Ireland Archives - Page 2 of 3 - The Automatic Earth

Facing a divided Congress for the first time, President Donald Trump on Tuesday called on Washington to reject “the politics of revenge, resistance and retribution.” He warned emboldened Democrats that “ridiculous partisan investigations” into his administration and businesses could hamper a surging American economy. Trump’s appeals for bipartisanship in his State of the Union address clashed with the rancorous atmosphere he has helped cultivate in the nation’s capital — as well as the desire of most Democrats to block his agenda during his next two years in office. Their opposition was on vivid display as Democratic congresswomen in the audience formed a sea of white in a nod to early 20th-century suffragettes.

Trump spoke at a critical moment in his presidency, staring down a two-year stretch that will determine whether he is re-elected or leaves office in defeat. His speech sought to shore up Republican support that had eroded slightly during the recent government shutdown and previewed a fresh defense against Democrats as they ready a round of investigations into every aspect of his administration. “If there is going to be peace and legislation, there cannot be war and investigation,” he declared. Lawmakers in the cavernous House chamber sat largely silent.

[..] One bright spot for the president has been the economy, which has added jobs for 100 straight months. He said the U.S. has “the hottest economy anywhere in the world.” He said, “The only thing that can stop it are foolish wars, politics or ridiculous partisan investigations” an apparent swipe at the special counsel investigation into ties between Russia and Trump’s 2016 campaign, as well as the upcoming congressional investigations. The diverse Democratic caucus, which includes a bevy of women, sat silently for much of Trump’s speech. But they leapt to their feet when he noted there are “more women in the workforce than ever before.”

Haven’t heard Moon for a while. There’s talk of a NoKor industrial area reopening.

• Trump, Kim To Hold Second Summit In Vietnam At End Of February (AP)

President Donald Trump said Tuesday that he will hold a two-day summit with North Korea leader Kim Jong Un Feb. 27-28 in Vietnam to continue his efforts to persuade Kim to give up his nuclear weapons. Trump has said his outreach to Kim and their first meeting last June in Singapore opened a path to peace. But there is not yet a concrete plan for how denuclearization could be implemented. Denuclearizing North Korea is something that has eluded the U.S. for more than two decades, since it was first learned that North Korea was close to acquiring the means for nuclear weapons. “As part of a bold new diplomacy, we continue our historic push for peace on the Korean Peninsula,” Trump said in his State of the Union address.

Director of National Intelligence Dan Coats told Congress last week that U.S. intelligence officials do not believe Kim will eliminate his nuclear weapons or the capacity to build more because he believes they are key to the survival of the regime. [..] At the second Trump-Kim summit, some experts say North Korea is likely to seek to trade the destruction of its main Yongbyon nuclear complex for a U.S. promise to formally declare the end of the 1950-53 Korean War, open a liaison office in Pyongyang and allow the North to resume some lucrative economic projects with South Korea. “Our hostages have come home, nuclear testing has stopped, and there has not been a missile launch in 15 months,” Trump said. “If I had not been elected President of the United States, we would right now, in my opinion, be in a major war with North Korea.

Interesting, good graph. It’s just that referring to ‘markets’ means you’re guaranteed to get so many things wrong. There are no markets when the Fed decides prices insead of allowing markets to do so.

• Too Fast, Too Furious (Roberts)

As noted by Deutsche Bank’s Parag Thatte noted recently: “While the S&P 500 rallied +15% since late December, equity funds have continued to see large outflows. As Thatte elaborates, “US equity funds in particular have continued to see large outflows (-$40bn) since then, following massive outflows (-$77bn) through the sell-off from October to December.” This confirms our concern the recent rally has primarily been a function of short-covering and repositioning in the markets rather than an “all-out” buying spree based on a “conviction” the “bull market” remains intact.

David Rosenberg recently confirmed the same: “Let’s go back to December for a minute. This was the worst December since 1931, mind you, followed by the best January since 1987. This is nothing more than market that has gone completely manic. To suggest that there is anything fundamental about this dead-cat bounce in equities is laughable. This is an economy, and a market, that couldn’t even sustain a 3% yield on the 10-year T-note. It sputtered at the thought of the Fed taking the funds rate marginally above zero on a ‘real’ basis, even as it feasted on unprecedented stimulus for a such a late-cycle economy. Yes, Powell et al. helped trigger this latest up-leg, not just at last week’s meeting, but in the lead-up to the confab as well. The Fed has been crying uncle for weeks now.”

Too many attempts at covering lies with other ones. What was she thinking?

• Elizabeth Warren Apologizes For Identifying As Native American (MW)

Sen. Elizabeth Warren apologized Tuesday for previously identifying herself as a Native American. In an interview with the Washington Post, the Massachusetts Democrat expanded on an apology issued last week to the Cherokee Nation. “I can’t go back,” she told the Post. “But I am sorry for furthering confusion on tribal sovereignty and tribal citizenship and harm that resulted.” As a presidential candidate, Warren has been trying to fight accusations that she identified as Native American to advance her career as a professor at Harvard and Penn law schools. In the same report, the Post published Warren’s previously undisclosed 1986 registration card to the State Bar of Texas, in which she handwrote her ethnicity as “American Indian.”

Thought she might flee into an Article 50 extension. But it wouldn’t bring anything. She’s close to checkmate.

• May Rules Out Brexit Delay And Hard Border With Ireland (G.)

Theresa May fired a warning shot at Brexit supporters on Tuesday, insisting there was “no suggestion” Britain would leave the EU without an insurance provision to protect against a hard border in Northern Ireland. At a speech in Belfast, May would only accept that technology could “play a part” in any alternative arrangements and that she would not countenance anything that would disrupt the lives of border communities. Brexit supporters immediately expressed their alarm at some of May’s language, which they fear could be read as a step back from previous assurances. “She knows what she promised us,” one ERG source said. “Even if she didn’t mean what she said, we do.”

The comments came as May prepared to meet EU leaders in Brussels for the first time since the historic defeat of her Brexit deal, where she is expected to formally request the reopening of the withdrawal agreement in order to address concerns about the backstop. The prime minister will travel to the Belgian capital on Thursday, meeting the European commission president, Jean-Claude Juncker, the EU parliament president Antonio Tajani, and the European council president. Donald Tusk. Both Tusk and Juncker have been adamant that the withdrawal agreement will not be reopened.

Number 10 sources suggested they did not expect a warm reception, but that it would signal the start of a new diplomatic process, involving proposals on the backstop worked on by MPs and ministers. Earlier on Tuesday, May told her cabinet she would not countenance any delay to the UK’s exit on 29 March, a message to ministers such as Jeremy Hunt and Sajid Javid who have suggested at least some delay might now be inevitable. Ministers who are more pessimistic about the prospects of the UK leaving on time with a deal held their tongues in the meeting after May’s warning. “She was pretty clear she had no time for anyone calling for it to be extended,” one cabinet source said.

“He has previously said Ireland would seek “mega-money” from the EU.”

• Ireland And EU Discuss Emergency Funding For No-Deal Brexit (G.)

Ireland is in talks with the EU over a substantial Brexit emergency fund to offset the damage caused to the country’s €4.5bn (£3.96bn) food exports to Britain if the UK crashes out of the bloc with no deal next month. As Theresa May prepares for a crunch meeting in Brussels on Thursday, officials at the European commission are already looking at continuous compensatory measures for Ireland as part of an ongoing arrangement that could last years. Contingency funds to compensate farmers have already been discussed at the highest levels and are expected to arise in talks with the taoiseach, Leo Varadkar, during a round of meetings in Brussels on Wednesday.

Sources say Ireland will be looking for a “long-term fix” in EU budget talks in April rather than a lump sum Brexit bailout. Politicians have cited the ongoing assistance given to the Baltic states after Russia banned certain food exports from the EU as an example of financial solidarity it hopes to win in a no-deal Brexit. Ireland exports €4.5bn worth of food and drink a year to the UK, ranging from beef to cheddar cheese. Calculations by the Department of Agriculture put the cost of tariffs under World Trade Organization rules at €1.7bn. Michael Creed, Ireland’s minister for agriculture, food and the marine, has said this would be an “existential challenge” for the food and drink sector. He has previously said Ireland would seek “mega-money” from the EU.

“China entered 2008 with $8 billion in officially counted debt; 10 years later that debt is $40 trillion..”

• China: Expansion, Stagnation and Decline (CHSmith)

China entered 2008 with $8 billion in officially counted debt; 10 years later that debt is $40 trillion, plus unknown trillions more in the shadow banking system which expanded the options for risky speculation and massive expansions of credit. Like all the other stagnating economies, China’s “solution” to stagnation was to expand debt-funded speculation and “investments” with little to no actual return. The high water mark of China’s financialization orgy was 2018. From now on, adding debt simply adds more drag on the underlying economy, as income is diverted to service speculative debt and defaults start hollowing out both the official banking system and the shadow banking system.

All the policies that worked in the Boost Phase no longer work. the policy tool chest is empty, and so China’s leadership is doing more of what’s failed: burying bad debt off the visible balance sheets, re-issuing new loans to pay off defaulted debt, and all the usual tricks of a failed banking/credit system. Japan has papered over its systemic rot and decline for 30 years by using a financial Perpetual Motion Machine: the state borrows and spends trillions by selling bonds to the central bank, which in effect prints “free money” for the state to burn propping up a sclerotic, corrupt, failed status quo.

If that’s policy makers’ idea of success, they are delusional. Credit/asset bubbles all deflate, and central bank buying of assets only gives the lie to the illusion of stability and market liquidity. Simply put, there is no indication China’s leadership has any plan to manage the inevitable stagnation and decline of China’s economy that is now painfully obvious to anyone with the slightest willingness to look beneath the flimsy propaganda of official statistics. They are not alone, of course; every other major economy is equally bereft of policies and equally dependent on bogus statistics and debt to paper over the decline.

Macron support slips further. “50 MPs from Macron’s own party abstained from voting”.. but “The main thing is that there were no votes against..”, says the party.

• French Lawmakers Approve Controversial ‘Anti-Riot’ Bill (F24)

French MPs on Tuesday approved an anti-rioting bill giving security forces the power to ban suspected hooligans from demonstrating, in a controversial bid to crack down on violence that has marred Yellow Vest protests over the last three months. Opponents say the bill, approved by the lower house of parliament by 387 votes to 92, contravenes the constitutional right to demonstrate. Under its most contentious provision, government officials would be able to ban people suspected of being hooligans from taking part in demonstrations – without oversight from a judge. Inspired by legislation used to crack down on football hooligans, the new law calls for a six-month prison sentence and a €7,500 ($8,500) fine for violators.

The legislation, if passed by the upper house and approved by the constitutional council, would also allow fines of €15,000 ($17,000) and a one-year prison term for demonstrators covering or masking their faces to escape identification. It would also hand French police greater powers to search would-be demonstrators for weapons. [..] Unusually, some 50 MPs from Macron’s own party, the Republic on the Move (LREM), abstained from voting in favour of the legislation on Tuesday in a sign of divisions within the group. [..] “The main thing is that there were no votes against,” Gilles Le Gendre, who heads LREM’s parliamentary group, told reporters after the vote on Tuesday.

A very curious case. We’ll hear much more of it.

• Judge Pauses Lawsuits Against Cryptocurrency Company Quadriga (R.)

A cryptocurrency platform that lost access to millions of dollars when its founder died with sole knowledge of company passwords has been granted a temporary reprieve from creditor lawsuits. Halifax judge Michael Wood on Tuesday ordered a 30-day stay that precludes filing of claims against Quadriga, a Canadian cryptocurrency exchange that has left thousands of investors without their money after the death of founder Gerald Cotten. Customers have threatened lawsuits. Ernst & Young has been appointed the company’s third-party monitor, to help manage Quadriga’s finances during the process.

Cotten, who died in December of complications from Crohn’s disease while in India, was the only person who had passwords to digital wallets containing C$180 million ($137.13 million) in cryptocurrencies, according to court filings. He was 30 years old. “Despite repeated and diligent searches, I have not been able to find (the passwords) written down anywhere,” his widow Jennifer Robertson said in an affidavit. A court file indicates Quadriga owes 115,000 users the equivalent of C$250 million ($190.46 million). The document showed Quadriga has $30 million in bank drafts, many of which it has had trouble depositing. Lawyer Maurice Chiasson told the court the company wants time to find the C$250 million it owes users. According to court filings the company is considering selling its platforms to cover its debts.

The riches of smartphones.

• 5G Wireless: A “Massive Health Experiment” (SHTF)

Experts are warning that superfast broadband known as 5G could cause cancer in humans, and the usage of 5G is nothing more than a “massive health experiment.” 5G could very well be a global catastrophe that kills wildlife, gives people terminal diseases, and causes the Earth’s magnetic field to change, according to shocking claims by a technology expert. Arthur Robert Firstenberg is an American author and an activist for electromagnetic radiation and health. In his 1997 book Microwaving Our Planet: The Environmental Impact of the Wireless Revolution, he claimed: “The telecommunications industry has suppressed damaging evidence about its technology since at least 1927.”

Firstenberg has also founded the independent campaign group the Celluar Phone Task Force and since 1996 he has argued in numerous publications that wireless technology is dangerous. According to a report by the Daily Star, Firstenberg has also recently started an online petition calling on world organizations, such as the United Nations, World Health Organisation (WHO), and European Union to “urgently halt the development of 5G,” which is due to be rolled out this year. In fact, Verizon has activated the world’s first 5G networks in four cities in the United States: Houston, Indianapolis, Los Angeles, and Sacramento. According to the Firstenberg, wireless networks are “harmful for humans” and the development of the next generation is “defined as a crime” under international law, as he states it in the online petition.

When speaking to The Daily Star Online, Firstenberg said this 5G rollout is deadly. “There is about to be as many as 20,000 satellites in the atmosphere. The FCC approved Elon Musk’s project for 12,000 satellites on November 15th and he’s going to launch his in mid-2019. I’m getting reports from various parts of the world that 5G antennas are being erected all over and people are already getting sick from what’s there now and the insect population is getting affected,” Firstenberg stated.

More riches of smartphones. Someone soon will propose a better term than ‘smart’-phones.

• 18% Of Young People In UK Do Not Think Life Is Worth Living (G.)

The number of young people in the UK who say they do not believe that life is worth living has doubled in the last decade, amid a sense of overwhelming pressure from social media which is driving feelings of inadequacy, new research suggests. In 2009, only 9% of 16-25-year-olds disagreed with the statement that “life is really worth living”, but that has now risen to 18%. More than a quarter also disagree that that their life has a sense of purpose, according to a YouGov survey of 2,162 people for the Prince’s Trust, a charity that helps 11 to 30-year-olds into education, training and work. Youth happiness levels have fallen most sharply over the last decade in respect of relationships with friends and emotional health, the survey found, while satisfaction with issues like money and accommodation have remained steady.

The Prince’s Trust has been gauging youth opinion for 10 years and found that just under half of young people who use social media now feel more anxious about their future when they compare themselves to others on sites and apps such as Instagram, Twitter and Facebook. A similar amount agree that social media makes them feel “inadequate”. More than half (57%) think social media creates “overwhelming pressure” to succeed. The gloomy view on life being taken by a growing minority of young people comes amid reports of an increased rate of teenage suicide. It was reported on Sunday that official statistics due later this year will show that suicides now occur at more than five in 100,000 teenagers in England. That contrasts with a figure of just over three in 100,000 in 2010.

“Social media has become omnipresent in the lives of young people and this research suggests it is exacerbating what is already an uncertain and emotionally turbulent time,” said Nick Stace, UK chief executive of The Prince’s Trust. “Young people are critical to the future success of this country, but they’ll only realise their full potential if they believe in themselves and define success in their own terms. It is therefore a moral and economic imperative that employers, government, charities and wider communities put the needs of young people centre stage.”

Britain gets rid of its old and its young. And presumably other ‘weaker’ groups.

• 50,000 Elderly In UK -77 Per Day- Die Waiting For Social Care (G.)

More than 50,000 people have died waiting for care while ministers dither over long-awaited plans to overhaul the funding of social care, a charity has claimed. Age UK estimated that 54,000 people – or 77 a day – have died while waiting for a care package in the 700 days since the government first said in March 2017 it would publish its social care green paper, which has since been delayed several times. The claim came as a cross-party group of MPs warned that the government was “in denial” about the perilous state of English local authority finances – a crisis driven by a growing demand for the care of vulnerable adults and children.

The Commons public accounts committee (PAC) said that after eight years in which central government funding had halved, councils were under “enormous pressure” just to maintain essential services. MPs accused ministers of having no meaningful plan to ensure local authority finances were sustainable in the future. Overall spending by local authorities on services fell by 19.2% in real terms between 2010-11 and 2016-17, according to the report. Meg Hillier, the committee chair said: “Government needs to get real, listen fully to the concerns of local government and take a hard look at the real impact funding reductions have on local services.”

The chancellor, Philip Hammond, announced a funding boost for councils at last autumn’s budget, amounting to £1.4 bn in 2018-19 and 2019-20. But the PAC said such short-term fixes failed to deal with the underlying challenges facing councils. It urged the government to focus on assuring the long-term sustainability of local authority finances, and be more ambitious than simply allowing them to “cope”.

Debt Rattle January 28 2019

Jan 282019

January 28, 2019 Posted by Raúl Ilargi Meijer at 11:29 am Finance Tagged with: backstop, Brexit, fossil fuels, Germany, gold, home loans, Ireland, real estate, sanctions, stockpiling, Venezuela, WTO, yuan 6 Responses »

Pablo Picasso Bust of woman with arms raised 1922

• US Sanctions On Venezuela Are Killing Citizens – Former UN Rapporteur (Ind.)

• PBOC Fixes Yuan Dramatically Stronger Following Gold Spike (ZH)

• China’s Real Estate Loan Growth Slows Further In 2018 (CNBC)

• Britain’s Biggest Lender To Offer 100% Mortgages To First-Time Buyers (G.)

• UK Cannot Simply Trade On WTO Terms After No-Deal Brexit (G.)

• May To Seek Binding Changes To Irish Backstop – Boris Johnson (R.)

• Ireland Stresses It Will Not Yield On Brexit Backstop (G.)

• UK Military Bases Stockpiling To Prepare For No-Deal Brexit (Sky)

• Brexit Exposes Growing Fractures In UK Society (G.)

• In Germany’s Plan To Phase Out Coal, A Big Polluter Will Benefit (BBG)

Picked up these numbers last week on Twitter. Chavez announced cancer in late 2012, died early 2013. Oil prices only explain a smal part of it. Economic warfare does the rest.

@spectatorindex – Venezuela GDP growth.
2012: 5.6%
2013: 1.3%
2014: -3.9%
2015: -6.2%
2016: -17%
2017: -15%
2018: -16%

• US Sanctions On Venezuela Are Killing Citizens – Former UN Rapporteur (Ind.)

The first UN rapporteur to visit Venezuela for 21 years has told The Independent the US sanctions on the country are illegal and could amount to “crimes against humanity” under international law. Former special rapporteur Alfred de Zayas, who finished his term at the UN in March, has criticized the US for engaging in “economic warfare” against Venezuela which he said is hurting the economy and killing Venezuelans. The comments come amid worsening tensions in the country after the US and UK have backed Juan Guaido, who appointed himself “interim president” of Venezuela as hundreds of thousands marched to support him. European leaders are calling for “free and fair” elections. Russia and Turkey remain Nicolas Maduro’s key supporters.

Mr De Zayas, a former secretary of the UN Human Rights Council (HRC) and an expert in international law, spoke to The Independent following the presentation of his Venezuela report to the HRC in September. He said that since its presentation the report has been ignored by the UN and has not sparked the public debate he believes it deserves. “Sanctions kill,” he told The Independent, adding that they fall most heavily on the poorest people in society, demonstrably cause death through food and medicine shortages, lead to violations of human rights and are aimed at coercing economic change in a “sister democracy”. On his fact-finding mission to the country in late 2017, he found internal overdependence on oil, poor governance and corruption had hit the Venezuelan economy hard, but said “economic warfare” practised by the US, EU and Canada are significant factors in the economic crisis.

In the report, Mr de Zayas recommended, among other actions, that the International Criminal Court investigate economic sanctions against Venezuela as possible crimes against humanity under Article 7 of the Rome Statute. The US sanctions are illegal under international law because they were not endorsed by the UN Security Council, Mr de Zayas, an expert on international law and a former senior lawyer with the UN High Commissioner for Human Rights, said. “Modern-day economic sanctions and blockades are comparable with medieval sieges of towns. “Twenty-first century sanctions attempt to bring not just a town, but sovereign countries to their knees,” Mr de Zayas said in his report.

Xi remains nervous.

• PBOC Fixes Yuan Dramatically Stronger Following Gold Spike (ZH)

PBOC fixed the yuan dramatically stronger against the dollar overnight, sending offshore yuan surging to its strongest against the dollar in six months. While the Chinese currency is reportedly strengthening on the heels of trade talks optimism (which is entirely the opposite of the rhetoric coming out of Washington), we note that this was the biggest positive shift in the yuan fix in 19 months…

Notably, the yuan is strengthening considerably more against the dollar than it is against the broad basket of trade partner currencies…Shanghai Accord 2.0? And coincidentally, the surge in yuan comes the day after gold prices broke out higher… Perhaps the PBOC’s aggressive action was prompted to manage the Yuan peg against gold back into balance?

If you look closer, nothing seems very dramatic. But real estate has become such a huge part of the economy that Beijing must weigh curbing risks vs continued growth.

It’s also the speed with which this has happened. 10 years ago Chinese didn’t borrow for homes. It’s literally been used to mitigate the financial crisis.

• China’s Real Estate Loan Growth Slows Further In 2018 (CNBC)

Loans to China’s property sector grew at a slower pace in 2018 as Beijing tightened home-purchase rules to curb bubble risk, but lending to property developers expanded slightly faster than the year before, central bank data showed on Friday. Outstanding yuan property loans grew 20% from a year earlier to 38.7 trillion yuan ($5.72 trillion) by end-December, compared with 20.9% growth in 2017, the PBOC said in a quarterly financial report. Outstanding mortgage lending climbed 17.8% year-on-year to 25.75 trillion yuan by the end of 2018, below a 22.2% rise in 2017, central bank data showed.

Policymakers have vowed to ensure “stable and healthy” development of the property market, repeatedly emphasizing that homes are for living in, not speculative investment. The government’s sustained drive to reduce debt risks in the economy has cooled the property market but a continued downturn in credit growth in the sector could add to growing pressures on the world’s second-largest economy. The real estate sector is a key driver of economic growth, so any further weakness could influence the pace and scope of fresh stimulus steps expected from Beijing this year.

Property investment is also looking wobbly, with analysts waiting to see if the government will risk loosening restrictions on home buyers that have kept speculation in check. Real estate investment in December rose 8.2% from a year earlier, down from 9.3% in November, according to Reuters calculations based on data released by the National Bureau of Statistics. That was just ahead of the slowest pace of growth last year at 7.7% recorded for October. Developers raised their borrowings last year though, with loans extended for property development up 22.6% in 2018 versus growth of 21.7% in 2017, the report showed. The central bank also said outstanding household loans jumped 18.2% to 47.9 trillion yuan by end-2018.

How much can Brexit hurt the British? A lot, we must assume. Then again, if you fall for this stuff at this moment in time, maybe you deserve what’s coming. How about a crisis worse than the 1930s?

• Britain’s Biggest Lender To Offer 100% Mortgages To First-Time Buyers (G.)

Britain’s biggest lender is to offer 100% mortgages to first-time buyers in a return to lending last seen before the financial crash – but only if the buyer has family that can stand behind the loan. Under the new Lloyds Bank “Lend A Hand” deal, a first-time buyer will be able to borrow up to £500,000 for a new home, without putting down a penny of deposit. The Lloyds move marks a major expansion into the first-time buyer market, as most other mainstream lenders demand a minimum deposit worth 5% of the property purchase price, although Barclays has offered a similar “family springboard” deal. Lloyds has priced the mortgages to undercut the Barclays offer.

The deal – part of what Lloyds said is a £30bn commitment to help first-time buyers – will reopen concern about a two-tier market where buyers with well-off families can elbow aside those without. Saving for a deposit is usually cited by first-time buyers as the biggest hurdle to home ownership. Lloyds said the average deposit put down by first-time buyers has climbed to £33,211, and a staggering £110,182 in London. The Lloyds deal requires that a member of the family – such as parent, grandparent or close relative – helps out. The bank will only grant the 100% mortgage if the family member puts a sum equal to 10% of the value of the property into a Lloyds savings account.

“The anticipated recession will be worse than the 1930s, let alone 2008.”

• UK Cannot Simply Trade On WTO Terms After No-Deal Brexit (G.)

