Oct 112018
 
 October 11, 2018  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Bather 1908

 

Dow Tumbles 830 Points In One Day, Trump Says The Fed Has ‘Gone Crazy’ (MW)
World Stock Markets Dive As Trump Attacks ‘Crazy’ US Rate Hikes (G.)
Tech Stocks Have Their Worst Day Since August 2011 (CNBC)
“Rising Inequality” Could Impact America’s AAA Credit Rating (SH)
How Will 6% Mortgage Rates Deal with Housing Bubble 2? (WS)
Brexit Deal Within Reach If May Agrees On Customs Union, Says Barnier (G.)
Hysteria Over the Italian Budget Is Wrong-Headed (Costantini)
Trump Campaign Claims Wikileaks Not Liable For Releasing Hacked Emails (G.)
Acropolis To Close In One-Day Strike Over Privatisation Fears (G.)
Trump Will Be The Last ‘Pure Human’ Leader – Scott Adams (Y!)
Judge Moves To Allow Monsanto New Trial After $289m Cancer Verdict (G.)
HSBC Issues Dire Warning On Antibiotics Resistance (BI)
Historic Climate Litigation Result Stands After Dutch Court Victory (CE)

 

 

Low volatility anyone?

Dow Tumbles 830 Points In One Day, Trump Says The Fed Has ‘Gone Crazy’ (MW)

‘I think the Fed is making a mistake. It’s so tight, I think the Fed has gone crazy’. That is the view that President Donald Trump shared of the Federal Reserve on Wednesday in the wake of a virtual bloodbath on Wall Street that resulted in the worst daily decline for the Dow Jones Industrial Average and the S&P 500 since both U.S. equity benchmarks tumbled into correction territory back in early February. The Nasdaq, meanwhile, suffered its ugliest day since U.K. voters coalesced around a market-disrupting plan to exit from the European Union’s trade bloc back in June 2016.

In all, it was a withering session for an administration that has closely watched stock-market performance and views it, at least partly, as a gauge of the success of its economic policies, including corporate tax cuts and deregulation. However, those efforts, Trump says, are imperiled by the policies of the Fed, which has raised interest rates three times this year and has signaled its intention to do so a fourth time before year-end. IMF managing director Christine Lagarde dismissed Trump’s comments Thursday. “I would not associate Jay Powell with craziness,” she told CNBC at the IMF and World Bank annual meetings in Bali, Indonesia.

Read more …

Everything’s going down. ‘Investors’ are jittery.

World Stock Markets Dive As Trump Attacks ‘Crazy’ US Rate Hikes (G.)

A jittery, volatile week on global financial markets has burst into a frenzy of selling, triggered by heavy losses on Wall Street and comments by Donald Trump describing US interest rate hikes as “crazy”. The Nikkei index in Tokyo was down by 4.25% on Thursday afternoon, while in Hong Kong the index was down 3.9% and Shanghai was at its lowest mark for four years after a plunge of 4.15%. In Sydney the benchmark S&P/ASX200 index closed down 2.74%, slipping below the 6,000-point mark for the first time since early June. European markets were braced for more losses with the FTSE100 in London poised to fall almost 2% and close to dropping down below 7,000 points for the first time since March.

The rout was triggered by a fall of more than 800 points in the Dow Jones industrial average on Wall Street on Wednesday. It was the worst drop in eight months and was led by sharp declines in technology stocks. Despite a booming US economy, low inflation and low unemployment, investors are concerned about rising bond yields that have been drawing money out of the stock market, and rising US interest rates. “It’s a bit of a bloodbath,” said Ed Campbell, senior portfolio manager at QMA, the asset management branch of Prudential Financial in New York. “It’s primarily the cumulative effect of interest rate moves over the past five days and news reports about trade impacting companies.”

[..] The Chinese yuan slipped against the dollar again on Thursday as Beijing tries to mitigate the impact of US tariffs. But it was the only currency across the region that was feeling the pressure from higher bond yields as the Australian dollar slipped under US71c. “The yuan has already weakened significantly, to offset the tariffs announced so far,” said Alan Ruskin, Deutsche’s global head of G10 FX strategy in Sydney. “Further weakness could exacerbate concerns of a self-fulfilling flight of capital, and a loss of control.”

Read more …

Most overvalued sinks fastest.

Tech Stocks Have Their Worst Day Since August 2011 (CNBC)

Technology stocks got clobbered on Wednesday, suffering their worst day in more than seven years, as concerns over rising interest rates punished the overall market, particularly shares of companies that have been the best performers. The S&P 500 Information Technology Index closed at $1,220.62, down 4.8 percent, marking the biggest decline since August 18, 2011, when the index dropped 5.3 percent. All 65 members of the index fell. The broader S&P 500 dropped by 3.3 percent and the Dow Jones Industrial Average tumbled 3.2 percent. The tech sector includes the largest companies by market cap in the U.S. and those that have been the biggest contributors to the extended rally. Shares of Apple, Microsoft and Amazon are up sharply for the year as investors bet they will continue to deliver strong earnings growth and take market share.

Read more …

“The wider the income gap becomes, the more the government will have to spend in order to support lower-income households.”

“Rising Inequality” Could Impact America’s AAA Credit Rating (SH)

“Since 1995, the top 10% of US income earners have experienced an overall median net worth increase of close to 200%, while the bottom 40% of income earners have seen a decline. There has been a particularly sharp increase in wealth and income inequality ratios since the global financial crisis,” Moody’s noted in a report released on Monday. “The global financial crisis exacerbated the effects of these trends by disproportionately affecting poorer overleveraged households and by reducing the mobility of households with negative home equity and, oftentimes, negative net wealth as a result,” says Moody’s Vice President William Foster. “Wealthier households with a higher concentration of equity market holdings in retirement savings plans and personal portfolio investments have disproportionately benefited from the significant gains in the US and global stock markets since the global financial crisis.”

In turn, that rising inequality “will exacerbate already material fiscal challenges on the horizon,” Moody’s continued. “Should inequality go unaddressed, social tensions will continue to rise, leading to a more fractious political landscape that increases political risk, and with it a less predictable policy environment.” But it’s not just about taxes, either. Everything from globalization, automation, technological advancements requiring advanced job skills, elevated premium on education and the increasing costs associated with education have played a role in widening inequality. So what does it mean for the U.S.’ AAA rating? According to Moody’s Vice President William Foster, the widening gap between rich and poor is a threat, but the U.S. government, of course, has other aspects supporting the rating—at least in the medium term (2-5 years). Chief among them is the debt denominated in dollars.

Still, Moody’s cites rising inequality as the U.S.’ weakest rating factor. Why? It’s simple math: The wider the income gap becomes, the more the government will have to spend in order to support lower-income households. These costs, Moody’s notes, “are unlikely to be offset by revenue raising measures following recent tax cuts”. At the end of the day, even though the economy is chugging along nicely—nicely enough, in fact, for everyone to ignore rising inequality that will contribute to widening fiscal deficits and a growing debt burden.

Read more …

Timebomb.

How Will 6% Mortgage Rates Deal with Housing Bubble 2? (WS)

What many in 2016 thought would never happen again is now reality. It finally happened – a line in the sand has been breached. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment did what people had thought in 2016 we’d never see again: It breached 5%. It hit 5.05%, to be precise, for the week ending October 5, according to the Mortgage Bankers Association (MBA) this morning. This is the highest average rate since January 5, 2010 (chart via Investing.com):

This is likely not the pain-threshold for the housing market, though it is already putting pressure on it at the margin, with some potential buyers being scared off and other potential buyers finding the inflated home prices of today with the current mortgage rates outside their range of affordability. As interest rates have risen, some potential buyers have fallen by the wayside – though not a huge number just yet. But 6% will likely be the pain threshold, in my estimates. It will block a considerable number of potential buyers from buying at current prices. Home prices would have to fall first.

If the maximum a household can afford is a mortgage payment of $1,720 a month, they can finance $320,000 over 30 years with a 5% fixed rate mortgage. But if the mortgage rate rises to 6%, they’re maxed out at $287,000. In other words, the price they can afford would drop by about 10% if the rate rises by 1 percentage point. This principle goes for all budget-constrained buyers. And 6% has moved into view. This is still historically low. It would take rates back to December 2008, when the Fed was kicking off its first round of QE to repress long-term rates and inflate asset prices. Beyond that are the now unimaginably high rates of 7% and 8%:

Mortgage rates move more or less in tandem with the 10-year Treasury yield, but are higher. The spread between the MBA’s average 30-year fixed mortgage rate and the 10-year yield runs around 1.5 to 2.0 percentage points over time. With today’s 10-year yield at 3.22%, the spread is 1.83 percentage points.

[..] This new mortgage rate environment is meeting home prices across the US that have surged over the past years. Affordability issues, already tough to deal with at 4% and 4.5% and even tougher to deal with at 5%, are going to be much tougher at 6%.

Read more …

Barnier knows that the DUP and hardliners won’t accept.

Brexit Deal Within Reach If May Agrees On Customs Union, Says Barnier (G.)

Michel Barnier has claimed a Brexit deal could be within reach by next Wednesday but warned the prime minister that only by abandoning a key red line and agreeing to a customs union can impediments on trade between Northern Ireland and the rest of the UK be avoided. The British government would have to give up on its plans for free-trade deals with China and the US under such an agreement, the EU’s chief negotiator insisted, but otherwise a customs and regulatory border within the territory of the UK will have to be erected.

The EU’s contentious proposal for avoiding a hard border on the island of Ireland after Brexit is for Northern Ireland to, in effect, stay in the customs union and remain under single market regulations, while the rest of the UK withdraws. In a speech in Brussels, Barnier reiterated his rejection of the counter-proposals hammered out by the cabinet at Chequers, which Theresa May insists is the only deal that respects both the referendum result and the constitutional integrity of the UK by ensuring “frictionless” trade and no hard border.

The prime minister’s plan for a common rulebook on goods and a customs arrangement that meant the UK could avoid border checks, while allowing the country to sign its own bespoke trade deals, would give British companies “a huge competitive edge” and be “counter to our very foundations”, Barnier said. He instead encouraged Britain to make a final push in the talks, offering to launch “around 10 negotiations running in parallel” from April 2019 on an EU-UK trade deal, if agreement can be found now on the Irish border issue and the principles of a Canada-style free trade deal.

Read more …

Why the EU-Italy feud will be fierce.

Hysteria Over the Italian Budget Is Wrong-Headed (Costantini)

Even the moderate face of the coalition, the Italian Premier Giuseppe Conte, stepped up to question the priorities of the European Commission, the Bank of Italy, and the IMF: He assured that his government remains committed to containing the public debt and maintaining fiscal stability, but claimed that goal is impossible to achieve without economic development. The minister for European affairs, economist Paolo Savona, said that, in fact, a higher deficit-to-GDP ratio than 2.4% would be helpful. The heated reactions to the new fiscal plan are unjustified. In fact, the estimated targets that the new fiscal plan would (minimally) breach are unreliable and based on wrong macroeconomic principles.

Moreover, despite accusations of profligacy, Italy has in fact been running large primary surpluses (the budget balance minus interest payments), and will keep doing so even if the government confirms its plans. If anything should be of “serious concern,” it is the fact that the country continues down the road of austerity, which has proven to be contractionary; it has locked the country into stagnation and exposed its banking system to still more stress. With public investments at historically low levels, unemployment still above the 2008 rate in all regions, and a youth unemployment rate above 30%, it is hard not to see a strong case for fiscal stimulus.

Read more …

It’s all about Russiagate and Mueller’s indictment of ‘Russian hackers’. All nonsense. Free Assange and let him provide the evidence.

Trump Campaign Claims Wikileaks Not Liable For Releasing Hacked Emails (G.)

The Trump campaign argued in a legal filing that Wikileaks could not be held liable for publishing emails that were stolen by Russian hackers ahead of the 2016 US election because the website was simply serving as a passive publishing platform on behalf of a third party, in the same way as Google or Facebook. Questions about Wikileaks’ publication of thousands of hacked emails, which it allegedly obtained following a plot by Russian military intelligence to steal the emails from Hillary Clinton’s presidential campaign and the Democratic party, are at the heart of Robert Mueller’s criminal investigation into possible collusion between the Trump campaign and the Kremlin.

The campaign also said in a legal filing that any alleged agreement between the Trump campaign and Wikileaks to publish the emails could not have been a “conspiracy” because Wikileaks’ decision to release the stolen emails was not an illegal act. The court filing was written in response to a civil lawsuit brought against the Trump campaign by two of Hillary Clinton’s donors and a former employee of the Democratic party. The Trump campaign’s surprising defence of Wikileaks marks a stark departure from official US policy, which has condemned the website for frequently targeting the US government and for publishing thousands of classified documents about covert policies.

[..] Analysts say the legal filing is also significant because it hints at how officials in the Trump White House or individuals who served on the campaign may eventually seek to defend themselves against any criminal charges alleging that they conspired with Wikileaks to release the emails. The legal arguments suggest the Trump White House would argue Wikileaks was not criminally liable for the release of the emails and that it therefore would not be a criminal conspiracy to work with the website on their release. The filing also makes the case that, under the campaign’s first amendment right to free speech, it had the right to publish information – even if it was stolen – as long as it did not participate in the theft of the emails. The hacked materials were a matter of “significant public concern”, the filing said.

Read more …

They need to move well beyond one day to get attention. And whoever signed those secret deals (Tsipras, Troika!) needs their day in court.

Acropolis To Close In One-Day Strike Over Privatisation Fears (G.)

Striking trade unionists in Greece are forcing the shutdown of the country’s prime ancient sites, including the Acropolis, in a one-day protest over privatisation fears. The 24-hour walkout on Thursday is expected to close the majority of Greece’s 275 archaeological sites, monuments and museums, which generate about €100m in revenue, mostly from ticket sales, every year. “We are doing this to protest the prospect of any of these sites being exploited by foreign funds,” said Grigoris Vafiadis, the head of the association of culture ministry employees. “Every day we are discovering that monuments have been transferred to the privatisation fund set up at the request of [bailout] lenders. No country in the world, for whatever reason, has mortgaged its cultural heritage.”

The sites, which protestors say include Knossos on Crete, are believed to have been placed on a list of properties overseen by a superfund established in 2016 with the express purpose of managing state assets for the next 99 years. The body, which also handles state asset sales, was part of the price the debt-burdened country had to pay to keep default at bay and remain in the eurozone. Vafiadis, whose union represents more than 3,000 cultural ministry officials, mostly in the Greater Attica region surrounding Athens and central Greece, said sites were listed in the superfund by code. “It’s a long process to work out what the codes refer to on the land registry. For all we know, they might even include the Acropolis which is not just Greek but a world heritage site and should never be put in the hands of any foreign fund,” he said.

Read more …

Interesting assessment.

Trump Will Be The Last ‘Pure Human’ Leader – Scott Adams (Y!)

Scott Adams, the creator of the office-themed comic strip “Dilbert,” isn’t laughing about the future of American democracy. Having expressed his admiration for Donald Trump over the past few years, Adams believes the tech industry poses a threat to the president as well as to the country as a whole. “I think President Trump will be the last pure human leader,” Adams told Grant Burningham, host of the Yahoo News podcast “Bots & Ballots.” “Everything after this will be a human and he will be elected, he or she, but the decisions will really come from the algorithm after that.”

The algorithm, Adams said, was the one unleashed on the world by Silicon Valley tech companies that has the power to shape popular opinion that, in turn, will determine how politicians express themselves. “There are people making decisions at the tech companies — the Googles and Twitters and Facebooks. Those decisions get turned into algorithms, and once they’re turned into algorithms, the humans no longer really understand them,” Adams said. Adams has likened Trump’s off-the-cuff communications approach in the 2016 presidential election to a form of hypnosis that helped insulate him from the powers of the algorithm.

“President Trump is unique in that his persuasion skills are greater than the tech companies’. It’s probably the only reason he got elected,” Adams said. “I can imagine no one else who would have beat Hillary Clinton. So, after him, I think if you get in an ordinary politician, and it doesn’t matter which party they’re in, the algorithm will push the voters and the voters will push the politicians and everybody will think they have free will, they will think they made up their own minds. They will think they did their own research, they came up with independent decisions, but we’re no longer in that world.”

Read more …

Monsanto will appeal until the next century.

Judge Moves To Allow Monsanto New Trial After $289m Cancer Verdict (G.)

A California judge has moved to grant the agrochemical company Monsanto a new trial after a landmark jury verdict found its herbicide had caused a man’s terminal cancer. Dewayne “Lee” Johnson, a 46-year-old former groundskeeper, won a $289m award in August in a trial alleging that the popular Roundup weedkiller had made him sick and that Monsanto had failed to warn him of the risks. Monsanto, now owned by Bayer, the German pharmaceutical company, immediately appealed the verdict, which included punitive damages and economic losses and also found that Monsanto had “acted with malice or oppression”.

The San Francisco superior court judge Suzanne Bolanos cited the “insufficiency of the evidence to justify the award for punitive damages” in a tentative written ruling issued before a hearing on Wednesday. She is expected to make a final decision after attorneys submit additional arguments. Monsanto sought to overturn the verdict and has continued to argue that it is safe to use glyphosate, the world’s most widely used herbicide. Glyphosate-based products, including the Roundup and Ranger Pro brands, are now worth billions of dollars in revenues, approved for use on more than 100 crops, and registered in 130 countries. Timothy Litzenburg, one of the attorneys who represented Johnson in the trial, told the Guardian that regardless of the outcome, the original ruling would still have a long-term impact: “There’s been a loud and clear message.”

Read more …

Precautionary principle? Not for Monsanto, not for Big Pharma.

HSBC Issues Dire Warning On Antibiotics Resistance (BI)

According to the global research team at HSBC, the use of antibiotics in meat production could have “devastating” consequences for humanity. When farmers feed antibiotics to their animals, they create antibiotic-resistant bacteria, which can lead to antibiotic-resistant “superbugs” in humans. Over time, this could make it difficult to treat even common infections like strep throat. The report’s authors liken the impact of antibiotic resistance to climate change: The causation may not be immediately clear, but the evidence suggests a catastrophic future. Scientific experts now predict that antibiotic resistance could lead to 10 million deaths annually by 2050, exceeding cancer as one of the most common forms of death worldwide.

While some of this is related to the overprescribing of antibiotics by doctors, it also has to do with the antibiotics that are fed to key sources of produce, such as chickens, cows, and pigs. According to the report, more than half of global antibiotics are used in agriculture rather than medicine. Although China accounts for 60% of the world’s agricultural antibiotics, the US also uses antibiotics in around 70% of its agricultural products. Most of these antibiotics are used in meat production, which has risen by 90% per capita globally since the 1960s. In June, an analysis of more than 47,000 US government lab tests found an increase in the number of pork chops and ground beef that were contaminated with antibiotic-resistant bacteria.

Read more …

Court decides because of “a violation of the European Convention on Human Rights”. If that is true in Holland, it will also be in 26 other countries. Moreover, as Elliot Sherber said in his article in yesterday’s Debt Rattle:

“According to the legal maxim that “the health of the people should be the supreme law” (another type of emergency brake – one cited by jurists, and those contesting coercive power, since antiquity), there is a legal duty to pursue this as well (for, among other things, human health is contingent on the health of its general environment – and freedom from oppression). Indeed, if we are to take this maxim seriously, we must recognize that it implies that conditions that are inimical to health (harmful to the health of the people) must be corrected in order to comply with the “supreme law.”

Historic Climate Litigation Result Stands After Dutch Court Victory (CE)

Climate litigators are celebrating after a second landmark court victory that will hold the Netherlands government to account for greater action on climate change. The Hague Court of Appeal has upheld a historic win for the Urgenda Foundation on behalf of 886 Dutch citizens in their climate case, rejecting the Dutch government’s arguments. A day after the UN IPCC report outlined the urgent climate action needed to restrict global warming to 1.5 degrees, the Dutch court today affirmed that any less than a 25% reduction in carbon emissions by the Netherlands government before 2020 would be a violation of the European Convention on Human Rights. Dutch emissions are currently only 13% lower compared to 1990 levels and have stagnated during the last six years.

The original legal victory by Urgenda inspired a wave of climate lawsuits worldwide, brought by people determined to hold their governments accountable for a lack of climate action. ClientEarth CEO James Thornton said: “Today’s news shows just what a powerful tool climate litigation has become in holding decision-makers to account for their climate inaction. “For a second time now, a Dutch court has ruled that the country’s government has a constitutional duty to protect its citizens from the impacts of climate change and that anything less is a violation of their human rights. “This second victory shows that Dutch judges have been clear about what the government must do now: accept both decisions and refocus its efforts on reducing its carbon emissions by 25% by 2020.

“This is the climate case that started it all, inspiring similar lawsuits worldwide. It has completely changed the debate on climate policy and will inspire people everywhere to use the power of the courts to hold their leaders to account for greater action on climate change.”

Read more …

Oct 072018
 
 October 7, 2018  Posted by at 9:10 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh Autumn landscape 1885

 

Turkish Police Suspect Saudi Journalist Khashoggi Was Killed At Consulate (MME)
Interpol Asks China For Information On Its Missing President (CBS/AP)
Brett Kavanaugh Sworn In As 114th Supreme Court Justice (ZH)
Hot Jobs Market, Trade Tensions May Be Lethal Combo – Stephen Roach (CNBC)
Former Fed Governor Warns Of “Several Decade Cold War” With China (ZH)
China Pumps $109bn Into Economy As Trade War Bites (G.)
Theresa May Bids For Centre Ground With Appeal To Labour Voters (O.)
Italy Debt Crisis Flares Up, Banks Get Hit, Showdown with EU Intensifies (DQ)
Migrants Fight To Save Italian Mayor Who Gave Them A New Home (G.)
Major Climate Report Will Slam The Door On Wishful Thinking (Vox)

 

 

Tureky will issue statement(s) later. If this is true, it should lead to very strong condemnation of Saudi.

“Khashoggi had been “brutally tortured, killed and cut into pieces. Everything was videotaped to prove the mission had been accomplished and the tape was taken out of the country”.

Turkish Police Suspect Saudi Journalist Khashoggi Was Killed At Consulate (MME)

Turkish authorities suspect that missing Saudi journalist Jamal Khashoggi, who disappeared four days ago after entering Saudi Arabia’s consulate in Istanbul, was killed inside the consulate, two Turkish sources told Reuters on Saturday. “The initial assessment of the Turkish police is that Mr Khashoggi has been killed at the consulate of Saudi Arabia in Istanbul. We believe that the murder was premeditated and the body was subsequently moved out of the consulate,” one of the sources, a Turkish official, said. A senior Turkish police source told MEE that Khashoggi had been “brutally tortured, killed and cut into pieces. Everything was videotaped to prove the mission had been accomplished and the tape was taken out of the country”.

