Jul 072018
 
 July 7, 2018  Posted by at 9:10 am Finance Tagged with: , , , , , , , , ,  


Claude Monet Water lilies 1904

 

Fed Discards Flattening Yield Curve as Recession Indicator (WS)
Theresa May Secures Approval From Cabinet To Negotiate Soft Brexit (G.)
Boris Johnson’s Gang Outgunned By Theresa May At Chequers (G.)
UK Government Has No Clue How To Execute Brexit Without Harm – Airbus CEO (G.)
Despite 213K Jobs Gain, Unemployment Up by 499K (Mish)
Russia Hikes Duties On US Imports, Pledges More Retaliation (R.)
US Border Agents Stop Canadian Fishermen In Disputed Waters Off Maine (G.)
More Ways Your Phone Is Spying On You (ZH)
Summer of Tough Love (Jim Kunstler)
Twitter Suspends Over 70 Million Accounts In Two Months (R.)
Tax Arbitrage Is An Issue (Setser)
Mainstream Politicians Short-Sighted, Don’t See World Changing – Grillo (RT)
Number Of Planes In The Sky To More Than Double In Next 20 Years (Ind.)
Pope Warns Earth Turning Into Vast Pile Of ‘Rubble, Deserts And Refuse’ (AP)

 

 

Seems like a risky gamble.

Fed Discards Flattening Yield Curve as Recession Indicator (WS)

In the minutes of the FOMC meeting on June 12 and 13, released this afternoon, there was a doozie, obscured somewhat by the dynamics of the rate hike plus the indication that there would be two more rate hikes this year, for a total of four, up from three at the prior meeting, with more hikes to come in 2019, along with other changes [..] But the doozie in the minutes was about the flattening “yield curve.” The yield curve is formed by Treasury yields of different maturities: normally, the two-year yield is quite a bit lower than the 10-year yield. Over the last several decades, each time the yield curve “inverted” – when the two-year yield ended up higher than the 10-year yield – a recession followed. The last time, the Financial Crisis followed.

So this has become a popular recession indicator that has cropped up a lot in the discussions of various Fed governors since last year. Today, the two-year yield closed at 2.55% and the 10-year yield at 2.84%. The spread between them was just 29 basis points, the lowest since before the Financial Crisis. The chart below shows the yield curves on December 14, 2016, when the Fed got serious about raising rates (black line); and today (red line). Note how the red line has “flattened” between the two-year and the 10-year markers, and how the spread has narrowed to just 29 basis points:

The chart below shows the two-year yield (black) and the 10-year yield (red) going back to 1992. Note how the spread has been narrowing in recent months.

The chart below tracks this spread for every day back to 2008. Today, the spread, at just 29 basis points, is the lowest since before the Financial Crisis:

There has been a lot of handwringing about this being an indicator that the next recession is nearing and that the Fed should back off with its rate hikes. But this Fed is getting seriously hawkish: In the minutes today, it revealed that instead of thinking about backing off with its rate hikes, it’s throwing out the flattening yield curve.

Read more …

She’s threatened to fire them. But Brexit looks less likely to happen by the day.

Theresa May Secures Approval From Cabinet To Negotiate Soft Brexit (G.)

Theresa May has secured approval to negotiate a soft Brexit deal with the European Union, signing up her fractious cabinet at a Chequers awayday to a controversial plan to match EU standards on food and goods. The prime minister released a statement following the critical afternoon session of the long-awaited summit that alarmed Tory hard Brexiters, in which she confirmed she had won over the cabinet to new customs arrangements ending political deadlock on the issue. May said the cabinet had “agreed our collective position for the future of our negotiations with the EU”. That included a proposal to “create a UK-EU free trade area which establishes a common rule book for industrial goods and agricultural products” after Brexit.

Tory Brexiters voiced concern at the agreement, while soft Brexiters expressed relief. Andrea Jenkyns, a hardline MP, complained that “British businesses will continue to be a rule taker from the EU” and said she would “pray” that the detail was not as bad as she feared. Heidi Allen, a moderate, said she was “pleased to report Theresa May has secured cabinet agreement for a sensible, soft Brexit”. On Thursday, when the common rule book proposal was first leaked, hardline Brexiter cabinet ministers and Conservative MPs voiced alarm that it could prevent the UK striking a trade deal with the US, which has different standards in goods and foods, such as allowing chickens to be washed in chlorine.

But May was able to release the text of a three-page agreed statement before cabinet, following a relatively undramatic day of discussions, sat down for dinner to listen to No 10 communications chiefs make a presentation on how to sell the new proposals. Michel Barnier, the EU’s chief Brexit negotiator, appeared to react warmly to the proposals, noting in a tweet that the “Chequers discussion on future to be welcomed. I look forward to white paper. We will assess proposals to see if they are workable and realistic”. The prime minister made clear that she expected ministers would be sacked if they did not remain in line with her soft Brexit blueprint.

She wrote to Tory MPs to explain her plans and included a clear warning about discipline: “As we developed our policy on Brexit, I have allowed cabinet colleagues to express their individual views. Agreement on this proposal marks the point where that is no longer the case and collective responsibility is now fully restored.”

Read more …

It doesn’t matter one bit unless the EU agrees.

Boris Johnson’s Gang Outgunned By Theresa May At Chequers (G.)

Theresa May has won the battle with her Brexiter rebels in the cabinet, but the war will be a long one. She gambled that the Brexit purists – those who gathered on the eve of the Chequers summit at the Foreign Office with Boris Johnson – would be outgunned at Chequers when the full cabinet was assembled. The choreography was impressive – May locked her ministers inside the Buckinghamshire retreat without their phones or special advisers. The final agreement – sent out on behalf of “HM government” came to journalists an hour before advisers had even seen it – and before they could get in contact with their ministers to know what concessions had been made. Within the hour, out came a letter to Conservative MPs warning the days of debate over the government’s Brexit position were over.

“Collective responsibility is now fully restored,” May warned. The deal clinched with her most difficult members of her cabinet, architects of the leave campaign such as Johnson and Michael Gove, gave May the leverage to demand similarly hardline MPs get in line. Downing Street has been briefing in a strident tone, practically daring hard Brexiter ministers to give it all up to walk down the Chequers drive. The numbers that will matter now are those in her parliamentary party. Some will express predictable fury, though in the hours since the deal was reached, Jacob Rees-Mogg was telling MPs to keep their powder dry. Key will be whether this is a deal that can win over mainstream backbenchers.

In recent weeks, a number of Conservative MPs had begun to express frustration that the prime minister was not prepared to face down one side of her party and lead. [..] On Monday, the prime minister will address the 1922 committee of backbenchers, though the timing of the summit means angry MPs will have the weekend to either cool off or come to the boil. “I’ll wait to see if this collective responsibility lasts the weekend,” another MP said. Perhaps just as crucially there are still some concerns about the future deal for UK services, around 80% of the UK economy. The agreement states the UK would “strike different arrangements for services, where it is in our interests to have regulatory flexibility, recognising the UK and the EU will not have current levels of access to each other’s markets”.

Read more …

And that’s the whole point.

UK Government Has No Clue How To Execute Brexit Without Harm – Airbus CEO (G.)

The chief executive of Airbus has accused the government of having “no clue” on how to leave the EU without harming the economy, as the prime minister aimed at uniting the cabinet behind a Brexit plan. The criticism from the aerospace firm, which employs 14,000 people in the UK, is the strongest intervention yet from the business community on the risk of a hard Brexit and came in the same week that Jaguar Land Rover, Britain’s largest carmaker, warned its were under threat. Speaking at a briefing in London before the Farnborough air show later this month, the Airbus chief executive, Tom Enders, said: “The sun is shining brightly on the UK, the English team is progressing towards the [World Cup] final, the RAF is preparing to celebrate its centenary and Her Majesty’s government still has no clue, no consensus on how to execute Brexit without severe harm.”

Enders said Airbus, a Franco-German group that supports a further 100,000 UK jobs in its supply chain, was wary of all types of Brexit, including a worst-case no-deal scenario. “Rest assured that we are taking first preparations as we speak in order to mitigate consequences from whatever Brexit scenario may follow,” he said. “Brexit in whatever form, soft or hard, light or clean, whatever you call it, will be damaging for industry, for our industry and damaging for the UK, whatever the outcome will be.”

Read more …

600,000 more looking for a job. Out of 95 million not in labor force. All new jobs are part-time. Full-time jobs fell.

Despite 213K Jobs Gain, Unemployment Up by 499K (Mish)

Today’s establishment survey shows jobs rose by 213,000. Revisions were positive. The unemployment rate rose from 3.8% to 4.0% as the labor force rose by 601,000. More people are starting to look for jobs but employment only rose by 102,000. Nonfarm wage growth was +0.2% vs an Econoday consensus of +0.3%. The Phillips’ curve is a joke, but it’s still widely believed. The change in total nonfarm payroll employment for April was revised up from +159,000 to +175,000, and the change for May was revised up from +223,000 to +244,000. With these revisions, employment gains in April and May combined were 37,000 more than previously reported

Read more …

Putin meets Trump in 9 days.

Russia Hikes Duties On US Imports, Pledges More Retaliation (R.)

Russia said on Friday it was imposing additional import duties on some U.S. industrial goods after the United States slapped tariffs on steel and aluminum imports, and warned that more retaliatory steps could be in the pipeline. The economy ministry said Russia would impose extra tariffs on some goods from the United States for which there are Russian-made substitutes.The extra duties of 25 to 40 percent will apply to imports of fiber optics and equipment for road construction, the oil and gas industries and metal processing and mining.

The ministry said the measures, signed by Russian Prime Minister Dmitry Medvedev, were intended to compensate for $87.6 million of damage suffered by Russian export-focused companies as a result of the U.S. metals tariffs. The U.S. tariff hike will cost an overall $537.6 million and Russia has the right to impose more compensatory measures in the future, the economy ministry said.

Read more …

Feels like Python.

US Border Agents Stop Canadian Fishermen In Disputed Waters Off Maine (G.)

Canada’s government is investigating reports that US border patrol officers have intercepted and questioned crew members on more than 20 Canadian vessels in disputed waters off the coast of Maine. The reports have thrust a longstanding territorial dispute between the two countries into the spotlight; since the late 1700s tensions have simmered over a pair of tiny, treeless islands that sit between Maine and the Canadian province of New Brunswick. Primarily inhabited by nesting puffins, the islands of North Rock and Machias Seal remain the only disputed lands between US and Canada, with both claiming sovereign jurisdiction over the islands and their surrounding waters.

As a result, the area has long hosted lobster fisherman from both sides of the border. The question of jurisdiction flared up recently after the Grand Manan Fishermen’s Association said a Canadian vessel had been stopped by US border patrol while fishing in the waters near Machias Seal Island in late June. “He informed them he was a Canadian vessel legally fishing in Canadian waters,” wrote Laurence Cook of the association on Facebook. He said he was “not surprised to see the Americans trying to push people around”, describing them as “typical American bullies.”

Read more …

In ways we didn’t yet know.

More Ways Your Phone Is Spying On You (ZH)

For years, conspiracy theories about smart phones listening to users without their permission to show them advertisements have abounded. While some researchers have shown this could happen, a first of its kind study just found something far more insidious. Academics at Northeastern University have just proven that your phone is recording your screen – as in taking video – and uploading it to third parties. For the last year, Elleen Pan, Jingjing Ren, Martina Lindorfer, Christo Wilson, and David Choffnes ran an experiment involving more than 17,000 of the most popular Android apps using ten different phones. Their findings were alarming, to say the least.

As Gizmodo points out, during the study, the researchers started to see that screenshots and video recordings of what people were doing in apps were being sent to third-party domains. For example, when one of the phones used an app from GoPuff, a delivery start-up for people who have sudden cravings for junk food, the interaction with the app was recorded and sent to a domain affiliated with Appsee, a mobile analytics company. The video included a screen where you could enter personal information – in this case, their zip code.

GoPuff did not disclose in its terms of use that its app was recording users screens and uploading this data to a third party. What’s more, when they were contacted by the researchers GoPuff merely added a disclosure to their policy acknowledging that “ApSee” might receive users PII. The fact that these apps can record your screen without you knowing and use this data is chilling. It illustrates how easy it would be for a malicious actor to be able to look at your private messages, personal information, passwords, photos, and videos. None of this is stopped by your phone’s security either as it is a function built into the apps and you don’t have an option to disallow it.

Read more …

“Mr. Mueller will come up with someone to indict on something, even if it’s ninety-seven ham sandwiches.”

Summer of Tough Love (Jim Kunstler)

The blowup of the bond and stock markets later this year will put to a gloomy rest the ludicrous notion that America has been enjoying a great economic boom. It’s actually been an engineered hallucination, thanks to the global monetary authorities applying the magic of limitless credit to a bad habit of credulous speculation. The central banks have launched a program of so-called “quantitative tightening (QT)” — an idiotic phrase meant to counterpoise the equally fatuous “quantitative easing (QE),” PhD economist-speak for grotesque interference in the bond markets — that will choke down the credit supply at exactly the moment that governments and giant corporations need new loans to pay the interest on old loans. The trajectory there is obvious.

The big question, of course — hardly ever asked in the public arena — is what that will do to currencies, i.e., money. It can really only go two ways: either make money very scarce, in which case a lot of people and enterprises go broke, or, if the monetary authorities respond to the predicament by enabling a return to bottomless credit issuance, the money will become worthless — they’ll be plenty of it, but it won’t buy much. Such a turn of events will make an already-unhinged nation fly apart. [..] Oh, yes, there is also that Hieronymus Bosch Garden of Earthly Delights known as the Mueller Investigation, with its dreary outposts in the executive suite of the FBI, and all the tangled mysteries entailed there.

Mr. Mueller will come up with someone to indict on something, even if it’s ninety-seven ham sandwiches. I suspect Mr. Trump will manage to dump Attorney General Jeff Sessions and Deputy AG Rod Rosenstein. And then the pardons will fly, like so many winged demons flapping from the mouth of Hades. Constitutional crisis may be too mild a word for what ensues. By holiday time in early winter, much will clarified about the actual direction of the country. By then, the “Walk Away” movement may even include the obdurate shills at CNN and The New York Times, and the Intellectual-Yet-Idiots on the college campuses. And the Golden Golem of Greatness will lie upended in the swamp that he just didn’t try hard enough to drain.

Read more …

How many fake accounts do they have?

Twitter Suspends Over 70 Million Accounts In Two Months (R.)

Twitter Inc suspended more than one million accounts a day in recent months to reduce the flow of misinformation on the platform, the Washington Post reported. Twitter and other social media platforms such as Facebook Inc have been under scrutiny by U.S. lawmakers and international regulators for doing too little to prevent the spread of false content. The companies have been taking steps such as deleting user accounts, introducing updates and actively monitoring content to help users avoid being a victim to fake content. Twitter suspended more than 70 million accounts in May and June, and the pace has continued in July, the Post reported on Friday, citing data it obtained.

“It’s hard to believe that 70 million accounts were affected when Twitter has only 336 million monthly active users (MAU),” Wedbush analyst Michael Pachter said. Twitter’s MAU is expected to grow nearly 3 percent to 337.06 in the second quarter, according to Thomson Reuters I/B/E/S. “My guess is that a large number of these suspended accounts were dormant … it should have little impact on the company,” Pachter told Reuters. If the 70 million were mostly active accounts, the affected accounts would have been “screaming bloody murder”, added the analyst.

Read more …

Tax havens.

Tax Arbitrage Is An Issue (Setser)

The impact of the U.S. tax reform on the U.S. trade balance was a hot item of debate last December. There was an argument that reducing the headline tax rate—and creating an even lower tax for the export of intangibles—would reduce the incentive for firms to book profits abroad in offshore tax centers. Booking those profits at home would raise U.S. services exports—while the service “exports” of countries like Ireland and Luxembourg (really re-exports of intellectual property created in the U.S) would fall. This would have no overall effect on the balance of payments. The rise in the recorded exports of intellectual property from the U.S. would be offset by a fall in the offshore income of U.S. firms.

For example, Google (U.S.) would show a bigger profit as offshore sales would be booked as exports of IP held in the U.S. (a service export) while Google (Bermuda) would show a smaller profit —and that would translate both into a smaller trade deficit and a smaller surplus on foreign direct investment income.* But shifting paper profits around would bring down the measured trade deficit—a potential win for Trump. It is obviously too soon to assess the full impact of the tax reform. But it isn’t too soon to start looking for some clues. The q1 balance of payments data doesn’t suggest that firms have lost their appetite for booking profits abroad, or their appetite for booking the bulk of their offshore profits in low tax jurisdictions. This shouldn’t be a surprise—the lowest rate in the new U.S. tax code is the new global minimum rate on intangibles.

Read more …

The existing “ideologies have outlived their usefulness,” Grillo said. “There are just good and bad ideas..”

Mainstream Politicians Short-Sighted, Don’t See World Changing – Grillo (RT)

Mainstream political parties have outlived their purpose as they cannot adapt to the changes in the political system and are out of step with the voters, Beppe Grillo, the founder of the Italian Five Star Movement (M5S), said. “The world of the old politics and old political parties,” which expect the people to trust them with defending the public interests, is “slowly dying out,” Grillo, a former Italian satirist and activist, told Ex-Ecuador President Rafael Correa during the “Conversations with Correa” show on RT Spanish. People are no more willing to just blindly follow some political forces, they are much more informed now, they seek for information in the internet and want to form their own opinions, he explained.

“The world is changing at a fantastic speed. However, the current generation of politicians does not feel these changes. They just do not see it,” Grillo said, adding that the politicians are oriented “on a short-term horizon.” Meanwhile, the society, particularly the young people, is no longer attracted by the ideas propagated by the mainstream parties. The existing “ideologies have outlived their usefulness,” Grillo said. “There are just good and bad ideas,” he added, explaining that “they are not divided into ‘right’ and ‘left’ anymore.” The self-described anti-establishment activist then criticized the mainstream politicians for hiding their own inability to adapt behind the warnings about the perceived threat of populism.

As for the populism, I am proud to be a populist, if the word ‘populus’ (the people) is still of some importance,” Grillo told Correa. “Our goal is to reach out to people, to encourage them to think for themselves, to give them instruments to fulfill their own ideas,” he added. He agreed with Correa’s statement that the so-called “anti-populism” is what really poses a threat to the modern society as it seeks to keep the system unchanged. He particularly agreed that “anti-populism” is in fact a “means of attack” as it sees everything that challenges the system as populism and seeks to clamp it down.

Read more …

It’s going to be so annoying people will stop flying.

Number Of Planes In The Sky To More Than Double In Next 20 Years (Ind.)

The number of aircraft in the skies will more than double by 2037, according to the latest Global Market Forecast by Airbus. The Toulouse-based plane maker says half the present 21,450 aircraft flying will still be aloft in 20 years. With 37,390 new planes predicted to take off, the world’s total will increase by 123 per cent to 47,990. The expected total number of aircraft is 11.3 per cent higher than it was in the last big forecast by Airbus, a year ago. The vast majority of the new planes will be smaller, narrow-bodied jets. More than three-quarters of deliveries will be from the Airbus A320 and Boeing 737 families, or aircraft of a similar scale from other manufacturers.

Assuming the 737 is still being made in 2037, it will be the most enduring aircraft in aviation history, having first flown 70-years earlier. Of the 28,550 predicted new narrow-bodied planes, one of Airbus’s leading hopes is the A321 NEO, a re-engined version of an aircraft that attracted little attention when it was launched as a stretched A320 in the early 1990s. The latest version can hold up to 244 passengers, and the long-range variant can fly 4,600 miles – the distance from Manchester to Seattle. The economics of the A321 are very tempting to 21st-century airlines, particularly for “long, thin” routes.

[..] Last month, Eamonn Brennan, director general of the air-traffic provider, Eurocontrol, warned: “On our most likely scenario, there won’t be enough capacity for approximately 1.5 million flights or 160 million passengers in 2040. “Many airports will become much busier, with higher delays. By 2040, 16 airports will be highly congested operating at close to capacity for much of the day, up from six airports today. “As a result of this congestion the number of passengers delayed by between one and two hours will grow from around 50,000 each day now to around 470,000 a day in 2040.”

Read more …

You’re going to need a lot tougher words than that.

Pope Warns Earth Turning Into Vast Pile Of ‘Rubble, Deserts And Refuse’ (AP)

Pope Francis urged governments on Friday to make good on their commitments to curb global warming, warning that climate change, continued unsustainable development and rampant consumption threatens to turn the Earth into a vast pile of “rubble, deserts and refuse”. Francis made the appeal at a Vatican conference marking the third anniversary of his landmark environmental encyclical “Praise Be.” The document, meant to spur action at the 2015 Paris climate conference, called for a paradigm shift in humanity’s relationship with Mother Nature. In his remarks, Francis urged governments to honor their Paris commitments and said institutions such as the IMF and World Bank had important roles to play in encouraging reforms promoting sustainable development.

“There is a real danger that we will leave future generations only rubble, deserts and refuse,” he warned. The Paris accord, reached by 195 countries, seeks to avoid some of the worst effects of climate change by curbing global greenhouse gas emissions via individual, non-binding national plans. President Donald Trump has said the US will pull out of the accord negotiated by his predecessor unless he can get a better deal. Friday’s conference was the latest in a series of Vatican initiatives meant to impress a sense of urgency about global warming and the threat it poses in particular to the world’s poorest and most marginalised people. Recently, Francis invited oil executives and investors to the Vatican for a closed-door conference where he urged them to find alternatives to fossil fuels. He warned climate change was a challenge of “epochal proportions”.

Read more …

Jul 062018
 
 July 6, 2018  Posted by at 8:55 am Finance Tagged with: , , , , , , , , , , , ,  


Henri Matisse Reading woman in violet dress 1898

 

China Imposes Tariffs, Says US Launching ‘Largest Trade War In History’ (CNBC)
Trump Says China Could Face More Than $500 Billion In US Tariffs (CNBC)
Merkel Open To Reducing EU Tariffs On American Cars (NC5)
US Labor Shortage Is Reaching A Critical Point (CNBC)
Theresa May’s New Customs Plan ‘Dead On Arrival’ In EU (Ind.)
Theresa May Battles To See Off Revolt Ahead Of Key Brexit Summit (G.)
The Dark Cloud Of Global Debt (GT)
“People Assume That Stocks Always Rise Over Time. They’re Wrong” (Eric Peters)
Most Dangerous Market Ever – Michael Pento (USAW)
Moscow Using UK As Dumping Ground For Poison, Says Sajid Javid (G.)
If The Novichok Was Planted By Russia, Where’s The Evidence? (G.)
Seehofer Tells Merkel, Italy And Greece To Solve Migration Row (EUO)
European Parliament Rejects Controversial Copyright Rules (Ind.)

 

 

Act like grown-ups.

China Imposes Tariffs, Says US Launching ‘Largest Trade War In History’ (CNBC)

China implemented retaliatory tariffs on some imports from the U.S. Friday, state media reported, immediately after new U.S. duties had taken effect. The move signals the start of a full-blown trade war between the world’s two largest economies, after President Donald Trump’s administration had initially made good on threats to impose steep tariffs on Chinese goods. At midnight Washington time, the U.S. imposed new tariffs on $34 billion of annual imports from China. This prompted Beijing to respond in kind with levy tariffs on 545 items of U.S. imports — also worth $34 billion, state-run newspaper The China Daily reported Friday.

A spokesperson at China’s ministry of commerce said that while the Asian giant had refused to “fire the first shot,” it was being forced to respond after the U.S. had “launched the largest trade war in economic history.” “This act is typical trade bullying,” the spokesperson said, before adding: “It seriously jeopardizes the global industrial chain … Hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers.”

Read more …

China has already retaliated.

Trump Says China Could Face More Than $500 Billion In US Tariffs (CNBC)

President Donald Trump said on Thursday he would consider imposing additional tariffs on $500 billion in Chinese goods, should Beijing retaliate. U.S. tariffs on $34 billion worth of Chinese goods kicked in on Friday. Another $16 billion are expected to go into effect in two weeks and potentially another $500 billion, Trump told reports aboard Air Force One on his way to a rally in Montana before the tariffs kicked in. China implemented retaliatory tariffs on some imports from the U.S., state media reported about two hours later, after new U.S. duties had taken effect.

First “34, and then you have another 16 in two weeks and then as you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300,” Trump said. “It’s only on China,” he added. Trump’s statements reinforce earlier threats that he would escalate the trade conflict. The dispute with China has roiled financial markets worldwide, including stocks, currencies and the global trade of commodities from soybeans to coal.

Read more …

Was that so hard?

Merkel Open To Reducing EU Tariffs On American Cars (NC5)

In the midst of trade tension between the European Union and the U.S., German Chancellor Angela Merkel said she’s open to lowering tariffs on American car imports. According to Reuters, Merkel said Europe would have to first agree upon a reduction in tariffs. In addition, she cited World Trade Organization rules that state lowering U.S. auto tariffs would mean doing the same for other countries as well. Merkel’s comments come after President Donald Trump imposed steel and aluminum tariffs on U.S. allies, including the EU, and threatened to put a 20 percent tax on European car imports.

The German chancellor warned Trump on Wednesday not to implement auto tariffs to avoid inciting an all-out trade war. Auto industry experts have suggested that if the Trump administration follows through on that threat, the move would negatively affect American autoworkers’ jobs and raise car prices. Trump is scheduled to travel to Brussels next week for the NATO summit, his first big meeting with European leaders together since last month’s G-7 summit.

Read more …

With 95 million still out of the labor force.

US Labor Shortage Is Reaching A Critical Point (CNBC)

America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying. A report Thursday from ADP and Moody’s Analytics cast an even brighter light on what is becoming one of the most important economic stories of 2018: the difficulty employers are having in finding qualified employees to fill a record 6.7 million job openings. Truck drivers are in perilously low supply, Silicon Valley continues to struggle to fill vacancies, and employers across the grid are coping with a skills mismatch as the economy edges ever closer to full employment. “Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement.

“These labor shortages will only intensify across all industries and company sizes.” Private payrolls grew by 177,000 in June, a respectable number but below market expectations. It was the fourth month in a row that the ADP/Moody’s count fell short of 200,000 after four months at or above that level. The reason for the tick down in hiring certainly isn’t because there aren’t enough jobs. The Bureau of Labor Statistics reported that April closed with 6.7 million job openings. May ended with just over 6 million people the BLS classifies as unemployed, continuing a trend this year that has seen openings eclipse the labor pool for the first time. At some point that gap will have to close. Economists expect that employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives.

Read more …

“We have been telling the UK for two years that we would not accept a single market a la carte. “What do they come with? – A single market a la carte.”

Theresa May’s New Customs Plan ‘Dead On Arrival’ In EU (Ind.)

Theresa May’s new plan for future relations with the EU will be “dead on arrival”, senior figures in Brussels have told The Independent. EU officials said any hint that the UK wants to be part of the single market on goods, but not services will be rejected. It is a blow for the prime minister who has spent the last week in meetings with EU leaders, including Angela Merkel, in a bid to prevent Europe dismissing her plans out of hand when they are published next week. Ms May is expected to push her cabinet to agree to a plan at Chequers on Friday, which would see Britain remaining in full regulatory alignment with the EU on goods, but not on services.

The meeting has also been preceded by threats and warnings from the Brexiteer wing of the Conservatives that the proposals mooted by the prime minister will not be accepted by them in the UK because they keep Britain too closely tied to the EU’s rules and regulations. But before her ministers have even agreed to the deal, EU officials told The Independent the white paper would be “dead on arrival” in Brussels if, as expected, it proposes that the UK remain in the EU’s single market for goods, but not services. They claimed they had repeatedly warned UK negotiators that this option would not work. They said it had been widely discussed among EU ministers and rejected – including, crucially, by the EU’s two most powerful players, France and Germany.

One Brussels source said: “We have been telling the UK for two years that we would not accept a single market a la carte. “What do they come with? – A single market a la carte.”

Read more …

Who will be left standing by Saturday?

Theresa May Battles To See Off Revolt Ahead Of Key Brexit Summit (G.)