The UK will be unable to have frictionless, tariff-free trade under World Trade Organization rules for up to seven years in the event of a no-deal Brexit, according to two leading European Union law specialists. The ensuing chaos could double food prices and plunge Britain into a recession that could last up to 30 years, claim the lawyers who acted for Gina Miller in the historic case that forced the government to seek parliament’s approval to leave the EU. It has been claimed that the UK could simply move to WTO terms if there is no deal with the EU. But Anneli Howard, a specialist in EU and competition law at Monckton Chambers and a member of the bar’s Brexit working group, believes this isn’t true. “No deal means leaving with nothing,” she said. “The anticipated recession will be worse than the 1930s, let alone 2008.

It is impossible to say how long it would go on for. Some economists say 10 years, others say the effects could be felt for 20 or even 30 years: even ardent Brexiters agree it could be decades.” The government’s own statistics have estimated that under the worst case no-deal scenario, GDP would be 10.7% lower than if the UK stays in the EU, in 15 years. There are two apparently insurmountable hurdles to the UK trading on current WTO tariffs in the event of Britain crashing out in March, said Howard. Firstly, the UK must produce its own schedule covering both services and each of the 5,000-plus product lines covered in the WTO agreement and get it agreed by all the 163 WTO states in the 32 remaining parliamentary sitting days until 29 March 2019. A number of states have already raised objections to the UK’s draft schedule: 20 over goods and three over services.

To make it more complicated, there are no “default terms” Britain can crash out on, Howard said, while at the same time, the UK has been blocked by WTO members from simply relying on the EU’s “schedule” – its existing tariffs and tariff-free trade quotas. The second hurdle is the sheer volume of domestic legislation that would need to be passed before being able to trade under WTO rules: there are nine statutes and 600 statutory instruments that would need to be adopted. The government cannot simply cut and paste the 120,000 EU statutes into UK law and then make changes to them gradually, Howard said. “The UK will need to set up new enforcement bodies and transfer new powers to regulators to create our own domestic regimes,” she said.

Fast and loose with Good Friday.

• May To Seek Binding Changes To Irish Backstop – Boris Johnson

Prime Minister Theresa May will seek legally binding changes to the Irish backstop from the European Union in an attempt to break the deadlock over Brexit, lawmaker Boris Johnson wrote in The Telegraph on Sunday, citing senior government sources. The PM is looking to change the text of the agreement to insert either a sunset clause or a mechanism for the UK to escape without reference to the EU, Boris Johnson said in The Telegraph. The contentious backstop arrangement is designed to prevent a hard border between Ireland and the UK province of Northern Ireland by requiring Britain to keep some EU rules if it was unable to agree a trade deal with the bloc. Ireland said earlier on Sunday it would not accept any changes to the backstop agreement.

The backstop will be May’s major point of contention this week. Stop her! There’s already talk of reinserting issues in the deal that have already been thrown out.

• Ireland Stresses It Will Not Yield On Brexit Backstop (G.)

Ireland has launched a last-minute effort to warn Theresa May off any attempt to unravel the backstop, two days before a crucial Commons debate that may decide the next move for the UK’s rudderless Brexit policy. Simon Coveney, the Irish foreign minister and deputy prime minister, insisted the backstop – the mechanism to ensure there will be no hard border between the Irish Republic and Northern Ireland if Britain and the EU fail to strike a free trade deal – was “part of a balanced package that isn’t going to change”. In a forceful interview, he insisted it was only part of the withdrawal agreement because of the UK’s red lines.

On Tuesday Tory Brexiters may get the chance to vote for amendments that would signal their willingness to back May’s Brexit deal subject to the backstop’s either being removed or time-limited. Ministers have not formally backed any of the anti-backstop amendments, which are incompatible with the deal that May agreed with UK leaders, but if one were to pass by a majority, she would be able to present the EU with a firm idea of what changes might get her deal through parliament – something that as yet remains unclear to Brussels. In an interview with BBC One’s The Andrew Marr Show, Coveney said he did not see the need for further compromise because “the backstop is already a compromise”.

Although originally Northern Ireland-specific, it was made UK-wide at the request of May, he said. “And the very need for the backstop in the first place was because of British red lines that they wanted to leave the customs union and single market,” he said.

Many Brits are so poor they can’t even think of stockpiling.

• UK Military Bases Stockpiling To Prepare For No-Deal Brexit (Sky)

Britain has begun stockpiling food, fuel, spare parts and ammunition at military bases in Gibraltar, Cyprus and the Falklands in case of a no-deal Brexit, Sky News has learnt. Extra supplies are also being built up at bases in the UK to reduce the risk of the armed forces running short and being unable to operate if it suddenly becomes much harder to import and export day-to-day goods after 29 March. Military chiefs have spent at least £23m on what is being described as “forward-purchased” goods, Sky News understands. The move is part of contingency planning by the government – codenamed Operation Yellowhammer – to reduce disruption if Britain departs from the European Union without an agreement, according to three defence sources.

“An army marches on its stomach. If supply lines breakdown they struggle,” one source said. Any blockage in the flow of food and other vital items to Britain’s military bases overseas could impact on operations and affect thousands of soldiers, sailors and airmen. There is a concern that supplies delivered to British troops in the rest of Europe – the UK has a permanent presence in Cyprus and a base on the British overseas territory of Gibraltar, which shares a border with Spain – could be impacted, according to the sources.

We haven’t seen any of it yet.

• Brexit Exposes Growing Fractures In UK Society (G.)

Britons have become angrier since the referendum to leave the EU, according to a survey which suggests there is widespread unhappiness about the direction in which the country is heading. 69 per cent of respondents said they felt their fellow citizens had become “angrier about politics and society” since the Brexit vote in 2016, according to the Edelman Trust Barometer, a long-established, annual survey of trust carried out across the globe. 40 per cent of people think others are now more likely to take part in violent protests, the UK results from the survey show, even though violent political protest in Britain is rare.

One person in six said they had fallen out with friends or relatives over the vote to leave the bloc, the survey found. Edelman, which said the findings exposed a “disUnited Kingdom”, found widespread concern about where the government was heading, particularly among those who voted remain, and those who backed Labour. Overall, about 65% of Britons think the country is “on the wrong track”, the survey suggests. Amongst remain voters the figure is 82%, but even among leave voters the figure is 43%. Some 60% of people who identify with the Conservatives think the country is heading in the right direction, but among Labour identifiers, the figure is just 20%.

The coal phase-out is part of a 500 billion-euro switch away from fossil fuels and toward renewables..

Compensating coal-mining regions & consumers for higher electricity prices expected to cost German taxpayer up to €78bn.

But across the border lies Italy, and next to it Greece. How are they going to pay for such a switch? And if they don’t, what’s the use of Germany doing it?

• In Germany’s Plan To Phase Out Coal, A Big Polluter Will Benefit (BBG)

A proposal to stop Germany from using coal for power generation within two decades may leave an unexpected beneficiary: The company that burns the most of the fuel. While RWE AG was quick to say it’s “too soon” to shed all fossil fuel plants by 2038, the recommendations outlined this weekend by a panel advising Chancellor Angela Merkel called for compensation for the utilities and 40 billion euros ($45.6 billion) for regions coping with the transition. Together, the measures would significantly soften the blow on industry from Merkel’s vow to scale back greenhouse gases. They show how far the government has moved away from a quick clampdown on the most polluting fossil fuel and give more certainty for the future of some of RWE’s most valuable assets.

And while the proposals could yet be watered down by politicians, they signal a longer life for many of the utility’s plants than environmentalists had hoped for. “We believe that clarity, compensation payments, and a relatively long phase-out period should trigger a re-rating for the company’s conventional power generation,” said Guido Hoymann, an analyst at the private bank B. Metzler Seel. Sohn & Co. KGaA who added RWE to a list of top 10 German stocks.

Germany’s 120 or so remaining coal and lignite plants have a combined capacity of about 45 gigawatts. That’s enough to feed 40 percent of the nation’s power demand or about 32 million homes. Germany is already falling short on its targets to slash greenhouse gas emissions and sees closing coal plants as one of the most important ways to make the reductions needed. The coal commission includes members from the main political parties, environmental groups and industry charged with developing a consensus that Germany can live with for years to come.

Debt Rattle January 27 2019

Jan 272019

January 27, 2019 Posted by Raúl Ilargi Meijer at 10:56 am Finance Tagged with: Airbnb, backstop, Brexit, collusion, comedy, customs union, Ireland, Juncker, late night, Mueller, Roger Stone, Venezuela, yellow vests 9 Responses »

René Magritte L’éternité 1935

• Mueller Hunt For Russia Collusion Turns Into Circus Show With Stone (Turley)

• Disgraced Wasserman-Schultz Now ‘Fixing’ Democracy In Venezuela (RT)

• Non-Yellow-Vest Protests Are Good? Macron Hails Venezuela Coup Attempt (RT)

• Ireland Dismisses Suggestion It Should Quit EU And Join UK (G.)

• Only Two Votes Really Matter Now On Brexit (Ind.)

• Juncker Warns May: Permanent Customs Union Is Price For Revisiting Backstop (G.)

• UK Firms Plan Mass Exodus If May Allows No-Deal Brexit (O.)

• Airbnb Contributes To Poor Housing Markets (Ind.)

• British Museum ‘Rules Out’ Returning Parthenon Marbles To Greece (Ind.)

• Late-Night With The Democrats (G.)

“.. if a deer could run over itself, then Stone is the ultimate roadkill defendant.”

• Mueller Hunt For Russia Collusion Turns Into Circus Show With Stone (Turley)

This is not the big game that Robert Mueller was hunting when he began his investigation of Russian interference in the 2016 presidential election. Despite the breathless news coverage, the indictment is underwhelming and far from what many predicted. As for the media, it seems to be only counting heads of Trump associates indicted, as opposed to what they were actually charged with. The media has long described Stone as the possible Trump campaign conduit to WikiLeaks and the Russians, citing his presumed communications with Julian Assange and his advance knowledge of the Democratic Party and Clinton campaign email hacks.

Yet, none of that was confirmed or even suggested in the indictment. There was no charge of collusion. No hint of meetings or arrangements with Assange. Not even a charge as an unregistered foreign agent of the Russians. Just collateral crimes with nary a mention of collusion and a defendant who alternatively presents himself as the tragically comic and the comically tragic figure mired in the special counsel investigation.

Indeed, if a deer could run over itself, then Stone is the ultimate roadkill defendant. Mueller has relentlessly pursued him for almost two years, and Stone has equally relentlessly taunted him and his team. Various grand jury witnesses recounted being questioned about Stone and theories of collusion for months. Mueller worked every evident angle before bringing down this indictment in what could be the final charging stage of his investigation. It was only last month that Mueller asked for the transcript of the testimony of Stone before Congress. Largely based on alleged false statements, the entirety of the indictment comes out of that transcript.

The Democrats have dozens if not hundreds of people they must urgently get rid of, or they’ll never win another election. Wasserman-Schultz was thrown out for treachery vs Bernie. And now she’s back?

• Disgraced Wasserman-Schultz Now ‘Fixing’ Democracy In Venezuela (RT)

Regime change and foreign interventions are things that the two US ruling parties agree on regardless of how much they exchange blows at home. Venezuela is the latest place where Republicans and Democrats have found common ground. If you watch the US media, you know what is happening in Venezuela: Dictator Nicolas Maduro is brutally suppressing the people he has been robbing for years, and now they have revolted and elected a true representative of their interest, the one true legitimate acting president Juan Guaido. And now it’s up to America to ‘fix’ democracy by whatever means necessary.

The House Foreign Affairs Committee has even offered a simple explanation on how a ‘dream team’ of Democrats have prepared a package of laws, which will ensure Venezuela’s transition into a better future. Debbie Mucarsel-Powell will be bringing humanitarian aid, Donna Shalala will stop the arming of Maduro’s thugs with batons and tear gas, while Debbie Wasserman Schultz gets arguably the hardest task of them all – taking on Russia’s President Vladimir Putin. You know, the one who – according to the current dogma of the American left establishment – already denied the Democrats the presidency in 2016 and whose puppet Donald Trump is currently trying to topple the Venezuelan government for some reason that only a 5-dimensional-chess master can understand.

Wasserman Schultz may hold a personal grudge against Putin. She had to resign as the Chair of the Democratic National Committee after leaked documents revealed how it was playing on the side of Hillary Clinton and against Bernie Sanders in 2016. The leak is widely attributed to Russia by American politicians and media. The irony of Wasserman Schultz now being on the frontline of bringing democracy to Venezuela didn’t go unnoticed by Jill Stein, the head of the Green Party. But who cares? Americans were told already that Stein is just a Putin tool stealing votes from Clinton and working for RT. Those were smears, but ‘alternative facts’ are not an invention of the Trump administration. Opposing Washington’s regime change is a dangerous cause. Say a word of doubt, and you’ll find yourself in a virtual concentration camp for Putin puppets, Assad apologists and Maduro mouthpieces.

Coverage of the Gilets Jaunes’ Acte XI is sparse. Given the extreme level of police violence, that is a bit weird. There are tons of videos, like of people losing eyes to police rubber bullets. Macron is damning his own presidency.

• Non-Yellow-Vest Protests Are Good? Macron Hails Venezuela Coup Attempt (RT)

Emmanuel Macron has praised the “courage” of Venezuelan protesters but fell short of recognizing self-declared “acting president” Juan Guaido. His desire to exert influence on Latin America could back him into a corner in Paris. “After the illegal election of Nicolas Maduro in 2018, Europe supports the restoration of democracy. I salute the courage of the hundreds of thousands of Venezuelans marching for their freedom,” Emmanuel Macron tweeted in French on his official account. The French leader went beyond the official statement from the EU, which has called for “an immediate political process leading to free and credible elections, in conformity with the constitutional order” although President Maduro’s second term officially runs to 2024.

Macron might be backing himself into a corner with his desire to exert influence on the situation in Venezuela and elevate his status on the international arena against a backdrop of a quite precarious situation at home, Chris Reynolds, an Associate Professor in Contemporary French and European Studies at the Nottingham Trent University, believes. “We can see a direct contradiction here between the domestic situation and Macron’s [statement] on this emerging situation in Venezuela,” Reynolds told RT, adding that the president’s response to the domestic Yellow Vests protests was “quite strong.” France has been gripped by massive weekly protests since November. United under the umbrella movement known as the Yellow Vests, the demonstrators, who first turned to the streets to protest fuel price hikes, are now expressing their discontent over Macron’s broader reform agenda.

Protests have often been marred by violence and were met with heavy police response as well as condemned by the president. With his sudden support for the Venezuelan street protests, Macron “opens himself up to criticism,” the professor said. “Those people, who would seek to criticize Macron will see a contradiction between his ambiguous support for the Venezuelan street protests [and his reaction to domestic protests] and therefore will have material to criticize him.” The fact that Macron stopped short of backing Guiado directly, and opted for a more vague statement instead, shows that he is well aware of this contradiction. “Macron finds himself in a situation, in which he cannot overtly express support to the Venezuelan opposition political leader, who has been brought to the fore on the back of the street protests,” Reynolds said.

VIDEO: "Do you think I can live on 421 euros per month?": hundreds of "yellow vest" protesters take to the streets of Paris pic.twitter.com/KTszmrD2GH

— AFP news agency (@AFP) January 27, 2019

But you’re our colony!

• Ireland Dismisses Suggestion It Should Quit EU And Join UK (G.)

Ireland has dismissed the suggestion that the best solution to the Brexit impasse might be for the country to quit the EU and join the UK. Questioned about the possibility by the BBC Today presenter John Humphrys, Ireland’s Europe minister, Helen McEntee, said it was not contemplating quitting the EU, that polls showed 92% of the population wanted to remain in the bloc, and “Irexit” was not plausible. She told the Radio 4 programme on Saturday that, in the event of no deal, Ireland was “not planning for the reintroduction of a border”, and urged the UK to honour its commitment to ensure the border remained invisible, as it had since the Good Friday peace deal was signed nearly 21 years ago.

Humphrys said: “There has to be an argument, doesn’t there, that says instead of Dublin telling this country that we have to stay in the single market etc within the customs union, why doesn’t Dublin, why doesn’t the Republic of Ireland, leave the EU and throw in their lot with this country?” McEntee replied: “To suggest that we should leave? Ninety-two per cent of Irish people last year said they wanted Ireland to remain part of the European Union and in fact since Brexit that figure has gotten only bigger.” The interview came hours before hundreds of people gathered on the border to protest against Brexit.

Big one coming up on Tuesday. Could take May’s powers away. But you’re right: they have far too many votes.

• Only Two Votes Really Matter Now On Brexit (Ind.)

Tuesday will be a big day in the Brexit story. We have had historic votes and critical moments before, but this is up another notch. The vote on the amendment jointly proposed by Yvette Cooper, Labour MP, and Nick Boles, Conservative MP, will be both historic and critical. It will be historic because it is the first time since the 17th century that the House of Commons has tried to take control of the nation’s affairs from the government. And it will be critical because no one knows which way the vote will go. The Cooper-Boles plan is to take no-deal Brexit “off the table” by requiring Theresa May to seek to postpone our departure from the EU if a deal has not been approved in time. The vote will be no mere expression of opinion.

If the amendment is passed, it will change the rules of the Commons to allow a bill drafted by Cooper and Boles to be rushed into law on 5 February. There is some talk of this bill being blocked by Eurosceptic peers in the House of Lords, which would have to whizz it through on the same day. Unlike the Commons, the Lords doesn’t have rules for timetabling debates, which means a small group of peers could keep talking to prevent votes. But Labour and Liberal Democrat peers insist that the huge majority opposed to a no-deal Brexit in the House of Lords would invent new rules, if needed, to get the bill through.

[..] Most attention is focused on an amendment which supports the withdrawal agreement, but only if the Ireland backstop is “replaced with alternative arrangements to avoid a hard border”. This wouldn’t be binding, and won’t pass unless the government or the official opposition support it, but its significance will be as a show of strength on the Tory back benches. Clever people think that if this amendment attracts a lot of votes it will strengthen the prime minister’s hand in going back to Brussels to ask for changes. Olly Robbins, May’s chief negotiator, is said to have drafted nine options for trying to make the backstop more palatable to Tory MPs who find it so objectionable they would rather leave without a deal.

Trying to be funny?!

“Critics of May’s deal believe that the backstop [..] could trap the UK in an indefinite customs union.”

And then Juncker says renegotiating the backstop does just that. That logic says whatever you do, you’re stuck with the customs union.

• Juncker Warns May: Permanent Customs Union Is Price For Revisiting Backstop (G.)

Jean-Claude Juncker has told Theresa May in a private phone call that shifting her red lines in favour of a permanent customs union is the price she will need to pay for the EU revising the Irish backstop. Without a major shift in the prime minister’s position, the European commission president told May that the current terms of the withdrawal agreement were non-negotiable. Details of the call, contained in a leaked diplomatic note, emerged as Juncker’s deputy, Frans Timmermans, said there had been no weakening of the resolve in Brussels in support of Ireland, and accused the Tory Brexiters of a “cavalier” approach to peace. “Let me be extremely clear: there is no way I could live in a situation where we throw Ireland under the bus,” Timmermans said.

“As far as the European commission is concerned, the backstop is an essential element for showing to Ireland and to the rest of Europe that we are in this together.” On Tuesday, the Commons will vote on a series of amendments that might variously force the prime minister to delay Brexit or go back to Brussels to demand the ditching of the Irish backstop or a time limit on its enforcement. Critics of May’s deal believe that the backstop, an “all-weather” solution for avoiding a hard border on the island of Ireland, could trap the UK in an indefinite customs union, limiting the country’s ability to pursue an independent trade policy. May’s deal was rejected this month by a historic 230 votes.

It’s a surprise any would want to stay.

• UK Firms Plan Mass Exodus If May Allows No-Deal Brexit (O.)

Thousands of British companies have already triggered emergency plans to cope with a no-deal Brexit, with many gearing up to move operations abroad if the UK crashes out of the EU, according to the British Chambers of Commerce. Before a crucial week in parliament, in which MPs will try to wrest control from Theresa May’s government in order to delay Brexit and avoid a no-deal outcome, the BCC said it believed companies that had already gone ahead with their plans represented the “tip of the iceberg” and that many of its 75,000 members were already spending vital funds to prepare for a disorderly exit. It said that in recent days alone, it had been told that 35 firms had activated plans to move operations out of the UK, or were stockpiling goods to combat the worst effects of Brexit.

Matt Griffith, director of policy at the BCC’s west of England branch, said that many more companies had acted to protect themselves since May’s Brexit deal was decisively rejected by MPs in the Commons earlier this month. He said: “Since the defeat for the prime minister’s deal, we have seen a sharp increase in companies taking actions to try and protect themselves from the worst effects of a no-deal Brexit. No deal has gone from being one of several possible scenarios to a firm date in the diary.” Labour MP Yvette Cooper has revealed to the Observer that two major employers in her West Yorkshire constituency – luxury goods manufacturer Burberry and confectioner Haribo – had both written to her, warning of the damaging effects of no deal on their UK operations.

[..] Last week some of the UK’s largest employers – including Airbus, Europe’s largest aerospace manufacturer, which employs 14,000 people in the UK and supports another 110,000 through supply chains – warned of potentially disastrous effects of no deal on its UK activities. Tom Enders, the boss of Airbus, said: “Please don’t listen to the Brexiters’ madness, which asserts that because we have huge plants here we will not move and we will always be here. They are wrong.”

Houses are places where people live. Any other use is detrimental.

• Airbnb Contributes To Poor Housing Markets (Ind.)

A recent report by a Toronto public interest group, Fairbnb, has added a local voice to the growing international chorus of concern about the impact of Airbnb on housing. It is now clear that a single American company has upended local markets, pushed rental prices skyward and could be contributing to poverty, especially in cities popular with tourists. Toronto City Council was slow to recognize the dangers posed by Airbnb, not only to unionized hotel workers but also to the million-plus tenants who need stable and affordable accommodation. Late in 2017, regulations were put in place making it difficult for deep-pocketed investors to buy multiple condos for the purpose of listing them on Airbnb.

But Airbnb hosts appealed against the legislation to Ontario’s Local Planning Appeal Tribunal. Six commercial operators added their voice. The hearings on the new bylaw are set for August 2019. In the meantime, there are no rules. Limiting Airbnb to some version of its initial ideal of “home sharing” is crucial. In 2018, 16 per cent of Toronto Airbnb hosts controlled 38 per cent of the listings, and the problem is worsening, with some downtown condos having hundreds of units listed on Airbnb, according to the Fairbnb report. The study concludes that Airbnb is responsible for countless illegal “ghost hotels”. What’s more, the report notes that if Toronto’s new rules were to come into force, more than 8,200 listings would have to be removed, and up to 6,500 whole homes would be available to boost the supply of long-term family rental housing.

Imperial powers still rule. So stand up to them. Tell the Brits they’re not welcome until they give back what they stole. Not a single one of them. Let them fix their issues at home first.

• British Museum ‘Rules Out’ Returning Parthenon Marbles To Greece (Ind.)

The director of the British Museum has appeared to rule out returning the Elgin Marbles to Greece after its government demanded Britain open negotiations over their return last year. The 2,500-year-old marble sculptures were removed from the Parthenon Temple on the Acropolis in Athens by the Ottoman ambassador Lord Elgin in the early 1800s. Lord Elgin sold the marbles to the British government, who passed them on to the British Museum in 1817 where they remain one of its most prized exhibits. Debate over where the sculptures should be located has raged for more than 200 years, with Labour leader Jeremy Corbyn pledging to return them to Greece if he becomes prime minister.

In August, Greek culture minister Lydia Koniordou invited UK officials to meetings in Greece to discuss the statues’ return in the midst of Brexit talks as Britain sought allies around Europe. In an interview with Ta Nea, Greece’s daily newspaper, British Museum director Hartwig Fischer said: “The Trustees of the British Museum feel the obligation to preserve the collection in its entirety, so that things that are part of this collection remain part of this collection.” Asked if he thinks the Greek people are right to want the Parthenon sculptures back, he told the newspaper: “I can certainly understand that the Greeks have a special and passionate relationship with this part of their cultural heritage. “Yes, I understand that there is a desire to see all of the Parthenon Sculptures in Athens.”

The other half of the Parthenon Sculptures are currently in the Acropolis Museum in Greece. For several decades, Greece has called for the reunification of the statues and has sent several formal requests, threatened legal action and proposed solutions such as mediation by Unesco. Supporters of the Greek position say although Lord Elgin said he had the permission of officials of the ruling Ottoman Empire to take the sculptures, the empire was a foreign force and had no right to let the artefacts go. When Mr Fischer was asked about Mr Corbyn’s pledge to return the Elgin Marbles to Greece if he became prime minister, he said: “I think that this is Mr Corbyn’s personal view on the question, that you take note of. “Obviously, that is not the stance and the view of the Trustees of the Museum.”