Khashoggi’s disappearance is likely to further deepen divisions between Turkey and Saudi Arabia, Reuters said. Relations were already strained after Turkey sent troops to the Gulf state of Qatar last year in a show of support after its Gulf neighbours, including Saudi Arabia, imposed an embargo on Doha. Police said about 15 Saudis, including officials, came to Istanbul on two private flights on Tuesday and were at the consulate at the same time as the journalist. They left again the same day, according to AFP. Their diplomatic bags could not be opened, a security ource told MEE, but Turkish intelligence was sure that Khashoggi’s remains were not in them.

Read more …

“The newspaper said that upon landing last week Meng was “taken away” for questioning by what it said were “discipline authorities.”

Interpol Asks China For Information On Its Missing President (CBS/AP)

Interpol has made a formal request to China for information about its missing Chinese president who seemingly vanished on a trip home. The agency said in a statement it “looks forward to an official response from China’s authorities to address concerns over the president’s well-being.” Interpol said it used law enforcement channels to submit its request about the status of Meng Hongwei. Meng’s wife says she hasn’t heard from him since he left Lyon at the end of September. French authorities say he boarded a plane and arrived in China, but the 64-year-old’s subsequent whereabouts are unknown. France has launched its own investigation.

“France is puzzled about the situation of Interpol’s president and concerned about the threats made to his wife,” its foreign ministry said, without providing any details. Meng is also a vice minister for public security in China, which has yet to comment. Previously, Interpol had said that reports about Meng’s disappearance were “a matter for the relevant authorities in both France and China.” The South China Morning Post, a Hong Kong newspaper, has suggested that Meng may have been the latest target of an ongoing campaign against corruption in China.

The newspaper said that upon landing last week Meng was “taken away” for questioning by what it said were “discipline authorities.” The term usually describes investigators in the ruling Communist Party who probe graft and political disloyalty. The Central Commission for Discipline Inspection, the party’s secretive internal investigation agency, had no announcements on its website about Meng and couldn’t be reached for comment. Meng is the first from his country to serve as Interpol’s president, a post that is largely symbolic but powerful in status. Because Interpol’s secretary general is responsible for the day-to-day running of the agency’s operations, Meng’s absence may have little operational effect.

Read more …

Need a new way to select Supreme Court judges. The Court must be perceived as neutral, or it loses credibility.

Brett Kavanaugh Sworn In As 114th Supreme Court Justice (ZH)

The drama of Judge Brett Kavanaugh’s confirmation to the US Supreme Court finally ended on Saturday afternoon, when without any last-minute surprises, the US Senate voted Kavanaugh to become the 114th Justice to the US Supreme Court in a major victory for both the Republican party and President Trump. Kavanaugh was confirmed as expected in a 50-48 vote, the narrowest margin for any justice since the 19th century. In a rare move, Alaska senator Lisa Murkowski was the only Republican senator to oppose Kavanaugh on Saturday, but she formally voted “present” to offset the absence of GOP Sen. Steve Daines who left Washington, D.C., on Friday to fly to Montana for his daughter’s wedding.

West Virginia Senator Joe Manchin, who is up for reelection in a state Trump won by more than 40 points in 2016, was the only Democratic senator to support Kavanaugh’s nomination. As The Hill reports, republicans used Manchin’s support to tout Kavanaugh’s nomination as “bipartisan,” but the razor-thin vote margin marks the closest successful Supreme Court vote since Stanley Matthews was confirmed in a 24-23 vote in 1881. In the ends, it doesn’t matter how they got there: Kavanaugh’s confirmation will be a crowning victory for Trump and McConnell, fulfilling a top campaign promise for the president and a critical priority for the Kentucky Republican. Kavanaugh’s ascension to the high court will ensure a conservative majority for decades to come, an outcome that McConnell especially has focused on during his long tenure as the top Senate Republican.

Read more …

Roach knows China. He doesn’t think they’ll give in.

Hot Jobs Market, Trade Tensions May Be Lethal Combo – Stephen Roach (CNBC)

There’s a growing risk that trade tensions between the world’s two largest economies may converge with other factors to disrupt the global economy — and knock the historic U.S. stock market rally off its stride, according to one of the world’s leading authorities on Asia. Yale University senior fellow Stephen Roach is worried the US-China trade war is putting sand in the gears of global supply chains, which has been playing a vital force in keeping price pressures in check. Roach referred to the threat as one of the “more destructive” layers of the trade war for stocks.

“You’ve got potentially a lethal combination between a hot labor market in an unwinding of the supply chain effects on the global front which could give you a surprising surge in inflation that the Fed is not positioned to really address with its still very, very low federal funds rate,” he warned Friday on CNBC’s “Trading Nation.” He added: “For every point of slack in advanced economies, the value chains hold down overall inflation by about 9/10s of a point.”

Roach, who served as Morgan Stanley Asia chairman for five years, believes Wall Street and policy makers are largely underestimating the impact of the trade tensions. Despite the new deal to replace the North America Free Trade Agreement, Roach isn’t optimistic the U.S. is any closer to a resolution with China. “The whole hope from the Trump administration is that China will be quickly beaten into submission as they did with supposedly Mexico and Canada,” said Roach. “The odds of a long disruption are high.”

Read more …

Economic cold war.

Former Fed Governor Warns Of “Several Decade Cold War” With China (ZH)

Former Fed governor Kevin Warsh warned on Thursday that the US-China relationship is “probably as poor as” it has ever been since former President Richard Nixon and Henry Kissinger developed strategic relations between both countries in the early 1970s. “We’re at the risk of a real cold war” between the world’s two largest economies, said Warsh who had been on President Trump’s list for Fed chairman before Jerome Powell was chosen. “The last 30 years we’ve been living and breathing globalization as if it’s an inevitable force,” but now, it seems the six-decade-long bubble has finally popped.

Bank of Americas says trade wars and deteriorating relations with China have been some of the reasons for the decline in globalism. Especially, US tariff duties collected, % of total imports have surged under the Trump administration. “Protectionism has cross-party support in the US, and nationalist parties continue to gain in Europe. Further action on China ($200bn), autos ($350bn), NAFTA ($690bn) could raise US tariff revenue as % total imports to levels not seen since 1946,” said BofA. During the CNBC interview, Wash used the term “cold war” to describe the economic standoff, not the decades-long “mutually assured destruction” nuclear stalemate with Russia. “We are probably on the precipice of a brand new relationship with the Chinese,” Warsh told CNBC. He asked: “Could we be at the beginning of a 10- or 20-year cold war?” If so, an economic cold war between the countries could have major implications for the global economy like causing a global growth scare and repricing risk assets.

Read more …

Fourth reserve requirement ratio cut this year. That’s not a game they can play forever.

China Pumps $109bn Into Economy As Trade War Bites (G.)

China has slashed the amount of cash some of its banks must hold in reserve as Beijing’s leadership seeks to bolster a flagging economy. As higher US interest rates and fears of a trade war piles pressure on economies around the world, China’s central bank said on Sunday that it was cutting the reserve requirement ratios (RRRs) by 1% from 15 October to lower financing costs and spur growth in the world’s second-biggest economy. The reserve cut, the fourth by the People’s Bank of China (PBOC) this year, came after Beijing pledged to speed up plans to invest billions of dollars in infrastructure projects as the economy shows signs of cooling further.

Investment growth has slowed to a record low and net exports have been a drag on growth in the first half of ther year. China releases a snapshot of its services sector on Monday, which will be closely watched for signs of slower growth. The injection of cash into the economy, which will be 750bn yuan ($109.2 billion), will also boost hopes that the negative impact of higher US tariffs on Chinese exports can be eased. The cut, which was announced on the last day of China’s week-long national day holiday, showed the central bank was probably worried about the impact of “external shocks” to markets such as a speech last week by US vice president Mike Pence criticising Beijing, said Zhang Yi, chief economist at Zhonghai Shengrong Capital Management.

Read more …

This will get ugly. Trying to split Labour. Anti-semitism accusations have been prepared.

Theresa May Bids For Centre Ground With Appeal To Labour Voters (O.)

Theresa May today delivers an extraordinary appeal to wavering Labour supporters to switch to the Conservatives as she attempts to portray her party as the only option for moderate and patriotic voters. Writing exclusively in today’s Observer the prime minister says that if people who have previously backed Labour look again at her government’s programme, including pledges to increase house building and manage markets where necessary, they will find that it is not driven by ideology, but by beliefs and values that the vast majority could support. Seeking to reclaim the One Nation mantle for the Tories, May writes: “I want voters who may previously have thought of themselves as Labour supporters to look at my government afresh. They will find a decent, moderate and patriotic programme that is worthy of their support.”

She argues that in an era in which traditional political allegiances count for less, the Tories now have a responsibility “on our shoulders” to offer a home to millions of former Labour voters who are unhappy with the party’s move left under Jeremy Corbyn. May’s pitch for the centre ground will enrage many Labour supporters who see her as a supporter of eight years of Tory austerity and the architect of the hostile environment for immigrants. It comes amid rumours in Westminster that disgruntled groups of Labour, Tory and Liberal Democrat MPs could try to form a new party on the centre ground to appeal to voters who regard the Tories as too pro-Brexit and right wing, and dislike the leftwing agenda of Corbyn.

[..] Reacting to her initial pitch for centre ground voters in her conference speech last Wednesday, former Labour home secretary David Blunkett said May was clearly laying a trap for his party. “This is a well tried tactic, attempting to achieve two things at the same time,” Blunkett said. “The first is to appear to move sufficiently on to Labour territory to seem reasonable and moderate while at the same time trying to push Labour further from the mainstream. We must avoid this trap, because it is a trap. “We need to be much more sure-footed in demonstrating where the Conservatives have stolen our clothes. And we need to reassure people that we won’t allow these blatant Conservative tactics to push Labour into adopting policies even more extreme and outside the mainstream.”

Read more …

The ECB buys Italian bonds like crazy. What will they do?

Italy Debt Crisis Flares Up, Banks Get Hit, Showdown with EU Intensifies (DQ)

As tensions between Rome and Brussels escalate, and uncertainty grows about Italy’s economic future, investors are dumping Italian debt, causing bond values to fall and yields to rise. That, in turn, is hitting banks’ funding costs and their capital cushions. On average, banks are estimated to already have lost 40 basis points of their core capital in the second quarter and another 8 bps in the third.As their capital base shrinks, banks are less able to write down bad loans — of which there are still frighteningly many — or issue new loans. According to analysts at Morgan Stanley, Banco BPM SpA, Banca Monte dei Paschi di Siena (MPS) SpA and UBI Banca SpA are the most vulnerable of Italy’s largest lenders due to the size of their holdings of government debt.

It is this outsized exposure of Italian banks to Italian debt that makes any sudden deterioration in the value of Italian bonds so dangerous. The banking sector hold around 18% of all of the nation’s public debt. It’s the reason why, as investors abandon Italian bonds en masse, the shares of Italy’s banks are also nose-diving, with the stock of recently rescued Monte dei Paschi di Siena leading the way down having lost more than half its value year-to-date. The chart below shows how the FTSE Italy Banks Index has plunged 29% since early May (black line), while the Italian government 10-year yield (red line) has nearly doubled from 1.8% to 3.4%, practically in tandem:

Read more …

Always put people first, no matter what your politics.

Migrants Fight To Save Italian Mayor Who Gave Them A New Home (G.)

In 2009, shortly after his re-election as mayor and several years after he embarked on a policy of welcoming migrants as a means of reversing depopulation in his town, Domenico Lucano was shot at through the window of a restaurant where he was eating with friends. As if to ram home their opposition to his plans, the local mafia also poisoned two of his dogs. Unperturbed, Lucano responded by installing a billboard at the entrance of the town, saying: “Riace – a town of hospitality.” The sign remains today, as does one on the main square that lists the 20 countries people have come from – Eritrea, Somalia, Nigeria, Pakistan, to name a few. Riace, a tiny hilltop town in Italy’s southern Calabria region, has become famous for its much-lauded model of integration, which began in the late 1990s and continues to this day.

But last week, Lucano, the man credited with changing the lives of Italians and foreigners through an initiative that breathed new life into a dying economy, was put under house arrest for allegedly abetting illegal immigration. On Saturday, lending their support to a man dismissed by far-right politician Matteo Salvini as worth “zero”, hundreds of people turned out in support of the mayor and his leadership. Invariably described as altruistic and honest, they struggle to comprehend how Lucano, 60, can have his liberty stripped from him while people belonging to the mafia, a scourge of Italy’s south, roam free. “Mafiosi kill, yet a mayor who does good is arrested? It doesn’t make any sense,” said Elisabetta, who asked for her surname not to be used.

Read more …

The worst wishful thinking is that we will replace fossil fuels with some other form of energy and go on growing the way we have. Fewer emissions is useful, fewer expectations is essential.

Major Climate Report Will Slam The Door On Wishful Thinking (Vox)

The leading international body of climate change researchers is preparing to release a major report Sunday night on the impacts of global warming and what it would take to cap warming at 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, above preindustrial levels, a goal that looks increasingly unlikely. The report is from the Intergovernmental Panel on Climate Change, an international consortium of hundreds of climate researchers convened by the United Nations. Authors are meeting this week in Incheon, South Korea, to finalize their findings, but Climate Home News obtained an early leaked draft.

Why examine the prospects for limiting global warming to 1.5°C? Because under the Paris agreement, countries agreed that the goal should be to limit warming to below 2°C by 2100, with a nice-to-have target of capping warming at 1.5°C. According to the drafts, the report finds that it would take a massive global effort, far more aggressive than any we’ve seen to date, to keep warming in line with 1.5°C — in part because we are already en route to 3°C of warming. And even if we hit the 1.5°C goal, the planet will still face massive, devastating changes. So it’s pretty grim. But this is also a thunderous call to action, laying out what tools we have at our disposal (we have plenty) to mitigate global warming and to accelerate the turn toward cleaner energy. Let’s walk through the basics.

Read more …

Oct 032018
 
 October 3, 2018  Posted by at 9:30 am Finance Tagged with: , , , , , , , , , , , ,  


Paul Gauguin The ford 1901

 

Fed’s Powell Says US Outlook ‘Remarkably Positive’ (R.)
Another Market Volatility Surge Is Likely Ahead (Colombo)
White House Responds To “Misleading” NYTimes’ Trump Tax Fraud Story (ZH)
Italy Folds To Europe On Budget Deficit; Euro Surges (ZH)
Merkel’s End Could Spark EU Breakdown (Luongo)
Vancouver Home Sales Crash 44% As “For Sale” Inventory Soars (ZH)
Australia Banking Royal Commission Could Trigger House Price Collapse (ABC.au)
DMZ Demining Operations Lay Groundwork For Korean Peninsula Peace (YH)
Russia May Veto Greece-FYROM Name Deal at the UN (GR)
The Case For Paying Every American A Dividend On The Nation’s Wealth (MW)
Restaurants In Austin Banned From Throwing Away Food (Hill)
‘We Have Found Hell’: Trauma Runs Deep For Children At Dire Lesbos Camp (G.)

 

 

First, here’s Ted Koppel agreeing with me that Trump Sells Better Than Sex, and Stelter really doesn’t understand:

 

 

And then he closed the spigots…

Fed’s Powell Says US Outlook ‘Remarkably Positive’ (R.)

U.S. Federal Reserve Chairman Jerome Powell on Tuesday hailed a “remarkably positive outlook” for the U.S. economy that he feels is on the verge of a “historically rare” era of ultra-low unemployment and tame prices for the foreseeable future. It is a view, he said, based on how a changed economy is operating today, with businesses and households immunized by strong central bank policy from the inflationary psychology that caused unemployment, inflation and interest rates to swing wildly in the 1960s and 1970s. It is an outlook that includes an economic performance “unique in modern U.S. data,” with unemployment of below 4 percent expected for at least two more years and inflation remaining modest even as wages rise.

And it is an outlook he feels will even survive the Trump administration’s efforts to rewrite the global trading system, a policy shift Powell said may lead to one-time price hikes, but not to persistent changes in the annual rate of inflation going forward. “This forecast is not too good to be true,” Powell told the National Associate for Business Economics, but instead “is testament to the fact that we remain in extraordinary times.” “These developments amount to a better world for households and businesses which no longer experience or even fear the scourge of high and volatile inflation.”

Read more …

There can be no doubt.

Another Market Volatility Surge Is Likely Ahead (Colombo)

The U.S. stock market is climbing to record highs once again and volatility has calmed down dramatically from its panic-induced levels reached earlier this year. Traders have become complacent as they passively ride the stock market higher and bet on lower volatility again. While it may seem like all is well, several reliable indicators are warning that another powerful volatility surge is likely ahead.

The first indicator is the 10-year/2-year Treasury spread that is calculated by subtracting the 2-year Treasury note yield from the 10-year Treasury note yield. The 10-year/2-year Treasury spread is helpful for estimating when the next recession is likely to occur, as I explained in a recent Forbes piece. The chart below (which I recreated from a chart made by BofA’s Savita Subramanian) shows that the inverted 10-year/2-year Treasury spread leads the CBOE Volatility Index or VIX by approximately three years. If this historic relationship holds true, we are about to experience a whole lot more volatility over the next few years.

The next chart shows the positioning of the “smart money” and “dumb money” in the Volatility Index or VIX futures. The “smart money”, or commercial futures hedgers (who tend to be right at major market turning points), are building up another bullish position in VIX futures, just like they did one year ago ahead of the stock market correction and volatility spike. In addition, the “dumb money”, or large traders (who tend to be wrong at major turning points), have built up a large short position, like they did before the early-2018 volatility spike. The positioning of these groups of traders indicates that another volatility spike is likely ahead in the not-too-distant future.

Read more …

Decades old, started when Trump was a toddler, good luck. Of course they pay as little as they can, but once the IRS signs off on it…

White House Responds To “Misleading” NYTimes’ Trump Tax Fraud Story (ZH)

Update 2: The White House has finally responded to the NYTimes story…(via Sarah Sanders) “Fred Trump has been gone for nearly twenty years and it’s sad to witness this misleading attack against the Trump family by the failing New York Times. Many decades ago the IRS reviewed and signed off on these transactions. The New York Times’ and other media outlets’ credibility with the American people is at an all time low because they are consumed with attacking the president and his family 24/7 instead of reporting the news.

The truth is the market is at an all-time high, unemployment is at a fifty year low, taxes for families and businesses have been cut, wages are up, farmers and workers are empowered from better trade deals, and America’s military is stronger than ever, yet the New York Times can rarely find anything positive about the President and has tremendous record of success to report. Perhaps another apology from the New York Times, like the one they had to issue after they got the 2016 election so embarrassingly wrong, is in order.”

The NYT reported that Trump and his siblings set up a “sham” corporation to help disguise otherwise taxable income that came from gifts from their parents. The president also allegedly helped his father take improper tax deductions that amounted to millions of dollars and helped formulate strategy to undervalue his parents’ real estate holdings, with the Internal Revenue Service reportedly providing little pushback against the Trumps’ reported tactics. According to the leaked confidential filings, Trump’s parents left more than $1 billion to their children, which would have resulted in a roughly $550 million tax bill at the time.

However, the Trumps paid a total of $52.2 million on that source of income, according to the NYT report. To achieve this, the newspaper cited records that showed Trump helped undervalue his father’s real estate holdings, which led to a lower tax bill when he and his siblings inherited the properties. In total, Trump received the equivalent today of at least $413 million from his father’s real estate empire, based on questionable tax dealings starting when he was a toddler and continuing to this day. And, in what will attract the most attention, the newspaper wrote that Trump’s behavior amounted to fraud in some cases.

Read more …

I don’t think this one’s over yet.

Italy Folds To Europe On Budget Deficit; Euro Surges (ZH)

After two days of brutal punishment by the markets which sent Italian bond yields to 4 years highs and slammed the euro, the Italian government appears to have folded to pressure from Brussels (and the one place in the world where the bond vigilantes still operate, just ask Sylvio Berlusconi), and according to Corriere della Sera, Italy’s draft budget plan will pledge to cut the deficit to 2% in 2021, after Rome reversed a proposal to maintain a 2.4% shortfall in the face of pressure from the EU. As a result, while the 2019 deficit will still rise to 2.4% of GDP in 2019, it will decline by 0.2% to 2.2% in 2020, and another 0.2% the year after. In kneejerk reaction, futures lept to fresh session highs, Treasury yields jumped by 2bps to 3.07% and the EURUSD spiked 50 pips higher to 1.1590.

Italy is not out of the woods yet though: according to Mizuho, the sustainability of the euro’s rebound will depend on whether the EU sees Italy’s latest budget plan as appropriate. It could be that Italy has already made compromise with the EU, but hard to predict whether the euro’s rebound has more legs until we see a reaction from the EU: “It all boils down to the EU’s response”, and if the ongoing war of words is any indication, merely promising to trim the deficit in the next three years will hardly be smiled upon. Others were even more skeptical. According to bond fund manager Daintree Capital, “The euro’s definitely reacting to the headlines on Italian budget plans, and it will continue to do so for future headlines.” However, “anyone who believes a populist government is all of a sudden going to be particularly responsible in a fiscal sense, has a misguided view.”

Read more …

Merkel’s losing it.

Merkel’s End Could Spark EU Breakdown (Luongo)

I saw a recent poll from Die Welt which has Alternative for Germany (AfD) creep past Merkel’s Grand Coalition partner, the Social Democrats (SPD), and challenge the CDU itself. Because when you back out the Christian Social Union’s (CSU) total which runs between 8% and 9% AfD is now in a position to become the party with the highest backing in Germany. And this is happening on the eve of Bavarian State elections this month. [..] I’ve talked about AfD’s chances to achieve this result in the past in terms of them crossing the 16% Chasm. And it appears, that slowly, they are doing so. German politics, from what I understand, is not used to this kind of upheaval and certainly not these kinds of leadership challenges. Earlier this year Merkel barely survived a challenge by former CSU Leader Horst Seehofer over immigration.

So, where to things go from here? As Mercouris points out, Merkel has very skillfully gutted the landscape of the CDU to keep potential leaders from emerging within the party. The SPD is falling off a cliff having lost more than half of its support since the 2014 elections. And the CSU is primarily a Bavarian party so they don’t have the support of the entirety of Germany. This landscape is why we’ve seen the Greens rise to 15% as well as AfD’s rise. And that cannot be ignored. The hard left of German politics is now split and ineffectual. But, no party has emerged in this chaos to take the reins of power.