Theresa May was battling to see off a revolt on the eve of a critical cabinet summit, as Boris Johnson convened a meeting of pro-Brexit ministers to discuss their options amid an atmosphere of tension and recrimination. The government was forced to deny “selective leaks” that appeared to suggest that the UK could struggle to strike a trade deal with the US in the future. No 10 insisted that paperwork released to ministers ahead of Friday’s crunch Brexit meeting at Chequers said just the opposite – as a caucus of seven cabinet members including Johnson, Michael Gove, Liam Fox and David Davis met at the Foreign Office to discuss their concerns.

An early leak suggested that the UK should “maintain a common rulebook” with the European Union on food and farming standards and that could make striking a trade deal with the more free market-oriented US more difficult as a result. That prompted a series of complaints from backbench Tory MPs and led to the Thursday evening meeting at the Foreign Office hosted by Johnson, the foreign secretary. Sources at No 10 said there had been selective leaks from the paperwork and the controversial passage appeared on page 15 out of 50 from one of several documents sent to all members of the cabinet.

Read more …

It’s corporations this time around.

The Dark Cloud Of Global Debt (GT)

While everyone is debating the effects of possible trade sanctions on the global economy, few are paying attention to a far more serious issue. Enormous global debt, combined with low-interest rates, have set the stage for a global recession that has the potential for economic chaos. The combination of enormous debt and artificially low-interest rates were at the center of the 2008 credit bubble. One would expect central banks to be aware of this and show more concern. However, the overall silence has been astonishing. An exception to this is the Bank for International Settlements (BIS), which has been making loud noises about the toxic level of global debt and the anticipated bubble.

It recently reported that the global debt of 2008 was $60 trillion, small when compared to the current debt of $170 trillion. To make matters worse, today’s global debt is 40 percent higher in relation to GDP than it was in 2008, just prior to the Lehman Bros. downfall. To add to the current headache are the rising debt levels of emerging markets and corporate debts. According to McKinsey & Company, a global consulting firm, two-thirds of U.S. corporate debt are from corporations that pose a high default risk. Countries such as Brazil, India, and China have been busy issuing questionable credit. This dubious credit being issued in many emerging markets has come with extremely low-interest rates.

If the borrowers’ default, the lenders won’t be looking at enough compensation to recoup their loses. Low-interest rates have become an overall global problem, including the rates in the U.S. high-yield bond market. Central banks around the world have been keeping interest rates artificially low while printing money with abandon. The current global debt is the direct result of this policy. $2 trillion in corporate debt will be maturing annually through 2022. A considerable amount of this debt may default and cause debt repricing. The damage caused by central banks and their policy of easy credit has been done, and there is little that can be done at this point to stem the tide. It can only be hoped that they are more aware now than they were in 2008.

Read more …

Central banks don’t really matter anymore.

“People Assume That Stocks Always Rise Over Time. They’re Wrong” (Eric Peters)

We’ve all looked at the stats, and we’re now at an unemployment rate in the US of sub-4% – 3.8%–3.7%. I think what a lot of people focus on is if the participation rate were back where it was pre-2008 you’d end up with an unemployment rate that had an 8 handle or something like that. So that’s what people are referring to. But making comparisons like that is difficult because a lot of things are changing. The US labor force is shrinking because people are getting older. There is the opioid issue. And this disability issue. Which are difficult to really handicap in terms of how big an impact that’s having on the US labor force.

If the central banks have been the ones who have gotten us here, they just – by definition – they’re not the ones that are going to get us out of here. So I think – look, we’re always going to look at what central banks are doing, they will be important. But I think that they’re no longer going to be dominant. What’s going to be dominant are the politicians. You’re seeing that in the US right now. I know that everyone loves to hang on every word that Powell speaks. And they look at the Fed statement. And people are still trained to look at the Fed dot plots (which are probably going to go away). People are trained to look at all of these things because that’s what they’ve done their whole careers.

But they just are not going to matter that much anymore. Whether the Fed’s terminal rate is 2.25 or 2.5 or 2.75 – we’re not talking about much. What are we going to do in terms of immigration policy? What are we going to do in terms of trade policy? How is that going to impact all of the major corporations’ global supply chains? These are the things that are really going to matter.

Read more …

“It is a confluence of events coming in October ..”

Most Dangerous Market Ever – Michael Pento (USAW)

Money manager Michael Pento is sounding the alarm because we are getting very close to something called a “yield curve inversion.” Pento explains, “Why do I care if the yield curve inverts? Because 9 out of the last 10 times the yield curve inverted, we had a recession. . . . The spread with the yield curve is the narrowest it has been since outside of the start of the Great Recession that commenced in December of 2007. . . . The last two times the yield curve inverted, we had a stock market drop of 50%. The market dropped, and the S&P 500 lost 50% of its value.” Can we keep partying in the markets like it’s 1999 or is there an expiration date for the good times?

Pento says, “Well, I have put a check on the calendar for October because of the fact the rate of quantitative easing goes to $15 billion per year, because the trade war will reach a crescendo, then because I believe, unfortunately because I am conservative, the Republicans lose the House of Representatives, because the Chinese credit boom will be in full reverse by October. It is a confluence of events coming in October . . . we’ve already entered into the beginnings of a bear market around the world. The top 22 banks in the world are in a bear market. There are many, many examples of banks around the world that are in a bear market. You have a bear market in Chinese shares. 20% of the S&P 500 is in a bear market. This is an incipient bear market that is already beginning. I believe it manifests clearly to even the people on CNBC by October.”

Read more …

None of this makes any sense.

Moscow Using UK As Dumping Ground For Poison, Says Sajid Javid (G.)

Britain will consult its allies about a possible response to Russia over the latest poisonings in Wiltshire as it emerged that the couple taken critically ill had handled an item contaminated with the nerve agent novichok. The home secretary, Sajid Javid, accused Moscow of using the UK as a “dumping ground” for poison and urged Russia to explain “exactly what has gone on”. In Salisbury, public health and council chiefs warned people not to pick up unidentified objects but dismissed the idea of making a general sweep of the city for novichok, although they said they could not rule out the possibility that more of the nerve agent was present.

The Guardian understands that the novichok that harmed them may have been in a sealed container left following the attack on the former Russian spy Sergei Skripal and his daughter, Yulia, in March. Sources close to the investigation dropped a hint that they may now know the identity of the would-be killers who targeted the Skripals. The Metropolitan police confirmed on Thursday evening that the couple taken ill, Dawn Sturgess, 44, from Salisbury, and Charlie Rowley, 45, of Amesbury, collapsed after picking up a contaminated item.

Read more …

Even the Guardian allows itself to publish out right criticism. Putin has a really successful World Cup going. Brexit splits Britain. 1+1=2

If The Novichok Was Planted By Russia, Where’s The Evidence? (G.)

I seem to be the only person alive with no clue as to who has poisoned four people in Wiltshire. I am told that only Russians have access to the poison, known as novichok – though the British research station of Porton Down, located ominously nearby, clearly knows a lot about it. Otherwise, I repeat, I have no clue. I suppose I can see why the Kremlin might want to kill an ex-spy such as Sergei Skripal and his daughter, so as to deter others from defecting. But why wait so long after he has fled, and why during the build-up to so highly politicised an event as a World Cup in Russia? Four months on from the crime, the Skripals have been incommunicado in a “secure location”. Barely a word has been heard from them.

Theresa May has persistently blamed Russia. She has called the incident “brazen and despicable”, and MI5 condemned “flagrant breaches of international rules”. But I cannot see the diplomatic or other purchase in prejudging the case, when no one can offer a clue. As to why the same person or persons should want to kill a couple, unconnected to the Skripals, on an Amesbury housing development, the questions are even more baffling. It seems a funny sort of carelessness. Did the couple pick up the infecting agent nearer the original site, eight miles away? Might the new poisoning be an attempt to divert attention from the earlier one? Could it be a devious plot, to make it seem that novichok is available on every street corner, from your friendly neighbourhood drug dealer?

Or perhaps one of the victims, Charlie Rowley, has mates in Porton Down? Perhaps someone is showing off, or panicking, or behaving like a complete idiot. Who knows? Since I have not a smidgen of an answer to any of these questions, I feel no need to capitulate to the politics of terror and fear. I can open my front door without cleaning my hand. I can visit Wiltshire in peace and safety and marvel at the spire of Salisbury Cathedral. I can revel in the remains of the bronze age Amesbury archer – whose death from bone disease has finally been resolved by the scientists. Where knowledge is nonexistent, ignorance is bliss.

Read more …

NIMBY on steroids.

Seehofer Tells Merkel, Italy And Greece To Solve Migration Row (EUO)

German interior minister Horst Seehofer defused tensions with Austria on Thursday (5 July) but increased political pressure on his boss, chancellor Angela Merkel, as well as on Italy and Greece, to find a way how Germany can reject asylum seekers without closing its border with Austria. “There will be no measures taken by Germany at the expense of Austria,” Austrian chancellor Sebastian Kurz said after meeting Seehofer in Vienna. Under a plan agreed on Monday between Merkel’s centre-right CDU party and Seehofer’s CSU, its Bavarian conservative sister party, asylum seekers would be sent back to the EU country where they were first registered, or to Austria.

Kurz had warned that in reaction, Austria would consider closing its own border with Italy and Slovenia in order to prevent migrants from coming in. This, Vienna had warned, would lead to a “domino effect” of closing borders and imperil the free-movement Schengen area. But Seehofer assured Kurz that Austria would have to take no specific measures, and that it would be up to Italy and Greece, where three-quarters of asylum seekers come from, to take them back. The Bavarian politician has been trying for almost a month to impose his plan on Merkel, who first refused to unilaterally reject asylum seekers. She advocated instead a “European solution” to be agreed with other member states, who would accept taking refugees from Germany.

Read more …

It’s not defeated yet.

European Parliament Rejects Controversial Copyright Rules (Ind.)

The European Parliament has voted against an incredibly controversial new set of copyright rules that campaigners claim could “ban memes”. The law will now be sent for a full reconsideration and debate inside the parliament, during which activists will try and remove the controversial Article 11 and 13. Article 11 has been referred to by campaigners as instituting a “link tax”, by forcing tech companies like Google and Facebook to pay to use snippets of content on their own sites. Article 13 adds rules that make tech companies responsible for ensuring any copyrighted material is not spread over their platforms. Those rules could force technology companies to scan through everything their users post and check it doesn’t include copyrighted material.

If it is found, the post will be forced to be removed, which campaigners claim could destroy the kind of memes and remixes that spread across the internet. The revamp has triggered strong criticism from Wikipedia founder Jimmy Wales, World Wide Web inventor Tim Berners-Lee, net neutrality expert Tim Wu, internet pioneer Vint Cerf and others. Copyright campaigners claim that the rules are necessary to ensure that material isn’t illegally spread across the internet. Europe’s broadcasters, publishers and artists including Paul McCartney backed the rules, arguing the controversial Article 13 would protect the music industry.

A total of 318 law makers voted against opening talks with EU countries based on the committee’s proposal while 278 voted in favour, and 31 abstained. In practice, the vote only delays the final decision on the rules and gives the European Parliament more time to deliberate on them. Another decision will be taken in September.

Read more …

Apr 072018
 
 April 7, 2018  Posted by at 10:24 am Finance Tagged with: , , , , , , , ,  


Arthur Rothstein Grain elevators, Great Falls, Montana 1939

 

US Jobs: One Big Miss (CNBC)
Everything Has Changed In Macroeconomics, But.. (Murphy)
Income From UK Savings Accounts Dropped 16% In A Year (Ind.)
Social Media Users Treated As ‘Experimental Rats’ – EU Watchdog (CNBC)
Facebook Users Have To Pay To Opt Out Of Their Data Being Used (CNBC)
AI: An ‘Immortal Dictator From Which We Can Never Escape’ (CNBC)
960,000 Households In Australia Will Face ‘Mortgage Stress’ (IBT)
Another Mighty Conundrum (Kunstler)
Provocations (Dmitry Orlov)
Shipping Is a Big Part of the Climate Problem (BBG)
Chinese Man Caught Smuggling Five Rhino Horns Is Jailed By Dutch Court (G.)

 

 

93 million not in the labor force.

US Jobs: One Big Miss (CNBC)

Nonfarm payrolls rose 103,000 in March while the unemployment rate was 4.1%, falling well short of Wall Street expectations during a month where weather caused havoc on the jobs market, according to a Bureau of Labor Statistics report Friday. Economists had been expecting a payrolls gain of 193,000 and the unemployment rate to decline one-tenth of a point to 4%. The monthly reading was a huge slip from the 326,000 reported in February. A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons — the underemployed — fell two-tenths of a point to 8%, its lowest reading in 11 years.

“If one were to only focus on this single month, the March employment report is on the disappointing side,” said Mark Hamrick, senior economic analyst at Bankrate.com. “Broader context is appropriate, however. The job market is widely regarded to be close to full employment. So, hiring gains should be slowing at this point in the expansion.” In addition to the payrolls news, the closely watched average hourly earnings figure rose 0.3%, against estimates of 0.2%. The number equates to a healthy but not worrisome 2.7% rate on an annualized basis. The average work week was unchanged at 34.5 hours.

Stock market reaction to the report was muted, with major indexes lower largely on renewed worries over a U.S. trade war with China. “Wage growth continues to inch higher but not enough to worry markets at this point,” said Quincy Krosby, chief market strategist at Prudential Financial. “As we move closer and closer towards full employment expectations are that headline employment should slow. This number reflects a continued reversion to the mean.” Professional and business services led with 33,000 new jobs while manufacturing and health care added 22,000 new jobs apiece. Mining rose 9,000 while construction lost 15,000 positions and retail fell 4,000.

Read more …

Never again…

Everything Has Changed In Macroeconomics, But.. (Murphy)

I spend a lot of time writing about the Global Financial Crisis. Not much of it is published yet: academia is desperately slow. The crash of 2008 and its aftermath is, however, an ever-present reality both in my work life, and to be candid, the world beyond it. But I still do not think we appreciate how much everything has changed. A blog from John Lewis who works for the Bank of England gave some hint of the scale of this change this week. Lewis looked at real interest rates for three centuries i.e. those adjusted for inflation. When considering real bank rate, mortgage rates, and 10-year government bond yields over time this is what he found. As he notes: ‘the lines show the five-year moving averages of the ex-post real interest rate. The dots show the values over the years 2012 to 2016’:

As he notes: “The 5-year average of real bank rate rarely goes below zero – previous instances were mainly during the 1970s inflation and around world wars. The decline in real bond yields since the 1980s leaves them about 300bps below their all time average.” Now there may be good reason for that: broader markets, real reduced risk because of better information, and so on. The absence of world war helps too. But it also means that if we were to return to ‘normal’ or the mean then the change in rates would be massive:

The most useful contrast is with 1997 – 2007, of course. We’re talking adjustments of 4% or more. That is not going to happen. There are good reasons. Most mortgage holders would fail to make their payments. Most banks would then collapse. and government debt costs would increase and may politicians would panic at that whether appropriately or not. I will be blunt. Everything has changed. Those rates are history. This though has massive implications. If this is the case then monetary policy as a mechanism for controlling inflation and economic activity has died: rates that let it work cannot be recreated. And yet almost the whole of macroeconomic thinking is premised on its use, as is the role of central banks in our economies.

The reality is that everything has changed. And yet there is, so far, almost no reaction. Fiscal policy – spend and tax – is the only tool left to the government now and yet no one is saying so. No wonder I spend half my time wondering why we feel so out of control. We are.

Read more …

We’ll get you into the casino yet.

Income From UK Savings Accounts Dropped 16% In A Year (Ind.)

UK savers’ income from bank accounts fell 16 per cent in a year, according to new research, due to low interest rates from banks and building societies. According to easyMoney, the investment platform launched by easyJet founder Stelios Haji-Ioannou, the drop in savings income is worse in real terms due to rising inflation. The decline in income is based on numbers from the 2015/2016 financial year (the latest available data from HMRC) when savers made £5.7bn compared with £6.8bn in 2014/2015. At the end of the 2014/2015 fiscal year, inflation was -0.1 per cent; by January this year it had risen to 3 per cent.

With savers seeing less benefit from stashing their money in bank accounts and cash ISAs, easyMoney said, people are increasingly turning towards alternatives, with many inclined to “take on a sensible increase in risk”. Andrew de Candole, CEO of easyMoney, said: “Savers are increasingly fed up with seeing their money just sitting doing nothing in bank accounts. “It’s easy to see why: these figures show that savings accounts’ and cash ISAs’ performance has been getting worse. With inflation eating away at values, the reality is there’s very little incentive to save through these traditional routes. “For many people the time has come to take action. Investors need products that offer real returns, and many are prepared to accept a sensible, calculated increase in risk in order to achieve this.”

Read more …

So act.

Social Media Users Treated As ‘Experimental Rats’ – EU Watchdog (CNBC)

Facebook needs to make sure the new tools it has introduced to help safeguard user data in the wake of the Cambridge Analytica scandal is done in “practice and not only on paper,” the European Union’s top data watchdog told CNBC. The social network has unveiled a raft of new tools since news of the fiasco broke, with the aim of helping users understand and control how their data are used. Giovanni Buttarelli, the European Data Protection Supervisor (EDPS), said Facebook CEO Mark Zuckerberg needs to ensure these changes are done in practice. “I take note of what Zuckerberg has said recently, he said that he takes care of the privacy right. The question is they should do it in practice and not only on paper,” Buttarelli told CNBC in a phone interview on Thursday.

[..] Buttarelli criticized social media firms’ data collection practices. “There are days when you have the impression people are treated as battery animals or experimental rats. We are treated as a farm for data. We are in within a walled garden and every single action is monitored,” Buttarelli said. The EDPS is in charge of making sure that data are being handled correctly within EU institutions like the Commission. But it is also part of a working group made up of the data protection authorities from various member states.

[..] Buttarelli said there are likely to be far-reaching consequences which could include punishments for companies. “I’m expecting far-reaching consequences on the broader scale. There is a need of a change of culture,” he told CNBC. Last month, European Parliament President Antonio Tajani invited Zuckerberg to testify in front of lawmakers and give reassurances that EU citizens’ data were not used to “manipulate democracy.” Buttarelli said it would be “wise” for Zuckerberg to honor the invitation from Tajani.

Read more …

If you ask me, the highest tree ain’t high enough. But that’s just me. And it’s not those that do it, it’s those that let them.

Facebook Users Have To Pay To Opt Out Of Their Data Being Used (CNBC)

Facebook users could have to pay to completely opt out of their data being used to target them with advertising, the company’s Chief Operating Officer Sheryl Sandberg told NBC News on Thursday. NBC asked if Facebook could come up with a tool to let people have a button that allows them to restrict the social network from using their profile data to stop targeted ads. Sandberg said that the company has “different forms of opt out” but not one button for everything. “We don’t have an opt-out at the highest level. That would be a paid product,” Sandberg told NBC. The comments come in the wake of the scandal in which 87 million Facebook profiles were scraped with the data being sent to political consultancy Cambridge Analytica.

Facebook CEO Mark Zuckerberg has apologized for the company’s role in the data scandal and is now set to testify in front of Congress on April 11. Zuckerberg has also been summoned to appear in front of lawmakers in the U.K. and European Union. The data issue arose from a quiz app that collected data of Facebook users and their friends. This data was then passed on to Cambridge Analytica. Facebook banned the app in 2015, and said it got “assurances” from Cambridge Analytica and the app maker that the data was deleted. However, reports suggested this wasn’t the case. Facebook has been criticized for not checking the data had been erased, a mistake that Sandberg acknowledged.

Read more …

Even Musk makes sense once in a blue moon.

AI: An ‘Immortal Dictator From Which We Can Never Escape’ (CNBC)

Superintelligence — a form of artificial intelligence (AI) smarter than humans — could create an “immortal dictator,” billionaire entrepreneur Elon Musk warned. In a documentary by American filmmaker Chris Paine, Musk said that the development of superintelligence by a company or other organization of people could result in a form of AI that governs the world. “The least scary future I can think of is one where we have at least democratized AI because if one company or small group of people manages to develop godlike digital superintelligence, they could take over the world,” Musk said. “At least when there’s an evil dictator, that human is going to die. But for an AI, there would be no death. It would live forever. And then you’d have an immortal dictator from which we can never escape.”

The documentary by Paine examines a number of examples of AI, including autonomous weapons, Wall Street technology and algorithms driving fake news. It also draws from cultural examples of AI, such as the 1999 film “The Matrix” and 2016 film “Ex Machina.” [..] “If AI has a goal and humanity just happens to be in the way, it will destroy humanity as a matter of course without even thinking about it. No hard feelings,” Musk said. “It’s just like, if we’re building a road and an anthill just happens to be in the way, we don’t hate ants, we’re just building a road, and so, goodbye anthill.”

Read more …

Lowballing.

960,000 Households In Australia Will Face ‘Mortgage Stress’ (IBT)

The number of Australian households facing “mortgage stress” will likely reach 960,000, according to a new data. Slow wage growth is blamed for the trend as it does not keep up with the rising cost of living. Digital Finance Analytics (DFA) has recently released data which suggests that the number of households facing mortgage stress will likely reach about one million. Mortgage stress is a term used to refer to households spending 30% or above of its pre-tax income on home loan repayments. Households are defined as “stressed” when cash flow does not cover ongoing costs.

As for access to other available assets, that is something that they may or may not have. Some households have paid ahead, but those in mild stress have little leeway in their net income while those in severe stress could not meet repayments from current income. The new data also shows that the figure was a climb of 30,000 in the last month, encapsulating low and high-income-earning households, according to 9 News. For DFA spokesperson Martin North, it was an indication of how dire the country’s housing situation is getting.

“Things will get more severe, especially as household debt continues to climb to new record levels, mortgage lending is still growing at two to three times income,” Daily Mail Australia reported him as saying. North added that those numbers were not sustainable. It was estimated that over 55,000 households risk 30-day default in the next 12 months. Bank portfolio losses were expected to be about 2.8 basis points. Aside from flat wages growth and rising costs of living, higher real mortgage rates are perceived to be a burden. Mortgage lending continues to grow at two to three times income. The latest household debt to income ratio is currently at a record 188.6.

Read more …

Pot and sanctuary.

Another Mighty Conundrum (Kunstler)

The sanctuary city movement seems to me the most mendacious element of the story, a nakedly emotional appeal against the rule of law. The attorney general of California, Xavier Becerra, lately threatened to fine corporations there that share employee information with federal agents. There has not been such arrant flouting of federal law by state officials since Governor George Wallace stood in the doorway of the University of Alabama crying “segregation now, segregation tomorrow, segregation forever” in June, 1963 — and we all know how that ended. I’m among those who would like to see the immigration laws honestly enforced. In fact, I would also like to see the 1965 immigration law reformed to admit far fewer people from any land into this country. We have economic and cultural interests to protect, and they would seem to be self-evident.

So why has there been no move by the federal authorities to impose sovereign federal law over figures like Mr. Becerra, or Oakland Mayor Libby Schaaf, who went through the barrio there Paul Revere style warning that the ICE agents were coming? Well, one big reason is the marijuana situation. Nine states have legalized cannabis for recreational use (i.e. for getting high), and 29 have legalized it for medical purposes. This includes all of the states on the “Left Coast.” All of them are flouting federal law in doing that. But imagine the political uproar if the feds tried to step in at this point and quash the cannabis trade. In the early adapters, like Colorado, California, and Washington State, the trade has blossomed into multi-million dollar corporate enterprise, with significant tax revenue.

So, much as I object to the dishonest practices around immigration, I don’t see how the federal government can take principled action against them without first addressing its attitude to the marijuana situation. Of course, that could be easily disposed of by congress adopting a simple law to the effect that the cultivation and sale of cannabis shall be regulated by the states. The craven members of congress apparently don’t even dare to raise the issue of resolving this conundrum, and the thought may have never even entered the mighty golden brain-pan of our president — not to mention The New York Times, The Washington Post, CNN, Fox-News, or any of the other media organs of public debate. Well, maybe the time has come for that discussion.

Read more …

An absolutely fantastic story by Dmitry. Don’t miss this.

Provocations (Dmitry Orlov)

First, I will present just the facts. Next, I will indicate some huge, gaping holes in the plot which we must, perforce, fill using our imaginations (for lack of detailed factual information), but relying on real world knowledge as much as possible to build a plausible scenario (or two). In the end, the most plausible scenario wins. On February 22, 2018, the Argentine newspaper El Clarin has reported that a major shipment of drugs from Buenos Aires to Moscow—389 kg of pure cocaine, valued at over 60 million USD, and bearing the markings of the Sinaloa drug cartel of Northern Mexico—was prevented from taking place thanks to the efforts of Russia’s FSB and the Argentine authorities. Several people, including a member of the Argentine police and someone involved in charity work, have been detained.

Victor Coronelli, Russia’s ambassador to Argentina, related how all the way back in 2016 the embassy received information that possessions belonging to some third party had been found in a storage space at a children’s school operated by the embassy and located several blocks away from it. Suspicions arose and a thorough examination had uncovered 12 colorful suitcases filled with 389 “keys” (1-kilo blocks) of cocaine bearing the little star that is the symbol of the Sinaloa cartel of Northern Mexico. Shortly after the cocaine was discovered, Russia’s FSB, working together with the Argentine police, hatched an ingenious plan for a sting operation, to find out who is behind this shipment. To this end, they carefully replaced the cocaine with flour and placed the 12 colorful suitcases back in storage.

And there they sat for over a year. What has been done with the cocaine that was extracted isn’t known. Apparently, it took a great deal of effort to get anyone to take possession of these suitcases. Eventually, two people were found who agreed to take delivery of them in Moscow: Vladimir Kalmykov and Ishtimir Hudzhamov. They are currently in pretrial detention in Russia. A third suspect, Andrei Kovalchuk, is under arrest in Germany, awaiting extradition to Russia, but his extradition is conditional on whether the Russian side can offer evidence of his complicity or guilt in organizing the shipment.

Kovalchuk used to work for Russia’s Foreign Ministry, but most recently he has used his old ministerial connections to arrange for some small-scale contraband to be shipped to Russia via diplomatic mail: cigars, coffee, cognac, etc. Such trade had been common during the 1990s, when Russian diplomats had fallen on hard times and did whatever they could to make ends meet, but it has become unnecessary in recent years, now that they are very well provided for once again. Still, cigars, coffee and cognac is what Kovalchuk—an apparent throwback to this earlier, meager era—maintains was in the suitcases he had stashed at the school in Buenos Aires: he has kept all of the receipts. He plans to travel to Russia of his own free will once he has gathered all the evidence he needs to exonerate himself.

Read more …

Bloomberg editors are clueless, but the issue is real.

Shipping Is a Big Part of the Climate Problem (BBG)

When almost all the world’s governments agreed in Paris more than two years ago to address climate change, they sidestepped an important issue: carbon emissions from international shipping. Next week in London, they have a chance to put this right. Shipping is by far the most energy-efficient mode of transport, and it moves some 80% of world trade by volume. However, the fuel it uses is hard on the environment and human health — and ships last a long time, so deploying cleaner fleets takes time. Already, international shipping accounts for about as much carbon dioxide each year as Germany’s whole economy. On current trends, its share of the total will rise quickly. It could account for roughly 15% of the global carbon budget set by the Paris accord for 2050.

Next week, the International Maritime Organization is expected to announce a strategy for reducing these emissions. The plan is unlikely to be bold. Countries including Argentina, Brazil, India, Panama and Saudi Arabia are resisting carbon dioxide targets for shipping. Unsurprisingly, the industry itself is also opposed. Despite this resistance, the IMO needs to be ambitious. Ultimately, the most cost-effective approach would be to put a tax on carbon, and let that guide investment and innovation. But devising and implementing an international carbon-price system won’t be done overnight. In the short run, the IMO ought to propose a variety of useful course corrections.

Read more …

The problem in a nutshell: 1 year in jail (5 months with good conduct?!) for 5 rhinos. He’ll do it again as soon as he’s freed. $600,000. Another issue where the tallest tree isn’t high enough.

And we’re not even trying.

