May 312017
 
 May 31, 2017  Posted by at 9:22 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Johannes Vermeer Woman in Blue Reading a Letter 1662-3

 

China Is The Greatest Financial Bubble in History (Rickards)
In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt (ZH)
EU Executive To Say Eurozone May Need Treasury, Minister, Budget (R.)
Sterling Dips After Poll Suggests Hung UK Parliament (BBC)
Theresa May Asks Voters To Imagine Jeremy Corbyn ‘Naked And Alone’ (M.)
US Starts Shipping Weapons To Syrian Kurds (ZH)
The Plot To Overthrow Trump Is Very Real (Martin Armstrong)
‘She’s Finally Understood She Needs To Solve Europe’ (Exp.)
Merkel Comes Out Swinging At Trump And Misses (Luongo)
After A Year’s Delay, Dutch Approve Ukraine Treaty (R.)
Two-Thirds Of Greek Construction Jobs Have Vanished (K.)
Once Costly Deep-Sea Oil Turns Cheap, to OPEC’s Dismay (BBG)
US Army Veterans Find Peace In Protecting Rhinos From Poaching (G.)

 

 

“The toxic combination of government debt, corporate debt, WMPs, and unrealistic growth expectations have set up China for the greatest market crash in history. But, not yet. As analysis will continue to prove, political forces will put off a day of reckoning until early 2018.”

China Is The Greatest Financial Bubble in History (Rickards)

China is in the greatest financial bubble in history. Yet, calling China a bubble does not do justice to the situation. This story has been touched on periodically over the last year. China has multiple bubbles, and they’re all getting ready to burst. If you make the right moves now, you could be well positioned even as Chinese credit and currency crash and burn. The first and most obvious bubble is credit. The combined Chinese government and corporate debt-to-equity ratio is over 300-to-1 after hidden liabilities, such as provincial guarantees and shadow banking system liabilities, are taken into account. Paying off that debt requires growth, but the growth itself is fueled by more debt. China is now at the point where enormous new debt is required to achieve only modest new growth. This is clearly non-sustainable.

The next bubble is in investment instruments called Wealth Management Products, or WMPs. Picture this. You’re a middle-class Chinese saver and you walk into a bank. They offer you two investment options. The first is a bank deposit that pays about 2%. The other is a WMP that pays about 7%. Which do you choose? In the past ten years, bank customers have chosen almost $12 trillion of WMPs. That might be fine if WMPs were like high-quality corporate or municipal bonds. They’re not. They’re more like the biggest Ponzi scheme in history. Here’s how they work. Proceeds from sales of WMPs are loaned to speculative real estate developers and unprofitable state owned enterprises (SOEs) at attractive yields in the form of notes. So, WMPs resemble collateralized debt obligations, CDOs, the same product that sank Lehman Brothers in the panic of 2008.

The problem is that the borrowers behind the WMPs can’t pay their debts. They’re relying on further bubbles in real estate or easy credit from the government to meet their interest obligations. What happens when a WMP matures? Usually the bank customer is encouraged to rollover the investment into a new WMP. What happens if the customer wants her money back? The bank sells a new WMP to another customer, then uses those sales proceeds to redeem the first customer. The new customer now steps into the shoes of the first customer with the same pile of bad debt. That’s where the Ponzi dynamic comes in. Simply put, most of the debts backing up the WMPs cannot be repaid, which means it’s just a matter of time before the WMP market goes into a full meltdown and triggers a banking panic.

Finally, there is an infrastructure bubble. As explained in more detail below, China has kept its growth engine humming mostly with investment instead of aggregate demand from consumers. Investment is fine if it is directed at long-term growth projects that produce a positive expected return and help the broader economy grow as well. But, that’s not what China has done. About half of China’s investment in the past ten years has been wasted on “ghost cities,” white elephant transportation facilities, and prestige projects that look good superficially, but that don’t produce enough revenue or efficiencies to pay for themselves. Much of this investment was financed with debt. If the project itself is not revenue producing then the associated debt cannot be repaid, and will go into default.

Read more …

Watershed Ponzi.

In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt (ZH)

Less than a decade after various complex, synthetic, squared, cubed and so on securitized debt structures nearly brought down the financial system, here come “Sovereign Bond-Backed Securities.” Moments ago, the FT reported that in a watershed event for the European – and global – bond markets, Brussels is pressing for sovereign debt from across the eurozone to be “bundled into a new financial instrument and sold to investors as part of a proposal to strengthen the single currency area.” Call it securitized sovereign debt. In the latest attempt by Europe to create a common bond market, a European Commission paper on the future of the euro seen by the Financial Times, advocates the launching of a market of “sovereign bond-backed securities” — packaging different countries’ national debt into a new asset.

The logic is simple: combine all the debt from strong and weak countries into one big pool, eliminating the outliers on both sides, then tranche it out, and sell it based on required yield returns. “Officials hope that the plans would boost demand for debt issued by governments with relatively weaker economies, and encourage banks to manage their risks better by diversifying their portfolios, while avoiding old political battles over whether the currency bloc should issue common bonds”. Why now? Because as has been Germany’s intention all along, Berlin has been hoping to create a fiscally intergrated Europe (with a shadow government in Berlin of course), call it a (quasi) “fiscal union”, and which is much more stable and resilient than the current iteration which is only as strong as its weakest link. Securitizing the sovereign debt resolves virtually all outstanding problems.

“The commission paper is the latest in a series of efforts to kick-start integration inside the eurozone. Such integration efforts have stalled since financial markets became convinced in 2013 that the European Central Bank would not allow the eurozone to break up. The last successful integration project was the creation of an EU banking union three years ago.” There is another reason why now: over the next year, the ECB’s QE, which has been instrumental to implement Draghi’s “Whatever it takes” bluff, will start hiking rates and eventually unwinding its balance sheet, the world’s biggest. That’s when the European bond market may have its next freak out moment. As a result, Brussels and Frankfurt are hoping to preempt this potential unwind by coming up with today’s “ingenious” solution.

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Brussels wants the opposite of what the people want.

EU Executive To Say Eurozone May Need Treasury, Minister, Budget (R.)

The EU executive will suggest on Wednesday the euro zone might need to issue collective debt and run a joint budget, among proposals for bolstering the single currency that echo ideas from new French President Emmanuel Macron. People familiar with the European Commission reflection paper told Reuters the scenario of a finance minister managing common revenue, spending and borrowing had been worked on for many months in Brussels, but now appears a much more likely option since centrist former banker Macron won power on May 7. German conservatives dislike an idea they say means paying for poorer neighbors. But Chancellor Angela Merkel, seeking re-election in September, has welcomed Macron’s victory and EU officials said they hoped governments might start working on a plan to forge a more cohesive euro zone from next year.

The Commission paper examines possible reforms to the bloc after the 2010-2012 sovereign debt crisis that nearly destroyed it and which triggered a wave of quick fixes for its weak spots. While some problems have been addressed, there is a lot more EU governments need to do to have an optimally functioning Economic and Monetary Union (EMU), the Commission will say. The document, part of a wider series on the future of the EU, comes as the EU is to start talks with Britain on the terms of its withdrawal – a great setback to European integration but one that will see the euro zone make up nearly four-fifths of the EU’s economy, up from two thirds today. The Commission will avoid making any clear suggestions as to the evolution of the single currency area, leaving it up to EU governments to decide which of the ideas they like. But it does say that in the later stages of deepening euro zone integration, not least because it would require politically difficult and time-consuming changes to EU treaties, the bloc could establish a euro zone treasury.

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May’s fall is swift.

Sterling Dips After Poll Suggests Hung UK Parliament (BBC)

The value of the pound dropped after a projection suggested the Conservatives could fail to win an outright majority in the election on 8 June. Previous opinion polls suggested Prime Minister Theresa May’s party would increase its majority, which is currently 17 seats. But the projection, published in the Times and based on YouGov research, suggests a possible hung parliament. Sterling fell by more than half of one per cent, but recovered some losses. By early Wednesday morning, it was trading 0.44% lower against the dollar at $1.28020 and 0.29% lower against the euro at €1.146. The Times said the YouGov data suggested that the Tories could lose up to 20 of the 330 seats they held in the last parliament, with Labour gaining nearly 30 seats.

The Conservatives would still be the biggest party, but would not have an overall majority. The model is based on 50,000 interviews over a week, with voters from a panel brought together by YouGov. It uses a new “constituency-by-constituency” model for polling, which the paper says allows for big variations. According to the Times, “the estimates were met with scepticism by Tory and Labour figures.” YouGov’s chief executive, Stephan Shakespeare said the model had been tested during the EU referendum campaign, when it consistently put the winning Leave side ahead. But he added: “It would take only a slight fall in Labour’s share and a slight increase in the Conservatives’ to result in Mrs May returning to No 10 with a healthy majority.”

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Fear rules the waves. Telegraph headline today: “Tax on homes ‘to treble under Labour plans for Land Value Tax’ “

Theresa May Asks Voters To Imagine Jeremy Corbyn ‘Naked And Alone’ (M.)

Flapping Theresa May fired off a volley of insults at Jeremy Corbyn today after Labour surged in general election polls. The desperate Prime Minister even conjured up an image of the Labour leader naked in Brussels as she urged voters to consider the impact of propelling Mr Corbyn to No 10. She used a Labour legend’s quote as she mocked Mr Corbyn over what she claimed would be his weakness in tough EU divorce talks. “With his position on Brexit , he will find himself alone and naked in the negotiating chamber,” she said. “I know that’s an image that doesn’t bear thinking about but actually this is very serious.” The barb was particularly wounding for Labour by borrowing the charge from one of the party’s heroes, NHS founder Aneurin Bevan.

Urging Labour conference delegates in October 1957 not to support unilateral nuclear disarmament, he warned: “You will send a British Foreign Secretary, whoever he may be, naked into the conference chamber.” Challenged by the Mirror, Mrs May denied demeaning the office of Prime Minister with her outspoken attacks. And she was later forced to deny they showed she was getting “desperate”, saying: “It represents the difference between myself, having prepared for the negotiations, having a clear plan for the negotiations, and Jeremy Corbyn and the Labour Party who have said they would tear up the plan we have produced.” Speaking at the former railway station in Wolverhampton, Mrs May claimed her rival’s performance in the Sky News/Channel 4 TV showdown proved he could not be PM. “Despite being a Member of Parliament for 34 years, despite being the leader of the Labour Party for the last two years, he’s simply not ready to govern, and not prepared to lead,” she said.

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Some are trying to turn this into a war with Iraq.

US Starts Shipping Weapons To Syrian Kurds (ZH)

Just three weeks after reports first emerged that the Trump administration was considering arming the Syrian Kurd militia caught in the crossfire between Turkish and Syrian army forces, NBC reported that the American military has started shipping weapons and equipment to the Kurdish fighters of the Syrian Democratic Forces, also known as YPG, a key US ally on the ground in Syria. Citing an unnamed official, NBC adds that the U.S. began providing the equipment in the last 24 hours. Details were scarce, with no specifics about what weapons and supplies the US is sending the Syrian Democratic Forces or how those items are being delivered however when the report first emerged, the U.S. military announced it would provide the YDF with ammunition, rifles, armor, radios, bulldozers, vehicles, and engineering equipment.

Pentagon spokesman Eric Pahon told RT taid that this move represents the “early steps to prepare for the eventual liberation of Raqqa,” which the Islamic State has declared the capital of its self-proclaimed caliphate. “Overall, the equipment the US-led coalition will provide to the SDF includes small arms, ammunition, heavy machine guns and weapons capable of defeating specific threats our partner forces are expected to encounter as they take the fight to a desperate enemy, such as heavily-armored vehicle-borne IEDs,” Pahon said. Earlier this month US officials said that Trump had signed off on a plan “to equip Kurdish elements of the Syrian Democratic Forces” in the fight to retake the Syrian city of Raqqa from ISIS. “The SDF, partnered with enabling support from U.S. and coalition forces, are the only force on the ground that can successfully seize Raqqa in the near future,” Pentagon spokeswoman Dana White said in a statement.

The announcement is guaranteed to send Turkey’s president Erdogan into another fit of rage. Earlier this month Erdogan condemned Trump’s decision to arm Syrian Kurds whom Turkey considers to be terrorists and an extension of outlawed Kurdish insurgents within its borders. Three weeks ago Erdogan said: “I hope very much that this mistake will be reversed immediately,” adding that “we want to believe that our allies would prefer [to] be side by side with ourselves rather than with the terror groups.” President Trump and Erdogan met earlier this month and discussed the administration’s plans to arm Kurdish militias in Syria. It was unclear what agreement the two leaders reached on this controverial move.

At the same time, Reuters reported that Syrian rebels say the United States and its allies “are sending them more arms to try to fend off a new push into the southeast by Iran-backed militias aiming to open an overland supply route between Iraq and Syria.” Rebels said military aid has been boosted through two separate channels: a program backed by the CIA, known as the MOC, and regional states including Jordan and Saudi Arabia, and one run by the Pentagon. “There has been an increase in the support,” said Tlass Salameh, head of the Jaish Usoud al-Sharqiya, one of the FSA groups backed via the CIA-backed program. “There’s no way we can let them open the Baghdad-Damascus highway,” he said.

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No doubt there.

The Plot To Overthrow Trump Is Very Real (Martin Armstrong)

There is a very REAL plot to overthrow Trump led by the political establishment and aided by the mainstream press.. This is not simply speculation – this is the real deal. Of course the Washington Post and New York Times are in full swing to get rid of Trump. No matter what it might be, the twist is always against Trump right down to the story how Sean Spicer wanted to see the Pope because he is a devote Catholic and was denied. CNN, of course, is also part of this conspiracy. You will NEVER find any positive article about Trump in mainstream media. Here is CNN and we can see that 50% of the top stories are always against Trump. We have Boehner coming out saying Trump is a disaster. This is the guy who threw people off committees if they did not vote for his agenda. The Kushner story is desperately trying to make something out of nothing.

Here we have after Flynn’s removal, Kushner suggesting setting up a direct channel for diplomatic purposes regarding Syria with the Russians. That is entirely within reason and has been done during confrontations in the past. This was only a suggestion. It was not done, yet the press twist this into somehow supporting Russia who single-handedly defeated Hillary and put Trump in office. They think if they can just keep selling that nonsense it will become a fact.. The press seems to want war with Russia and absolutely nothing else. No such link was established and the last thing you want to do is not talk to your adversary. So why is this a major story? Of yes. It’s again RUSSIA. The press created the Spanish American War. They supported the Vietnam War and kill more than 58,000 American boys, most of my high school friends died thanks to them.