This is reminding me of Italy’s situation at the end of 2017 with no less than five parties polling in double digits. It’s a messy situation and it makes more sense in Germany that big shifts in voter preference would occur at a slower rate given the stability of German coalition governments since the modern state was founded after World War II. In other words Germans are loathe to make these kinds of changes. So, you know the situation must be bad if these numbers are changing this quickly. So, it shouldn’t be much of a surprise really to see this type of breakdown and the slow rise of AfD past the 16% chasm. It may be the riots in Chemnitz that finally begin pushing their poll numbers into the 20’s nationally.

Read more …

Glass half full: “”There’s more selection for home buyers to choose from today.”

Vancouver Home Sales Crash 44% As “For Sale” Inventory Soars (ZH)

What happens when prices rise so high that a chasm forms between bids and asks? The market grinds to a halt. That’s what happened in Vancouver housing in September, when according to the Real Estate Board of Vancouver (REBGV), residential property sales tumbled by 17.3% from August 2018, and a whopping 43.5% from one year ago. In fact, a total of only 1,595 transactions took place as both buyers and sellers continue to sit on their hands amid confusion whether the recent torrid price gains will continue or whether the housing bubble has burst. Sales of detached properties in July was just 508, a decrease of 40.4% from the 852 recorded in September 2017, and the 812 apartments sold was a 44% drop compared to the 1,451 sales in September 2017.

And no, it’s not seasonal: last month’s sales were a whopping 36.1% below the 10-year September sales average. The reason for the collapse in transactions: the formerly all too willing buyers, mostly Chinese oligarchs who would use Vancouver real estate as their offshore Swiss bank account, have disappeared. Meanwhile sellers are dumping properties in the market in hopes of a quick flip. “Fewer home sales are allowing listings to accumulate and prices to ease across the Metro Vancouver housing market,” Ashley Smith, REBGV president-elect said. “There’s more selection for home buyers to choose from today. Since spring, home listing totals have risen to levels we haven’t seen in our market in four years.”

Read more …

What would we do without our housing bubble?

Australia Banking Royal Commission Could Trigger House Price Collapse (ABC.au)

There is a lot riding on the policy recommendations from the banking royal commission, not least of which is the stability of the Australian property market, according to some respected analysts. Independent economist Saul Eslake said there was potential for the royal commission’s recommendations to have what economists refer to as “unintended consequences”. The unintended consequences Mr Eslake is referring to include a steep fall in house prices spurred on by a royal commission-inspired clampdown on bank lending. Capital Economics chief economist Paul Dales said while house price falls to date have been small, Australia could be in for a record housing decline, at least in its recent history.

“At the moment the trajectory is a bit worrying cause the house prices seem to be declining at a faster rate and, in our view at Capital Economics, this will eventually prove to be the largest downturn in Australia’s modern history,” he said. Mr Dales is forecasting a protracted slowdown in the housing market as a result of a crackdown in bank lending standards, the banking royal commission itself and rising interest rates. “There’s significant time delays with these things,” he said. “I would have thought over the next six to 12 months is where we would, if there was going to be a big pullback in lending, that’s when we would see it and then, thereafter as and when the royal commission makes any recommendations and the Government implements them, the next six to 12 months after that.

Read more …

Korea’s move on.

DMZ Demining Operations Lay Groundwork For Korean Peninsula Peace (YH)

After a 15-minute bumpy ride along a dusty, hilly path inside the Demilitarized Zone (DMZ), dozens of South Korean troops in full gear disembarked near a grisly site of intense battles during the 1950-53 Korean War. Accompanying them in the buffer zone separating the two Koreas was a phalanx of security guards, medical specialists and other personnel specializing in disposing of unidentified explosives and excavating war remains. They are part of the 120-member team tasked with removing landmines in the Arrowhead Ridge, or Hill 281 in Cheorwon, some 90 kilometers northeast of Seoul — a site that the two Koreas have designated for a joint project to retrieve war remains from April to October next year.

There were three key battles against communist forces on the notorious ridge from 1952-53. The remains of more than 200 South Korean soldiers and dozens of U.N. Command (UNC) forces, such as U.S. and French troops, are thought to be buried in it. “We have made preparations (for the landmine removal) for a long period and are well prepared now,” the commander in charge of the frontline areas told reporters on condition of anonymity on Tuesday, the second day of the demining work set to continue until Nov. 30. “We will not rush and will carry out our mission with the first and foremost priority placed on the safety of our troops,” he added.

Read more …

EU and NATO want to keep pushing, but how about democracy?

Russia May Veto Greece-FYROM Name Deal at the UN (GR)

Russia is implicitly threatening that it may block the Prespa agreement at the UN Security Council. In a statement on Monday, following the referendum in FYROM, the Russian foreign ministry says that the low turnout “means that the referendum cannot be recognised as valid.” It clearly indicates that the voters “chose to boycott the solutions imposed on Skopje and Athens.” The statement also blasts leading politicians from NATO and EU member states who participated in “large-scale propaganda campaign directly, freely interfering in the internal affairs of this Balkan state.” Despite the low turnout, Prime Minister Zoran Zaev vowed to push ahead with the name change on Monday.

The Russian foreign ministry condemned the move: “There is a clear drive to ensure Skopje’s entanglement in NATO despite the will of the Macedonian people.” Russia is traditionally wary of NATO’s enlargement in eastern Europe. The alliance’s 1999 bombings of its ally Serbia caused a major rift in Russia’s relations with the West at the time. Moscow says that a long-term solution can only be agreed upon by the two parties on their own, without any external interference, and only within the framework of the law and with broad public support.

Read more …

Inequality in Europe rises fast, too. Where are the breaking points?

The Case For Paying Every American A Dividend On The Nation’s Wealth (MW)

The newest research shows that unconditional cash transfers boost work productivity and quality of life, including better mental and physical health, and reduce crime. A study by the Roosevelt Institute in New York, a left-leaning think tank, concludes that giving $500 a month to every adult American could meaningfully grow the U.S. economy and address its widening wealth gap. (The top 1% of Americans now receive 20% of the national income, while those in the bottom 50% receive 13%; in 1980, the numbers were essentially reversed, at 11% and 20%, respectively, according to the 2018 World Inequality Report.)

Yet basic income in the U.S., characterized as a utopian solution by its true believers but as welfare, socialism or worse by its detractors, has gone nowhere. Basic income did enjoy a bit of a heyday in the U.S. in the 1960s and 1970s and was even embraced in conservative circles; free-market economist Milton Friedman went so far in 1962 as to propose a negative federal income tax that would guarantee a basic income to the poorest Americans while also incentivizing work. Other ideals of the era — the four-day workweek, the 30-hour workweek, the all but limitless vacation allotment — have fallen by the wayside, even as U.S. labor conditions have worsened.

Read more …

In France, this is a nation-wide law.

Restaurants In Austin Banned From Throwing Away Food (Hill)

Restaurants in Austin, Texas, will no longer be allowed to throw out food waste, the city announced this week. Under a new policy that began Monday, all food-permitted businesses in the city are required to keep organic material, such as food scraps and soiled paper products, from landfills. Businesses can dispose of their food waste by donating extra food, giving scraps to local farms for animals, or composting, the city government said in a press release announcing the policy.

The city’s Universal Recycling Ordinance also requires businesses to provide employees with training on organic waste diversion, and to post information about the plan. Official city data shows that 37 percent of material sent to landfills is organic and could have otherwise been donated or composted, the city said. Austin’s ordinance is the latest move by a major city to introduce eco-friendly policies. Dozens of cities and businesses nationwide have banned plastic straws and other single-use plastic items in an effort to cut down on waste.

Read more …

Welcome to Europe.

‘We Have Found Hell’: Trauma Runs Deep For Children At Dire Lesbos Camp (G.)

The drawings tell of trauma. Stormy seas dotted with terrified faces. Lifeless bodies of children floating among the waves. And planes dropping bombs, down on to homes and on to people. Eyes that weep blood. The pencil scrawls were made by children who are part of a growing phenomenon in the Moria refugee camp in Lesbos, Greece. All have attempted suicide or serious self-harm since they came to this place. Approximately 3,000 minors live in the Moria camp, which Médecins Sans Frontières (MSF) calls a giant open-air “mental asylum” owing to the overcrowding and dire sanitary conditions. Last Tuesday an adolescent attempted to hang himself from a pole. In August, a 10-year-old boy only just failed to take his own life.

The camp, among hills dotted with olive trees a few kilometres from the island’s capital town of Mytilene, is home to 9,000 asylum seekers living in a centre designed to hold one third of that number. Migrants live in groups of up to 30 people, crammed into tents or metal containers situated just centimetres apart. Rubbish, scattered everywhere, makes the air almost unbreathable. Most come from war-torn countries like Syria, Iraq and Afghanistan. They arrive in dinghies from the Turkish towns of Ayvalik or Canakkale. According to aid agencies, the controversial deal brokered between Brussels and Ankara aimed at stopping the flow of migrants to Europe via Turkey, combined with the refusal on the part of European countries to take in asylum seekers arriving in Greece, have transformed Lesbos into an Alcatraz, leaving people imprisoned on the island with no way out.

“Although the vast majority of migrants who arrive in Moria are traumatised, after having fled from violent conflicts in their home countries, conditions in the camp have exacerbated their trauma,” says Luca Fontana, field coordinator of MSF on the island. “After two years, some are still awaiting transferral, even if they know they could be deported to Turkey at a moment’s notice. I’ve worked in camps infested with Ebola in Sierra Leone and Guinea, but I guarantee you that this is the worst situation I’ve ever seen.”

Read more …

Oct 022018
 
 October 2, 2018  Posted by at 9:20 am Finance Tagged with: , , , , , , , , , , ,  


Pieter Bruegel the Elder Children’s games 1560

 

US Gross National Debt Hits $21.5 Trillion in Fiscal 2018 (WS)
Average Stock Is Overvalued Somewhere Between Tremendously And Enormously (MW)
A Three-Way Train Wreck Is About to Derail the Markets (Rickards)
China Says Its Economy Is Slowing. PBOC May Be Preparing To Intervene (CNBC)
China Blocks Bad Economic News As Economy Slumps (ZH)
Real Estate Rage Signals Turn in Chinese Housing Market (IICS)
Di Maio Accuses EU Of Market ‘Terrorism’ Over Italy Budget (R.)
Greece Tests Creditors And The Markets With Its 2019 Spending Plans (CNBC)
Iran “Finalizing” Mechanism To Bypass SWIFT In Trade With Europe (ZH)
Alex Jones Sues Paypal For Infowars Ban (ZH)
The Woman Who Accuses Ronaldo of Rape (Spiegel)

 

 

They are only boom times BECAUSE the debt rises so fast.

US Gross National Debt Hits $21.5 Trillion in Fiscal 2018 (WS)

But wait — these are the Boom Times!

The US gross national debt jumped by $84 billion on September 28, the last business day of fiscal year 2018, the Treasury Department reported Monday afternoon. During the entire fiscal year 2018, the gross national debt ballooned by $1.271 trillion to a breath-taking height of $21.52 trillion. Just six months ago, on March 16, it had pierced the $21-trillion mark. At the end of September 2017, it was still $20.2 trillion. The flat spots in the chart below, followed by the vertical spikes, are the results of the debt-ceiling grandstanding in Congress: These trillions are whizzing by so fast they’re hard to see. What was that, we asked? Where did that go?

Over the fiscal year, the gross national debt increased by 6.3% and now amounts to 105.4% of current-dollar GDP. But this isn’t the Great Recession when tax revenues collapsed because millions of people lost their jobs and because companies lost money or went bankrupt as their sales collapsed and credit froze up; and when government expenditures soared because support payments such as unemployment compensation and food stamps soared, and because there was some stimulus spending too. But no – these are the good times.

Over the last 12-month period through Q2, the economy, as measured by nominal GDP grew 5.4%. “Nominal” GDP rather than inflation-adjusted (“real”) GDP because the debt isn’t adjusted for inflation either, and we want an apples-to-apples comparison. The increases in the gross national debt have been a fiasco for many years. Even after the Great Recession was declared over and done with, the gross national debt increased on average by $954 billion per fiscal year from 2011 through 2017.

Read more …

Katsenelson.

Average Stock Is Overvalued Somewhere Between Tremendously And Enormously (MW)

Here’s another, called the “Buffett Indicator.” Apparently, Warren Buffett likes to use it to take the temperature of market valuations. Think of this chart as a price-to-sales ratio for the entire U.S. economy, that is, the market value of all equities divided by GDP. The higher the price-to-sales ratio, the more expensive stocks are.

This chart tells a similar story to the first one. Though I was not around in 1929, we can imagine there were a lot of bulls celebrating and cheerleading every day as the market marched higher in 1927, 1928, and the first 10 months of 1929. The cheerleaders probably made a lot of intelligent, well-reasoned arguments, which could be put into two buckets: First: “This time is different” (it never is). Second: “Yes, stocks are overvalued, but we are still in the bull market.” (They were right about this until they lost their shirts.)

I was investing during the 1999 bubble. I vividly remember the “This time is different” argument of 1999. It was the New Economy vs. the old, and the New was supposed to change or at least modify the rules of economic gravity. The economy was now supposed to grow at a much faster rate. But economic growth over the past 20 years has not been any different than in the previous 20. Actually, I take that back — it’s been lower. From 1980 to 2000 the U.S. economy’s real growth was about 3% a year, while from 2000 to now it has been about 2% a year.

Finally, let’s look at a Tobin’s Q Ratio chart. This chart simply shows the market value of equities in relation to their replacement cost. If you are a dentist, and dental practices are sold for a million dollars while the cost of opening a new practice (phone system, chairs, drills, x-ray equipment, etc.) is $500,000, then Tobin’s Q Ratio is 2.0. The higher the ratio the more expensive stocks are. Again, this one tells the same story as the other two charts: U.S. stocks are extremely expensive — and were more expensive only twice in the past hundred-plus years.

Read more …

China foreign reserves under threat.

A Three-Way Train Wreck Is About to Derail the Markets (Rickards)

The U.S. trade war with China and China’s daunting debt problems are well understood by most investors. Coming U.S. sanctions on Iran and Iran’s internal economic problems are also well understood. What is not understood is how these two bilateral confrontations are intimately linked in a three-way tangle that could throw the global economy into complete turmoil and possibly escalate into war. Untangling and understanding these connections is one of the most important tasks for investors today. Let’s begin with the China debt bomb. As is apparent from the chart below, China has the largest volume of dollar-denominated debt coming due in the next 15 months.

The chart shows China with almost $100 billion of external dollar-denominated liabilities maturing before the end of 2019. But this debt wall is just the tip of the iceberg. This chart does not include amounts owed by financial institutions nor does it include intercompany payables and receivables. China’s total dollar debt burden is over $200 billion and towers over other emerging-market economy debt burdens. This wall of maturing debt might not matter if China had easy access to new finance with which to pay the debt and if its economy were growing at a healthy clip. Neither condition is true.

China has entered a trade war with the U.S., which will reduce the prospects of many Chinese companies and hurt their ability to refinance dollar debt. At the same time, China is trying to get its debt problems under control by restricting credit and tightening lending standards. But this monetary tightening also hurts growth. Selective defaults have already emerged among some large Chinese companies and certain regional governments. The overall effect is tighter monetary conditions, reduced access to foreign markets and slower growth all coming at the worst possible time.

Read more …

Yeah, sure, the PBOC may cut reserve requirement ratios, but there’s a reason for those requirements: shaky banks.

China Says Its Economy Is Slowing. PBOC May Be Preparing To Intervene (CNBC)

Beijing will likely take steps to mitigate the impact of the trade war with the U.S. as recent economic indicators from China point to a slowdown, an economist said on Monday. “We were calling for some slowdown, but the degree is much more than what we expected,” said Jeff Ng, chief economist for Asia at Continuum Economics, a research firm. Over the weekend, a private survey showed growth in China’s factory sector stalled after 15 months of expansion, with export orders falling the fastest in over two years, while an official survey confirmed a further manufacturing weakening. The official manufacturing index fell to a seven-month low of 50.8 in September, from 51.3 in August and below a Reuters poll forecast of 51.2.

That index has stayed above the 50-point mark for 26 straight months. A reading above 50 indicates expansion, while a reading below that signals contraction. But the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell more than expected to 50.0 in September, from 50.6 in the previous month. Economists polled by Reuters had forecast 50.5 on average. “I think we are expecting some more triple-R cuts by the end of the year … I think one more triple-R cut by end of the year,” Ng said, referring to possibility that the People’s Bank of China may cut reserve requirement ratios for banks in order to boost liquidity and growth.

Read more …

That should help.

China Blocks Bad Economic News As Economy Slumps (ZH)

China’s Shadow-banking system is collapsing (and with its China’s economic-fuel – the credit impulse), it’s equity market has become a slow-motion train-wreck, its economic data has been serially disappointing for two years, and its bond market is starting to show signs of serious systemic risk as corporate defaults in 2018 hit a record high. But, if you were to read the Chinese press, none of that would be evident, as The New York Times reports a government directive sent to journalists in China on Friday named six economic topics to be “managed,” as the long hand of China’s ‘Ministry of Truth’ have now reached the business media in an effort to censor negative news about the economy.

The New York Times lists the topics that are to be “managed” as: • Worse-than-expected data that could show the economy is slowing. • Local government debt risks. • The impact of the trade war with the United States. • Signs of declining consumer confidence • The risks of stagflation, or rising prices coupled with slowing economic growth • “Hot-button issues to show the difficulties of people’s lives.”

The government’s new directive betrays a mounting anxiety among Chinese leaders that the country could be heading into a growing economic slump. Even before the trade war between the United States and China, residents of the world’s second-largest economy were showing signs of keeping a tight grip on their wallets. Industrial profit growth has slowed for four consecutive months, and China’s stock market is near its lowest level in four years. “It’s possible that the situation is more serious than previously thought or that they want to prevent a panic,” said Zhang Ming, a retired political science professor from Renmin University in Beijing. Mr. Zhang said the effect of the expanded censorship strategy could more readily cause people to believe rumors about the economy. “They are worried about chaos,” he added. “But in barring the media from reporting, things may get more chaotic.”

Read more …

The Chinese think their property should hold value or gain. And of not, Beijing should make it.

Real Estate Rage Signals Turn in Chinese Housing Market (IICS)

Chinese homebuyers have demanded to return their housing in 2008, 2011 and 2014: each time the market price declined, but real estate rage first appeared in 2011. There was a report of real estate rage in Shanghai. The developer had slashed prices by one-third and homebuyers who purchased days or weeks responded by smashing up the sales office. “My house’s value has dropped by as much as one-third, and we have lost some 10,000yuan,” a homeowner surnamed Yang told Shanghai Daily. Real estate rage returned in early 2014. Angry homeowners in Hangzhou were upset for the same reason as those in Shanghai: the developer slashed prices. They flooded the developer’s office, but police were quickly on the scene.

“In 2008, 2011, 2014, there were three rounds of very obvious check-outs in the country. As long as the house price fell, the pre-purchasers began to reduce their prices.” Chongyuan Real Estate pointed out that the phenomenon of price reduction “rights” It has appeared from time to time, with 2011 being the most typical. According to public information, since September 2011, Beijing, Shanghai, Nanjing, Ningbo and other places have continued to reduce prices and defend their rights. The sales offices of various projects such as Vanke, Longhu and Hesheng have been destroyed, and some project owners have also physical conflict with security guards.

In September, there were several reports of “real estate rage” across the country. Instead of smashing offices, homeowners are protesting outside to “protect their rights” but the cause of their anger is the same: developers slashing prices to move inventory. While this evidence is anecdotal, there have been many reports about developers moving inventory to recoup cash. More importantly, both the 2011 and 2014 “real estate rage” incidents were coincident indicators of a housing market top.

Read more …

He’s at least partly right.

Di Maio Accuses EU Of Market ‘Terrorism’ Over Italy Budget (R.)

Italian Deputy Prime Minister Luigi Di Maio on Monday accused European Union officials of deliberately upsetting financial markets by making negative comments about Italy’s budget plans. “Some European institutions are playing … at creating terrorism on the markets,” said Di Maio, who is the head of the anti-establishment 5-Star Movement. He specifically took aim at European Economic Affairs Commissioner Pierre Moscovici, saying he had deliberately “upset the markets” with earlier comments on Italy.

Read more …

Pension cuts may not be needed, but the IMF demands them regardless.

Greece Tests Creditors And The Markets With Its 2019 Spending Plans (CNBC)

Greece could be about to start another fight with its creditors and the financial markets. The government unveiled last evening the first draft of its 2019 budget plan in which two scenarios were put forward for its spending plans and economic targets for the coming year. One of them included planned and pre-legislated pension cuts, in line with its creditors’ expectations. The other spending plan does not include pension cuts, however, indicating that the Greek government is willing to make changes to reforms that it had previously agreed with its creditors.

The pension cuts were due to start in January and were one of the most difficult reforms to come to an agreement. Potential changes to pensions, or to other reforms, could spark confrontations with European institutions and the IMF. The IMF said last month that the 2019 pension cuts are part of the reforms that the Greek government agreed to, and that Greece needs to show it is investor-friendly. The 2019 budget is the first in nearly a decade without Greece being subject to a bailout program. Nonetheless, Athens promised on Monday to stick to fiscal targets that had agreed with its creditors. In fact, Greece has said it will over-deliver when it comes to its primary budget surplus.

Read more …

Iran gets desperate. But this may still work.

Iran “Finalizing” Mechanism To Bypass SWIFT In Trade With Europe (ZH)

Just days after Europe unveiled a “special purpose vehicle” meant to circumvent SWIFT and US monopoly on global dollar-denominated monetary transfers – and potentially jeopardizing the reserve status of the dollar – Iran said it was finalizing mechanisms for the oil trade to bypass US sanctions against the country, said Iranian Deputy Foreign Minister Abbas Araghchi. According to RT, Araghchi said that Tehran is not ruling out the possibility of setting up an alternative to the international payments provider SWIFT to circumvent sanctions imposed by Washington. “As we know, Europeans are also trying to see how SWIFT can continue working with Iran, or if a parallel [financial] messaging system is necessary… This is something that we are still working on,” Araghchi said.

According to the Iranian diplomat, the independent equivalent of the SWIFT system that was earlier suggested by the EU to protect European firms working in Iran from US sanctions will be available for third countries. “This is the important element in SPV (Special Purpose Vehicle) that it is not only for Europeans but other countries can also use this. We hope that before the re-imposition of the second part of the US sanctions [from November 4], these mechanisms can be in place and be functional,” said the official. One can see why: the Iranian economy has been hit hard in recent days, and the Rial has plunged to all time lows, amid fears that the sanctions will cripple Iran’s most valuable export resulting in a shortage of hard currency, eventually leading to a replica of Venezuela’s economic collapse.