Chinese Man Caught Smuggling Five Rhino Horns Is Jailed By Dutch Court (G.)

A Dutch court has sentenced a Chinese man to a year in jail for smuggling five rhino horns and four other horn objects worth about €500,000 ($613,000) in his luggage. The man was caught by customs officials at Schiphol airport in December as he traveled through Amsterdam on his way from South Africa to the Chinese city of Shanghai. It recalled that trading in endangered species is banned under the CITES convention prohibiting sales of protected animals and plants. South Africa is battling a scourge of rhino poaching fuelled by insatiable demand for their horn in Asia.

The country’s ministry of environmental affairs said earlier this year that 1,028 rhinos were slaughtered in 2017. In the last eight years alone, roughly a quarter of the world population of rhinos has been killed in South Africa, home to 80% of the remaining animals. Most of the demand comes from China and Vietnam, where the horn is coveted as a traditional medicine, an aphrodisiac or as a status symbol.

Read more …

Dec 102017
 
 December 10, 2017  Posted by at 10:22 am Finance Tagged with: , , , , , , , , , ,  


Robert Frank Motorama, Los Angeles 1956

 

Peak Fantasy Time (David Stockman)
Deflation Remains Biggest Threat As Lofty Stock Markets Head Into 2018 (F.)
Global Powers Lobby To Stop Special Brexit Deal For UK (G.)
The US Media Yesterday Suffered its Most Humiliating Debacle in Ages (GG)
Principles of Political Economy: The Opening Lines (Steve Keen)
Half A Salary, Half A Job, Half A Life (K.)
Erdogan, Tsipras Strike Secret Deal On Refugees (K.)
Refugee Arrivals in Greece Offset Decongestion Efforts (K.)
Super Rich Shown To Have Grown Out Of Ancient Farming (G.)
India Gov. Files Suits Against Monsanto et al Over Bollworm Cotton Attack (VoI)

 

 

Politics is the entertainment division of the military industrial complex.
-Frank Zappa

The decline in quality of jobs -and compensation- is as horrible as the jobs reports’ attempts at hiding that decline.

Peak Fantasy Time (David Stockman)

If you want to know why both Wall Street and Washington are so delusional about America’s baleful economic predicament, just consider this morsel from today’s Wall Street Journal on the purportedly awesome November jobs report. “Wages rose just 2.5% from a year earlier in November—near the same lackluster pace maintained since late 2015, despite a much lower unemployment rate. But in a positive sign for Americans’ incomes, the average work week increased by about 6 minutes to 34.5 hours in November…. November marked the 86th straight month employers added to payrolls.” Whoopee! Six whole minutes added to a work week that has been shrinking for decades owing to the relentlessly deteriorating quality mix of the “jobs” counted by the BLS establishment survey.

In fact, even by that dubious measure, the work week is still shorter than it was at the December 2007 pre-crisis peak (33.8) and well below its 2000 peak level. The reason isn’t hard to figure: The US economy is generating fewer and fewer goods producing jobs where the work week averages 40.5 hours and weekly pay equates to $58,400 annually and far more bar, hotel and restaurant jobs, where the work week averages just 26.1 hours and weekly pay equates to only $21,000 annually. In other words, the ballyhoed headline averages are essentially meaningless noise because the BLS counts all jobs equal – that is, a 10-hour per week gig at the minimum wage at McDonald’s weighs the same as a 45 hour per week (with overtime) job at the Caterpillar plant in Peoria that pays $80,000 annually in wages and benefits.

In fact, what has been the weakest expansion in history by far may now be finally running out of gas. During the last several weeks the pace of US treasury payroll tax collections has actually dropped sharply – and it is ultimately Uncle Sam’s collection box which gives the most accurate, concurrent reading on the state of the US economy. Some 20 million employers do not tend to send in withholding receipts for the kind of phantom seasonally maladjusted, imputed and trend-modeled jobs which populate the BLS reports.

Yet we we are not close to having recovered the 4.3 million goods producing jobs lost in the Great Recession; 40% of them are still AWOL – meaning they are not likely to be recovered before the next recession hits. Stated differently, the US economy has been shedding high paying goods producing jobs ever since they peaked at 25 million way back in 1980. Indeed, we are still not even close to the 24.6 million figure which was posted at the turn of the century.

By contrast, the count of leisure and hospitality jobs( bars, hotels and restaurants), or what we have dubbed the “Bread and Circuses Economy” keeps growing steadily, thereby filling up the empty space where good jobs have vacated the BLS headline total. Thus, when goods-producing jobs peaked at 25 million back in 1980, there were only 6.7 million jobs in leisure and hospitality. Today that sector employs 16.0 million part-time, low-pay workers..

Read more …

“.. the Fed has erroneously predicted 2% inflation for 66 months and continues to tell us that the low levels of inflation are “transitory.“

Deflation Remains Biggest Threat As Lofty Stock Markets Head Into 2018 (F.)

In the two weeks running up to the passage of the Senate’s version of the tax bill, the equity markets moved significantly depending on how any particular Republican senator intended on voting. Then, when the Senate finally passed the bill on the next business day, markets made new intra-day record highs, but then reversed course. Given the current sky-high market valuation levels, the tax benefits are already priced in. Economist David Rosenberg examined market reaction to the five major tax bills of the last 70 years. He found that, on average, the S&P 500 rises 14.3% (median 18.9%) in the year leading up to the passage of the tax legislation. In the year following, on average, the index falls 7.5% (median 13.1%). It could be he is on to something.

If it has been historically easy money that has propelled the U.S. and every other major stock market to record heights over the past few years, then it is noteworthy that the last 12 moves from the world’s central banks have been tightening moves. We know that the Fed is certain to tighten next week at its December 12-13 meeting. This, despite the fact that the Fed’s governing board is deeply divided on the outlook for interest rates and inflation. According to their own minutes, some Fed-governing members continue to hold to the academic view that the Phillips curve (i.e., inflation always rises when the unemployment rate is low) is alive and well. Under this view, inflation is just around the corner and the Fed had better be pre-emptive, lest inflation get ahead of them.

The other view is that today’s economy exhibits behaviors that are significantly different from those that dominated the 60+ years of post-WWII America, and that inflation is no longer the threat it used to be. In fact, deflation may be a bigger threat, especially given the high and rising debt levels. Regular readers know that I have espoused the latter viewpoint. I have pointed out several times that the Fed has erroneously predicted 2% inflation for 66 months and continues to tell us that the low levels of inflation are “transitory.” Fed Chair-Elect Powell espoused this viewpoint in his confirmation hearing, so, there is not much hope that they Fed will back off.

Read more …

US, Canada et al don’t want any special treatment for Britain. But that’s not their decision.

Global Powers Lobby To Stop Special Brexit Deal For UK (G.)

Theresa May’s hopes of securing a unique post-Brexit trade deal with the EU were under threat on Saturday night as Brussels said it was coming under international pressure to deny Britain special treatment. After a week that saw May reach a deal with the EU that will allow Brexit talks to move forward on to future trade relations, EU officials insisted a bespoke deal more favourable to the UK than other non-EU nations was out of the question. One EU source close to the talks said: “We have been approached by a number of [non-member] countries expressing concerns and making it clear that it would constitute a major problem for them if suddenly the UK were to get better terms than they get.”

The official said that once the UK is out of the single market and customs union in March 2019, there could be no replication of the terms of the current trading relationship, or anything close to it, and no special treatment. “It is not just an indication of some strange rigid principle. It is because things won’t work,” he said. “First and foremost we need to stick to this balance of rights and obligations, otherwise we will be undermining our own customs union and single market. Second, we cannot upset relations with other third countries,” the official said. “If we were to give the UK a very lopsided deal, then the other partners with whom we have been engaging and who entered into balanced agreements would come back and question those agreements.”

Read more …

Julian Assange on Twitter: “Is the fake news story about @WikiLeaks yesterday the worst since Iraq? It’s a serious question. Three outlets, CNN, NBC and ABC all independently “confirmed” the same false information. Has there previously been a serious triple origin fake news story? i.e not just re-reporting.”

The US Media Yesterday Suffered its Most Humiliating Debacle in Ages (GG)

Friday was one of the most embarrassing days for the U.S. media in quite a long time. The humiliation orgy was kicked off by CNN, with MSNBC and CBS close behind, with countless pundits, commentators and operatives joining the party throughout the day. By the end of the day, it was clear that several of the nation’s largest and most influential news outlets had spread an explosive but completely false news story to millions of people, while refusing to provide any explanation of how it happened. The spectacle began on Friday morning at 11:00 am EST, when the Most Trusted Name in News™ spent 12 straight minutes on air flamboyantly hyping an exclusive bombshell report that seemed to prove that WikiLeaks, last September, had secretly offered the Trump campaign, even Donald Trump himself, special access to the DNC emails before they were published on the internet.

As CNN sees the world, this would prove collusion between the Trump family and WikiLeaks and, more importantly, between Trump and Russia, since the U.S. intelligence community regards WikiLeaks as an “arm of Russian intelligence,” and therefore, so does the U.S. media. This entire revelation was based on an email which CNN strongly implied it had exclusively obtained and had in its possession. The email was sent by someone named “Michael J. Erickson” – someone nobody had heard of previously and whom CNN could not identify – to Donald Trump, Jr., offering a decryption key and access to DNC emails that WikiLeaks had “uploaded.”

Read more …

Steve is busy introducing economics to energy. Another thing the entire field entirely overlooked.

Principles of Political Economy: The Opening Lines (Steve Keen)

Labor without Energy is a Corpse; Capital without Energy is a Statue

Economics went astray from the very first sentence of Adam Smith’s Wealth of Nations in 1776: “The annual labour of every nation”, Smith asserted, “is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always, either in the immediate produce of that labour, or in what is purchased with that produce from other nations.” This paragraph mimicked the structure, and even the cadence (though not the brevity), of the opening sentence of Richard Cantillon’s 1730 treatise Essai sur la Nature du Commerce en Général (which Smith read). However, Smith made one crucial substitution: he asserted that “Labor … is the fund” from which our wealth springs, whereas Cantillon asserted that it was Land:

“Land”, Cantillon began, “is the source or matter from which all wealth is drawn; man’s labor provides the form for its production, and wealth in itself is nothing but the food, conveniences, and pleasures of life.” (21) Both these assertions are strictly false. The true source of the wealth that humanity has generated from production is neither Labor nor Land, but the Energy that humanity’s production systems harness and turn into useful work (now known as “Exergy”). However, Smith’s assertion is irredeemably false, whereas Cantillon’s merely needs generalization to make it consistent with the fundamental laws of the universe known as the Laws of Thermodynamics. These Laws are still poorly known by economists, which in part explains why economic theory has managed to be in conflict with them for so long. Illustrating why this is so, and why it is crucial, will take time, and effort on your part too to understand them (if you do not already).

But the fact that no theory that contradicts them can be taken seriously, was stated eloquently by the physicist Arthur Eddington in his 1928 book for lay readers The Nature of the Physical World: The law that entropy always increases—the second law of thermodynamics—holds, I think, the supreme position among the laws of Nature. If someone points out to you that your pet theory of the universe is in disagreement with Maxwell’s equations—then so much the worse for Maxwell’s equations. If it is found to be contradicted by observations—well, these experimentalists do bungle things sometimes. But if your theory is found to be against the second law of thermodynamics I can give you no hope; there is nothing for it but to collapse in deepest humiliation. (37)

Read more …

Life in Greece. Every day gets worse.

Half A Salary, Half A Job, Half A Life (K.)

Two in three Greeks fail to pay their bills on time, mainly because they don’t have the money. Three in 10 private sector workers, meanwhile, work part time and get paid a salary of 407.15 euros a month, on average. The first case puts Greece at the top of the list of EU countries in terms of citizens that don’t keep up with their bills, according to the European Consumer Payment Report 2017, with the main reason being the lack of money. In the rest of Europe, the main causes of delays are simple absentmindedness or forgetfulness. The second case is something entirely different. In one sense, it can be interpreted as a reduction in unemployment, which dropped to 20.5% in September. Basically, unemployment falls as part-time work rises, with 30.6% of employees in the private sector working such jobs.

Is this something to be glad about? Should we welcome it as an improvement in the country’s economy? Flexible forms of labor that bring in a pittance of a salary strengthen the ranks of the nouveau pauvre, but at the same time bring down unemployment – albeit dragging down every index that points to a normal life along with it. This is the new normal. But how can 400 euros a month possibly be considered normal? We are beyond the viral videos of the first months of the crisis, of frenzied officials claiming that children were fainting of hunger at school, of images of people rummaging through trash cans looking for food, of pensioners falling over each other for a bag of free potatoes and other such dramatic scenes, real or contrived, that appeared on screens all over the world, and which the present government is quick to claim no longer exist.

Today, some really “lucky” Greeks are insured and have a daily wage of 51 euros, adding up to 1,193 euros a month. But the majority, the less fortunate – yet still fortunate enough to have a job – need to make do with 400 euros a month. It is a conundrum that requires a good deal of math. This month you’ll pay the water bill but not the electricity, you’ll limit your purchases to the bare essentials and you’ll adapt your diet to your budget. What’s left after that? A constant knot in your stomach that you have to learn to put up with. You won’t faint in the street, but each day will be a struggle. You will die a little bit inside, but this is not a measurable reaction and the indices don’t care. Neither does the government, whose slogan when it was in the opposition was that there are real people behind the data. Now the only number it cares to talk about is the shrinking unemployment rate.[..]

The line that defines normal is constantly being shifted and with it the definition of poverty.

Read more …

Erdogan was in Greece the past week and tried to stir up as much shit as he could. Refugees remain his main weapon.

Erdogan, Tsipras Strike Secret Deal On Refugees (K.)

As pressure due to overcrowding continues to build at reception centers for migrants on the islands of the eastern Aegean, Turkish President Recep Tayyip Erdogan accepted a request by Prime Minister Alexis Tsipras that Turkey take back migrants from the Greek mainland as well as the islands, Kathimerini understands. During a joint press conference with Erdogan on Thursday, Tsipras declared that “new measures have been agreed for cooperation in the context of the European Union-Turkey agreement,” referring to a deal signed between Ankara and Brussels in March 2016 to curb human trafficking across the Aegean. Tsipras’s comments spurred much speculation about what those measures might be. It appears that they would involve triggering the return of migrants to Turkey, a process that has largely halted as new arrivals often lodge applications for asylum, a lengthy process.

Thousands of migrants, particularly those deemed to be the most vulnerable such as children, pregnant women and the elderly, have already been transferred from cramped facilities on the islands to the mainland. But conditions remain overcrowded at the island camps amid a constant stream of new arrivals from neighboring Turkey. What remains unclear is whether officials in Brussels have approved the deal; as it stands, it would basically undermine the basis of last year’s EU-Ankara agreement, according to which migrants should remain on the islands until a decision has been reached on their status (whether they are considered to belong to vulnerable groups meriting priority treatment, to be granted asylum etc). In recent comments, Dutch Ambassador in Athens Caspar Veldkamp expressed concerns about the prospects of mass relocations to the mainland if returns are not being made to Turkey, noting that this could undermine the EU-Turkey deal and encourage human smugglers rather than averting them.

For the leftist-led government, however, moving migrants from cramped facilities to mainland camps would appease those in the party concerned about inhumane conditions on the islands. As winter looms, and hundreds of migrants continue to live in tents around the reception centers, Migration Minister Yiannis Mouzalas has conceded that he could not rule out the risk of people dying from hypothermia. In an interview with Der Spiegel that was published on Friday, Mouzalas said that authorities were making preparations to ensure that island camps are ready to deal with plunging temperatures. Everything should be in place by December 15, he said. “The key though is the number of new arrivals,” he said, adding that if there is no large increase in numbers “then we are well prepared.” Authorities might reserve some rooms at local hotels if necessary, he said.

Read more …

Haven’t heard this one before, and it feels like an ominous sign: “Migration Minister Yiannis Mouzalas told Germany’s Spiegel Online that he cannot guarantee that no one will die in the camps with the onset of winter.”

Refugee Arrivals in Greece Offset Decongestion Efforts (K.)

The effort to improve the living conditions of refugees and migrants stranded at overcrowded reception centers on the eastern Aegean islands of Lesvos, Chios and Samos by transferring some of them to the mainland will fail to yield the desired result as long as flows from Turkey continue. In its latest report, the UNHCR said that 17,764 people were transferred from the islands to the mainland in the period from July 2016 to November 2017. UNHCR sources clarified, however, that the number of those removed from the islands is significantly higher than the official figure. Many of the people who have completed the necessary procedures or are deemed to be vulnerable, and as such are allowed to depart for the mainland, do so at their own cost, the same sources said.

They also reckoned that in 2016 around 40% of transfers were conducted by the UNHCR but the%age rose to 80% in 2017 after a request by the Migration Policy Ministry. At the same time, however, in the period between early April 2016, when Ankara and Brussels reached a deal to limit migrant flows into Europe, until late November, some 48,600 people arrived in Greece. In November, 3,800 people arrived on the Greek islands from Turkey, while 2,128 asylum seekers were transferred to the mainland in the same month. The Migration Policy Ministry on Saturday dismissed rumors on Chios that there are plans for the immediate removal of some 1,000 people from the Vial hotspot. It said that removals will take place gradually.

Meanwhile, Migration Minister Yiannis Mouzalas told Germany’s Spiegel Online that he cannot guarantee that no one will die in the camps with the onset of winter. “What we can do,” he said, “is try the utmost to prevent death.” Moreover, the German newspaper Bild said that an increasing number of refugees in Greece are trying to get to other European Union countries using forged passports.

Read more …

There are multiple pieces coming out lately that prove the obvious: once mankind started gathering surpluses, hierarchies developed, and so did inequality.

Super Rich Shown To Have Grown Out Of Ancient Farming (G.)

To measure relative wealth in a society, the team worked with archaeologists studying 62 different societies in Europe, Asia and North America. Some of these were up to 10,000 years old and included digs in ancient Babylonia, Catalhoyuk (now in Turkey) and Pompeii. Researchers analysed the sizes of houses at these sites and used these as indicators of the variations of wealth that existed there at any one time. “House size gives a very good indication of wealth,” said Smith. This point was backed by Kohler. “We consider house size to be a proxy for wealth.” The figures produced by these analyses provided the team with an indication of a particular society’s wealth. The greater the diversity in house size, the greater the inequality. In turn this disparity was measured using a system based on the Gini coefficient.

“Gini coefficients range from zero for societies in which each person has exactly the same amount of wealth to a society in which a single person owns the resources of an entire society. Such a society would have a Gini coefficient of one,” Kohler said. The team found that ancient farming societies had an inequality with a coefficient of around 0.35. That is a higher level of inequality than the level that is likely to have existed in earlier millennia when humans lived as hunter gatherers and shared many resources. “However, this inequality among these, the first farmers, is an awful lot less than the inequality you find in the US today,” said Kohler. “Here we have a Gini coefficient of around 0.8 today.” In the ancient farms of the New World, inequality stayed more or less the same. However, in Eurasia it started to climb over time until it reached levels of around 0.6 a few thousand years ago. This rise coincides with the introduction of oxen and horses and their exploitation in the ploughing of fields.

Read more …

More. Monsanto. Mayhem.

India Gov. Files Suits Against Monsanto et al Over Bollworm Cotton Attack (VoI)

The Maharashtra government on Friday announced that it would file police complaints against seed companies like Monsanto, which supplied seeds of BT Cotton, the crops from which were destroyed in a large-scale bollworm attack. Maharashtra’s Revenue Minister Chandrakant Patil said on Friday more than 70% of the cotton crop in Vidarbha has been destroyed due to the bollworm attack. He added that companies like Monsanto had provided the BT Cotton seeds with the promise that they were immune to attacks by the pest. The Vasantrao Naik Shetkari Swavalamban Mission, a state government body, has estimated that the output of cotton in Maharashtra would fall to 43.10 lakh quintal as compared to 78.61 quintals in December 2016.

The opposition parties are however demanding that the Maharashtra government pay compensation to cotton farmers on the lines of the ongoing farm loan waiver extended to cultivators. The Nationalist Congress Party is demanding that the government provide a compensation of Rs 25,000 per hectare for farmers whose crop has been destroyed in the bollworm attack. NCP leader Dhananjay Munde said his party would hold protests in the cotton-growing areas of Vidarbha to force the government raise compesation to farmers. With the opposition parties likely to paralyse the state legislature during the Winter Session to be held in Nagpur from Monday, Chief Ministre Devendra Fadnavis’s government on Friday asked revenue officials to carry out panchnama of crops destroyed in the bollwork attack. “We are working on a compensation package for farmers,” Patil told reporters.

Read more …

 

Politics is the entertainment division of the military industrial complex.
-Frank Zappa

 

Sep 022017
 
 September 2, 2017  Posted by at 8:58 am Finance Tagged with: , , , , , , , , , ,  


René Magritte Promenades d’Euclid 1955

 

Whoever Leads In AI Will Rule The World – Putin (RT)
Deflation Is Already Here – Albert Edwards (ZH)
Fiscal Austerity After The Great Recession Was A Catastrophic Mistake (Coppola)
Ugly Jobs Report: August Payrolls Miss (ZH)
Deciphering The Swamp’s Unemployment Deception (Feierstein)
The Working Class Can’t Afford the American Dream (HowMuch)
Central Banks Must Be Ready With Cash To Calm Brexit Nerves – Bank Lobby (R.)
How to Crack the Code on Gold – Rickards (DR)
Trump Seeks $7.85 Billion For Harvey Relief, Warns On Debt Ceiling (R.)
Harvey: “Unprecedented” Disruptions To Supplies Of “Essential” Chemicals (ZH)
Irma Intensifies Over The Atlantic (R.)

 

 

Plenty scary thought.

Whoever Leads In AI Will Rule The World – Putin (RT)

Vladimir Putin spoke with students about science in an open lesson on September 1, the start of the school year in Russia. He told them that “the future belongs to artificial intelligence,” and whoever masters it first will rule the world. “Artificial intelligence is the future, not only for Russia, but for all humankind. It comes with colossal opportunities, but also threats that are difficult to predict. Whoever becomes the leader in this sphere will become the ruler of the world,” Russian President Vladimir Putin said. However, the president said he would not like to see anyone “monopolize” the field.

“If we become leaders in this area, we will share this know-how with entire world, the same way we share our nuclear technologies today,” he told students from across Russia via satellite link-up, speaking from the Yaroslavl region. During the 45-minute open lesson (the standard academic hour in Russia), Putin also discussed space, medicine, and the capabilities of the human brain, pointing out the importance of cognitive science. “The movement of the eyes can be used to operate various systems, and also there are possibilities to analyze human behavior in extreme situations, including in space,” Putin said, adding that he believes these studies provide unlimited opportunities. The open lesson was attended by students and teachers from 16,000 schools, Rossiyskaya Gazeta reports. The total audience exceeded one million.

Read more …

“..never since the mid-1960s, when records began, has core CPI (less food, energy and shelter) declined over a six-month period..”

Deflation Is Already Here – Albert Edwards (ZH)

At the start of the year, we were surprised when SocGen’s Albert “Ice Age” Edwards, the biggest perma-deflationist on Wall Street, flipped his outlook on the US economy, and said he now expected a fast spike in inflation driven by wage growth, which in turn would prompt an even more accelerated tightening cycle by the Fed. We did not see it, and said so, pointing out that the bulk of US job growth in recent years has been among industries that have little to no wage power. More than half a year later, and several months after a puzzled Edwards asked “Where Is The Wage Inflation?”, the SocGen strategist has finally thrown in the towel, and in a note released this morning, admits he was wrong, or as he puts it “I was too optimistic”, to wit:

“At this point in the US economic cycle a tight labour market would normally be producing a notable upturn in wage and CPI inflation. This would usually prompt the Fed into a tightening cycle that would typically end in a surprise recession. This is exactly what I expected to occur at the start of this year and I thought it would be that recession that would tip the US into outright deflation ? but I was wrong. I was too optimistic!” And while there has been a modest improvement in average hourly earnings according to the BLS, if not according to the BEA’s wage data, which according to the just released Personal Income data showed another drop in both private and government worker wages…

… broader inflation trends continue to disappoint. Furthermore, when digging through the recent CPI data, Edwards noticed something unexpected: as he writes, although wages have accelerated due to the tight labor market, the last six months has seen consistent downside surprises. And then this: “this has come hand-in-hand with an unprecedented slump in underlying US CPI inflation into outright deflation – in stark contrast to the eurozone where core CPI inflation has decisively risen.” Putting the finding in context, the “wrong, too optimistic” Edwards writes that never since the mid-1960s, when records began, has core CPI (less food, energy and shelter) declined over a six-month period, as demonstrated by the red line in the chart below. Or, as he summarizes, “Deflation did not need another US recession to emerge. It is already here.”

the SocGen strategist has some advice to the Fed: “If I were a Fed Governor I would be pretty shocked/concerned/bemused at inflation developments this year. However confident the Fed is of a self-sustaining-recovery, there is growing evidence of a slide into outright deflation even ahead of the next recession which will likely unambiguously take us deep into deflationary territory.” Imminent deflationary prints notwithstanding, Edwards still thinks rates should be normalised. Why? “Well, because the longer the current credit excesses are allowed to continue, the deeper the next recession and deflationary bust will ultimately be.”

Read more …

“What a complete, utter, disastrous failure of public policy, not just for Greece but for the world.”

Fiscal Austerity After The Great Recession Was A Catastrophic Mistake (Coppola)

In a new paper presented at Jackson Hole last week, the economists Alan Auerbach and Yuriy Gorodnichenko showed that, contrary to popular belief, fiscal expansion after a major financial shock such as that in 2008 did not cause debt/GDP ratios to rise. In fact, the researchers found that debt could become more sustainable, not less, after fiscal stimulus: For a sample of developed countries, we find that government spending shocks do not lead to persistent increases in debt-to-GDP ratios or costs of borrowing, especially during periods of economic weakness. Indeed, fiscal stimulus in a weak economy can improve fiscal sustainability along the metrics we study. Fiscal stimulus works. What a pity we did not allow ourselves to do it, much. But what about Greece? Surely fiscal austerity was necessary there?

Well, maybe. “The experience of Greece and other countries in Southern Europe is a grave warning about the political risks and limits of fiscal policy,” say the researchers. “Bridges to nowhere, “pet” projects and other wasteful spending can outweigh any benefits of countercyclical fiscal policy.” But they nevertheless find that fiscal expansion works even when debt/GDP levels are high. “The penalty for a high debt-to-GDP ratio does not appear to be high at the debt levels experienced historically for developed countries,” they say. So when Greece’s debt was a mere 100% of GDP, fiscal expansion could have been a good strategy. Now, of course, Greece’s debt/GDP ratio is off the chart, because of the aforementioned catastrophic failure of public policy. The researchers warn that their results are uncertain at very high debt/GDP levels. So fiscal expansion might now be too late for Greece. What a tragedy.

“We have been giving catastrophically bad advice to countries with high debt to GDP ratios”, said Jason Furman, the former chair of Barack Obama’s Council of Economic Advisers who is now at Harvard. Too right. And Greece has paid the price. But it is not just Greece that has paid. If Auerbach and Gorodnichenko are right, then the policy path since 2010 has been wrong for many more countries. They have truncated their recoveries and hurt their populations by embarking on premature fiscal consolidation, while cudgeling central banks into somehow conjuring up a recovery that monetary policy is incapable of producing at the lower bound. As a result, there has been a prolonged and wholly unnecessary global slowdown, which will leave lasting scars, particularly on the young. What a complete, utter, disastrous failure of public policy, not just for Greece but for the world.

Read more …

Pre-Harvey ugly.

Ugly Jobs Report: August Payrolls Miss (ZH)

[..] moments ago the BLS reported that in August just 156K jobs were created, a big miss to the 180K expected, and following a sharp downward revision to June and July, which were revised to 210K and 189K, respectively, a 41K drop combined. But don’t worry, the worse, the better as the more disappointing the economic data, the less likely the Fed will hike in September, December, or ever for that matter. And keep in mind, today’s data did not include the Harvey devastation, which will assure no rate hikes from the Fed for months, if not decades to come. Not helping matters – for the economy, if not the stock market which now once again loves bad data – was the Household Survey, according to which the number of employed Americans declined by 74,000 to 153,439K. On an annual basis, the increase in the employment level dropped to 1.2%, the lowest since March.