Asked by Ta Nea if he would accept that Greece is the legal owner of the Parthenon Sculptures, he replied: “No, I would not. The objects that are part of the collection of the British Museum are in the fiduciary ownership of the Trustees of the Museum.”

I’m guessing this divides America in two along a very sharp dividing line. What I see of it (not much) is Trevor Noah being an embarrassment to Jon Stewart, and Colbert having completely lost his mojo after he shed his right-wing persona. They do what the media do: play safe, keep feeding your followers what you know they want. Anti-Trumpism.

But if there’s one thing humor needs to thrive, it’s surprise. And none of this pretend humor has any of that. It’s all just devolved into a painfully predictabe word-play game. Letterman wouldn’t have gone there, Jon Stewart wouldn’t. Humor can’t just confirm people’s fixed opinions, there’s nothing funny about that.

• Late-Night With The Democrats (G.)

Diners and town halls. Iowa and New Hampshire. The Rachel Maddow Show and The Late Show with Stephen Colbert. While some campaign stops for Democrats running for president are very familiar, others reflect how the rise of liberal media hosts, late night comedians and “going viral” online could make all the difference in a tight race. Senator Kirsten Gillibrand has appeared twice in three months on Colbert’s programme on the CBS TV network, first to promote her book, then for the big reveal about 2020. Colbert asked: “Do you have anything you would like to announce?” She replied: “I’m filing an exploratory committee for president of the United States, tonight!”

Other guests on The Late Show, filmed before an audience at the Ed Sullivan Theater in New York and broadcast at 11.35pm, have included Eric Holder, Cory Booker, John Kerry, Beto O’Rourke, Amy Klobuchar, Bernie Sanders, Julián Castro (who appeared with twin brother Joaquin) and Kamala Harris, all of whom have declared their candidacy or are said to be considering it. A recent CNN article was headlined: “Welcome to the Stephen Colbert primary.” Colbert, 54, who cut his teeth in improvisational comedy, has earned it. Future historians could do worse than watch the bitingly satirical take-downs of Donald Trump in his opening monologues. His edgy political wit has catapulted him past Jimmy Fallon in the late night ratings and drawn interviewees including Hillary Clinton, Michelle Obama, Alexandria Ocasio-Cortez and Nancy Pelosi.

“Any Democratic candidate who thinks they can ignore Stephen Colbert might as well not run for president,” said Stephen Farnsworth, director of the Center for Leadership and Media Studies at the University of Mary Washington in Fredericksburg, Virginia. “Colbert once joked that the road to the White House runs through his show but it’s no joke; it is exactly so.”

[..] Maddow scooped the first interview with Warren after the Massachusetts senator announced she was formally exploring a run for the White House. She asked Gillibrand pointed questions about her shifting policy positions. Last week she questioned Harris and Ohio senator Sherrod Brown, another possible candidate. All seemingly regard Maddow’s show as a hotline to the anti-Trump resistance. Bob Shrum, a Democratic strategist who was an adviser to the Al Gore and John Kerry presidential campaigns, said: “I think she’s terrific. She’s incisive, she’s smart, she has her own views on things and, by the way, she doesn’t disguise them: they’re right out in the open.”

Robert Lichter, professor of communication at George Mason University in Fairfax, Virginia, said: “With the Democratic party moving to the left, she’s positioned to become a kingmaker. She’s a highly respected liberal and can make or break a candidacy early on by exposing someone who doesn’t know what they’re talking about. Candidates will try to aim through Colbert’s jokes and Maddow’s seriousness.”

Debt Rattle January 20 2019

Jan 202019

January 20, 2019 Posted by Raúl Ilargi Meijer at 11:09 am Finance Tagged with: Brexit, Fannie Mae, Freddie Mac, Ireland, Lincoln, Macron, May, Pelosi, shutdown, surveillance, Trump, wall, yellow vests 7 Responses »

Pablo Picasso Woman in an armchair (Olga) 1922

• Pelosi Rejects Trump Shutdown Deal Before President Announces It (O.)

• Battle Royale (Jim Kunstler)

• No President Since Lincoln Treated Worse Than Me – Trump (RT)

• Theresa May Wants Irish Treaty To Break Brexit Impasse (R.)

• One Thing To Be Grateful To Brexit For: Britons Are Buying Less On Credit (G.)

• ‘The Gilets Jaunes Are Unstoppable’ (Guilluy)

• Yellow Vests Defy Macron ‘National Debate’ In 10th Saturday Of Protests (F24)

• Fannie Mae And Freddie Mac Regulator Has Plan To End Conservatorship (MW)

• ‘The Goal Is To Automate Us’: The Age Of Surveillance Capitalism (O.)

Pelosi and her ilk act as if they won the elections. They must be smart enough to know Trump does what he says he will?!

• Pelosi Rejects Trump Shutdown Deal Before President Announces It (O.)

Donald Trump forged ahead on Saturday and proposed a deal to end the US government shutdown, despite Democrats having rejected it before he began to speak. If its timing was striking, the rejection was no surprise. In exchange for temporary concessions on the status of threatened migrant groups, the president doubled down on his demand for a border wall. A senior House Democratic aide told the Guardian the party, which has vowed not to give Trump funding for any wall, was not consulted. Speaking from the White House, the president outlined a plan that would extend protections for young undocumented migrants brought to the US as children, known as Dreamers, and individuals from some Central American and African nations, in exchange for $5.7bn for a wall on the US-Mexico border.

“A wall is not immoral,” he said, adding: “The radical left can never control our borders. I will never let that happen.” “As a candidate for president,” he said, “I promised I would fix this crisis, and I intend to keep that promise one way or the other.” Trump spoke as the partial shutdown of the federal government, the longest in US history, rolled through its 29th day. Prompted on 22 December over Trump’s demand for a wall, the partial closure of departments and services has left around 800,000 federal workers without pay. Hundreds of thousands of contractors are also going without a check.

Before the president took the podium, House speaker Nancy Pelosi panned his proposal. “Democrats were hopeful that the president was finally willing to re-open government and proceed with a much-need discussion to protect the border,” she said in a statement. “Unfortunately … his proposal is a compilation of several previously rejected initiatives, each of which is unacceptable and in total do not represent a good faith effort to restore certainty to people’s lives. It is unlikely that any one of these provisions alone would pass the House, and taken together, they are a non-starter.”

“..a little dust-up in the meadows and cornfields known as the Civil War..”

• Battle Royale (Jim Kunstler)

The effrontery of Ms. Pelosi, Speaker of the House, in cancelling Mr. Trump’s State of the Union address in the chamber she controls is perhaps the worst insult to institutional protocol since the spring day in 1856 when Congressman Preston Brooks (D-SC) skulked into the senate chamber and smashed Senator Charles Sumner (R-Mass) about the head within an inch of his life with a gold-headed walking stick. Brooks’s attack was launched after Sen. Sumner gave his “Bleeding Kansas” speech, arguing that the territory be let into the union as a “free” state, and denouncing “the harlot slavery,” whom he imputed was Rep. Brooks’s dearest consort.

Many of us — except perhaps students immersed in intersectional gender studies — know how that worked out: a little dust-up in the meadows and cornfields known as the Civil War. We’re about at that level of animosity today in the two federal houses of legislature, though it is very hard to imagine how Civil War Two might play out on the ground. Perhaps opposing mobs (not even armies) meet in the Walmart parking lots of Pennsylvania and go at it demolition derby style, with monster trucks bashing their enemies’ Teslas and Beemers. Throw in clown suits instead of blue and gray uniforms and we’ll really capture the spirit of the age.

Not to be outdone, days after the SOTU cancellation, the Golden Golem of Greatness cancelled a Democratic Party grandstanding junket to the Middle East, led by Ms. Pelosi. A US Air Force bus has just departed for Andrews Air Force Base, where an Air Force jet waited for the junketeers. But then, with impeccable timing, Mr. Trump cancelled the junket — denying the use of military aircraft as Commander-in-Chief — and forcing the bus back to town with its load of elected dignitaries and their luggage — making the reasonable suggestion that they fly a commercial airline instead.

Trump trolling America.

• No President Since Lincoln Treated Worse Than Me – Trump (RT)

Not since Abraham Lincoln has a US president been treated so badly by the media, Donald Trump lamented in a series of Twitter rants before going to Delaware to honor the four Americans killed in Syria. “Will be leaving for Dover to be with the families of four very special people who lost their lives in service to our Country,” Trump wrote on Twitter on Saturday. Two US troops, a civilian and a contractor were killed in a suicide bombing in the Kurdish-controlled northern Syrian city of Manbij on Wednesday. But the president had no intention to focus on his surprise visit to Dower Airforce Base in Delaware for too long.

His next Twitter post was dedicated to a completely different subject, as Trump cited former House Speaker, Newt Gingrich, who – according to him – said: “There has been no president since Abraham Lincoln who has been treated worse or more unfairly by the media than your favorite President, me!” At the same time, he insisted that “there has been no president who has accomplished more in his first two years in office!” Trump’s invocation of Lincoln prompted reactions from his supporters and opponents.

May cannot have a bilateral treaty with Irleand that would essentially be designed to bypass the EU, as long as Ireland is part of the EU.

• Theresa May Wants Irish Treaty To Break Brexit Impasse (R.)

British Prime Minister Theresa May plans to seek a bilateral treaty with the Irish government as a way to remove the contentious backstop arrangement from Britain’s divorce deal with the European Union, a newspaper reported. The Sunday Times said aides to May thought a deal with Ireland would remove the opposition to her Brexit plan from the Democratic Unionist Party that supports May’s minority government and from pro-Brexit rebels in her Conservative Party. However the Irish edition of the same newspaper quoted a senior Irish government source as saying the bilateral treaty proposal was “not something we would entertain” and a second senior political source as saying it would not work with the European Commission.

May suffered a heavy defeat in parliament on Tuesday when Conservative lawmakers and members of other parties rejected her Brexit plan by an overwhelming majority. That left Britain facing the prospect of no deal to smooth its exit from the EU in little more than two months’ time. May is due to announce on Monday how she plans to proceed. Many Conservatives and the DUP oppose the backstop that the EU insists on as a guarantee to avoid a hard border between the Irish Republic and Northern Ireland. Earlier on Saturday, Ireland’s foreign minister Simon Coveney said Dublin’s commitment to the Brexit divorce deal struck with the British government was “absolute,” including the border backstop arrangement. The Sunday Times also said a group of lawmakers in Britain’s parliament would meet on Sunday to consider ways they could suspend the Brexit process, wresting control away from May’s government.

There’s that question again: a sign of confidence or despair?

• One Thing To Be Grateful To Brexit For: Britons Are Buying Less On Credit (G.)

A sharp decline in household spending on the never-never, and especially spending on credit cards, is a trend that must surely be welcomed. The Bank of England said last week in its quarterly credit health check that high street banks were about to witness the biggest decline in such borrowing since records began 12 years ago. Threadneedle Street said its index of demand for credit card lending over the three months to the end of March had dropped to -20.7 from -7.2. That is a far cry from the summer of 2017, when consumer borrowing soared above £200bn and MPs across the political spectrum became alarmed at the return of binge buying on plastic.

At that time, with wages flat or at least not rising by more than inflation, policymakers feared that households were supplementing their incomes with borrowing to the degree that they had in the run-up to the 2008 financial crash. Regulators reacted to the rise by telling banks to tighten up their lending criteria. Most institutions obeyed, as anyone tracking the trend for borrowing across 2018 can see. So far, so good. That, after all, was supposed to be how the regulators looked after the interests of the country and its economy, and kept individual households from borrowing more than they could afford to repay.

However, it also seems clear that another force was at play – the Brexit effect, which began to have an impact once it became clear that Theresa May’s government was struggling to find a formula that could win over a majority in the House of Commons. The fall in sentiment since last summer has proved to be dramatic – far sharper than the banks would ever have expected from a few little tweaks to their lending rules. And the lack of consumer borrowing has been felt in few places more than it has in the car industry. Since 2010, cars have increasingly been sold through complex lease deals that fall under the credit figures. By 2017, nine out of 10 cars were being sold this way. Then came the diesel emissions scandal and a confused government reaction, which discouraged sales.

Brexit made the situation worse. Consumers were already reluctant to make major purchases such as a new home, or big-ticket household items like furniture. Next on the list of things not to buy was a car. Figures from the industry show that car sales in the UK declined by almost 7% in 2018. With a major slice of credit no longer in demand, the borrowing figures were bound to tumble. The shocking element of the story is how much harm a fall in personal lending can cause to the British economy, which has already suffered a lopsided expansion since the financial crash.

Excellent essay on what the Yellow Vests actually are.

• ‘The Gilets Jaunes Are Unstoppable’ (Guilluy)

‘Paris creates enough wealth for the whole of France, and London does the same in Britain. But you cannot build a society around this. The gilets jaunes is a revolt of the working classes who live in these places. ‘They tend to be people in work, but who don’t earn very much, between 1000€ and 2000€ per month. Some of them are very poor if they are unemployed. Others were once middle-class. What they all have in common is that they live in areas where there is hardly any work left. They know that even if they have a job today, they could lose it tomorrow and they won’t find anything else. ‘Not only does peripheral France fare badly in the modern economy, it is also culturally misunderstood by the elite. …

One illustration of this cultural divide is that most modern, progressive social movements and protests are quickly endorsed by celebrities, actors, the media and the intellectuals. But none of them approve of the gilets jaunes. Their emergence has caused a kind of psychological shock to the cultural establishment. It is exactly the same shock that the British elites experienced with the Brexit vote and that they are still experiencing now, three years later. ‘The Brexit vote had a lot to do with culture, too, I think. It was more than just the question of leaving the EU. Many voters wanted to remind the political class that they exist. That’s what French people are using the gilets jaunes for – to say we exist. We are seeing the same phenomenon in populist revolts across the world. [ … ]

‘The Parisian economy needs executives and qualified professionals. It also needs workers, predominantly immigrants, for the construction industry and catering et cetera. Business relies on this very specific demographic mix. The problem is that ‘the people’ outside of this still exist. In fact, ‘Peripheral France’ actually encompasses the majority of French people. [ … ] Think of the ‘deplorables’ evoked by Hillary Clinton. There is a similar view of the working class in France and Britain. They are looked upon as if they are some kind of Amazonian tribe. The problem for the elites is that it is a very big tribe.

Really, you think Macron can have his national debate? “..98 cases of serious injuries, including 15 cases of people losing an eye..”

• Yellow Vests Defy Macron ‘National Debate’ In 10th Saturday Of Protests (F24)

Around 84,000 “Yellow Vest” demonstrators marched all around France on Saturday, marking a 10th straight weekend of anti-government protests, defying attempts by President Emmanuel Macron to channel their anger into a series of town hall debates. In Paris, Protesters assembled by the Invalides plaza near the National Assembly and marched through the city’s Left Bank in freezing temperatures. These demonstrations were largely peaceful but, according to reporters, clashes broke out late in the afternoon between police and demonstrators, some wearing masks, in Paris’ central Invalides district. Protesters threw firecrackers, bottles and stones at the police who responded with water cannon and tear gas to push them back.

Authorities said there were around 7,000 protesters in Paris, some of whom gathered near the world-famous Champs Elysees, while there were similar demonstrations in major cities across France. Rallies took place in Toulouse, Lyon, Rouen and other cities. According to the French Interior Ministry, some 84,000 people marched across France on Saturday, as many as last week. In the French capital though, there were fewer protestors on this 10th consecutive weekend than on the previous Saturday, when there were 8,000.

[..] the protesters behind the biggest crisis in Macron’s presidency remain fully mobilised. The centrist leader is hoping that the launch this week of a “grand national debate” on policy will mark a turning point. [..] many yellow vests have announced plans to boycott the discussions scheduled in dozens of towns and villages, seeing them as an attempt to drain support from a movement that erupted in mid-November over fuel taxes and quickly broadened into a campaign of weekly protests that have regularly ended in clashes with police and destruction of property. The growing number of demonstrators to suffer serious injuries at the hands of the police has compounded their anger towards the state. The “Disarm” collective, a local group that campaigns against police violence, has counted 98 cases of serious injuries, including 15 cases of people losing an eye, mostly after being hit by rubber bullets.

Probably means they see a huge plunge come in housing.

• Fannie Mae And Freddie Mac Regulator Has Plan To End Conservatorship (MW)

The acting director of the Federal Housing Finance Agency has told the agency’s employees that the regulator will announce a plan within weeks to take the government-sponsored enterprises out of conservatorship. Joseph Otting, who is leading the FHFA as Mark Calabria awaits Senate confirmation, said at an all-hands meeting on Thursday that a plan to lift Fannie Mae and Freddie Mac out of the conservatorship that has permeated the institutions since the financial crisis will soon be announced, according to an attendee of that gathering. A spokesperson for the agency confirmed there was discussion about ending Fannie and Freddie conservatorship but denied there was any talk of timing or details.

“Acting Director Otting held the internal meeting to meet FHFA staff and establish open lines of communication,” the FHFA said. “He mentioned, as he previously has, that Treasury and the White House are expected to release a plan for housing that will include details about reform and will likely include a recommendation for ending Fannie Mae and Freddie Mac conservatorships. [Treasury] Secretary Mnuchin has said that the goal of the [Trump] administration is to take the GSEs out of conservatorship. Acting Director Otting said that he and FHFA will work to advance that plan.” Fannie and Freddie were rushed into government control at the height of the financial crisis. Then, in 2012, the terms of the 2008 bailout were amended to steer the quarterly profits of both enterprises to Treasury. That wiped out holders of the companies’ stock, and they’ve fought the federal government in court ever since.

Shoshana Zuboff’s new book The Age of Surveillance Capital sounds like a treat.

• ‘The Goal Is To Automate Us’: The Age Of Surveillance Capitalism (O.)

Surveillance capitalism is a human creation. It lives in history, not in technological inevitability. It was pioneered and elaborated through trial and error at Google in much the same way that the Ford Motor Company discovered the new economics of mass production or General Motors discovered the logic of managerial capitalism. Surveillance capitalism was invented around 2001 as the solution to financial emergency in the teeth of the dotcom bust when the fledgling company faced the loss of investor confidence. As investor pressure mounted, Google’s leaders abandoned their declared antipathy toward advertising. Instead they decided to boost ad revenue by using their exclusive access to user data logs (once known as “data exhaust”) in combination with their already substantial analytical capabilities and computational power, to generate predictions of user click-through rates, taken as a signal of an ad’s relevance.

Operationally this meant that Google would both repurpose its growing cache of behavioural data, now put to work as a behavioural data surplus, and develop methods to aggressively seek new sources of this surplus. The company developed new methods of secret surplus capture that could uncover data that users intentionally opted to keep private, as well as to infer extensive personal information that users did not or would not provide. And this surplus would then be analysed for hidden meanings that could predict click-through behaviour. The surplus data became the basis for new predictions markets called targeted advertising.

Here was the origin of surveillance capitalism in an unprecedented and lucrative brew: behavioural surplus, data science, material infrastructure, computational power, algorithmic systems, and automated platforms. As click-through rates skyrocketed, advertising quickly became as important as search. Eventually it became the cornerstone of a new kind of commerce that depended upon online surveillance at scale. The success of these new mechanisms only became visible when Google went public in 2004. That’s when it finally revealed that between 2001 and its 2004 IPO, revenues increased by 3,590%.

[..] Google began by unilaterally declaring that the world wide web was its to take for its search engine. Surveillance capitalism originated in a second declaration that claimed our private experience for its revenues that flow from telling and selling our fortunes to other businesses. In both cases, it took without asking. Page [Larry, Google co-founder] foresaw that surplus operations would move beyond the online milieu to the real world, where data on human experience would be free for the taking. As it turns out his vision perfectly reflected the history of capitalism, marked by taking things that live outside the market sphere and declaring their new life as market commodities.

We were caught off guard by surveillance capitalism because there was no way that we could have imagined its action, any more than the early peoples of the Caribbean could have foreseen the rivers of blood that would flow from their hospitality toward the sailors who appeared out of thin air waving the banner of the Spanish monarchs. Like the Caribbean people, we faced something truly unprecedented. Once we searched Google, but now Google searches us. Once we thought of digital services as free, but now surveillance capitalists think of us as free.

Bowie in 1999. He was a long way ahead.

David Bowie in 1999 about the impact of the Internet on society pic.twitter.com/aPcG9CO9MS

— Bret Taylor (@btaylor) January 15, 2019

Debt Rattle July 18 2018

Jul 182018

July 18, 2018 Posted by Raúl Ilargi Meijer at 9:31 am Finance Tagged with: Australia, Balding, China, cold war, GDPR, Ireland, laundromat, Putin, Russia, tariffs, Treasuries, Trump 10 Responses »

Paul Gauguin Van Gogh painting sunflowers 1888

• Russia Dumped Most/All Of Its US Treasury Holdings, Disappeared from List (WS)

• Japan, EU Sign Trade Deal To Eliminate Nearly All Tariffs (AP)

• Going, Going Gone For Australia’s House Price Boom (R.)

• Australia’s Expensive Real Estate Problem Remains A Dirty Little Secret (D.)

• Right Now, We Are In A New Cold War – Stephen Cohen (Fox)

• Is President Trump A Traitor Because He Wants Peace With Russia? (PCR)

• A Walk On The Wild Side As Trump Meets Putin At Finland Station (Escobar)

• Trump Haters Don’t Get the “Art of the Deal” (Jim Rickards)

• Twelve Ham Sandwiches with Russian Dressing (Kunstler)

• The EU’s New Data Protection Rules Are Already Hurting Europeans (Mises)

• Dear Europe, Follow Ireland, Not France (Lacalle)

• Balding Out (Christopher Balding)

Russia goes for gold.

• Russia Dumped Most/All Of Its US Treasury Holdings, Disappeared from List (WS)

It’s a good thing Russia never held as many US Treasury securities as China and Japan. The scenario would have been different. The “grand total” of US Treasury bonds, notes, and bills held by official foreign investors (central banks, governments, etc.) and non-official foreign investors rose by $44.6 billion to $6.17 trillion at the end of May, according to the Treasury Department’s TIC data released Tuesday afternoon. This is in the middle of the range of the past 12 months. But Russia stands out by its sudden absence.

Russia was never a large holder of US Treasuries, compared to China and Japan. In March it was in 16th place with $96.1 billion in Treasury holdings. In April, it liquidated $47.4 billion of its holdings, and ended the month with $48.7 billion. That was down 69% from May 2013 ($153 billion). It knocked Russia into 22nd place behind the UAE and Thailand. And in May, Russia liquidated more of its holdings and disappeared entirely from the TIC’s list of the 33 largest foreign holders of Treasuries. The smallest one on the list was Chile, with $30.2 billion. Russia’s holdings must have fallen below that amount, and I can imagine to zero:

If there was a message in Russia’s liquidation of US Treasuries, it was a pitch in the water: The 10-year Treasury sell-off that had started last September peaked with the 10-year yield at 3.11% on May 17. Since then, the 10-year Treasury has rallied under heavy demand, and the yield has fallen – hence the handwringing about the inverted yield curve. The largest holder of US Treasuries is China, a position it had lost briefly during its era of peak capital-flight from October 2016 through March 2017. Its holdings in May ticked up by $1.2 billion to $1.183 trillion. Its holdings have remained within the same range since August 2017, despite escalating threats of a “trade war.” Japan had been systematically reducing its Treasury holdings. In April its holdings had dropped to $1.031 trillion, the lowest since October 2011. But in May, it increased its holdings by $17.6 billion to $1.049 trillion:

99% of tariffs to be lifted.

• Japan, EU Sign Trade Deal To Eliminate Nearly All Tariffs (AP)

The European Union and Japan signed a landmark deal on Tuesday that will eliminate nearly all tariffs on products they trade. The ambitious pact signed in Tokyo runs counter to President Donald Trump’s moves to hike tariffs on imports from many U.S. trading partners. It covers a third of the global economy and markets of more than 600 million people. “The EU and Japan showed an undeterred determination to lead the world as flag-bearers for free trade,” Abe said at a joint news conference with European Council President Donald Tusk and European Commission President Jean-Claude Juncker.

Tusk praised the deal as “the largest bilateral trade deal ever.” He said the partnership is being strengthened in various other areas, including defense, climate change and human exchange, and is “sending a clear message” against protectionism. The leaders did not mention Trump by name, but they did little to mask what was on their minds — highlighting how Europe and Japan have been pushed closer by Trump’s actions. [..] The deal eliminates about 99 percent of the tariffs on Japanese goods sold to the EU. About 94 percent of the tariffs on European exports to Japan will be lifted, rising to 99 percent in the future. The difference reflects exceptions on such products as rice, which enjoys strong political protection from imports in Japan.