Read more …

Points also to Paypal’s de facto monopoly.

Alex Jones Sues Paypal For Infowars Ban (ZH)

Alex Jones’s company, Free Speech Systems, LLC, has sued PayPal for the its ban of Infowars because the controversial website “promoted hate and discriminatory intolerance against certain communities and religions.” In the complaint filed by Jones’s lawyers, Marc Randazza Legal group, they accuse PayPal of banning Infowars “for no other reason than a disagreement with the message plaintiff conveys” and call ban “unconscionable” because PayPal has never advised users that “it might ban users for off-platform activity.”

“It is at this point well known that large tech companies, located primarily in Silicon Valley, are discriminating against politically conservative entities and individuals, including banning them from social media platforms such as Twitter, based solely on their political and ideological viewpoints,” Jones’ lawyers claim in the 15-page complaint. Jones claims PayPal’s decision was based purely on “viewpoint discrimination.” He also says the decision was made based on conduct that “had nothing to do with” the PayPal platform, which purportedly violates Infowars’ contract with the payment-processing giant. If PayPal’s decision were allowed to stand, it would set “a dangerous precedent for any person or entity with controversial views,” the lawsuit alleges.

Read more …

A few days old, and an odd one out for a Debt Rattle, I know. But Las Vegas police have yesterday involved re-opened the file. This comes after Ronaldo called the Spiegel article fake news, and one of the journalists posted 24 tweets detailing their investigation, saying they worked on it with 20 people for a long time, and have a strong legal team. Spiegel first opened the case in 2009, but the woman didn’t want to talk. She refused to name Ronaldo to police at the time as well.

The Woman Who Accuses Ronaldo of Rape (Spiegel)

She was supposed to be invisible, damned to silence. Forever. Nobody was to ever learn about that night in Las Vegas back in 2009, especially not her version of events. She even signed a settlement deal and received a payoff ensuring that she would never give voice to the accusations. She signed, she says, out of fear for herself and her family. And out of impotence, the inability to stand up to him. And out of the hope that she could finally put the incident behind her. But, says Kathryn Mayorga, she was never able to close that chapter. The American is a slender 34-year-old with long, dark hair and green eyes. Until recently, she worked at an elementary school. But she quit, she says, “because I need all my strength now.”

She needs the strength to stand up to the man who she accuses of having raped her nine years ago — accusations that he denies. The man isn’t just anybody. It is Cristiano Ronaldo, arguably the best soccer player in the world, with vast amounts of success, money and adoration from the fans. An anonymous woman versus Ronaldo — the discrepancy could hardly be greater. They met on June 12, 2009 in a Las Vegas nightclub. Ronaldo was there on vacation with his brother-in-law and cousin. It was the summer when the star, then 24, would transfer from Manchester United to Real Madrid for a then-record sum of 94 million euros.

Read more …

Sep 282018
 
 September 28, 2018  Posted by at 9:29 am Finance Tagged with: , , , , , , , , , , , , , , ,  


Pablo Picasso Carnival Bistro [Study] 1908

 

Well, I Think We Found Our Supreme Court Justice Today… (F.)
BIS’s Claudio Borio Says the World Economy Is About to Get Very Sick (Auerback)
Italy Agrees High Public Spending Reforms In Potential Clash With EU (G.)
Irish Banks’ Loan Losses Hit €140 Billion In 10 Years After Crash (IT)
Janet Yellen Says It’s Time For “Alarm” As Loan Bubble Runs Amok (ZH)
Why Do Debt Crises Come in Cycles? (Dalio)
Elon Musk Tore Up Last Minute SEC Settlement, Decided To Fight Instead (ZH)
Corbyn Talks With EU Officials Spark Fresh No-Deal Brexit Fears (G.)
Britain, Ecuador Seeking An End To The Assange Standoff (AP)
Seattle Judges Throw Out 15 Years Of Marijuana Convictions (BBC)
Austrian Fruit Grower Sentenced To Prison Over Bee Deaths (AFP)
Orca ‘Apocalypse’: Half Of Killer Whales Doomed To Die From Pollution (G.)

 

 

No, not what I would write. But might as well take an odd approach. One thing that hearing made clear: “..we as a nation are losing our way”.

Well, I Think We Found Our Supreme Court Justice Today… (F.)

Well, I think we found our Supreme Court Justice today. This should be very good news for Republicans, who seem to be in an awful hurry to get this done quickly. It doesn’t look like we have to wait any longer. Let’s all take a deep breath and step back for a moment. All crazy partisan politics aside, let’s consider the qualities a good justice should have. A good justice should be objective and fair-minded, not guided by strong preconceived opinions. A good justice should be empathetic, not focused on oneself. A good justice should be calm, not angry. A good justice should show grace under pressure, not be easily rattled. A good justice should be even-tempered, not short-tempered. A good justice should be thoughtful, not strident. A good justice should in the face of adversity show courage, not petulance.

There are classic lines from Shakespeare’s The Merchant of Venice about mercy and justice: The quality of mercy is not strained. It droppeth as the gentle rain from heaven Upon the place beneath. At the end of the day good leadership is about temperament. Having the kind of calm demeanor and even temperament that enables one to make sound thoughtful decisions under pressure. Not decisions that are reflexive, impulsive, angry or politically driven. When one thinks of the sea of strident bitter recriminations that have engulfed this whole Supreme Court nomination process, and the partisan political football the Supreme Court has become, it feels like we’ve completely lost sight of what a Supreme Court ought to be. It feels, sadly, like we as a nation are losing our way.

Well, cheer up, the good news at least is I think we found someone today with the right temperament to make a fine Supreme Court Justice. Her name is Christine Blasey Ford.

Read more …

And it’s the exact same disease.

BIS’s Claudio Borio Says the World Economy Is About to Get Very Sick (Auerback)

When Claudio Borio speaks, the big bankers and investors, the economics profession, and senior policymakers listen quite carefully—even if his sentiments don’t reach the shores of the popular media. Borio, the chief economist for the Bank for International Settlements (BIS), the central bankers’ central bank, recently remarked on the fragility of the global economy, and suggested that we were on the verge of a significant relapsesimilar to the global crash experienced 10 years ago. Among the parallels he perceives: the proliferation of “collateralized loan obligations (CLOs), which are ‘close cousins’ of the infamous instruments known as collateralized debt obligations, or CDOs, and securities backed by residential mortgages,” the prevalence of which helped to crater the credit system in 2008.

Mindful as central bankers have been about the ready availability of liquidity, they have (as I have written before) omitted to “proactively… [charging] private market participants variable risk premiums commensurate with the risk of the underlying activity they are undertaking when providing credit.” Furthermore, Borio implies that the monetary and fiscal authorities expended excessive efforts toward restoring the status quo ante, instead of directing policy toward broader job creation and income generation, which would place the economy on sounder footing when the next downturn inevitably comes. Finally, the BIS’s chief economist also publicly mooted whether additional “medicine” of the kind that we used last time will be in sufficient supply to respond adequately when the next crisis emerges.

So is Dr. Borio correct in both his diagnosis and concomitant concern about the lack of readily available cures for the prevailing illness? And are there any key omissions in his analysis that could help to mitigate the inevitable relapse that he forecasts?

Read more …

UBI vs austerity.

Italy Agrees High Public Spending Reforms In Potential Clash With EU (G.)

The Italian government agreed to a 2019 budget deficit target at 2.4% of GDP on Thursday night in a move that was celebrated by leaders but could bring the heavily indebted country into conflict with the European Union. The economy minister Giovanni Tria succumbed to pressure from the government’s two deputy prime ministers – Luigi Di Maio, the leader of the anti-establishment Five Star Movement (M5S), and Matteo Salvini, who heads up the far-right League – to increase the target in order to pay for election campaign promises such as a universal basic income, flat tax and pension reforms. Tria, an academic who is not affiliated to either party, had been seeking a more conservative 1.9% in order to avoid adding to Italy’s debt pile, which currently stands at around 131% of GDP, the second highest in the eurozone after Greece.

Speculation that Tria would resign has been denied. “There is an accord within the whole government for 2.4%, we are satisfied, this is a budget for change,” Di Maio and Salvini said in a joint statement. Di Maio wrote on Facebook that the agreement marked a historic day and was a victory for Italian citizens, not the government. The means-tested basic income, which will cost €10bn, was a key feature of his party’s election campaign. “For the first time in the history of this country we will erase poverty thanks to the basic income,” he said. “We will finally give a future to the 6.5 million people, who until now have lived in poverty and been completely ignored.”

Read more …

“..three-quarters of the size of the Irish economy in 2008.”

Irish Banks’ Loan Losses Hit €140 Billion In 10 Years After Crash (IT)

The State’s main 11 banks and building societies racked up a total of €140 billion in loan losses in the decade since western Europe’s worst property crash, according to data compiled by The Irish Times. That equates to about three-quarters of the size of the Irish economy in 2008. The figures include bad-loan charges that lenders took between 2008 and 2017, as well as losses on the sale of batches of loans to overseas investment firms and the National Asset Management Agency (Nama). As Saturday marks the 10th anniversary of the snap guarantee of the Republic’s banking system, property developer Sean Mulryan and former Central Bank governor Patrick Honohan have warned in interviews with The Irish Times of risks facing the recovering housing market and State finances.

The guarantee of six Dublin-based lenders would cost taxpayers €64 billion in bailouts and tip the State into an international bailout. Foreign-owned Bank of Scotland (Ireland), Ulster Bank and KBC Bank Ireland also required multibillion-euro capital injections from their parents during the financial crisis. The 11 banks’ net loan losses over the past decade amount to €134.2 billion – or 25 per cent of their total 2008 loans – according to the data, compiled from banks’ annual reports and regulatory filings. [..] Only five of the original lenders remain as standalone companies, as the State continues to grapple with the legacy of the crash. Housebuilding is running at half of estimated annual demand for 35,000 homes and banks are still dealing with high levels of distressed loans.

Read more …

These people only warn when they’ve left the job. While in the job, they do exactly what they later warn against.

“Powell said that “overall vulnerabilities” were “moderate”. He also stated that banks today “take much less risk than they used to”.”

Janet Yellen Says It’s Time For “Alarm” As Loan Bubble Runs Amok (ZH)

As rates move higher like they are now, the loans – whose interest rates reference such floating instruments as LIBOR or Prime – pay out more. As a result, as the Fed tightens the money supply, defaults tend to increase as the interest expenses rise and as the overall cost of capital increases. And because an increasing amount of the financing for these loans is done outside of the traditional banking sector, regulators and agencies like the Federal Reserve aren’t able to do much to rein it in. The market for leveraged loans and junk bonds is now over $2 trillion. Escalating the risk of the unbridled loan explosion, none other than Janet Yellen – who is directly responsible for the current loan bubble – recently told Bloomberg that “regulators should sound the alarm. They should make it clear to the public and the Congress there are things they are concerned about and they don’t have the tools to fix it.”

As we noted recently, the risks of such loans defaulting are obvious, including loss of jobs and risk to companies on both the borrowing and the lending side. Tobias Adrian, a former senior vice president at the New York Fed who’s now the IMF’s financial markets chief, told Bloomberg: “…supporting growth is important, but future downside risks also need to be considered.” He also stated that regulators had “limited tools to rein in nonbank credit”. But you’d never know this by listening to the Federal Reserve. According to Fed chairman Jerome Powell, during his press conference Wednesday, the Fed doesn’t see any risks right now. Powell said that “overall vulnerabilities” were “moderate”. He also stated that banks today “take much less risk than they used to”.

Read more …

h/t Tyler. Monopoly on steroids.

Why Do Debt Crises Come in Cycles? (Dalio)

If you understand the game of Monopoly®, you can pretty well understand how credit cycles work on the level of a whole economy. Early in the game, people have a lot of cash and only a few properties, so it pays to convert your cash into property. As the game progresses and players acquire more and more houses and hotels, more and more cash is needed to pay the rents that are charged when you land on a property that has a lot of them. Some players are forced to sell their property at discounted prices to raise that cash. So early in the game, “property is king” and later in the game, “cash is king.” Those who play the game best understand how to hold the right mix of property and cash as the game progresses.

Now, let’s imagine how this Monopoly® game would work if we allowed the bank to make loans and take deposits. Players would be able to borrow money to buy property, and, rather than holding their cash idly, they would deposit it at the bank to earn interest, which in turn would provide the bank with more money to lend. Let’s also imagine that players in this game could buy and sell properties from each other on credit (i.e., by promising to pay back the money with interest at a later date). If Monopoly® were played this way, it would provide an almost perfect model for the way our economy operates. The amount of debt-financed spending on hotels would quickly grow to multiples of the amount of money in existence.

Down the road, the debtors who hold those hotels will become short on the cash they need to pay their rents and service their debt. The bank will also get into trouble as their depositors’ rising need for cash will cause them to withdraw it, even as more and more debtors are falling behind on their payments. If nothing is done to intervene, both banks and debtors will go broke and the economy will contract. Over time, as these cycles of expansion and contraction occur repeatedly, the conditions are created for a big, long-term debt crisis.

Read more …

The board is behing Musk. But is that enough? It’s not just the SEC, the DOJ is on the case too.

Elon Musk Tore Up Last Minute SEC Settlement, Decided To Fight Instead (ZH)

To many it was clear from the beginning: “It’s an easy case,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “He said in the tweet he had financing, and apparently he didn’t. … It’s about as straightforward as you can get.” And on Thursday afternoon, the SEC confirmed that indeed just those two words blasted to the entire world and contained in Elon Musk’s infamous “funding secured” tweet – it would emerge just days later that funding was not, in fact, secured- would serve as the basis for a securities fraud litigation against Elon Musk; and while Tesla wasn’t named in the suit as a defendant, the SEC is seeking to bar Musk, Tesla’s largest shareholder and its top executive, from serving as an officer or director of any U.S. public company.

It almost didn’t happen that way: according to the WSJ, the SEC complaint only came after a last-minute decision by Musk and his lawyers to fight the case rather than settle the charges. The SEC had crafted a settlement with Mr. Musk—approved by the agency’s commissioners—that it was preparing to file Thursday morning when Mr. Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in proceeding with the agreement, according to people familiar with the matter. After the phone call, the SEC rushed to pull together the complaint that it subsequently filed, the people said. Considering that this is an open and shut case, one wonders if Musk was once again on drugs when he decided that instead of settling, he would fight the charges. Or he simply saw the “playbook” and decided to roll the dice…

In any case, a fighting Elon is just what the SEC – its reputation in tatters after years of not pursuing “big name” stock manipulators – needs to restore its image. The case ranks as one of the highest-profile civil securities-fraud cases in years. Its filing less than two months after the Aug. 7 tweets by Mr. Musk also marks an unusually rapid turnaround by an agency that has been under fire for its perceived failure to promptly bring significant cases in the financial crisis and other episodes. “It means there was not that much investigation they needed to do to get comfortable that it was a case they should bring, but also a case they can win,” said Michael Liftik, a former SEC enforcement lawyer now at Quinn, Emanuel, Urquhart & Sullivan LLP.

Read more …

“.. he will vote down anything that fails to deliver the same benefits as membership of the single market and customs union.”

Corbyn Talks With EU Officials Spark Fresh No-Deal Brexit Fears (G.)

Jeremy Corbyn has sparked fresh fears in Brussels of a no-deal Brexit after saying during talks with senior EU Brexit officials that he will vote down anything that fails to deliver the same benefits as membership of the single market and customs union. The Labour leader spent two hours with Michel Barnier, the EU’s chief negotiator, and Martin Selmayr, the most senior official in charge of planning for a cliff-edge Brexit. Emerging from the European commission headquarters, Corbyn said Barnier “was interested to know what our views are in the six tests”, referring to the criteria Labour has said must be met to ensure its MPs back a deal. The EU is increasingly concerned that the UK parliament will vote down any deal put forward by Theresa May.

One of Labour’s tests is that an agreement must offer the “exact same benefits” as membership of the single market and customs union. The Labour leader had initially planned a low-key visit to Brussels to attend the naming of a square in the Belgian capital in honour of the murdered Labour MP Jo Cox. It is understood, however, that the EU’s most senior officials were anxious to hear directly from Corbyn about his party’s plans, and invited him for a session of talks. After meeting Barnier and Selmayr, who is the secretary general of the European commission and in charge of no-deal planning, Corbyn insisted he was “not negotiating” but that there was an informal agreement that both sides would continue to talk.

Read more …

AP makes an ‘error’ and corrects: “The Associated Press reported erroneously that Assange over the past two years had continued to hack the accounts of politicians around the world. It should’ve said Assange had published material from hacked politicians’ accounts.”

Britain, Ecuador Seeking An End To The Assange Standoff (AP)

Ecuador’s president said Wednesday that his country and Britain are working on a legal solution for Julian Assange to allow the Wikileaks founder to leave the Ecuadorian Embassy in London in “the medium term.” President Lenin Moreno told The Associated Press that Assange’s lawyers were aware of the negotiations. He declined to provide more details because of the sensitivity of the case. [..] Moreno said his country will work for Assange’s safety and the preservation of his human rights as it seeks a way for him to leave the embassy. “Being five or six years in an embassy already violates his human rights,” Moreno said on the sidelines of the UN General Assembly. “But his presence in the embassy is also a problem.”

Read more …

Now the rest of the nation. How about New York State?

Seattle Judges Throw Out 15 Years Of Marijuana Convictions (BBC)

Judges in Seattle have decided to quash convictions for marijuana possession for anyone prosecuted in the city between 1996 and 2010. City Attorney Pete Homes asked the court to take the step “to right the injustices of a drug war that has primarily targeted people of colour.” Possession of marijuana became legal in the state of Washington in 2012. Officials estimate that more than 542 people could have their convictions dismissed by mid-November. Mr Holmes said the city should “take a moment to recognise the significance” of the court’s ruling. “We’ve come a long way, and I hope this action inspires other jurisdictions to follow suit,” he said. Mayor Jenny Durkan also welcomed the ruling, which she said would offer residents a “clean slate.” “For too many who call Seattle home, a misdemeanour marijuana conviction or charge has created barriers to opportunity – good jobs, housing, loans and education,” she said.

Read more …

Here’s what it will take.

Austrian Fruit Grower Sentenced To Prison Over Bee Deaths (AFP)

An Austrian fruit grower was handed a rare prison sentence Wednesday for having illegally spread an insecticide which led to the deaths of dozens of neighbouring bee colonies. The 47-year-old man had spread a powerful insecticide called chlorpyrifos over his trees in the Lavanttal area of Carinthia province, at a time when their blossoms were still attracting bees. More than 50 colonies belonging to two neighbouring apiarists perished. The court in the city of Klagenfurt found the fruit grower guilty of “deliberately damaging the environment”, pointing to his experience and role in training others in his field as evidence that he knew the consequences of his actions.

He was sentenced to a year in prison, of which four months will be without probation. Ordered to pay more than 20,000 euros ($23,500) in compensation, he said he will appeal. The court said it hoped the sentence would serve as a deterrent and to remind others that the “use of pesticides needs to strike a balance between the environment and economics”. The widespread use of pesticides has been blamed for a steep rise in deaths among bees and other pollinating insects. In April the EU voted to outlaw the use of certain pesticides from the neonicotinoid family blamed for killing off bee populations.

Read more …

And we’re still allowing glyphosate? We must insists on precautionary principle.

Orca ‘Apocalypse’: Half Of Killer Whales Doomed To Die From Pollution (G.)

At least half of the world’s killer whale populations are doomed to extinction due to toxic and persistent pollution of the oceans, according to a major new study. Although the poisonous chemicals, PCBs, have been banned for decades, they are still leaking into the seas. They become concentrated up the food chain; as a result, killer whales, the top predators, are the most contaminated animals on the planet. Worse, their fat-rich milk passes on very high doses to their newborn calves. PCB concentrations found in killer whales can be 100 times safe levels and severely damage reproductive organs, cause cancer and damage the immune system. The new research analysed the prospects for killer whale populations over the next century and found those offshore from industrialised nations could vanish as soon as 30-50 years.

Among those most at risk are the UK’s last pod, where a recent death revealed one of the highest PCB levels ever recorded. Others off Gibraltar, Japan and Brazil and in the north-east Pacific are also in great danger. Killer whales are one of the most widespread mammals on earth but have already been lost in the North Sea, around Spain and many other places. “It is like a killer whale apocalypse,” said Paul Jepson at the Zoological Society of London, part of the international research team behind the new study. “Even in a pristine condition they are very slow to reproduce.” Healthy killer whales take 20 years to reach peak sexual maturity and 18 months to gestate a calf.

PCBs were used around the world since the 1930s in electrical components, plastics and paints but their toxicity has been known for 50 years. They were banned by nations in the 1970s and 1980s but 80% of the 1m tonnes produced have yet to be destroyed and are still leaking into the seas from landfills and other sources.


Photograph: Audun Rikardsen/Science

Read more …

Aug 242018
 
 August 24, 2018  Posted by at 7:57 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh Café, le soir, Arles 1888

 

Thoughts On The ‘Longest Bull Market Ever’ (Black)
New Reality of China’s Failing Economy Is Coming Soon (Rickards)
UK Tells Drug Companies To Stockpile Medicine In Case Of No-Deal Brexit (Ind.)
Big Oil Asks Government To Protect It From Climate Change (AP)
Scott Morrison New Australian PM As Turnbull Denounces ‘Insurgency’ (G.)
Saudi Modernisation Drive Is Reflected In Aramco’s Faltering Sale (G.)
Libya Refuses To Take Migrants Rejected By Italy (AFP)
Italy Threatens To Stop EU Funding Unless Other States Accept Refugees (ZH)
Inflation Adjusted Gold Is At Historical Lows (von Greyerz)
Monsanto Faces A Surge In Lawsuits Following Cancer Ruling (BBC)
‘Monsanto’s History Is One Full of Vast Lies’ (Spiegel)
After 70 Years, Korean Father, Son Share A Drink For First, Last? Time (H.)

 

 

“..a full SIXTY PERCENT of corporate debt issued by companies in the Russell 2000 is rated as JUNK..”

Thoughts On The ‘Longest Bull Market Ever’ (Black)

Well, it happened. Yesterday the US stock market broke the all-time record for the longest bull market ever. This means that the US stock market has been generally rising for nearly a decade straight… or even more specifically, that the market has gone 3,453 days without a 20% correction. That’s a pretty big milestone. And there’s no end in sight. So it’s possible this market continues marching higher for the foreseeable future. But if you step back and really look at the big picture, there are a lot of things that might make a rational person scratch his/her head. For example– the Russell 2000 index (which is comprised of smaller companies whose shares are listed on various US stock exchanges) is currently right at its all-time high.