The unemployment rate also disappointed, rising from 4.3% to 4.4%, while the avg hourly earnings missed, increasing by 2.5% Y/Y in August, below the 2.6% estimate and the same as July. The sequential increase in earnings was just 0.1%, also below the 0.2% expected, and far below the 0.3% in July. Furthermore, since average weekly hours declined also, from 34.5 to 34.4, average weekly earnings declined outright from $909.42 to $907.82 in August. Furthermore, average weekly earnings rose just 2.2% Y/Y, the lowest rate of increase since January.

While the labor force participation rate remained unchanged at 62.9%, the number of Americans not in the labor force increased once again, growing by 128K in August to 94.785 million.

Read more …

Mitch wants investigations. And not the ones going on right now.

Deciphering The Swamp’s Unemployment Deception (Feierstein)

I strongly see the need for a full and open inquiry into Hillary’s illegal server, Clinton’s leaking of top secret documents, the pay-to-play Clinton Foundation, the entire ‘Fake news’ Russian collusion affair and James Comey’s ‘Fake FBI investigation’ with a predetermined outcome. I am not taking a partisan position here. However, I am guessing many people will reason: ‘The Republicans are bashing the Democrats over these inquiries; this guy Feierstein wants an inquiry, so he must be a Republican.’ I don’t blame people for making these assumptions. Our whole country has become infected with this kind of twisted logic. Our entire political debate has caught the virus. Yet, it makes no sense. No sense at all. Here are two facts and one conclusion:

Fact One : Hillary had an illegal server in the basement of her home that contained ‘Top-Secret Emails.’ Fact Two : Senators Grassley and Graham’s statement regarding FBI’s James Comey’s exoneration of Clinton read: “Conclusion first, fact-gathering second—that’s no way to run an investigation. The FBI should be held to a higher standard than that, especially in a matter of such great public interest and controversy.” Conclusion : These allegations are serious enough to deserve an open investigation, period. Partisan bickering and political spin is simply a diversion from the action that American people deserve — and the truth that the American people require.

I say all this because I’m about to call attention to another government department: the Bureau of Labor Statistics. Now, I know that Democrats are currently bashing President Trump over everything he does. I know that Trump is bashing back. But, people, the issue at stake is the creation of jobs in America and the way those things are being recorded and reported. The issues I’m about to address were present under George W. Bush and Barack Obama. They haven’t changed under Donald Trump. The depression which struck this country in the wake of financial crisis 1.0 might have peaked under a Democrat, but it was born in a Republican era. If you yourself are so partisan that you want to make fine distinctions about these things, you should go ahead and make them. Me: I see two peas in a pod.

Good. Preamble over. Here’s the issue: “The number of jobs created in America declined by 74,000 to 153,439 in August. A horrible number, far below expectations. The jobless rate rose to 4.4 and hourly earnings missed increasing only 2.5% year-over-year. Average hours worked also declined, seeing as weekly wages followed suit.” Yet, central bank manipulated stocks are surging, on the terrible economic news, in anticipation of more global central bank easing. News and economic data are irrelevant in our “rigged” system as market participants eagerly line up like heroin addicts awaiting another federal reserve fix.

Read more …

As if anyone still believes in that dream.

The Working Class Can’t Afford the American Dream (HowMuch)

The national conversation in the U.S. is focused squarely on improving the lives of people in the working class. The debate revolves around exactly how to do that. Politicians and pundits have all sorts of ideas, from efforts to save jobs, create tax cuts, subsidize housing, and provide universal healthcare. Thing is, people don’t even agree on how to define the working class, much less how their living conditions stack up across the country. We created a data visualization to illustrate this complex situation. Each bubble represents a city. The color corresponds to the amount of money a typical working-class family would have left over at the end of the year after paying for their living costs, like housing, food and transportation.

The darker the shade of red, the worse off you are. The darker the shade of green, the better off you are. The size of the bubble also fits on a sliding scale—large and dark red means the city is totally unaffordable. Bigger dark green bubbles likewise indicate a city where the working class can get by. The data come from our new True Cost of Living Tool. It’s kind of a big deal because it lets you drill down to a specific city and search through layers of relevant information to understand exactly how much money it takes to live in any given area. We stitched together a variety of different reputable sources, like the Bureau of Labor Statistics for income levels, the National Bureau of Economic Research for tax data, and the U.S. Department of Agriculture for the cost of food. Basically, you can check our work.

Read more …

Banks say central banks must be ready to give money to … banks.

Central Banks Must Be Ready With Cash To Calm Brexit Nerves – Bank Lobby (R.)

Central banks should be ready to inject cash into the financial markets to keep them stable after Britain leaves the European Union in 2019, a draft report from a bank industry lobby said. The Association for Financial Markets in Europe (AFME), in a draft report seen by Reuters, said that regulators, central banks and national governments should continue to support financial market stability between Britain’s departure from the EU and start of new trading terms. “This may require particular attention during the uncertain period around Brexit, and in particular during the transition, and may involve more regular market communications and targeted support in case of market need, for example, access to liquidity schemes,” the report said. This and other steps would be needed to minimise disruption, it said. AFME’s report also provides a blueprint for a transition phase after Britain’s EU exit in March 2019.

This would include a “bridging phase” to avoid “short-term disruption” until new trading terms are ratified and an “adaptation phase” for moving to the new terms. The report did not specify a time frame for the transition but said it should be limited. “It is crucial that clarity is provided as soon as possible on a transitional period, and ideally before the end of this year,” AFME said. AFME wants existing market arrangements maintained throughout the transitional period, reflecting worries among bankers that they might have to comply first with a transition period and then the new trading terms. “This means that existing legislation, regulation, permissions and authorisations should continue to be effective during the transitional period,” it said. Company bosses also want Britain to negotiate a staggered departure from the EU by the end of this year or they will have to push ahead with plans that assume they will lose all access to the single market after March 2019.

Read more …

Rickards sticks to his guns.

How to Crack the Code on Gold – Rickards (DR)

“Don’t underestimate the extent to which gold is being impacted by hedge funds, leverage players, and others that are in the mix for the current high in gold. They don’t really care if it is gold, soybeans, etc. but it is simply another commodity. They receive a nice profit with tight profits, tight stops.” “The bigger picture to look as here is that gold hit an interim low last December and has been grinding higher ever since. Now gold is up over $200 an ounce and is one of the best performing assets in 2017. There’s a pattern of higher highs and shows a very positive occurrence.” [..] “This all relates to currency wars. I think of gold by weight.”

“When most people look at the cost of gold they relate it to the dollar. That gives the dollar a privilege to say that it is the way to count everything. It is also possible to count gold in euro, yen or even bitcoin. I think of gold as money. These are all just cross rates. When I see a higher dollar price for gold, I think of the dollar as being weaker. Likewise, if I see a lower price for gold it just shows that gold is constant and the dollar got stronger.” “There are three things going on right now in gold. There’s a fear trade, there’s technicals with supply shortages and ultimately a weaker dollar. If you want to know where the dollar price for gold is going, ask yourself where the dollar is headed. As the dollar gets weaker due to Federal Reserve Chair Yellen’s plan to tighten rates into weakness. We’re getting disinflation, not inflation and the desire from the Fed is a weaker dollar.”

[..] “I expect to see gold hit $5,000 and eventually to $10,000 an ounce. Maybe not tomorrow or a couple of years but that is the fundamental price of gold as money.” [..] “Bitcoin is a very small market cap compared to gold. I don’t think it has much impact on gold and looks like a bubble right now.” “As someone who has been around Wall Street a long time I’ve seen a lot of different tricks of the trade and frauds that come and go. I am seeing all of the various schemes in bitcoin right now. There’s good forensic evidence that there are people doing wash sales right now and the suckers don’t know they are getting sucked in. Gold is still the ultimate safe haven.”

Read more …

That’s just emergency funding. Washington will need to find ways to help the uninsured.

Trump Seeks $7.85 Billion For Harvey Relief, Warns On Debt Ceiling (R.)

U.S. President Donald Trump has asked Congress for an initial $7.85 billion for Hurricane Harvey recovery efforts, the White House budget director said on Friday, adding that failure to raise the budget ceiling may hinder disaster relief spending. In a letter to U.S. House of Representatives Speaker Paul Ryan, White House budget director Mick Mulvaney said the request included $7.4 billion for the Federal Emergency Management Agency’s Disaster Relief Fund and $450 million for the Small Business Administration’s disaster loan program. “This request is a down-payment on the president’s commitment to help affected states recover from the storm, and future requests will address longer-term rebuilding needs,” Mulvaney said. Trump had been expected to request $5.95 billion for the recovery effort after Harvey flooded areas of Houston and other parts of Texas.

The White House has said that it would make multiple requests for aid from Congress to fund the Harvey recovery effort. White House homeland security adviser Tom Bossert told reporters on Thursday aid funding requests would come in stages as more became known about the impact of the storm. Texas Governor Greg Abbott has said that his state may need more than $125 billion. Bossert said the Trump administration wanted Congress to pass the disaster relief measure on its own and not add it to other measures, such as the effort to raise the debt ceiling. The U.S. government has a statutory limit on how much money it can borrow to cover the budget deficit that results from Washington spending more than it collects in taxes. Only Congress can raise that limit. Mulvaney urged Congress to act “expeditiously to ensure that the debt ceiling does not affect these critical response and recovery efforts.”

Read more …

Ethylene, polypropylene. It’s silly, but we ‘need’ them.

Harvey: “Unprecedented” Disruptions To Supplies Of “Essential” Chemicals (ZH)

The unprecedented destruction wrought by Hurricane Harvey will impact the US economy in ways may not be immediately apparent. Until recently, coverage of the storm’s impact has focused on property damage and the impact on the energy industry. But in a story published Friday, Bloomberg explains the devastating impact the storm has had on Texas’s chemicals industry, which is already causing supply-chain headaches for American manufacturers who’re struggling to source the chemicals required to produce plastics and other components used in everything from milk jugs to car parts. Indeed, if Texas’s chemicals plants are closed for an extended period, production at a potentially huge number of American manufacturers to grind to a halt.

More than 60% of the US’s production capacity for ethylene – one of the most important chemical building blocks for American manufacturers – has been taken offline by the storm, a development that could ripple across the US manufacturing industry. “Texas alone produces nearly three quarters of the country’s supply of one of the most basic chemical building blocks. Ethylene is the foundation for making plastics essential to U.S. consumer and industrial goods, feeding into car parts used by Detroit and diapers sold by Wal-Mart. With Harvey’s floods shutting down almost all the state’s plants, 61% of U.S. ethylene capacity has been closed, according to PetroChemWire.” Ethylene, the gas given off by fruit as it ripens, occurs naturally, but it’s also a crucial product of the $3.5 trillion global chemical industry, with factories pumping out 146 million tons last year.

Processing plants turn the chemical into polyethylene, the world’s most common plastic, which is used in garbage bags and food packaging. When transformed into ethylene glycol, it’s the antifreeze that keeps engines and airplane wings from freezing in winter. It’s used to make polyester for both textiles and water bottles. Ethylene is an ingredient in vinyl products such as PVC pipes, life-saving medical devices and sneaker soles. It helps combat global warming with polystyrene foam insulation and lighter, fuel-saving plastic auto parts. It’s used to make the synthetic rubber found in tires. It’s even an ingredient in house paints and chewing gum. Ethylene and its derivatives account for about 40% of global chemical sales, according to Hassan Ahmed, an analyst at Alembic Global Advisors. And the Gulf Coast is a crucial player in the global market: US production accounts for one of every five tons on the market. International ethylene plants were running nearly full out to meet rising demand before Harvey.

Read more …

‘T is the season. The lesser Antilles could get hit bigtime.

Irma Intensifies Over The Atlantic (R.)

As Harvey diminishes a new storm has emerged. Irma, the fourth hurricane of the 2017 Atlantic hurricane season, has strengthened over the eastern Atlantic to become a Category 3 storm, the U.S. National Hurricane Center said in its latest advisory Thursday. Irma is forecast to intensify Thursday night and is projected to be a very dangerous hurricane for the next few days, the Miami-based center said. Irma is located about 1,845 miles east of the Leeward Islands and has maximum sustained winds of 115 mph, the NHC said. NHC forecast models were showing it heading for the U.S. territory of Puerto Rico, the Dominican Republic, and neighboring Haiti with possible landfall by the middle of next week.

While currently a Category 3 storm, Irma’s winds could strengthen to become a Category 4 storm in five days’ time, the Miami Herald reported. Irma will not reach the eastern Caribbean Lesser Antilles islands until the middle of next week, and it is too soon to determine whether or not the storm will pose a threat to the U.S., according to The Weather Channel. Still, the potential for a U.S. landfall should prompt all who may be affected in those areas to closely monitor the storm in the coming days, The Weather Channel said. “Irma is forecast to become a major hurricane by tonight and is expected to be an extremely dangerous hurricane for the next several days,” the NHC said Thursday, while adding there is no current risk to land from the storm.

Read more …

Aug 052017
 
 August 5, 2017  Posted by at 8:54 am Finance Tagged with: , , , , , , ,  


Pablo Picasso Absinthe Drinker 1901

 

The Body Language of Power (Handelsblatt)
Let This Be Your Final Warning On US Stocks’ Overvaluation (MW)
Beneath The Glow Of Stock-Market Records Lurk Darkly Bearish Trends (MW)
Albert Edwards: Central Banks To Blame For Impending Disaster (CW)
Paul Singer Rages Against Everything From Passive Investing To Safe Spaces (ZH)
The Amazon Effect: Part Time Jobs Soar By 393K, Full Time Jobs Slide (ZH)
Where The Jobs Were: Waiters And Bartenders Topped The List (ZH)
Volkswagen Executive Pleads Guilty In US Emissions Cheating Scandal (R.)
Krauthammer Warns Impeachment Would Be “A Catastrophic Mistake” (ZH)
Russiatosis (Jim Kunstler)
Greece Erasing Asylum Backlog (K.)
Italy Seizes Refugee Rescue Ship (Ind.)

 

 

Germans making fun of Trump and lauding Merkel. What else can they do? She’s as strong as ever. That’s why I added a second picture at the bottom. But someone should write “The Dark Side of Merkel”.

The Body Language of Power (Handelsblatt)

Much about her unique style of power was already evident at the very moment she was closing in on the office of chancellor. It occurred on German television shortly after eight in the evening of September 18, 2005. Germans had just voted, and the polls showed Ms. Merkel’s center-right bloc falling far short of expectations with a tiny lead at 35 percent. The Social Democrats led by the incumbent chancellor Gerhard Schröder were in effect tied at 34 percent. As is customary in Germany, all the parties’ leaders gathered with two journalists to take stock on air. Ms. Merkel, with much larger hair than today, was the only woman among seven men. In the German parliamentary system, various coalition options were still open for either Mr. Schröder or Ms. Merkel to control a majority of the Bundestag. So Mr. Schröder, whom the German press called an “alpha animal”, decided to create facts on the ground.

He burst out with a forceful verbal barrage, insinuating that the moderators were biased, asserting that he was the real winner and disparaging Ms. Merkel. Constantly interrupting all his interlocutors as though in some dominance ritual, he blurted out, “Do you seriously think that my party will take up an offer of coalition talks from Ms. Merkel in this situation, in which she says she wants to be chancellor?” The other men in the round were not his primary targets, but they spent the following 40 minutes sparring with him. Ms. Merkel’s reaction was more interesting. Whenever the camera strayed from the dueling silverbacks and zoomed in on her, she had a neutral expression, or a look of mild puzzlement, but never one of anger or annoyance. Her hands mostly stayed folded on the table in front of her. She hardly spoke at all. In effect, she responded to Mr. Schröder by not reacting.

In the following hours and days, Mr. Schröder’s political career collapsed, as all of Germany wondered what demon had got into him. In at least one interview, he later had to deny that he was drunk during the debate. Meanwhile, Ms. Merkel quietly began coalition negotiations that led her to be sworn in as chancellor two months later, with the Social Democrats as her junior partners. Something had revealed itself that day on television between Mr. Schröder and Ms. Merkel. “When he entered the room, she had lost the election. When he left, she had won the chancellor’s office,” recalls Wolfgang Nowak, a former adviser to Mr. Schröder, who nowadays also has the ear of Ms. Merkel. “Nobody is like her,” says Gregor Gysi, who was opposition leader in parliament for much of Ms. Merkel’s current term. Mr. Gysi is widely considered the wittiest speaker in German politics, and his job in the Bundestag was to needle and provoke the chancellor. But all of his attacks fell flat. Merkel never took his baits; he never got a rise out of her.

Mr. Gysi, now retired, does not contest the point. Ms. Merkel, he says, reminds him of his experience in the 1970s, when he was a lawyer in the East German dictatorship. During interrogations he could always crack the men, he says, but against a certain kind of woman he had “no chance”, provided they did not make the mistake of trying to be like men. Hillary Clinton made that mistake, Mr. Gysi says. She blew a presidential election in America against a man who is almost comical in his pseudo-virility. By contrast, Mr. Gysi says, “Merkel’s secret is that she has found a method against the men, but the men have found no method against her.” “Merkel gets stronger by letting the men be men,” Mr. Nowak agrees. Many of these encounters resemble that televised encounter with Mr Schröder. “She let him do all his wrestling poses,” recalls Mr. Nowak. And in the end the macho always throws himself on the mat, with her left standing.


The flipside. Pic posted on Twitter with caption: “Don’t play with superglue”

Read more …

“People on Wall Street always tell you “this time is different,” but it never has been yet.”

Let This Be Your Final Warning On US Stocks’ Overvaluation (MW)

The Shiller PE [..] compares stocks against the average earnings of the past 10 years, rather than just one year, as Wall Street likes to do. The argument is that longer-term measures smooth out the distortions of booms and busts. Shiller has tracked his data back to 1881. The stock market’s average reading has been about 16 over that time. But that’s masked a wide range, from the single digits all the way up to 45 in early 2000. Critics sometimes like to argue that the reading of late has been distorted because it includes the abysmal corporate earnings during the 2008-2009 crash. So I decided to exclude those, and just compare stock prices to the average of the past five years, rather than 10, to see how that affected the measure. And, yes, it does. But it only cuts the reading from 31 to 25.5.

For reference, it’s only reached a level of about 25 on five previous occasions: 1901, 1928-9, 1966, 1996-2002 and 2003-2007. Each one ended with a crash. People on Wall Street always tell you “this time is different,” but it never has been yet. The “new era” of the 1920s, the “Nifty Fifty” stocks of the 1970s, the “new economy” of the 1990s. Investors in those eras have been told to ignore the lessons of the past and look only to the bright and unprecedented future. Each time they’ve lost their shirts. Other metrics with long-term records are also flashing yellow or red. Those include the so-called Tobin’s q, which compares stock valuations to how much it would cost to rebuild all those companies from scratch; and the Warren Buffett indicator, which compares the value of the stock market to the size of the national economy. (Buffett himself has somewhat backed away from that measure recently.)

Read more …

“As the indexes continue to produce a series of higher highs, subsurface conditions are painting an entirely different picture..”

Beneath The Glow Of Stock-Market Records Lurk Darkly Bearish Trends (MW)

Major U.S. stock-market indexes are trading near record levels, but does that statistic simply mask an ominous picture that’s being painted behind the scenes? Market breadth, a measure of how many stocks are rising versus the number that are dropping, has turned “exceedingly negative,” according to Brad Lamensdorf, a portfolio manager at Ranger Alternative Management. Lamensdorf writes the Lamensdorf Market Timing Report newsletter and runs the AdvisorShares Ranger Equity Bear, an exchange-traded fund that “shorts” stocks, or bets that they will fall. “As the indexes continue to produce a series of higher highs, subsurface conditions are painting an entirely different picture,” Lamensdorf wrote in the latest edition of the newsletter. He noted that the year-to-date advance in equities — the S&P 500 is up 10.6% in 2017 — has been driven by outsize gains in some of the market’s biggest names.

Most notably, the so-called FAANG stocks, which refers to a quintet of technology and internet names, have by themselves contributed more than 28% of the benchmark index’s gain. Separately, megacap names like Boeing and Johnson & Johnson have also outperformed the broader market. “The good performance of these large companies is masking the fact that many stocks, including REITs and those in the retail sector, have already entered bear-market territory,” Lamensdorf wrote, referring to real estate investment trusts. According to an analysis of FactSet data, 79 components of the S&P 500 are trading at least 20% below their 52-week high; a bear market is typically defined as a 20% drop from a peak. However, more than half the components are in what could be deemed bull market territory — at least 20% above their 52-week low.

Lamensdorf also cited a measure that compares market volume on advancing days to volume on days when the major indexes decline. This is a volatile metric, one that has both spikes and pronounced dips. However, since mid-2016, the spikes have topped out at progressively smaller highs. “This situation has occurred while the indexes have simultaneously hit higher highs; a classic negative divergence illustrating that large institutional sponsorship has not been following the indexes,” he wrote.

Read more …

Wait. Wasn’t that my line?

Albert Edwards: Central Banks To Blame For Impending Disaster (CW)

Notoriously bearish strategist Albert Edwards believes the UK is sitting on a ‘massive credit bubble that is primed to burst’ as another recession looms. The Société Générale global strategist said the recent sharp decline in household saving ratios (SR) in the UK and the US was last seen in 2007 just before the global financial crisis. This week, the US saw a substantial downward revision to its SR, with 1.5% lopped off the estimates taking the ratio to 3.8%, a level which Edwards claimed was last seen prior to the recession. In the UK, household SR slumped in the first quarter of this year to 1.9%, which he said was ‘shockingly low’. He said: ‘I’m genuinely getting tired of bashing the major central banks, but every day more evidence mounts that almost exactly the same debt excesses that caused the global financial crisis in 2008 are present today.

‘The UK Bank of England and US Federal Reserve deserve particular vilification for failing to remove the monetary punchbowl quickly enough just like the 2003-2007 period, allowing grotesque debt excesses to build.’ Edwards previously said he believed the US corporate sector ‘borrowing binge’ will take ‘centre stage in the next credit crisis’, but now thinks the household sector will play a bigger part thanks to the latest SR data. Blaming the Fed, he said: ‘QE has not only inflated corporate debt to grotesque levels, but finally the US SR has responded to the surge in household paper wealth that QE has produced. ‘Typically the SR always declines with rising wealth. Why do you need to bother saving if interest rates are close to zero and house and stock prices are rising?’

Edwards also believes the Bank of England (BoE) should have normalised rates ‘long ago’ and thinks it is ‘100%’ the BoE’s ‘own responsibility’ if credit growth spirals out of control. Comparing the UK to SR data from other European countries, Edwards said huge swings in the SR, representing credit booms and busts, are most apparent in the UK – ‘especially relative to the stability of somewhere like France.’ He added: ‘But the recent decline in the UK SR is almost without historical precedent. It is a credit disaster waiting to happen.’

Read more …

“..most fiscal and monetary policymakers’ knowlege of the world is somewhere between “close to nothing” and “way less than zero..”

Paul Singer Rages Against Everything From Passive Investing To Safe Spaces (ZH)

On Central Bankers: The combination of central banker-applied brute force (buying everything in sight) and deity-like central banker pronouncements has dampened market volatility and frisky free-lancing, but at the same time it has encouraged risk taking (in market positioning, not it business formation). We have thought, and still think, that confidence in central banks and policymakers has been unjustified and thus could erode or collapse at any time. Since the major financial institutions which comprise the financial system are still way overleveraged and opaque (in fact with record amounts of debt and derivatives at present), such a break in confidence could happen abruptly and without warning. Investors should come to grips, intellectually and viscerally, with the likelihood that most fiscal and monetary policymakers’ knowlege of the world is somewhere between “close to nothing” and “way less than zero,” and that their pronouncements and policies usually range from “silly but harmless” to “dumb and dangerous.

On whether labor markets are tight: Short answer: no. Programs which foster long-term dependency are not creating social justice; rather, they are creating demeaned citizens and preventing people from experiencing the dignity and contribution to society of work. Given record stock prices and low unemployment rates, the slow rate of increases in wages is “surprising.” But it clearly demonstrates that there is something wrong with the existing prosperity-delivering mechanism. In this regard, America is catching up (but not in a good way) with Europe, which long has lived with much higher rates of unemployment and long-term dependency.

On Chinese Debt: In response to the world economic slowdown after the GFC, China undertook a large debt-fueled stimulus. In 2008, it had a non-financial sector debt-to-GDP ratio of 141% or $6.6 trillion; by 2016 that number was 257% or $27.5 trillion. Combined with wild real estate booms and overbuilding, plus an unhealthy dose of corruption and severe neglect in “rule of law” infrastructure, a serious economic dislocation (or crash) is the obvious (but not necessarily correct) expectation based on the numbers, the leverage, the interconnectivity and the likely quality of debt. A Chinese financial market collapse would likely push the global economy into a deep recession.

Whether they will succeed or fail is completely unknown as this letter is written. A reasonable conclusion about China is that it is foolish to ignore the signs of developing storm but also ill-advised to put a “clock” on it or deem it to be inevitable. Our instinct is that close to perfection will be required to avoid a very painful sequence of events in the global financial system and hence the world economy.

Read more …

Still haven’t got a serious way to measure job quality. A job is a job is a job is nonsense.

The Amazon Effect: Part Time Jobs Soar By 393K, Full Time Jobs Slide (ZH)

On the surface the July jobs report was solid, with 209K jobs added, more than the expected, as the recent auto sector slowdown appears to skip the labor market (for now), with Trump quick to take credit for the report. However, digging through the numbers reveals some troubling features: while the Household survey reported that an impressive 345K jobs were added, more than 50% higher than the Establishment survey, the bulk of these jobs was part-time. According to the BLS, in July 393,000 part time jobs were added, offset by a drop of 54,000 full-time workers.

Read more …

Most jobs now go to people with high school or less.

Where The Jobs Were: Waiters And Bartenders Topped The List (ZH)

We already showed that contrary to the strong headline payrolls print, the sole source of job gains in July was part-time jobs, which rose by 393K in the month, the biggest monthly increase since September 2016, as full-time jobs sunk by 54K. Which is why it should not surprise that of the 209K jobs added according to the Establishment survey, the sector that added the most jobs was the “food services and drinking places”, i.e. “waiters and barenders” category, which added 53,000 jobs, the highest monthly increase since March 2014. There have now been 89 consecutive months without a decline for waiter and bartender jobs, the strongest sector for US employment. Needless to say, these jobs fall within leisure and hospitality, that sector pays the worst wages, an average of $13.35 an hour, and $331.08 a week.

Read more …

Will the others pick a plea deal as well now?

Volkswagen Executive Pleads Guilty In US Emissions Cheating Scandal (R.)

Volkswagen executive Oliver Schmidt pleaded guilty on Friday in U.S. District Court in Detroit in connection with a massive diesel emissions scandal that has cost the German automaker as much as $25 billion. Under a plea agreement, Schmidt faces up to seven years in prison and a fine of between $40,000 and $400,000 after admitting to conspiring to mislead U.S regulators and violating clean air laws. Schmidt will be sentenced on Dec. 6. In March, Volkswagen pleaded guilty to three felony counts under a plea agreement to resolve U.S. charges it installed secret software in vehicles to evade emissions tests. U.S. prosecutors have charged eight current and former Volkswagen executives.

Earlier this year, Schmidt was charged with 11 felony counts and federal prosecutors said he could have faced a maximum of up to 169 years in prison. As part of his guilty plea, prosecutors agreed to drop most of the counts and Schmidt has consented to be deported at the end of his prison sentence. After being informed of the existence of the emissions software in the summer of 2015, according to the agreement, Schmidt conspired with other executives to avoid disclosing “intentional cheating” by the automaker in a bid to seek regulatory approval for its model 2016 VW 2 liter diesel vehicles. During the period in question, Schmidt was working at the companys Wolfsburg, Germany, headquarters as one of three subordinates to the head of engine development. He was arrested when he traveled to the United States in early January.