China’s clampdown.

• Going, Going Gone For Australia’s House Price Boom (R.)

It’s a winter weekend in Sydney’s bustling northern suburb of Chatswood and a three-bedroom family house sporting an endless garden is up for auction. It’s priced to sell at A$1.88 million ($1.4 million) but no buyers bite and the sale is abandoned. On the same day, in the heart of the harbor-hugging city a two-bedroom apartment with panoramic views fails to sell as no bidders turn up. Auctions are a bellwether of demand in property-obsessed Australia, where attending sales is almost a national pastime. It is therefore telling that only just over half were successful the weekend last month a Reuters reporter visited some of Sydney’s auctions, compared to more than two-thirds for all of last year.

And while that week was the worst since 2012, it wasn’t a one off. Auction clearance rates have averaged in the mid-to-low 50 percent range for each of the past nine weeks. The recent weakness in the Australian housing market, which has been one of the drivers of an economy that has now grown for 27 years without a downturn, has some economists warning of heightened risks of a recession and even a financial crisis. In anticipation, some hedge funds are shorting the nation’s financial assets and some significant investors are heavily underweight Australia compared to regional benchmarks.

The slack has been partly engineered by the authorities. Curbs on lending to foreigners, foreign buyer taxes and a clampdown on capital flows by Beijing have hurt bubbling demand from Chinese investors, who have been important contributors to the housing boom of recent years. There are signs of a similar fall in Chinese investment in Vancouver, Canada – which has also been a red hot market in recent years and where the authorities have also intervened by raising taxes on foreign buyers. But a decline in Vancouver’s sales is yet to translate into price declines.

Laundromat.

• Australia’s Expensive Real Estate Problem Remains A Dirty Little Secret (D.)

Nobody knows how many billions of dollars in dirty money is pouring into Australia’s housing market, but global authorities describe local real estate as a prime target for money laundering – and you may have paid more for your house because of it. The likelihood of cashed up crooks increasing house prices is much greater than many people realise, given the hidden nature of the problem, a lack of regulation in the Australian real estate industry and the staggering sums involved. AMP chief economist Shane Oliver says criminals willing to pay extra to wash illicit funds have probably already had an impact on the high end of the housing market. “Even one transaction can have a huge effect that pulls the whole lot up.”

Real estate agents say corrupt money can also influence average house prices, because criminals paying more than market value for one house are likely to encourage higher asking prices for similar properties in the same street. “To the extent that money laundering may well have played a role in making houses unaffordable to the average Australian, even if it’s marginal, there’s a case to investigate that,” Mr Oliver says. Estimates vary, however an International Monetary Fund calculation converted to local currency shows up to $5 trillion in corrupt money – more than three times Australia’s GDP – flowing into global financial systems last year. Only 0.2 per cent of the illegal transfers were likely to be seized or frozen, according to a UN report.

I know, I know, it’s Fox and Tucker Carlson. But this is Stephen Cohen.

• Right Now, We Are In A New Cold War – Stephen Cohen (Fox)

NYU Russian studies Professor Emeritus Stephen Cohen says President Trump had no choice but to meet with Putin, blasts ‘pornography passing as analysis’ in the news coverage of Trump.

“Russian weapons are so superior to the junk produced by the waste-filled US military/security complex that lives high off the hog on the insouciant American taxpayer that it is questionable if the US is even a second class military power.”

• Is President Trump A Traitor Because He Wants Peace With Russia? (PCR)

The US Democratic Party is determined to take the world to thermo-nuclear war rather than to admit that Hillary Clinton lost the presidential election fair and square. The Democratic Party was totally corrupted by the Clinton Regime, and now it is totally insane. Leaders of the Democratic Party, such as Nancy Pelosi and Chuck Schumer, my former co-author in the New York Times, have responded in a non-Democratic way to the first step President Trump has taken to reduce the extremely dangerous tensions with Russia that the Clinton, George W. Bush, and Obama regimes created between the two superpowers.

Yes, Russia is a superpower. Russian weapons are so superior to the junk produced by the waste-filled US military/security complex that lives high off the hog on the insouciant American taxpayer that it is questionable if the US is even a second class military power. If the insane neoconservatives, such as Max Boot, William Kristol, and the rest of the neocon scum get their way, the US, the UK, and Europe will be a radioactive ruin for thousands of years.

House Democratic leader Nancy Pelosi (CA), Minority Leader of the US House of Representatives, declared that out of fear of some undefined retribution from Putin, a dossier on Trump perhaps, the President of the United States sold out the American people to Russia because he wants to make peace: “It begs the question, what does Vladimir Putin, what do the Russians have on Donald Trump—personally, politically and financially that he should behave in such a manner?” The “such a manner” Pelosi is speaking about is making peace instead of war.

“Russophobia is a 24/7 industry..”

• A Walk On The Wild Side As Trump Meets Putin At Finland Station (Escobar)

“The Cold War is a thing of the past.” By the time President Putin said as much during preliminary remarks at his joint press conference with President Trump in Helsinki, it was clear this would not stand. Not after so much investment by American conservatives in Cold War 2.0. Russophobia is a 24/7 industry, and all concerned, including its media vassals, remain absolutely livid with the “disgraceful” Trump-Putin presser. Trump has “colluded with Russia.” How could the President of the United States promote “moral equivalence” with a “world-class thug”? Multiple opportunities for apoplectic outrage were in order. Trump: “Our relationship has never been worse than it is now. However, that changed. As of about four hours ago.”

Putin: “The United States could be more decisive in nudging Ukrainian leadership.” Trump: “There was no collusion… I beat Hillary Clinton easily.” Putin: “We should be guided by facts. Can you name a single fact that would definitively prove collusion? This is nonsense.” Then, the clincher: the Russian president calls [Special Counsel] Robert Mueller’s ‘bluff’, offering to interrogate the Russians indicted for alleged election meddling in the US if Mueller makes an official request to Moscow. But in exchange, Russia would expect the US to question Americans on whether Moscow should face charges for illegal actions. Trump hits it out of the park when asked whether he believes US intelligence, which concluded that Russia did meddle in the election, or Putin, who strongly denies it. “President Putin says it’s not Russia. I don’t see any reason why it would be.”

How it works.

• Trump Haters Don’t Get the “Art of the Deal” (Jim Rickards)

I’m continually amazed at the legions of politicos, pundits and so-called “experts” who don’t understand President Trump or how he conducts policy. These elites have a mental model of how a president is supposed to behave and how the policymaking process is supposed to be carried out. Obviously, Trump does not fit their model. Instead of trying to grasp the model that Trump does use, they continually berate and disparage Trump for not living up to their expectations. A more thoughtful group would say, “Well, he’s different, so why don’t we try to understand the differences and analyze the new model?” Really, these people need to get out of Washington, New York and Hollywood more and get away from their screens.

If they knew more everyday Americans, they would come a lot closer to understanding how Trump gets things done. It’s not chaos; it’s just a little different and more down to earth. This is because of Trump’s “art of the deal” style described in his best-selling book by that name. Bush 43 and Obama were totally process-driven. You could see events coming a mile away as they wound their way through the West Wing and Capitol Hill deliberative processes. All you had to do was understand the process and you could forecast big developments in a relatively straightforward way. With Trump, there is a process, but it does not adhere to a timeline or existing template. Trump seems to be the only process participant most of the time.

Here’s the Trump process: 1) Identify a big goal (tax cuts, balanced trade, the wall, etc.). 2) Identify your leverage points versus anyone who stands in your way (elections, tariffs, jobs, etc.). 3) Announce some extreme threat against your opponent that uses your leverage. 4) If the opponent backs down, mitigate the threat, declare victory and go home with a win. 5) If the opponent fires back, double down. If Trump declares tariffs on $50 billion of good from China,and China shoots back with tariffs on $50 billion of goods from the U.S., Trump doubles down with tariffs on $100 billion of goods, etc. Trump will keep escalating until he wins. 6) Eventually, the escalation process can lead to negotiations with at least the perception of a victory for Trump (North Korea) — even if the victory is more visual than real.

“..the entire exercise is a joke and a fraud..”

• Twelve Ham Sandwiches with Russian Dressing (Kunstler)

After two years of Trump-inspired hysteria, it’s pretty obvious what went on in the bungled Obama-Hillary power handoff of 2016 and afterward: the indictable shenanigans of candidate Hillary and her captive DNC prompted a campaign of agit-prop by the US Intel “community” to gaslight the public with a Russian meddling story that morphed uncontrollably into a crusade to make it impossible for Mr. Trump to govern. And what’s followed for many months is an equally bungled effort to conceal, deceive, and confuse the issues in the case by Democratic Party partisans still in high places. It was very likely begun with the tacit knowledge of President Obama, though he remained protected by a shield of plausible deniability.

And it was carried out by high-ranking officials who turned out to be shockingly unprofessional, and whose activities have been disclosed through an electronic data evidence trail. Mr. Trump’s visit to confer with Russian President Putin in Helsinki seems to have provoked a kind of last-gasp effort to keep the increasingly idiotic Russian election meddling story alive — with Robert Mueller’s ballyhooed indictment of twelve “Russian intel agents” alleged to have “hacked” emails and computer files of the DNC and Hillary’s campaign chairman John Podesta. The gaping holes in that part of the tale have long been unearthed so I’ll summarize as briefly as possible:

1) the bandwidth required to transfer the files has been proven to be greater than an internet hack might have conceivably managed in the time allowed and points rather to a direct download into a flash drive device. 2) the DNC computer hard drives, said to be the source of the alleged hacking, disappeared while in the custody of the US Intel Community (including the FBI). 3) the authenticity of the purloined emails by Mr. Podesta and others has never been disputed, and they revealed a lot of potentially criminal behavior by them. 4) Mr. Mueller must know he will never get twelve Russian intel agents into a US courtroom, so the entire exercise is a joke and a fraud. In effect, he’s indicted twelve ham sandwiches with Russian dressing.

When anti-spam leads to more spam.

• The EU’s New Data Protection Rules Are Already Hurting Europeans (Mises)

It’s finally over: the flood of e-mails that every single human being who possesses an inbox has received in the last few weeks thanks to the new data protection rules by the EU. These rules, called GDPR, have caused havoc even before becoming effective on May 25, and have probably caused the greatest spam wave of all time – all in the name of fighting against spam of course. The GDPR rules were designed to protect European consumers from data violations by big tech companies (Brussels thinks that Facebook, Google and Co. are abusing the rights of its people), and include – just as a best of – a “right to be forgotten” (meaning that Europeans can ask companies to delete all their data), “consent” (meaning that the data being processed by a company has to be consented to by the individual – though what “consent” means is still disputed), an obligation to hire a data protection officer if you are a bigger company, and above all else, hefty fines for infringements.

Those infringements shall “be subject to administrative fines up to €20,000,000, or in the case of an undertaking, up to 4 percent of the total worldwide annual turnover of the preceding financial year, whichever is higher.” What has been the result of these data protection rules after a little over a month? Summing it up in one word would probably be: chaos. As the trillions of e-mails that were sent around the globe showed, no one really understands what the rules are all about – or what to do about it.

On the day the rules came into effect, several US pages panickingly switched off their platforms in EU countries, among them the Los Angeles Times, the Chicago Tribune, New York Daily News, and Orlando Sentinel. But not only newspapers have blocked Europeans ever since: the list also includesShoes.com,Instapaper, and the History Channel. Meanwhile, ad companies, being hit the most by the new rules, have pulled out of the EU altogether, including Drawbridge and Verve , citing the GDPR as the reason that they can’t continue their business on the Continent anymore. Those staying have had to incur gigantic costs: British companies have reportedly sunk 1.1 billion dollars, and Americans 7.8 billion in preparation for GDPR.

There’s always some miracle nation in the EU.

• Dear Europe, Follow Ireland, Not France (Lacalle)

Whenever we talk about tax cuts and growth-oriented tax programs in Europe, many tell us that it is not possible and that the European Union does not allow it. However, it is false. Attractive, growth-oriented tax systems are not only possible in the European Union, but those countries that implement them have higher economic growth rates, less unemployment, and a first-class welfare state. To deceive us, we are forced to ignore Ireland, The Netherlands or Luxembourg as well as most of the technology and job creation leaders. Lower taxes and greater liberalization than in the rest of the Eurozone means higher growth, better wealth and greater social welfare. The economic miracle of Ireland is not statism.

Its secret is to put budgetary stability, investment attraction, private initiative and maximize disposable income of citizens as the pillars of its economic policy. Ireland has a corporate tax of 12.5% and a rate of 6.25% on income from patents and intellectual property, a key factor to attract technology companies. Its minimum salary is almost double that of Spain, Portugal and other Eurozone countries, the average pension is higher as well and its health and education systems are of the highest quality, with nine universities among the best in the world according to the Best Global Universities Ranking 2018. Ireland’s debt to GDP is 73%, unemployment is 5.1% (youth unemployment at 11.4%), public deficit is just 0.7% of GDP.

Only a few years ago, Ireland was close to the edge financially, and its 10-year bond yield rose to 14%. Ireland was considered one of the highest risk of default countries with Spain, Portugal, Greece or Italy. Since then, low taxes, budget control and reforms oriented at attracting capital have made Ireland become the fastest-growing European economy, with an unemployment rate that is less than half that of Spain, for example. Deficits have been slashed, debt is under control, the economy is expected to grow 5.1% in 2018, and the economy is expected to reach full employment in 2019.

Economist Christopher Balding is leaving China after 9 years. Great farewell.

• Balding Out (Christopher Balding)

One of my biggest fears living in China has always been that I would be detained. Though I happily pointed out the absurdity of the rapidly encroaching authoritarianism, a fact which continues to elude so many experts not living in China, I tried to make sure I knew where the line was and did not cross it. There is a profound sense of relief to be leaving safely knowing others, Chinese or foreigners, who have had significantly greater difficulties than myself. There are many cases which resulted in significantly more problems for them. I know I am blessed to make it out.

I leave China profoundly worried about the future of China and US China relations. Most attention here has focused on the Thucydides Trap where conflict results from an established and a rising power. This leaves out probably the most important variable not just the distinction between an established and a rising power but the values inherent within each state and the system they want to project defining relations between states and the citizenry to the state.

The United States under Trump and the GOP is facing a significant test and re-evaluation of its principles. However, I remain decidedly confident in the US to handle those tests. The self correction nature of democracy is on clear display. The best case scenario for the Trump administration is to minimize congressional losses with the very real possibility of losing control of the house. President Trump has lost more in the courts than he has won and is under investigations by law enforcement headed by registered Republicans. His own party has been unable to pass consequential legislation except for a tax cut. While none of this confronts the international challenges facing the United States, it speaks to the evolutionary, self corrective nature of US democracy.

Debt Rattle December 5 2017

Dec 052017

December 5, 2017 Posted by Raúl Ilargi Meijer at 10:01 am Finance Tagged with: Apple, asymmetric bubbles, bitcoin, China, Corbyn, Fraud, Ireland, May, oceans, refugees, Trump 4 Responses »

The Kennedies

• China’s Property Binge Fuels Mortgage Fraud Frenzy (R.)

• This Time IS Different, It Just Ends The Same (Roberts)

• What Sowed The Seeds Of The Bitcoin Mania? (TM)

• Bitcoin Is A ‘Dangerous Speculative Bubble’ – Stephen Roach (CNBC)

• The Two-Tiered European Community (Bilbo)

• This Could Mean The End Of May – And The Beginning Of Corbyn (Ind.)

• Theresa May Humiliated As DUP Scuppers Border Deal (Ind.)

• Confused May In Alignment Only With Herself Over Irish Issue (G.)

• White House Weighing Plans For Private Spies To Counter “Deep State” (IC)

• Apple Agrees To Pay Over $15 Billion To Ireland In Back Taxes (ArsT)

• China, the Digital Giant (PS)

• Pilots Across Germany Are Blocking The Deportation Of Asylum Seekers (IBT)

• Push To Move Refugees From Greek Islands To Mainland (K.)

• The World’s Oceans Are Under The Greatest Threat In History – Attenborough (G.)

It’s all fraud, and none of it is persecuted: “When everyone is doing it, you can’t put everyone in jail..”

“Operating out of small, cramped offices, often in residential blocks, loan agents “re-package” – or falsify documents for mortgage applications. “Around 60% of property buyers in Shanghai are involved in some kind of re-packaging..”

• China’s Property Binge Fuels Mortgage Fraud Frenzy (R.)

[..] across China, unqualified borrowers use fake documents to secure mortgages, while loans deceptively obtained for other purposes are funnelled into property. These frauds are often committed with the consent and encouragement of other parties to the transactions, including lending brokers, property agents, valuation companies and the banks themselves. And these alleged crimes are rarely punished. Hu Weigang, a senior partner at Guangdong Shen Dadi Law Firm, would like to see the law enforced on the mainland as it is in Hong Kong, where creating a bogus document can lead to jail. But, he acknowledges, the scale of this cheating makes it virtually impossible. “When everyone is doing it, you can’t put everyone in jail,” says Hu, who specializes in real estate litigation.

While property prices in China continue to rise, mortgage fraud remains largely a hidden danger, much as subprime loans in the United States remained mostly out of sight ahead of the 2008 global financial crisis. The fear is that in a property correction, fraudulent mortgages would unravel, accelerating a collapse of housing prices in the world’s second biggest economy. This, in turn, would imperil China’s debt-laden financial system. The danger from gravity-defying home prices is clear to the ruling Communist Party. In his marathon speech at the 19th Party Congress in October, Chinese President Xi Jinping warned about the overheated property market. “Houses are built to be lived in, not for speculation,” he said. Top bank officials are also worried. Xu Zhong, head of the research bureau at the central bank, the People’s Bank of China, sees pitfalls ahead.

“We must be very aware that rapidly rising housing prices could not only hamper our economic development, but could easily result in systemic risks and negatively impact the macroeconomy..” The motive for widespread mortgage fraud is simple: fear of missing out. Millions of homeowners are enjoying the sensation of ever-expanding wealth. The average value of residential housing in China more than tripled between 2000 and 2015 as a huge property market emerged from the early decades of economic reforms. So far, China’s new home-owning class has yet to experience a sustained downturn in housing values. Official data showed prices grew 12.4% in 2016, the fastest rate since 2011. A report tracking home price trends by the Chinese Academy of Social Sciences, a state think tank, showed prices in 33 major cities soared 42% in 2016. Private estimates and anecdotal evidence suggest prices in most big Chinese cities actually doubled or tripled since late 2015.

Look at them bubbles…

• This Time IS Different, It Just Ends The Same (Roberts)

“Market bubbles have NOTHING to do with valuations or fundamentals.” [..] Stock market bubbles are driven by speculation, greed, and emotional biases – therefore valuations and fundamentals are simply a reflection of those emotions. In other words, bubbles can exist even at times when valuations and fundamentals might argue otherwise. Let me show you a very basic example of what I mean. The chart below is the long-term valuation of the S&P 500 going back to 1871.

The pattern of bubbles is interesting because it changes the argument from a fundamental view to a technical view. Prices reflect the psychology of the market which can create a feedback loop between the markets and fundamentals. This pattern of bubbles can be clearly seen at every bull market peak in history. The chart below utilizes Dr. Robert Shiller’s stock market data going back to 1900 on an inflation-adjusted basis with an overlay of the asymmetrical bubble shape.

There is currently a strong belief that the financial markets are not in a bubble. The arguments supporting those beliefs are all based on comparisons to past market bubbles. The inherent problem with much of the mainstream analysis is that it assumes everything remains status quo. However, the question becomes what can go wrong for the market? In a word, “much.” Economic growth remains very elusive, corporate profits appear to have peaked, and there is an overwhelming complacency with regards to risk. Those ingredients combined with an extraction of liquidity by the Federal Reserve leaves the markets more vulnerable to an exogenous event than currently believed.

I can hear the protests from here…

• What Sowed The Seeds Of The Bitcoin Mania? (TM)

2017 was an unusual year where financial conditions actually eased despite the Federal Reserve raising rates. The financial tightness in 2015 and 2016 was catalyzed by weakness in the energy market. With the help of central banks, as we have previously stated, the economy narrowly avoided a recession. It’s still remarkable to see how much financial conditions have eased since. According to the Taylor Rule, financial conditions are the easiest since 1970. The Chicago Fed’s net financial conditions index has financial conditions the easiest since 1993.

Chicago Fed- Financial Conditions Index

This explains why GDP growth was above 3% in Q2 and Q3 2017 for the first time since 2004-2005. It also explains why stock volatility has been very low; the S&P 500 has been up for 13 straight months which is the longest streak since at least 1928 (the index was created in 1923). With low interest rates and easy financial conditions, it’s not surprising that we’ve seen intense speculation in bitcoin. The cryptocurrency space has had other years with great performance, but the break out in 2017 is partially a result of the easy monetary environment. As you can see, the financial conditions in the 1990s and in the past year have both been very loose. The economic expansions were both elongated which further increases speculation as traders forget what a recession is. The chart below compares bitcoin’s rally since 2016 with other bubbles.

As you can see, Qualcomm’s performance in the 1990s is like bitcoin’s rally. This is a great analogy because Qualcomm saw its stock collapse in the dot com bust, but it has had a viable business model recently, making the Snapdragon chips in smartphones. The tech bubble was based on optimism which ended up being realized with the expansion of the mobile internet. However, the tech bubble witnessed exaggerated valuations, much like cryptocurrencies are experiencing today. Most of the blockchain startups today will fail like Pets.com did in the 1990s. However, blockchain technology in the future will likely become as synonymous with daily life as the internet is today.

And more protests. Lots of older economists speak out against bitcoin.

• Bitcoin Is A ‘Dangerous Speculative Bubble’ – Stephen Roach (CNBC)

With the price of bitcoin moving toward $12,000, a top economist on Tuesday sent a stark warning to investors: The cryptocurrency is in a “dangerous speculative bubble.” “This is a toxic concept for investors,” said Stephen Roach, Yale University senior fellow and the former Asia chairman and chief economist at investment bank Morgan Stanley. Roach, described by Yale as one of Wall Street’s most influential economists, spent the bulk of his 30-year career at Morgan Stanley heading up a highly regarded team of economists around the world. He had a critical take on the explosion of buying the world’s most popular cryptocurrency. “This is a dangerous speculative bubble by any shadow or stretch of the imagination,” he told CNBC’s “The Rundown.” “I’ve never seen a chart of a security where the price really has a vertical pattern to it. And bitcoin is the most vertical of any pattern I’ve ever seen in my career,” he added.

Bitcoin has surged more than 1,000% this year, accelerated by rising interest from retail and institutional investors who view the digital currency as a possible future means of exchange and store of value. Major exchanges like the CME and CBOE have also legitimized the currency’s investment credentials by saying they plan to introduce futures contracts to their respective exchanges, likely further supporting the price. Roach suggested that exchange legitimization makes bitcoin “somewhat dangerous” for investors, given what he described as a “lack of intrinsic underlying economic value to the concept.” Many investors admit to not understanding the technicalities of the instrument or the blockchain technology that underpins its existence, hoping instead to profit on the expectation that bitcoin as an investment will simply continue to rise. “Like all bubbles, they burst,” Roach said. “They go down, and the one who’s made the last investment gets hurt the most, there’s no question about it.”

But the Troika demands 3.5% surpluses! “My estimate is that Greece should be running deficits close to 8 to 10% of GDP to move the economy in the right direction.”

• The Two-Tiered European Community (Bilbo)

This is the final part of my four-part discussion of a so-called progressive proposal advanced by German academic Fritz Sharpf to reform the Eurozone into two tiers: a ‘Northern’ hard currency tier and a ‘Southern’ non-euro tier with the latter nations tying their currencies to the euro. We have seen that rather than providing a framework for convergence between the current Eurozone Member States, Sharpfs’ proposal would not liberate the weaker nations from the yoke of the euro, In fact, the proposal would just tie the exiting nations to the euro in a slightly different way – one that will not provide sufficient flexibility to make much difference.

In questioning the current orthodoxy, Sharpf also notes that if the ECB strictly behaved within the Maastricht rules then the need for even more aggressive internal devaluation would be required as the “sanctions would be inflicted by anonymous market forces”. That is, the Member States currently in trouble would soon go broke as they would have trouble raising funds from the bond markets at acceptable yields, given they do not issue their own currencies. In this context, Sharpf concludes that: “It is hard to see why Southern governments, after all the sacrifices that they have already been forced to make under the present regime, should opt for an alternative that would not loosen economic constraints but remove the present protections against state insolvency.” The same might be said of his Proposal 2.