Behind the Curtain, Republican Elites are conspiring to overthrow Trump (including Boehner) to protect the establishment. McCain and Graham are the worst of the lot in office. They obviously picked up the phone and called Boehner for help. The Republicans have lost it. They think this “populism” is over with Macron’s victory in France so it’s time to get rid of Trump and it will all be OK again. I have never seen such an all out effort on a massive coordinated effort to reject the people’s demand for reform. This is HIGHLY dangerous for we can very well move toward civil war. These people think getting rid of Trump and it will all be roses and raining money for them once again. They are DEAD wrong! Our model also warns that that United States can break up as a result of this by 2032-2040.

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No, Merkel has started her campaign.

‘She’s Finally Understood She Needs To Solve Europe’ (Exp.)

Attending a campaign rally ahead of the country’s elections, Angela Merkel claimed that now was the time for Europe to pay more attention to its own interests, and “take our fate into our own hands”. In an uncharacteristically bold speech, she went so far as to suggest that even the US was no longer a reliable partner to the EU – a strong statement, according to officials, who were left stunned. The words appeared to herald a change in transatlantic relations – effectively saying with Donald Trump in charge, the US-European alliance would never be the same. Mrs Merkel’s out of character appearance also signalled a strong pro-European stance to voters in Germany, as well as the wider EU, that Berlin will be playing a more activist role in the bloc. Norbert Spinrath, Europe spokesman in the Bundestag for the Social Democrats, said: “[Mrs] Merkel seems to have finally understood that she really needs to get stuck in and solve Europe’s problems.

“She has to realise that Europe is more than just fiscal consolidation — we need closer integration, we need to strengthen the currency and fight social imbalances.” The speech comes just weeks after newly elected French president Emmanuel Macron announced his plans to spearhead reforms in the Eurozone. It would be a sharp departure from her previous role as the EU’s crisis manager, with Mr Macron’s election pushing the German leader to present a more promising vision of Europe’s future. According to Jan Techau, a foreign policy analyst at the American Academy in Berlin, the speech was more for domestic audiences than those abroad, with the country’s federal elections just four months away. He adds: “It shows she is finally moving into campaign mode. “She’s switched from the international Merkel to the domestic Merkel.”

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What is Trump going to do if Corbyn wins? Or Merkel?

Merkel Comes Out Swinging At Trump And Misses (Luongo)

German Chancellor Angela Merkel will preside over the end of the European Union. Her reaction to the G-7 meeting and U.S. President Donald Trump’s refusal to endorse the Paris Agreement on Climate Change will accelerate the market’s rejection of EU policy. I’ve been warning about this for months in my articles here on Seeking Alpha. Angela Merkel is caught between two stanch nationalists whom Germany depends on: Russian President Vladimir Putin to the east and U.S. President Donald Trump to the right. Last week, I told you that Trump would clash with Merkel over Brexit at the G-7 meeting. “But, the likelihood of that is remote. If anything, there are signs that Trump is getting control of the narrative and his presence at the G-7 meeting this weekend will put the EU, specifically German Chancellor Angela Merkel in her place with respect to Brexit by backing U.K. Prime Minister Theresa May.”

And by all accounts he did that and more, forcing the G-7 to issue a four-page forward statement that outlined the lack of consensus among the participants. This is unprecedented. Trump went overseas and stood athwart the financial and political order to fulfill campaign promises. Now, Angela Merkel is forced to make campaign promises of her own. And she’s not happy about it. Merkel gave a “watershed speech” during a Christian Democratic Union (CDU) rally in Munich. From an AFP report on the speech: “Europe “must take its fate into its own hands” faced with a western alliance divided by Brexit and Donald Trump’s presidency, German Chancellor Angela Merkel said Sunday. “The times in which we could completely depend on others are on the way out. I’ve experienced that in the last few days,” Merkel told a crowd at an election rally in Munich, southern Germany. “We Europeans truly have to take our fate into our own hands,” she added.

And while these are fighting words, they also ring hollow. Merkel is in no position to drive a hard bargain with either the U.S. or the U.K. over trade. Trump went to the G-7 to put the kibosh on the EU’s intransigence over Brexit. He succeeded. Trump is winning control of the political narrative at home. He’s up in the polls, he was deferential to Israel and even handed with the Arabs in Saudi Arabia. This trip and his standing up to G-7 technocrats on behalf of his voters give him the political capital to whip his Republican majority into line on spending, taxes and budgeting. The punditry is right. This is a watershed moment. But, it was not instigated by Merkel. It was instigated by Trump. And it will be the beginning of the next wave of capital flight out of the EU.

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So much for democracy in Holland. Make that Europe. Big mistake, guys.

After A Year’s Delay, Dutch Approve Ukraine Treaty (R.)

The Dutch senate on Tuesday approved a European Union “association agreement” with Ukraine, a final hurdle to the treaty, which strengthens the former Soviet republic’s ties with Western Europe and moves it further from Moscow’s orbit. It did so following amendments made at the EU level to take into consideration the Dutch referendum vote last year against the agreement. “Today’s vote in the Dutch Senate sends an important signal from the Netherlands and the entire European Union to our Ukrainian friends: Ukraine’s place is in Europe. Ukraine’s future lies with Europe,” said EU Commission President Jean-Claude Juncker. The agreement, a treaty, had already been negotiated and approved by all EU governments and by Ukraine in 2014, and had even partially gone into effect pending ratification when it was abruptly rejected by Dutch voters in a snap referendum held in April 2016.

The Dutch vote was as much a rebuke to Prime Minister Mark Rutte and the European Union as a rejection of the treaty, which focuses mostly on trade ties. But Rutte and the European Union diplomats were forced to renegotiate parts of the treaty in order to render it palatable to Dutch parliament or risk seeing it derailed, since it cannot be ratified without support from all European Union legislatures. Ultimately the treaty was amended to underline it does not make Ukraine a candidate for EU membership, does not entitle Kiev to financial aid or military assistance from the bloc, and does not give Ukrainians the right to live and work in EU member states. The amended version passed Dutch parliament in March, and the Senate approved it Monday, both by comfortable margins.

Read more at

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Everything is left to fall apart. As billion-dollar buildings open in Brussels. Union.

Two-Thirds Of Greek Construction Jobs Have Vanished (K.)

The number of companies active in the construction sector has declined by 35.4% since 2004 as a result of the financial crisis and the considerable drop in investment in infrastructure. Worse, compared to the 401,000 employees in the sector during the third quarter of 2008 – just before the recession cycle started – construction employed just 141,800 workers at end-2016, which means that at least 64.6% of the construction workers eight-and-a-half years ago have now been forced out of the sector.

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Ironic quote of the year, from the oil industry: “There is life in deep-water yet..”

Once Costly Deep-Sea Oil Turns Cheap, to OPEC’s Dismay (BBG)

Reports of deep-sea drilling’s demise in a world of sub-$100 oil may have been greatly exaggerated, much to OPEC’s dismay. Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritize drilling in core wells, according to Wood Mackenzie. That means oil at $50 a barrel could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates. The tumbling costs present another challenge for OPEC which is currently curbing output to shrink a glut. In 2014, when the U.S. shale boom sparked oil’s crash from above $100 a barrel, the group embarked on a different strategy of pumping at will to defend market share and throttle high-cost projects.

Ali Al-Naimi, the former energy minister of OPEC member Saudi Arabia, said in February 2016 that such producers need to either “lower costs, borrow cash or liquidate.” “There is life in deep-water yet,” said Angus Rodger, director of upstream Asia-Pacific research at Wood Mackenzie in Singapore. “When oil prices fell, many projects were deferred, but the ones that were deferred first were deep-water because the overall break-evens were highest. Now in 2017, we’re seeing signs that the best ones are coming back.” The falling costs make it more likely that investors will approve pumping crude from such large deep-water projects, the process for which is more complex and risky than drilling traditional fields on land. That may compete with OPEC’s oil to meet future supply gaps that the group sees forming as demand increases and output from existing wells naturally declines.

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We should start training young people for this. Send them to Africa to live with the vets and observe. Best teachers ever.

US Army Veterans Find Peace In Protecting Rhinos From Poaching (G.)

The sun has set over the scrubby savannah. The moon is full. It is time for Ryan Tate and his men to go to work. In camouflage fatigues, they check their weapons and head to the vehicles. Somewhere beyond the ring of light cast by the campfire, out in the vast dark expanse of thornbushes, baobab trees, rocks and grass, are the rhinos. Somewhere, too, may be the poachers who will kill them to get their precious horns. The job of Tate, a 32-year-old former US Marine, and the group of US military veterans he has assembled in a remote private reserve in the far north of South Africa is simple: keep the rhinos and the rest of the game in the bush around their remote base alive. The men are not mercenaries, or park rangers –they work for Tate’s Veterans Empowered To Protect African Wildlife (Vetpaw), a US-based nonprofit organisation funded by private donations.

All have seen combat, often with elite military units, in Iraq, Afghanistan and elsewhere. Though equipped with vehicles, trail bikes, assault rifles, sniper suits and radios, the most important weapons in the war against poaching, Tate believes, are the skills and experiences his team gained on successive deployments in conflict zones over the last decade and a half. “We are here for free. We are not going anywhere. Whether it is cold or hot, day or night … we want to work with anyone who needs help,” Tate says. The initiative is not without controversy. Some experts fear “green militarisation” and an arms race between poachers and gamekeepers. Others believe deploying American former soldiers to fight criminals in South Africa undermines the troubled country’s already fragile state. But the scale of the challenge of protecting South Africa’s rhinos is clear to everyone, with a rise in poaching in recent years threatening to reverse conservation gains made over decades.

[..] Tate founded Vetpaw after seeing a documentary about poaching and the deaths of park rangers in Africa. His team now work on a dozen private game reserves covering a total of around 200,000 hectares in Limpopo, the country’s northernmost province. One advantage for local landowners is the protection heavily armed combat veterans provide against the violent break-ins feared by so many South Africans, particularly on isolated rural farmsteads. The team has also run training courses for local guides and security staff. But if one aim of Vetpaw is to counter poaching, another is to help combat veterans in the US, where former servicemen suffer high levels of unemployment and mental illness. “Everyone gets PTSD when they come back from war … you are never going to get the brotherhood, the intensity again.. [There are] all these veterans with billions of dollars of training and the government doesn’t use them. I saw a need in two places and just put them together,” says Tate.

Read more …

May 102017
 
 May 10, 2017  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , ,  No Responses »
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Dresden February 1945

 

Trump Fires FBI Director Comey, Setting Off US Political Storm (R.)
Turning Gen. Flynn into Road Kill (Robert Parry)
NATO Chief Finds a New Friend in Trump (Spiegel)
Trump Approves Plan to Arm Syrian Kurds (NBC)
Turkey Hopes US Will End Support Of Syrian Kurdish YPG (R.)
Assange: ‘CIA Is Basically Useless, Incompetent’ (Exp.)
Stockman: There Is No Reason To Own Stocks At This Point In The Game (DR)
Shale Drillers Are Outspending the World With $84 Billion Spree (BBG)
UK Tory MPs Could Learn Fate Of Electoral Spending Inquiry By Wednesday (G.)
Anonymous Warns World To ‘Prepare’ For World War 3 (NYP)
French Election A Catastrophe For World Peace (Paul Craig Roberts)
Emmanuel Clinton and the Revolt of the Elites (Escobar)
Paris Afterparty (Jim Kunstler)
Germany: Greek Gold, Real Estate As Collateral If IMF Out Of Program (KTG)
Greek Court Finds New Pension Cuts Illegal Under Greek, European Law (K.)
Damning Findings From EU Audit Of Greek & Italian Refugee “Hotspots” (Oxfam)

 

 

The most striking thing about this is how utterly impossible it has become to find an objective discussion of it. I’ll go with Reuters.

Trump Fires FBI Director Comey, Setting Off US Political Storm (R.)

U.S. President Donald Trump ignited a political firestorm on Tuesday by firing FBI Director James Comey, who had been leading an investigation into the Trump 2016 presidential campaign’s possible collusion with Russia to influence the election outcome. The Republican president said he fired Comey, the top U.S. law enforcement official, over his handling of an election-year email scandal involving then-Democratic presidential nominee Hillary Clinton. The move stunned Washington and raised suspicions among Democrats and others that the White House was trying to blunt the FBI probe involving Russia. Some Democrats compared Trump’s move to the “Saturday Night Massacre” of 1973, in which President Richard Nixon fired an independent special prosecutor investigating the Watergate scandal.

White House officials denied allegations that there was any political motive in the move by Trump, who took office on Jan. 20. Senate Democratic leader Chuck Schumer said he spoke to Trump and told him he was “making a very big mistake” in firing Comey, adding the president did not “really answer” in response. An independent investigation into Moscow’s role in the election “is now the only way to go to restore the American people’s faith,” Schumer said. Though many Democrats have criticized Comey’s handling of the Clinton email probe, they said they were troubled by the timing of Trump’s firing of him.

[..] Pushing back against critics of the move, White House officials said Deputy Attorney General Rod Rosenstein, a career prosecutor who took office on April 25, assessed the situation at the FBI and concluded that Comey had lost his confidence. Rosenstein sent his recommendation to Sessions, who concurred and they forwarded their recommendation to Trump, who accepted it on Tuesday, they said. The White House released a memo in which Rosenstein wrote: “I cannot defend the Director’s handling of the conclusion of the investigation of Secretary Clinton’s emails, and I do not understand his refusal to accept the nearly universal judgment that he was mistaken.”

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The facts are classified.

Turning Gen. Flynn into Road Kill (Robert Parry)

Not to defend retired Lt. Gen. Michael Flynn for his suspect judgment, but it should be noted that his case represents a disturbing example of how electronic surveillance and politicized law enforcement can destroy an American citizen’s life in today’s New McCarthyism. The testimony on Monday by former acting Attorney General Sally Yates and former Director of National Intelligence James Clapper offered no evidence of Flynn’s wrongdoing – those facts were deemed “classified” – yet the pair thoroughly destroyed Flynn’s reputation, portraying him as both a liar and a potential traitor. That Senate Democrats, in particular, saw nothing troubling about this smearing of the former director of the Defense Intelligence Agency and, briefly, President Trump’s national security adviser was itself troubling. Republicans were a bit more skeptical but no one, it seemed, wanted to be labeled as soft on Russia.