Read more …

“..if you think a man is unfit, you vote against him. But you don’t remove him from office..”

Krauthammer Warns Impeachment Would Be “A Catastrophic Mistake” (ZH)

“I think [impeaching Trump] would be a catastrophic mistake,” warned outspoken conservative, and Fox News contributor, Charles Krauthammer, noting that there’s no evidence Trump has committed any crime. As The Hill reports, Krauthammer stressed that he doesn’t defend Trump, but only thinks that impeachment is a mistake. “Again, I think he’s unfit,” Krauthammer said, “but that’s not the grounds for removal.” “I don’t think he’s very well fit for the presidency. But fitness is not a reason for impeachment and removal.” Crucially, Krauthammer notes, as demonstrated by last night’s rally in West Virginia… Trump’s base is still firmly behind him and worries “I think we’re really headed into very choppy and dangerous constitutional waters” “Here’s a guy whose numbers are down in the 30s,” Krauthammer said on Fox News’s “Tucker Carlson Tonight.”

“He’s got this grand jury, reports of a grand jury being convened, he’s got the walls kind of closing in on him in Washington. And here he’s going out into the country and saying ‘These are my people. These are real people. Forget about the numbers. Forget about the chatter in Washington. Forget about the stories about Russia – which he spent a lot of time on – but I represent a huge constituency of tremendous support and enthusiasm.’” Townhall notes that Krauthammer then stressed the importance of our democratic process. “Again, I think he’s unfit but that’s not the grounds for removal,” Krauthammer said. What it means is, if you think a man is unfit, you vote against him. But you don’t remove him from office and that’s where I’m afraid we are headed given the forces that are surrounding the president. I just hope that cooler heads prevail. There will be another election – there always are – people can make their choices.”

Read more …

“All of this psychotic political behavior screams for the rise of a new party, or more than one new party..”

Russiatosis (Jim Kunstler)

So what exactly was Mr. Trump thinking when he signed the “deeply flawed” (his words) Russian Sanctions bill coughed up like a hairball by congress? It’s a ridiculous piece of legislation from any angle. It limits the president’s own established prerogatives for negotiating with foreign nations (probably unconstitutionally), and will only provoke economic warfare (at least) against the US that can easily lead to shattering global trade relations entirely. Some observers say he had to sign it because the vote for it in congress was so overwhelming (419 to 3) that they would only override a Trump veto. But the veto would have had, at least, symbolic value in the Jacksonian spirit that Trump pretended to want to emulate at the outset of his term. Perhaps he sees the Deep State endgame and is tired of resisting.

On the home front, Russia paranoia is at the center of Robert Mueller’s intensifying probe of Trump and his political associates as he calls a federal grand jury to hear testimony — which implies that he some lined up. This opens up all kinds of opportunities for prosecutorial mischief, for instance going after every business transaction Trump made as a private citizen before he ran for president, and coercing Trump intimates into immunization deals in exchange for testimony, real or cooked-up, to enable the establishment’s ultimate goal of shoving Trump out. The “Russian meddling in our election” story hasn’t produced any credible evidence after a full year — and speaking to foreign diplomats is not a crime — but the Russian meddling juggernaut rolls on perfectly well, and might accomplish its ends, without it.

Just repeating “Russian meddling” five thousand times on CNN has surely induced many poorly-informed citizens to believe that Russia changed the numbers in American voting machines though, in fact, voting machines are not connected to the Internet. All of this psychotic political behavior screams for the rise of a new party, or more than one new party, composed of men and women who have not lost their minds. I’m sure they’re out there. Plenty of traces on the Internet attest to the existence of a higher and better political consciousness in this country. It just hasn’t found a way to congeal. Yet.

Read more …

It’s still a godalmighty mess. And we can thank Merkel for that, too.

Greece Erasing Asylum Backlog (K.)

Greece has taken a significant step toward restoring the credibility of its asylum system as – according to the latest data from sources within the Migration Policy Ministry – authorities have processed 97.5 percent of a backlog of about 84,000 claims submitted under the old procedure in place before 2011. Progress has been achieved mostly thanks to an amendment to Law 4375/2016. Adopted in the wake of an EU-Turkey deal aimed at stemming the flow of migrants into Europe, the law introduced a series of changes to the institutional framework. Now applicants for international protection who lodged a claim more than five years ago, have a pending appeal and possess a valid asylum seeker’s permit are granted a residence permit on humanitarian grounds. The measure affects about 800 cases.

“It’s a fair decision as these people have lived in the country for many years with no final decision on their cases without it being their fault. They have become integrated and grown ties with Greece and the people. Some may have even made a family here,” Maria Stavropoulou, head of the Greek Asylum service, told Kathimerini. “It would be harsh and unfair to demand after all those years that these people return to their country of origin,” she said. With the same amendment that was voted in Parliament early last week, individuals with pending appeals under the old system who have not appeared before the Greek authorities to renew their asylum-seeker permit for a minimum of eight months are considered to have implicitly withdrawn their applications – and their claims are thereby discontinued.

Read more …

Another case of non-existent collusion, played out in the media for political reasons.

Italy Seizes Refugee Rescue Ship (Ind.)

Italian authorities have seized a refugee rescue ship operated by a German charity over allegations volunteers had contact with Libyan smugglers. Prosecutors in Trapani said an investigation started in October had uncovered evidence suggesting that the Iuventa was used “to aid and abet illegal immigration”. The vessel, operated by Jugend Rettet, was seized on the island of Lampedusa on Wednesday after it was ordered to take rescued migrants to shore there and its crew have been interviewed by police. Ambrogio Cartosio, a public prosecutor from Trapani, said there was evidence some members had contact with smugglers during one incident in September and two others in June. “There were contacts, meetings, understandings,” between the group’s boat and the smugglers, he said.

The prosecutor alleged that migrants were “handed over” to the Iuventa by smugglers rather than being “rescued”, and later transferred to other ships to be taken ashore in Italy. “The evidence is serious,” Mr Cartosio said. “We have evidence of encounters between traffickers, who escorted illegal immigrants to the Iuventa, and members of the boat’s crew.” But the prosecutor stressed that there was no evidence of Jugend Rettet receiving any money from Libyan traffickers and no indication of a wider conspiracy between the two groups – a favourite theory of the European far-right. “My personal conviction was that the motive is humanitarian, exclusively humanitarian,” Mr Cartosio said. “It would be fantasy to say there was a coordinated plan between the NGOs and the Libyan traffickers.”

Read more …

Jul 082017
 
 July 8, 2017  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , ,  


Canaletto View of the Churches of the Redentore 1750

 

‘Neither Of Them Wanted To Stop’: Trump And Putin Enjoy Successful ‘First Date’ (G.)
US, Russia Agree To Cease-Fire In Southwest Syria Starting Sunday (AP)
Russia Disputes US Claim Trump “Pressed” Putin on Election Hacking (IC)
Trump Says Trade Deal With UK Will Be Agreed “Very Very Quickly” (BBC)
Why the Next Recession will be a Doozie for Consumers (WS)
U.S. Jobs Growth Picks Up, but Wage Gains Lag Behind (WSJ)
A Multibillion-Dollar Crack In One Of The World’s Largest LNG Projects (CNBC)
Even The IMF Says Austerity Doesn’t Work (G.)
RIvers Do Not Have Same Rights As Humans: India’s Top Court (AFP)
Greek Bankruptcies Grew Fivefold In Last Decade (K.)
War and Violence Drive 80% Of People Fleeing To Europe By Sea (G.)
The US Has Been at War for Over 220 in 241 Years (AHT)

 

 

I tried to find an objective description of the Trump-Puin meeting, but it’s all echo chamber all the way (like this from the Guardian). The world is full of people who seem to have convinced themselves and each other that any one of them would be a better US president than Trump. The problem is, they’re not, and he is. So it’s all about ‘topics’ such as handshakes, and the deeper meaning thereof. Apparently, Trump should have damned Putin to hellfire and threatened him with war, with election hacking accusations he has no proof of. But US intelligence says it’s so! Yeah, and they would never lie, would they, for power political reasons. Maybe they shouldn’t have turned on Trump in the first place.

Meanwhile, I am glad that the two prime world leaders took the time, and then some, to talk to each other. And I hope they will do so again, and regularly. The world is not a better place is they do not. No matter what the echo chamber says.

‘Neither Of Them Wanted To Stop’: Trump And Putin Enjoy Successful ‘First Date’ (G.)

It is a blossoming bromance. In what one US-based critic called a “first Tinder date”, Donald Trump and Vladimir Putin talked for two and a quarter hours on Friday instead of their scheduled 30 minutes. “I think there was just such a level of engagement and exchange, and neither one of them wanted to stop,” US secretary of State Rex Tillerson said afterwards. “Several times I had to remind the president, and people were sticking their heads in the door. And they sent in the first lady at one point to see if she could get us out of there, and that didn’t work either.” There were sighs of relief in Washington that Trump, an erratic and volatile president with little foreign policy experience, had avoided a major gaffe. The news website Axios summed it up: “Trump survives the Putin meeting.”

But diplomats and experts said this was hardly cause for celebration. Thomas Countryman, former US acting undersecretary for arms control and international security, commented: “It’s an indication of how rapidly our standards are falling when we’re reasonably pleased that President Trump has not made an obvious error.” Pre-meeting hype had focused on whether Trump would confront Putin over Russia’s interference in the US election. He delivered, according to Tillerson, pressing the issue repeatedly. But Putin denied it and Tillerson later admitted that the two leaders had focused on how to move on from here. There seemed little indication that Trump had held Putin’s feet to the fire.

Trump had accepted Putin’s assurances, Countryman said: “It certainly was the minimum that any US president should have done in this situation. I’m glad he brought it up. What we don’t know – and may never know – is what he replied when Vladimir Putin looked him in the eye and falsely said: ‘It was not us.’” Russian foreign minister Sergei Lavrov claimed Trump had accepted Putin’s assurances, although the US disputed that.

Read more …

A good first outcome. Now don’t the US military dare interfere.

US, Russia Agree To Cease-Fire In Southwest Syria Starting Sunday (AP)

The United States and Russia struck an agreement Friday on a cease-fire in southwest Syria, crowning President Donald Trump’s first meeting with Russian President Vladimir Putin. It is the first U.S.-Russian effort under Trump’s presidency to stem Syria’s six-year civil war. The cease-fire goes into effect Sunday at noon Damascus time, according to U.S. officials and the Jordanian government, which is also involved in the deal. Secretary of State Rex Tillerson, who accompanied Trump in his meeting with Putin, said the understanding is designed to reduce violence in an area of Syria near Jordan’s border and which is critical to the U.S. ally’s security.

It’s a “very complicated part of the Syrian battlefield,” Tillerson told reporters after the U.S. and Russian leaders met for about 2 hours and 15 minutes on the sidelines of a global summit in Hamburg, Germany. Of the agreement, he said: “I think this is our first indication of the U.S. and Russia being able to work together in Syria.” [..] Russia’s top diplomat, who accompanied Putin in the meeting with Trump, said Russian military police will monitor the new truce. All sides will try to ensure aid deliveries to the area, Foreign Minister Sergey Lavrov said. The deal marks a new level of involvement for the Trump administration in trying to resolve Syria’s civil war.

Read more …

No, Intercept, Lavrov, let alone Russia, has not disputed anything Tillerson said. To dispute something, you need to address it. Lavrov has simply provided his version of what was said.

Russia Disputes US Claim Trump “Pressed” Putin on Election Hacking (IC)

According to two widely divergent witness accounts, Donald Trump either “pressed” Vladimir Putin repeatedly on Friday to admit that Russia helped him get elected president of the United States — by stealing and releasing embarrassing emails from Democrats — or told the Russian leader that he accepted his claim that Russia had nothing to do with the hacking and called concern over the issue “exaggerated.” Those two very different accounts of what was said in the meeting between Trump and Putin in Hamburg, Germany, came in dueling press briefings given after it by the only other senior officials in the room when the conversation took place: Rex Tillerson, the U.S. secretary of state, and Sergey Lavrov, Russia’s foreign minister.

“The President opened the meeting with President Putin by raising the concerns of the American people regarding Russian interference in the 2016 election,” Tillerson told American reporters, according to audio recorded by PBS Newshour. “Now they had a very robust and lengthy exchange on the subject,” Tillerson continued. “The President pressed President Putin on more than one occasion regarding Russian involvement; President Putin denied such involvement, as I think he has in the past.” “The two leaders agreed though,” Tillerson added, “that this is a substantial hinderance in the ability of us to move the Russian-U.S. relationship forward, and agreed to exchange further work regarding commitments on non-interference.” The Russians, Tillerson said, also asked to see whatever proof of their role in the hacking American intelligence agencies claim to have.

Lavrov, who is fluent in both Russian and English, offered a very different summary of the conversation. Trump, he told Russian reporters, had raised the issue during a broader conversation about threats posed to society by the internet, including terrorism and child pornography. “President Trump said that in the U.S. there are still some circles who are talking about Russian alleged intrusion and Russian alleged attempts to influence the U.S. election,” Lavrov said, according to translation from Ruptly, a Russian state-owned news agency. “President Trump said that this campaign has already taken on a rather strange character because over the many months that these accusations have been made, not a single fact has been presented,” Lavrov added. “President Trump said that he had heard the clear statements from President Putin about this being untrue, that the Russian leadership did not interfere in the election, and that he accepts these statements.”

Read more …

Not possible until UK has left EU.

Trump Says Trade Deal With UK Will Be Agreed “Very Very Quickly” (BBC)

US President Donald Trump has said he expects a “powerful” trade deal with the UK to be completed “very quickly”. Speaking at the G20 summit in Hamburg, he also said he will come to London. The US president is holding one-to-one talks with UK Prime Minister Theresa May to discuss a post-Brexit trade deal. It is one of a series of one-to-one meetings with world leaders which will also see Mrs May hold trade talks with Japanese Prime Minister Shinzo Abe. Ahead of their meeting, Mr Trump hailed the “very special relationship” he had developed with Mrs May. “There is no country that could possibly be closer than our countries,” he told reporters.

“We have been working on a trade deal which will be a very, very big deal, a very powerful deal, great for both countries and I think we will have that done very, very quickly.” Mr Trump said he “will be going to London”. Asked when, he replied: “We’ll work that out.” But Sir Simon Fraser, a former diplomat who served as a permanent under-secretary at the Foreign Office, cast doubt on how soon any deal could be reached. “The point is we can’t negotiate with them or anyone else until we’ve left the European Union.”

Read more …

Running to stand still. And as Wolf says, these are the good times.

Why the Next Recession will be a Doozie for Consumers (WS)

But here is the thing about employment and recessions: Something big changed since 2000. It can be seen in the employment-population ratio, which tracks people over 16 years of age who have jobs, as defined by the Bureau of Labor Statistics. From the 1960s until 2000, the ratio fell during recessions, but then during the recovery regained all the lost ground plus some, ratcheting up to new records after each recession. Some of this had to do with women entering the work force in large numbers. But since the ratio’s peak in April 2000 at 64.7%, a new pattern has developed. As before, the ratio drops before the official recession begins and keeps dropping until after the recession has ended. But when employment recovers, the ratio ticks up only slowly, recovering only a fraction of the ground lost, before the next recession hits. This has happened over the last two recessions.

For the 2001/2002 recession, the ratio started falling in May 2000 and continued falling until September 2003. During those 3.5 years, it fell 2.7 percentage points from 64.7% to 62%. Over the next three-plus years of the “recovery,” the ratio rose to 63.4% by December 2006, having regained only half of the lost ground, before the next downturn set in. This time, the ratio plunged from 63.4% to 58.2% in November 2010 and again in June and July 2011. It plunged 5.2 percentage points in 4.5 years. During that time, nonfarm payrolls plunged by 8.7 million jobs. Over the seven-plus years of the jobs recovery since then, the economy added 16.7 million jobs (146.4 million nonfarm payrolls, as defined by the BLS). But the employment-population ratio only made it to 60.1%. It regained only 1.9 percentage points, after having plunged 5.2 percentage points. In other words, after seven-plus years of jobs recovery, it has regained less than one-third of what it had lost:

And now the Fed is preparing for the next recession. There are all kinds of factors that move this equation one way or the other. Baby boomers are not retiring to the extent prior generations did. Millennials have fully entered into the working-age population (16 and over by this definition) though many are still in school. And according to Census Bureau estimates, the overall US population has surged by 16.7 million people from April 2010 through “today,” to 325.4 million. Since the bottom of the employment crisis in February 2010, the economy has created 16.7 million jobs as measured by nonfarm payrolls. During the same time, the population has grown by 16.7 million people. Not all of this population growth is working age. But this is the problem that the employment-population ratio depicts: jobs are being created, but not enough for the dual task of absorbing the growth in the working-age population and in putting people back to work who lost their jobs during the recession.

And these are the good times! What happens during the next recession?

Read more …

Why don’t you fit my theory? It’s failproof!

U.S. Jobs Growth Picks Up, but Wage Gains Lag Behind (WSJ)

U.S. employers are churning out jobs unabated as the economic expansion enters its ninth year, but the inability to generate more robust wage growth represents a missing piece in a largely complete labor recovery. U.S. employers added a seasonally adjusted 222,000 jobs in June, the Labor Department said Friday, and the unemployment rate rose slightly to 4.4% with more people actively looking for work. The U.S. has added jobs every month since October 2010, a record 81-month stretch that has absorbed roughly 16 million workers and slowly repaired much of the damage from the 2007-09 recession. The unemployment rate touched a 16-year low in May and the number of job openings hit a record earlier this year.

Still, average hourly earnings for private-sector workers rose slightly in June, 2.5% compared with a year earlier, a level little changed since March. As recently as December, the figure was 2.9% and in the months before the recession, wage gains consistently topped 3%. Since mid-2009, when the expansion started, hourly earnings of blue-collar workers—for which long-run data series are available—have grown on average 2.2% a year, much less than the 3% expansion of the 2000s, the 3.2% expansion of the 1990s or the 3.3% expansion of the 1980s. Tepid wage growth is a puzzle because worker incomes should in theory rise faster as employers compete for scarce labor, though some economists say broader economic forces are at work. “With both productivity growth and inflation continuing to prove sluggish, it is not altogether surprising that wage growth has disappointed,” said John E. Silvia, chief economist at Wells Fargo.

Read more …

“..it may suggest Inpex has lost control over costs.”

A Multibillion-Dollar Crack In One Of The World’s Largest LNG Projects (CNBC)

One of the biggest, most expensive liquefied natural gas projects in history may have developed a physical crack — and the managing company isn’t answering questions from investors. They may have reason to worry. The crack, which is believed to be in a floating production storage and offloading (FPSO) unit, could add billions of dollars in upfront costs, and it could delay the project even further, likely costing more down the line as a major competitor plans to swoop in. The floating unit is sitting at a yard in Busan, South Korea, and is set to eventually operate at “Ichthys” — a giant gas and condensate field offshore western Australia led by Japan’s Inpex, with a 30% stake from France’s Total. That project first broke ground in 2012 and is set to be a mega-scale operation that produces about 8.9 million tons of LNG every year if it reaches full capacity.

Inpex said earlier this month that the unit would “soon” sail away to Australia, and the Japanese operator said the unit is undergoing “last-minute preparation work” including commissioning, cleaning and certification work. One person familiar with the project, however, told CNBC that they have firsthand knowledge of an unannounced crack in the equipment, which was driving up costs and delaying the unit’s journey to Australia, previously expected for 2015. An additional three sources said they had been told there was a crack, but could not independently confirm the defect. When CNBC reached out to the company and asked whether the rumored crack is real, Inpex said it “cannot provide details concerning reasons for the delay.” According to one person familiar with the matter, Inpex recently hired as many as 300 welders to fix the damage. Several sources said they believe the damage is the main reason for the delay.

The alleged fault is in the unit’s “turret,” a central part of an FPSO that conveys “almost everything that will enter or leave” the unit, including chemical injection lines and power cables, Ichthys LNG Project Offshore Director Claude Cahuzac said in comments available on Inpex’s website. A fault in a big piece of liquid natural gas equipment isn’t so abnormal, industry analysts told CNBC, with one suggesting LNG projects generally require “lots of trials and errors.” What is less common, they said, is the amount of investor concern being generated by the Ichthys project. Naturally enough, that concern comes down to money. The original budget of the project back in 2008 was around $20 billion. Inpex’s estimate now stands at $37 billion plus an additional amount of spending, Mizuho Securities said following an analyst briefing in May this year.

In fact, one portfolio manager who reviewed the recent spending projections by Inpex said that “with the 2018 capital expenditure guidance increasing by around 50% over the last six months, it may suggest Inpex has lost control over costs.”

Read more …

Writing about austerity without addressing Greece is useless, Britain.

Even The IMF Says Austerity Doesn’t Work (G.)

A few weeks on from the general election, and David Cameron has been disinterred to say giving public sector workers pay rises is the height of selfishness – while Theresa May is back to harping on in prime minister’s questions about the debt left by the last Labour government. It’s apparently 2015 all over again. It’s tiresome to have to keep pointing it out, but Dave from PR was wrong then, and he remains wrong now. He was a good salesman, for sure. Pretending that “The Deficit” is a scary monster that will eat us unless we appease it by sacrificing our wages plays into many instinctual beliefs about the virtues of probity and thrift. But if anything, the monster in the room is the prevalence of what economist John Quiggin called “zombie economics” – ideas that are constantly discredited, but insist on shambling back to life and lurching their way through our public discourse.

The supposed justifications for austerity were always, Quiggin writes, “absurd on the face of things”. The theory that government spending crowds out private sector investment never withstood scrutiny. As he points out, “the painfully evident fact that there is already plenty of room for private expansion, in the form of unemployed workers and idle factories, is simply ignored”. The IMF – historically the world’s foremost cheerleader of austerity – admitted that it was based on a false prospectus: these policies do more harm than good. Simon Wren-Lewis of Oxford University said that the issue was not whether attempts to reduce the deficit had damaged the economy, but “how much GDP has been lost as a result”. Amartya Sen said that while austerity “deepened Europe’s economic problems, it did not help in the aimed objective of reducing the ratio of debt to GDP to any significant extent”.

[..] With the evidence so prolific that Cameron’s supposed “sound finance” is anything but, and with battalions of respected economists lined up to denounce it, why does this zombie idea keep resurrecting itself? The answer must surely lie in its political utility. The global financial crisis was an opportunity for politicians to practise Naomi Klein’s “shock doctrine” capitalism in the west rather than in the developing world. The Conservatives have presented their ideological project of returning us to the early 19th century as being economically necessary, even unavoidable.

Before Jeremy Corbyn’s rise, elements in the Labour party were similarly enamoured with recession as an opportunity to push a culture war over what they saw as a betrayal of “authentic” left politics. Just as austerity economics relies on the demonisation of immigrants and “identity politics” to mask its own crippling impact, so authentocracy relies on a false zero-sum formula where the “white working class” is in a battle with new arrivals for a share of a fixed pot of cash. Its proponents can hide behind discredited economics to claim they are making “hard but necessary choices” about resource allocation which, somehow, never address the actual allocation of said resources.

Read more …

In other words: you can’t protect a river, not even if people are at risk by the failure to do so?!

RIvers Do Not Have Same Rights As Humans: India’s Top Court (AFP)

India’s sacred Ganges and Yamuna rivers cannot be considered “living entities”, the country’s top court ruled Friday, suspending an earlier order that granted them the same legal rights as humans. The Supreme Court stayed a March order by a lower body that recognised the Ganges and its tributary the Yamuna as “legal persons” in an attempt to protect the highly polluted rivers from further degradation. The landmark ruling made polluting or damaging the rivers legally comparable to hurting a person, and saw three top government officials appointed as custodians. But the Himalayan state of Uttrakhand, where the Ganges originates, petitioned the top court arguing the legal status to the venerated rivers was “unsustainable in the law”.

In its plea, the state said the ruling was unclear on whether the custodians or the state government was liable to pay damages to those who drown during floods, in case they file damage suits. Petitioner Mohammad Saleem, on whose plea the Uttrakhand High Court bestowed the legal rights to the water bodies, will have the opportunity to appeal the ruling by a bench headed by chief justice J S Khehar. M C Pant, Saleem’s lawyer, said he was “shocked and surprised” over the government’s decision to oppose the status. “We will present our case before the court and convince them,” Pant told AFP. The Ganges is India’s longest and holiest river, but the waters in which pilgrims ritualistically bathe and scatter the ashes of their dead is heavily polluted with untreated sewage and industrial waste.

Read more …

Why Greece cannot recover.

Greek Bankruptcies Grew Fivefold In Last Decade (K.)

Corporate bankruptcies in Greece are still a staggering five times what they were in the period before the outbreak of the financial crisis, despite the small 2 percentage point decline recorded so far in 2017, according to international credit insurance company Atradius. The 2% decline is the smallest drop recorded among eurozone member-states, while Greece remains on top of the 22 countries Atradius monitors in Europe and beyond in terms of bankruptcies. While Greece’s rate is currently five times what it was before 2009, in Portugal it is four times as high, in Italy 2.4 times, in Ireland 2.2 times and in Spain it is twice as high.

The business sectors of food and electronics are expected to be among those to enjoy a reduction in their bankruptcy rate, unlike the construction, apparel and machinery sectors, which will continue to see high bankruptcy levels, the survey has found in Greece. The local credit system remains entrapped in the problem of nonperforming loans, which account for 37% of their total portfolios, Atradius says. This hampers lending to the private sector, it adds, calling for the swift enforcement of the recent law for clearing out or selling bad loans.

Read more …

As if there was any doubt about this. We need to stop bombing them. That’s the only answer there is.

War and Violence Drive 80% Of People Fleeing To Europe By Sea (G.)

The vast majority of people arriving in Europe by sea are fleeing persecution, war and famine, while less than a fifth are economic migrants, a report published on Friday reveals. More than 80% of an estimated 1,008,616 arrivals in 2015 came from refugee-producing countries including Syria, Afghanistan and Iraq, and a quarter of that number were children. Researchers say the findings challenge the myth that migrants are coming to Europe for economic reasons. The study is based on 750 questionnaires and more than 100 interviews carried out at reception centres in Greece, Italy and Malta. It highlights the abuse many have faced, with 17% experiencing forced labour. Half of those questioned had been arrested or detained during their journeys.

Professor Brad Blitz, who led the research team, said the findings made it clear that people had complex reasons for coming to Europe. He said: “Governments and certain media organisations perpetuate the myth that the ‘pull’ factors are stronger than the ‘push’ factors with economic reasons being the key catalyst – but we found the opposite. “The overwhelming majority of people we spoke to were coming from desperately poor countries but also places where they were subject to targeted violence or other concerns around family security. They had no other option.” War was the biggest “push”, and given as the reason for leaving their homes by 49% of those questioned in Greece, and 53% of those in Malta. One Syrian said: “I used to live with my wife in Idlib. We had a normal life there until the outbreak of war. Our house was bombed and we lost everything, we hadn’t any option but to leave.”

Read more …

“U.S. soldiers gave poisoned cookies to children seeking their help.”

The US Has Been at War for Over 220 in 241 Years (AHT)

The United States presents itself to the world as a beacon of liberty and a proponent of human rights around the world, ready and willing to stand up for and defend the downtrodden. Florida Senator Marco Rubio recently said that the world looks to the U.S. as an example of democracy. This myth is not believed outside of the United States’ borders, and decreasingly within. There is simply too much evidence to the contrary. The U.S. has been at war for over 220 of its 241 year history. During that time, it has shown a complete lack of respect for the human rights of both the citizens of the nations against which it wages war, and its own soldiers. We’ll take a look at examples from recent history, and see how the U.S. continues these barbaric practices today.