Why would the Southern states, who would be forced to exit under his plan, not then fully exploit their new found currency capacities to improve domestic demand conditions immediately, which would then, after a while push their external balances into deficit, and once there was sufficient volumes of their own currency in the system, place downward pressure on their exchange rates? Greece only has a current account close to balance because the enduring Depression has killed import growth. Turn the growth back on and they will soon be back in deficit. As I noted in Part 1, the real exchange rate data shows that despite the painful internal devaluation that has been imposed on many Eurozone nations, only Ireland has improved its international competitiveness against Germany.

I also cannot see the ECB agreeing to unconditionally provide euro and other foreign currency reserves to the exiting nations who are running their fiscal policy outside the parameters of the Northern states. Can you imagine Germany, which proudly runs fiscal surpluses while its major transport network is falling apart (bridges etc) tolerating Greece running the fiscal deficits it needs to restore some sense of prosperity? While Germany sits on current account surpluses of around 7-8% and thus creating massive imbalances within the Eurozone, they lecture everyone else about fiscal rectitude. My estimate is that Greece should be running deficits close to 8 to 10% of GDP to move the economy in the right direction.

More entertainment.

• This Could Mean The End Of May – And The Beginning Of Corbyn (Ind.)

Is this it? The moment when the May premiership is over? Could Corbyn end up taking power in a matter of weeks? It’s at least possible, though I concede it sounds far-fetched at first. In history, some British Prime Ministers have had their premierships wrecked by the “Irish Question”. Others, in more recent times, have been destroyed by Europe. Theresa May is unique in managing to combine both famously intractable and insoluble issues into one lethal cocktail. And so, it seems she is about to swallow the poison. Her premiership may be even shorter than many anticipated, and a Jeremy Corbyn-led government could be a fact of British life by the time the snows melt next year. Here’s how.

From what we can discern, the Government is perfectly happy to concede “special status” for Northern Ireland / Ireland in the Brexit talks – anathema to the Ulster Unionists. This is because the Government desperately needs to get onto the second phase of the process – the trade talks for the whole UK – and MPs, without being too crude about it, are happy to sign whatever the EU sticks under their nose and worry about the consequences later. In the end, they will risk their support from the DUP to get moving on Brexit. Jobs (Tory MPs’ included) are at stake. After all, ministers such as David Davis always say that “nothing’s agreed until everything’s agreed”, so having now ratted on the Democratic Unionists, they can, in due course, re-rat on the Irish and the EU, after a trade deal is sorted out.

This looks very amateurish. And everybody knows.

• Theresa May Humiliated As DUP Scuppers Border Deal (Ind.)

Theresa May’s Brexit strategy is in disarray after the Irish Prime Minister dramatically accused her of reneging on an agreement that would have ended the deadlock in the talks. On a day of drama, the Prime Minister pulled the plug on a deal on the Irish border after it was rejected by the Democratic Unionist Party which props her up in power – triggering claims she is being “held to ransom”. The embarrassment left Ms May scrambling to arrange crisis talks with the DUP before she heads back to Brussels later this week, with the clock ticking on the negotiations. EU leaders have demanded she guarantee there will no hard land border in Ireland before a summit next week, if the talks are to move on to discussing future trade and a transitional deal.

The unravelling of the deal also left many Conservatives questioning Ms May’s handling of the talks, amid disbelief that the DUP had not been squared off in advance. The talks broke down after Arlene Foster, the DUP leader, ruled out any move “which separates Northern Ireland economically or politically from the rest of the United Kingdom”. “We have been very clear. Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom,” she said, speaking at Stormont. The party – despite being the Tories’ partner in government – appeared to be blindsided by the UK’s apparent concession of “regulatory alignment” on both sides of the border, to avoid checks. Within 20 minutes, Ms May interrupted her talks with Jean-Claude Juncker, the EU Commission President, to telephone Ms Foster. When she went back to the lunch, the deal was off.

“By the time Cornwall had got in on the act by insisting its dogs be allowed to surf wherever they wanted..”

• Confused May In Alignment Only With Herself Over Irish Issue (G.)

“Are you sure we can’t fudge the Northern Ireland border issue just a little bit?” she had asked Juncker on arrival in Brussels. Juncker had sniggered. Absolutely not. What bit of “regulatory alignment” did she not get? Theresa had another go. How about we say that pigs, cheese and a few cows are allowed to wander across the border without a passport? So you’re basically giving in and accepting that Northern Ireland must stay inside the single market and the customs union, Juncker had observed. Mmm, yes and no, Theresa whispered, checking over her shoulder to make sure no one was listening. It was like this. Regulatory divergence and regulatory alignment could almost mean exactly the same thing. It just depended which side you were looking at it from. The secret was to persuade the divergers that you weren’t aligning and the aligners you weren’t diverging by drafting something that was equally open to misinterpretation by both.

“Whatever,” Juncker had yawned. Having persuaded herself she had got a deal she could sell – to herself if no one else – Theresa set about drafting an agreement with the Irish government. As the news seeped out that an agreement had been reached, all hell broke loose. If the Northern Irish could have a special nod and a wink for pigs, the Scots must have the same exemptions for scotch. And heather. Then London started making demands. Just because it could. It had never fancied leaving the EU anyway. By the time Cornwall had got in on the act by insisting its dogs be allowed to surf wherever they wanted, it dawned on the prime minister that maybe she ought to run the agreement past the DUP. Arlene Foster’s response had been unequivocal. Theresa could keep her £1bn. Any deal that didn’t make Northern Ireland exactly the same as the rest of the UK was unacceptable. No special status, no nothing. And if push came to shove, she’d bring down the UK government.

Erik Prince and Oliver North. Yeah, those are the guys I would trust.

• White House Weighing Plans For Private Spies To Counter “Deep State” (IC)

The Trump administration is considering a set of proposals developed by Blackwater founder Erik Prince and a retired CIA officer — with assistance from Oliver North, a key figure in the Iran-Contra scandal — to provide CIA Director Mike Pompeo and the White House with a global, private spy network that would circumvent official U.S. intelligence agencies, according to several current and former U.S. intelligence officials and others familiar with the proposals. The sources say the plans have been pitched to the White House as a means of countering “deep state” enemies in the intelligence community seeking to undermine Trump’s presidency. The creation of such a program raises the possibility that the effort would be used to create an intelligence apparatus to justify the Trump administration’s political agenda.

“Pompeo can’t trust the CIA bureaucracy, so we need to create this thing that reports just directly to him,” said a former senior U.S. intelligence official with firsthand knowledge of the proposals, in describing White House discussions. “It is a direct-action arm, totally off the books,” this person said, meaning the intelligence collected would not be shared with the rest of the CIA or the larger intelligence community. “The whole point is this is supposed to report to the president and Pompeo directly.” Oliver North, who appears frequently on Trump’s favorite TV network, Fox News, was enlisted to help sell the effort to the administration. He was the “ideological leader” brought in to lend credibility, said the former senior intelligence official.

Some of the individuals involved with the proposals secretly met with major Trump donors asking them to help finance operations before any official contracts were signed. The proposals would utilize an army of spies with no official cover in several countries deemed “denied areas” for current American intelligence personnel, including North Korea and Iran. The White House has also considered creating a new global rendition unit meant to capture terrorist suspects around the world, as well as a propaganda campaign in the Middle East and Europe to combat Islamic extremism and Iran. “I can find no evidence that this ever came to the attention of anyone at the NSC or [White House] at all,” wrote Michael N. Anton, a spokesperson for the National Security Council, in an email. “The White House does not and would not support such a proposal.”

“The deal had allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003, down to as low as 0.005% in certain years..”

• Apple Agrees To Pay Over $15 Billion To Ireland In Back Taxes (ArsT)

According to a top Irish official, Apple has agreed to to pay Ireland around $15.4 billion in back taxes. “We have now reached agreement with Apple in relation to the principles and operation of the escrow fund,” Finance Minister Paschal Donohoe told reporters before a meeting with European Competition Commissioner Margrethe Vestager. “We expect the money will begin to be transmitted into the account from Apple across the first quarter of next year.” Ireland was formally referred to the European Court of Justice after it failed to implement a 2016 order that required the island nation to collect the same amount in unpaid taxes. Over a year ago, as Ars reported, the EU’s competition chief Vestager said that a two-year investigation into so-called sweetheart tax deals in 1991 and 2007 had found Apple guilty of receiving illegal state aid from the Emerald Isle.

The deal had allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003, down to as low as 0.005% in certain years, according to Vestager. Apple has denied any wrongdoing and has also said that it received no “special deal.” “We have a dedicated team working diligently and expeditiously with Ireland on the process the European Commission has mandated,” Apple said in a Monday statement according to UPI. “We remain confident the General Court of the EU will overturn the Commission’s decision once it has reviewed all the evidence.” Both Apple and Ireland have challenged the EU’s court order.

Why not check this for fraud too?

• China, the Digital Giant (PS)

China has firmly established itself as a global leader in consumer-oriented digital technologies. It is the world’s largest e-commerce market, accounting for more than 40% of global transactions, and ranks among the top three countries for venture capital investment in autonomous vehicles, 3D printing, robotics, drones, and artificial intelligence (AI). One in three of the world’s unicorns (start-ups valued at more than $1 billion) is Chinese, and the country’s cloud providers hold the world record for computing efficiency. While China runs a trade deficit in services overall, it has lately been running a trade surplus in digital services of up to $15 billion per year. Powering China’s impressive progress in the digital economy are Internet giants like Alibaba, Baidu, and Tencent, which are commercializing their services on a massive scale, and bringing new business models to the world.

Together, these three companies have 500-900 million active monthly users in their respective sectors. Their rise has been facilitated by light – or, perhaps more accurate, late – regulation. For example, regulators put a cap on the value of online money transfers a full 11 years after Alipay introduced the service. Now, these Internet firms are using their positions to invest in China’s digital ecosystem – and in the emerging cadre of tenacious entrepreneurs that increasingly define it. Alibaba, Baidu, and Tencent together fund 30% of China’s top start-ups, such as Didi Chuxing ($50 billion), Meituan-Dianping ($30 billion), and JD.com ($56 billion). With the world’s largest domestic market and plentiful venture capital, China’s old “copy-cat” entrepreneurs have transformed themselves into innovation powerhouses.

They fought like gladiators in the world’s most competitive market, learned to develop sophisticated business models (such as Taobao’s freemium model), and built impregnable moats to protect their businesses (for example, Meituan-Dianping created an end-to-end food app, including delivery). As a result, the valuation of Chinese innovators is many times higher than that of their Western counterparts. Moreover, China leads the world in some sectors, from livestreaming (one example is Musical.ly, a lip-syncing and video-sharing app) to bicycle sharing (Mobike and Ofo exceed 50 million rides per day in China, and are now expanding abroad).

Most important, China is at the frontier of mobile payments, with more than 600 million Chinese mobile users able to conduct peer-to-peer transactions with nearly no fees. China’s mobile-payment infrastructure – which already handles far more transactions than the third-party mobile-payment market in the United States – will become a platform for many more innovations.

Merkel is losing ground fast. First inviting refugees and then paying them to leave, what is that?

• Pilots Across Germany Are Blocking The Deportation Of Asylum Seekers (IBT)

Pilots across Germany are refusing to carry out deportations of asylum seekers and have prevented at least 222 planned flights so far, the government said on Monday (4 December) Germany’s main airline Lufthansa and its subsidiary Eurowings halted at least 85 flights in the first eight months of this year, according to a freedom of information request obtained by the Left party. The majority of the cancellations took place at Frankfurt airport, Germany’s largest and most important transport hub. A large number of the flights were scheduled to repatriate refugees to Afghanistan, a move which has been widely condemned by human rights organisations. Earlier this year, Amnesty International called on European governments to “implement a moratorium on returns to Afghanistan until they can take place in safety and dignity”.

Anna Shea, Amnesty International’s Researcher on Refugee and Migrant Rights, said that government was being “wilfully blind” to the fact that violence was at a record high in Afghanistan. Despite an increase in deportations, Germany remains the top destination for refugees in the European Union. This year, Germany has taken in more asylum seekers than all other 27 EU countries combined. In the first six months of 2017 the country processed 388,201 asylum cases, Die Welt reported, quoting statistics agency Eurostat. To try and curb the numbers, the German government is offering rejected asylum seekers up to €1000 in benefits if they voluntarily return home. Families who agree to leave are entitled to receive up to €3000. Interior Minister Thomas de Maizière (CDU) told the Süddeutsche Zeitung on Sunday (3 December): “If you decide by the end of February for a voluntary return, you will get in addition to first aid, a housing aid for the first 12 months in your country of origin.”

Tsipras has to ask Brussels (re: Merkel) for permission.

• Push To Move Refugees From Greek Islands To Mainland (K.)

Municipal officials from the islands of Lesvos, Chios and Samos, which are bearing the brunt of an increased influx of migrants from neighboring Turkey, are due in Athens on Tuesday to press the government for action to ease the pressure on their local communities. The officials decided to coordinate their protests and seek a meeting with Migration Minister Yiannis Mouzalas to speed up the transfer of migrants from the islands to mainland Greece. There are currently more than 15,000 migrants living in state-run camps on Lesvos, Chios, Samos, Leros and Kos. More than 15,000 have been transferred to the mainland over the past year. Of those more than 3,500 were transferred in the last month alone. But islanders say more action is needed due to growing tensions in the reception centers and among the local communities as arrivals from Turkey have increased.

Hopes that a European Union refugee relocation program could ease some of the pressure have been largely frustrated as the process is a slow one. European Migration Commissioner Dimitris Avramopoulos has said the so-called Dublin Regulation, which dictates that refugees apply for asylum in the first EU country they enter, must be reformed for pressure on countries such as Greece and Italy to ease. In a related development on Monday, a court on Lesvos indicted 16 North African migrants who participated in the occupation of a central square in Mytilene, the main port of Lesvos. Authorities on the island detained a total of 25 protesters late on Sunday but the other nine were released as they are minors. The migrants had staged the protest in a bid to press authorities to accelerate their asylum applications and their transfer to mainland Greece.

No question there.

• The World’s Oceans Are Under The Greatest Threat In History – Attenborough (G.)

The world’s oceans are under the greatest threat in history, according to Sir David Attenborough. The seas are a vital part of the global ecosystem, leaving the future of all life on Earth dependent on humanity’s actions, he says. Attenborough will issue the warning in the final episode of the Blue Planet 2 series, which details the damage being wreaked in seas around the globe by climate change, plastic pollution, overfishing and even noise. Previous BBC nature series presented by Attenborough have sometimes been criticised for treading too lightly around humanity’s damage to the planet. But the final episode of the latest series is entirely dedicated to the issue. “For years we thought the oceans were so vast and the inhabitants so infinitely numerous that nothing we could do could have an effect upon them. But now we know that was wrong,” says Attenborough.

“It is now clear our actions are having a significant impact on the world’s oceans. [They] are under threat now as never before in human history. Many people believe the oceans have reached a crisis point.” Attenborough says: “Surely we have a responsibility to care for our blue planet. The future of humanity, and indeed all life on Earth, now depends on us.” BBC executives were reportedly concerned about the series appearing to become politicised and ordered a fact-check, which it passed. The series producer, Mark Brownlow, said it was impossible to overlook the harm being caused in the oceans: “We just couldn’t ignore it – it wouldn’t be a truthful portrayal of the world’s oceans. We are not out there to campaign. We are just showing it as it is and it is quite shocking.”

Strict management of the herring fishery in Norway has saved it from collapse. Herring now draw in humpback whales and orca. Photograph: Audun Rikardsen

Brexit Is Pandora’s Gift To Britain

Dec 042017

December 4, 2017 Posted by Raúl Ilargi Meijer at 1:44 pm Finance Tagged with: Blair, Corbyn, DUP, EU, Ireland, May, Pandora, poverty, referendum, secrecy, Trump 8 Responses »

Saul Leiter Raining on two 1957

First of all, let me reiterate that I don’t think Brexit is a bad thing per se. Getting rid of Brussels is at least as much of a relief as it is a headache. Moreover, Britain needed a makeover, badly, as has ironically been shown especially after the referendum. But as an outsider it is still top class theater to see it playing out. And the real high value drama hasn’t even started.

But we can already hear the orchestra changing tone, and mood, and the fat lady’s warming up her voice. To see the whole negotiating process being led and conducted by a woman who voted against initiating it in the first place is a guaranteed added bonus. Not sure Shakespeare would have found it a credible plotline, but there you go.

It’s much less amusing to see that poverty in Britain is soaring and a fifth of the population is now poor, including an additional 400,000 children in the past 5 years. But that is a strong indicator of how much of a failed state the country has become, and it makes the Brexit vote outcome that much easier to explain. Still, whether the vote had been Leave or Remain, the real damage had been done long before.

The people doing the negotiations are to a large extent accountable for that damage, they’re all Tories from the Cameron era, and Tony Blair, who’s just as much to blame, is speaking up again as well. The Brexit mess thus functions to expose the abject failure of the entire British political system as much as Donald Trump’s ascent to the US presidency does in America.

It’s now just a matter of learning the right lessons from these events. And that is not that the US would be fine if Trump were not there, or that Brexit itself is the main problem in the UK. It’s that these are the consequences of systems failing across the board, with Blair turning UK’s Labour party into a right wing force, and the DNC doing the same with the Democrats.

Try to take away people’s voices along with their money, and they will speak up. It’s one easy step from there for the other side of the spectrum to claim they are the real voice of the people, and getting the benefit of the doubt. Not that it will end there, but until and unless the left has re-defined itself as actual left again, representing people instead of themselves, there will be no easy way out.

That said, both Trump and Brexit will become mired in cesspools, just not because of Russia but because both turn against their fast impoverishing populations. But even then, redefining is a crucial issue.

As Theresa May is in Brussels to hold talks aimed merely at just getting negotiations started, something she will have to make hefty concessions for, the majority her party had before she called a snap election keeps slip sliding away. Labour would now get that majority. If she were smart, she’d call another election today, lose it and let Corbyn deal with the mess, but she won’t, the Tories are addicted to the smell of power in the morning, and so is May herself.

May seems to have reached some shaky sounding deal with the EU about the Irish border issue (“regulatory alignment”), but that will only lead to more problems (as will all deals she manages to reach in the talks). In this case, her coalition with Northern Ireland DUP party, which keeps her in power to begin with, comes under strain. Every solution will lead to another problem, and she can’t keep everybody happy.

Brexit is Pandora’s gift to Britain. Suppose the DUP accepts open borders with EU member Ireland, why would not Scotland, for instance, demand a similar deal?

Labour Open Up 8-Point Lead Over Conservatives In Latest Opinion Poll

Jeremy Corbyn’s Labour party has extended its lead over the Conservatives to eight points, according to a new poll that will provide grim reading for the Prime Minister. The poll by Survation puts Labour on 45%, with Theresa May’s Conservatives trailing behind on 37%, and the Liberal Democrats under Vince Cable on six%. An eight point lead, the polling company added, would likely put Labour into overall majority territory if such vote share totals were reflected at the ballot box.

Meanwhile, ever more people want a say in what Brexit will look like, via another referendum. Before the negotiations are finished, someone will add up how much Brexit will really cost, and that’ll be the end of it, unless the Tories prevent that second referendum. There will come a point that the Tories realize this whole process will push them out of power for a long time, but it’ll be too late then.

Second Brexit Referendum Has 16-Point Lead As Half Of Britons Back New Vote

Half of Britons want a public vote on the UK’s final Brexit deal with the EU once the Government’s negotiations are over, a new poll suggests. Of the 1,003 people surveyed in the Survation poll , 497, or 50%, said they would “support holding a referendum asking the public if they will accept or reject the deal”. A total of 343, or 34%, said they were against the idea of a public vote, while 164 (16%) said they did not know. Of the people who were in favour of a referendum on the UK’s deal for exiting the EU, 271 (54.5%) had voted Remain in the 2016 Brexit vote, while 145 (29%) voted Leave.

Jeremy Corbyn is set to become UK PM, if he can shake off Tony Blair, but he hasn’t quite screwed up the courage to turn his back on the Brexit vote, so he’s as much in an impossible split as May is. It’s all he can do is to wait until she makes ever more mistakes and then stumbles over them. Meanwhile, he can carefully open up the second referendum option, because it doesn’t directly contradict the outcome of the first.

Corbyn Signals Labour Could Be Open to Second Brexit Referendum

U.K. Labour Party leader Jeremy Corbyn hinted that he could be open to holding a second referendum on Brexit as the consequences of leaving the European Union become clearer. Asked if he was prepared to rule out a second vote after meeting with Portuguese Prime Minister Antonio Costa in Lisbon on Saturday, Corbyn said his party hasn’t fixed its position on the issue. “We’ve not made any decision on a second referendum,’’ Corbyn said at a European Socialist Party conference in the Portuguese capital. “What we’ve said is that we would respect the result of the first referendum.”

And May’s own people are starting to turn their backs on her, slowly at first but that will pick up, because they start fearing for their own future careers if they back her for too long. She has to balance this with her fanatical Brexiteers who are only looking to replace her.

Theresa May Faces New Crisis After Mass Walkout Over Social Policy

Theresa May was plunged into a new crisis on Saturday night after the government’s social mobility adviser revealed he and his team were quitting, warning that the prime minister was failing in her pledge to build a “fairer Britain”. In a major blow to No 10, Alan Milburn, the former Labour cabinet minister who chairs the government’s social mobility commission, said that he and all three of his fellow commissioners were walking out – including a leading conservative, Gillian Shephard. The move will be seen as a direct challenge to May’s vow in Downing Street to place fairness and social justice at the heart of her premiership. In his resignation letter, seen by the Observer, Milburn warns that dealing with Brexit means the government “does not seem to have the necessary bandwidth to ensure the rhetoric of healing social division is matched with the reality.

An interesting suggestion from commission chair Milburn was that while he thought May might actually want to tackle inequality and connected issues, he doesn’t think the government has the time to do that, because all its attention is most be focused on Brexit. That suggests the country effectively has no functioning government at the moment, and perhaps for years to come. Great prospect for a country deep in doodoo.

And it’s not a big surprise in this climate that May tries to keep all kinds of things secret. Not a big surprise, but certainly a big mistake.

Theresa May Under Growing Pressure To Reveal True Cost Of Divorce Bill

Senior Conservatives are demanding Theresa May be clear about how much the British public will be forced to pay to settle the Brexit “divorce bill”. MPs and peers, including former cabinet ministers, say that with the bill agreed this week and likely to be between £40bn and £50bn, the time has come for the Prime Minister to be completely open on how much Brexit will cost. Labour is threatening to bring the matter to a head by calling on Tory MPs to back a plan to let the UK’s spending watchdogs assess the financial settlement and give Parliament a vote on it, The Independent can reveal.

It comes 24 hours before Ms May will sit down with European Commission President Jean-Claude Juncker to secure an agreement-in-principle on the withdrawal terms of Brexit – including the divorce bill, Irish border and EU citizens’ rights. But despite any deal being likely to gain approval at the European Council in mid-December, the British public have not been told by the Government how big the divorce bill is likely to be, or how it is being worked out.

Indeed, secrecy is a policy in Tory Britain.

Irish warn Theresa May: Change Course Or Risk Brexit Chaos

Ministers are under mounting pressure to come clean over the extent of economic damage that a “no deal” outcome could cause to the economy. In the budget, Philip Hammond announced that the Office for Budget Responsibility revised downwards forecasts for UK growth over the next few years, mainly because of concerns of low productivity growth. But the OBR made clear that these downgrades were premised on a benign outcome to Brexit negotiations. Both the Treasury, privately, and leading independent economists recognise that actual growth will be considerably lower than the gloomy budget projections if the UK does not achieve most of its negotiating goals, or if there is a “no deal” result.

Government sources said ministers would this week release sections of assessments into the potential economic impact of Brexit carried out across Whitehall, which until recently they had tried to keep secret. Many MPs believe the published sections will be heavily redacted and will not make clear the extent of potential economic damage. Last night Nicky Morgan, who chairs the Treasury select committee, said it was essential that as many projections as possible were made public.

The latest work by economists at the London School of Economics estimates that, if the UK crashes out of the EU with no deal, the impact will be far more severe than the projections in the budget suggested. Thomas Sampson of the LSE’s Centre for Economic Performance said Brexit could reduce UK living standards by up to 9% in the most pessimistic case.

The best thing by a mile that May could possible do is to get out of the way before the way steamrollers all over her. But as I said, she won’t. And that is as tragic for her as it is for Britain. It’ll be entertaining to see the show -and May- go down. As long as you don’t live in Britain.