So, there was no skepticism toward Yates’s curious assertion that Flynn’s supposed lying to Vice President Mike Pence about the details of a phone call with Russian Ambassador Sergey Kislyak somehow opened Flynn to Russian blackmail – her core explanation for why she rushed to Trump’s White House with warnings of this allegedly grave danger. Yates also talked ominously about “underlying” information that raised further questions about Flynn’s patriotism, but that evidence, too, couldn’t be shared with the American people; it was classified, leaving it to your imagination the depth of Flynn’s perfidy. Despite the thinness of Yates’s charges – and the echoes of Sen. Joe McCarthy with his secret lists of communists that he wouldn’t release – the mainstream U.S. news media has bestowed on Yates a hero status without any concern that she might be exaggerating the highly unlikely possibility that the Russians would have blackmailed Flynn.

Her supposition was that since Vice President Mike Pence’s account of the Kislyak-Flynn conversation deviated somewhat from the details of what was actually said, the Russians would seize on the discrepancy to coerce Flynn to do their bidding. But that really makes no sense, in part, because even if the Russians did pick up the discrepancy, they would assume correctly that U.S. intelligence had its own transcript of the conversation, so there would be no basis for blackmail. Yates’s supposed alarm might make for a good spy novel but it has little or no basis in the real world. But it is hard for Americans to assess her claims because all the key facts are classified.

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NATO has become an anti-ISIS vehicle. Wonder if they realize this. Turkey is a member.

NATO Chief Finds a New Friend in Trump (Spiegel)

In Donald Trump’s eyes, NATO Secretary-General Jens Stoltenberg was actually the head of an alliance that history had made superfluous. The new American president made clear during his election campaign that he considered NATO to be a Cold War relic – cumbersome, expensive and useless. But when Stoltenberg appeared at a joint press conference during a visit to the new U.S. leader in the White House, nary a word indicated any resentment over NATO. “I said it was obsolete. It is no longer obsolete,” Trump said in a spectacular turnaround. So what happened? Stoltenberg chuckles at the question before fastening his seat belt. The Belgian air force passenger jet taxis onto the runway at the airport in Rome as it prepares to take off for Brussels. “We learn something new every day,” he says.

“Donald Trump and I discussed how NATO must further develop because the world has changed.” Above all, change means that the Europeans will have to increase their defense spending in the future – both Republican Trump and Social Democrat Stoltenberg are in agreement on the issue. In recent weeks, an alliance has formed between the two, very different men. The blustering U.S. president, who has little foreign policy experience, and the measured secretary-general from Norway are now pulling together, with both desiring more money for the alliance. Stoltenberg, 58, is now paying visits to European capitals in order to drum up the necessary funds. In two weeks, Trump plans to travel to Europe for the first time as U.S. president, and it is no coincidence that one of his first stops on May 25 will be to the massive new NATO headquarters in Brussels.

In addition to his demand for more money from other alliance members, Trump is also hoping NATO will take on a greater role in the fight against Islamic State (IS). He would like to see NATO join the U.S.-led coalition against the terrorist organization. Stoltenberg has long been of the opinion that the era of peace dividends has passed, particularly given Russia’s annexation of Crimea and the IS establishment of a “caliphate” in Syria and Iraq. But it was only with Trump’s election that his demands have gained significant momentum. Ironically, the very man who until recently considered NATO to be superfluous is now one of Stoltenberg’s closest allies.

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And this flies straight in the face of Turkey’s NATO membership.

Trump Approves Plan to Arm Syrian Kurds (NBC)

Two U.S. defense officials tell NBC News that President Donald Trump has approved a plan to arm the Syrian Kurdish militia — an important U.S. ally in Syria in the fight against ISIS. One of the officials said the move is significant because it supports the notion that the Syrian Democratic Force is the fighting force that will eventually go in to Raqqa, a city in Syria’s center which has been under ISIS control since 2014. The move also reinforces the idea that the entire Syrian Democratic Force, Syrian Kurds (YPG) and the Syrian Arab Coalition, has the backing of the U.S. Trump and members of the Cabinet spoke about it during a meeting late yesterday at the White House with Secretary of Defense James Mattis joining by video teleconference.

The order has been signed and that “allows the process to begin to function,” one official said. Once the order comes to the Pentagon, the U.S. can begin providing the Syrian Kurds with arms and equipment fairly quickly since some equipment is pre-positioned. [..] The Turks will be notified about the decision soon and the officials expect a strong reaction from them. In March, Secretary of State Rex Tillerson traveled to Turkey to meet with President Recep Tayyip Erdogan, who sees the YPG as terrorists.

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Erdogan is not amused. And his recent attack on Israel won’t help.

Turkey Hopes US Will End Support Of Syrian Kurdish YPG (R.)

Turkey hopes the United States will end its policy of supporting the Syrian Kurdish YPG militia, Deputy Prime Minister Nurettin Canikli said on Wednesday, adding that Ankara could not accept its NATO ally backing the group. Canikli’s comments are among the first official responses after U.S. officials said on Tuesday that President Donald Trump has approved supplying arms to the YPG to support an operation to retake the Syrian city of Raqqa from Islamic State. Ankara views the YPG as the Syrian extension of the outlawed Kurdistan Workers Party (PKK), considered a terrorist group by the United States, Turkey and Europe. The United States sees the YPG as a valuable partner in the fight against Islamic State in northern Syria.

“We cannot accept the presence of terrorist organizations that would threaten the future of the Turkish state,” Canikli said in an interview with Turkish broadcaster A Haber. “We hope the U.S. administration will put a stop to this wrong and turn back from it. Such a policy will not be beneficial, you can’t be in the same sack as terrorist organizations.” Turkish President Tayyip Erdogan is expected to meet Trump in Washington next week. Erdogan has repeatedly castigated the United States for its support for the YPG, saying its NATO ally should support it fully in the fight against terrorism. The Pentagon has sought to stress that it saw arming the Kurdish forces as necessary to ensure a victory in Raqqa, Islamic State’s de facto capital in Syria and a hub for planning the group’s attacks against the West.

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Extremely incompetent. But the CIA doesn’t have to be competent, all it has to do is be secretive.

Assange: ‘CIA Is Basically Useless, Incompetent’ (Exp.)

Mr Assange, declared by the Donald Trump administration as US public enemy number one, was speaking ahead of a live Spanish television interview. He told current affairs show When It’s Gone: “The CIA is basically useless. They are extremely incompetent as an organisation. “It is the organisation that gave us the end of democracy in Iran, Pinochet, the destruction of Libya, the rise of ISIS within Libya, al-Qaeda, the Syrian disaster and the Iraq war. “It is one of the most useless organisations in the world.” US intelligence agencies have concluded that Russia was behind the hack, and used Wikileaks to harm the chances of Mrs Clinton and favour Mr Trump. Mr Assange said the release was not intended to affect the election.

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“This is the greatest suckers rally we’ve ever seen.”

Stockman: There Is No Reason To Own Stocks At This Point In The Game (DR)

[..] “There will be panic in the financial markets. This is not priced in. The market isn’t expecting anything. I think it will cause some very difficult times.” The interviewer then asked what his expectations on a government shutdown would look like with Trump.” [..] “I doubt he’ll go for a shutdown by choice. The leadership is not going to stand for it. They have a false idea that Republicans can govern by keeping the Washington Monument open even if we’re bankrupting the country by piling spending. I don’t think they’re going to elect to have a shutdown. What I think is going to happen instead is they’re going to run out of borrowing authority with the debt ceiling, it is now frozen on March 15. We’re locked in at $19.8 trillion so when they run out of cash in a few months, they’ll need a majority in both houses to vote through a multi-trillion bill in both houses. They won’t have the votes.”

[..] “The market is pricing itself for perfection for all of eternity. This is crazy. We’ve got headwinds everywhere. The auto industry is now starting to roll over. The red ponzi in China has only a matter of time before it explodes. We now have debt for the household sector above where it was for the 2008 crisis. I think the market could easily drop to 1,300-1,600 by 30% or more once the fantasy ends. The government will show its true colors. We are headed for a fiscal bloodbath.” Stockman voiced his concern for clarity remarking, “This crazy notion that there is going to be a Trump tax cut and fiscal stimulus must be put to rest once and for all. It’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporates $10 or $15 trillion of debt over the next decade. Week by week, slowly the market is beginning to figure this out.

What it means is, all of the corporate insiders are selling stock like there is no tomorrow… where institutional sales of stock have been going up since the election and what we have is the usual end of the cycle. This is the greatest suckers rally we’ve ever seen.” When asked what he would recommend to protect yourself he urged, “The main thing is, get out of the markets. These markets are unstable. They’re rigged and unsustainable… there is no reason to own stocks at this point in the game. It is so overvalued that maybe you can get another two or three out but you’re facing a 30% or 40% down. The risk versus reward is horrible. The bond market is one giant bubble because the central bank’s have been buying bonds worldwide. They’re buying a trillion and still buying a trillion or so on an annual basis. All of that is coming to a halt.”

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Credit is still cheap. Even, or especially, depending on how you look at it, for zombies.

Shale Drillers Are Outspending the World With $84 Billion Spree (BBG)

U.S. shale explorers are boosting drilling budgets 10 times faster than the rest of the world to harvest fields that register fat profits even with the recent drop in oil prices. Flush with cash from a short-lived OPEC-led crude rally, North American drillers plan to lift their 2017 outlays by 32% to $84 billion, compared with just 3% for international projects, according to analysts at Barclays. Much of the increase in spending is flowing into the Permian Basin, a sprawling, mile-thick accumulation of crude beneath Texas and New Mexico, where producers have been reaping double-digit returns even with oil commanding less than half what it did in 2014. That’s bad news for OPEC and its partners in a global campaign to crimp supplies and elevate prices. Wood Mackenzie estimates that new spending will add 800,000 barrels of North American crude this year, equivalent to 44% of the reductions announced by the Saudi- and Russia-led group.

“The specter of American supply is real,” Roy Martin, a Wood Mackenzie research analyst in Houston, said in a telephone interview. “The level of capital budget increases really surprised us.” Drilling budgets around the world collapsed in 2016 as the worst crude market collapse in a generation erased cash flows, forcing explorers to cancel expansion projects, cut jobs and sell oil and natural gas fields to raise cash. The pain also swept across OPEC, which in November relented by agreeing with several non-OPEC nations to curb output by 1.8 million barrels a day. Oil prices that initially popped above $55 in the weeks after the cut was announced have since dipped to around $46, reflecting pessimism that the OPEC-led deal can withstand the onslaught of U.S. shale.

[..] EOG, the second-largest U.S. explorer that doesn’t own refineries, plans to boost spending by 44% this year to between $3.7 billion and $4.1 billion. Pioneer is eyeing a 33% increase to $2.8 billion. The sub-group that includes North American shale drillers like EOG and Pioneer is collectively targeting $53 billion in spending this year, up from $35 billion in 2016, according to the Barclays analysts. U.S. oil production is already swelling, even though output from the new wells being drilled won’t materialize above ground for months. The Energy Department’s statistics arm raised its full-year 2017 supply estimate to 9.31 million barrels a day on Tuesday, a 1% increase from the April forecast. Next year, U.S. fields will pump 9.96 million barrels a day, 0.6% more than the department estimated last month.

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What are the odds anyone will be charged that May wants to keep on?

UK Tory MPs Could Learn Fate Of Electoral Spending Inquiry By Wednesday (G.)

Dozens of Conservative MPs expect to learn shortly whether they will be charged with fraud in relation to their spending at the last election, as deadlines for the Crown Prosecution Service to make a decision approaches. MPs and their agents have been under investigation by 14 police forces for more than a year over their spending declarations at the 2015 election. They are now likely to learn their fates before the general election, possibly as soon as Wednesday as the various time limits for bringing charges are coming to an end. If it happens on Wednesday, this could be in time for Theresa May to jettison any candidates facing prosecution before the deadline for final nominations at 4pm on Thursday, but the timeline for replacements would be extremely tight.

Any decision to prosecute them would be an explosive twist in the general election with more than 20 MPs in the last parliament potentially facing charges under the Representation of the People Act. But the bar for prosecution is considered to be high, with the police having to prove intent to submit wrongful expenditure claims. Tory MPs maintain they recorded their spending as directed by the national party. The allegations centre around the declaration of spending on Conservative battle bus tour in 2015, which took activists to dozens of marginal seats before the election. This was declared as national campaign spending, with the Tories some millions below their official limit. But it emerged that the activists had been campaigning on behalf of specific Conservative MPs, rather than the party generally, leading to claims that the spending should have been record as local expenditure.

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Bit of an oddity for now. But events could change that, fast.

Anonymous Warns World To ‘Prepare’ For World War 3 (NYP)

The infamous hacktivist group Anonymous has released a chilling new video — urging people across the globe to “prepare” for World War 3 – as the US and North Korea continue to move “strategic pieces into place” for battle. “All the signs of a looming war on the Korean peninsula are surfacing,” the group says in the ominous six-minute clip, posted on YouTube over the weekend. Using their signature Guy Fawkes character, the hackers make several claims about recent military movements in the region — and alleged warnings made by Japan and South Korea about imminent nuclear attacks from the North — as they deliver their frightening prophecy. “Watching as each country moves strategic pieces into place,” the organization says, in its notorious robotic voice. “But unlike past world wars, although there will be ground troops, the battle is likely to be fierce, brutal and quick. It will also be globally devastating, both on environmental and economical levels.”

According to Anonymous, President Trump’s test of the Minuteman 3 intercontinental ballistic missile last week — coupled with a recent warning from Japanese officials to citizens, telling them to make preparations for a possible nuclear attack — are ultimately proof that all signs are pointing to a major conflict between the US and North Korea. In addition, China reportedly has urged its citizens in the Hermit Kingdom to return home as tensions continue to escalate over their nuclear weapons program. “This is a real war with real global consequences,” the group explains. “With three superpowers drawn into the mix, other nations will be coerced into choosing sides, so what do the chess pieces look like so far?”

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Macron as evil incarnate.

French Election A Catastrophe For World Peace (Paul Craig Roberts)

Marine Le Pen’s defeat, if the vote count was honest, indicates that the French are even more insouciant than Americans. The week before the election the Russian high command announced that Washington had convinced the Russian military that Washington intended a preemptive nuclear first strike against Russia. No European leader saw danger in this annoucement except Le Pen. No European leader, and no one in Washington, has stepped forward to reassure the Russians. In the US apparently only my readers even know of the Russian conclusion. Simply nothing is said in the Western media about the extraordinary risk of convincing Russia that the US is preparing a first strike against Russia. Nothing in the 20th century Cold War comes close to this. Le Pen, as Trump did prior to his castration by the military/security complex, understands that military conflict with Russia means death for humanity.