During the U.S. war against Viet Nam, which lasted for several years, conservative estimates indicate that at least 2,000,000 men, women and children were killed. Entire villages were burned; soldiers were told to assume that anyone, of an age, was the enemy. U.S. soldiers gave poisoned cookies to children seeking their help. The My Lai massacre, in which between 350 and 500 innocent people were killed, mostly women, children and elderly men, garnered international publicity, but was only one example of U.S. barbarity. U.S. soldiers returned home from this and later wars with severe physical and emotional problems. Veterans’ organizations worked for years to have the effects of ‘Agent Orange’, a chemical defoliant used in Viet Nam that caused birth defects in the children of soldiers who used it, recognized by the government so they could get government assistance.

A generation later, the reality of Gulf War Syndrome was denied for years by the U.S. government. How does this continue in the current environment? When the U.S. invaded Iraq early in the administration of President George Bush, it bombed residential areas in a country where over half the population was under the age of 15. It destroyed government institutions, even as it protected oil lines, leaving millions of people without essential services.

In Yemen, drones have killed at least 6,000 people. In the first drone attack authorized by then President Barack Obama, 34 people were killed. Of these, two were suspected of having ties to so-called terrorist groups. The other 32 were innocent men, women and children. And these atrocities continue to this day. In Syria, the U.S. is supporting radical groups that are causing untold suffering. At least one third of the population of Syria has fled their homes; recently, due to the efforts of the Syrian army and its allies, some have begun to return. The death toll, directly attributable to the actions of the U.S., is at least half a million.

Read more …

Jun 032017
 
 June 3, 2017  Posted by at 8:30 am Finance Tagged with: , , , , , , , , , ,  


Ervin Marto Paris 1950

 

Liar Liar: The Protest Song Is Back (CaptainSKA)
The Magic Money Tree Exists (MMM)
The Basics of Modern Money (MMB)
In The Last 10 Years US Economy Grew At Same Rate As In The 1930s (Snyder)
The UK Could Teach The Eurozone About Successful Monetary Unions (CityAM)
Huge Miss: Only 138K US Jobs Added In May; April Revised Much Lower (ZH)
US Full-Time Jobs Tumble By 367,000, Biggest Drop In Three Years (ZH)
The Chinese Economic “Death Spiral” (Rickards)
Russia Can ‘Live Forever’ With $40 Oil in Warning to Hedge Funds (BBG)
New York Times Reinvents Putin’s Comments on America’s Election (Lendman)
A Lifetime Of Debt: NZ’s Biggest Mortgages Are On Auckland North Shore (Stuff)
Obama Joined The Paris Agreement Unilaterally. Trump Can Quit The Same Way (BBG)
Liberal Circus in Washington Ignores Trump’s True Scandals (AHT)
Covfefe Land (Jim Kunstler)
EU Sees Taxpayers Funding Bank Bad-Loan Fix Within Current Rules (BBG)
Greece Approves $8 Billion Chinese-Backed Resort Project Outside Athens (G.)

 

 

Number 4 in the UK charts, but the BBC refuses to play it. It’s just so well done, and so timely, that none of that matters. It’s 40 years ago that the same happened with the SexPistols’ “God save the Queen”. The BBC ban pushed the song up the charts.

Liar Liar: The Protest Song Is Back (CaptainSKA)

NHS crisis, education crisis, u turns … you can’t trust Theresa May. Let’s get this into the top 40. Download now and force the BBC to play it on our airwaves. All proceeds from downloads of the track between 26th May and 8th June 2017 will be split between food banks around the UK and The People’s Assembly Against Austerity. Download from the following links: (Please note we previously released a version of Liar Liar in 2010 so don’t download the wrong one! Correct track is called ‘Liar Liar GE2017’)

Read more …

It’s high time to at least have this discussion, and no longer let a bunch of economists deny it flat-out and end it there.

The Magic Money Tree Exists (MMM)

The quality of debate in the 2017 UK General election has been generally terrible. The Tories have been trying to push the “There’s no such thing as a Magic Money Tree” line, and falling straight into the “Don’t think of a pink elephant” problem. This line is known in economic and political circles as The Noble Lie. The Magic Money Tree does exist. They all know it does. When there is a bank to bail out, does anybody ask where the money is coming from? When there is a nuclear missile system that needs building? How about when a foreign nation needs bombing? Like the elephant in the room The Tree cannot be mentioned, because then the electorate might start asking awkward questions about public services – perhaps we should have some? – and taxation – are we overtaxed for the size of government we have, given that we still have people without work?

Once you know about The Tree you might have your politicians delay a casino build and build a hospital instead. You might let the rich people keep their coins, but stop them using them to reserve scare doctors and teachers for their own purposes ahead of the general population. The Tories want to privatise everything, and Labour want to hit rich people hard with taxation sticks. There are no doubt reasons for these fetishes that psychologists would find fascinating. But they are damaging to our nation. They get in the way of doing the job. The debate we should be having is about the size of government we want. And then we instruct our government to provide that. Taxation then is just a thermostat on the wall. You count the bodies in the unemployment queue. If there are too many there is too much taxation and you turn the dial down. If there aren’t any and prices are hotting up, you may have too little taxation so you turn the dial up a little.

Alex Douglas explains in Getting Money out of Politics that the debate is one about resource allocation: “you don’t need to worry about ‘where the money will come from’ to pay for this or that programme or public service. Think about this instead: Are there enough resources to provide the proposed service? Is there enough wood, bricks, glass, PVC, to build new council houses? Is there enough land to build them on? Are there enough builders to build them? If not, are there enough apprenticeships to train them? Are there enough staff in the schools and hospitals? If not, are there enough colleges to train them? If not, are there enough resources to create more of these?” So let’s drop the pretence and get onto the real debate. We know that the last 40 years has been about the magic of the market and that government must constrain itself. It must do as it is told by a small number of unelected technocrats sitting in a central bank ivory tower.

Read more …

Watch these 6 minutes. And then watch it again and again until you understand it. The world will never look the same. Share it wherever you can. Make people literate.

The Basics of Modern Money (MMB)

A nation’s currency is a wonderful, powerful thing. Learn how countries like the U.S.—which issue their own sovereign currency—can afford to use that currency to serve their citizens. Get inspired about our untapped potential, and learn to be less worried about the so-called “national debt”!

Read more …

Nice find, Michael.

In The Last 10 Years US Economy Grew At Same Rate As In The 1930s (Snyder)

Earlier today I came across an article about President Trump’s new budget from Fox News, and in this article the author makes a startling claim… “The hard fact is that the past decade’s $10 trillion in deficit spending has produced the worst economic growth as measured by Gross Domestic Product in our nation’s history. You read that right, in the past decade our nation’s economy grew slower than even during the Great Depression. This stagnant, new normal, low-growth economy is leaving millions of working age people behind who have given up even trying to participate, and has led to a malaise where many doubt that the American dream is attainable.

When I first read that, I thought that this claim could not possibly be true. But I was curious, and so I looked up the numbers for myself. What I found was absolutely astounding. The following are U.S. GDP growth rates for every year during the 1930s…
1930: -8.5%
1931: -6.4%
1932: -12.9%
1933: -1.3%
1934: 10.8%
1935: 8.9%
1936: 12.9%
1937: 5.1%
1938: -3.3%
1939: 8.0%

When you average all of those years together, you get an average rate of economic growth of 1.33%. That is really bad, but it is the kind of number that one would expect from “the Great Depression”. So then I looked up the numbers for the last ten years…
2007: 1.8%
2008: -0.3%
2009: -2.8%
2010: 2.5%
2011: 1.6%
2012: 2.2%
2013: 1.7%
2014: 2.4%
2015: 2.6%
2016: 1.6%

When you average these years together, you get an average rate of economic growth of 1.33%. I thought that was a really strange coincidence, and so I pulled up my calculator and ran all of the numbers again and I got the exact same results. The 1930s certainly had more big ups and downs, but the average rate of economic growth during that decade was exactly the same as we have seen over the past 10 years. And of course the early 1940s turned out to be a boom time for the U.S. economy, while it appears that our rate of economic growth is actually slowing down. As I noted yesterday, U.S. GDP growth during the first quarter of 2017 was just 0.7%.

Read more …

So could the US of course. The problem in Europe is it’s too late now. Getting it right would be seen as too negative in Germany, and it’s Germany, and Germany alone, that ultimately takes ll the main decisions in the EU.

The UK Could Teach The Eurozone About Successful Monetary Unions (CityAM)

The Office for National Statistics (ONS) published last week some figures which show how a successful monetary union works in practice. It is not obvious at first sight, from the dry heading: “regional public sector finances”. The ONS collects information on the amounts of public spending and money raised in taxes across the regions of the UK. The difference is the so-called fiscal balance of the region. Only three regions generate a surplus. In London, the South East and the East of England, total tax receipts exceed public spending. The capital has a healthy positive balance of £3,070 per head, followed by the South East at £1,667 per head. Essentially, these two regions subsidise the rest of the UK. Public spending in the North East, for example, is £3,827 per person above the level of taxes raised in that region.

In Wales, it is even higher at £4,545. No wonder that one of the first things Carwyn Jones, leader of the Welsh Assembly, said after the Brexit vote was: “Wales must not lose a penny of subsidy”. The region which benefits most is Northern Ireland, which gets £5,437 per head more than it generates in tax. Scotland, to complete the picture, receives around half of that, at £2,824 per person. There is a lot of debate around Brexit and the border between the North and the Republic of Ireland. There is even talk of reunification, but on these numbers the Republic would be mad to want it. Essentially, the regions receive these subsidies because they are running deficits on their trade balance of payments. The exports of goods and services from the North East, for example, to the rest of the UK are much less than it imports.

In balance of payments jargon, the subsidy it receives is a monetary transfer from the rest of the country, principally from London and the South East. The ONS does not actually produce regional balance of payments statistics. But the fact that most regions receive these large transfers implies that they are just not productive enough to sustain their living standards by their own efforts. All the regions are in the sterling monetary union. Those running trade deficits cannot devalue to try to improve their position. They must instead rely on subsidy. Exactly the same principles apply in the Eurozone. The massive difference of course is that there is no central Eurozone government to make sure the weaker performing regions receive the necessary funding.

This is why President Macron and Chancellor Merkel announced they will examine changes to treaties to allow for further Eurozone integration. Even the hardline German finance minister, Wolfgang Schauble, said: “a community cannot exist without the strong vouching for the weaker ones”. To be sustainable, a monetary union needs large transfers between its regions. London and the South East already put their hands deep into their pockets for the rest of the UK. Gordon Brown did get one thing spectacularly right. He kept us out of the Euro.

Read more …

Not even enough to stand still. Trump recovery? Nah.

Huge Miss: Only 138K US Jobs Added In May; April Revised Much Lower (ZH)

As previewed last night, the jobs “whisper” risk was to the downside, and in what was a very disappointing print released moments ago by the BLS, the whisper was spot on with only 138K jobs added in May, far below the 185K estimate, and below the lowest estimate of 140K. This was the second lowest print going back all the way to last October. Additionally, April’s big beat of 211K was revised substantially lower to only 174K, suggesting that any expectation the Fed may have had of “evidence” the recent economic slowdown was transitory was just crushed.

The change in total payrolls for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported. This means that over the past 3 months, job gains have averaged 121,000 per month, a far cry from the 181,000 average jobs added over the past 12 months. To be sure, as SouthBay Research points out, a big reason for the unexpected miss was the sharp seasonal adjustment favtor, which was the biggest going back to the financial crisis days:

Not helping the Trump agenda, manufacturing jobs declined sharply, posting the weakest growth of 2017.

Read more …

The quality of jobs just keeps deteriorating, even if numbers do not.

US Full-Time Jobs Tumble By 367,000, Biggest Drop In Three Years (ZH)

While on the surface, the payrolls report, the wage growth and the unemployment rate (which dropped for all the wrong reasons) were disappointing, a quick look inside the underlying data reveals even more troubling trends, such as that in addition to the number of employed workers dropping by 233K according to the household survey, the composition of these jobs raised even more red flags because in May the US lost 367,000 full time jobs offset by the gain of 133,000 part time jobs.

Putting this number in context, it was the biggest drop in full-time jobs going back to June 2014. And in this context, we are happy to announce that while manufacturing jobs once again declined by 1,000, the waiter and bartender recovery continues to hum along, with 30,000 workers added in “food services and drinking places.”

Read more …

EUrope gets $2 for every $1 increase in growth? I don’t believe that for a second.

The Chinese Economic “Death Spiral” (Rickards)

China has reported annual growth rates since the panic of 2008 of between 6.7% and 12.2%, with a steady downward trend since early 2010. If China’s growth engine is running out of steam, as I’ve described, how has China managed to maintain such relatively high growth rates? The answer is contained in three key words: debt, deflation and waste. Waste is a blunt word referring to non-productive investment. The investment component of China’s GDP is about 45% of the total. Most major economies show about 25% to 35% for investment. But at least half the Chinese investment is wasted. It goes to projects that will never produce an adequate return, either on an absolute basis or relative to alternative uses of the funds. If this wasted investment is subtracted from GDP, similar to a one-time write off under general accounting principles, then 8% growth would be 6.2%, and 6% growth would be 4.7%.

[..] Any economy can produce short-term growth by incurring debt and using the proceeds as government spending, tax cuts, investment, or grants. This is nothing more than the classic Keynesian fiscal stimulus with its mystical “multiplier” effect that produces more than $1.00 in aggregate demand for every $1.00 borrowed and spent. In fact, there’s ample evidence that the Keynesian multiplier only exists when an economy is in recession or the very early stages of an expansion, and when its debt levels are relatively low and sustainable. Highly indebted economies in the late stages of an expansion do not conform to Keynes’ theory of a multiplier. Unfortunately for China, it is both highly indebted and has not suffered a recession for eight years. China should therefore expect the GDP multiplier on new debt used for spending or infrastructure to be less than 1.

That is exactly what the data shows. The chart below measures credit intensity defined as the number of units of local currency needed to produce one unit of growth. The local currency metric is a measured by central bank money printing to monetize debt, and is therefore a proxy for the debt itself. The chart shows that in China today, it takes $4.00 of money printing to produce $1.00 of growth. This is up significantly from 2008 when it took $1.70 of money printing to produce $1.00 of growth. This shows that the Keynesian multiplier is less than 1, in fact it’s 0.25 in China today. (Only Europe shows a true multiplier where less than one unit of new money can produce a unit of growth).

Read more …

Russia has used the crisis, and the sanctions, to make its economy more resilient. That’s power.

Russia Can ‘Live Forever’ With $40 Oil in Warning to Hedge Funds (BBG)

A race to the bottom in oil prices may not have many winners, but Russia is certain it can survive. It’s less sure about hedge funds. “We’re actually ready to live forever with the oil price at $40 or below,” Russian Economy Minister Maxim Oreshkin said in a Bloomberg Television interview at the St. Petersburg International Economic Forum on Thursday. “All macroeconomic policy is now based on the assumption of the oil price of $40.” While the world’s biggest energy exporter has made clear it’s hunkering down for years of depressed oil prices, “forever” might be a slight exaggeration, according to the head of Russia’s second-largest bank. Still, “I fully agree with the minister that the oil price is no threat to the economy,” VTB Group CEO Andrey Kostin said during a panel on Friday. As Russia’s future economic plans increasingly converge around crude at that level, Oreshkin says he’s baffled by a more bullish turn taken by hedge funds.

Bets on rising WTI prices jumped the most this year just as Saudi Arabia and Russia were mustering support for the deal they struck in Vienna last month, U.S. Commodity Futures Trading Commission data show. “The oil price within one or two years might be much lower, and those funds which are on the other side of the deals on hedging for one, for two years – they are taking huge risks,” Oreshkin said. Hedge funds’ WTI net-long position – the difference between bets on a price rise and wagers on a drop – rose 20% in the week ended May 23, according to the CFTC. The number had plunged 50% in the previous four weeks. Net-long positions in benchmark Brent – which trades at a small premium to Russia’s Urals export blend – rose 17%, data from ICE Futures Europe showed. Oreshkin questioned “the strategy of those hedge funds” that are striking deals with shale producers for one to two years. “Because the risks are there,” he said.

Read more …

Stephen keeps writing despite being gravely ill. Click the link to help.

New York Times Reinvents Putin’s Comments on America’s Election (Lendman)

Instead of reporting precisely what he said, and certainly meant, about fabricated allegations of Russian US election hacking, The Times deliberately misrepresented his recent comments. Interviewed in France by Le Figaro, he repeated what he said many times before. No Russian interference occurred, no evidence suggesting it. “Who is making these allegations,” he asked? “Based on what? If these are just allegations, then these hackers could be from anywhere else and not necessarily from Russia.” Putin knows no hacking occurred. Information was leaked from one or more DNC insiders, no foreign governments involved. He stressed “(i)t makes no sense for (Russia) to do such things. What for?” Speaking to heads of international news agencies on the sidelines of the St. Petersburg Economic Forum, he said “no hackers can influence a foreign election campaign in a significant way.”

“No information leaked this way would resonate with the voters and affect the outcome. We don’t do this at a state level, have no intention of doing it, and on the contrary, we are fighting against it.” He also stressed Moscow’s involvement in creating multi-world polarity. Some countries (meaning US-led Western ones) want Russia contained to further their national interests. “They do this through all kinds of actions that are outside the framework of international law, including economic restrictions,” Putin explained. “Now, they see that this is not working and has produced no results. This irritates them and rouses them into using other methods to pursue their aims and tempts them to up the stakes.” “But we do not go along with these attempts, do not offer pretexts for action. They therefore need to invent pretexts out of nowhere.” Russia, China and Iran are the leading forces against Washington’s hegemonic ambitions – why they’re surrounded by US bases and targeted for regime change.

Addressing the issues of hackers, he said they “can be anywhere…in any country in the world…At the governmental level, we never engage in this. This is what is most important.” He explained attacks can occur from outside Russia made to look like they occurred from its territory. “Modern technology allows that. It is very easy.” It’s a CIA and NSA hacking method to blame Russia, China, Iran or other targeted countries for actions they didn’t commit. “(M)ost important is I am deeply convinced that no hackers can have a real impact on an election campaign in another country,” Putin stressed. “You see, nothing, no information can be imprinted in voters’ minds, in the minds of a nation, and influence the final outcome and the final result.” Those were his recent comments, clearly indicating no Russian direct or indirect involvement in US election hacking or against any other countries.

Instead of reporting what Putin said as I did above, The NYT headlined “Putin Hints at US Election Meddling by ‘Patriotically Minded Russian,” inferring possible state involvement he clearly explained didn’t happen time and again. The Times claimed he “(s)hift(ed) from his previous blanket denials…” False! He did no such thing! The Times: “(H)is comments…were a departure from the Kremlin’s previous position: that Russia had played no role whatsoever in” US election hacking. Fact: His comments repeated what he said many times before, no departure from his position or from any other Russian officials. The Times lied. The Times: “The boundary between state and private action…is often blurry, particularly in matters relating to the projection of Russian influence abroad.”

Again The Times inferred what didn’t happen. If Russian election hacking occurred, incriminating evidence would have been revealed long ago. There’s none, proving accusations are groundless. Instead of truth-telling on this and numerous other vital issues, especially geopolitical ones, notably on Russia, The Times consistently publishes rubbish. Everything it’s reported on alleged Russian US election hacking is disinformation, deception and fake news. Believe none of it.

Read more …

$1 US – $1.40 NZD

A Lifetime Of Debt: NZ’s Biggest Mortgages Are On Auckland North Shore (Stuff)

Owning your own home may be the Kiwi dream but some North Shore homeowners are “drowning in debt” without hope of being mortgage-free. New data from credit information website CreditSimple.co.nz showed North Shore homeowners under 55 had an average debt of $542,600: the highest debt in the country. The information also showed Shore homeowners over 55 still owed an average $381,500. This was the second-highest debt in the country, just behind central Auckland’s older homeowners with an average mortgage of $393,200. Brian Pethybridge, the manager of North Shore Budget Service, was not surprised by the figures. “It’s a phenomenon that’s going to rear it’s head basically because mortgages were $500,000 and now they’re looking at $1 million,” he said. “The options that you had before are limited. It’s a sign of the times.”

According to QV’s latest residential house values, the average house on the Shore was valued at $1.195m, up 8.5% on last year. Pethybridge said many North Shore homeowners were unlikely to pay off their mortgage by the time they retired. Many people’s retirement plans involved selling the house and moving to a cheaper area or a retirement village, he said. But Pethybridge warned there was no guarantee house prices would keep on going up. Another risk was that interest rates could go up and homeowners would not be able to service their mortgage repayments, he said. Banks were already warning people to be prepared to pay 7% interest, and Pethybridge remembered a time when interest rates went “up and up”. Some people were already paying interest-only on their mortgage, meaning the debt was not going down, he said.

Read more …

“How can one man, even if he is the president, single-handedly alter our international obligations?”

Obama Joined The Paris Agreement Unilaterally. Trump Can Quit The Same Way (BBG)

To critics of President Donald Trump’s decision to withdraw the U.S. from the Paris climate accord, it may seem like presidential fiat is a very dysfunctional way to do foreign policy. How, exactly, is such overwhelming power consistent with checks and balances? How can one man, even if he is the president, single-handedly alter our international obligations? The short answer is the Constitution, not so much in its origins as in its evolution. It’s an important reminder that the tremendous power of the imperial presidency isn’t an unmitigated good – at least when you don’t like the policies of the person holding office. It’s important to note that President Barack Obama put the U.S. into the Paris climate deal exactly the same way Trump took the U.S. out, namely by unilateral executive action.

Obama couldn’t have gotten two-thirds of the Senate to approve a climate protection treaty. That’s the constitutional requirement for a treaty, as designed by the framers, who for the most part didn’t contemplate that the president would be able to commit the U.S. internationally without the participation of Congress. Understanding that he couldn’t turn the Paris deal into a treaty, Obama turned to a tool used by modern presidents to streamline international deal-making: the executive agreement. An executive agreement doesn’t bring all the domestic legal effects of a treaty. Under the Constitution’s supremacy clause, treaties become the law of the land, which is not the case for executive deals. But that isn’t a huge difference today.

Executive agreements are internationally binding like treaties, because international law isn’t focused on domestic processes like ratification but on the promise to join the compact. The Supreme Court has weakened treaties by requiring explicit language for them to have direct domestic legal effect. And the court has also held that executive agreements can affect some domestic legal rights, a reflection of expanded presidential authority. Indeed, the Paris accord was designed to accommodate the reality that Obama needed to be entering into an executive agreement, not a treaty. It doesn’t call itself a treaty or a protocol but an agreement. And it is in practical terms largely nonbinding, calling for countries to set targets without setting sanctions for noncompliance.

Some conservatives have argued that the Paris accord really is a treaty and should have been submitted to the Senate. But whether they’re right or wrong is a matter courts ordinarily wouldn’t address. Given that Obama entered the Paris accord unilaterally, there isn’t much doubt that Trump can withdraw unilaterally. And liberals who would like to think otherwise would do well to recall that without the executive agreement option, the U.S. wouldn’t have joined the deal in the first place. What’s more remarkable still is that, even if the Senate had approved the Paris accord as a treaty, Trump could have withdrawn without getting the Senate’s consent.

Read more …

Kabuki gone berserk.

Liberal Circus in Washington Ignores Trump’s True Scandals (AHT)

After suffering a devastating election loss to the weakest candidate the GOP has ever had to offer, establishment liberals have stopped at nothing to rationalize their miserable defeat to reality television star Donald J. Trump, even concocting outlandish McCarthyite theories of foreign interference, in what seems to be intentional, purely for the obfuscation of the Democratic Party’s own deficiencies. Bereft of any evidence whatsoever, political elites accused our old Cold War nemesis, Russia, of interfering in the American presidential election to favor the GOP’s Donald Trump over Democratic Party darling Hillary Clinton. Mass liberal outrage and the Democratic Party’s newfound super-patriotism prompted investigation into foreign hacking claims and the Office of the Director of National Intelligence released its intelligence report on Russian interference in early January.

Despite its grandiose promises of revealing irrefutable evidence of the Kremlin’s direct involvement, the ODNI failed to deliver. Although lauded by both establishments as “damning,” the ODNI’s highly publicized intelligence report provided not a shred of evidence linking Russia to the hacking of the DNC; thus, concluding absolutely nothing. Political analysts, journalists, and those bearing at least some critical thinking ability dismissed the report altogether, as the first half contained nothing but baseless assertions, inconsistencies, and contradictions, while the second half was devoted entirely to irrelevant Russia Today bashing.

One would think that the increased potential of nuclear armageddon would dissuade political elites from accusing a nuclear power of such crimes without solid proof, but liberals never cease to amaze. Unfazed by popular skepticism and/or the general lack of evidence of Russia’s involvement, the liberal bourgeoisie, conjuring recycled Cold War sentiments, advanced their partisan crusade against Trump, painting him as some sort of Russian puppet installed to do the unconditional bidding of President Vladimir Putin. Eleven months have passed since the birth of these Russian hacking conspiracies, but the Trump-Russia non-scandal has persisted to dominate American political discourse ever since — with skepticism in the minority, surviving as fringe thought, at best. Trump’s actual conflicts of interest and legitimate criticism of his policies have drowned into irrelevance as his every tweet receives 24×7 coverage and the liberal mainstream media entertains any and every conspiracy theory of Russian collusion known to man.

Read more …

“Did incoming officials in earlier election transitions never meet with Russian diplomats on the way to assuming their duties? And if they did meet, what do you suppose they talked about? The Baltimore Orioles pitching prospects?”

Covfefe Land (Jim Kunstler)

The extraordinary thought disorders of this moment in history are equally distributed across the political spectrum. They’re an inevitable product of what Sigmund Freud identified as the discontents of civilization, but they grow especially acute as that civilization enters an economic crack-up zone. The craziness is equally distributed while the nation’s wealth is not. The old middle, or center, is imploding both economically and psychologically, concentrating distortions of reality at each end, Left and Right. The disordered thought in Trumpism is as self-evident as (a) covfefe, though it came into being out of the authentic pain of those classes that bear the brunt of accelerating collapse. The thought disorders among Trump’s adversaries interest me more, because they emanate from the far more educated ranks of society, the place where rational leadership is supposed to spawn.

If you can’t depend on those people to think straight in difficult times, then it raises the question of what exactly is the value of an advanced education? For instance: the incredible new idea put out by CNN that it is verboten for officials in the government — the president especially — to meet with the Russian ambassador to the United States. I’ve asked this question before, but obviously it needs to be repeated in the face of this persistent nonsense: why do you think nations send diplomats to other lands if not to meet with and communicate with government officials? Since when — and why — are we shocked that a US president would meet in the White House with the Russian ambassador and foreign minister? Did previous presidents not meet with Russian diplomats? Did incoming officials in earlier election transitions never meet with Russian diplomats on the way to assuming their duties?

And if they did meet, what do you suppose they talked about? The Baltimore Orioles pitching prospects? The newest fusion cuisine? Or serious matters of mutual geopolitical interest? Do American diplomats in Moscow avoid meeting with Russian leaders? Why do we even bother to send them there? Whether it is a misunderstanding of reality by the educated people who work on Cable TV news, or a malicious twisting of the public’s credulity, it is producing a grievous breakdown in collective coherence with the potential of causing enormous political mischief in American life. The Dem/Prog “resistance” may think that it is taking a bold stand against a rogue government, but it is only making itself look dangerously unreliable as a supposed alternative to Trumpism.

Read more …

Bailin, bailout. Up, down. Flip, flop. The EU is fast eroding any trust it still has.

EU Sees Taxpayers Funding Bank Bad-Loan Fix Within Current Rules (BBG)

EU member states can use public funds to help struggling banks dispose of soured loans, but only within the limits of laws put in place since the financial crisis, according to an EU report. While EU law normally stipulates that the need for “extraordinary public financial support” means a bank is failing and should be wound down, an exception is made for temporary state aid, known as a precautionary recapitalization, to address a capital shortfall identified in a stress test. “It seems conceivable” for governments to use such aid to finance an impaired-asset measure, the May 31 report states. The document says the conditions in EU law for giving state aid to a solvent bank must be observed.