Yet simultaneously, according to the Wall Street Journal, a full SIXTY PERCENT of corporate debt issued by companies in the Russell 2000 is rated as JUNK. How is that even possible– a junk debt rating coupled with an all-time high? It’s as if investors are saying, “Well, there’s very little chance these companies will be able to pay their debts… but screw it, I’ll pay a record high price to buy the stock anyhow.” It just doesn’t make any sense. Looking at the larger companies in the Land of the Free (which make up the S&P 500 index), the current ‘CAPE ratio’ is now the second highest on record. ‘CAPE’ stands for ‘cyclically-adjusted price/earnings ratio’. Essentially it refers to how much investors are willing to pay for shares of a company, relative to the company’s long-term average earnings.

And right now investors are willing to pay 33x long-term average earnings for the typical company in the S&P 500. The median CAPE ratio based on data that goes back to the 1800s is about 15.6. So at 33, investors are literally paying more than TWICE as much for every dollar of a company’s long-term average earnings than they have throughout all of US market history. And it’s only been higher ONE other time– just before the 2000 stock market crash (when the dot-com bubble burst). 33 is higher than right before the 2008 crisis. It’s even higher than it was before the Great Depression.

Read more …

Building zombies for the future.

New Reality of China’s Failing Economy Is Coming Soon (Rickards)

There’s no denying China’s remarkable economic progress over the past thirty years. Hundreds of millions have escaped poverty and found useful employment in manufacturing or services in the major cities. Infrastructure gains have been historic, including some of the best trains in the world, state-of-the-art transportation hubs, cutting edge telecommunications systems, and a rapidly improving military. Yet, that’s only half the story. The other half is pure waste, fraud and theft. About 45% of Chinese GDP is in the category of “investment.” A developed economy GDP such as the U.S. is about 70% consumption and 20% investment. There’s nothing wrong with 45% investment in a fast-growing developing economy assuming the investment is highly productive and intelligently allocated.

That’s not the case in China. At least half of the investment there is pure waste. It takes the form of “ghost cities” that are fully-built with skyscrapers, apartments, hotels, clubs, and transportation networks – and are completely empty. This is not just western propaganda; I’ve seen the ghost cities first hand and walked around the empty offices and hotels. Chinese officials try to defend the ghost cities by claiming they are built for the future. That’s nonsense. Modern construction is impressive, but it’s also high maintenance. Those shiny new buildings require occupants, rents and continual maintenance to remain shiny and functional. The ghost cities will be obsolete long before they are ever occupied.

Other examples of investment waste include over-the-top white elephant public structures such as train stations with marble facades, 128 escalators (mostly empty), 100-foot ceilings, digital advertising and few passengers. The list can be extended to include airports, canals, highways, and ports, some of which are needed and many of which are pure waste. Communist party leaders endorse these wasteful projects because they have positive effects in terms of job creation, steel fabrication, glass installation, and construction. However, those effects are purely temporary until the project is completed. The costs are paid with borrowed money that can never be repaid. China might report 6.8% growth in GDP, but when the waste is stripped out the actual growth is closer to 4.5%. Meanwhile, China’s debts grow faster than the economy and its debt-to-GDP ratio is even worse than the U.S.

Read more …

It’s beginning to hit home that time has run out. Wait till the days shorten for real.

UK Tells Drug Companies To Stockpile Medicine In Case Of No-Deal Brexit (Ind.)

Health secretary Matt Hancock has told drug companies to ensure they have six weeks additional supplies of medicines on top of their normal stockpiles to avoid disruption caused by a possible no-deal Brexit. The remarks from Mr Hancock came as Dominic Raab, the Brexit secretary, released the first tranche of technical notes outlining the government’s preparations and warnings to businesses if Britain crashes out of the bloc without a deal. Among the 24 detailed papers it was also revealed that credit card users could be hit with a new “Brexit tax” amounting to £166m, UK citizens living in Europe face the prospect of losing access to pension income and new red tape could delay foreign sperm donations arriving in Britain.

In one of the most stark warnings, Mr Hancock told NHS staff and service providers that the move to increase pharmaceutical companies’ stockpiles was necessary “in case imports from the EU through certain routes” are affected if Theresa May fails to strike a deal with negotiators in Brussels. The request, according to the chief executive of the UK Bioindustry Association, Steve Bates, would be a “massive challenge” for the industry to deliver in less than 200 days. But Mr Hancock also warned that hospitals, GPs and community pharmacies should not hoard or stockpile additional drugs “beyond their business” as usual levels.

Read more …

Priceless.

Big Oil Asks Government To Protect It From Climate Change (AP)

As the nation plans new defenses against the more powerful storms and higher tides expected from climate change, one project stands out: an ambitious proposal to build a nearly 60-mile “spine” of concrete seawalls, earthen barriers, floating gates and steel levees on the Texas Gulf Coast. Like other oceanfront projects, this one would protect homes, delicate ecosystems and vital infrastructure, but it also has another priority — to shield some of the crown jewels of the petroleum industry, which is blamed for contributing to global warming and now wants the federal government to build safeguards against the consequences of it.

The plan is focused on a stretch of coastline that runs from the Louisiana border to industrial enclaves south of Houston that are home to one of the world’s largest concentrations of petrochemical facilities, including most of Texas’ 30 refineries, which represent 30 percent of the nation’s refining capacity. Texas is seeking at least $12 billion for the full coastal spine, with nearly all of it coming from public funds. Last month, the government fast-tracked an initial $3.9 billion for three separate, smaller storm barrier projects that would specifically protect oil facilities.

That followed Hurricane Harvey, which roared ashore last Aug. 25 and swamped Houston and parts of the coast, temporarily knocking out a quarter of the area’s oil refining capacity and causing average gasoline prices to jump 28 cents a gallon nationwide. Many Republicans argue that the Texas oil projects belong at the top of Washington’s spending list. “Our overall economy, not only in Texas but in the entire country, is so much at risk from a high storm surge,” said Matt Sebesta, a Republican who as Brazoria County judge oversees a swath of Gulf Coast. But the idea of taxpayers around the country paying to protect refineries worth billions, and in a state where top politicians still dispute climate change’s validity, doesn’t sit well with some.

Read more …

Another rightwing anti-immigrant yokel. That’s all they have down under.

Scott Morrison New Australian PM As Turnbull Denounces ‘Insurgency’ (G.)

Australia will have a new prime minister in Scott Morrison – the socially conservative architect of Australia’s hardline anti-asylum seeker policies – after he mounted a late challenge during a drawn-out struggle for power in the governing Liberal party. On Friday, incumbent Malcolm Turnbull failed in his attempt to stare down a challenge from hard right MP Peter Dutton, with insurgents in his party gathering enough signatures to call for a “spill” of the leadership. It led to a three-way challenge that included Morrison, Turnbull’s treasurer, and Julie Bishop, the foreign minister. Turnbull himself stood aside from the contest.

In a party room ballot, Bishop was eliminated in the first round, and Morrison won against former home affairs minister Dutton in a subsequent run-off, 45 votes to 40, suggesting the party is still deeply divided. There appears no end in sight to the civil war consuming the ruling Liberal-led coalition government. The country may be headed to an election, with Turnbull saying he will not stay in parliament. His resignation in between general elections would erase the government’s single-seat majority in the House of Representatives. Australia has now had five prime ministers in just over five years. Since 2010 four prime ministers have lost office not at the ballot box, but torn down by their own parties, earning Canberra the unhappy appellation “the coup capital of the Pacific”.

Read more …

Selling 5% of Aramco was supposed to finance ‘diversification’.

Saudi Modernisation Drive Is Reflected In Aramco’s Faltering Sale (G.)

For the Saudis, the implications of the Paris agreement were obvious: the drive to decarbonise the world economy would mean that a considerable part of their oil reserves would have to stay in the ground. This made a warning at the turn of the millennium by the former Saudi energy minister Sheikh Ahmed Zaki Yamani, seem suddenly urgent. “Thirty years from now, there will be a huge amount of oil – and no buyers”, Yamani said. “Oil will be left in the ground. The stone age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”

It was not long before Saudi’s rulers responded to this twin challenge. In the short term, they sought to persuade fellow oil producing nations to agree production curbs that would limit supply, drive up crude prices and so ease the pressures on the public finances. At the current oil price of around $70 a barrel, the Saudis can make their budget arithmetic stack up. In the longer term, there was a plan to diversify the economy away from oil. Saudi Vision 2030 was announced by Crown Prince Mohammed bin Salman in April 2016, shortly after the oil price reached its trough. The idea was to make Saudi Arabia a global investment giant, to turn the country into a hub linking the three continents of Europe, Asia and Africa and to be the heart of the Arab and Islamic worlds.

The proposed sale of part of the state-owned oil company – Saudi Aramco – was a key part of this attempt to transform and modernise the economy. Proceeds were earmarked for the country’s sovereign wealth fund so it could continue investing in companies such as the electric car company Tesla and the ride-hailing app Uber.

Read more …

Thank you Barack and Hillary.

Libya Refuses To Take Migrants Rejected By Italy (AFP)

Libya has refused to take in a group of 177 migrants stranded on an Italian coastguard boat off a Sicilian port after Rome insisted they would not be allowed to disembark. Italy’s Interior Minister Matteo Salvini threatened earlier this week to return the migrants to the North African country unless other European governments offered to take some of them in. But Mohamed Siala, foreign minister of the UN-backed Libyan unity government, said that “Libya does not accept this unjust and illegal measure because it already has more than 700,000 migrants” on its territory.

In a statement late Wednesday, he called on the international community “to put pressure on the countries of departure to repatriate their nationals”, adding that Libya had only served as a transit point. The Italian boat “Diciotti” arrived on Monday night off the Sicilian port of Catania. Plunged into chaos following the fall and killing of longtime dictator Moamer Kadhafi in a 2011 NATO-backed uprising, Libya has become a prime transit point for sub-Saharan African migrants making dangerous clandestine bids to reach Europe. The country takes in migrants whose boats are intercepted in its waters by the Libyan coastguard, but it has repeatedly rejected those rescued by foreign navies or by humanitarian organisations off its coast.

Read more …

Who’s going to blame them?

Italy Threatens To Stop EU Funding Unless Other States Accept Refugees (ZH)

On Thursday, out of the blue, Italy’s Deputy Prime Minister Luigi Di Maio threatened to stop financial contributions to the European Union next year unless other states agreed to take in migrants being held on a coastguard ship in Sicily. The Italian’s ultimatum comes less two months after Europe triumphantly announced a “vaguely worded” deal on how to resolve the continent’s migrant influx. “If tomorrow at the meeting of the European Commission nothing is decided on the redistribution of migrants and the Diciotti ship, I and the entire Five Star Movement are not willing to give 20 billion to the European Union,” Di Maio said in a video posted on his Facebook page.

He echoed statements by Interior Minister and Deputy Premier Matteo Salvini, who has refused to allow 177 migrants to leave the Italian coastguard ship Ubaldo Diciotti, which is docked in the Sicilian port of Catania. While Italian prosecutors opened an investigation into the detention of the migrants and 29 children were allowed to disembark, Salvini still won’t allow the rest of the people to come ashore and has attacked the EU for its “cowardly silence.” Salvini described those aboard as “illegal immigrants,” and said they won’t be allowed to step foot on Italian soil. Instead, he insisted fellow European Union nations take in some of the asylum-seekers. “Italy’s no longer Europe’s refugee camp,” he tweeted. “Upon my authorization, no one is disembarking from the Diciotti.”

Salvini, who is also interior minister, was defiant in the face of a criminal probe into possible kidnapping charges for forcing the migrants to remain on the vessel. The chief prosecutor from the Agrigento court, Luigi Patronaggio, on Wednesday boarded the Diciotti and said afterwards he had opened a probe against “unknown” persons for holding the migrants against their will. “There’s a court that is investigating whether those illegally on board the ship have been kidnapped,” Salvini said in a radio interview. “I’m not unknown. My name is Matteo Salvini… I’m the Interior Minister and I think it is my duty to defend the security of this country’s borders.”

Read more …

Just liked the graph, don’t want to tell anyone to buy anything.

Inflation Adjusted Gold Is At Historical Lows (von Greyerz)

Gold at $1,220, adjusted for real inflation, is almost as cheap as it was in 1999 at the $250 low. More importantly, inflation adjusted gold is now very near the 300 year low of 1999. So right now gold is again unloved and undervalued and therefore a bargain. On an inflation adjusted basis, the 1980 high of $850 would today be $16,650. Long before we get hyperinflationary gold prices, that $16,600 level should be easily reached. Owning physical gold for wealth protection purposes is the best preserved secret in the West. In this part of the world, virtually nobody holds gold. At the same time, the wise people in the East continue to buy all the gold that is produced annually. China, India, Iran, Turkey, Russia and many more Eastern nations understand history and economics. That is why they are accumulating major gold reserves at these levels.

Read more …

Bayer really didn’t see this coming.

Monsanto Faces A Surge In Lawsuits Following Cancer Ruling (BBC)

American agro-chemicals company Monsanto is facing a surge in lawsuits that may cost its new owners, Bayer, billions in damages. Monsanto manufactures glyphosate-based weedkillers which some believe are carcinogenic. Last month it lost a $289m (£225m) court case that alleged its products Roundup and RangerPro had led to a Californian man’s terminal cancer. Bayer said the number of outstanding cases had risen from 5,200 to 8,000. The German firm’s shares have lost 11% of their value since it lost the case in a California court to groundskeeper Dewayne Johnson, who claimed Monsanto herbicides containing glyphosate, had caused his non-Hodgkins lymphoma.

Bayer shares fell another 1.7% on Thursday. Chief executive Werner Baumann said that when it bought Monsanto, Bayer “could not foresee the scope of the current lawsuits.” The $63bn deal was completed earlier this month. “In the course of the acquisition, we carried out due diligence as is standard practice when taking over a listed company. In doing so, we of course also considered the legal risks,” he said in an interview with Germany’s Handelsblatt newspaper. In a conference call on Thursday, Mr Baumann added: “Our view is that the number is not indicative of the merits of the plaintiffs’ cases”.

Read more …

“..Another program is called “Freedom to Operate.” Its purpose is to eliminate everything that might disrupt sales of their products – laws, scientific articles, they go after everything.”

‘Monsanto’s History Is One Full of Vast Lies’ (Spiegel)

On Aug. 10, lawyer Brent Wisner, 34, scored a landmark verdict on behalf of his client, cancer patient Dewayne Johnson. A court in San Francisco ruled that Monsanto was guilty of concealing the potential health risks associated with its weed killer glyphosate, which is sold in the United States under the brand name Round Up. The jury ordered the company to pay $289 million in damages to the plaintiff, who had used Round Up at his job as a janitor for a school district. The court said Monsanto should have labeled the product’s possible dangers for consumers. Monsanto, which was recently acquired by German pharmaceuticals giant Bayer, has denied any link between the product and the disease. Wisner spoke to DER SPIEGEL about the case in an interview.

[..] DER SPIEGEL: How much does Monsanto have to do with the fact that a verdict was reached only now? Wisner: A lot! Monsanto has an internal program called “Let Nothing Go.” The aim of this program is to attack scientists who are critical of Monsanto products. They go after people directly and discredit them. They also pay others to do so. DER SPIEGEL: Are there other such PR strategies? Wisner: Another program is called “Freedom to Operate.” Its purpose is to eliminate everything that might disrupt sales of their products – laws, scientific articles, they go after everything. As part of that effort, they also engage lobbyists – scientists who Monsanto pays for their opportunism. Such programs reflect a corporate culture that shows no interest whatsoever in public health, only in profits.

DER SPIEGEL: Monsanto continues to dispute that it tried to influence scientific research. What was the critical factor for jurors in reaching the verdict? Wisner: I believe it was the scientific findings themselves. The 12 jurors were not lightweights after all. There was a molecular biologist, an environmental engineer, a lawyer. Some colleagues told me: “Be careful Brent, so much intelligence can be an impediment.” But I was certain that the arguments in the critical studies, parts of which were suppressed, were the strongest evidence we had.

Read more …

Sad and joyful. Why Korea’s really want peace.

After 70 Years, Korean Father, Son Share A Drink For First, Last? Time (H.)

As soon as 91-year-old Lee Gi-sun got up on the morning of Aug. 22, he pulled out one of the bottles of soju, a potent distilled liquor, that he’d stashed in the bottom of his suitcase. He’d brought this precious liquor to accompany a ceremony for which he’d waited his entire life – a daytime drink with his son! At 10 am on Aug. 22, the final day of the three-day reunion for families divided by the Korean War, family members met in the banquet hall on the second floor of the Mt. Kumgang Hotel to say their goodbyes. A few hours hence, they would return to their respective homes in South and North Korea, with no guarantee of seeing each other again. The father filled a cup with the soju he’d brought.

After taking a sip himself, he silently passed the cup to his son. Gi-sun’s North Korean son, Gang-son (69 years old himself), was also silent as he took the cup and brought it to his lips. This was the first drink shared by the white-haired father and son, and it very well might be their last. It was a heartrending moment when the father’s lifelong dream came true. “We were separated when he was two years old. Two years old,” the father said, letting the last phrase linger in the air. In Jan. 1951, he and his older brother had left their families behind in their home of Yonbaek County, Hwanghae Province, fleeing south with UN troops beaten back by the Chinese onslaught. Gi-sun had assumed he would soon be able to return.

Read more …

Aug 172018
 
 August 17, 2018  Posted by at 9:37 am Finance Tagged with: , , , , , , , , , , ,  


Pablo Picasso Brick factory at Tortosa 1909

 

Emerging Markets and US Treasuries (Albert Edwards)
Asia the Next Source of Downside Systemic Risk for Financial Markets (WS)
Trump Says US ‘Will Pay Nothing’ To Turkey For Release Of Detained Pastor (R.)
Lira Rallies As Turkey Pledges Spending Cuts To Avoid IMF Bailout (G.)
Turkish Tremors Will Cause Shocks In Britain (Times)
$125,000: The Pension Debt Each Chicago Household Is On The Hook For (WP)
Russian Oil Industry Would Weather US ‘Bill From Hell’ (R.)
NATO Repeats the Great Mistake of the Warsaw Pact (SCF)
Italy’s NATO Racket… A Bridge Too Far (SCF)
Google Staff Tell Bosses China Censorship Is “Moral And Ethical” Crisis (IC)
Jury in Paul Manafort’s Case Asks Judge to Redefine ‘Reasonable Doubt’ (BBG)

 

 

From an email sent to Mish.

Emerging Markets and US Treasuries (Albert Edwards)

Turkey has discovered that high and rising foreign-denominated debt never sits well with a huge current account deficit and a reluctance to raise interest rates. The problem though is that this is not about Turkey or even EM. It is as always, about the Fed. When the most important person in the free world starts lobbing macro hand-grenades in an effort to drain the swamp, the financial markets will always eventually react badly. No, I am not talking about President Trump with his tweets about imposing tariffs on Turkey. I am actually talking about Fed Chair Jerome Powell draining the global liquidity swamp.

Make no mistake, whatever the macro-idiosyncrasies of Turkey, the key to the current turmoil that is spreading into EM generally, is Fed tightening and the strong dollar. As we have repeated ad infinitum, since 1950 there have been 13 Fed tightening cycles, 10 of them ended in recession and the others usually saw the EM blow up – such as the 1994 collapse in the Mexican peso. The Fed always tightens until something breaks. It is usually its own economy, but sometimes it is the EM’s. And when the liquidity tide goes out we always find out who is swimming naked. If it hadn’t been Turkey it would eventually have been someone else.

To be sure the unfolding EM crisis has been building for many years. And just as investors ignored the naysayers in the run-up to the Global Financial Crisis (GFC), they have ignored the IMF and BIS, who have been cautioning for some years about the explosive build-up in EM debt and especially dollar-denominated debt. According to the BIS, total dollar-denominated debt outside the U.S. reached $10.7 trillion in the first quarter of 2017, and about a third of this debt is owed by the EM nonfinancial sector. EM specialists, the Institute of International Finance (IIF), have also warned about this build-up in EM foreign-denominated debt. They too note that the EM corporate sector has been leading the explosion of debt, with Turkey standing out for the increase in its exposure since the GFC. Turkey has never managed to escape membership of ‘The Fragile Five’ EM country club.

 

Read more …

Dollar shortages.

Asia the Next Source of Downside Systemic Risk for Financial Markets (WS)

“Except for an expected short-term reprieve, we expect these tighter USD conditions to remain in place for the rest of the year,” the strategists write. “That is unless policy makers react soon to stimulate financial markets with liquidity.” “Southeast Asia stands out again as in 1997/8, with a large amount of USD denominated debt outstanding,” the write. “The only difference is then Asia had fixed exchange rates and now they are floating! We believe Asia will be the next source of downside systemic risk for financial markets.” The chart below shows dollar-denominated debt in the EMs, in trillion dollars. This does not include euro-denominated debt which plays a large role in Turkey. The fat gray area represents Asia without China:

Asia’s dollar-denominated debt, relative to its foreign exchange reserves and exports, has risen significantly since 2009, they note. The chart below shows the ratio between dollar-denominated debt and foreign exchange reserves in Asia, with China (green line) and without China (black dotted line). Values over 50% mean that there is more dollar-debt than foreign exchange reserves:

“This leaves these nations susceptible to a shortage in USDs,” they write: “Notably, the Asian nations that have amassed record amounts of USD debt are also home to the largest technology companies i.e. Tencent (China), Alibaba (China), TSNC (Taiwan), Samsung (South Korea). The tech sector is now 28% of the MSCI EM index. The rally in the US Dollar, dented global growth prospects, credit growth in China slowing down and escalating political tensions from the US leaves these nations very exposed to a shortage in USDs.”

Read more …

More sanctions. Yesterday’s relief is gone.

Trump Says US ‘Will Pay Nothing’ To Turkey For Release Of Detained Pastor (R.)

U.S. President Donald Trump said on Thursday the United States “will pay nothing” to Turkey for the release of detained American pastor Andrew Brunson, who he called “a great patriot hostage.” “We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!” Trump said on Twitter. The U.S. warned Turkey on Thursday to expect more economic sanctions unless it hands over Brunson, as relations between the two countries took a further turn for the worse. U.S. Treasury Secretary Steven Mnuchin assured Trump at a Cabinet meeting that sanctions were ready to be put in place if Brunson was not freed. “We have more that we are planning to do if they don’t release him quickly,” Mnuchin said during the meeting.