Debt Rattle December 3 2017

Dec 032017

December 3, 2017 Posted by Raúl Ilargi Meijer at 9:47 am Finance Tagged with: bitcoin, Brexit, Corbyn, farming, Greece, Ireland, IRS, May, refugees, taxes, taxhavens 1 Response »

Nicolas de Staël Paris la nuit 1954

• Are We Too Optimistic On Global Growth? (Saxo Bank)

• The Government Is Coming For Your Bitcoin (Black)

• Bitcoin & Tax: The Coming Coinbase Fiasco (Mike Maloney)

• Theresa May Faces New Crisis After Mass Walkout Over Social Policy (O.)

• Corbyn Signals Labour Could Be Open to Second Brexit Referendum (BBG)

• Theresa May Has Got To Come Clean About The Cost Of Brexit (Ind.)

• The Coming Days Will Stretch The Politics Of Brexit To The Limit (RTE)

• EU’s Net Starts To Close On Tax Havens (G.)

• Greece, Creditors Strike Deal on the Conditions for Fresh Cash (BBG)

• Islanders To Descend On Athens Over Refugee Crisis (K.)

• US Pulls Out of UN’s Global Compact on Migration (AFP)

• Why Did We Start Farming? (LRB)

Bits and pieces from A Saxo banks missive.

First graph: China credit impulse in the world economy plummeted 25% in Q2.

Second graph: Saxo smokes funny stuff. It says: Global trade but also non-construction investment in Western countries has been catching up with the pre-crisis long-term trend.. Well, not that I can see there.

Third graph: Stuff about inflation. Look, velocity is sinking through the floor. And Broad Money is not rising much (despite QE). Ergo: no inflation.

• Are We Too Optimistic On Global Growth? (Saxo Bank)

Is economic growth on a solid footing?We have a contrarian view on global growth in 2018 and consider that the consensus is a bit too rosy. We expect lower GDP growth in the second and third quarters due to the contraction in the credit impulse in China. As mentioned by the IMF, China still represents one-third of the global growth impulse. In Q2’17, China’s credit impulse declined by 25% year-on-year, therefore reaching a new post-crisis low. Since this index leads the real economy by nine to 12 months, we expect worse data next year for China, but also for the global economy.

The global economic situation has been improving over the past years. Global trade but also non-construction investment in Western countries has been catching up with the pre-crisis long-term trend.

[..] Will inflation ever come back? Lowflation has been one of the main macroeconomic issues in recent years and it is expected to remain a thorn in the foot of central bankers for longer yet. Since September 2016, China – the main exporter of deflation – has started to export inflation along with higher global commodity prices (up 3% in October 2017 year-on-year, based on data from the World Bank), but global inflation still remains subdued. Central bankers, and particularly ECB president Mario Draghi, consider that low inflation is only a transitory phenomenon linked to hysteresis and underemployment and that job gains will eventually push inflation to target. Those elements certainly play a role in the short and medium terms but as pointed out by Benoit Coeuré, the problem is that the Phillips curve is “flatter, non-linear, mid-specified”.

We don’t expect that inflation will significantly pick up next year since, in our view, lowflation is primarily a structural phenomenon. More and more economists are agreeing with that take, including outgoing Federal Reserve chair Janet Yellen who recently confirmed that we don’t properly understand inflation dynamics. Monetarists explain low inflation by the slow rate of growth in broad money since the great recession. This might be part of the problem, but it is not completely convincing since the money stock has not been constant and has started to decrease since 1997 in the United States.

Two pieces on the same issue: the IRS and bitcoin. First Simon Black, then Mike Maloney.

• The Government Is Coming For Your Bitcoin (Black)

The same day Bitcoin cracked its all-time high above $11,000, the government dealt its first blow to the crypto world… On Wednesday, a federal judge in San Francisco ordered the popular Bitcoin exchange, Coinbase, to provide the IRS with information on over 14,000 account holders. The taxman noticed that only 800-900 people reported gains related to Bitcoin in each of the years between 2013-2015. It seemed unusual given Bitcoin’s meteoric rise. So the IRS went for its pound of flesh. Initially, the government wanted complete data on every Coinbase user that transacted between 2013 and 2015. The exchange’s website says it has 13 million users (more than the number of Schwab brokerage accounts).

But Coinbase pushed back… and the government agreed to only take limited data (including name, date of birth, address, tax ID number, transaction statements and account logs) for accounts that have bought, sold, sent or received at least $20,000 worth of Bitcoin in a given year. Don’t say I didn’t warn you about Coinbase. I told Sovereign Man: Confidential readers last month: “If you’re tempted to purchase Bitcoin from the popular Coinbase exchange, don’t bother. They’ve sold out to regulators.” The IRS is calling this a “partial win.” But you can be sure, there will be a public beheading. This is something governments almost always do. [..] Now that it’s at all-time highs, the government wants its piece.

I read the 400+ pages of the proposed tax code. How many lines in there do you think deal with cryptocurrency? ZERO. How many lines deal with e-commerce? ZERO. The government had every opportunity to set the rules for the 21st century. And they failed miserably. So the rules remain as clear as mud. Instead of trying to make it clear, their tactic is intimidation, force and coercion. This is just the beginning. There will be more. And my advice is don’t be one of those guys. Every transaction that you make in Bitcoin is potentially a taxable event.

“And guess what they’re going to have to sell to come up with the cash [to pay the IRS]; because you can’t pay your taxes with bitcoin…

• Bitcoin & Tax: The Coming Coinbase Fiasco (Mike Maloney)

Mike Maloney takes a look at a very important Bitcoin issue that could prove to be a market-mover in the new year: The IRS has realized that Bitcoin is a cash cow for them, but at the same time there is just a small percentage of Coinbase users who are filing gains or losses. What could this add up to?

May’s problems grow fast. Her own people are starting to leave her. They fear for their own political futures. Cue Corbyn.

• Theresa May Faces New Crisis After Mass Walkout Over Social Policy (O.)

Theresa May was plunged into a new crisis on Saturday night after the government’s social mobility adviser revealed he and his team were quitting, warning that the prime minister was failing in her pledge to build a “fairer Britain”. In a major blow to No 10, Alan Milburn, the former Labour cabinet minister who chairs the government’s social mobility commission, said that he and all three of his fellow commissioners were walking out – including a leading conservative, Gillian Shephard. The move will be seen as a direct challenge to May’s vow in Downing Street to place fairness and social justice at the heart of her premiership. In his resignation letter, seen by the Observer, Milburn warns that dealing with Brexit means the government “does not seem to have the necessary bandwidth to ensure the rhetoric of healing social division is matched with the reality.

“I have little hope of the current government making the progress I believe is necessary to bring about a fairer Britain,” he tells the prime minister. “It seems unable to commit to the future of the commission as an independent body or to give due priority to the social mobility challenge facing our nation.” The resignations come with the prime minister already under pressure, as she faces crunch Brexit talks and questions over the future of her most senior minister, Damian Green. Milburn says failing to deal with the inequalities that fuelled the Brexit vote would simply lead to a rise of political extremes. In a devastating assessment of the lack of progress, Milburn says: “The worst position in politics is to set out a proposition that you’re going to heal social divisions and then do nothing about it. It’s almost better never to say that you’ll do anything about it.

“It’s disappointing at least that the government hasn’t got its shoulder to the wheel in the way it should to deal with these structural issues that lead to social division and political alienation in the country. “In America for 30 years real average earnings have remained flat. Now here the chancellor is predicting that will last for 20 years. That has a consequence for people, but a political consequence as well. It means more anger, more resentment and creates a breeding ground for populism.”

Very risky, but once he can make the costs clear, he might pull it off. He’ll need Tory defectors, though, and they won’t want to help him. But if things get bad enough with May, they may.

• Corbyn Signals Labour Could Be Open to Second Brexit Referendum (BBG)

U.K. Labour Party leader Jeremy Corbyn hinted that he could be open to holding a second referendum on Brexit as the consequences of leaving the European Union become clearer. Asked if he was prepared to rule out a second vote after meeting with Portuguese Prime Minister Antonio Costa in Lisbon on Saturday, Corbyn said his party hasn’t fixed its position on the issue. “We’ve not made any decision on a second referendum,’’ Corbyn said at a European Socialist Party conference in the Portuguese capital. “What we’ve said is that we would respect the result of the first referendum.”

Britain’s main opposition party is trying to portray itself as a government-in-waiting after gaining seats in June’s general election and stripping Prime Minister Theresa May of her majority. Since going into that vote with a Brexit strategy similar to May’s Conservatives, Labour has diverged in recent months, saying it would keep open the options of remaining in the single market and customs union, both of which the premier has ruled out. “If we were in government, we would immediately legislate to guarantee British residence to all European Union nationals that live and work in Britain, and the right to bring their families to Britain as well,’’ Corbyn told reporters. “We will negotiate the issues of relations with Europe on the basis of a free-trade relationship with Europe.’’

This is only about the divorce bill. Someone should ask about the total cost.

• Theresa May Has Got To Come Clean About The Cost Of Brexit (Ind.)

We know what the Prime Minister is up to. She wants to keep quiet about the size of the exit fee she is offering to the European Union until after Monday’s lunch with Jean-Claude Juncker, the Europan Commission President, and Michel Barnier, the EU negotiator. Indeed, she does not want her own MPs to know the sum until after the European Council on 14 and 15 December, at which she hopes to secure agreement to move to the next phase of Brexit talks. Once again, the national interest is being subordinated to the higher cause of holding the Conservative Party together – the sort of thing that prompted David Cameron to get us into the mess we are now in.

It is a small consolation, therefore, that the official opposition, led on this question by Sir Keir Starmer, the Shadow Brexit Secretary, is holding the Government to account. Labour is tabling an amendment to the EU (Withdrawal) Bill on Wednesday that would require any financial settlement to be assessed by the Office for Budget Responsibility and the National Audit Office. Of course, The Independent regards the prospect of a settlement amounting to between £45bn and £55bn as reasonable in principle. The reasons Conservative Eurosceptics might find it hard to accept are obvious. One is that they ran a referendum campaign on the assumption that leaving the EU would save the British people vast sums that could be diverted to the health service or other popular causes. The divorce bill gives the opposite impression.

This impression is reinforced by the way the sum, made up of several separate items, is rolled up into one very big number. In fact, of the £45bn-£55bn, about £20bn represents the continuation of our net contributions for the two years of a transition period, in which we would continue to be an EU member in all but name (and influence). The rest, Ms May insists, is similarly money that we owe in any case as a consequence of our membership. f so, there can be no objection to its being scrutinised to confirm it – or to giving Parliament the chance to approve or reject it in a vote. As Lord Heseltine, the former Deputy Prime Minister, told The Independent, “What would a Conservative opposition do if a Labour Party proposed to spend £30bn, £40bn or £50bn without telling Parliament what it was doing with it?”

And then there’s the Irish question.

• The Coming Days Will Stretch The Politics Of Brexit To The Limit (RTE)

When it comes to the border on the island of Ireland, the coming days will stretch the politics of Brexit to the limit. “For a border community, it impacts on every aspect of everyday life. When you get up in the morning, which road do you go out on?” “In Dublin or Belfast they won’t understand.” These are the views of one resident reported in a comprehensive survey of people living along both sides of the border on how Brexit will impact their lives, economically, socially, and psychologically. The paper, Bordering on Brexit: The Views of Local Communities in the Central Border Region of Ireland/Northern Ireland, has been published by a Queen’s University research team led by Dr Katy Hayward.

“That very close, tight way that it affects everything you think about and everything you do” continues the respondent. “For example, the man who fixes my car lives in Newtownbutler, Co Fermanagh – to drive you’d go out the Cavan road into Co Fermanagh, then into Co Monaghan, then into Co Fermanagh and then you get to his house. I could do that journey in 10 or 15 minutes; what would that be like if crossing an international European border?” These parochial but very real concerns, from Derry to Dundalk, are this weekend the subject of intense international diplomacy, gripping London, Dublin, Belfast and Brussels in a seemingly irreconcilable tug of politics. Donald Tusk, the President of the European Council, has set Monday as an absolute deadline for Theresa May to tell the EU, during a working lunch with the Commission president Jean-Claude Juncker, how she intends to solve the border problem, as well as the issue of Britain’s financial settlement and the rights of EU citizens.

Whether that deadline can be met, and what happens between Monday and the summit of EU leaders on 14 and 15 December, will have untold implications for the history of Ireland and the United Kingdom. The outcome may determine whether there is a hard border, no border, or something in between. It will have ramifications for the civil war in the Conservative Party and the stand-off between Sinn Féin and the DUP in Northern Ireland. It will have implications for millions of euro in cross-border trade, for cross-border healthcare, education, energy, waterways and other daily activities whose very nature is encouraged and facilitated by the Good Friday Agreement (GFA). And it will have implications for the man in Co Cavan who gets his car fixed in Newtownbutler, Co Fermanagh.

Just not their own., Ireland; Luxembourg; The Netherlands; Malta.

• EU’s Net Starts To Close On Tax Havens (G.)

When Europe’s finance ministers sit down to a working breakfast in Brussels on Tuesday, after deciding whether to order the continental or the full English, the British delegation will be faced with an even tougher decision. Chancellor Philip Hammond and his counterparts will be asked to approve a list of those countries, island states and former colonies which the European Union has deemed to be “non-cooperative jurisdictions”. Put more plainly, the EU will be announcing a blacklist of tax havens. Coming as it does less than a month after the publication of the Paradise Papers – an investigation by the Guardian and 95 partners worldwide into a leak of 13.4 million files from two offshore service providers – the announcement is hotly anticipated. Campaigners, lobbyists and politicians on both sides of the offshore debate are on tenterhooks.

For the kind of small island economies whose GDP depends on selling secrecy and tax breaks, a blacklisting could be devastating, particularly if Brussels follows up with a series of sanctions for doing business in these countries. Speculation about who will be placed on the EU’s naughty step has reached fever pitch. The latest draft, according to reports last week, contains 20 names, down from a possible 92 at the beginning of the year. That number could be further whittled down – the horse-trading is continuing up to the wire. So fierce is the debate that some believe publication might be postponed. “The finance ministers of the member states must not let political considerations cloud their judgment when agreeing their final list next week,” says the influential tax reform campaigner and German MEP Sven Giegold.

One of the big questions is how many, if any, members of the UK’s sprawling offshore network will be named. Any decision taken by ministers on Tuesday will have to be unanimous. Britain may be exiting Europe, but it retains its veto until 2019 and Theresa May’s government has been pulling every lever to protect its dependencies. Whitehall sources have confirmed that those Caribbean territories which suffered the most damage during this year’s devastating hurricanes will be given extra time to get their house in order. It has been reported that seven jurisdictions, not all of them British, have been given a temporary reprieve in order to recover from the damage. This is likely to mean the British Virgin Islands, Montserrat and the Turks & Caicos Islands – all of which are UK territories that took a battering from hurricanes Harvey, Irma and Maria – are safe for now.

[..] In a recent report, Blacklist or Whitewash?, Oxfam applied the criteria the EU is using to draw up the blacklist to 92 countries screened by the union and its 28 member states. The criteria exclude EU member states, but if they did not, Oxfam concluded that four countries should be blacklisted: Ireland; Luxembourg; The Netherlands; Malta. It also concluded that 35 non-EU states should be on the list: Albania; Anguilla; Antigua and Barbuda; Aruba; Bahamas; Bahrain; Bermuda; Bosnia and Herzegovina; British Virgin Islands; Cook Islands; Cayman Islands; Curaçao; Faroe Islands; Macedonia; Gibraltar; Greenland; Guam; Hong Kong; Jersey; Marshall Islands; Mauritius; Montenegro; Nauru; New Caledonia; Niue; Oman; Palau; Serbia; Singapore; Switzerland; Taiwan; Trinidad and Tobago; UAE; US Virgin Islands; Vanuatu.

Drip drip drip bloodletting.

• Greece, Creditors Strike Deal on the Conditions for Fresh Cash (BBG)

Greece and its international creditors agreed on a set of economic overhauls the country must undertake in exchange for fresh loans, paving the way for a payment that will help it build a cash buffer as it seeks to prepare for its bailout exit. The so-called staff level agreement came after a week of talks in Athens saw the two sides reach common ground on politically sensitive issues such as reforms in the energy sector, public administration, the financial system, social-cohesion programs and fiscal performance among others. “We reached the staff-level agreement” Finance Minister Euclid Tsakalotos said after the last meeting with creditor’s representatives in Athens. Greece is going to implement as soon as possible all the measures needed in order to get fresh bailout money, he added.

After January’s Eurogroup, Tsakalotos expects that discussions will start for further debt relief, the fourth bailout review that is expected to conclude in May or June, and for exiting the crisis. The deal marks the completion of a key step in the negotiations between Athens and the auditors of its aid program – representing euro-area governments and the IMF – as the country is starting to prepare for its post-bailout life. A successful conclusion of the current review will not only entail the release of fresh loans but it will also help Greece regain the trust of investors, as it plans to tap financial markets again. The continent’s most indebted state was the first euro-area nation to seek a lifeline from its peers in 2010 and the only one still reliant on such concessional loans to stay afloat. Additional bond sales are a crucial step in the efforts to build up a post-program cash cushion and ensure it can stand on its own feet without external help. “Looking ahead, our baseline remains that Greece will achieve a clean exit from the bailout program when it ends next summer,” Wolfango Piccoli, co-president of Teneo Intelligence said in a note to clients.

“To this aim, Greece would need to build a buffer of around 12-15 billion euros ahead of its exit from the program.” Still, the Greek government will first have to implement a long list of around 100 overhauls before it can receive any fresh disbursements and formally conclude the ongoing audit of its bailout. Some measures will be voted in December while an omnibus bill to implement the remaining prior actions must be voted in parliament before Jan. 11. Once Greece has undertaken the agreed reforms, euro-area finance ministry deputies can examine whether Athens has fully complied with the conditions attached to its bailout at a meeting on Jan. 11 and green-light the disbursement of fresh loans, which could take place by mid-February, an EU official said on Dec. 1.

Athens will end up bringing thousands to the mainland. And housing many in deplorable conditions.

• Islanders To Descend On Athens Over Refugee Crisis (K.)

Protesters will converge outside the Immigration Policy Ministry on Tuesday to demand immediate relief for the eastern Aegean islands of Samos, Lesvos and Chios, where facilities for migrants and refugees are overflowing with thousands of stranded asylum seekers. The rally is being organized by the municipalities of the three islands and aims to publicize the plight of asylum seekers who have been trapped there for more than a year, testing local communities. “We have decided to protest and to demand again the immediate decongestion of our islands, so that the government reacts to the problem,” a joint statement by the municipalities read. To this end, Samos Mayor Michalis Angelopoulos is in contact with islander associations in Athens to get their support.

Currently the islands of the Aegean are home to a total of 15,486 refugees and migrants, of whom 6,520 are at Lesvos’s Moria hotspot, which was designed to hold 2,300 people. Similarly, on Samos there are 2,083 people sheltered at the center near Vathi which has a capacity of just 700, as does the Vial facility on Chios, which is currently sheltering 2,377 people. With winter arriving, hundreds of people – half of whom are children – at the Lesvos and Chios hotspots are still living in summer tents and exposed to the elements, without access to basic hygiene facilities.

Reports said that work to place prefabricated huts next to the Vial hotspot to help ease the crowded conditions at the center and to make improvements to existing facilities was put on hold on Friday by a local court, pending a January 16 trial which will examine a lawsuit filed by the Chios Municipality against the Immigration Policy Ministry over its decision to house migrants and refugees at that specific hotspot. Meanwhile, in a government bid to relieve some of the pressure on the islands, 500 people were transferred in the last two days alone from the islands to the Greek mainland. Nonetheless, 50 more people arrived on the islands’ shores from Turkey on Friday.

Given what we see of refugee conditions globally, that Compact doesn’t seem to amount to much.

• US Pulls Out of UN’s Global Compact on Migration (AFP)

The administration of President Donald Trump has withdrawn the United States from a United Nations pact to improve the handling of migrant and refugee situations, deeming it “inconsistent” with its policies, the US mission to the global body announced Saturday. “Today, the US Mission to the United Nations informed the UN Secretary-General that the United States is ending its participation in the Global Compact on Migration,” the Americans said in a statement. In September 2016, the 193 members of the UN General Assembly unanimously adopted a non-binding political declaration, the New York Declaration for Refugees and Migrants, pledging to uphold the rights of refugees, help them resettle and ensure they have access to education and jobs.

“The New York Declaration contains numerous provisions that are inconsistent with US immigration and refugee policies and the Trump Administration’s immigration principles. As a result, President Trump determined that the United States would end its participation in the Compact process that aims to reach international consensus at the UN in 2018,” the US statement said. US Ambassador Nikki Haley said the country would continue its “generosity” in supporting migrants and refugees around the world, but that “our decisions on immigration policies must always be made by Americans and Americans alone.” “We will decide how best to control our borders and who will be allowed to enter our country. The global approach in the New York Declaration is simply not compatible with US sovereignty.”

Great discussion. Many false assumptions. Farming was not exactly a health booster.

• Why Did We Start Farming? (LRB)

Fire changed humans as well as the world. Eating cooked food transformed our bodies; we developed a much shorter digestive tract, meaning that more metabolic energy was available to grow our brains. At the same time, Homo sapiens became domesticated by its dependence on fire for warmth, protection and fuel. If this was the start of human progress towards ‘civilisation’, then – according to the conventional narrative – the next step was the invention of agriculture around ten thousand years ago. Farming, it is said, saved us from a dreary nomadic Stone Age hunter-gatherer existence by allowing us to settle down, build towns and develop the city-states that were the centres of early civilisations. People flocked to them for the security, leisure and economic opportunities gained from living within thick city walls.

The story continues with the collapse of the city-states and barbarian insurgency, plunging civilised worlds – ancient Mesopotamia, China, Mesoamerica – into their dark ages. Thus civilisations rise and fall. Or so we are told. The perfectly formed city-state is the ideal, deeply ingrained in the Western psyche, on which our notion of the nation-state is founded, ultimately inspiring Donald Trump’s notion of a ‘city’ wall to keep out the barbarian Mexican horde, and Brexiters’ desire to ‘take back control’ from insurgent European bureaucrats. But what if the conventional narrative is entirely wrong? What if ancient ruins testify to an aberration in the normal state of human affairs rather than a glorious and ancient past to whose achievements we should once again aspire?

What if the origin of farming wasn’t a moment of liberation but of entrapment? Scott offers an alternative to the conventional narrative that is altogether more fascinating, not least in the way it omits any self-congratulation about human achievement. His account of the deep past doesn’t purport to be definitive, but it is surely more accurate than the one we’re used to, and it implicitly exposes the flaws in contemporary political ideas that ultimately rest on a narrative of human progress and on the ideal of the city/nation-state.

[..] But why did it take so long – about four thousand years – for the city-states to appear? The reason is probably the disease, pestilence and economic fragility of those Neolithic villages. How did they survive and grow at all? Well, although farming would have significantly increased mortality rates in both infants and adults, sedentism would have increased fertility. Mobile hunter-gatherers were effectively limited by the demands of travel to having one child every four years. An increase in fertility that just about outpaced the increase in mortality would account for the slow, steady increase in population in the villages. By 3500 BCE the economic and demographic conditions were in place for a power-grab by would-be leaders.

Debt Rattle December 19 2016

Dec 192016

December 19, 2016 Posted by Raúl Ilargi Meijer at 9:23 am Finance Tagged with: Aleppo, Apple, China, coup, electors, FBI, gold, India, Ireland, Italy, liquidity, Trump 2 Responses »

Oil wells in Venice, California, bringing oil up from beach area 1952

• Amid The Bombs of Aleppo, All You Can Hear Are The Lies (Peter Hitchens)

• Coup Or No Coup: The Electoral College Votes On Monday (ZH)

• A Spy Coup in America? (Robert Parry)

• Trump Wants To Hear Hacking Evidence Direct From FBI (WSJ)

• The $12 Trillion Credit Risk Juggle (BBG)

• Gone in 60 Seconds: Chinese Snap Up Dollars as Yuan Tanks (BBG)

• As Yuan Weakens, Chinese Rush To Open Foreign Currency Accounts (R.)

• China Central Bank Presses Banks To Help After Interbank Lending Freezes (R.)

• China To Strictly Limit Property Speculation In 2017 (R.)

• Italy Banking Crisis is Also a Huge Crime Scene (DQ)

• Ireland Appeals EU Order To Collect €13 Billion In Back Taxes From Apple (AP)

• Apple To Appeal EU Tax Ruling, Says It Was A ‘Convenient Target’ (R.)

• India Has Less And Less Reason To Exist In Its Current Form (Bhandari)

• Greek Migration Minister Eyes ‘Closed’ Facilities On Islands (Kath.)

• The Seven Deadly Things We’re Doing To Trash The Planet (John Vidal)

Hitchens is a veteran. And western propaganda on Aleppo has gotten way out of hand.