“Dealing with the issue of high NPLs should not imply any deviation from the rules of the banking union,” it states, referring to the package of laws intended to bolster financial stability and deepen integration in the bloc. Andrea Enria, head of the European Banking Authority, has been one of the most vocal proponents of allowing state aid for banks that incur losses in the course of selling bad loans. He told EU lawmakers in April that state aid could be used to “deal promptly and decisively with the significant legacy of asset-quality problems in the European banking sector, which remains a drag on the EU economy.” Freeing up public money to offset banks’ losses could help to chip away at the €1 trillion bad-debt mountain and could smooth the way for bailouts in the EU’s hardest-hit countries, including Cyprus, Portugal and Italy.

Read more …

The EU forces one of its sovereign member states to sell its assets to China. That should flash some very bright red lights.

Greece Approves $8 Billion Chinese-Backed Resort Project Outside Athens (G.)

Construction work on a $7.9bn project to develop a sprawling coastal Olympics complex and Athens’s former airport will begin in six months, the Greek government has said. State minister Alekos Flabouraris said on Friday that the leftist administration’s privatisation agency had given the go-ahead to a consortium of Abu Dhabi and Chinese investors backed by the Chinese conglomerate Fosun, which owns 12% of the British holiday company Thomas Cook, to turn the site into a major resort. It had been earmarked as a metropolitan park but was largely abandoned for the past decade. Now the consortium plans to build a 200-hectare (494-acre) park along with apartments, hotels and shopping malls at the site, which also includes some venues from the 2004 Olympics.

Greece committed to sell off state assets under the terms of the international bailout keeping its economy afloat since 2010. Its main private property developer, Lamda, signed a deal in 2014 to build on the Hellenikon coastal area, in one of Europe’s biggest real estate development projects. The announcement came as Greece’s statistics service, Elstat, said the economy expanded in the first three months of 2017, upwardly revising a previous flash estimate in May that showed a 0.1% quarterly contraction. Data showed the economy grew by 0.4% in January to March compared with the final quarter of 2016 when GDP contracted by 1.1%. [..] Under a deal with its EU/IMF lenders, Athens needs to speed up the Hellenikon investment and address any forestry and archaeological issues.

Read more …

Apr 082017
 
 April 8, 2017  Posted by at 8:13 am Finance Tagged with: , , , , , , , , , ,  


Dorothea Lange Wife of sharecropper in town to sell crop at tobacco auction, Douglas Georgia 1938

 

US Credit Card Debt Tops $1 Trillion For The First Time In A Decade (ZH)
Store Wars: US Retail Sector Is Shedding Jobs Like It’s A Recession (MW)
Apparel Retailers Lead The Charge Out Of Brick-And-Mortar (Forbes)
Wall Street Is Making It Harder to Buy a Car (BBG)
US Jobs Growth Slumps To 98,000 In March (MW)
Millions Of Americans Desperate To Trade Part-Time Work For Full-Time (MW)
Toronto Real Estate Is In A Bubble Of Historic Proportions (Rosenberg)
Rosenberg: Toronto Housing Bubble ‘On Par With What We Had In The US’ (BNN)
Could Europe Copy America’s Supersized Corporate Debt? (BBG)
Syrian Gas Attack is a Lie: “Stop Your Governments!” – Russia (FR)
US Missile Strikes in Syria Cross Russian ‘Red Lines’ (RI)
Greece On Course To Avoid Debt Default As Athens Agrees Pension Cuts (Tel.)
Letting People Drown Is Not A European Value (EUO)

 

 

On top of auto and student loans, both already well over $1 trillion. Get a fork and turn ’em over.

US Credit Card Debt Tops $1 Trillion For The First Time In A Decade (ZH)

Unlike last month’s unexpectedly week consumer credit report, which saw a plunge in revolving, or credit card, debt moments ago the Fed, in its latest G.19 release, announced that there were few surprises in the February report: Total revolving credit rose by $2.9 billion, undoing last month’s $2.6 billion drop – the biggest since 2012 – while non-revolving credit increased by $12.3 billion, for a total increase in February consumer credit of $15.2 billion, roughly in line with the $15 billion expected. However, while in general the data was uneventful, there was one notable milestone: in February, following modest prior revisions, total revolving/credit card debt, has once again risen above the “nice round number” of $1 trillion for the first time since January 2007… where it now joins both auto ($1.1 trillion) and student ($1.4 trillion) loans, both of which are well above $1 trillion as of this moment.

Read more …

It IS a recession.

Store Wars: US Retail Sector Is Shedding Jobs Like It’s A Recession (MW)

The U.S. retail industry is shedding jobs at an unparalleled pace outside of recession and stands to lose many more as the industry continues to shrink its physical footprint, a response to the shift in consumer shopping habits away from purchasing in stores and malls in favor of e-commerce. The U.S. retail sector lost 60,600 jobs in February and March, the worst two months for the sector since the tail end of 2009, according to Labor Department data. The category called general merchandise stores – Target, J.C. Penney and the like – has shed jobs for five consecutive months. Media reports have tallied more than 3,500 store closures for 2017, with retailers including J.C. Penney, Sears, Macy’s and others announcing that they are shutting doors and making job cuts.

Ralph Lauren has outlined the next phase of its turnaround effort, which includes shutting stores and cutting jobs. Bankruptcies and liquidations have also picked up, with Payless ShoeSource just this week announcing nearly 400 store closures. Wet Seal, Aeropostale, Sports Authority, and Hhgregg are among the many other retailers that have either filed for bankruptcy or liquidated. The current state of retail, which is weighed by less foot traffic, more promotions, and increased competition, particularly from Amazon.com, suggests that additional closures are on the horizon. The U.S. simply has too many stores, according to a report from Cowen & Company titled “Retail’s Disruption Yields Opportunities – Store Wars!,” which found that up to 2,000 stores should close.

“[W]e expect online penetration of apparel to increase to 35% to 40% from 20%, yielding closures of 20% at oversized chains,” the report said. Cowen analysts say there are about 1,200 malls in the U.S. and they represent about 15% of retail square footage. Cowen anticipates that up to about 20%, or 240 malls, will close or be repurposed, with anchor store closures and the rise of digital among the primary drivers.

Read more …

The Amazon bubble. Killing off America’s last remaining meeting places.

Apparel Retailers Lead The Charge Out Of Brick-And-Mortar (Forbes)

This week, Payless ShoeSource filed for bankruptcy, joining many other U.S. apparel brands, including The Limited and Wet Seal, that have sought Chapter 11 protection in recent months. These three chains alone will shutter almost 1,000 stores. Fung Global Retail & Technology estimates that all of the major U.S. store closures announced so far this year total 2,507. That total is just for announcements made in the three months through April 4, 2017, yet it already dwarfs the 1,674 store closures we recorded across major U.S. chains in all of 2016. Closures are impacting multiple sectors: electronics is represented by RadioShack, furniture and appliances by Hhgregg, office products by Staples and healthcare by CVS. Apparel, however, is leading the charge out of brick-and-mortar. We calculate that apparel retailers and department stores account for 2,060 (82%) of the 2,507 closures announced so far this year.

What can we infer from this surge in store closures? We see three principal takeaways: Weak demand for apparel persists. The most obvious conclusion from the recent bankruptcy filings is that apparel retailers continue to feel the impact of subdued consumer demand. American shoppers have been flush with cash thanks to low gas prices, but they have chosen to spend on cars and their homes rather than on fashion. The latest retail sales data from the U.S. Census Bureau show that apparel specialist stores saw a 1% year-over-year decline in sales in February. There is little reason to think shoppers will switch back to apparel as interest rates rise and if fuel prices creep up.

Second, pure-play retailing is fashionable again. Amid all the talk of omnichannel retailing and Internet pure plays opening brick-and-mortar stores, we are now seeing a trend of retailers going the opposite way, moving from operating stores to selling only online. Bebe is one such retailer that is planning to become an Internet pure play. The Limited considered a similar plan but is no longer selling online after filing for bankruptcy. Third, more retailers are facing reality. Not all store closures are being forced by bankruptcies. J.C. Penney and Macy’s, for instance, are slimming down their store networks in order to prepare for the future. We expect more retailers to join them in recognizing a need for fewer stores. Accordingly, we do not expect this year’s store-closure count to stop at 2,507.

Read more …

Just in time economy?!

Wall Street Is Making It Harder to Buy a Car (BBG)

On countless occasions in recent years, the U.S. auto industry has relied on cheap and easy credit from Wall Street to get it through rough patches. Not this time. With both bad loans and interest rates on the rise, financial institutions are becoming more selective in doling out credit for new-car purchases, adding to the pressure for automakers already up against the wall with sliding sales, swelling inventories and a used-car glut. “We’ve been having a party for a few years and it was fun,” said Maryann Keller, an industry consultant in Stamford, Connecticut. “Now lenders are getting back to basics.” Many figure they have to. For one thing, subprime borrowers have been falling behind on their car-loan payments at a rate not seen since just after the 2008 financial crisis.

Delinquencies for auto debt of all stripes have been climbing, with the value of those behind for at least 30 days swelling to $23.3 billion in December, a 14% jump from a year earlier, according to the Federal Reserve. This helps explain why 10% of senior bank-loan officers said they expect to pull back on extending credit to car buyers this year, according to a Fed survey. Expectations are that terms will toughen for loans the vast majority of Americans need to buy new vehicles as the Fed boosts benchmark rates. “There are only so many people wanting a new car and only so much capital available,” said Daniel Parry, CEO of Praxis Finance and co-founder of Exeter Finance, a subprime lender. “Manufacturers and lenders will have to reset to reduced volume levels.”

The reset has already started, with auto sales dipping in each of the first three months of the year. In March, the annualized pace, adjusted for seasonal trends, slowed to 16.6 million from 16.7 million a year earlier, according to Autodata Corp. Analysts had projected it would accelerate to about 17.2 million. Now Goldman Sachs economists figure there’s only demand for about 15 million per year, they said in an April 4 report. The industry set a record by selling 17.6 million cars and trucks in 2016 and has been on a seven-year growth streak. But General Motors, Ford and others had to pile on discounts and incentives to keep the expansion going, with both their finance arms and third-party lenders giving them a boost with easy credit. “This has come full circle,” Keller, the consultant, said. “We’ve created an auto market of 17.5 million vehicles based on accommodating credit. There will be consequences.”

Read more …

Whaddaya think? Yup, weather.

US Jobs Growth Slumps To 98,000 In March (MW)

The U.S. created just 98,000 new jobs in March to mark the smallest gain in almost a year, a sign the labor market is not quite as strong as big hiring gains earlier in 2017 suggested. The unemployment rate, meanwhile, fell to 4.5% from 4.7% and touched a nearly 10-year low despite the slowdown in hiring. U.S. stocks ended the session pretty much where they started as investors sifted through the March employment report. The U.S. had added more than 200,000 jobs in January and February, but hiring in weather-sensitive industries such as construction was helped by unusually high temperatures in the dead of winter.

Many economists were skeptical the recent pace of job creation was sustainable after a six-year hiring boom that chopped the unemployment rate in half and ignited growing complaints among companies about a shortage of skilled workers to fill open jobs. As a result, economists polled by MarketWatch had estimated the number of new jobs created in March would taper off to 185,000 in the third month of Donald Trump’s young presidency. Instead the decline was even steeper, speared by plunging employment in a beleaguered retail industry. “The 200,000-plus numbers reported for job gains in January and February always seemed a bit outlandish,” said Steven Blitz, chief U.S. economist at TS Lombard. Added economist Harm Bandholz of UniCredit: “Most of this is weather related and correct for exaggerated strengths seen earlier in the year.”

Read more …

It’s going so well, get me come shades.

Millions Of Americans Desperate To Trade Part-Time Work For Full-Time (MW)

Millions of Americans don’t want to work part-time. The U.S. economy added just 98,000 jobs in March, the smallest gain in nearly a year, after adding more than 200,000 jobs in January and February. Economists predicted that the number of jobs created in March would hit 180,000, so the actual figures fell far short of that. Unemployment fell to a 10-year-low of 4.5% in March from 4.7% in February, but the “real” unemployment rate that includes part-time workers who would rather work full-time and job hunters who gave up searching for work was 8.9%, although this was also down from 9.2% in February. Part-time work is still a contentious alternative for many workers. On Thursday, Amazon said it will create 30,000 part-time jobs in the U.S. over the next year, nearly double the current number. Of those, 25,000 will be in warehouses and 5,000 will be home-based customer service positions.

Amazon said in January it would create 100,000 full-time jobs over the next 18 months, according to a separate announcement made in January. Last year, Amazon’s world-wide workforce grew by 48% to 341,400 employees. In the U.S., it has over 70 “fulfillment centers” and 90,000 full-time employees. There were some 5.6 million involuntary part-time workers in March 2017, little changed from the month before, but down from 6.4 million a year earlier, according to the Bureau of Labor Statistics. That number is up from 4.5 million in November 2007, but way off a peak of 8.6 million in September 2012. These figures are almost entirely due to the inability of workers to find full-time jobs, leaving many workers to take or keep lower-paying jobs, according to the Economic Policy Institute, a nonprofit think-tank in Washington, D.C. And 54% of the growth in these involuntary part-time jobs between 2007 and 2015 were in retail, leisure and hospitality industries, the EPI said.

[..] Perhaps not surprisingly, involuntary part-time workers tend to earn less than their voluntary part-time counterparts. Approximately 40% of involuntary part-time workers report a total family income of less than $30,000, compared with just 18% of the latter and 29% of the population as a whole, according to an earlier report published in 2015 by Rutgers University. More than four out of every five involuntary part-time workers says it’s hard to save for retirement and about seven out of every 10 say they earn less money than they and their family need to get by and pay bills.

Read more …

It’s too late to gently deflate.

Toronto Real Estate Is In A Bubble Of Historic Proportions (Rosenberg)

The concerns about froth in Toronto’s housing market are not likely to subside given the sticker-shock from the latest report from the Toronto Real Estate Board. As per the March report, the average single-detached house in the Greater Toronto Area (GTA) sold for $1,214,422 last month up from $910,375 in March of last year – that is a 33% YoY surge, and follows a 16% run-up over the prior 12 months. Whatever the term is for an acceleration in an already parabolic curve, well, that is what we have on our hands today. And it isn’t just detached homes seeing this degree of rapid price appreciation — the benchmark single-family home selling price was up 29% YoY, the benchmark townhouse price was up 28% and the condo/apartment composite was up 24%. This is a bubble of historic proportions.

Not only to have home prices in the GTA now absorb an unprecedented 13 years of median family income, but to have 30%-ish run-ups against a backdrop of a 2% inflation rate, wages that are barely going up 2% as well, and nominal GDP growth of around 4%. This should put 30% into some sort of perspective when we conclude that what we have on our hands is a near three standard deviation event. That alone qualifies as a bubble — if you don’t like that term, then call it a giant sud. In the past, Toronto home prices went up at an annual rate of 4% in real terms, in the past year they have surged by nearly 30%. [..] it goes without saying that if the name of the game is to tame the flame then have the foreign investor share the blame. A tax on foreign transactions, as was already done in Vancouver, seems like a pretty good idea.

And the government can at the very least use the revenues to either provide greater tax incentives to build and/or provide tax relief for the low/mid income entry-level buyer who is struggling to cobble together the funds for a down payment. So yes, in this sense, I would be advocating a Robin Hood style of economic policy. Indeed, what may be needed is a very progressive tax on foreign buying of local residential real estate in the bid to cool demand and reverse the exponential surge in home prices – a surge that is creating tremendous social problems by crowding out young families (or individuals) from chasing the homeownership dream (a typical response is for these folks is to go out and buy a condo instead, but the reality is that average prices here have also skyrocketed 24% in the past year and are in a bubble of their own).

Everyone says that the Bank of Canada cannot raise interest rates to curb the excess demand because of the deleterious effect this would have on the economy writ large (for example, taking the Canadian dollar back up to or above 80 cents which would thwart our export competitiveness which has become a longstanding role of the central bank). Be that as it may, the home price surge in the GTA over the past year has impaired homeowner affordability to such an extent that it is basically the equivalent of the Bank of Canada having raised rates 150 basis points – actually a 200 basis point increase if you were to look at what home prices have done to affordability ratios over the past two years …

Read more …

“Where home prices are in Toronto, they absorb 13 years of average family income. That is completely abnormal. We’ve never seen this before.”

Rosenberg: Toronto Housing Bubble ‘On Par With What We Had In The US’ (BNN)

Gluskin Sheff Chief Economist David Rosenberg is joining the growing chorus of calls for government intervention into the Toronto housing market. In an interview on BNN, Rosenberg, who correctly called the U.S. housing bubble in 2005, said the massive deviation from historical norms has him drawing comparisons between the two situations. “This bubble is on par with what we had in the States back in ’05, ’06, ’07,” he said. “We have to actually take a look at the situation. The housing market here is in a classic price bubble. If you don’t acknowledge that, you have your head in the sand.” Rosenberg warned unchecked increases in home prices are becoming a social issue. “It’s not an equity, it’s not a bond – it’s where people live,” he said. “Where home prices are in Toronto, they absorb 13 years of average family income. That is completely abnormal. We’ve never seen this before.”

Rosenberg said he’d be singing a different tune if price increases were running in line with any of the usual economic fundamentals, such as job growth, rising incomes, or nominal GDP growth. “We’re out of equilibrium, and when we’re out of equilibrium, or there’s some sort of market failure, are there grounds there for government intervention? I think even the most ardent libertarian would say ‘yes,’” he said. Rosenberg said there are a trio of levers the government can pull to cool down the market. Authorities can address supply, which he said has already been “kiboshed.” Interest rates can be raised, but Rosenberg doesn’t believe the Bank of Canada will do that. Or new policy can be drafted to address the prevalence of speculation.

“These are not prices driven by the local fundamentals – this is the foreign buyer coming in,” Rosenberg said. “Toronto has really emerged as a first-class city, not just politically, not just culturally and economically, but also in terms of being a major financial centre. But if you’re going to ask me at this stage, ‘do we need to approach taxation of this capital coming in differently to curb the demand?’ [That’s] absolutely right.”

Read more …

In a word: YES.

Could Europe Copy America’s Supersized Corporate Debt? (BBG)

Unilever CEO Paul Polman must have had one eye focused across the Atlantic when he unveiled his revamp of the consumer goods giant this week. And not just because erstwhile suitors 3G Capital, Kraft Heinz and Warren Buffett will have been watching. In an effort to appease shareholders, Polman also ripped a couple of pages from any U.S. CEO’s post-crisis playbook: load more debt on the balance sheet and buy back lots of your own shares. So Unilever will lift its net debt to Ebitda ratio from 1.3 to 2 and buy back 5 billion euros ($5.3 billion) of stock.In Europe, that counts as relatively bold. Faced with anemic economic growth since the global financial crisis, non-financial companies here have typically been reluctant to take on more debt, as the chart below shows.

They’re also far less likely to buy back stock: U.S. corporations repurchased more than $530 billion of stock last year. In Europe the total was a fraction of that.Polman seems to have belatedly recognized the obvious: having a lightly geared balance sheet makes a company vulnerable to a takeover. That’s especially true if the buyer is holding dollars and your stock is priced in relatively cheap euros or pounds.

Of course there’s an argument what Polman is doing is common sense. Debt is cheap compared to equity, so Unilever’s balance sheet is simply becoming more efficient. Having more debt shouldn’t pose a problem for Unilever as its earnings power is considerable. People still need to buy soap and deodorant, even in a recession.Still, this sets a rather uncomfortable precedent. Polman rebuffed Kraft Heinz’s $143 billion bid in part because he’s no fan of financial engineering. It would be a shame if other European companies now drew the conclusion that to remain independent they need to indulge in some financial engineering of their own. Especially if they load up on too much debt just as the current economic cycle starts to look long in the tooth.

Read more …

She’s crystal clear.

Syrian Gas Attack is a Lie: “Stop Your Governments!” – Russia (FR)

On April 7th, US warships delivered an illegal blow to a Syrian airbase in Homs. Their justification was the recent “chemical weapon” attack on behalf of the Syrian government in Idlib. The Kremlin condemned the strike as an act of aggression against a sovereign state, and a violation of international law. Meanwhile, at the UN, representatives of Western governments attempt to push through a resolution that is based on information taken out of thin air. It includes the removal of Assad, whether or not he was behind the attack.

It is noteworthy, that the only real source of information on what took place, are the videos made by the White Helmets, an infamous propaganda organisation as it pertains to the Syrian civil war. In this clip, Maria Zakharova calls on Western respresenatives/ journalists to hear Russia, and what it has to say. The attack against the Syrian government, much like the Ghouta gas attack in 2013, which precipitated the Syrian civil war, is a giant facade for the military industrial warhawks in the US, to put their money where their mouth is.

Read more …

“Putin has a cool mind and we may anticipate that the Russian response will come at a time of his choosing and in a manner that is appropriate to the seriousness of the U.S. offense. Look for this before the end of the month.”

US Missile Strikes in Syria Cross Russian ‘Red Lines’ (RI)

My days as apologist for Donald Trump’s backsliding on his electoral campaign promise of a new direction in foreign policy are over. From being the solution, he has become an integral part of the problem. And with his bigger than life ego, petulance and stubbornness, Commander-in-Chief Trump is potentially a greater threat to world peace than the weak-willed Barack Obama whom he replaced. Trump has ignored Russian calls for an investigation into the alleged chemical gas attack in Idlib province before issuing conclusions on culpability, as happened within hours of the event. He has accepted a narrative that is very possibly a false flag produced by anti-government rebels in Syria, disseminated by the White Helmets and other phony NGO’s paid from Washington and London.

He ordered the firing of 50 or more Tomahawk missiles against a Syrian Government air base in Homs province, thereby crossing all Russian “red lines” in Syria. Until this point, the Kremlin has chosen not to react to all signs coming from Washington that Trump’s determination to change course on Russia and global hegemony was failing. The wait-and-see posture antedated Trump’s accession to power when Putin overruled the dictates of protocol and did not respond to Obama’s final salvo, the seizure of Russian diplomatic property in the U.S. and the eviction of Russian diplomats. The Russians also looked the other way when the new administration continued the same Neocon rhetoric from the tribune of the UN Security Council and during the visits of Vice President Pence, Pentagon boss Mattis and Secretary of State Tillerson to Europe.

However, the missile attack in Syria is a game changer. The pressure on Vladimir Vladimirovich Putin to respond in kind is now enormous. Putin has a cool mind and we may anticipate that the Russian response will come at a time of his choosing and in a manner that is appropriate to the seriousness of the U.S. offense. Look for this before the end of the month. In the meantime, we who have been hoping for a change of direction, for the rooting out of the Neocons and Liberal hawks directing the Deep State should drop what we are doing, and help form a grass roots political statement that Donald Trump and the political establishment will hear loud and clear.

A mass letter-writing campaign to Congress and the White House? A march on Washington? One way or another, the White House must be told that arranging foreign policy moves out of purely domestic calculations, such as likely happened yesterday puts the nation’s very existence at risk. Acting tough, striking out at Russia and its allies, is not the way to form a coalition to pass a tax reform act. The same may be said of an alternative reading of the missile attack yesterday: that it was intended as a message to visiting Chinese President Xi that should there be no joint action to restrain North Korea, the United States will act alone and with total disregard for international law. Either logic in the end is a formula for suicide.

Read more …

I predict very large demonstrations, and quite possibly more violent ones. This could well be the end of Tsipras, and of SYRIZA; there’s no credibility left. They should have fought for the people.

Greece On Course To Avoid Debt Default As Athens Agrees Pension Cuts (Tel.)

Greece is on course to avoid a debt default this summer after creditors reached a deal with Athens on reforms including pension cuts and tax changes that will continue until the end of the decade. Jeroen Dijsselbloem, who leads the group of eurozone finance ministers, said creditors had reached an agreement in principle on the “size, sequencing and timing” of Greek reforms. The agreement also paves the way for the IMF to join the country’s third, €86bn bail-out programme. The Eurogroup chief said “significant progress” had been made in all areas, with debt inspectors expected to return to Greece shortly to “put the last dots on the ‘i’s and to reach a full staff-level agreement as soon as possible”.

A final agreement among finance chiefs will unlock a fresh tranche of rescue funds, enabling Athens to pay back around €6bn to creditors in July, including the ECB. “We’ve solved all the big issues,” said Mr Dijsselbloem. “The big blocks have now been sorted out and that should allow us to speed up and go for the final stretch.” The measures, which include controversial cuts to pensions and a widening of the tax base, amount to 2pc of Greek GDP in 2019 and 2020. Greece will be able to implement “parallel expansionary measures” if the economy is strong enough, said Mr Dijsselbloem. He said discussions on medium-term debt relief would not be discussed at a political level until a full agreement is reached and approved by the Greek government, which has a slim majority.

The pension cuts are likely to spark a fresh wave of protests across the country. Euclid Tsakalotos, the Greek finance minister, said austerity measures would be legislated “in the coming weeks”. “There are things that will upset the Greek people,” he said. Mr Tsakalotos said the government would also adopt stimulus measures in parallel, which will be “activated” if Athens meets its fiscal targets. Gerry Rice, a spokesman at the IMF, welcomed the “important progress” made in recent weeks, but said it still needed “satisfactory assurances” on debt sustainability before the Fund would seek board approval to participate in Greece’s third rescue programme.

Read more …

There is so much in the way of international law and UN conventions to protect refugees, but none of it has any meaning in Brussels.

Letting People Drown Is Not A European Value (EUO)

595. A nice round number, right? It refers to the dead and missing in the central Mediterranean, mostly between Libya and Italy, in the first three months of 2017. The known dead died from drowning, exposure, hypothermia, and suffocation. Horrible, agonising deaths. 24,474. This is a nicer number. It refers to the women, men, and children who made it safely to Italy this year, all of them plucked from flimsy, overcrowded boats by European vessels. Many were rescued by teams from nongovernmental organisations patrolling international waters just off Libya, where most migrant boats depart. Those groups – including Doctors Without Borders (MSF), Migrant Offshore Aid Station (MOAS), SOS Mediterranee, Proactiva Open Arms, Sea-Watch and others – are now being accused of encouraging boat migration. Or worse, of collusion with people smugglers.

The EU border agency, Frontex, has suggested that the presence of rescue operations by nongovernmental groups is a pull factor, encouraging people to take the dangerous journey in hopes of rescue. A prosecutor in Catania, Sicily, has opened an inquiry into the funding streams for these groups, indicating a suspicion that they may be profiting illicitly from the movement of people in search of safety and better lives. This is the latest cruel twist in the EU’s response to boat migration from Libya. It reflects concern over increasing numbers of people embarking from Libya, the strain on the reception system in Italy and beyond, and the rise of xenophobic populism in many EU countries. But blaming the lifesavers ignores history, reality, and basic morality.

As MSF’s Aurelie Ponthieu explained, the NGO group rescuers are not “the cause but a response” to an ongoing human tragedy. Even before the significant increase in numbers in 2015, tens of thousands of people have been risking their lives in unseaworthy boats in the Mediterranean for decades; almost 14,000 have died or been reported missing since 2011. After the October 2013 Lampedusa tragedy, in which 368 people lost their lives, there was increased talk among organisations about mounting rescue missions in the central Mediterranean. In 2015, that became a reality, in large part because the end of the Italian navy’s humanitarian rescue mission Mare Nostrum and the gaps in its poor replacement by the EU border agency Frontex. People embark on these dangerous journeys for myriad reasons; they are fleeing persecution, violence, and poverty, and moving toward freedom, safety, and opportunity.

Both pull and push factors are always in play when people are on the move. Insofar as more freedoms, liberties, and policies grounded in respect for human rights – including vital rescue-at-sea operations – serve as pull factors, these should not be sacrificed in the name of limiting migration. The presence of EU vessels just off Libyan waters has changed the dynamic of boat migration. There is more hope of rescue, and smugglers have adopted even more unscrupulous tactics like using inflatable (throw-away) Zodiacs instead of wooden boats and providing only enough fuel to reach international waters. But to question the humanitarian imperative of rescue at sea is to discard our most basic respect for life. And the logic of those who criticise the rescue operations as a pull factor is that the groups should stop rescuing people and let them drown to discourage others from coming.