The United States and Turkey have exchanged tit-for-tat tariffs in an escalating attempt by Trump to induce Turkish President Tayyip Erdogan into giving up Brunson, who denies charges that he was involved in a coup attempt against Erdogan two years ago. “They have not proven to be a good friend,” Trump said of Turkey during the Cabinet meeting. “They have a great Christian pastor there. He’s an innocent man.” Trump’s national security adviser, John Bolton, had issued a blunt warning to Turkish ambassador Serdar Kilic when he met him on Monday at the White House, an administration official said on Thursday. When Kilic sought to tie conditions to Brunson’s release, Bolton waved them aside and said there would be no negotiations.

Read more …

But that was yesterday. Today, the lira’s lost 4% already.

Lira Rallies As Turkey Pledges Spending Cuts To Avoid IMF Bailout (G.)

Turkey’s finance minister sparked a recovery in the lira after he addressed thousands of international investors, pledging to protect beleaguered local banks and cut public spending to prevent the country defaulting on its loans. Berat Albayrak, who has faced criticism for failing to tackle the country’s growing financial crisis, spoke to around 6,000 investors on a conference call to rebuff concerns that a funding squeeze on Turkey’s banks and a damaging trade war with the US would force him to seek a rescue bailout from the IMF. Albayrak, who was appointed as finance minister last month by his father-in-law, president Recep Tayyip Erdogan, said Turkey will not hesitate to provide support to the banking sector, which was capable of accessing funds itself during the current turmoil in financial markets.

He added that deposit withdrawals by panicked investors remained low and manageable. “We are experiencing unfavourable conditions but we will overcome,” he said. The Turkish lira was up 4% against the US dollar following the conference call and after reassuring words from the French president, Emmanuel Macron, and Germany’s chancellor, Angela Merkel, that Turkey’s stability was important. However, Albayrak’s attempt to shore up confidence in the lira was quickly undermined by the US Treasury secretary, Steve Mnuchin, who reportedly told president Donald Trump in a cabinet meeting that he was preparing further sanctions against Ankara. The lira slipped back to settle at just 1% up on the previous day.

Read more …

It’s not Spain or Italy. It’s Britain.

Turkish Tremors Will Cause Shocks In Britain (Times)

There are many strange things about Recep Tayyip Erdogan, but one of the oddest is his pet theory about interest rates. The Turkish president believes that high borrowing costs produce high inflation. “The interest rate is the cause and inflation is the result,” he said a few months ago. “The lower the interest rate is, the lower inflation will be.” No, you didn’t misread that. In defiance of economic orthodoxy (not to mention centuries of experience) which says that high interest rates tend to reduce inflation, President Erdogan believes the opposite. As one economist put it, this is a little like believing that umbrellas cause rain.

The Turkish president’s eccentric attitude towards monetary policy is not the only reason his country is now facing an economic crisis, but it is at least part of the explanation. Over the past decade or so, Turkey became one of the great bubbles of the modern era. Housing bubble? Check. Debt binge? Check. Yawning current account deficit? Check. Runaway inflation? Check. These traits alone qualified the Turkish economy for crisis candidacy some time ago. But as always, saying a country is due a crunch is far simpler than predicting when and how. And Turkey may well have muddled through a little longer were it not for four critical ingredients.

[..] Who is most exposed to this looming crisis? Conventional wisdom says Spain and Italy, whose banks have Turkish subsidiaries. However, this slightly misses the point, since much of that lending is in lira. Those banks should be able to survive even the loss of their stakes. The real question is: who has been lending Turkish companies all this foreign exchange debt? That brings us to the sting in the tail. For when you dig through Turkish treasury data, as the Deutsche Bank economist Oliver Harvey has, you discover that the country that lent most to Turkey, both short and long term, was the UK. That’s right: Britain, or more specifically the City of London, is by far the most exposed to a collapse in the Turkish economy.

Read more …

Creative accounting 101.

$125,000: The Pension Debt Each Chicago Household Is On The Hook For (WP)

Chicagoans have no idea how much pension debt Illinois politicians have saddled them with. Officially, Windy City residents are on the hook for $70 billion in total pension shortfalls from the city and its sister governments plus a share of Cook County and state pensions. But listen to Moody’s Investors Service, the rating agency that’s been most critical of Chicago’s finances, and you’ll get a different picture. Moody’s pegs the total pension debt burden for Chicagoans at $130 billion, nearly double the official numbers. (Yes, by chance the number is eerily similar to the official shortfall of $129 billion facing the five state-run pension funds. But don’t confuse the two.)

That’s scary news for Windy City residents. Barring real reforms, concessions from the unions or bankruptcy, Chicagoans can expect to be hit with whatever series of tax hikes politicians will try to enact to reduce that debt. That $130 billion is the total Moody’s calculates when adding up the direct pension debt owed by the city government, Chicago Public Schools, the park district and Chicago’s share of various Cook County governments and the five state pension funds. Moody’s takes a more realistic approach to investment assumptions than the city and county governments take.

Read more …

Russia’s had time to prepare.

Russian Oil Industry Would Weather US ‘Bill From Hell’ (R.)

Stiff new U.S. sanctions against Russia would only have a limited impact on its oil industry because it has drastically reduced its reliance on Western funding and foreign partnerships and is lessening its dependence on imported technology. Western sanctions imposed in 2014 over Russia’s annexation of Crimea have already made it extremely hard for many state oil firms such as Rosneft to borrow abroad or use Western technology to develop shale, offshore and Arctic deposits. While those measures have slowed down a number of challenging oil projects, they have done little to halt the Russian industry’s growth with production near a record high of 11.2 million barrels per day in July – and set to climb further.

Since 2014, the Russian oil industry has effectively halted borrowing from Western institutions, instead relying on its own cash flow and lending from state-owned banks while developing technology to replace services once supplied by Western firms. Analysts say this is partly why Russian oil stocks have been relatively unscathed since U.S. senators introduced legislation to impose new sanctions on Russia over its interference in U.S. elections and its activities in Syria and Ukraine. The measures introduced on Aug. 2, dubbed by the senators as the “bill from hell”, include potential curbs on the operations of state-owned Russian banks, restrictions on holding Russian sovereign debt as well as measures against Western involvement in Russian oil and gas projects.

Read more …

Too expensive.

NATO Repeats the Great Mistake of the Warsaw Pact (SCF)

Through the 1990s, during the terms of US President Bill Clinton, NATO relentlessly and inexorably expanded through Central Europe. Today, the expansion of that alliance eastward – encircling Russia with fiercely Russo-phobic regimes in one tiny country after another and in Ukraine, which is not tiny at all – continues. This NATO expansion – which the legendary George Kennan presciently warned against in vain – continues to drive the world the closer towards the threat of thermonuclear war. Far from bringing the United States and the Western NATO allies increased security, it strips them of the certainty of the peace and security they would enjoy if they instead sought a sincere, constructive and above all stable relationship with Russia.

It is argued that the addition of the old Warsaw Pact member states of Central Europe to NATO has dramatically strengthened NATO and gravely weakened Russia. This has been a universally-accepted assumption in the United States and throughout the West for the past quarter century. Yet it simply is not true. In reality, the United States and its Western European allies are now discovering the hard way the same lesson that drained and exhausted the Soviet Union from the creation of the Warsaw Pact in 1955 to its dissolution 36 years later. The tier of Central European nations has always lacked the coherence, the industrial base and the combined economic infrastructure to generate significant industrial, financial or most of all strategic and military power.

[..] When nations such as France, Germany, the Soviet Union or the United States are seen as rising powers in the world, the small countries of Central Europe always hasten to ally themselves accordingly. They therefore adopt and discard Ottoman Islamic imperialism. Austrian Christian imperialism, democracy, Nazism, Communism and again democracy as easily as putting on or off different costumes at a fancy dress ball in Vienna or Budapest. As Russia rises once again in global standing and national power, supported by its genuinely powerful allies China, India and Pakistan in the Shanghai Cooperation Organization, the nations of Central Europe can be anticipated to reorient their own loyalties accordingly once again.

Read more …

Case in point: the cost of NATO and Russiagate.

Italy’s NATO Racket… A Bridge Too Far (SCF)

What should be a matter of urgent public demand is why Italy is increasing its national spending on military upgrades and procurements instead of civilian amenities. As with all European members of the NATO alliance, Italy is being pressured by the United States to ramp up its military expenditure. US President Donald Trump has made the NATO budget a priority, haranguing European states to increase their military spending to a level of 2 per cent of GDP. Trump has even since doubled that figure to 4 per cent. Washington’s demand on European allies predates Trump. At a NATO summit in 2015, when Barack Obama was president, all members of the military alliance then acceded to US pressure for greater allocation of budgets to hit the 2 per cent target.

The alleged threat of Russian aggression has been cited over and over as the main reason for boosting NATO. Figures show that Italy, as with other European countries, has sharply increased its annual military spending every year since the 2015 summit. The upward trend reverses a decade-long decline. Currently, Italy spends about $28 billion annually on military. That equates to only about 1.15 per cent of GDP, way below the US-demanded target of 2 per cent of GDP. But the disturbing thing is that Italy’s defense minister Elisabetta Trenta reportedly gave assurances to Trump’s national security advisor John Bolton that her government was committed to hitting its NATO target in the coming years. On current figures that translates roughly into a doubling of Italy’s annual military budget. Meanwhile, the Italian public have had to endure years of economic austerity from cutbacks in social spending and civilian infrastructure.

Read more …

But the company’s become a secret service.

Google Staff Tell Bosses China Censorship Is “Moral And Ethical” Crisis (IC)

Google employees are demanding answers from the company’s leadership amid growing internal protests over plans to launch a censored search engine in China. Staff inside the internet giant’s offices have agreed that the censorship project raises “urgent moral and ethical issues” and have circulated a letter saying so, calling on bosses to disclose more about the company’s work in China, which they say is shrouded in too much secrecy, according to three sources with knowledge of the matter. The internal furor began after The Intercept earlier this month revealed details about the censored search engine, which would remove content that China’s authoritarian government views as sensitive, such as information about political dissidents, free speech, democracy, human rights, and peaceful protest.

It would “blacklist sensitive queries” so that “no results will be shown” at all when people enter certain words or phrases, leaked Google documents disclosed. The search platform is to be launched via an Android app, pending approval from Chinese officials. The censorship plan – code-named Dragonfly – was not widely known within Google. Prior to its public exposure, only a few hundred of Google’s 88,000 employees had been briefed about the project – around 0.35 percent of the total workforce. When the news spread through the company’s offices across the world, many employees expressed anger and confusion. Now, a letter has been circulated among staff calling for Google’s leadership to recognize that there is a “code yellow” situation – a kind of internal alert that signifies a crisis is unfolding.

The letter suggests that the Dragonfly initiative violates an internal Google artificial intelligence ethical code, which says that the company will not build or deploy technologies “whose purpose contravenes widely accepted principles of international law and human rights.” The letter says: “Currently we do not have the information required to make ethically-informed decisions about our work, our projects, and our employment. That the decision to build Dragonfly was made in secret, and progressed with the [artificial intelligence] Principles in place, makes clear that the Principles alone are not enough. We urgently need more transparency, a seat at the table, and a commitment to clear and open processes: Google employees need to know what we’re building.”

Read more …

Don’t be surprised if he’s aquitted.

Jury in Paul Manafort’s Case Asks Judge to Redefine ‘Reasonable Doubt’ (BBG)

A Virginia jury deliberating the fraud charges against President Donald Trump’s former campaign manager Paul Manafort sent a note with four questions to the judge in the case. Near the end of the first day of deliberations on Thursday, the jury asked whether a report of foreign bank and financial accounts, known as an FBAR, needed to be filed by a person with less than a 50 percent ownership. Manafort is charged with four counts of failing to file FBARs for offshore companies. The jury also asked about the definition of a shelf company.

U.S. District Judge T.S. Ellis III replied that the jurors should rely on their collective memory. The jury also requested that the judge redefine “reasonable doubt.” Ellis replied that the government wasn’t required to prove its case beyond “all doubt,” just to the extent that a person would consider reasonable. Finally, the jury asked if the exhibit list could be amended to include the indictment. The jury was excused for the day and is to return Friday to continue deliberations.

Read more …

Aug 142018
 
 August 14, 2018  Posted by at 7:37 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh Vincent’s House in Arles (The Yellow House) 1888

 

Turkey Will Be The Largest EM Default Of All Time (Russell Napier)
‘What Happens In Turkey Won’t Stay In Turkey’ (CNBC)
Italy Expects Financial Market Attack In August (R.)
The Price of Cheap Dollar/Euro Debts: Local Currencies Come Unglued (WS)
Indian Rupee Drops To All-Time Low Against Dollar Over Turkish Crisis (Ind.)
Close Up and Long Shot (Kunstler)
Musk: “I Am Working With Silver Lake, Goldman On Taking Tesla Private” (ZH)
The Law As Weapon (Paul Craig Roberts)
Russia-Gate One Year After VIPS Showed a Leak, Not a Hack (CN)
Greek Fishermen Accuse Turkish Boats of Opening Fire off Leros Island (GR)
Turkish FM Accuses Greece Of Escalating Tensions In Aegean (K.)
Palm Oil A New Threat To Africa’s Primates (BBC)
Scotland’s Mountain Hare Population Is At Just 1% Of 1950s Level (G.)

 

 

Napier thinks Turkey will default on $500 billion in debt by imposing capital controls.

Turkey Will Be The Largest EM Default Of All Time (Russell Napier)

Regular readers of the Fortnightly will know that The Solid Ground has long forecast a major debt default in Turkey. More specifically, the forecast remains that the country will impose capital controls enforcing a near total loss of US$500bn of credit assets held by the global financial system. That is a large financial hole in a still highly leveraged system. That scale of loss will surpass the scale of loss suffered by the creditors of Bear Stearns and while Lehman’s did have liabilities of US$619bn, it has paid more than US$100bn to its unsecured creditors alone since its bankruptcy. It is the nature of EM lending that there is little in the way of liquid assets to realize; they are predominantly denominated in a currency different from the liability, and also title has to be pursued through the local legal system.

Turkey will almost certainly be the largest EM default of all time, should it resort to capital controls as your analyst expects, but it could also be the largest bankruptcy of all time given the difficulty of its creditors in recovering any assets. So the events of last Friday represent only the end of the beginning for Turkey. The true nature of the scale of its default and the global impacts of that default are very much still to come. Strong form capital controls produce a de facto debt moratorium, and very rapidly investors realize just how little their credit assets are worth. A de jure debt moratorium at the outbreak of The Great War in 1914 bankrupted almost the entire European banking system – it was saved by mass government intervention.

While the imposition of capital controls in recent years has hit selected investors hard, in Iceland, Cyprus, Greece and key emerging markets, there has been nothing of this size and it is to be fully borne by financial institutions who believe they hold not just valuable credit assets but actually liquid credit assets! The loss of hundreds of billions of assets recently considered liquid by global financial institutions, through the de facto debt moratorium of capital controls, will be a huge shock to the global financial system.

Read more …

Turkey=corporate debt. How do you bail that out?

‘What Happens In Turkey Won’t Stay In Turkey’ (CNBC)

The markets have seen much of this movie before: a heavily indebted country finds itself in crisis, the currency plunges and talk quickly turns to contagion and, ultimately, an expensive globally financed bailout. In Turkey’s case, the plot line is a little different, however. Where the other debt crises generally involved government borrowing, Turkey’s is mostly a corporate story, making the bailout mechanics more complicated and thus raising fears that what started in a small country with only marginal systemic importance on its face could quickly escalate. “How can a country where the entire market cap of Turkish equities traded on the Istanbul Stock exchange is less than the market cap of Netflix wreak such havoc? It is all about the direct and indirect impacts,” wrote Katie Nixon, chief investment officer for wealth management at Northern Trust.

“There are certain emerging market countries with relatively weak currencies and a heavy reliance on external (predominately dollar based) financing. The fear is that what happens in Turkey won’t stay in Turkey.” Nixon said that while the crisis does not appear to have major global implications, a strong U.S. dollar coupled with weakening emerging market currencies could fuel the problem. To date, the debt emergencies in Greece, Cyprus, Italy and other euro zone countries — not to mention Argentina, Malaysia and perhaps Pakistan before long — have had limited global spillovers. Several required bailout loans from the IMF, an organization that gets 17.5 percent of its funding from the U.S.

Read more …

Low market volumes in summer make an attack easier to execute.

Italy Expects Financial Market Attack In August (R.)

Speculators will probably attack Italian financial markets this month but the country has the resources to defend itself, a senior and highly influential government official said in a newspaper interview on Sunday. Giancarlo Giorgetti, undersecretary in the prime minister’s office and a leading light in the far-right League party, said thin summer trading volumes helped fuel market assaults. “I expect an attack (in August),” Giorgetti told Libero. “The markets are populated by hungry speculative funds that choose their prey and pounce … In the summer the market volumes are small, you can lay the groundwork for aggressive initiatives against countries. Look at Turkey.”

Turkish markets slumped last week on growing concerns over the country’s economy and political leadership. Italian assets have also come under strain in recent weeks, with investors concerned that the governing coalition, made up of the League and the anti-establishment 5-Star Movement, might tear up EU fiscal rules to pay for big-spending budget plans. “If the (market) storm comes, we will open our umbrella. Italy is a big country and has the resources to react, thanks in part to its large amount of private savings,” said Giorgetti, who is seen as a moderating force within the League. Quoting a report by bankers’ federation Fabi, Italian newspapers said on Sunday household savings in Italy totaled some 4.4 trillion euros against 2.2 trillion in 1998.

Read more …

The reason for all the trouble? Cheap central bank credit.

The Price of Cheap Dollar/Euro Debts: Local Currencies Come Unglued (WS)

Turkey has its own sets of problems and isn’t even seriously trying to prop up its currency. Now global bondholders are clamoring for the IMF to step in and calm the waters around the currency crisis in Turkey that has turned into a debt crisis that is now dragging some European banks through the dirt. Those global bondholders want the IMF to lend Turkey money to bail out Turkey’s bondholders to put an end to the turmoil and torture in emerging markets bonds that were so hot just eight months ago. In return for an IMF bailout of its bondholders, Turkey would have to follow the IMF’s program, slash its expenses, including social expenses, and curtail its crazy borrowing binge. But no go.

Instead of trying to address the problem, or beg the IMF for a bailout, the Turkish government has heaped scorn on the West. In return, the Turkish lira plunged another 8% against the dollar on Monday, to 7.04 lira to the dollar. Seen the other way around, as the chart below shows, the value of 1 lira has now dropped to 14.4 US cents, from 25 cents just four months ago, which, if nothing else, tells people to go figure out how to invest in gold and silver. Monday’s drop brings the grand collapse over the past three days to 24%, and over the past four months to 43%.

After nine years of experimental monetary policies in the US, Europe, Japan, and elsewhere, the Emerging Market economies have become addicted to this debt borrowed in a hard currency that they cannot inflate away. In Turkey, this cheap debt – cheap even for junk-rated issuers such as the government of Turkey – funded a construction boom in the property sector. This construction boom has been crucial to the economy – which is why the government is trying to ride this bull all the way. Turkey’s inflation is surging. In July, annual inflation reached 16%, the highest since January 2004. Inflation is what ultimately destroys a currency. But it’s not yet 30% as in Argentina, and perhaps the government thinks it still has some leeway.

Read more …

Are you calling New Zealand an emerging market?

Indian Rupee Drops To All-Time Low Against Dollar Over Turkish Crisis (Ind.)

The Indian currency has dropped to an all-time low against the dollar, while the New Zealand dollar has slumped to two-year lows as emerging markets feel the effects of the crisis in Turkey. Investors have instead moved towards safe haven currencies such as the yen, which surged to a six-week high, and the Swiss franc, which jumped close to a one-year high against the euro. The Indian central bank reportedly intervened to prevent a sharp drop in the rupee’s value, however, it did little to stem the decline, and the currency fell to 69.62 rupees per dollar. The New Zealand dollar has also felt the effects of the Turkish crisis, dropping below $0.66 for the first time in two years over the weekend. Meanwhile, the euro fell against the dollar to $1.14, as investors try to work out how badly European banks might be affected by the problems in Turkey, with the Spanish, French, and Italian in particular all hugely exposed to Turkish debt.

Read more …

“President Trump’s tariff monkeyshines are shoving the Chinese banking system up against a wall of utterly irresolvable insolvency problems..”

Close Up and Long Shot (Kunstler)

Who cares about the currency of a second-rate player in the global economy? A lot of SIFIs (“systemically important financial institutions”) otherwise known as Too-Big-To-Fail banks. That’s who. Deutsche Bank’s stock dropped over 6 percent when the Turkish Lira tanked on Friday. Turkey’s nickname since the collapse of the Ottoman Empire in the 1920s has been “the sick man of Europe” and Deutsche Bank in the post-2008-crash era is widely regarded as the sick man of SIFI banks. One analyst wag downgraded its status a year ago to “dead bank walking.” Its balance sheet was a Cave of Winds littered with the moldering skeletons of malinvestment.

If the European Central Bank (aka Germany) has to bail out DB, all bets are off for the Euro, which was showing serious signs of distress Friday. And who is going to bail out Turkey? If the IMF is your go-to vehicle, then you mean US taxpayers. Anyway, Turkey’s Lira is only one of several Emerging Market currencies whose hands have been called at the global poker table, where the four-flushers are getting flushed out. The Russian ruble was another one, ostensibly to the delight of America’s Destroy-Russia-at-All-Costs faction. China is also having to play a round of super Three Card Monte with its currency, the yuan.

President Trump’s tariff monkeyshines are shoving the Chinese banking system up against a wall of utterly irresolvable insolvency problems and threatening the stability of Xi Jinping’s one-party government. The Chinese export trade is at the heart of the world’s current economic arrangements. If you pull it out of the globalism machine, the machine will stop. It is going to stop one way or another anyway, but the gathering crisis of autumn 2018 will hasten that. All of this is happening because the whole world can’t handle the debts it has racked up, and the whole world knows it. And knowing it, they also know that their debt-based currencies are worthless. And knowing that, they also know that absolutely everybody else is broke and unable to meet their obligations. That is some dangerous knowledge.

Read more …

Will Musk get away with not following the rules?

Musk: “I Am Working With Silver Lake, Goldman On Taking Tesla Private” (ZH)

Update 2: And here things get bizarre because according to Reuters, Silver Lake is not currently discussing participating as an investor in Elon Musk’s proposed take-private deal for Tesla, citing an unidentified person. Reuters also adds that Silver Lake is offering assistance to Musk without compensation and hasn’t been hired as financial adviser in an official capacity.