Why were the French voters unconcerned with what may be their impending deaths? The answer is that the French have been brainwashed into believing that to stand for France, as Marine Le Pen does, is to place patriotism and nationalism above diversity and is fascist. All of Europe, except for the majority of the British, has been brainwashed into the belief that it is Hitler-like or fascist to stand up for your country. For a French man or woman to escape the fascist designation, he or she must be Europeans, not French, German, Dutch, Italian, Greek, Spanish, Portuguese. Brainwashed as the French are that it is fascist to stand up for France, the French voted for the international bankers and for the EU. The French election was a disaster for Europeans, but it was a huge victory for the American neoconservatives who will now be able to push Russia to war without European opposition.

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Macron as a hologram.

Emmanuel Clinton and the Revolt of the Elites (Escobar)

So in the end the West was saved by the election of Emmanuel Macron as President of France: relief in Brussels, a buoyant eurozone, rallies in Asian markets. That was always a no-brainer. After all, Macron was endorsed by the EU, Goddess of the Market, and Barack Obama. And he was fully backed by the French ruling class. This was a referendum on the EU – and the EU, in its current set-up, won. Cyberwar had to be part of the picture. No one knows where the MacronLeaks came from – a last minute, massive online dump of Macron campaign hacked emails. WikiLeaks certified the documents it had time to review as legitimate. That did not stop the Macron galaxy from immediately blaming it on Russia. Le Monde, a once-great paper now owned by three influential Macron backers, faithfully mirrored his campaign’s denunciation of RT and Sputnik, information technology attacks and, in general, the interference of Russia in the elections.

The Macron Russophobia in the French media-sphere also happens to include Liberation, once the paper of Jean-Paul Sartre. Edouard de Rothschild, the previous head of Rothschild & Cie Banque, bought a 37% controlling stake in the paper in 2005. Three years later, an unknown Emmanuel Macron started to rise in the mergers and acquisitions department, soon acquiring a reputation as “the Mozart of finance.” After a brief stint at the Ministry of Finance, a movement, En Marche! was set up for him by a network of powerful players and think tanks. Now, the presidency. Welcome to the revolving door, Moet & Chandon-style. In the last TV face-off with Marine Le Pen, Macron did not shy from displaying condescending/rude streaks and even raked some extra%age points by hammering “Marine” as a misinformed, corrupt, “hate-filled” nationalist liar who “feeds off France’s misery” and would precipitate “civil war.”

That may in fact come back to haunt him. Macron is bound to be a carrier of France’s internal devaluation; a champion of wage “rigor,” whose counterpoint will be a boom of under-employment; and a champion of increasing precariousness on the road to boost competitiveness. Big Business lauds his idea of cutting corporate tax from 33% to 25% (the European average). But overall, what Macron has sold is a recipe for a “see you on the barricades” scenario: severe cuts in health spending, unemployment benefits and local government budgets; at least 120,000 layoffs from the public sector; and abrogation of some key workers’ rights. He wants to advance the “reform” of the French work code – opposed by 67% of French voters – ruling by decree.

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Macron as a greater fool.

Paris Afterparty (Jim Kunstler)

First mistake: Emmanuel Macron’s handlers played Beethoven’s “Ode to Joy” instead of the French national anthem at the winner’s election rally. Well, at least they didn’t play “Deutschland Über Alles.” The tensions in the Euroland situation remain: the 20%-plus youth unemployment, the papered-over insolvency of the European banks, and the implacable contraction of economic activity, especially at the southern rim of the EU. The clash of civilizations brought on by the EU’s self-induced refugee glut still hangs over the continent like a hijab. That there was no Islamic terror violence around the election should not be reassuring. The interests of the jihadists probably lie in the continued squishiness of the status quo, with its sentimental multiculture fantasies — can’t we all just get along? — so En Marche was their best bet. LePen might have pushed back hard. Macron looks to bathe France’s Islamic antagonists in a nutrient-medium of Hollandaise lite.

The sclerosis of Europe is assured for now. But events are in charge, not elected officials so much, and Europe’s economic fate may be determined by forces far away and beyond its power to control, namely in China, where the phony-baloney banking system is likely to be the first to implode in a global daisy-chain of financial uncontrolled demolition. Much of that depends on the continuing stability of currencies. The trouble is they are all pegged to fatally unrealistic expectations of economic expansion. Without it, the repayment of interest on monumental outstanding debt becomes an impossibility. And the game of issuing more new debt to pay the interest on the old debt completely falls apart. Once again, the dynamic relationship between real capital creation and the quandaries of the oil industry lurks behind these failures of economy.

In a crisis of debt repayment, governments will not know what else to do except “print” more money, and this time they are liable to destroy faith in the value of “money” the world over. I put “money” in quotation marks because the dollars, euros, yuan, and yen are only worth what people believe them to be, subject to measurement against increasingly fictional indexes of value, such as interest rates, stock and bond markets, government-issued employment and GDP stats, and other benchmarks so egregiously gamed by the issuing authorities that Ole Karl Marx’s hoary warning finally comes to pass and everything solid melts into air.

Revolving credit seemed like a good idea through the 20th century, and it sure worked to build an economic matrix based on cheap energy, which is, alas, no more. What remains is the wishful pretense that the old familiar protocols can still work their magic. The disappointment will be epic, and the result next time may be political figures even worse than LePen and Trump. Consider, though, that what you take for the drumbeat of nationalism is actually just a stair-step down on a much-longer journey out of the globally financialized economy. Because the ultimate destination down this stairway is a form of local autarky that the current mandarins of the status quo can’t even imagine.

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They want it all, all of Greece. Beware.

Germany: Greek Gold, Real Estate As Collateral If IMF Out Of Program (KTG)

The Bavarian Minister of Finance, Markus Soeder (CSU), a fierce Grexit supporter of Merkel’s CDU sister party apparently has moved away from his demand for a Greek euro exit. During a visit to Athens, Soeder said that the problems around Britain’s exit from the EU showed how difficult a Grexit would be. In addition, the Brexit already causes enough uncertainty. and Germany wants neither problems, nor uncertainty that could harm its profits especially before the parliamentary elections in autumn 2017. As Grexit is out of question, Greece should use gold reserves and real estate as collateral if the IMF stays out of the Greek program. However, Markus Soeder brought back an older idea of his, an idea he openly formulated in February 2017: that Greece pledges Gold, cash and real estate in order to get the bailout tranches, the loans by the European creditors, who love to call them financial aid.

“Soeder did not give up serious demands on Greece wile he was in Athens,” German magazine Der Spiegel writes. If the IMF does not participate in the Greek program, “new money can only be provided against collateral such as cash or real estate,” Soeder said. Soeder referred to Finland that participated in the second aid package for Greece only in 2012 and only after then Greek finance minister Evangelos Venizelos signed a bilateral agreement on colateral. “This worked,” the CSU politician said about the deal. Soeder’s demand is, however, amply theoretical, since he continues to regard an IMF participation as indispensable. He has the same problem as Federal Minister of Finance Wolfgang Schäuble (CDU): He strongly rejects further debt relief, as the IMF makes it a condition. “I have made it quite clear that a debt cut is out of question for Germany, as it the idea about issuing Eurobonds or similar.”

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Brussels pisses on Greek courts.

Greek Court Finds New Pension Cuts Illegal Under Greek, European Law (K.)

The Plenary of the State Audit Council has ruled that the cuts to main and supplementary pensions that the government and its creditors have agreed on contravene the European Convention of Human Rights, sources said on Tuesday night. The council also decided that the fiscal bill containing the cuts, to be implemented from 2019, contravenes Greek legislation as it has been tabled to the audit council without an actuarial study. A bill, outlining the pension cuts and other measures agreed with creditors is due to go to a vote in Parliament next week.

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Nothing new here. WIll anything change now that an EU body finds the same many others have before them?

Damning Findings From EU Audit Of Greek & Italian Refugee “Hotspots” (Oxfam)

1. EU Court of Auditors found “overcrowded” camps, migrants “sleeping rough”, and “scant access to basic services” According to the Court of Auditors, hotspots are seriously overcrowded, particularly on the Greek islands of Lesvos, Chios and Samos. People are fleeing from the camps, because they don’t have sufficient access to water and there are too few doctors to provide adequate health care. People also didn’t feel safe in the hotspots since fights often break out in the camps. Many of these people ended up sleeping on the streets outside the hotspots. The appalling situation in hotspots is also documented by NGOs, who have reported that people in the hotspots have been exposed to degrading conditions and had their rights denied. More than 2,000 people were forced to sleep in barely heated tents during the freezing winter.

2. Children held for months in “inappropriate conditions” against international laws and standards, the auditors say The auditors raised serious concerns about the situation of unaccompanied children in hotspots. In most hotspots children were confined either to fenced areas, or accommodated without protection from adults, exposing them to the risk of abuse. Children were held for three months or more closed in behind fences in the Moria hotspot after it was converted to a de-facto detention centre. In some hotspots, girls and boys were held together, against standard practice. NGOs have been raising concerns about this situation for months. Now the Court of Auditors has confirmed that the welfare of the children in Moria was put at risk.

3. ‘‘No framework for remedying bottlenecks or sharing lessons learnt”, the Court found Overall, the ‘hotspot approach’ has been disorganised and inconsistent, the EU auditors found. The absence of consistent guidelines for the way hotspots should be managed means that responsibilities between the various actors are not clearly defined. Conditions and services are far worse in some hotspots than in others. The unfairness of this inconsistency has been criticised by NGOs, who have also highlighted the lack of oversight over decisions and accountability for human rights violations.

Furthermore, it is difficult to track the situation of people in the hotspots and how the management of the camps affects them – because key data is not shared between authorities. Neither the length of time migrants spend in hotspots while waiting to register and complete their asylum application in Greece, nor the total number of migrants identified, registered, or receiving return orders in Italy was shared. The Court of Auditor’s recommendations to better define the roles of the different agencies involved and to appoint a manager for each hotspot exposes that management is currently lacking.

4. The auditors highlight that the “functioning of hotspots is affected by bottle-necks in the follow-up procedures” The hotspots were meant to be just a first step in the EU’s migration response. Member states should then have stepped in to facilitate the relocation and integration of these people across Europe, or facilitate their safe and dignified return. That has not happened. The set-up of the hotspots is a completely new way for national governments to cooperate with EU institutions and agencies within a member state’s territory. If follow up continues to falter, the pressure on the hotspots will only grow. This could lead to people living in the hotspots being exposed to even more suffering, and the risk that authorities will abandon acceptable legal and living standards increases. This has been evident since December, if not earlier.

5. The EU-Turkey deal “had a major impact on the functioning of hotspots” and on detentions, the auditors say The EU-Turkey deal of March 2016 had a great impact on the functioning of the hotspots, as becomes evident when we look at the details of the auditors’ report. When the deal with Turkey was announced, hotspots turned into de-facto detention centres, provoking criticism from many NGOs. But the current European approach only attempts to increase the use of detention for asylum seekers even further. The auditors have detailed the hotspots procedures in the annex to their report, and reading this makes clear how difficult it is not to be detained in the process they record.

The findings of the European Court of Auditors suggest that hotspots are being made to work at the expense of people, for the sake of fulfilling policy objectives. It is vital that safeguards are in place to ensure that people are not forced to stay in the hotspots under the conditions the EU auditors and NGOs have found to be degrading. Very close scrutiny is needed to protect the rights of those who arrive looking for safety on Europe’s shores.

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Apr 302017
 
 April 30, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
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Pablo Picasso Self portrait 1965

 

Are Canada’s Homes and Mortgages Worth Just 50 Cents on the Dollar? (WS)
US Congress Does Bare Minimum to Keep Government Open Next Week (BBG)
All the Plenary’s Men (BestEvidence)
The National Blues (Jim Kunstler)
‘Taxation Is Theft’ Meme Goes Mainstream (TAM)
Erdogan: Turkey and US Can Wipe Out ISIL in Raqqa (AlJ)
ISIS Suffers Heavy Casualties In Kurdish Fighters’ Advances In Raqqa (FNA)
Russia Backs China Call To Stop N. Korea Nuke Tests, US-S. Korea Drills (RT)
Brazil Paralyzed by Nationwide Strike, Driven by Corruption and Impunity (GG)
Mélenchon: France To Choose Between Extreme Right And Extreme Finance (IC)
Matteo Renzi Tries The Macron Approach (Pol.)
EU Throws Down Brexit Gauntlet to Britain as Talks Edge Closer (BBG)
Merkel Talks Tough on Migrants in Election Campaign Warm-Up (BBG)
PwC: Greece Must Reform Or Forget Recovery (K.)

 

 

“On April 28, HOOPP CEO Jim Keohane told BNN in an interview that “for every $1 we lend Home Capital, they’re going to provide us with $2 of mortgages as collateral. That’s where we get our protection from.” So the C$2 billion loan would be backed by C$4 billion in mortgages. In other words, in the eyes of Keohane, these mortgages might be actually worth, when push comes to shove, 50 cents on the dollar.”

Are Canada’s Homes and Mortgages Worth Just 50 Cents on the Dollar? (WS)

Home Capital is Canada’s biggest “alternative” mortgage lender. It’s not a bank – which today is part of its problem because it cannot create money to lend out; it has to obtain it first by attracting deposits and borrowing money through other channels. Through its subsidiary, Home Trust, it specializes in high-profit mortgages to risky borrowers, with dented credit or unreliable incomes who don’t qualify for mortgage insurance and were turned down by the banks. This includes subprime borrowers. Since revelations of liar loans surfaced in 2015, things have gone to heck. Now it’s experiencing a run on its deposits. Teetering at the abyss, it obtained a $2 billion bailout loan on Thursday. The terms are onerous. And on Friday, the crux of the deal emerged – the amount of mortgages it has to post as collateral. It’s a doozie.

It sheds some light on what insiders think mortgages and the homes that back them are worth when push comes to shove. A bone-chilling wake-up call for the Canadian housing and mortgage market. This is when the whole construct started falling apart: On July 15, 2015, Home Capital announced that originations of high-margin uninsured mortgages had plunged 16% and originations of lower-margin insured mortgages had plummeted 55%, and that it had axed an unspecified number of brokers. Shares plunged 25% in two days. On July 30, 2015, it disclosed, upon the urging of the Ontario Securities Commission, the results of an investigation that had been going on secretly since September 2014 into “falsification of income information.” Liar loans. It suspended 45 mortgage brokers who’d together originated in 2014 nearly C$1 billion in residential mortgages, or 12.5% of its total.