Read more …

Mar 112017
 
 March 11, 2017  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , ,  


Robert Capa Warsaw, Poland 1948

 

US Jobs Report Means Fed Rate Hike Is A Bolt-On Certainty (G.)
US Household Wealth Has Never Been Higher Relative To Income (ZH)
Rising Household Debt A Concern Across Asia (TEP)
Sessions Asks 46 Obama-Era US Attorneys To Resign (R.)
Trump’s Revised Travel Ban Dealt First Court Setback (R.)
Trump To Ask Merkel For Advice On Putin, Ukraine (R.)
Nobel Economist Deaton Takes Aim At Rent-Seeking US Economy (MW)
US Regulators Reject Bitcoin ETF, Digital Currency Plunges (R.)
The Bag Holder and His Bag (Jim Kunstler)
New Island To Be Built In North Sea Under ‘Science-Fiction-Like’ Plan (Ind.)
General Flynn and the Strategic Deficit (K.)
Turkey Loses Momentum In Northern Syria As US Supports Kurds (ARA)
UN Accuses Turkey Of Abuses Against Kurds In Country’s Southeast (AlJ)
Greek Court To Rule On Turkey’s ‘Safe Country’ Status (K.)
Lagarde Insists On Greek Debt Restructuring (K.)
Roman Citizens Are Breaking The Law To Feed And Help Refugees (R.)
World Faces Worst Humanitarian Crisis Since 1945 – UN (G.)

 

 

Don’t be surprised if Yellen gets cold feet.

US Jobs Report Means Fed Rate Hike Is A Bolt-On Certainty (G.)

The latest US jobs report removes any lingering doubts about whether the Federal Reserve will raise interest rates next week. Following news that the world’s biggest economy generated 235,000 net new non-farm jobs in February, it is a bolt-on certainty that the central bank will push up the cost of borrowing by a quarter of a point. It is now almost 10 years since the start of the financial crisis ushered in a period of ultra-low interest rates and it has been clear for a while that the Fed is anxious to speed up the normalisation process. A healthy labour market is the key to that process and it would have taken a shockingly bad report to stay the bank’s hand. This was not it. Indeed, the financial markets have already moved on from next week to musing about how many more times the Fed will tighten during the course of 2017. The feeling is that two more rate rises are in prospect.

It certainly seems unlikely that next Wednesday’s rise will be the end of the matter. The report from the Bureau of Labour Statistics showed employment up by more than the 190,000 expected by Wall Street and unemployment at 4.7%. Annual wage growth is running at 2.8%. Policymakers at the Fed will look at this data and conclude that inflationary pressures are building as the economy approaches full employment. With US productivity so weak, the central bank will certainly be tempted to move again if and when earnings growth hits 3%. There was plenty for Donald Trump to welcome. A mild winter has resulted in a big increase in construction jobs. Manufacturing employment was also up. The only weak spot was retailing. The new president has plans for a big package of tax cuts and spending increases but fiscal easing will mean more aggressive tightening from the Fed, which is already starting to fret about the risks of the economy overheating.

Read more …

Print and borrow. Rinse and repeat.

US Household Wealth Has Never Been Higher Relative To Income (ZH)

For 45 years – until Alan Greenspan in 1994 – the average wealth-to-income of American households had held steady around 4.9x – but as of Q4 2016, for the first time in US history, household wealth has reached a point where it is 6.5 times large than inflation-adjusted household disposable income in America. As Bloomberg reports, the surge – driven by higher stock prices and property values, according to The Fed – pushed this measure of relative exuberance (think of it as the country’s price-to-earnings ratio) above the housing boom peak of mid-2000s and well above the dot-com bubble driven highs of the last 1990s. As Alliance Bernstein economist Joe Carson wrote in a note: “Economic and financial history do not always repeat, but sometimes they do.” So the question is – what happens next?

Read more …

Debt and wealth feel eerily similar.

Rising Household Debt A Concern Across Asia (TEP)

Government officials, policymakers, economists, bankers and experts gathered here for the Second Annual Asean Consumer and Household Debt Conference on Feb 22 and 23. The two-day event aimed to provide insight into the implications of household debt and the challenges faced by the policymakers. “Over the years, household financial liabilities as a share of personal disposable income has gone up in Asia,” said Akrur Barua, an economist at Deloitte Services LP, setting the tone for the conference. According to Barua, a number of factors have led to the rise in household debt in Asia. Rising incomes in Asia have resulted in higher consumer demand for products and services. Along with income growth, there is an increase in access to credit across Asian economies.

Post- 2008, policymakers also offered fiscal and monetary incentives to entice consumers to spend more. In addition, rising demand and a flow of liquidity led to a surge in asset prices, especially in the housing sector. With demand for housing remaining strong and house prices rising, the result has been a rapid increase in the value of housing loans or mortgages. “Cyclical credit outpaced cyclical growth from 2011 to 2015 in many Southeast Asian countries”, noted Vincent Conti, Asia-Pacific economist at Standard & Poor’s Ratings Services Singapore. According to Barua, the household debt burden in many Asian economies is now even higher than the US figure prior to 2009, before the global financial crisis (see Chart 1). In fact, Thailand, Malaysia, South Korea and Taiwan have crossed the 80% mark in household debt-to-GDP ratio.

Read more …

David Stockman on Twitter: “46 Obama US Attorneys must go ASAP. That means you, Preet Bharara. Enough self-righteous bullies with badges! “

Sessions Asks 46 Obama-Era US Attorneys To Resign (R.)

U.S. Attorney General Jeff Sessions abruptly asked the remaining 46 chief federal prosecutors left over from the Obama administration to resign on Friday, including Manhattan U.S. Attorney Preet Bharara, who had been asked to stay on in November by then President-elect Donald Trump. Although U.S. attorneys are political appointees, and the request from Trump’s Justice Department is part of a routine process, the move came as a surprise. Not every new administration replaces all U.S. attorneys at once. A Justice Department spokeswoman confirmed the resignation requests included Bharara, whose office handles some of the most critical business and criminal cases passing through the federal judicial system.

Bharara met with Trump in Trump Tower on Nov. 30. After, Bharara told reporters the two had a “good meeting” and he had agreed to stay on. On Friday, Bharara was unsure where he stood because he did not know if the person who contacted him about resigning was aware that Trump had asked him to remain in office, according to a source familiar with the matter. It was not immediately clear if all resignations would ultimately be accepted. A Justice Department spokesman said on Friday Trump had called Dana Boente, acting U.S. deputy attorney general, to decline his resignation. Trump also called Maryland U.S. Attorney Rod Rosenstein, his pick to take over as deputy attorney general, to keep him in his post, the spokesman said.

Read more …

Broader views are needed.

Trump’s Revised Travel Ban Dealt First Court Setback (R.)

A federal judge in Wisconsin dealt the first legal blow to President Donald Trump’s revised travel ban on Friday, barring enforcement of the policy to deny U.S. entry to the wife and child of a Syrian refugee already granted asylum in the United States. The temporary restraining order, granted by U.S. District Judge William Conley in Madison, applies only to the family of the Syrian refugee, who brought the case anonymously to protect the identities of his wife and daughter, still living in the war-torn Syrian city of Aleppo. But it represents the first of several challenges brought against Trump’s newly amended executive order, issued on March 6 and due to go into effect on March 16, to draw a court ruling in opposition to its enforcement.

Conley, chief judge of the federal court in Wisconsin’s western district and an appointee of former President Barack Obama, concluded the plaintiff “has presented some likelihood of success on the merits” of his case and that his family faces “significant risk of irreparable harm” if forced to remain in Syria. The plaintiff, a Sunni Muslim, fled Syria to the United States in 2014 to “escape near-certain death” at the hands of sectarian military forces fighting the Syrian government in Aleppo, according to his lawsuit. He subsequently obtained asylum for his wife and their only surviving child, a daughter, and their application had cleared the security vetting process and was headed for final processing when it was halted by Trump’s original travel ban on Jan. 27.

Read more …

Those are Merkel’s blind spots. And Greece.

Trump To Ask Merkel For Advice On Putin, Ukraine (R.)

President Donald Trump will ask Chancellor Angela Merkel for advice on how to deal with Russian President Vladimir Putin, U.S. officials said on Friday, as the U.S. and German leaders meet next week after sometimes pointed disagreements in recent months. Merkel will visit the White House on Tuesday for talks with Trump and a joint news conference in what will be their first face-to-face meeting since the new U.S. president took power on Jan. 20. They are expected to discuss Germany’s level of defense spending for the NATO alliance, the Ukraine conflict, Syrian refugees, the EU and a host of other issues, said three senior Trump administration officials who briefed reporters.

During the 2016 U.S. presidential campaign, Trump regularly criticized Merkel for her open-door refugee policy, contrasting it with what he promised would be tighter controls in the United States if he won office. Merkel has been a leading critic of Trump’s effort to ban travelers temporarily from seven Muslim-majority nations, a list that has since been pared back to six. “My expectation is that they’ll have a very positive, cordial meeting,” said one of the officials, who spoke on condition of anonymity. Trump has long expressed desire for warmer U.S. relations with Russia but some of his top Cabinet officials are skeptical. “The president will be very interested in hearing the chancellor’s views on her experience interacting with Putin,” said another official. “He’s going to be very interested in hearing her insights on what it’s like to deal with the Russians.”

Read more …

Deaton is no fool.

Nobel Economist Takes Aim At Rent-Seeking Banking, Healthcare Industries (MW)

Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might, said Nobel-winning economist Angus Deaton on Monday. If an entrepreneur invents something on the order of another Facebook, Deaton said he has no problem with that person becoming wealthy. “What is not OK is for rent-seekers to get rich,” Deaton said in a luncheon speech to the National Association for Business Economics. Rent seekers lobby and persuade governments to give them special favors. Bankers during the financial crisis, and much of the health-care system, are two prime examples, Deaton said. Rent-seeking is not only does not generate new product, it actually slows down economic growth, Deaton said.

“All that talent is devoted to stealing things, instead of making things,” he said. Another prime example of rent-seeking is that the Medicaid is funding opioid prescriptions for low-income workers, Deaton said. The results are workers who are becoming addicted and overdosing while profits are going to the Sacker family which owns Purdue Pharma that makes OxyContin. Deaton said he favors a single-payer health system only because our current part-private and part-public system is exquisitely designed to give opportunities for rent-seeking. “So I, who do not believe in socialized health-care, would advocate a single-payment system…because it will get this monster that we’ve created out of the economy and allow the rest of capitalism to flourish without the awful things that healthcare is doing to us,” he said.

Read more …

But door is left open.

US Regulators Reject Bitcoin ETF, Digital Currency Plunges (R.)

The U.S. Securities and Exchange Commission on Friday denied a request to list what would have been the first U.S. exchange-traded fund built to track bitcoin, the digital currency. Investors Cameron and Tyler Winklevoss have been trying for more than three years to convince the SEC to let it bring the Bitcoin ETF to market. CBOE Holdings’ Bats exchange had applied to list the ETF. The digital currency’s price plunged, falling as much as 18% in trading immediately after the decision before rebounding slightly. It last traded down 7.8% to $1,098. Bitcoin had scaled to a record of nearly $1,300 this month, higher than the price of an ounce of gold, as investors speculated that an ETF holding the digital currency could woo more people into buying the asset.

[..] “Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated,” the SEC said in a statement. “The commission notes that bitcoin is still in the relatively early stages of its development and that, over time, regulated bitcoin-related markets of significant size may develop.” The regulators have questions and concerns about how the funds would work and whether they could be priced and trade effectively, according to a financial industry source familiar with the SEC’s thinking. [..] Advocates of the currency and the technology it relies on to document transactions, blockchain, were dismayed by the ruling. “How do we develop well-capitalized and regulated markets in the U.S. and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like bitcoin?” asked Jerry Brito, executive director of Coin Center, an advocacy group.

Read more …

“RussiaGate — come on, let’s finally call it that —”

The Bag Holder and His Bag (Jim Kunstler)

[..] getting rid of Trump would only leave the Deep State with a bigger problem: itself. That is, an economy and a society that can’t be governed by any means. I think many professional observers-of-the-scene are missing something in this unspooling story: the Deep State is actually becoming more impotent and ineffectual, not omnipotent. Case in point: RussiaGate — come on, let’s finally call it that — the popular idea that Russia hacked the 2016 presidential election. It’s popular because it’s such a convenient excuse for the failure of a corrupt, exhausted, and brain-dead Democratic establishment. But all the exertions of the Deep State to put over this story since last summer were negated this week by two events.

First, there was former NSA Director James Clapper’s appearance on NBC’s Sunday Meet the Press show with Chuck Todd featuring the following interchange: CHUCK TODD: Does intelligence exist that can definitively answer the following question, whether there were improper contacts between the Trump campaign and Russian officials? JAMES CLAPPER: We did not include any evidence in our report, and I say, “our,” that’s N.S.A., F.B.I. and C.I.A., with my office, the Director of National Intelligence, that had anything, that had any reflection of collusion between members of the Trump campaign and the Russians. There was no evidence of that included in our report. CHUCK TODD: I understand that. But does it exist? JAMES CLAPPER: Not to my knowledge. And so what to make of the RussiaGate histrionics served up by CNN, The New York Times, the WashPo, NPR, and sundry tools as Senator Chuck Schumer (D–NY)?

What I make of it is a growing civil war in the government itself, and perhaps something arguably like sedition. Second matter: this week’s release of Wikileaks’ Vault-7 trove of purloined government documents. These seem to suggest that US Intel agencies have acquired the ability to spoof any activity on any sort of computer or program that makes it impossible to track the identity of any hacker and, what’s more, gives US Intel a tool to make any party appear culpable for any given case of hacking — meaning that if so called computer hacking “footprints” had been discovered linking Russia to the Hillary-DNC-Podesta emails, those footprints could have been engineered by US Intel itself… meaning further that any so-called “evidence” of Russian election hacking could not be proven one way or the other.

Now, this might be too fine a point for the RussiaGate partisans, but I don’t see how it fails to moot the issue. The partisans are still finding other ways to propagandize. On Thursday evening, NPR ran a story about Russia breaking a missile agreement with this wrap-up from correspondent David Welna: WELNA: Still unclear is how President Trump, an admirer of Russian President Vladimir Putin, might respond to Moscow’s defiance. David Welna, NPR News, Washington. That lapse of newsmanship is the kind of thing that makes me (a still-registered Democrat) want to support the defunding of NPR.

Read more …

Far too many people still claim we can replace our current energy consumption with renewables. That idea will have to die first.

New Island To Be Built In North Sea Under ‘Science-Fiction-Like’ Plan (Ind.)

A vast artificial island is to be built at Dogger Bank in the North Sea, complete with a harbour, airstrip and homes, to help provide a vast new supply of renewable energy, under plans drawn up by two companies with the blessing of the European Union. The North Sea Wind Power Hub would act as a hub for offshore wind turbines and a new place to put solar panels, according to the German and Dutch arms of electricity firm TenneT and Danish company Energinet. The firms will sign a deal creating a consortium to develop the plan further in Brussels on 23 March in the presence of European Energy Union Commissioner, Maos Sefcovic. Torben Glar Nielsen, Energinet’s Danish technical director, said: “Maybe it sounds a bit crazy and science fiction-like, but an island on Dogger Bank could make the wind power of the future a lot cheaper and more effective.”

It is thought the island – or possibly islands – could act as a hub for thousands of new wind turbines, which would eventually generate green electricity for more than 80 million people. Under the proposals, the island would be connected by electricity cables to the UK, Norway, the Netherlands, Germany, Denmark and Belgium. Mel Kroon, TenneT’s chief executive, said: “This project can significantly contribute to a completely renewable supply of electricity in north-west Europe. “TenneT and Energinet.dk both have extensive experience in the fields of onshore grids, the connection of offshore wind energy and cross-border connections.

Read more …

Flynn’s escapades as a foreign agent for Turkey are making Greeks very nervous.

General Flynn and the Strategic Deficit (K.)

It is as if a torpedo passed under our keel and we saw it only when it exploded elsewhere. The recent revelations from President Donald Trump’s former national security adviser, retired General Michael Flynn, showed that we had a close call. A lawyer for Flynn filed paperwork with the Justice Department declaring that last year he undertook lobbying work that “could be construed to have principally benefited the Republic of Turkey.” For the work between August and November, Flynn Intel Group Inc was paid 530,000 dollars. Flynn was forced to resign from the position of Trump’s top security aide in February when it emerged that although he had met with the Russian ambassador to the United States he had lied to Vice President Mike Pence about this, after which the latter repeated Flynn’s lies in public.

The extent of Flynn’s dealings with Russia and Turkey is not known, but it is clear that if he had not resigned he would have remained, at least, a former strong supporter of Turkey. On November 8, Flynn had published an opinion piece in The Hill, a Washington-based political newspaper, titled “Our ally Turkey is in crisis and needs our support.” Flynn argued that the United States should extradite the self-exiled cleric Fethullah Gulen, whom Turkish President Recep Tayyip Erdogan claims was behind the failed coup in Turkey last July. “We should not provide him safe haven,” Flynn wrote of Gulen. “In this crisis, it is imperative that we remember who our real friends are.”

On Wednesday, The Hill’s editor added a note to the piece, clarifying that the newspaper did not know that Flynn had been paid to write it, nor that the draft had been shown earlier to a Dutch company, Inovo BV, which, the note said, is “owned by a Turkish businessman with ties to Turkey’s president.” The Associated Press reported that according to the documents filed, Flynn, who was then a top aide to presidential candidate Trump, met in September with the Turkish ministers of foreign affairs and energy.

The cooperation ended in November, and though it is difficult to believe that Flynn was paid half a million dollars for one op-ed piece, we cannot claim that as national security adviser he would have made Turkish interests his priority. At the same time, can we really have expected him to have been completely unbiased in any Greek-Turkish dispute? We still don’t know the interests of people around the American president – who himself has business interests in Turkey, among other countries. Nothing is as it was. Prior US strategy cannot be taken for granted. This makes it imperative for our country to be clear about its own course, to implement its strategy calmly and decisively. We must avoid being caught up in the game of our excitable neighbors and keep our eyes on where we want to go.

Read more …

Things are only getting more confusing.

Turkey Loses Momentum In Northern Syria As US Supports Kurds (ARA)

Turkey has lost momentum in the war for northern Syria as the United States draws on Kurdish allies in the assault on ISIS-held Raqqa, but Ankara is still pressing Washington for a deal that allays its fears of Kurdish ascendancy. Syrian Kurdish groups meanwhile sense Washington is now more firmly behind them than before, a shift they hope will eventually aid their ambitions for autonomy after years of persecution by the Syrian government. One of the most complicated theatres in the multi-sided Syrian conflict, the war in the north has played out at lightning pace in the last few weeks with ISIS fighters either withdrawing or collapsing in swathes of territory. The Russian-backed Syrian army has benefited from this, creating a corridor to the Euphrates River that secures Aleppo’s water supplies and suggests at least tacit coordination with US-allied Kurdish militia – at Turkey’s expense.

In a swipe at Washington, Turkish Prime Minister Binali Yildirim said on Tuesday it was unfortunate that some of Turkey’s allies had chosen the Kurdish People’s Protection Units (YPG) as a partner in the fight against ISIS in Syria. “The field in Syria at the moment is really very complicated,” said a senior Turkish official, stressing the fast-moving nature of events and the urgent need for agreement. “Anything could happen at any moment.” “Such a harsh step in completely excluding Turkey there will cause a problem for relations between the countries,” the Turkish official said. “Hence a share point must be found. Talks are still continuing.”

[..] Ankara had hoped to advance its strategy in northern Syria by persuading Washington to abandon its Kurdish allies and switch support to Free Syrian Army (FSA) rebel groups for the final assault on Raqqa – a northern Syrian city that is ISIS’s de facto capital. But any hopes of this have faded in recent days. Conflicting US and Turkish agendas have surfaced clearly over Manbij, a city controlled by Kurdish-allied fighters since its capture from ISIS last year. A deployment of US forces there last week deterred a threatened Turkish attack. Foreign minister Mevlut Cavusoglu made clear Turkish sensitivities about the presence of Kurdish fighters in Manbij, a town Ankara sees as the next stepping stone in creation of a safe zone free of Kurdish influence west of the Euphrates. “We will not allow the YPG’s canton dreams (to come true),” NTV television cited Cavusoglu as saying. “If we go to Manbij and the PYD is there, we will hit them.”

Read more …

High time for EU, US to take a stand against Turkey, but the courage is failing.

UN Accuses Turkey Of Abuses Against Kurds In Country’s Southeast (AlJ)

A UN report has accused Turkish security forces of human rights violations during operations against Kurdish fighters in the country’s southeast, drawing an angry response by Turkey which rejected it as “biased”. The report by the UN Human Rights Office on Friday detailed accusations of massive infrastructure destruction, unlawful killings and other serious abuses committed between July 2015 and December 2016 following the collapse of a ceasefire. The outlawed Kurdistan Workers’ Party (PKK) and the Turkish state were engaged in a war for almost 30 years until a 2013 truce was declared and the two sides launched peace talks. The ceasefire largely held until the summer of 2015, and since then the two sides have been engaged in escalating clashes. Turkey, the US and the EU all consider the PKK a “terrorist” group.

The UN said that its study, which was carried through “remote monitoring”, was based on interviews, analysis of information provided by Turkey’s government and NGOs, as well as official records, open source documents, satellite images and other materials. Citing data from various sources, the report said that around 2,000 people were killed in the region between July 2015 and December 2016 amid security operations. “Reports generally put the number of local residents killed at approximately 1,200, of whom an unspecified number may have been involved in violent or non-violent actions against the state,” it said, adding that about 800 members of security forces were reportedly killed in clashes. More than 355,000 people were displaced and entire neighbourhoods were destroyed in various parts of southeastern Turkey, the report said.

Read more …

How could it possibly declare Turkey safe?

Greek Court To Rule On Turkey’s ‘Safe Country’ Status (K.)

Greece’s highest administrative court is expected to rule later this month on whether Turkey can be considered a safe country for refugees being returned under a deal with the European Union. The Council of State’s plenary on Friday heard arguments based on the appeal of two Syrian nationals whose asylum applications were rejected by the Greek Asylum Committee. The Syrians’ lawyers argued that the rejection is a violation of the UN Charter of Human Rights and the Geneva Convention as the committee based its decision solely on Turkey’s assurances, without a proper assessment of conditions in the neighboring country.

Another plaintiff acting on their behalf, the Greek Council for Refugees, has also raised questions regarding the partiality of the judges serving on the Asylum Committee’s panels. The appeal comes after seven judges at the Council of State’s Fourth Chamber ruled in favor of the Asylum Committee’s decision, saying that Turkey’s participation in the Geneva Convention defines it as a safe country. If the plenary upholds the Syrians’ appeal, this could undermine the deal signed between the European Union and Turkey a year ago for the latter to take back rejected asylum claimants in exchange for financial assistance.

Read more …

Yada yada.

Lagarde Insists On Greek Debt Restructuring (K.)

International Monetary Fund (IMF) chief Christine Lagarde has reiterated that Greece’s mountainous debt needs restructuring. Speaking to French newspaper Le Parisien, Lagarde insisted that the IMF can only join the Greek program if Athens implements more reforms and the country’s debt is made manageable. “We also need a sustainable debt,” she told the paper, adding that this could be done in different ways, including an extension of loan repayment periods and lower interest rates. She also said she was trying to convince European leaders to accept that Greece needs debt relief.

Meanwhile, representatives of Greece’s international creditors were expected to leave the capital on Friday without having reached an agreement with government officials on contentious issues including pension reform and overhauls to labor rights and the tax system. The IMF said some progress was made but differences “remain in important areas.” Despite the insistence by European officials that a conclusion of the bailout review is unlikely before May, the Greek government indicated that there is enough time for an agreement significantly sooner than that though probably not in time for a March 20 Eurogroup.

Read more …

Sounds very familiar 😉

Roman Citizens Are Breaking The Law To Feed And Help Refugees (R.)

Volunteers served macaroni in marinara sauce to dozens of migrants outside one of Rome’s biggest train stations this week, offering help to travelers largely ignored by institutions on the frontline of Europe’s migrant crisis. While other European cities including Milan have set up information centers and shelters for migrants, Rome has repeatedly cleared out impromptu camps citing security concerns. “We’ve had 13 evictions,” Andrea Costa, director of the Baobab Experience group of volunteers, said before the migrants settled in for a cold night. To keep from being cleared out yet again, volunteers cook meals at home and bring them to a bare plaza outside Tiburtina station where tents are set up at 9 p.m. and taken down in the early morning. There are now 50 migrants staying here, mostly from Africa, as they attempt to reach other European countries.

That number is expected to soar this summer with sea arrivals to Italy up 60% already this year after setting a record last year. “With boat arrivals at this pace, in a little while we’ll have hundreds of people to take care of,” Costa said. Baobab saw between 500 and 1,000 migrants per day last summer, and volunteers have helped almost 63,000 migrants over the past two years with no state funding – only donations. Robel Tesfit, a 27-year-old Eritrean-Ethiopian who everybody calls “Bob,” arrived in Italy by sea in 2015, hoping to reach Britain where he wanted “to play for Manchester United.” He never made it to Britain, and returned to Rome where he was granted asylum. Now he uses his knowledge of Italian, Arabic, Tigrinya and Amharic to help Baobab volunteers, who gave him food, shelter and advice on his journey.

Pointing to the men and women lining up for pasta, he said: “When I arrived, I was the same as them.” While Italy has shelters to house 175,000 asylum seekers, it does not fund structures for migrants in transit, in part because the European Union wants to stop migrants from moving on, not help them to do so. EU law says they must seek asylum in the country where they first set foot. At the end of last year, Rome set aside about 60 beds in a nearby Red Cross center for travelers and officials say they want to renovate a hotel near the station to provide beds for about 100 more.

Read more …

20 million people. And we think about the value of our houses. And where to go on holiday.

World Faces Worst Humanitarian Crisis Since 1945 – UN (G.)

The world faces the largest humanitarian crisis since the end of the second world war with more than 20 million people in four countries facing starvation and famine, a senior United Nations official has warned. Without collective and coordinated global efforts, “people will simply starve to death” and “many more will suffer and die from disease”, Stephen O’Brien, the UN under secretary-general for humanitarian affairs, told the security council in New York on Friday that He urged an immediate injection of funds for Yemen, South Sudan, Somalia and northeast Nigeria plus safe and unimpeded access for humanitarian aid “to avert a catastrophe.” “To be precise,” O’Brien said, “we need $4.4bn by July”. Unless there was a major infusion of money, he said, children would be stunted by severe malnutrition and would not be able to go to school, gains in economic development would be reversed and “livelihoods, futures and hope lost”.

UN and food organisations define famine as when more than 30% of children under age 5 suffer from acute malnutrition and mortality rates are two or more deaths per 10,000 people every day, among other criteria. “Already at the beginning of the year we are facing the largest humanitarian crisis since the creation of the United Nations [in 1945],” O’Brien said. “Now, more than 20 million people across four countries face starvation and famine.” O’Brien said the largest humanitarian crisis was in Yemen where two-thirds of the population — 18.8 million people — need aid and more than seven million people are hungry and did not know where their next meal would come from. “That is three million people more than in January,” he said.

[..] For 2017, O’Brien said $2.1bn was needed to reach 12 million Yemenis “with life-saving assistance and protection” but only 6% has been received so far. He announced that secretary-general Antonio Guterres will chair a pledging conference for Yemen on 25 April in Geneva. The UN humanitarian chief also visited South Sudan, the world’s newest nation which has been ravaged by a three-year civil war, and said “the situation is worse than it has ever been.” “The famine in South Sudan is man-made,” he said. “Parties to the conflict are parties to the famine — as are those not intervening to make the violence stop.” O’Brien said more than 7.5 million people need aid, up by 1.4 million from last year, and about 3.4 million South Sudanese are displaced by fighting including almost 200,000 who have fled the country since January.

“More than one million children are estimated to be acutely malnourished across the country, including 270,000 children who face the imminent risk of death should they not be reached in time with assistance,” he said.

Read more …