Update: in a tweet sent out on Monday evening, Musk said the he was working with Silver Lake and Goldman Sachs as financial advisors, as well as Wachtell Lipton as legal advisors, on his “proposal” to take Tesla private.

It was not immediately clear why Silver Lake, an investor, is serving as a financial advisor, nor was it clear why Musk defined the “going private” transaction as merely a proposal when he previously classified it as a firm deal, with “secured funding.” The tweet followed a blog post by Musk in which he finally offered more details on his tweet that he had “funding secured” to take Tesla Inc. private, however as Bloomberg echoed our skepticism from earlier (see below) , “it’s unlikely to get U.S. regulators off his back.” Musk’s elaboration doesn’t wash away the investor confusion he triggered a week ago by failing to provide evidence that he had financing. Without more information, investors were left guessing at how far along negotiations on a bid had progressed.

Musk’s fresh disclosure might even help the Securities and Exchange Commission show that his initial tweet was misleading, lawyers said. Bloomberg quoted Keith Higgins, a Ropes & Gray lawyer who said that “a cautious lawyer would have said you shouldn’t have said ‘funding secured’ unless you had a commitment letter,” which Musk clearly did not have, and certainly not from the Saudi Wealth Fund which as Musk admitted, needed to do more due diligence and analysis and had yet to conduct an “internal review process for obtaining approvals.” John Coffee, director of the Center on Corporate Governance at Columbia Law School, agreed. He said Monday’s post indicates Musk was being overly bullish last week, potentially increasing his vulnerability in any SEC investigation. “He clearly had not secured funding at the time of his tweet – he concedes that obliquely,” Coffee said.

Read more …

How Mueller arrived at Manafort.

The Law As Weapon (Paul Craig Roberts)

Robert Mueller is supposed to be investigating Russiagate, which has been shown to be a hoax concocted by former CIA director John Brennan, former FBI director James Comey, and current deputy Attorney General Rod Rosenstein. As Russiagate is a hoax, Mueller has not been able to produce a shred of evidence of the alleged Trump/Putin plot to hack Hillary’s emails and influence the last presidential election. With his investigation unable to produce any evidence of the alleged Russiagate, Mueller concluded that he had to direct attention away from the failed hoax by bringing some sort of case against someone, knowing that the incompetent and corrupt US media and insouciant public would assume that the case had something to do with Russiagate.

Mueller chose Paul Manafort as a target, hoping that faced with fighting false charges, Manafort would make a deal and make up some lies about Trump and Putin in exchange for the case against him being dropped. But Manafort stood his ground, forcing Mueller to go forward with a false case. Manafort’s career is involved with Republican political campaigns. He is charged with such crimes as paying for NY Yankee baseball tickets with offshore funds not declared to tax authorities and with attempting to get bank loans on the basis of misrepresentation of his financial condition. In the prosecutors’ case, Manafort doesn’t have to have succeeded in getting a loan based on financial misrepresentation, only to be guilty of trying.

Two of the people testifying against him have been paid off with dropped charges. Mueller’s investigation is restricted to Russiagate. In other words, Mueller has no mandate to investigate or bring charges unrelated to Russiagate. In my opinion, Muller gets away with this only because the deputy Attorney General is in on the Russiagate plot against Trump. Mueller and Rosenstein know that they can count on the presstitutes to continue to deceive the public by presenting the Manafort trial as part of Russiagate.

Read more …

But people like Mueller still claim a hack, because otherwise they can’t involve Russia.

Russia-Gate One Year After VIPS Showed a Leak, Not a Hack (CN)

A year has passed since highly credentialed intelligence professionals produced the first hard evidence that allegations of mail theft and other crimes attributed to Russia rested on purposeful falsification and subterfuge. The initial reaction to these revelations—a firestorm of frantic denial—augured ill, and the time since has fulfilled one’s worst expectations. One year later we live within an institutionalized proscription of proven reality. Our discourse consists of a series of fence posts and taboos. By any detached measure, this lands us in deep, serious trouble. The sprawl of what we call “Russia-gate” now brings our republic and its institutions to a moment of great peril—the gravest since the McCarthy years and possibly since the Civil War. No, I do not consider this hyperbole.

Much has happened since Veteran Intelligence Professionals for Sanity published its report on intrusions into the Democratic Party’s mail servers on Consortium News on July 24 last year. Parts of the intelligence apparatus—by no means all or even most of it—have issued official “assessments” of Russian culpability. Media have produced countless multi-part “investigations,” “special reports,” and what-have-yous that amount to an orgy of faulty syllogisms. Robert Mueller’s special investigation has issued two sets of indictments that, on scrutiny, prove as wanting in evidence as the notoriously flimsy intelligence “assessment” of January 6, 2017. Indictments are not evidence and do not need to contain evidence. That is supposed to come out at trial, which is very unlikely to ever happen.

Nevertheless, the corporate media has treated the indictments as convictions. Numerous sets of sanctions against Russia, individual Russians, and Russian entities have been imposed on the basis of this great conjuring of assumption and presumption. The latest came last week, when the Trump administration announced measures in response to the alleged attempt to murder Sergei and Yulia Skripal, a former double agent and his daughter, in England last March. No evidence proving responsibility in the Skripal case has yet been produced. This amounts to our new standard. It prompted a reader with whom I am in regular contact to ask, “How far will we allow our government to escalate against others without proof of anything?” This is a very good question.

Read more …

I hinted at this in my article Sunday. Many Greek islands are off the Turkish coast, as per the 1923 Lausanne Treaty. If Erdogan wants to push nationalism -and he does-, this may be his best bet. In essence, the Treaty finally ended the Ottoman Empire, and a lot more territory was lost, but this part is what Turks will be receptive to. One other piece on the Treaty: Turkey ceded all claims to Cyprus. We know how that fared.

Greek Fishermen Accuse Turkish Boats of Opening Fire off Leros Island (GR)

Greek fishermen have reported that they were fired upon by Turkish fishing boats near Kalapodi islet, 300 meters off the coast of Leros island. Two Greek seamen, owners of fishing boats, spoke to Alpha television saying that the Turkish boats were inside Greece’s territorial waters on Sunday when their crews shot at them. They also said that, since July, Turkish fishing boats have repeatedly intruded upon Greek waters to fish in the area. The Greek fishermen said that usually they call the coast guard upon seeing the Turkish boats; the intruders are forced to exit Greek waters upon the arrival of coast guard ships. This time, however, Leros fisherman Kostas Tsiftis told Alpha, the crew of the Turkish boat fired gunshots at them. He also said that the gunfire was from an automatic weapon because some of the shots were repeated.

The Greek fishermen were forced to leave the area and called the Hellenic Coast Guard. Upon the arrival of two coast guard patrol vessels, the Turkish fishing boats moved towards international waters. The fishermen noted that even though they are used to provocative acts by Turkish fishermen, Sunday’s incident was unprecedented. “We heard six shots. The two of them, the third and the fourth, were repeated. The gun was neither a hunting rifle, nor a revolver,” said Lefteris Giannoukas, who was in one of the Greek boats. “The Turkish fishermen were about 200 meters away. This is the first time that the Turks shot at us. Of course we were afraid, we did not expect it,” Tsiftis said. The Greek fisherman noted that this is the first time the Turkish boats came this close.

Read more …

And there you go. For domestic consumption.

Turkish FM Accuses Greece Of Escalating Tensions In Aegean (K.)

Greece is responsible for escalating tension in Aegean and Mediterranean, even though Turkey has always stood by Greeks in their times of difficulty, Turkey’s foreign minister has told his country’s ambassadors. “In their difficult days, we are always at their side. But in the Aegean and the Mediterranean, they are again increasing tension. They do bizarre things, which are not acceptable. Don’t we all want the eastern Mediterranean to become a region of peace and prosperity?” Mevlut Cavusoglu told the 10th conference of Turkish ambassadors. He also called for a new process to resolve the Cyprus issue, blaming the Republic of Cyprus for the impasse. “In order to reach a solution in Cyprus, a new process must be launched. Greek Cypriots do not want to cooperate. And this we saw last year. We saw it in Geneva, we saw it in Crans-Montana,” Tsavousoglou said. And “Greece is no different,” he alleged.

Read more …

It’s devastated Borneo. Now it’s coming for Africa. Next up Amazon?

Palm Oil A New Threat To Africa’s Primates (BBC)

Endangered monkeys and apes will almost certainly face new risks if Africa becomes a big player in the palm oil industry. That is the message of a study looking at how large-scale expansion of the oil crop in Africa might affect the continent’s rich diversity of wildlife. Most areas suitable for growing palm oil are key habitats for primates, according to researchers. They say consumers can help by choosing sustainably-grown palm oil. Ultimately, this may mean paying more for food, cosmetics and cleaning products that contain the oil, or limiting their use. “If we are concerned about the environment, we have to pay for it,” said Serge Wich, professor of primate biology at Liverpool John Moores University, and leader of the study. “In the products that we buy, the cost to the environment has to be incorporated.”

[..] Many companies growing palm oil are looking to expand into Africa. This is a worry for conservationists, as potential plantation sites are in areas of rich biodiversity. They are particularly worried about Africa’s primates. Nearly 200 primate species are found in Africa, many of which are already under threat. Habitat destruction is one of the main reasons why all great apes are at the edge of extinction. The introduction of palm oil plantations to Africa is expected to accelerate the habitat loss. [..] The study found that while oil palm cultivation represents an important source of income for many tropical countries, there are few opportunities for compromise by growing palm oil in areas that are of low importance for primate conservation.

“We found that such areas of compromise are very rare throughout the continent (0.13 million hectares), and that large-scale expansion of oil palm cultivation in Africa will have unavoidable, negative effects on primates,” said the research team. To put that figure into context, 53 million hectares of land will be needed by 2050 to grow palm oil in order to meet global demand.

Read more …

An entire article without naming any numbers, only percentages. How many mountain hares are there in Scotland? 2, 20, 2 million?

Scotland’s Mountain Hare Population Is At Just 1% Of 1950s Level (G.)

The number of mountain hares on moorlands in the eastern Scottish Highlands has fallen to less than 1% of the level recorded more than 60 years ago, according to a long-term study. The Centre for Ecology & Hydrology and the RSPB teamed up to study counts of the animals over several decades on moorland managed for red grouse shooting and nearby mountain land. From 1954 to 1999, the mountain hare population on moorland sites decreased by almost 5% every year, the study found, saying the long-term decline was likely to be due to land use changes such as the loss of grouse moors to conifer forests. However, from 1999 to 2017 the scale of the “severe” moorland declines increased to over 30% every year, leading to counts last year of less than 1% of original levels in 1954, researchers said.

On higher, alpine sites, numbers of mountain hares fluctuated, but increased overall until 2007, and then declined, although not to the lows seen on the moorland sites, the study noted. The report stated: “The study found long-term declines in mountain hare densities on moorland, but not alpine, sites in the core area of UK mountain hare distribution in the eastern Highlands of Scotland. “These moorland declines were faster after 1999 at a time when hare culling by grouse moor managers with the specific aim of tick and LIV [Louping ill virus, which is spread by ticks] control has become more frequent.” Gamekeepers and estate managers claim culls limit the spread of ticks, protect trees and safeguard fragile environments, and a policy of voluntary restraint is in place. However, campaigners believe the practice is cruel and unnecessary.

Read more …

Jul 152018
 
 July 15, 2018  Posted by at 9:31 am Finance Tagged with: , , , , , , , , , ,  


Ezra Stoller Parking garage, New Haven, Connecticut 1963

 

Theresa May: Trump Told Me To Sue The EU (BBC)
Trump Reveals The Queen’s Private Views On Brexit (G.)
Theresa May Warns There Could Be ‘No Brexit At All’ (R.)
The Chequers Brexit Compromise Offers The Worst Of Both Worlds (Mandelson)
Prepare For No-Deal Brexit, German Business Groups Tell Members (R.)
Immigrant Children, Parents Reunited Faster Under New Court Order (R.)
Spain Saves Over 340 Migrants At Sea, One On Truck Tyre (AFP)
450 Migrants Stranded At Sea As Italy, Malta Dig Heels In (AFP)
Mobile Phones Are ‘The Best Spying Device You Can Imagine’ (CNBC)
The Wealthy Are Plotting To Leave Us Behind (Rushkoff)

 

 

Stranger things have happened.

Theresa May: Trump Told Me To Sue The EU (BBC)

Donald Trump told Theresa May she should sue the EU rather than negotiate, she has told the BBC. The US president said on Friday at a joint press conference that he had given her a suggestion but she had found it too “brutal”. Asked by the BBC’s Andrew Marr what it was he had said, she replied: “He told me I should sue the EU – not go into negotiations.” She defended her blueprint for Brexit and urged her critics to back it. She said it would allow the UK to strike trade deals with other nations, end free movement of people and the jurisdiction of the European Court of Justice.

A White Paper published on Thursday fleshed out details of the agreement reached by the cabinet on how post-Brexit trade will work. Before the paper was published, Brexit Secretary David Davis and Foreign Secretary Boris Johnson resigned, saying it would not deliver the Brexit people had voted for in the 2016 EU referendum. Talking about the president’s advice on how to handle the EU, Mrs May said: “Interestingly what the president also said at that press conference was ‘don’t walk away’. “Don’t walk away from those negotiations because then you’ll be stuck. So I want us to be able to sit down to negotiate the best deal for Britain.”

Read more …

Not really.

Trump Reveals The Queen’s Private Views On Brexit (G.)

Trump enthused about his reception at Windsor Castle on Friday, where he and Melania spent 45 minutes with the Queen. “It was a very easy talk,” he said. “You know, it’s hard to talk to somebody if you’re, sort of, if there’s not that something special. You know that better than anybody. Sometimes you’ll have a guest on where no matter what you do it’s not working, right? And then sometimes it’s magic. We had a great, a great feeling.” Morgan asked: “Did you get the feeling she liked you?” “Well I don’t want to speak for her,” Trump said, “but I can tell you I liked her. So usually that helps. But I liked her a lot.”

Asked if he had discussed Brexit, Trump said: “I did. She said it’s a very – and she’s right – it’s a very complex problem. I think nobody had any idea how complex that was going to be … Everyone thought it was going to be, ‘Oh it’s simple, we join or don’t join, or let’s see what happens’.” Trump would not say if the 92-year-old monarch told him what she really thinks of Britain’s attempt to leave the European Union. “Well,” he said, “I can’t talk, you know I’ve heard very strongly from a lot of people, you just don’t talk about that conversation with the Queen, right? You don’t wanna do that … Let me tell you what I can talk about … she is an incredible woman, she is so sharp, she is so beautiful, when I say beautiful – inside and out. That is a beautiful woman.”

Read more …

That’s not a warning, it’s a wish.

Theresa May Warns There Could Be ‘No Brexit At All’ (R.)

Prime Minister Theresa May has warned there may be “no Brexit at all” because of lawmakers’ attempts to undermine her plan to leave the European Union. “My message to the country this weekend is simple: we need to keep our eyes on the prize,” May wrote in the Mail on Sunday newspaper. “If we don’t, we risk ending up with no Brexit at all.” Earlier this week two senior ministers resigned in protest at May’s plans for trade with the EU after Britain leaves the bloc next March. Her blueprint was then criticised in a newspaper interview by U.S. President Donald Trump, a position he backtracked on during a meeting with May on Friday.

May also wrote in the Mail on Sunday article that Britain would take a tough stance in its next round of negotiations with the EU. “Some people have asked whether our Brexit deal is just a starting point from which we will regress,” she said. “Let me be clear. Our Brexit deal is not some long wish-list from which negotiators get to pick and choose. It is a complete plan with a set of outcomes that are non-negotiable.”

Read more …

Damned if you do, doomed if you don’t.

The Chequers Brexit Compromise Offers The Worst Of Both Worlds (Mandelson)

When I first looked at what had been agreed on Brexit at Chequers, I thought the plan would please nobody, but that the public might conclude that these proposals represent the best available. In reality, it’s a spatchcocked, half-in, half-out plan and the business response was frustration: it is better trade news for goods but a disappointing hard Brexit for services. Those who voted to “take back control” were more vitriolic: it is an attempt to remain close to Europe, full of concessions and compromises, and therefore a million miles from what they expected. In Brussels on the day of the white paper’s publication, I met officials on the British and EU sides, as well as the Irish, and found a desire to debate its content seriously.

For the last two years Theresa May has elevated sovereignty over trade and she seemed to be making a timely correction, as well as reaffirming her Irish border commitment. But as I returned home, my earlier doubts resurfaced. This plan neither allows us to receive the economic benefits of being fully inside the EU’s trade perimeter nor will it give us the freedom to market ourselves independently to the rest of the world. It is a halfway house that will leave us hanging by a thread, subject to the EU’s rules – whatever they are in future – with no say in their formulation. As a former EU trade commissioner, I know how complicated trade negotiations are and why they always end up with fewer gains on both sides than either expects.

So I am sympathetic to the government’s desire for something more ambitious and more customised to Britain’s needs. And I understand why the CBI has welcomed this ambition, particularly because it has chosen to prioritise international manufacturing businesses and their supply chains over services. However, it is services rather than manufacturing that make up the bulk of the UK economy and to relegate them makes no sense.

Read more …

They’re as slow as the British themselves.

Prepare For No-Deal Brexit, German Business Groups Tell Members (R.)

German business groups have urged their members to step up preparations for a hard Brexit that would see Britain crash out of the European Union next year without negotiating a deal. British Prime Minister Theresa May secured a cabinet agreement last week for “a business-friendly” proposal to leave the EU, aimed at spurring stalled Brexit talks. But the hard-won compromise has come under fire from within her governing Conservative Party and may yet fall flat with EU negotiators. “Even if the British government is moving now, companies must plan for the scenario in which there is no agreement,” Joachim Lang, managing director of the BDI, Germany’s biggest industry lobby, told the Welt am Sonntag newspaper.

Thilo Brodtmann, managing director of the VDMA engineering association, told the same paper: “It is urgent to prepare for Brexit and to expect the worst case scenario.” German industry is concerned about increased friction in trade with Britain after Brexit. Britain is the second-biggest export market for German car manufacturers. But Lang said some German businesses were only just starting to analyze what Brexit would mean for them, adding: “At least that has moved us forward from a few months ago.”

Read more …

I like Dana Sabraw.

Immigrant Children, Parents Reunited Faster Under New Court Order (R.)

When Yolany Padilla was released from immigration custody in Seattle last week, she assumed she would be quickly reunited with her 6-year-old son, who had been taken from her at the U.S.-Mexico border two months earlier. But caseworkers at Cayuga Centers in New York, where the boy had been placed, told her lawyer that the government’s vetting process for reunification would take time. Fingerprint collection and analysis alone could take 60 days, and there would also be background checks of all the adults with whom she and her son would stay. It would likely be weeks before her son could be returned to her. “I didn’t want to believe that could be true,” said Padilla, who comes from Honduras and is seeking asylum in the United States.

“It hurt so much to even think it could be 60 days.” That estimate changed abruptly on Thursday night after a federal judge’s order that the government streamline some vetting procedures for reunifying parents and children. Padilla’s lawyer, Leta Sanchez, received a call from Cayuga Centers’ general counsel saying the case had been referred for expedited processing. On Saturday, Padilla and her son, Jelsin, were reunited at the Seattle airport, where he was flown from New York. Padilla ran to her son as he entered the airport waiting area, dropping to her knees and embracing the small boy as he smiled broadly. “It’s been so long since I’ve seen him, imagine how I feel inside,” Padilla said, speaking through a translator at the airport after the reunion.

“It was like my heart was going to come out of my body,” Several immigration attorneys reached by Reuters said they had seen similar expedited reunions following a July 10 order by U.S. District Judge Dana Sabraw in a case brought against the government by the American Civil Liberties Union. The judge had previously ordered the government to reunify by July 26 as many as 2,500 immigrant children it had separated from their parents at the U.S.-Mexico border in recent months. The separations were part of President Donald Trump’s efforts to crack down on illegal immigration, though some of the separated families are also asylum seekers. That policy was abandoned in June in the wake of widespread protests.

On July 10, after examining how an initial wave of reunifications of young children had gone, Sabraw concluded that government vetting policies could be streamlined to speed the process. Reunifications should not be delayed by “lengthy background checks,” the judge wrote, noting that such checks would not have been performed if the parents and children had never been separated.

Read more …

Spain is going to be the no. 1 destination.

Spain Saves Over 340 Migrants At Sea, One On Truck Tyre (AFP)

Spanish rescuers saved more than 340 migrants in the Mediterranean on Saturday (July 14), including one person from north Africa who was attempting the crossing on board a truck tyre, they said. Salvamento Maritimo, Spain’s coastguards, said their ships had rescued 240 people spread out in 12 boats, 10 of them in the Strait of Gibraltar and two others in the Alboran Sea, and on the truck tyre. A spokesman added that the Guardia Civil police force had also saved more than 100 migrants in the Mediterranean. Spain is set to overtake Italy as the country of choice for migrants trying to reach Europe.

Some 16,902 people have arrived in Spain so far this year, the International Organization for Migration’s most recent figures show, and a further 294 died in the attempt. All in all, more than 1,400 migrants have lost their lives in the Mediterranean this year, they add. Last month, Spain also agreed to take in 630 migrants who arrived aboard three vessels, including the French NGO rescue ship Aquarius.

Read more …

The EU is conspicuously silent on this.

450 Migrants Stranded At Sea As Italy, Malta Dig Heels In (AFP)

Another 450 migrants on board two military vessels were stranded at sea on Saturday as Italy and Malta locked horns over whose responsibility it was to offer them safe harbour. The boats, which are currently in Italian waters, had initially set sail from Libya in a single wooden vessel which was identified early Friday while passing through waters under Malta’s jurisdiction. But Italy’s far-right Interior Minister Matteo Salvini, who has authority over the country’s ports, on Friday refused to let them dock in his latest show of intransigence over migrants stranded at sea. And on Saturday, as those on board were transferred to two other vessels, he insisted the boats be instructed to “head south, to Libya or Malta”.

“We need an act of justice, of respect and of courage to fight against these human traffickers and generate a European intervention,” he said in talks with Prime Minister Giuseppe Conte, his remarks carried by Italian news agencies. In an exchange of messages, emails and phonecalls on Friday, Rome had tried to push Valetta to take responsibility for those on board the wooden boat. But Malta said the ship was much closer to the Italian island of Lampedusa, insisting that those on board only wanted to reach Italy. On Saturday morning, they were transferred to two military vessels but where the vessels will dock remains unclear. Eight women and children were taken to Lampedusa for medical treatment. The new standoff kicked in just hours after 67 migrants were allowed to disembark from an Italian coast guard ship in Sicily late on Thursday.