The scandal festered. Short sellers circled in formation. On April 26, 2017, Home Capital announced that it’s experiencing a run on its deposits. As of the end of March, its subsidiary Home Trust sat on about C$2 billion in high-interest savings accounts (HISA) it is offering to regular savers. But these folks were pulling their money out, it said, and the pace of the run was accelerating. It also disclosed that it was finalizing a $2 billion bailout loan from the Healthcare of Ontario Pension Plan (HOOPP) which has about $70 billion in assets. The loan would “have a material impact on earnings….” So an expensive loan.

Home Trust would pay a non-refundable commitment fee of $100 million; would be required to make an initial draw of $1 billion at an interest rate of 10%; and would pay a 2.5% standby fee on undrawn funds. So the initial $1 billion for the first 12 months would cost it $225 million in fees and interest, a juicy 22.5%! Once the credit line is fully utilized, the cost of the loan would drop to 15%. Its shares collapsed by 65%. On Friday, April 28, it announced that another C$290 million in deposits were yanked out on Thursday, after C$472 had been yanked out on Wednesday. Its HISA deposits were down to C$521 million, having plunged 75% since late March.y

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Kept the lights on for 100 days.

US Congress Does Bare Minimum to Keep Government Open Next Week (BBG)

Congress gave itself one more week to agree on a spending bill to fund the U.S. government through September, leading into President Donald Trump’s 100th day in office Saturday by keeping the lights on. The 382-30 House vote Friday was followed quickly by unanimous Senate passage of the stopgap spending bill hours before the shutdown deadline. Trump signed the bill Friday evening, according to a White House official. “We feel very good” that lawmakers will be able to pass a full spending bill next week, White House press secretary Sean Spicer told reporters earlier in the day. Leaders of both parties say they’re close to agreement on a broader spending plan after Republicans signaled they would accept Democratic demands that the Trump administration promise to continue paying Obamacare subsidies and to drop its bid for immediate funds for a wall on the Mexican border.

“You shouldn’t create artificial deadlines,” Alabama Republican Representative Gary Palmer said in support of the short-term measure. “If there are things we need to work through, we need to take the time to work through them.” Vermont Senator Patrick Leahy, the top Democrat on the Appropriations Committee, said both sides have made progress on issues including more funds for the National Institutes of Health, opioid funding for states, Pell college grants and money for transit. But he said the talks remain snagged over Republican demands for policy “riders.” “Let’s not govern by partisan manufactured crisis,” he said on the Senate floor. “Stop posturing,” he added as he called for a speedy resolution on the bill sometime next week. “This is no way to govern,” Leahy said before the Senate vote.

Sixteen House Republicans voted against Friday’s stopgap measure. The short-term fix to ward off a government shutdown – on a deadline set months ago – shows the stubborn dysfunction of Congress even with a unified Republican government. House GOP leaders on Thursday abandoned efforts to vote this week on their plan to repeal and replace Obamacare for lack of support in their party. A vote is still possible next week.

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Eye-opening to say the least. Make the coffee extra strong before viewing. Lots of ground gets covered, quickly. And don’t mothball those pitchforks and torches just yet.

All the Plenary’s Men (BestEvidence)

“The King can do no wrong.”
—William Blackstone, Commentaries on the Laws of England

“When the president does it, that means that it is not illegal.”
—Ex-President Richard Nixon, interview with David Frost

The question at bar is why the U.S. Department of Justice has failed to prosecute any too-big-to-fail banks or—more importantly—their bankers, even for admitted crimes. It’s a crucial question, because after eight straight years of unremitting prosecutorial failure, it looks very much as if a select group of top banks can, in fact, do no wrong. If that’s the case, then our constitutional republic isn’t merely in trouble. It’s dead. A person or group of people who satisfy Blackstone’s criterion for ultimate sovereign power—the power to commit crimes with impunity—can’t exist in a nation where the law reigns supreme. And yet here we are a decade after the financial crisis began in earnest, and not one TBTF bank executive has gone to jail.

Legally, the TBTF banks are indistinguishable from the King, since the power to commit crimes with impunity swallows all other sovereign powers; such a power isn’t even supposed to exist in the U.S., and yet it does. Moreover, since there can’t be two kings in a kingdom, the entire U.S. government, from the president on down, is just one of the King’s men under this formulation of power. The real job of the U.S. government, then, isn’t to represent the will of the people at all, it’s to do the King’s bidding. A nation that isn’t governed by law is governed by instead by a king—it’s one or the other—and the president’s inferiority to such an above-the-law sovereign was confirmed over 40 years ago with Nixon’s ouster. The president, unlike the King, answers to the law (despite Nixon’s opinion).

Now, you may say that while the TBTF banks might arguably have the de facto power of the King, that’s a far cry from wielding such power formally (i.e., having de jure criminal immunity). The reply to that objection is set forth in this film, “All the Plenary’s Men,” which is a sequel to “The Veneer of Justice in a Kingdom of Crime.” Another objection, raised by the DOJ itself, is that it HAS prosecuted TBTF bankers, citing cases like that of Raj Rajaratnam. These cases, however, in fact reveal the DOJ acting on behalf of the criminal global banking cartel. On that score, the DOJ’s abysmal track record is by now so extensive and so thorough that it’s possible to spot legal patterns in the DOJ’s protracted miscarriage of justice, and, as you’re about to see, those patterns are very deeply disturbing indeed.

What’s been going on cuts right past a garden variety constitutional crisis like Watergate straight to a crisis of sovereignty. The backdrop for all of this is HSBC’s exoneration in December of 2012 for laundering money for drug dealers and terrorists, about which the House Financial Services Committee issued a report in July of 2016. Whether it was due to the political circus in town at the time, or to the Republican authorship of that report (albeit without dissent), it didn’t get nearly the scrutiny it deserved. You see, prosecutors working on the HSBC case were actually going to indict the bank, but they got overruled, and HSBC and its team of criminals skated. The story of how exactly that reversal came about reveals, if not the King himself, then certainly many of the King’s top men.

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“It concentrates the mind, as Samuel Johnson once remarked, like waiting to be hanged.”

The National Blues (Jim Kunstler)

You can read it in the bodies of the people in the new town square, i.e. the supermarket: people prematurely old, fattened and sickened by bad food made to look and taste irresistible to con those sunk in despair, a deadly consolation for lives otherwise filled by empty hours, trash television, addictive computer games, and their own family melodramas concocted to give some narrative meaning to lives otherwise bereft of event or effort. These are people who have suffered their economic and social roles in life to be stolen from them. They do not work at things that matter. They have no prospects for a better life — and, anyway, the sheer notion of that has been reduced to absurd fantasies of Kardashian luxury, i.e. maximum comfort with no purpose other than to enable self-dramatization. And nothing dramatizes a desperate life like a drug habit. It concentrates the mind, as Samuel Johnson once remarked, like waiting to be hanged.

[..] The eerie thing about reading the landscape of despair is that you can see the ghosts of purpose and meaning in it. Before 1970, there were at least five factories in my little town, all designed originally to run on the water power (or hydro-electric) of the Battenkill River, a tributary of the nearby Hudson. The ruins of these enterprises are still there, the red brick walls with the roofs caved in, the twisted chain-link fence that no longer has anything to protect, the broken masonry mill-races. The ghosts of commerce are also plainly visible in the bones of Main Street. These were businesses owned by people who lived in town, who employed other people who lived in town, who often bought and sold things grown or made in and around town.

Every level of this activity occupied people and gave purpose and meaning to their lives, even if the work associated with it was sometimes hard. Altogether, it formed a rich network of interdependence, of networked human lives and family histories. What galls me is how casually the country accepts the forces that it has enabled to wreck these relationships. None of the news reports or “studies” done about opioid addiction will challenge or even mention the deadly logic of Wal Mart and operations like it that systematically destroyed local retail economies (and the lives entailed in them.) The news media would have you believe that we still value “bargain shopping” above all other social dynamics. In the end, we don’t know what we’re talking about.

I’ve maintained for many years that it will probably require the collapse of the current arrangements for the nation to reacquire a reality-based sense of purpose and meaning. I’m kind of glad to see national chain retail failing, one less major bad thing in American life. Trump was just a crude symptom of the sore-beset public’s longing for a new disposition of things. He’ll be swept away in the collapse of the rackets, including the real estate racket that he built his career on. Once the collapse gets underway in earnest, starting with the most toxic racket of all, contemporary finance, there will be a lot to do. The day may dawn in America when people are too busy to resort to opioids, and actually derive some satisfaction from the busy-ness that occupies them.

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Funny but true.

‘Taxation Is Theft’ Meme Goes Mainstream (TAM)

The month of April is a nightmare for anyone with a conscience, as we only have until “tax day” — which usually falls on April 15 — to give the taxman what he says he deserves. So if you pay taxes to Uncle Sam and you’re also aware you’re paying for mass murder in the Middle East and in U.S. streets due to the drug war, you should also feel sick to your stomach as you write that check. To a restaurant customer, this may have served as enough incentive to remind his server that taxation is always immoral — but he didn’t stop there. Last week, a customer at a Missouri restaurant gave the waitress a “personal gift” instead of a tip, writing the now popular line “Taxation is theft” in the tip section of the receipt. In a second note, the fiscally conscious customer added: “This is not a tip. This is a personal gift and not subject to federal or state income taxes.”

With major progressive news outlets like ATTN: reporting on this story, left-leaning reporters started to debate wages in the food and service industries, discussing the fact that tips end up being factored as wages, meaning they are always taxable. But as that discussion developed, reporters were quick to realize that when personal gifts are in the mix, the taxman can’t take part of those earnings away. After all, a gift would have to exceed $13,000 to be subject to taxation, meaning that even if the customer had spent hundreds, the “personal gift” would not amount to anything close to the requirements stipulated by the IRS.

With that, ladies and gentlemen, it becomes easier to not only tip with class, but also with substance, giving your waiter a lesson on what’s moral and how to legally go around the rules to make sure they enjoy their full tip — not just the percentage deemed to be fit by the federal government. As this story becomes part of the popular movement ignited by libertarians, expect to see more progressive news outlets becoming familiarized with the actual concept of taxation. What’s left for us to find out is if they are going to change their tune and start attacking people like this customer when the two-party pendulum swings once again and a fully Democratic slate takes over Washington. Are they going to remain consistent in discussing taxation from the point of view of the worker, or are they going to side with the leech? Only time will tell.

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From separate map picked up on Twitter: “When ISIS was winning Turkey was just watching. Now when ISIS is getting defeated by Kurds, Turkey starts attacking Kurds. Turkey = ISIS.”

Erdogan: Turkey and US Can Wipe Out ISIL in Raqqa (AlJ)

Turkish President Recep Tayyip Erdogan said on Saturday if Ankara and Washington were to join forces they could turn the Syrian city of Raqqa into a “graveyard” for Islamic State of Iraq and the Levant (ISIL). Erdogan also suggested he could launch cross-border operations against Kurdish rebels at any time, just days after the military carried out air strikes in Syria and Iraq, drawing concern from the United States. “America, the coalition, and Turkey can join hands and turn Raqqa into a graveyard for [ISIL],” Erdogan told a business summit in Istanbul. “They [ISIL] will look for a place to hide.” Erdogan’s comments come ahead of a meeting with US President Donald Trump on May 16 – their first face-to-face summit since the real estate mogul and reality TV star took office in January.

Ankara is hopeful about a relationship with Washington under Trump after ties frayed in the final years of Barack Obama’s administration, which limited cooperation between the NATO allies. The two countries have bitterly disagreed over the role of the Kurdish People’s Protection Units (YPG) in Syria. Turkey views the YPG as the Syrian extension of the Kurdish PKK group, which has waged a deadly insurgency against the Turkish state since 1984. But the US is concerned that Turkey’s military operations in Syria are more focused on preventing Syrian Kurds from forming an autonomous region in northern Syria, along Turkey’s border, that could embolden Turkey’s own Kurdish minority.


@Furiouskurd: When ISIS was winning Turkey was just watching. Now when ISIS is getting defeated by Kurds, Turkey starts attacking Kurds. Turkey = ISIS.

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As the only party involved, the Kurds fight for their own land. And they have liberated lots of prisoners, women, children.

ISIS Suffers Heavy Casualties In Kurdish Fighters’ Advances In Raqqa (FNA)

The Kurdish-led Syrian Democratic Forces (SDF) continued the anti-ISIL Euphrates Rage Operation in Western Raqqa and managed to drive the terrorists out of more neighborhoods in al-Tabaqa city, killing over 40 of them. The SDF engaged in heavy fighting with ISIL in al-Tabaqa city and managed to take control of the neighborhoods of al-Nababeleh, al-Zahra and al-Wahab, killing 23 militants. In the meantime, the Kurdish fighters managed to push ISIL back from al-Wahabah and Radio Station in al-Tabaqa, killing 20 militants and capturing 10 others. In relevant developments in the province on Tuesday, the SDF stormed ISIL’s defense lines and took full control over the villages and settlements of Kabash al-Sharqi, Um al-Tonok, Rayan, Tishrin farm, Mosheirehe al-Shamaliyeh, Mosheirefeh al-Janoubiyeh, al-Rahiyat, Beir Jarbou, Jarwa, al-Hattash, Hazimeh, Khalwa Abideh, Holo Abd, Abareh, al-Kaleteh, Sukriyeh and Zohra, inflicting major losses on ISIL.

The Kurdish forces also won back a key neighborhood in the Southern sector of Tabaqa city following a large advance on its Western urban. In the meantime, the SDF managed to seize control over the Alexandria suburb, and now the Kurds have swept through the adjacent Wahab neighborhood. Kurdish forces also secured the island of Jazirat al-Ayd, a few kilometers North of Lake Assad. According to latest reports, around 40% of Tabaqa city has been brought under Kurdish control with just a few hundred ISIL militants left in its Northern sector and around the city center.

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‘..double suspension..’

Russia Backs China Call To Stop N. Korea Nuke Tests, US-S. Korea Drills (RT)

Russia has supported a Chinese initiative in the UNSC intended to stabilize the situation on the Korean peninsula. It calls on the North to refrain from missile and nuclear testing, while the US and South Korea should halt military drills in the area.
“Members of the [UN] Security Council have unanimously called upon DPRK [Democratic People’s Republic of Korea] to stop missile and nuclear tests and to fulfil UNSC resolutions,” the Russian Foreign Ministry said in a statement on Saturday following a United Nations Security Council (UNSC) session held in New York earlier on Friday. The UNSC called for a political and diplomatic solution to the nuclear crisis on the Korean Peninsula, the ministry added.

“In this context, the Russian Federation supported a Chinese proposal for a ‘double suspension’ (Pyongyang is to stop missile and nuclear tests and the US and South Korean militaries are to halt drills near North Korea) as a starting point for political negotiations.” However, the council was not able to agree on a common solution, the ministry added. The UNSC session was joined by Russian Deputy Foreign Minister Gennady Gatilov, who urged Washington and Seoul to reconsider their decision to station a THAAD anti-missile system on the Korean Peninsula, warning that it will serve as a “destabilizing factor” in the region.