• Amid The Bombs of Aleppo, All You Can Hear Are The Lies (Peter Hitchens)

[..] the old cliche ‘the first casualty of war is truth’ is absolutely right, and should be displayed in letters of fire over every TV and newspaper report of conflict, for ever. Almost nothing can be checked. You become totally reliant on the people you are with, and you identify with them. If you can find a working phone, you will feel justified in shouting whatever you have got into the mouthpiece – as simple and unqualified as possible. And your office will feel justified in putting it on the front page (if you are lucky). And that is when you are actually there, which is a sort of excuse for bending the rules.

In the past few days we have been bombarded with colourful reports of events in eastern Aleppo, written or transmitted by people in Beirut (180 miles away and in another country), or even London (2,105 miles away and in another world). There have, we are told, been massacres of women and children, people have been burned alive. The sources for these reports are so-called ‘activists’. Who are they? As far as I know, there was not one single staff reporter for any Western news organisation in eastern Aleppo last week. Not one. This is for the very good reason that they would have been kidnapped and probably murdered. The zone was ruled without mercy by heavily armed Osama Bin Laden sympathisers, who were bombarding the west of the city with powerful artillery (they frequently killed innocent civilians and struck hospitals, since you ask).

That is why you never see pictures of armed males in eastern Aleppo, just beautifully composed photographs of handsome young unarmed men lifting wounded children from the rubble, with the light just right. The women are all but invisible, segregated and shrouded in black, just as in the IS areas, as we saw when they let them out. For reasons that I find it increasingly hard to understand or excuse, much of the British media refer to these Al Qaeda types coyly as ‘rebels’ (David Cameron used to call them ‘moderates’). But if they were in any other place in the world, including Birmingham or Belmarsh, they would call them extremists, jihadis, terrorists and fanatics. One of them, Abu Sakkar, famously cut out and sank his teeth into the heart of a fallen enemy, while his comrades cheered. This is a checked and verified fact, by the way.

Sakkar later confirmed it to the BBC, when Western journalists still had contact with these people, and there is film of it if you care to watch. There is also film of a Syrian ‘rebel’ group, Nour al-din al Zenki, beheading a 12-year-old boy called Abdullah Issa. They smirk a lot. It is on the behalf of these ‘moderates’ that MPs staged a wholly one-sided debate last week, and on their behalf that so many people have been emoting equally one-sidedly over alleged massacres and supposed war crimes by Syrian and Russian troops – for which I have yet to see a single piece of independent, checkable evidence.

A real American Christmas comedy.

• Coup Or No Coup: The Electoral College Votes On Monday (ZH)

With even Harvard’s Larry Lessig admitting that his efforts to flip the Electoral College against Trump have failed miserably, it’s a near certainty that Trump will, in fact, be elected President when the Electoral College casts their votes tomorrow. That said, there could always be surprises and, as such, The Hill has published a list of five things you should keep an eye on as electors get set to cast their ballots. First, here is how the 538 electors should cast their ballots if they all strictly follow the will of the voters in their respective states.

That said, we know that at least one Texas elector, Chris Suprun, has vowed to go rogue tomorrow and anxious eyes will be waiting to see if anyone decides to join him. As The Hill points out, there hasn’t been an election since 1836 in which more than 1 elector changed his vote, so even 2 defectors would make history.

There’s no evidence of a widespread number of Republican defections—just one Republican elector from Texas has gone public with plans to break from Trump. But there hasn’t been an election in which more than one elector jumped ship for reasons other than the death of a candidate since 1836, according to the nonprofit FairVote. So a defection by even one more Republican elector would make history.

The next thing to watch is whether any Democrat electors will cast protest votes. A small group of Democratic electors had vowed to join Larry Lessig’s coup attempt by throwing their support behind an alternative Republican candidate. While this now seems like a remote possibility, it is something to watch for.

Democratic electors are the ones beating the drums for the revolt, yet they’re largely powerless to change the outcome. A handful of electors are already planning on uniting around a Republican alternative as a protest, but it’s still unclear how many are willing to join the protest. In theory, a unified front of the 232 Democrats could join with 38 Republicans to elect an alternative president. But in practice, the anti-Trump electors will be lucky if more than a dozen Democrats break.

With 29 states and the District of Columbia binding their electors by law, it will also be interesting to see if anyone in those states choose to defect, and if so, what penalties will be levied upon them.

Lots of info from Parry, but basically just confirms what we already knew.

• A Spy Coup in America? (Robert Parry)

As Official Washington’s latest “group think” solidifies into certainty – that Russia used hacked Democratic emails to help elect Donald Trump – something entirely different may be afoot: a months-long effort by elements of the U.S. intelligence community to determine who becomes the next president. I was told by a well-placed intelligence source some months ago that senior leaders of the Obama administration’s intelligence agencies – from the CIA to the FBI – were deeply concerned about either Hillary Clinton or Donald Trump ascending to the presidency. And, it’s true that intelligence officials often come to see themselves as the stewards of America’s fundamental interests, sometimes needing to protect the country from dangerous passions of the public or from inept or corrupt political leaders.

It was, after all, a senior FBI official, Mark Felt, who – as “Deep Throat” – guided The Washington Post’s Bob Woodward and Carl Bernstein in their Watergate investigation into the criminality of President Richard Nixon. And, I was told by former U.S. intelligence officers that they wanted to block President Jimmy Carter’s reelection in 1980 because they viewed him as ineffectual and thus not protecting American global interests. It’s also true that intelligence community sources frequently plant stories in major mainstream publications that serve propaganda or political goals, including stories that can be misleading or entirely false. So, what to make of what we have seen over the past several months when there have been a series of leaks and investigations that have damaged both Clinton and Trump — with some major disclosures coming, overtly and covertly, from the U.S. intelligence community led by CIA Director John Brennan and FBI Director James Comey?

The WSJ headline is: “Donald Trump’s Team Tones Down Skepticism on Russia Hacking Evidence”. But all he does is say: “show us the proof, show me and the American people.” So let’s have it.

• Trump Wants To Hear Hacking Evidence Direct From FBI (WSJ)

Fresh signs emerged Sunday that President-elect Donald Trump could embrace the intelligence community’s view that the Russians were behind a computer-hacking operation aimed at influencing the November election. A senior Trump aide said Mr. Trump could accept Russia’s involvement if there is a unified presentation of evidence from the Federal Bureau of Investigation and other agencies. This followed weeks of skepticism from the president-elect and his supporters that there is sufficient evidence that Russia was responsible for cyberattacks against the Democratic National Committee or leak of stolen emails.

Speaking on Fox News Sunday, Mr. Trump’s incoming chief of staff, Reince Priebus, said the president-elect “would accept the conclusion if these intelligence professionals would get together, put out a report, show the American people that they are actually on the same page.” His statement follows an intensifying bipartisan push on Capitol Hill to launch a separate investigation into the matter. Mr. Trump has called for opening up new lines of cooperation with Russia, and some of his critics in both parties have said his refusal so far to say Russia tried to interfere in the election was a sign that he doesn’t believe that Moscow is a U.S. adversary.

That’s quite the shift.

• The $12 Trillion Credit Risk Juggle (BBG)

After the financial crisis, regulators were worried about too much risk being concentrated in too few hands.They are still concerned, but the hands have changed. The U.S. Treasury’s Office of Financial Research is devoted to worrying about everything and anything that could spur another financial crisis, and near the top of the list is the post-crisis explosion in corporate credit. This pile of debt is “a top threat to stability,” according to this Treasury unit’s latest report, as Bloomberg’s Claire Boston wrote on Tuesday. In particular, these researchers are wary of the changing composition of who owns these bonds. Big banks and hedge funds own a much smaller proportion, while insurers and mutual funds own much more of it.

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More specifically, banks and household and nonprofits, a category that includes hedge funds, have reduced their holdings of U.S. corporate credit by $1.6 trillion since 2008, while insurers, mutual funds and the rest of the world have increased it by $3.6 trillion, according to data compiled by Goldman Sachs that includes foreign sovereign debt and asset-backed securities. This is a salient matter. The Federal Reserve just raised rates for a second time in two years and predicts three rate increases next year, possibly marking the end of this era of financial repression that’s spurred a record pace of corporate-debt sales.

With Goldman predicting the biggest fall for the yuan in 20 years, Beijing is in a bind.

• Gone in 60 Seconds: Chinese Snap Up Dollars as Yuan Tanks (BBG)

Chinese savers, eager to convert their yuan before the currency keeps depreciating, are snapping up U.S. dollar investment products that offer options for keeping money at home instead of sending it overseas. The latest wealth management products from China Merchants Bank last week, paying 2.37% annual interest on U.S. dollars, sold out in 60 seconds flat. “You won’t be able to get it online because it’s gone in less than a minute,” said a branch manager, who would only give the surname Xu, and encourages customers to book a day in advance next time. A growing number of offerings of such U.S. dollar funds and how quickly they’re being purchased show the surging demand for foreign currency amid outflows that are estimated to have totaled more than $1.5 trillion since the beginning of 2015.

By shifting into dollars – U.S., Australian and Hong Kong are among the favorites – deposit holders are shielded from the yuan’s losses without having to take their money out of the country to seek returns. “It seems an attractive choice to convert the yuan into the dollar sooner rather than later,” Harrison Hu at NatWest Markets, a unit of RBS, wrote in a note. He estimates that household purchases of foreign exchange could double to $15 billion a month in the coming quarter, absent new controls. A more hawkish than expected outlook from the U.S. Federal Reserve after it lifted interest rates last week has helped accelerate a dollar rally, with analysts predicting further gains. As the yuan has declined, China’s authorities have tried to vigorously enforce strict rules on moving cash over the border, where it is often invested in purchases such as real estate.

In recent weeks, policy makers in Beijing have put the brakes on everything from companies buying assets overseas to offshore purchases of life insurance to stem the tide of cash outflows. The fresh measures include checks by the currency regulator on any capital account transactions involving foreign exchange of $5 million or more. That followed steps earlier this year to ban the sharing of foreign-exchange quotas. In November, banks sold 49% more foreign-currency denominated wealth management products, most of them in U.S. dollars, than in October, according to PY Standard. November’s foreign currency deposits increased 11.4% from a year earlier, more than double the 4.8% rise in October, according to the People’s Bank of China.

If you’re really a market economy, what do you do?

• As Yuan Weakens, Chinese Rush To Open Foreign Currency Accounts (R.)

Zhang Yuting lives and works in Shanghai, has only visited the United States once, and rarely needs to use foreign currency. But that hasn’t stopped the 29-year-old accountant from putting a slice of her bank savings into the greenback. She is not alone. In the first 11 months of 2016, official figures show that foreign currency bank deposits owned by Chinese households rose by almost 32%, propelled by the yuan’s recent fall to eight-year lows against the dollar. The rapid rise – almost four times the growth rate for total deposits in the yuan and other currencies as recorded in central bank data – comes at a time when the yuan is under intense pressure from capital outflows. The outflows are partially a result of concerns that the yuan is going to weaken further as U.S. interest rates rise, and because of lingering concerns about the health of the Chinese economy.

U.S. President-elect Donald Trump’s threats to declare China a currency manipulator and to impose punitive tariffs on Chinese imports into the U.S., as well as tensions over Taiwan and the South China Sea, have only added to the fears. “Expectations of capital flight are clear,” said Zhang, who used her yuan savings to buy $10,000 this year. “I might exchange more yuan early next year, as long as I’ve got money.” Household foreign currency deposits in China are not huge compared to the money that companies, banks and wealthy individuals have been directing into foreign currency accounts and other assets offshore. All up, households had $118.72 billion of foreign money in their bank accounts at the end of November, while total foreign currency deposits were $702.56 billion. But the high growth rate in the household forex holdings are symbolic of a growing headache for the government as it struggles to counter the yuan’s weakness

Liquidity is one of the things central banks do not control. Not in the way China sees control.

• China Central Bank Presses Banks To Help After Interbank Lending Freezes (R.)

China’s central bank stepped in to urge major commercial banks to lend to non-bank financial institutions on Thursday afternoon after many suspended interbank operations amid tight liquidity conditions, Caixin reported. The People’s Bank of China intervened to help institutions such as securities firms and fund managers after banks, including the big four state-owned banks, became reluctant to make loans, the financial magazine said, citing traders and institutional sources. Caixin said that traders pointed to worsening sentiment among banks about market conditions and growing caution over interbank lending, especially after the U.S. Fed triggered a sell-off in the bond futures market on Thursday by signaling more rate hikes in 2017. Liquidity has become a major factor affecting the market after the central bank increased the cost of capital through open market operations in the past month, the magazine added.

Don’t believe a word of it.

• China To Strictly Limit Property Speculation In 2017 (R.)

China will strictly limit credit flowing into speculative buying in the property market in 2017, top leaders said at an economic conference on Friday, as reported by the official Xinhua news agency. “Houses are for people to live in, not for people to speculate,” Xinhua said, citing a statement issued by the leaders after the Central Economic Work Conference concluded. “We must control credits in the macro sense,” they said in the statement. China will also boost the supply of land for cities where housing prices face stiff upward pressure, they said. China must quickly establish a long-term mechanism to restrain property bubbles and prevent price volatility in 2017, Xinhua said. Top leaders began the conference on Wednesday to map out economic and reform plans. The annual event is keenly watched by investors for clues to policy priorities and economic targets in the year ahead.

That’s what the country always used to be good at after all.

• Italy Banking Crisis is Also a Huge Crime Scene (DQ)

The Bank of Italy’s Target 2 liabilities towards other Eurozone central banks — one of the most important indicators of banking stress — has risen by €129 billion in the last 12 months through November to €358.6 billion. That’s well above the €289 billion peak reached in August 2012 at the height of Europe’s sovereign debt crisis. Foreign and local investors are dumping Italian government bonds and withdrawing their funding to Italian banks. The bank at the heart of Italy’s financial crisis, Monte dei Paschi di Siena (MPS), has bled €6 billion of “commercial direct deposits” between September 30 and December 13, €2 billion of which since December 4, the date of Italy’s constitutional referendum.

Italy’s new Prime Minister Paolo Gentiloni, who took over from Matteo Renzi after his defeat in the referendum,said his government — a virtual carbon copy of the last one — is prepared to do whatever it takes to stop MPS from collapsing and thereby engulfing other European banks. His options would include directly supporting Italy’s ailing banks, in contravention of the EU’s bail-in rules passed into law at the beginning of this year. Though now, that push comes to shove, the EU seems happy to look the other way. While attention is focused on the rescue of MPS, news regarding another Italian bank, Banca Etruria, has quietly slipped by the wayside. On Friday it was announced that the first part of an investigation concerning fraudulent bankruptcy charges, in which 21 board members are implicated, had been closed.

This strand of the investigation concerns €180 million of loans offered by the bank which were never paid back, leading to the regional lender’s bankruptcy and eventual bail-in/out last November that left bondholders holding virtually worthless bonds. The Banca Etruria scandal is a reminder — and certainly not a welcome one right now for Italian authorities — that a large part of the €360 billion of toxic loans putrefying on the balance sheets of Italy’s banks should never have been created at all and were a result of the widespread culture of corruption, political kickbacks, and other forms of fraud and abuse infecting Italy’s banking sector. Etruria is also under investigation for fraudulently selling high-risk bonds to retail investors — a common practice among banks in Italy (and Spain) during the liquidity-starved years of Europe’s sovereign debt crisis.

Put simply, “misselling” subordinated debt to unsuspecting depositors was “the way they recapitalized the banking system,” as Jim Millstein, the U.S. Treasury official who led the restructuring of U.S. banks after the financial crisis, told Bloomberg earlier this year.

Yeah, it’s unfair!!

• Ireland Appeals EU Order To Collect €13 Billion In Back Taxes From Apple (AP)

Ireland will appeal the European Union’s order to force it to collect a record €13bn in taxes from Apple, the Irish government has said. The Irish finance department’s announcement on Monday comes nearly four months after EU competition authorities hit Apple with the back-tax bill based on its longtime reporting of European-wide profits through Ireland. The country charges the American company only for sales on its own territory at Europe-low rates that in turn have been greatly reduced by the controversial use of shell companies at home and abroad. In its formal legal submission, the Dublin says its low taxes are the whole point of its sales pitch to foreign investors — and said it is perfectly legal to levy far less tax on profits than imposed by competitors.

It accuses EU competition authorities of unfairness, exceeding their competence and authority, and seeking to breach Ireland’s sovereignty in national tax affairs. The ruling unveiled 30 August by the European competition commissioner Margrethe Vestager called on Apple to pay Ireland the €13bn for gross underpayment of tax on profits across the bloc from 2003 to 2014. Her report concluded that Apple used two shell companies incorporated in Ireland to permit Apple to report its Europe-wide profits at effective rates well under 1%. The scope of the order could have been even greater because EU time limits meant the judgment could include potential tax infringements dating only from 2003, not all the way back to Apple’s original 1991 tax deal with Ireland. But Irish specialists in corporate tax estimate that the EU’s order, if enforced, actually would total €19bn because of compounding interest from delayed payment.

Everybody appeals.

• Apple To Appeal EU Tax Ruling, Says It Was A ‘Convenient Target’ (R.)

Apple will launch a legal challenge this week to a record $14 billion EU tax demand, arguing that EU regulators ignored tax experts and corporate law and deliberately picked a method to maximize the penalty, senior executives said. Apple’s combative stand underlines its anger with the European Commission, which said on Aug. 30 the company’s Irish tax deal was illegal state aid and ordered it to repay up to €13 billion to Ireland, where Apple has its European headquarters. European Competition Commissioner Margrethe Vestager, a former Danish economy minister, said Apple’s Irish tax bill implied a tax rate of 0.005% in 2014. Apple intends to lodge an appeal against the Commission’s ruling at Europe’s second highest court this week, its General Counsel Bruce Sewell and CFO Luca Maestri told Reuters.

The iPhone and iPad maker was singled out because of its success, Sewell said. “Apple is not an outlier in any sense that matters to the law. Apple is a convenient target because it generates lots of headlines. It allows the commissioner to become Dane of the year for 2016,” he said, referring to the title accorded by Danish newspaper Berlingske last month. Apple will tell judges the Commission was not diligent in its investigation because it disregarded tax experts brought in by Irish authorities. “Now the Irish have put in an expert opinion from an incredibly well-respected Irish tax lawyer. The Commission not only didn’t attack that – didn’t argue with it, as far as we know – they probably didn’t even read it. Because there is no reference (in the EU decision) whatsoever,” Sewell said.

A police state that bans gold and creates a huge underground market in it.

• India Has Less And Less Reason To Exist In Its Current Form (Bhandari)

Assaults on people’s private property and the integrity of their homes through tax-raids continue. In a recent notification, government has made it clear that any ownership of jewelry above 500 grams of gold per married woman will be put under the microscopic scrutiny of tax authorities. Steep taxes and penalties will be imposed on those who cannot prove the source of their gold. In India’s Orwellian new-speak this means that because bullion has not been explicitly mentioned, its ownership will be deemed to be illegal. Courts will do what Modi wants. Huge bribes will have to be paid. Sane people are of course cleaning up their bank lockers. The secondary consequence of this will be a steep increase in unreported crimes, for people will be afraid of going to the police after a theft, fearing that the tax authorities will then ask questions.

At the same time, the gold market has mostly gone underground, and apparently the volume of gold buying has gone up. The salaried middle class is the consumption class, often heavily indebted. Poor people have limited amounts of gold. The government is merely doing what pleases the majority and their sense of envy, to the detriment of small businesses and savers. Now, the middle class is starting to face problems as well. This will worsen once the the impact of the destruction of small businesses becomes obvious. India has always had a negative-yielding economy. It has suddenly become even more negative-yielding. Business risk has gone through the roof. Savers will be victimized. It is because of negative yields that Indian savers buy gold. They will buy more going forward.

Sane Indians should stay a step ahead of their rapacious government and the evolving totalitarian society, which are less and less inhibited by any institutions or values in support of liberty. India will become a police state, likely with the full support of most Indians. Nationalism will be the thread that weaves them together. But it is a fake thread, devoid of any value. Eventually, there will be far too many stresses in the system, whose institutions are already in an advance stage of decay. India as it exists today is a British creation. With the British now gone for 69 years, it is an entity has less and less reason to exist in its current form.

Yeah, let’s all get crazy when Brussels says so.

• Greek Migration Minister Eyes ‘Closed’ Facilities On Islands (Kath.)

Despite widespread opposition in the ranks of SYRIZA to such a prospect, Migration Minister Yiannis Mouzalas has called for the creation of “closed” reception centers for migrants on Aegean islands, saying they will help minimize tensions amid local communities. A key reason for building tensions at existing centers on the islands is the slow pace at which migrants’ asylum applications are being processed. German Chancellor Angela Merkel made a pointed reference to the slow pace of migrant returns from Greece to Turkey last week. However, official figures show that an agreement signed in March between the European Union and Ankara significantly curbed arrivals in Greece. Of the 172,699 migrants that arrived in Greece from Turkey this year, only 20,457 have landed on the islands since the beginning of April, when the EU-Turkey deal went into effect.

Asylum officials on the Aegean islands have received a total of 21,314 applications, while 2,110 have appealed against initial rejections. The government hopes to create new facilities to accommodate migrants who have displayed delinquent behavior in a bid to curb the outbreak of rioting at larger centers and to stop thefts and other petty crimes that have been testing tolerance in local communities. “We propose small facilities for 150-200 people,” Mouzalas told Kathimerini, adding that authorities were not seeking the tolerance but the “solidarity” of islanders to help “normalize the situation.” As for the prospect of transferring some migrants from island centers to facilities on the mainland, Athens has asked EU officials about it but has failed to receive a response amid fears that such a move would constitute a violation of the EU-Turkey pact, Mouzalas said.

There’s far more than seven, but hey, it’s John Vidal. Who spent half his life doing this.

• The Seven Deadly Things We’re Doing To Trash The Planet (John Vidal)

A baby ibex on a precipitous cliff edge. The hyenas of Harar eating from a human hand. Leopards in Mumbai, whales breaching and baby turtles heading blindly away from the sea. We are amazed by images of wildlife seen in ever more beautifully filmed natural history documentaries. They raise awareness, entertain, inform and amuse. We weep when we hear there are fewer birds in the sky, or that thousands of species are critically endangered. But there are some metaphorical megafauna that the BBC and we in the media really do not want everyone to see. After half a lifetime writing for the Guardian about the decline of the natural world, I have to report that there is a herd of enormous elephants in the forest that are trashing the place. We avert our eyes and pretend they are not there. We hope they will go away, but they appear to be breeding. But it is now clear that they are doing so much damage that unless confronted, there is little chance that the rest of the animals, including us, will survive very long.

Hyper-consumerism is the dominant matriarch of this destructive herd and the dysfunctional economic model that supports it, generating waste and ecological damage on a massive scale. The average US supermarket offers nearly 50,000 products; in the UK we throw away millions of tonnes of food a year; mobile phones have an average lifespan of just over a year; computers and cars just a few years more. The free market economy that has been built around it celebrates speed, obsolescence and quantity over longevity and efficiency. But we know that hyper-consumerism leads directly to deforestation, over-extraction of minerals, the waste of natural resources and pollution. We simply have too much stuff that no one possibly needs. To avoid ecological disaster, it must be culled.

Debt Rattle September 4 2016

Sep 042016

September 4, 2016 Posted by Raúl Ilargi Meijer at 9:58 am Finance Tagged with: backlash, Christmas, dollar, ECB, G20, insult, Ireland, Le Pen, mergers, Obama, surplus, taxes Comments Off

NPC “Georgetown-Marines game” 1923

• Dollar Hegemony Endures As Share Of Global Transactions Keeps Rising (AEP)

• US Has 9.93 Million More Government Workers Than Manufacturing Workers (CI)

• German Budget Surpluses Are Bad For The Global Economy (Economist)

• ECB’s Mersch: Central Banking Based On “Mathematical Models”, Not Reality (ZH)

• Europe’s Broken Banks Need the Urge to Merge (BBG)

• Economic Czars Warn G-20 of Risk From Populist Backlash on Trade (BBG)

• Chinese Consumers Take Credit For Boom In Car Loans (R.)

• 6 Steps To Avoiding All EU (Incl. Irish) And US Taxes Via Ireland (PP)

• Rural France Pledges To Vote For Marine Le Pen As Next President (G.)

• Shops Set For Christmas Price Hikes As Millions Of Shipments Stranded (Ind.)

• Row On Tarmac An Awkward G20 Start For US, China (R.)

• Barack Obama ‘Deliberately Snubbed’ By Chinese In Chaotic Arrival At G20 (G.)