Read more …

A thousand ways to track you.

Mobile Phones Are ‘The Best Spying Device You Can Imagine’ (CNBC)

Could someone be tracking you as you drive around your city or town? You may think turning off your smartphone’s location will prevent this, but researchers from Northeastern University in Boston found that isn’t always the case. “Not a lot of people are aware of this problem. Mainly because when we think about location, we associate it with the GPS on the phone,” said Sashank Narain a postdoctoral researcher at Northeastern. In a test, Narain and his team were able to track people driving through Boston, Waltham, Massachusetts, and London. Traditional locators, like GPS were turned off — so the researchers used other sensors. “The goal of our project is to make people aware that vulnerabilities such as these exist, and they should be taken care of,” Narain added.

Guevara Noubir, a professor at Northeastern University who was involved in the research and also directs Northeastern’s Cybersecurity & Information Assurance Graduate Program, told CNBC that “there’s a whole area, what’s called the side channel attacks, where you use side information to infer something that can have an impact on security,” and specifically, privacy. Using Android phones running Google’s operating system, the researchers did the tracking using sensors in smartphones that were not designed to track location. Those tools included an accelerometer, which tracks how fast a phone is moving, a magnetometer, which works like a digital compass, and a gyroscope, which tracks rotation. These sensors are responsible for things like changing the screen orientation from horizontal to vertical when the phone is moved.

Read more …

“No matter their embedded biases, technologies are declared neutral.”

The Wealthy Are Plotting To Leave Us Behind (Rushkoff)

[..] the more devastating impacts of pedal-to-the-metal digital capitalism fall on the environment and global poor. The manufacture of some of our computers and smartphones still uses networks of slave labor. These practices are so deeply entrenched that a company called Fairphone, founded from the ground up to make and market ethical phones, learned it was impossible. (The company’s founder now sadly refers to their products as “fairer” phones.) Meanwhile, the mining of rare earth metals and disposal of our highly digital technologies destroys human habitats, replacing them with toxic waste dumps, which are then picked over by peasant children and their families, who sell usable materials back to the manufacturers.

This “out of sight, out of mind” externalization of poverty and poison doesn’t go away just because we’ve covered our eyes with VR goggles and immersed ourselves in an alternate reality. If anything, the longer we ignore the social, economic, and environmental repercussions, the more of a problem they become. This, in turn, motivates even more withdrawal, more isolationism and apocalyptic fantasy — and more desperately concocted technologies and business plans. The cycle feeds itself. The more committed we are to this view of the world, the more we come to see human beings as the problem and technology as the solution.

The very essence of what it means to be human is treated less as a feature than bug. No matter their embedded biases, technologies are declared neutral. Any bad behaviors they induce in us are just a reflection of our own corrupted core. It’s as if some innate human savagery is to blame for our troubles. Just as the inefficiency of a local taxi market can be “solved” with an app that bankrupts human drivers, the vexing inconsistencies of the human psyche can be corrected with a digital or genetic upgrade.

Read more …

Jun 252018
 
 June 25, 2018  Posted by at 8:45 am Finance Tagged with: , , , , , , , , , , ,  


Edward Hopper Cape Cod morning 1950

 

China’s Central Bank Frees Up $100 Billion In Funding As Trade War Looms (SCMP)
US Plans Limits On Chinese Investment In US Technology Firms (R.)
Tit-for-Tat Tariff Battle Could Spark Downturn In Global Economy – BIS (G.)
Why The Debt Deal With The EU Is Bad For Greece (AlJ)
UK Minister Urges Gov’t to Ignore BMW, Airbus Brexit Warnings (Sp.)
Some Of The Pictures Of Border Kids That Haunt Me Most Are From 2014 (PI)
Migration Is Threat To EU Free Travel Area – Italian Prime Minister (G.)
Italy Tells Rescue Ships Not To Help Refugees In Peril At Sea (Ind.)
The US, Under Obama, Created Europe’s Refugee Crisis (Zuesse)
Merkel’s Troubles Began in Syria and End in Italy (Luongo)
Erdogan To Gain Sweeping New Powers After Declaring Election Victory (Ind.)
Erdogan Says Turkey Will Continue Advancing In Syria (R.)
‘Tourists Go Home, Refugees Welcome’ – Barcelona (G.)

 

 

Bankruptcies. Nothing to do with a trade war.

China’s Central Bank Frees Up $100 Billion In Funding As Trade War Looms (SCMP)

China’s central bank said on Sunday it would unlock at least US$100 billion for the country’s lenders to bail out troubled state firms and to help small businesses, as Beijing tries to shore up growth under the shadow of a trade war with the United States. The People’s Bank of China (PBOC) said in a statement it would cut the reserve requirement ratio, the share of deposits lenders must put aside with the central lender, for commercial banks by half a percentage point from July 5. The cut would free up 500 billion yuan (US$76.86 billion) in funds for the big banks, including Industrial and Commercial Bank of China and China Construction Bank, to finance debt-to-equity swaps, a measure often used for troubled state enterprises.

It would also free up 200 billion yuan for smaller banks to boost lending to small businesses across the country, the central bank said. The move is a “targeted operation” aimed at supporting the weak links in the economy and not a change to the country’s “neutral and prudent” monetary policy stance, the PBOC said. Although the statement did not mention China’s trade row with the United States, or its recently released weaker economic indicators, the reduction in the reserve ratio will come into effect a day before the first of US President Donald Trump’s additional tariffs on Chinese products are due to be implemented.

Deng Haiqing, a visiting scholar at Renmin University of China, wrote in a note that the PBOC’s move represented a significant shift in China’s policy, and was not just fine-tuning. “The authorities have started to see the pain inflicted on the real economy from deleveraging, and they are trying to reduce it,” he said.

Read more …

Makes sense.

US Plans Limits On Chinese Investment In US Technology Firms (R.)

The U.S. Treasury Department is drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. companies with “industrially significant technology,” a government official briefed on the matter said on Sunday. The official, whose comments matched a report by the Wall Street Journal, emphasized that the Chinese ownership threshold may change before the restrictions are announced on Friday. The move marks another escalation of President Donald Trump’s trade conflict with China, which threatens to roil financial markets and dent global growth.

Tariffs on $34 billion worth of Chinese goods, the first of a potential total of $450 billion, are due to take effect on July 6 over U.S. complaints that China is misappropriating U.S. technology through joint venture rules and other policies. The Treasury investment restrictions are expected to target key sectors, including several China is trying to develop as part of its “Made in China 2025” industrial plan, the U.S. official said. Among its objectives, the plan aims to upgrade China’s capabilities in advanced information technology, aerospace, marine engineering, pharmaceuticals, advanced energy vehicles, robotics and other high-technology industries. The Wall Street Journal also said the U.S. Commerce Department and National Security Council were proposing “enhanced” export controls to keep such technologies from being shipped to China.

Read more …

Give me a break: “Ten years after the start of the global crisis, central bankers should feel satisfied with the state of the global economy..”

Tit-for-Tat Tariff Battle Could Spark Downturn In Global Economy – BIS (G.)

An escalation of protectionist measures could spark a fresh downturn just as the global economy is picking itself up after the last one, the international body that represents the world’s central banks has warned. The Bank for International Settlements (BIS) said there were already signs that “the ratcheting up of rhetoric” was weighing on investment. It comes as Donald Trump steps up hostility with some of the US’s key trading partners and allies, raising fears of a full-blown trade war. What began with tariffs imposed on steel and aluminium imported into the US has turned into a broader trade battle with trading partners including China and the EU, as they respond with retaliatory measures.

The US president is threatening Beijing with tariffs on $200bn of goods imported from China and on Friday Trump threatened to impose tariffs on European cars after Brussels introduced levies on American goods such as Levi’s jeans, bourbon whiskey and Harley-Davidson motorbikes. Agustín Carstens, the general manager of BIS, said an increase in protectionist measures was a key vulnerability in the global economy that threatened to undermine growth and could spread to financial markets. “One possible trigger of an economic slowdown or downturn could be an escalation of protectionist measures. Its impact could be very significant, if such escalation was seen as threatening the open multilateral trading system.

“Indeed, there are signs that the rise in uncertainty associated with the first protectionist steps and the ratcheting up of rhetoric have already been inhibiting investment.” In its annual report on the challenges facing the global economy, BIS said that the ultra-low interest rates implemented by central banks as an emergency response to the financial crisis had served the global economy well but said loose monetary policy was posing a threat to stability. “Ten years after the start of the global crisis, central bankers should feel satisfied with the state of the global economy, after expansionary and unconventional monetary policies were left to bear the burden of recovery,” Carstens said. “But this has left a legacy of higher debts on public and private balance sheets. Still reliant on central bank support and with less room for manoeuvre. Central banks cannot continue be the only game in town.”

Read more …

This is where the EU started collapsing. Immigration issues will do the rest.

Why The Debt Deal With The EU Is Bad For Greece (AlJ)

[..] there is more to this deal than the arithmetic of long-term debt sustainability. At the heart of Greece’s protracted fiscal crisis was always a highly contentious social and political question about the real meaning of European solidarity: Who should be made to pay for the presumed “profligacy” of successive Greek governments, or the “excessive risk-taking” of profit-hungry private creditors in the lead-up to the crisis? The course of action that European leaders ended up settling on turned out to be very one-sided in this respect: Greece alone was to blame for its predicament, and therefore, Greece alone would be made to pay for it.

The real motivation behind the bailouts was always to safeguard the survival of a dangerously over-exposed European banking system – but this fact was quickly obscured. Instead, right-wing politicians and the tabloid media whipped up a frenzy of anti-Greek sentiment. The Greeks were widely portrayed as splurging the money on lavish pensions and long beach holidays – or on “booze and women,” as former Dutch finance minister Jeroen Dijsselbloem infamously put it last year. But as research by the European School of Management and Technology in Berlin has since shown, 95 percent of the bailout funds that were supposedly “given” to Greece actually went straight back to private creditors.

Meanwhile, the bailout loans themselves were added to Greece’s overall debt, and the country continued to pay interest on them over subsequent years. In other words, the Greek people never received any handouts from their European creditors. Meanwhile, the Greek government reduced the size of its public sector by 26 percent, cutting pensions and welfare spending by 70 percent and slashing the public health budget in half. As a result, incomes fell by one-third and unemployment skyrocketed to a peak of over 28 percent, unleashing a veritable humanitarian catastrophe.

Read more …

But Jeremy, they have shareholders.

UK Minister Urges Gov’t to Ignore BMW, Airbus Brexit Warnings (Sp.)

Speaking to the BBC, Health Secretary Jeremy Hunt said that businesses sounding the alarm about post-Brexit job losses actually affect the UK’s negotiations with the European Union. According to him, the best way for companies to achieve the “clarity and certainty” they need is to support the PM in her talks with Europe. Hunt suggested that a “Brexit fudge” would be likely if Theresa May’s attempts to “deliver the best possible Brexit, a clean Brexit” were undermined. The statement comes several days after BMW, a German-based car giant which employs around 8,000 people in Britain, threatened to start preparing “contingency plans” if it doesn’t get details on the UK’s post-Brexit trading arrangements by the end of summer.

BMW echoed the warning of the French aviation giant Airbus, which announced on June 21 that a no-deal scenario would have a “catastrophic” outcome and would force it to reconsider its long-term position in the UK, putting some 14,000 UK-based jobs at risk. With the UK government failing to provide clarity on Brexit for the time being, a recent survey has found that nearly half of business leaders from the rest of Europe have cut investment in the country. The poll also shows that three quarters of big companies want the bloc to make concessions to Britain to enable a better trading relationship after London’s divorce with Brussels.

Read more …

I think it’s important that we see the big picture here. You won’t find a solution if you can’t define the problem. This has been going on for years.

Some Of The Pictures Of Border Kids That Haunt Me Most Are From 2014 (PI)

The other day, a veteran immigration lawyer named R. Andrew Free shared an anecdote that sheds some really critical light on what’s happening on America’s southern border — a tale that not surprisingly got buried amid a sandstorm of news about mothers not knowing where their kids are, audiotapes of anguished, crying children, and now the protests to end the human rights abuses that the current government is undertaking in our name. What Free described on Twitter was an opportunity that few people get: A chance to personally confront the president of the United States and question him about his immigration policies.

Free wrote that the answers he received from the so-called leader of the free world “shook me to my core.” The immigration lawyer had been to two large detention centers in Texas where U.S. officials were holding hundreds of migrant families from Central America, often for months at a time. Free said some of the conditions at these makeshift detention camps were appalling. “I remember hearing the constant, violent coughing and sickness of small children, and the worry of their mothers who stood in the sun outside the clinic all day only to be told their kids should ‘drink water,’” Free tweeted. “I remember nearly doubling over when I saw the line of strollers.”

When Free had a chance encounter with the president at a political event, he warned him that the detention centers would be “a stain on his legacy.” He said the president wanted to know if Free was an immigration lawyer — implying that everyday citizens weren’t worried about what goes on at the border — and then said, according to Free: “I’ll tell you what we can’t have, it’s these parents sending their kids here on a dangerous journey and putting their lives at risk.” The message that Free took away was that the president saw family detention as a deterrent to keep more refugees from coming. This happened in 2015. The president with the looming stain on his legacy was Barack Obama.

Read more …

There goes Merkel.

Migration Is Threat To EU Free Travel Area – Italian Prime Minister (G.)

Italy has warned the future of the EU’s border-free travel zone is at stake as it sought to ease the pressure on Mediterranean countries arising from hosting refugees and migrants. Italy’s prime minister, Giuseppe Conte, was speaking at a mini-EU summit in Brussels, where he said a plan from his government presented at the summit represented a paradigm shift in dealing with migration. But his ambitious move to change what he called obsolete EU rules that govern who is responsible for asylum claimants is likely to encounter opposition from other countries.

The 10-point plan by his new populist government revives many ideas proposed by previous Italian governments, such as calling on all EU member states to share responsibility for migrants rescued at sea, and countries being docked EU funds if they refuse to take in refugees. Leaders from 16 EU countries put on a show of unity, as they left an emergency summit in Brussels on Sunday. The unorthodox meeting, boycotted by several EU countries, was called to shore up the conservative coalition government of the German chancellor, Angela Merkel, which is riven by a row over migration. Spain’s prime minister, Pedro Sánchez, said the talks had been “frank and open,” although they had not resulted in “any concrete consequences or conclusions”.

Sunday’s ad-hoc meeting sets the stage for a long-planned gathering of all EU leaders on Thursday, where it will be harder to mask Europe’s deep divisions on migration. Hungary’s prime minister, Viktor Orbán, can be expected to repeat his fierce opposition to migrant quotas, a policy opposed by other central European countries.

Read more …

Salvini is going to Libya this week.

Italy Tells Rescue Ships Not To Help Refugees In Peril At Sea (Ind.)

Italy’s far-right government told aid ships in the Mediterranean Sea not to rescue thousands of refugees in peril on Sunday – despite receiving six separate distress calls from unseaworthy boats. Officials said the vessels – carrying people from North Africa to Europe – were all in Libyan waters and, therefore, Libyan responsibility. The Spanish aid group, Proactiva Open Arms, which had ships in the area, said it had been specifically told not to help. Matteo Salvini, Italy’s interior minister, said in a tweet: “It’s right that the Libyan authorities intervene, as they’ve been doing for days, without having the NGOs interrupt them and disturb them.”

The latest revelation follows a fortnight in which Italy has refused permission for aid ships carrying rescued refugees to dock in its ports. One, the Aquarius with 630 people on board, had to reroute to Spain. Another, Lifeline holding 240 people, remained at sea over the weekend. Mr Salvini has said such refugees would only see his country “on a postcard”. Italy has said it is seeing a constant stream of people coming illegally from Africa, and has threatened to withhold payments to the EU unless a more even way of dispersing refugees is agreed.

Read more …

Zuesse misses the role that Britain -remember Blair, Cameron?- and France have played.

The US, Under Obama, Created Europe’s Refugee Crisis (Zuesse)

The current US President, Donald Trump, claimed on June 18th, that Germany’s leadership, and the leadership in other EU nations, caused the refugee-crisis that Europe is facing: “The people of Germany are turning against their leadership as migration is rocking the already tenuous Berlin coalition. Crime in Germany is way up. Big mistake made all over Europe in allowing millions of people in who have so strongly and violently changed their culture!” The US Government is clearly lying about this. The US Government itself caused this crisis that Europeans are struggling to deal with.

Would the crisis even exist, at all, if the US had not invaded and tried to overthrow (and in some instances actually overthrown) the governments in Libya, Syria, and elsewhere — the places from which these refugees are escaping? The US Government, and a few of its allies in Europe (the ones who actually therefore really do share in some of the authentic blame for this crisis) caused this war and government-overthrow, etc., but Germany’s Government wasn’t among them, nor were many of the others in Europe. If the US Government had not led these invasions, probably not even France would have participated in any of them. The US Government, alone, is responsible for having caused these refugees.

The US Government itself created this enormous burden to Europe, and yet refuses to accept these refugees that it itself had produced, by its having invaded and bombed to overthrow (among others) Libya’s Government, and then Syria’s Government, and by its aiding Al Qaeda in organizing and leading and arming, jihadists from all over the world to come to Syria to overthrow Syria’s Government and to replace it with one that would be selected by the US regime’s key Middle Eastern ally, the Saud family, who own Saudi Arabia, including its Government, and who are determined to take over Syria.

Trump blames Angela Merkel for — in essence — having been an ally of the US regime, a regime of aggression which goes back decades, and which Trump himself now is leading, instead of his ending, and of his restoring democracy to the United States, and, finally, thus, his restoring freedom (from America), and peace, to other nations, in Europe, and elsewhere (such as in Syria, Yemen, etc.).

Read more …

Chaos.

Merkel’s Troubles Began in Syria and End in Italy (Luongo)

It looks like we are entering the end of Merkel-ism in Europe. German Chancellor Angela Merkel is approaching her final days in that position. Be it next week or the end of this year, we are looking at unprecedented change in European politics thanks to Merkel’s insistence on taking in millions of Syrian and North African refugees from chaos unleashed by aggressive and insane foreign policy actions by the U.S. and supported by the EU. From the destruction of Libya to the manufactured ‘civil war’ in Syria the displacement of millions of people was created from the desired to destabilize the entire region for the betterment of the U.S. and its allies in the region, Saudi Arabia and Israel. Jordan, Turkey and Qatar were originally involved but have since jumped ship in the wake of Russia’s intervention there.

Merkel’s current plight politically stems from her intractability in accepting the chain of events that led us to this point. All of the problems of Europe now stem from the collision of these foreign policy disasters and the economic degradation of the euro-zone from the flawed structure of the euro itself. And the insistence of the U.S./Saudi/Israeli alliance to continue trying to manufacture a win in Syria that is clearly beyond their control at this point only tightens the noose around Merkel’s neck.

Read more …

Predictable but still scary.

Erdogan To Gain Sweeping New Powers After Declaring Election Victory (Ind.)

Recep Tayyip Erdogan has been declared triumphant in Turkey’s presidential vote by the country’s electoral board, amid accusations of manipulation by his opponents. Mr Erdogan had earlier claimed he had won after state run news outlets said he was victorious. An announcement from the broadcaster TRT came soon after the Anadolu Agency, who reported that he had won 52.51 per cent of the vote with 98.4 per cent of the total counted. Independent election monitors and the opposition both maintained that less than half the votes had been counted at that point. The president’s main rival, Muharrem Ince – who state media said had won 30.72 per cent of the vote – urged observers and his supporters to stay on at counting centres, warning that vote rigging was likely to place if they left under the impression that the result had been decided.

But speaking in the early hours of Monday, the head of the Supreme Election Council Sadi Guven confirmed the result. He said that Mr Erdogan “received the absolute majority of all valid votes” and the remaining ballots would not affect the outcome. In his speech Mr Erdogan had warned: “The Turkish public has mandated me as president according to unofficial results. I hope nobody will damage democracy by casting a shadow on this election and its results to hide their failure.”

Read more …

Doesn’t waste any time.

Erdogan Says Turkey Will Continue Advancing In Syria (R.)

Turkey will continue to “liberate Syrian lands” so that refugees can return to Syria safely, President Tayyip Erdogan said in an election victory speech on Monday. Speaking to supporters from the balcony of his ruling AK Party’s headquarters in Ankara after Sunday’s presidential and parliamentary elections, Erdogan said Turkey would also act more decisively against terrorist organizations.

Read more …

“In 1990 the city received 1.7 million tourists; last year the figure was 32 million – roughly 20 times the resident population.”

‘Tourists Go Home, Refugees Welcome’ – Barcelona (G.)

Early last year, around 150,000 people in Barcelona marched to demand that the Spanish government allow more refugees into the country. Shortly afterwards, “Tourists go home, refugees welcome” started appearing on the city’s walls; soon the city was inundated with protestors marching behind the slogans “Barcelona is not for sale” and “We will not be driven out”. What the Spanish media dubbed turismofobia overtook several European cities last summer, with protests held and measures taken in Venice, Rome, Amsterdam, Florence, Berlin, Lisbon, Palma de Mallorca and elsewhere in Europe against the invasion of visitors. But in contrast to many, as fiercely as Barcelona has pushed back against tourists, it has campaigned to welcome more refugees.

When news broke two weeks ago that a rescue ship carrying 629 migrantswas adrift in the Mediterranean, mayor Ada Colau was among the first to offer those aboard safe haven. Is it really the case that Barcelona would prefer to receive thousands of penniless immigrants rather than the millions of tourists who last year spent around €30bn in the city? The short answer, it appears, is yes. Increasingly it is tourism, not immigration, that people see as a threat to the city’s very identity – though numbers of both have risen exponentially in recent decades. In 2000 foreigners accounted for less than 2% of the population; a mere five years later, the figure was 15% (266,000). In 2018, it is now officially 18% although, according to Lola López, the city’s integration and immigration commissioner, the true figure is closer to 30%.

The influx of new residents has radically changed the face of the city, but Barcelona has not seen a single anti-immigrant protest of any substance – nor is immigration an issue at local elections. According to research by Paolo Giaccaria, a social scientist at the University of Turin, the case of Barcelona “establishes a connection between two types of mobility that are at odds with each other: northern tourism and southern migration. It subverts the common feeling about which kind of mobility is desirable which is not.” Immigration has changed the city, but tourism is destabilising it – and even people in the industry agree that it can’t go on like this. In 1990 the city received 1.7 million tourists; last year the figure was 32 million – roughly 20 times the resident population. The sheer volume of visitors is driving up rents, pushing residents out of neighbourhoods, and overwhelming the public space.

Read more …