Gatilov said the Terminal High Altitude Area Defense (THAAD) had been deployed “in line with the vicious logic of creating a global missile shield,” while warning that it is also undermining the security and deterrent capacities of adjacent states, such as China, thus threatening “the existing military balance in the region.” “It is not only we who perceived this step very negatively. We are once again urging both the United States and the Republic of Korea to reconsider its expediency, and other regional states not to yield to the temptation of joining such destabilizing efforts,” the deputy foreign minister said. Ahead of the UNSC session, Chinese Foreign Minister Wang Yi told reporters that a peaceful solution to the Korean crisis is the “only right choice.” “Peaceful settlement of the nuclear issue on the Korean Peninsula through dialogue and negotiations represents the only right choice that is practical and viable,” Wang said.

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Very few Brazil politicians are not involved in one scam or another.

Brazil Paralyzed by Nationwide Strike, Driven by Corruption and Impunity (GG)

Just over one year ago, Brazil’s elected President, Dilma Rousseff, was impeached – ostensibly due to budgetary lawbreaking – and replaced with her centrist Vice President, Michel Temer. Since then, virtually every aspect of the nation’s political and economic crisis – especially corruption – has worsened. Temer’s approval ratings have collapsed to single digits. His closest political allies – the same officials who engineered Dilma’s impeachment and installed him in the presidency – recently became the official targets of a sprawling criminal investigation. The President himself has been implicated by new revelations, saved only by the legal immunity he enjoys. It’s almost impossible to imagine a presidency imploding more completely and rapidly than the unelected one imposed by elites on the Brazilian population in the wake of Dilma’s impeachment.

The disgust validly generated by all of these failures finally exploded this week. A nationwide strike, and tumultuous protests in numerous cities, today has paralyzed much of the country, shutting roads, airports and schools. It is the largest strike to hit Brazil in at least two decades. The protests were largely peaceful, but some random violence emerged. The proximate cause of the anger is a set of “reforms” that the Temer government is ushering in that will limit the rights of workers, raise their retirement age by several years, and cut various pension and social security benefits. These austerity measures are being imposed at a time of great suffering, with the unemployment rate rising dramatically and social improvements of the last decade, which raised millions of people out of poverty, unravelling.

[..] During the past three years, Brazilians have been subjected to one revelation after the next of extreme corruption pervading the country’s political and economic class. Scores of corporate executives and long-time party leaders are imprisoned. They include the head of the Brazilian construction giant Odebrecht, the House Speaker who presided over Dilma’s impeachment, and the former governor of the state of Rio de Janeiro. The current House Speaker, and Senate President, and nine of Temer’s ministers are now targets of criminal investigations for bribery and money laundering, as are numerous governors.

In sum, the vast bulk of the top-shelf political and economic elite have proven to be radically corrupt. Billions upon billions of dollars have been stolen from the Brazilian public. Recently released recordings from the judicial confessions of Marcelo Odebrecht, scion of one of Brazil’s richest families, depict a country ruled almost entirely through bribes and criminality, regardless of the ideology or party of political leaders. And yet, even in the wake of this oozing and incomparable elite corruption, the price that is being paid falls overwhelmingly on the victims – ordinary Brazilians – while the culprits prosper.

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Melenchon seeks to hold on to his voters for the June parliamentary elections.

Mélenchon: France To Choose Between Extreme Right And Extreme Finance (IC)

The leader of a far-left movement who won nearly 20% of the vote in the first round of France’s presidential election, Jean-Luc Mélenchon, told his seven million voters in a YouTube address on Friday that he would not tell them how to vote in the final-round run-off next weekend. As for himself, Mélenchon said that he would cast a ballot, and that it would not be for Marine Le Pen, the candidate of the far-right National Front, who courted his voters in a video of her own on Friday. But Mélenchon also refused to say, like the leaders of other parties across the political spectrum – and celebrities including the French soccer legend Zinedine Zidane – that he would vote for Le Pen’s centrist rival, the former banker Emmanuel Macron, to stop the far-right from gaining power.

Instead, Mélenchon predicted that forcing France to choose between a candidate of “the extreme right” and one of “extreme finance” would led to a political crisis, and left open the possibility that he would submit a blank ballot, a form of protest vote permitted under French electoral law. (Mélenchon’s platform included provisions for voting to be made mandatory, and for blank ballots to be recognized under law.) The appeal for unity, to construct a barrage, or dam, against the rising tide of the far-right, Mélenchon said, was, in fact, a disguised attempt to force voters like him, who profoundly disagree with Macron’s economic policies, to endorse his project. Amid fears that widespread abstention and protest votes for neither candidate could lower the threshold for Le Pen to win with 50% of the valid votes cast, Mélenchon’s refusal to join the sort of united front against Le Pen that led to her father’s defeat in 2002 caused anxiety to spike.

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Chameleons and parrots are us.

Matteo Renzi Tries The Macron Approach (Pol.)

Matteo Renzi toned down the EU-critical rhetoric of his final months as Italian prime minister during his visit to Brussels on Friday to drum up support for his bid to be restored as head of the Democratic Party (PD) in its primaries this weekend. With aides suggesting on social media that French presidential hopeful Emmanuel Macron’s pro-EU stance, which helped him beat Euroskeptic Marine Le Pen in the election’s first round, could be a boost for Renzi, he talked about “Angela, François and I” when referring to German Chancellor Angela Merkel and French President François Hollande. Renzi even stood in front of a display showing the EU flag, and felt the need to explain why, in the run-up to his failed constitutional referendum that cost him the prime ministership last December, he had removed the EU flag from behind his desk.

“It wasn’t anger, it was calculated gesture,” Renzi told PD followers at a hotel near the European Parliament, adding that it was in response to the European Commission demanding Italian action on its budget deficit when it had been hit by an earthquake. The Italian and international media have speculated about the similarities between Renzi and Macron, with Renzi’s slogan for the PD primary this Sunday — In Cammino (“on the way”) — almost a direct translation of the name of Macron’s centrist political movement, En Marche. One close Renzi aide, Giuliano Da Empoli, wrote on Facebook the day after Macron’s first-round victory on April 23 that the French result “shows that one can be at the same time a convinced pro-European and a harsh critic of the status quo.”

That was the tone Renzi tried to strike in Brussels on Friday, repeating his line that the EU “needs radical change” and taking a dig at Germany for its trade surplus, while warning about the dangers of populism. “With the radicals you win the primary elections but then you lose the elections,” he told the audience. In the French campaign, which comes to a head with the second-round vote on May 7, the candidate closest to Renzi’s Democratic Party was Benoît Hamon, who won the ruling Socialist Party’s primaries but took only 6% of the vote on election night. That must resonate for Renzi, who wants to regain control of the PD to prepare a bid for a new term as prime minister in elections due early next year.

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“Nobody has united here against the U.K.,” German Chancellor Angela Merkel told reporters..” She’s right, all everyone’s done is side WITH Germany. Without a word.

EU Throws Down Brexit Gauntlet to Britain as Talks Edge Closer (BBG)

European Union governments threw down the gauntlet to the U.K. ahead of Brexit talks, listing demands Prime Minister Theresa May must satisfy before they will discuss the trade deal she wants and urging her to be more realistic in her expectations. Any doubts about the scale of the task facing Britain in withdrawing from the EU after four decades were laid to rest at a Brussels summit of the region’s leaders on Saturday. A tough negotiating stance was endorsed unanimously, within minutes and to applause. The U.K. responded by saying it’s bracing for a confrontation. The complexity comes down to the fact that a departure from the world’s biggest trading bloc has never been done and was never supposed to happen. The EU is striving to ensure the U.K. is worse off outside it than inside, not least to avoid setting a precedent.

After agreeing to the terms of separation, then it’s a matter of getting down to the business of what a future relationship might look like. “Nobody has united here against the U.K.,” German Chancellor Angela Merkel told reporters as she left the meeting. “The British people have made a decision, which we will have to respect. But we remaining 27 now get together in order to speak with one voice.” The Brexit discussions will begin soon after the U.K.’s June election, which May called in part to strengthen her mandate going into talks. The first orders of business will be guaranteeing the rights of 3 million EU citizens living in the Britain and calculating a financial settlement one leader said would be at least €40 billion euros ($44 billion). Only once “sufficient progress’’ is made on those thorny topics and reinforcing the border between the two Irelands will the EU’s attention turn to trade. That looks unlikely to happen before December.

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Merkel tries to deflect the blame for what’s gone wrong, blames local officials for sweeping things under the carpet. Yeah, she would never have had any reason to do just that herself. Plus, she blames ‘Europe’s haphazard policing of its outer borders’, something for which no-one carries more responsibility than … Merkel, the de facto boss of the EU. Mutti Merkel’s just another politician going wherever the wind blows.

Merkel Talks Tough on Migrants in Election Campaign Warm-Up (BBG)

German Chancellor Angela Merkel is talking tough on migrants and crime as she hits the campaign trail for two state elections next month, giving a foretaste of her bid for a fourth term in September. Merkel’s hardened rhetoric was on display in North Rhine-Westphalia, Germany’s most populous state, where her Christian Democratic Union is seeking to end seven years of Social Democratic rule on May 14. On Friday, she’s campaigning east of Hamburg in Schleswig-Holstein, where two polls this week suggest her party has a slim lead over the SPD ahead of a regional vote on May 7. At a CDU rally in the rural Westphalian town of Beverungen, Merkel reaffirmed her push to return migrants who don’t qualify for asylum and attacked the state’s Social Democrat-led government as soft on crime.

She said local officials “tried to sweep under the carpet” lapses in policing around mass sexual assaults on women in Cologne on New Year’s Eve in 2015, an incident that stoked an anti-immigration backlash. “The opportunity for improvement was there,” Merkel told the crowd on Thursday. “Things didn’t get better, so it’s time for a change.” As polls suggest that both Germany’s anti-immigration AfD party and her Social Democratic challenger Martin Schulz are in retreat for now, Merkel is using the opening to rally her CDU behind traditional themes of public safety. At a security conference this week, she said Europe’s haphazard policing of its outer borders compares unfavorably to U.S. immigration checks and must be strengthened.

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PricewaterhouseCoopers gets the first half right: as I’ve said numerous times, Greece cannot recover under present conditions imposed by the Troika. But then PwC loses the thread. Pity but predictable.

PwC: Greece Must Reform Or Forget Recovery (K.)

The extent of the destruction the Greek economy has suffered in the last few years, also undermining the effort to restructure it, becomes clear when comparing specific data, not on a quarterly or annual basis, but over the longer term. The country remains in a vicious cycle of recession, the economy will not grow by more than 1% this year, and any positive signs have proved temporary or insufficient to alter the overall picture. According to “Economic Outlook for Greece 2017-2018,” a study by PricewaterhouseCoopers (PwC), investment in the country’s economy dropped from €60 billion in 2010 to €20 billion last year. Investments are showing no signs of sustainable recovery as savings remain in the red and banks continue to deleverage their financial reports.

Consumption has been in constant decline, with a small recovery last year followed by a fresh drop in recent months. The average disposable income has gone down primarily due to the increased taxation and hikes in social security contributions, while the capital controls remain and banks are dependent on emergency liquidity assistance (ELA) for their financing. PwC notes that disposable incomes are unlikely to grow significantly anytime soon. There are just a few domestic investments that could fuel a recovery and no significant funding for investments is expected from abroad. At the same time it will be hard for fiscal performance to post a significant improvement without any deep structural reforms, including in the social security system.

The banks’ lack of liquidity, the delayed repayment of the state’s dues to its suppliers and the capital controls are likely to persist. PwC further argues that despite the delays in the second bailout review, Greece could avoid any unforeseeable tension and political events and achieve some growth, but not any greater than 1%, and the same challenges will remain next year too. An exit from the vicious cycle, says PwC, will require not only a change in the Greek debt’s sustainability terms, but also a drastic acceleration of structural reforms and the boosting of competitiveness and growth.

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Mar 192017
 
 March 19, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , ,  Comments Off on Debt Rattle March 19 2017
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DPC Broadway from Chambers Street, NYC 1910

 

More Proof of Janet Yellen’s Idiocy (David Stockman)
How The Bosses ‘Game’ Workers (Moore)
Oz Parliamentary Budget Office Costs Plan To Kill Off Stamp Duty (SMH)
Russian Parliament Backs Investigation Into US Media (R.)
German Foreign Minister: Turkey Further Away From EU Membership Than Ever (R.)
Turkey Furious As Kurds Rally In Frankfurt With PKK Insignia (AFP)
Fear Stalks Refugees Huddled Along Hungary’s Border (G.)
Dirty Deals Done Dirt Cheap (ECRE)
Desperate Conditions In Greece’s Migration Jails (AlA)
‘Exiles in the Aegean’: A Year After The EU–Turkey Deal (Christopoulos)

 

 

“..corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street.”

More Proof of Janet Yellen’s Idiocy (David Stockman)

During the last 129 months, the Fed has held 86 meetings. On 83 of those occasions it either cut rates or left them unchanged. So you can perhaps understand why Wednesday’s completely expected (for the last three weeks!) 25 bips left the day traders nonplussed. The Dow rallied over 100 points that day. Traders understandably believe that this monetary farce can continue indefinitely, and that our Keynesian school marm’s post-meeting presser was evidence that the Fed is still their friend. No it isn’t! Janet Yellen’s sing-song gibberish was the equivalent of a monetary DEFCON 1, alerting all except the most addicted Kool-Aid drinkers to get out of the casino.

Our monetary politburo has expanded its balance sheet by a lunatic 22X during the last three decades and in the process has systematically falsified financial asset prices and birthed a mutant debt-fueled of simulacrum of prosperity. But once it begins to withdraw substantial amounts of cash from the canyons of Wall Street as per its newly reaffirmed “normalization” policy, the whole house of cards is destined to collapse. There will be a stock market implosion soon, and that will in turn generate panic in the C-suites as the value of stock options vanish. Like in the fall of 2008 — except on an even more sweeping and long-lasting scale — corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street. But there is nothing left to brake the casino’s fall.

If the money market rate conforms to the Fed’s latest command and settles at 88 basis points, it is still effectively at the zero bound. Our monetary politburo is thus still out of dry powder — except for the nuclear option of QE4, which Yellen herself made quite clear would never happen until after the next recession is already underway. Yet by then it will be too late — way too late. That’s because the market is priced as if the business cycle has been outlawed and as if the feckless band of Keynesian pretenders who have seized control of financial markets have ushered in the Nirvana of permanent full-employment. World without end. Needless to say, they haven’t because they haven’t repealed the law of supply and demand. That is, if the Fed plans to keep raising until rates until they reach 3.0% by 2019, it will have to suck massive amounts of cash out of the financial markets.

