacks, car strikes, climate change and disease have taken their toll on one of Australia’s most recognisable animals. Studies show a 26% decline in the koala population in New South Wales over the last 15-20 years. The state lists the species as “vulnerable”, while in other parts of the country they are effectively extinct. Under the Aus$45 million plan, thousands of hectares will be set aside to preserve the marsupial’s natural habitat.

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The madness of it. After 44 years of active use, they’re finally being tested (!). But their formulas remain confidential business information, so they don’t even know what they’re testing.

Glyphosate-Based Weedkillers Much More Toxic Than Their Active Ingredient (G.)

US government researchers have uncovered evidence that some popular weedkilling products, like Monsanto’s widely-used Roundup, are potentially more toxic to human cells than their active ingredient is by itself. These “formulated” weedkillers are commonly used in agriculture, leaving residues in food and water, as well as public spaces such as golf courses, parks and children’s playgrounds. The tests are part of the US National Toxicology Program’s (NTP) first-ever examination of herbicide formulations made with the active ingredient glyphosate, but that also include other chemicals. While regulators have previously required extensive testing of glyphosate in isolation, government scientists have not fully examined the toxicity of the more complex products sold to consumers, farmers and others.

Monsanto introduced its glyphosate-based Roundup brand in 1974. But it is only now, after more than 40 years of widespread use, that the government is investigating the toxicity of “glyphosate-based herbicides” on human cells. The NTP tests were requested by the Environmental Protection Agency (EPA) after the International Agency for Research on Cancer (IARC) in 2015 classified glyphosate as a probable human carcinogen. The IARC also highlighted concerns about formulations which combine glyphosate with other ingredients to enhance weed killing effectiveness. Monsanto and rivals sell hundreds of these products around the world in a market valued at roughly $9bn.

Mike DeVito, acting chief of the National Toxicology Program Laboratory, told the Guardian the agency’s work is ongoing but its early findings are clear on one key point. “We see the formulations are much more toxic. The formulations were killing the cells. The glyphosate really didn’t do it,” DeVito said. [..] “This testing is important, because the EPA has only been looking at the active ingredient. But it’s the formulations that people are exposed to on their lawns and gardens, where they play and in their food,” said Jennifer Sass, a scientist with the Natural Resources Defense Council.

One problem government scientists have run into is corporate secrecy about the ingredients mixed with glyphosate in their products. Documents obtained through Freedom of Information Act requests show uncertainty within the EPA over Roundup formulations and how those formulations have changed over the last three decades. That confusion has continued with the NTP testing. “We don’t know what the formulation is. That is confidential business information,” DeVito said. NTP scientists sourced some samples from store shelves, picking up products the EPA told them were the top sellers, he said.

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