• Half The Forms Of Life On Earth Will Be Gone By 2050 (ZH)

It’s nice to be able to agree with Ambrose once in a while.

• Dollar Hegemony Endures As Share Of Global Transactions Keeps Rising (AEP)

The US dollar is tightening its grip on the global financial system at the expense of the euro, entrenching American hegemony and rendering the US Federal Reserve more powerful than at any time in history. Newly-released data from the Bank for International Settlements (BIS) show that the dollar’s share of the $5.1 trillion in foreign exchange trades each day has continued rising to 87.6pc of all transactions. It is the latest evidence confirming the extraordinary resilience of the dollar-based international order, confounding expectations of US financial decline a decade ago. Roughly 60pc of the global economy is either in the dollar zone or closely tied to it through currency pegs or ‘dirty floats’, and the level of debt issued in dollars outside US jurisdiction has soared to $9 trillion.

This has profound implications for monetary policy. The Fed has become the world’s central bank whether it likes it or not, setting borrowing costs for much of the global system. The BIS data shows that the volume of transactions in which the euro was on one side of the trade has slipped to 31.3pc from 37pc in 2007. The dollar share has ratcheted up to 87.6pc over the same period. It is much the same picture for the foreign exchange reserves of central banks, a good barometer of global trust. The dollar share has recovered to 63.6pc, roughly where it was a decade ago. The euro share has tumbled over the last eight years from 28pc to 20.4pc, and is barely above Deutsche Mark share in the early 1990s.

“There are no foreseeable rivals to the dollar as a viable reserve currency,” said Eswar Prasad from Cornell University, author of “The Dollar Trap: How the US Dollar Tightened Its Grip on Global Finance”. “The US is hard to beat. The US has deep financial markets, a powerful central bank and legal framework the rest of the world has a great deal of trust in,” he said. The eurozone is crippled by the lack of a unified EU treasury, joint bond issuance, and a genuine banking union to back up the currency. It would require a change in the German constitution to open the way for fiscal union, an unthinkable prospect in the current political climate.

Many years ago I dubbed it the ‘Bulgaria Model’.

• US Has 9.93 Million More Government Workers Than Manufacturing Workers (CI)

The August jobs report was filled with some interest factoids, like there are now 9.93 million government workers than there are manufacturing workers. That is a ratio of 1.81 government workers for every manufacturing worker. Such was not always the case. But a variety of factors such as labor cost differentials, EPA regulations and taxes had led to manufacturing jobs to be sent overseas. Now a 1.81 government to manufacturing employment ratio is called OVERHEAD. And you wonder why high paying manufacturing jobs are fleeing to other countries?

“German saving and Greek suffering are two sides of the same coin..”

• German Budget Surpluses Are Bad For The Global Economy (Economist)

On August 24th Germans received news to warm any Teutonic heart. Figures revealed a larger-than-expected budget surplus in the first half of 2016, and put Germany on track for its third year in a row in the black. To many such excess seems harmless enough—admirable even. Were Greece half as fiscally responsible as Germany, it might not be facing its eighth year of economic contraction in a decade. Yet German saving and Greek suffering are two sides of the same coin. Seemingly prudent budgeting in economies like Germany’s produce dangerous strains globally. The pressure may yet be the undoing of the euro area. German frugality and economic woes elsewhere are linked through global trade and capital flows.

In recent years, as Germany’s budget balance flipped from red to black, its current-account surplus—which reflects net cross-border flows of goods, services and investment—has soared, to nearly 9% of German GDP this year. The connection between budgets and current accounts might not be immediately obvious. But in a series of papers published in 2011 IMF economists found evidence that cutting budget deficits is associated with reduced investment, greater saving and a shift in the current account from deficit toward surplus. Two IMF economists, John Bluedorn and Daniel Leigh, reckoned that a fiscal consolidation of one percentage point of GDP led to an improvement in the ratio of the current-account balance to GDP of 0.6 percentage points.

On that reckoning, the German government’s thriftiness accounts for a small but meaningful share of its growing current-account surplus; perhaps as much as three percentage points of GDP over the past five years.

That has helped to resurrect an old problem. Global imbalances were a scourge of the world economy before the financial crisis of 2007-08. Back then, China and oil-exporting economies accounted for the surplus side of the world’s trade ledger, which reached nearly 3% of the world’s GDP on the eve of the crisis. Other countries, notably America, ran correspondingly large current-account deficits, financed in part by flows of investment from surplus countries that flooded into the country’s overheating housing market. A similar dynamic played out in miniature within the euro area, as core economies like Germany ran current-account surpluses and peripheral countries like Spain ran deficits.

Taking away their powers is the only solution. But … that’s not going to happen.

• ECB’s Mersch: Central Banking Based On “Mathematical Models”, Not Reality (ZH)

At first (literally the day the Fed announced QE1) it was just “tinfoil fringe blogs” who predicted the failure of the central bank’s attempt to boost the economy by printing money, instead warning that all the Fed would do is unleash an unprecedented income and wealth divide that may culminate in civil war and hyperinflation. Then, gradually, analysts, pundits and even the mainstream press admitted the truth, i.e., that tin-foilers were right all along, until recently even the Fed’s own mouthpiece, Jon Hilsenrath, one day before the Jackson Hole meeting wrote that “Years of Fed Missteps Fueled Disillusion With the Economy and Washington”, an article which set the stage for the pivot to the US issuance of much more debt, because apparently $9 trillion in new debt under Obama is not considered enough “fiscal stimulus.”

However, with virtually everyone else now slamming central banks for fooling the world for the past 7 years that they knew what they were doing, now that even Yellen admitted she has no idea what will happen in just the next 3 years projecting a 70% confidence interval of the Fed Funds rate of between 0% and 5% by the end of 2018 (we wonder what a 100% confidence would look like)…

.. overnight central bankers themselves attacked central bank policies, when ECB board member Yves Mersch warned on Saturday against using “extreme [policy] measures [with] unacceptable side effects” to shore up the eurozone’s weak economy, which he said could undermine trust in the single currency, a warning aimed squarely at Mario Draghi. Mersch’s comments come amid a growing debate over whether central banks in Europe and Japan should bolster economic growth by turning to even more tools such as “helicopter money.” Even more ludicrous, as we reported yesterday, Reuters already lobbed a tentative trial balloon, hinting that the ECB may be “forced” to buy ETFs and equities having virtually run out of bonds to monetize. Still, despite all ongoing ECB deflationary counter-measures, eurozone inflation was just 0.2% in August, far below the ECB’s near-2% target. Investors are increasingly concerned that the central bank is running out of tools.

Surprisingly, at this point Mersch joined the Weidmann bandwagon, and cautioned against “academic proposals [that] seem to prefer sophisticated models to social psychology.” Or in other words, for the first time, a central banker has suggested that broken (which is a far more accurate definition that sophisticated) financial models should be ignored when dealing with reality. “We cannot fulfill our mandate with mathematical equations, but only with instruments that maintain trust in the currency,” Mersch said at an annual economic forum on the shores of Lake Como, Italy. Expanding his tongue in cheek criticism of Mario Draghi’s relentless crusade to hurt the euro and reflate asset prices at all costs, Mersch then said that “extreme measures or legal violations of our mandate aren’t among those instruments.”

Restructure. Only way. And again, not going to happen.

• Europe’s Broken Banks Need the Urge to Merge (BBG)

The recent flurry of excitement at the idea that Germany’s Deutsche Bank and Commerzbank contemplated a merger reinforces the view that the European finance industry is ripe for consolidation. Banking leaders themselves talk about the need for mergers in an overbanked market, but no one among the bigger banks seems to want to go first. If something doesn’t change soon, Europe won’t have a banking industry worthy of the name. The relentless collapse in bank share prices this year may speak to difficult market conditions, but they also suggest that Europe’s banking model is broken, amid a deadly combination of negative interest rates, anemic economic growth and a lack of clarity about the future regulatory outlook (albeit in large part because European banks have fought every line of every proposed rule change).

The region’s banks have lost almost a quarter of their value this year, according to the Stoxx 600 Banks index. As Germany has by far the least consolidated banking sector in the euro zone, it’s no surprise that both Commerzbank and Deutsche Bank have done even worse. Merger talk sparked a bit of a rally in the two German banks in recent days, even though the discussions, reported to have taken place over two weeks this summer, have been abandoned. With both banks embarking on major cost-cutting and restructuring projects, it may have been too early to talk of a merger.

It’s all in the choice of terminology: populism, protectionism, they sound very negative, so they are what you read. But it makes no difference: without growth, centralization withers away all by itself.

• Economic Czars Warn G-20 of Risk From Populist Backlash on Trade (BBG)

The heads of three world economic bodies warned of the risk to trade from the protectionist headwinds sweeping many developed nations as global leaders met in Hangzhou, China. In a panel session Saturday ahead of the Group of 20 summit, Christine Lagarde, Managing Director of the IMF, urged business chiefs to lobby governments to help keep trade flows up as she issued a warning about the outlook for growth into 2017. Her views were echoed by Roberto Azevedo, Director-General of the WTO. “Trade is way too low and has been way too low for a long time,” Lagarde said. “There is at the moment an undercurrent of anti-trade movement. It’s at the political level. It’s at the public opinion level” and also being reflected in policy, she added.

“If there is no international trade, if there is no cross-border investment, if services, capital, people and goods do not cross borders, then it’s less activity for you, it’s less jobs in whichever country you are headquartered,” she said. Lagarde’s comments come as momentum for ratifying the U.S.-led Trans-Pacific Partnership, which would link 12 nations making up about 40% of the world economy, falters in the final months of U.S. President Barack Obama’s term. Both presidential candidates have spoken against the deal, which does not include China, while progress on a U.S.-EU trade and investment deal, known as TTIP, has also stalled.

France’s trade minister Matthias Fekl said late last month that the U.S. hasn’t offered anything substantial in negotiations with the EU on the free-trade deal and that talks should come to an end. His comments followed those of German Economy Minister Sigmar Gabriel, who said discussions on the TTIP “have de-facto broken down, even if no one wants to say so.” Many Western nations are grappling with a mood of protectionism that is leading to calls for caution on free trade, and on foreign investment in things like property and utilities. Chinese companies recently were dealt a blow on prospective projects in both the U.K. and Australia.

Let’s see: more debt AND more cars. It’s a win-win! Happy days!

• Chinese Consumers Take Credit For Boom In Car Loans (R.)

Chinese households, traditional savers with an aversion to debt, are rapidly warming to the idea of borrowing to buy a car, as automakers push financing deals to boost sales and margins in an increasingly competitive market. Nearly 30% of Chinese car buyers bought on credit last year, up from 18% in 2013, according to analysts from Sanford C. Bernstein and Deloitte, helping a rebound in the car market after a sticky 2015. That is welcome news to China’s government, which wants consumers to borrow and spend more to shift its slowing economy away from heavy industry and investment-led growth. Beijing resident Wang Danian said he planned to buy his first car on credit, saying it was the smart move.

“I can use my cash to do other things,” the 28-year-old said. “If I use all my savings at once to buy a car, and then something happens, I can’t manage the risk.” Six consumers interviewed by Reuters said they would all consider loans, lured by low-fee and interest-free deals, with half saying they’d prefer to buy on credit and save cash for other items. “I’d estimate after the manufacturer came out with the low-interest deal that about 30% of potential cash buyers switched to buying on credit,” said a salesman at a Volkswagen dealership in eastern China’s Jiangsu province who gave his name as Mr. Zhao. That is still a far cry from the more than 80% of cars bought on loans in the United States, but Deloitte predicts China will reach 50% by 2020.

[..] China’s auto market struggled last year thanks to the slowest economic growth in 25 years and a stock market rout, but rebounded in October when the government cut sales tax on smaller cars. By July, vehicle sales were rising at their fastest monthly rate in three and a half years. “While the government’s tax reduction was the most obvious explanation for the rebound in Chinese car sales at the end of 2015, soaring auto financing penetration represented another, lesser noticed, driver of the boom,” Bernstein said in April.

Excellent thread from The Property Pin. A lot more under the link.

• 6 Steps To Avoiding All EU (Incl. Irish) And US Taxes Via Ireland (PP)

1. Making the Intellectual Property (IP). Let’s say that Apple US spent $200m (validly) developing iOS (it’s iPhone operating system). What Apple does next is to “sell” a non-US version of iOS to an Apple Ireland entity (generic name), for c $500m. Apple US will then pay full US taxes on this gain of $300m. Easy so far. The US IRS is already starting to probe these “internal” sales.

2. Stepping up the IP value (when the “magic” happens). Specialist IP corporate finances (why Dublin accountancy firms have big corporate finance practices) make two discoveries. First, if the Apple device has no iOS software, it can’t function. iOS is the “secret sauce” (like a drug patent). They then show Apple Ireland that it has done an amazing deal at the expense of its parent, Apple US. They show that if the non-US version of iOS is converted in to 200 different languages (and local network formats), then Apple Ireland can sell devices all over the world (fancy that). The global commercial value is over €50bn (why many MNC jobs in Ireland are “localisation”, or language translation, jobs). Apple has the tax equivalent of “Alchemy”.

3. Avoiding tax on the IP step-up. A €50bn gain in Apple Ireland is going to incur tax (both Irish and US), and would distort Ireland’s National Accounts (our 2014 GDP was only €200bn). Apple, and the Irish State, worked a scheme to have Apple Ireland both resident in Ireland (essential so Apple Ireland can avail of EU TP (Transfer Pricing) rules; you can’t do EU TP from Cayman, or worse, “Stateless” locations), and non-resident in Ireland (to avoid Irish tax). The EU’s Apple report, proves the recent 26% increase in Irish GDP (“leprechaun economics”) was all Apple, forced to unwind it’s “dual” status (as EU report drew near). Apple paid a once-off tax on the transfer (€500m vs. €50bn gain), which increased our EU GDP levies by 380m. Per Annum.

4. Executing the TP of this IP into Europe. Before step 3., if Apple Ireland sold an iPhone in Germany for €500, Apple Germany would offset valid incurred cash costs (Apple China/Foxconn manufacturing costs of about €150, and Apple Germany marketing costs of about €50) giving a German profit of €300 on that iPhone. German Revenue would take €100 of this in German taxes, and €200 can go back to Ireland. EU TP rules allow EU resident companies, like Apple Ireland, to charge Apple Germany a share of their €50bn IP value, expressed as a royalty charge. Charging this royalty to Apple Germany wipes out all Apple’s German profits. Apple Germany pays no German taxes, and the full €300 goes back to Apple Ireland tax-free.

5. The Cherry on Top. EU challenged step 4. in 2011 (we will get to CCCTB), but the UK Veto stopped it (Osborne was turning Britain into an even bigger EU tax-haven than Ireland). Despite Ireland having the “golden ticket” of being INSIDE the EU’s TP system (why Apple Ireland had to be legally resident in Ireland), AND having the lowest EU corporate tax rate, that was not enough. In 2010, Apple Ireland’s tax rate collapsed from a tiny 0.5% to effectively 0%. Apple Ireland’s profits quadrupled (and doubled every year after). The Irish State had perfected a “straw” for Apple, stuck into the EU, allowing Apple to suck all its EU profits (Germany, France, Italy etc.), via Ireland, to offshore locations, free of EU, Irish and US taxes.

6. Locking it in. US tax law requires US MNCs to remit non-US profits back to the US for final taxing. US tax rate is high at 35% (even by EU standards). The Double Tax Treaty system allows the MNCs to get a credit for taxes paid in the countries in which the profits were made. If Apple pays 35% on German profits, no further US taxes apply. The US IRS allows MNCs to leave non-US profits outside of the US if these non-US profits are going to be re-invested in the non-US location. Apple claimed this right in their US 10K Returns (Margrethe showed how Apple violate this). That is how Apple built the largest offshore cash hoard of modern economic history. Profits from the EU, on which they have never paid EU, Irish or US taxes. Period.

In France, as in UK and US and many other places, voters vote against someone, not for.

• Rural France Pledges To Vote For Marine Le Pen As Next President (G.)

In the picturesque hamlet of Brachay, in scorching late summer heat, Marine Le Pen was preaching to the politically converted. “Marine, président”, they chanted. “On va gagner” (we’re going to win). A banner stretching the length of one of the stone buildings overlooking the village square read: “Marine: Save France.” Le Pen’s stump speech was the most closely watched and significant campaign launch of la rentrée, the national return to work after the long summer holidays, and the leader of France’s far-right Front National was welcomed like a conquering hero. Le Pen has been largely absent from the political scene for several weeks and has refrained from adding her 10 cents’ worth to the raging polemic over the burkini and rows about security following deadly attacks by Islamic fundamentalists, both fertile ground for her party.

In the meantime, the country’s governing Socialists and centre-right opposition Les Républicains have engaged in what one FN heavyweight described with schadenfreude as a “bloodbath, left and right”. The Parti Socialiste is bitterly split and in turmoil over whether François Hollande, with his calamitous popularity ratings will, or indeed should, stand for a second term. The alternative, to stand down, would be unprecedented for a serving leader. Emmanuel Macron, the finance minister who resigned last week, might be the rabbit that the party pulls out of the hat, but he is disliked by the PS’s leftwing, which is fielding its own candidates. In any case, Macron has not said whether he will even throw his hat into the presidential ring.

On the right, things are scarcely more harmonious. The deadline for Les Républicains candidates is Friday, and already former president Nicolas Sarkozy, mayor of Bordeaux Alain Juppé and former prime minister François Fillon have either announced they are standing or are expected to do so. Amid this political free-for-all, Le Pen is trying to throw off the party’s divisive reputation and market herself as a politician above and beyond the fray of the same-old-same-old French elite: a new, unifying, patriotic force who will break the shackles of Europe, end “mass immigration” and give France back to the French. Her slogan is La France apaisée – a soothed France.

So if people have to spend more to buy the same stuff, that’s good for the economy, right?

• Shops Set For Christmas Price Hikes As Millions Of Shipments Stranded (Ind.)

Summer is not yet over but Christmas could be about to get more expensive as millions of gifts including TVs and electrical gadgets could be stranded at sea for months. Retailers have been thrown into turmoil after one of the world’s largest shipping companies collapsed into bankruptcy. South Korean company Hanjin’s vessels have been seized at Chinese ports, while others have been banned from docking until unpaid fees are received. As a result, the cost of transporting goods from Asia to the US and Europe has jumped by more than half, threatening margins as retailers begin stocking up for Christmas. September marks the start of the busiest period of the year for transporting goods.

The US National Retail Federation, the world’s largest retail trade association, wrote to Penny Pritzker, secretary of commerce, on Thursday, urging them to work with the South Korean government, ports and others to prevent disruptions. The bankruptcy is having “a ripple effect throughout the global supply chain” that could cause significant harm to both consumers and the economy, the association wrote. “Retailers’ main concern is that there (are) millions of dollars’ worth of merchandise that needs to be on store shelves that could be impacted by this,” said Jonathan Gold, the group’s vice president for supply chain and customs policy.

“Some of it is sitting in Asia waiting to be loaded on ships, some is already aboard ships out on the ocean and some is sitting on US docks waiting to be picked up. It is understandable that port terminal operators, railroads, trucking companies and others don’t want to do work for Hanjin if they are concerned they won’t get paid.” With an estimated half a million 40-foot containers full of goods stuck at sea or in ports there appears to be little hope of a quick resolution to the issue. September marks the start of the busiest time of the year for transporting goods, but a Korean court on Thursday set a deadline of 25 November to submit a plan to resolve the dispute.

Hilarious!

• Row On Tarmac An Awkward G20 Start For US, China (R.)

A Chinese official confronted U.S. President Barack Obama’s national security adviser on the tarmac on Saturday prompting the Secret Service to intervene, an unusual altercation as China implements strict controls ahead of a big summit. The stakes are high for China to pull off a trouble-free G20 summit of the world’s top economies, its highest profile event of the year, as it looks to cement its global standing and avoid acrimony over a long list of tensions with Washington. Shortly after Obama’s plane landed in the eastern city of Hangzhou, a Chinese official attempted to prevent his national security adviser Susan Rice from walking to the motorcade as she crossed a media rope line, speaking angrily to her before a Secret Service agent stepped between the two.

Rice responded but her comments were inaudible to reporters standing underneath the wing of Air Force One. It was unclear if the official, whose name was not immediately clear, knew that Rice was a senior official and not a reporter. The same official shouted at a White House press aide who was instructing foreign reporters on where to stand as they recorded Obama disembarking from the plane. “This is our country. This is our airport,” the official said in English, pointing and speaking angrily with the aide. The U.S. aide insisted that the journalists be allowed to stand behind a rope line, and they were able to record the interaction and Obama’s arrival uninterrupted, typical practice for U.S. press traveling with the president.

“.. the leader of the world’s largest economy, who is on his final tour of Asia, was forced to disembark from Air Force One through a little-used exit in the plane’s belly..”

• Barack Obama ‘Deliberately Snubbed’ By Chinese In Chaotic Arrival At G20 (G.)

China’s leaders have been accused of delivering a calculated diplomatic snub to Barack Obama after the US president was not provided with a staircase to leave his plane during his chaotic arrival in Hangzhou ahead of the start of the G20. Chinese authorities have rolled out the red carpet for leaders including India’s prime pinister Narendra Modi, Russian president Vladimir Putin, South Korean president Park Geun-hye, Brazil’s president Michel Temer and British prime minister Theresa May, who touched down on Sunday morning. But the leader of the world’s largest economy, who is on his final tour of Asia, was forced to disembark from Air Force One through a little-used exit in the plane’s belly after no rolling staircase was provided when he landed in the eastern Chinese city on Saturday afternoon.

When Obama did find his way onto a red carpet on the tarmac below there were heated altercations between US and Chinese officials, with one Chinese official caught on video shouting: “This is our country! This is our airport!” “The reception that President Obama and his staff got when they arrived here Saturday afternoon was bruising, even by Chinese standards,” the New York Times reported. Jorge Guajardo, Mexico’s former ambassador to China, said he was convinced Obama’s treatment was part of a calculated snub. “These things do not happen by mistake. Not with the Chinese,” Guajardo, who hosted presidents Enrique Peña Nieto and Felipe Calderón during his time in Beijing, told the Guardian.

“I’ve dealt with the Chinese for six years. I’ve done these visits. I took Xi Jinping to Mexico. I received two Mexican presidents in China. I know exactly how these things get worked out. It’s down to the last detail in everything. It’s not a mistake. It’s not.” Guajardo added: “It’s a snub. It’s a way of saying: ‘You know, you’re not that special to us.’ It’s part of the new Chinese arrogance. It’s part of stirring up Chinese nationalism. It’s part of saying: ‘China stands up to the superpower.’ It’s part of saying: ‘And by the way, you’re just someone else to us.’ It works very well with the local audience. “Why [did it happen]?” the former diplomat, who was ambassador from 2007 until 2013, added. “I guess it is part of Xi Jinping playing the nationalist card. That’s my guess.”

I am not optimistic.

• Half The Forms Of Life On Earth Will Be Gone By 2050 (ZH)

Humanity should start saving nature and switch to 80% renewables by 2030, otherwise the Earth will keep losing species, and within 33 years around 800,000 forms of life will be gone, conservation biologist Reese Halter told RT’s News with Ed. Humans have changed the Earth so much that some scientists think we have entered a new geological age. According to a report in the Science Magazine, the Earth is now in the anthropocene epoch. Millions of years from now our impact on Earth will be found in rocks just like we see fossils of plants and animals which lived years ago – except this time scientists of the future will find radioactive elements from nuclear bombs and fossilized plastic.

RT: Tell us about this new age.
Reese Halter: Yes. There are three things that come to mind. First of all, imagine you’re back on the football field. Each year in America – America alone – we throw away the equivalent of one football field, a 100 miles deep. That is the first thing. The second thing, we’ve entered the age of climate instability. That means from burning subsidized climate altering fossil fuels our food security is in jeopardy. The third thing that is striking is we’re losing species a thousand times faster than in the last 65 million years. At this rate within 33 years, by midcentury – that means 800,000 forms of life, or half of everything we know will be gone. The only way we can reverse this is to two things: save nature now, our life support system, and we do this by switching to 80% renewables by 2030. It is a WWIII mentality. In America we have the technology; we have the blueprint. We lack the political will just right now. But in the next short while we will, because it is a matter of survival.

RT: We’ve just gone through the hottest month on record. There is plenty of data out there to suggest that we truly are entering something our world has never seen in our lifetime. To brand it as a new geological age, what impact is that going to have? RH: It’s got the impact that humans are here. As I said earlier, we’re talking a 160% more than mother Earth can sustain 7.4 billion people. The way to do it is to pull it back to 90%. If we were a big bathtub the ring will read: toxicity, toxicity, toxicity. We’ve got to peal that back, because what we do to the Earth, we do to ourselves.

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