So doing, it will drive long-term yields substantially higher and thereby obliterate the ultra-low cap rate delusion on which the entire regime of Bubble Finance is based. In fact, in a blathering response at her presser about the pace by which the Fed intends to shrink its bloated $4.4 trillion balance sheet, Yellen proved she is clueless about the financial firestorm our rogue central bank is about to unleash. She claimed that the Fed could implement 3-4 money market rate increases a year, while deferring the shrinkage of its balance sheet into the indefinite future. But that it most assuredly cannot do. With a staggering overhang of $2.1 trillion of excess reserves in the financial system, even our vaunted monetary politburo cannot command the tides to recede. If it wants the money rate to rise on its appointed path through 2019, it must drain loads of cash from Wall Street.

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“In Australia, the bottom 3.9 million people share the same level of wealth as the top 10 individuals. And the gap is growing.”

How The Bosses ‘Game’ Workers (Moore)

When was the last time we heard someone talking about economic sustainability? When was the last time an economist was heard talking about equitable sharing of the economic growth? Australia “averted a recession” with 1.1 per cent growth in the December quarter. Let’s celebrate! Good news. Well, good for some. Not so good for others. Increasing disparity! The good news: company profits are “at record levels”. In the December quarter company profits rose by a whopping 20.1 per cent. One of the big winners is mining. Mining! Those same companies who were crying doom and gloom a few years ago when they defeated the government’s attempt to apply some level of taxation on their “super profits”. The bad news: well, that is for wage earners. While profits grew by 20 per cent, average wages dropped.

Tom Kennedy, of JP Morgan, explained to the ABC: “Some of the support for profits in the non-mining economy seems to be from weaker wage payments, which fell 0.5 per cent quarter-on-quarter (annual run rate slowed further to 1 per cent year-on-year) on the precarious combination of weaker wage growth, fewer hours and elevated underemployment.” In simple language Kennedy could have said: business increased profits by cutting workers’ wages, reducing hours and by employing less people. Any number of economic inquiries or reports suggest good ideas about taxation, employment and economic growth. A much smaller number examines what is equitable sharing of wealth. Even in the current climate, where the government is constantly bombarding the community about living within our means, Turnbull’s government is determined to deliver a $50 billion tax break for the corporate sector.

They have a good return on investment for political party donations. In Australia, the bottom 3.9 million people share the same level of wealth as the top 10 individuals. And the gap is growing. Sensible taxation measures are just one method of reducing the disparity by applying straightforward rules that are not subject to exemptions. In a globalised environment, corporations avoid current tax measures by moving money around the world at a touch of a button. One alternative, to provide a fair way to levy the corporate sector and one that is difficult to “game”, is a tax on gross turnover within a country. Such a tax is simple. It is hard to avoid. Big business would pay their share and contribute to community infrastructure from which they draw significant advantage.

Personal income is also “gamed”. American tycoon Warren Buffett noted his secretary paid a higher percentage of income tax than him simply because he could afford better accounting advice. The answer is to apply a “floor level” for high-income earners. It would catch the 77 individuals, identified by the Australian Tax Office in 2015, who earned over $1 million and paid NO tax. With the “Buffett Rule”, this group of selfish leeches would not have been able to avoid their fair contribution to the education, health and infrastructure that they all use. The Australia Institute identifies an injection of $2.5 billion if a 35 per cent “Buffet Rule” level was applied to just the top 1 per cent of salary earners. Surely good government means finding ways to reduce disparity. Inequality is fodder for populist movements around the world. A disparity index is just one way to remind our politicians of their responsibilities.

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Thinking about land tax is not a bad thing. But using it to lure more people into mortgage debt is.

Oz Parliamentary Budget Office Costs Plan To Kill Off Stamp Duty (SMH)

The Parliamentary Budget Office has costed a proposal that would kill stamp duty and replace it with land tax, saving home buyers up to $40,000 in Sydney and $55,000 in Melbourne, while delivering billions of dollars to fund schools and hospitals. The costing will put land tax back up for debate when Parliament returns next week as the government looks to mark its authority on the housing affordability crisis less than two months out from the federal budget. Both the NSW and Victorian governments have thrown their weight behind broader stamp duty tax reform and Treasurer Scott Morrison has indicated his support for a transition to taxing land. “When you talk about tax reform, this is far and away the biggest prize on offer,” said John Daley, the chief executive of independent think tank the Grattan Institute.

Under current regulations, home buyers pay tens of thousands of dollars in stamp duty, creating an additional hurdle for people looking to enter the market amid soaring property prices in Sydney and Melbourne. Removing stamp duty and implementing an annual land tax on all newly purchased homes would help level the playing field and generate billions of dollars in annual returns to the NSW and Victorian budgets, while also relieving federal government spending over a 15-year-period. Under the policy submitted by the Greens and backed by the Grattan Institute and the Council of the Ageing, home buyers would no longer stump up to $40,000 in stamp duty when purchasing a property worth $1 million in Sydney. In Melbourne, a home buyer would save $55,000 stamp duty on a property of the same value.

Research from the Grattan Institute shows an annual tax of $1 per every $1000 of a home’s value would cost the median Sydney household $845 a year in tax and the median Melbourne home $623 a year. To offset the cost of losing lucrative stamp duty payments, the Commonwealth would have to loan money to the states. The loans would peak in 2020 when the hit to the budget bottom line would grow to $800 million. Rising land tax revenues would enable the states to pay back the loan by 2030. The Parliamentary Budget Office estimates that in the next four years alone the tax would generate $2.3 billion in revenue for the states, but warned the overall costings were of low reliability due to the variations in number of properties sold across Australia each year.

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“..the senator should have included a clause drawing up a list of books for burning..”

Russian Parliament Backs Investigation Into US Media (R.)

The Russian lower house of parliament, the State Duma, has approved a proposal to launch an investigation into U.S. media organizations that operate in Russia, it said in a statement posted on its web site late on Friday. The investigation, which will be conducted by the Duma’s information policy, technologies and communications committee, will check whether CNN, the Voice of America, Radio Liberty and “other American media” are complying with Russian law. The statement said the Duma backed the move on Friday evening after Konstantin Zatulin, an MP from the pro-Kremlin United Russia party, proposed an investigation to retaliate for what he called a “repressive” U.S. move against Russian state-funded broadcaster RT.

He said he was referring to an initiative by U.S. Senator Jeanne Shaheen, who has introduced a bill to empower the Justice Department to investigate possible violations of the Foreign Agents Registration Act by RT. Shaheen, a Democrat, cited a U.S. intelligence agency assessment that suggested RT was part of a Russian influence campaign to help Donald Trump win the White House last year. The Kremlin and RT have strongly rejected that allegation. Foreign media in Russia are overseen by the Russian Foreign Ministry, whose spokeswoman Maria Zakharova this week singled out Shaheen’s demarche for criticism, quipping ironically that the senator should have included a clause drawing up a list of books for burning. The U.S. move also solicited the ire of Margarita Simonyan, RT’s editor-in-chief, who on Wednesday told the daily Izvestia it had echoes of the activities of U.S. Senator Joseph McCarthy..

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EU nations would never have accepted a nation of 82 million muslims as a member. Turkey’s as far away as ever, not more, not less.

German Foreign Minister: Turkey Further Away From EU Membership Than Ever (R.)

German Foreign Minister Sigmar Gabriel said in an interview with news magazine Der Spiegel published on Saturday that Turkey has never been less likely to join the European Union than now, as relations between Ankara and Berlin hit a low point. “Today Turkey is definitely further away from becoming a member of the European Union than ever before,” Gabriel said in the interview. He also said that he always had doubts about whether Turkey should join the EU but found himself in the minority in his Social Democrat (SPD) party. Before taking power in Germany in 2005, Chancellor Angela Merkel was an outspoken opponent of Turkey’s membership and instead called for a “privileged partnership”.

Gabriel disliked that idea because he thought it would make Turks feel like second-class Europeans but he said his opinion had changed since Britain’s decision to leave the EU. “Today the situation is totally different due to Brexit. We’d be well advised to bring about a ‘special relationship’ with Great Britain after its exit from the EU,” Gabriel said. “That will be an important learning process for the EU and perhaps some of it can serve as a blueprint for other countries in the long term,” Gabriel said. Turkish President Tayyip Erdogan is courting Turks abroad for support in an April 16 referendum that would grant him sweeping new powers. He infuriated Germany and the Netherlands by describing bans on planned rallies by Turkish ministers as “fascist”. The arrest of a Turkish-German journalist in Ankara has also caused upset.

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EU and US still define PKK as a terrorist organization. That should be reconsidered.

Turkey Furious As Kurds Rally In Frankfurt With PKK Insignia (AFP)

Some 30,000 pro-Kurdish demonstrators rallied in the German city of Frankfurt on Saturday calling for “democracy in Turkey” and urging a “no” vote in an upcoming referendum on expanding Turkish President Recep Tayyip Erdogan’s powers. Turkey angrily denounced the demonstration as “unacceptable”. Many demonstrators carried symbols of the outlawed Kurdistan Workers Party (PKK) which has battled the Turkish state for over three decades in a continuing insurgency. Tensions are already running high between Berlin and Ankara after German authorities refused to allow some Turkish ministers to campaign in the country for a “yes” vote in the April 16 referendum that would hand Erdogan an executive presidency. Significantly more people turned up than organisers had been expecting for the rally, which took place ahead of the annual Newroz festival when Kurds mark the traditional New Year.

Saturday’s protest march in Frankfurt went off peacefully, a police spokesman said. Some of the participants carried flags and banners of the outlawed PKK, as well as portraits of the group’s jailed leader Abdullah Ocalan, who is serving a life sentence in Turkey, calling for his release. Police said no banners or flags were confiscated so as to not provoke the crowd, but added that photos had been taken which could lead to future prosecutions. Erdogan’s spokesman Ibrahim Kalin said in a statement that the presidency “condemned in the strongest terms” the fact that the rally had been allowed to go ahead. “It is unacceptable to see PKK symbols and slogans… when Turkish ministers and lawmakers are being prevented from meeting their own citizens,” he said. He said the “scandal” of the Frankfurt demonstration showed that some EU countries were actively working in favour of a “no” vote in the critical referendum.

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For those hailing Merkel for her dealings with Trump, and calling her the leader of the western world: this is what she produced in Europe, where she really is the leader.

Fear Stalks Refugees Huddled Along Hungary’s Border (G.)

Behind a high metal fence topped with loose curls of barbed wire, the newly positioned blue shipping containers lined neatly along Hungary’s southern border at Röszke provide a glimpse of the new plans of the prime minister, Viktor Orbán, to detain thousands of asylum seekers, including children. Construction on Hungary’s new detention camps and a second electrified fence, which stretches 108 miles along its border with Serbia, are now under way despite virulent opposition from the UN, human rights groups and a European court ruling which it was hoped might halt the country’s determination to imprison refugees. President János Áder signed the bill, which will allow all asylum seekers to be locked up in detention camps, and will also permit police to return asylum seekers from anywhere in the country back to Serbia.

Orbán, leader of the rightwing populist Fidesz party, has described migration as the “Trojan horse for terrorism” and considers Muslim migrants a threat to European identity and culture. More than 7,000 asylum seekers trying to reach western Europe are stuck in Serbia, outside the EU, following Hungary’s decision last summer to introduce strict limits on the number of refugees allowed to enter and began patrolling the borders with a controversial new wing of its police force known as Határvadász, or border hunters. At an open transit camp in Subotica, Serbia, 15 miles from the border crossing, where families and unaccompanied children wait to have their asylum claims processed in Hungary, officials say the new law will cause trouble for Serbia and more hardship for people here.

“We are like storage for the Hungarians,” said Nikola Ljubomirovic, coordinator at the camp, run by Serbia’s commissariat for refugees and migrants. [..] The majority of families at this camp are fleeing conflicts in Syria, Iraq and Afghanistan. They have made arduous journeys but are out of funds which would enable them to try other routes to Europe. Their only option is to claim asylum in Hungary. They face a long wait. Hungary has reduced the number of asylum seekers it accepts per day from Serbia from 200 in 2015 to 10 in January this year. The decision as to which 10 people can enter the country every weekday via two transit zones, Horgos and Kelebija, is arbitrary, far from transparent, and appears to be managed in part by refugee community leaders, leading to uncertainty and confusion among already desperate families.

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“..a legitimate objective for the EU Member States to pursue is undermining rather than ensuring the right to asylum..”

Dirty Deals Done Dirt Cheap (ECRE)

The impact of the EU Turkey – Deal is widely debated and often misrepresented. The triumphant progress reports of the Commission hail the drop in numbers of refugees arriving in Greece and people drowning in the Aegean, but ignore the wider devastating impact of Europe’s containment policy on the international protection regime and beyond. If anything, one-year into its existence the deal has “succeeded” in contributing to problematic developments in four inter-linked ways: It is a key factor in the transformation of the political debate at EU level, which moves towards a consensus that a legitimate objective for the EU Member States to pursue is undermining rather than ensuring the right to asylum (enshrined in the EU Charter of Fundamental Rights) is.

By endorsing this deal, the EU has jeopardized not only its own credibility as a global human rights actor but also the values of democracy, respect for fundamental rights and the rule of law upon which it is based. It has become the blueprint for outsourcing Europe’s protection responsibility to third countries often characterized by instability and with problematic human rights records in exchange for development aid or political favours as if refugees were tradable commodities. Finally, it has transferred substantial political capital from the EU to the regimes in question, leaving the EU beholden –with Turkey itself as the most obvious example of the increasing ability of these third countries to influence Europe rather than the other way around. No, for Europeans who believe in universal human rights there is nothing to celebrate but lots to regret at the one-year anniversary of the EU-Turkey Deal!

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There needs to be an EU summit on this, and a UN summit on the whole refugee issue. But I’ve been saying that for a long time, and it still has not happened. It will be done only when chaos rules and it’s too late.

Desperate Conditions In Greece’s Migration Jails (AlA)

Greece has struggled to implement the controversial EU-Turkey deal agreed last March, and many who arrived on the islands after March 19, 2016, ended up being held in closed detention facilities for months on end. This treatment of new arrivals is likely to only become even more strict. Greek authorities are building new detention facilities for irregular migrants on Samos, Lesvos and Kos, while looking for spaces in the islands of Leros and Chios. Maarten Verwey, coordinator for the implementation of the EU-Turkey agreement, said that new detention facilities in Greece would be temporary. But a year ago, the UN’s refugee agency decided not to back Greek authorities. “We will not provide support to mandatory ‘detention centers’ for refugees in Greece,” said an official announcement from the UNHCR.

Greece is using ex-military camps, police stations and specially built detention centres to house those seeking refuge in the medium term. These are different from the reception and identification centres at the hotspots where newly arrived refugees and migrants are initially held. There are currently six detention centres with a total of 5,215 places in Amygdaleza, Petrou Ralli, Corinth, Paranesti, Xanthi and Orestiada. A new report, titled Forgotten, by Aitima, an Athens-based NGO, says there are some 2,000 “irregular migrants” now detained in Greece – but this number might increase fast in the next few months as pre-departure facilities on the islands are completed. Officials believe that the creation of “closed-structure facilities”, each with a capacity of 150-200 people, will be the key to easing pressure on islands where more than 10,000 new arrivals are stranded.

Conditions inside existing detention facilities in Greece continue to be alarming. Most are without hot water, reports Aitima. They have no heating, there are no interpreters, no social workers and no psychologists. Detained migrants complain about inedible food. No provisions of clothes and shoes from the authorities are given. Doctors visit detention areas only in very urgent cases.

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History repeating.

‘Exiles in the Aegean’: A Year After The EU–Turkey Deal (Christopoulos)

Bert Birtles, an Australian journalist and poet, arrived in Athens in the fall of 1935 to meet Dora “at sunset under the Parthenon”. Very soon, the interest of the young devoted admirers of classical Greece shifted from the archaeological ruins to contemporary politics. In 1936, following a fascist coup, Bert and Dora started visiting islands of the Aegean that were used as destinations for exiles. In 1938, Birtles published Exiles in the Aegean, his “personal narrative of Greek politics and travel”. The book offers an exciting first-hand chronicle of the experiences and lives of the exiled leftists on the islands of Anafi and Gavdos, but also Leros, Karpathos and Lesvos. These islands continued to operate as spaces of “administrative displacement” throughout the twentieth century, and it was only in 1974, after the end of the colonels’ dictatorship, that this practice came to an end.

Even for my generation, born in the late 1960s, the phrase “to the dry islands” was the synonym of isolation, just as the phrase “to the mountains” was the synonym of resistance against the Axis forces in the 1940s. And then, in the 1980s, the “dry islands” became the ideal tourist resort, one of the must-see destinations of the world: a synonym of pleasure and relaxation. At the dawn of the 21st century, the islands of the eastern Aegean, close to the Turkish coast, became the first entry point to the EU for the thousands fleeing their countries, either for fear of being persecuted, or just in search of a decent life in Europe. Islands became the stepping stone to Athens, and, in turn, Athens a stepping stone to northern Europe. Islands offer a prototype for an exercise in control and biopolitics, as Foucault would put it.

The pre-1974 Greek state, which was not exactly famous for its democratic culture, knew this well. The European Union, on the other hand, only really realised this a year ago, with the infamous EU-Turkey statement addressing what the Europeans labelled a “migration crisis”, i.e. the arrival of a million refugees in a continent of half a billion inhabitants… Islands, both now and then, are regarded as the ideal quarantine zone: first it was for communists so they wouldn’t intoxicate their environment with their ideas, now for migrants and refugees, with a twofold objective. First, to send the message that this is what lies ahead for those who intend to make their way across the Aegean. Second, to send a message to European citizens and to address their primary fear: the buffer zone at the periphery of the EU ensures that no more refugees and immigrants can enter the ‘promised land’.

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Mar 132017
 
 March 13, 2017  Posted by at 5:41 pm Finance Tagged with: , , , , , , , , ,  3 Responses »
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Vincenzo Camuccini La Morte Di Cesare 1804

 

I don’t think Holland realized they planned their election on the Ides of March, don’t remember the date or event ever being mentioned when I lived there as a child. That Washington knew what it was doing when back in 2013 it set the end of the latest debt ceiling compromise to March 15 is not likely either. Nor is Janet Yellen deliberately setting the Fed’s ‘next’ rate hike on the date. They may all, in hindsight, wish they had possessed a little more historical knowledge.

When Shakespeare (and Plutarch before him) wrote ‘Beware the Ides of March’, he was talking about the murder of Julius Ceasar in 44 BC, by a group of senators, which included Brutus. But the incident can also be more broadly seen as the separation line between the Roman Republic and the Roman Empire. And now we’re getting somewhere interesting when looking at present day events. Democracy under threat of absolutism.

Leafing through the Dutch press, opinions differ on which politicians will profit most from the sudden row with Turkey that flared up over the weekend. Is it far right Wilders, who can now claim that he always foresaw things like this? Or is it “just a little less right” PM Rutte, who gets to look like a statesman and a decision maker? None of the other parties, there are 31 in total, look positioned to reap any gains from the bewildering developments.

The Netherlands is the ‘capital of fascism’, said Turkish foreign minister Cavusoglu on Sunday in France, where he ended up after being refused landing rights on Saturday. I know I’m biased, but no matter how you twist and turn it, that’s quite a statement about the country of Anne Frank, which lost most of its extensive Jewish population, and it was only a follow-up to Turkish president Erdogan earlier calling the Dutch ‘nazi’s and ‘remnants of fascists’.

Erdogan later managed ‘banana republic’. And declared that no-one can treat ‘his citizens’ the way a photograph taken Saturday night seemed to depict, in which a Turkish protester was attacked by a police dog. Apart from the question whether dogs should ever be used in quelling protests, this raises another issue crucial to the whole story. That is, Turkey insists that people who’ve lived in other countries for decades are nevertheless ‘its citizens’ (and not of their adopted countries).

As an aside, that story and photo of the dog – a German shepherd- reminds me of ‘When We Were Kings’, the movie about the Rumble in the Jungle fight in Kinshasa between Muhammad Ali and George Foreman, in which the latter emerges, upon arrival, from his plane with a huge German shepherd and thereby loses the sympthy of the local people, and some say the whole fight, people had very bad memories about such dogs.

 

So what happened in Holland? About 10 days ago, someone announced there would be a meeting (a rally) on Saturday March 11 in a ‘party hall’ in Rotterdam, that would be attended by Turkish foreign minister Cavusoglu. This set off an alert inside the Dutch government, because in Germany similar meetings had been cancelled in the preceding days. The reason for the cancellations is that these are political rallies to gain support from Turks living abroad for an April 16 referendum designed to give Erdogan very far-reaching powers.

Turkey claims the right to freedom of speech and political gathering. And they would perhaps have been granted this, if not for the July 15 2016 coup in the country, and especially its aftermath. Both Germany and Holland have been aware of Erdogan and his people putting pressure on their ‘citizens’ living abroad to for instance report ‘hidden’ Gülen supporters to embassies and consulates and mosques. In other words, to create divisions between one group of (Dutch or German) Turks and another.

Needless to say, neither Berlin not The Hague wants anything to do with that. But they want to reach some sort of compromise. No matter how they may feel about the country post-coup, Turkey is a NATO partner and the EU has an all-important deal with Ankara to keep refugees away from Europe. Even though it was obvious from the start that this was the dumbest deal with the devil anyone since Faust has ever signed, elections trump common sense and principles.

Over the next days, the Dutch tell Ankara they consider foreign minister Cavusoglu’s planned rally ‘undesirable’. Rotterdam mayor Aboutaleb, a Dutch-Morrocan muslim, bans the planned meeting. But the Turks respond that Cavusoglu will come no matter what, and for Holland to arrange an alternative venue. The Dutch don’t like this at all, but try to compromise with a meeting with a small group of invitees. On Friday, Turkey suggests the Rotterdam residence of the Turkish consul. Aboutaleb is not amused: the location of the home ‘invites’ the gathering of a large number of people outside.

Saturday morning comes with a lot of discussion. The consulate is suggested as a venue. Then, Turkey sends a message to a large group of Dutch Turks to come to the consulate. And while talks are ongoing, Cavusoglu tells CNNTürk TV that if Holland revokes his plane’s landing rights, something that has been mentioned in negotiations only as a last resort, there will be ‘economic and political sanctions’.

 

Rutte and his crew see no other choice than to do just that: revoke the landing rights. To which the response is to drive the -female- Turkish Minister of Family Affairs, Kaya, who’s in Germany, to Rotterdam. There were allegedly even multiple convoys, with decoys and all, so Holland wouldn’t know what car she was in. Meanwhile, the allegations of nazism and fascism had started to be unloaded on The Hague.

As someone remarked: all Erdogan wanted was a photo-op, a picture with 10,000 Turks waving their flags in the streets of Holland. Things turned out different. Minister Kaya made it to Rotterdam, but was refused entry into the consulate, declared an undesirable alien and told she must return to Germany. It took many hours, but finally she was put into a different car than the one she came in and driven back across the border.

From where she took a private plane to Istanbul. Turkey apparently was not clear on the difference between someone having a diplomatic passport and having diplomatic immunity. These things are regulated in the Vienna Convention, and Turkey wants Holland to be found in violation of it. But it doesn’t look like they are. And there are a few other things as well:

 

 

What I don’t get: where in the world does it say that you are free to hold political campaign events in any country you choose? Can you see Guatemalan rallies in the streets of LA? With the risk of clashes between rival groups? And what would Turkey say if an anti-Erdogan protest were held in Berlin tomorrow? You think political rallies by foreigners are allowed in Turkey?

And then the rioting started late Saturday night in Rotterdam. What struck me in the pictures of the riots, and in other footage, is how many times they contain men making hand-signs of either the Muslim Brotherhood or the Grey Wolves, an ultra right wing Turkish group. I don’t get how that fits in the streets of countries like Germany and Holland, and I don’t get how it fits in with the man who’s seen as a demi-god in Turkey, founder in 1923 of the secular country of Turhey, Kemal Atatürk.

It looks like Erdogan is trying to idolize Atatürk, as any Turkish leader would have to do to get votes, and at the same time make the country an islamic state, something Atatürk definitely did not want, but which could Erdogan hand a majority for the referendum next month. Why else does he accuse western Europe of being Islamophobic?

Oh, and how does Michael Flynn fit into this picture? Trump’s former security adviser worked for Erdogan -indirectly- while sitting in on security meetings, and pushed the US to extradite Erdogan’s no. 1 enemy, Fethullah Gülen. If Washington had had proof that Gülen was behind the coup last year, one would think he’d already have been extradited. Flynn’s role gets curiouser by the day. Is this why he was cast out of the Trump team? For being a foreign agent?

 

Also curious is the fact that Erdogan on Friday, the day before the Holland situation played out, was visiting Russia to meet with Putin. He arrived back home to say something about an anti-missile defense system they could build together, and suggested that Putin agreed with him on the danger of the Kurdish fighters in Syria and beyond. Only, Putin never acknowledged such a thing, and Putin has never forgiven Erdogan for downing a Russian jet in November 2015. He just waits for the right payback time. But Turkey is a NATO country.

The EU should never have kept the Union membership carrot dangling in front of Erdogan’s face, knowing full well Turkey would never be accepted as a member, zero chance. It should not have signed the refugee deal either; that could only ever have blown up into its face. The first and major victim of that will once again be Greece. Another country that Erdogan has been trying to bully.

Turkish jets violating Greek airspace are so common people tend to ignore them. Recently, army ships have been sailing into Greek waters too. The idea seems to be some sort of preparation for contesting the 1923 Lausanne Treaty , which settled ownership disputes post-Ottoman Empire. There are so many islands and islets and rocks, anyone who wants to can always find something to fight over. And then of course there’s still Cyprus; negotiations are ongoing, but so are efforts to frustrate them.

And it’s not that the Turkish economy is doing so well, the lira lost 30% in 2016 and another 10% so far this year. But unlike Greece, Turkey still has its own currency, and therefore the ability to devaluate it and absorb financial shocks. Still, 40% in 15 months is a lot. Imports are getting very expensive. Maybe that’s what Erdogan is trying to drown out with his fighting words.

 

This afternoon, Turkey’s Parliament Speaker compared Dutch PM Rutte to Hitler, Franco AND Mussolini. Pol Pot must have slipped his mind for a moment. Denmark, France, Angela Merkel and Brussels have all told Turkey to tone down. But at the same time, German TV network ZDF reports there are 30 more Erdogan rallies and meetings planned in the country in the next month.

Erdogan is trying to let his people see him as a strongman, not afraid of anyone. He only has to paint this picture for another month, through his state owned TV channels, and he’ll get his near absolute powers. Meanwhile, the US and all of the EU are too busy trying to manage their own election issues. But that may not be such a wise choice. On April 17, they may be faced with a near dictator as member of NATO, and with a pro-Islam and anti-EU agenda.

Erdogan is done winning in Europe, and it was even only ever for his home audience to begin with. His biggest gains in votes -and he looks to be 48%-52% behind right now- will have to come from the war theater, where he pretends to fight ISIS only to send his army to kill the Kurds. It would be a good thing if besides Putin there were a few other powers to tell him that’s a no-go. Donald?! Turkey will never beat the Kurds, it’s just an endless bloody battle. Time to make Kurdistan a nation, one way or the other.

It all sort of fits in with the whole political picture these days, doesn’t it? And with Ceasar and the Ides of March.

 

 

Mar 112017
 
 March 11, 2017  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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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.

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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?

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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.

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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.

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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.

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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.”

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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.

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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.

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“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.

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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.

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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.

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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.”

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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.

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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.

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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.

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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.

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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.

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Nov 042016
 
 November 4, 2016  Posted by at 9:56 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle November 4 2016
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DPC Madison Street east from Fifth Avenue, Chicago Sep 1 1900

Both US Parties Need to Worry About Poverty (BBG)
The End of a Great Industrial Power: France Car Production Collapses (Gef.)
The Sad Case Of Japan Should Serve As A Warning For China (BBG)
China Faces Looming Bulge in Currency Pressure (WSJ)
Egypt Central Bank Devalues Currency By 48% In Exchange For IMF Loan (AlJ.)
‘The FBI Is Trumpland’: Anti-Clinton Atmosphere Spurred Leaks (G.)
US Voters Fear The Media Far More Than Russian Hackers (WE)
Trump is Half Right and Half Wrong about Mosul (Di Lorenzo)
Tory MPs Warn High Court Trio Of Early Election If They Don’t Back Down (DM)
Government Pension Plans Are Headed For Disaster (Mises Inst.)
Toronto Home Prices Surge in October, Undaunted by New Rules (BBG)
Turkey Police Round Up Kurdish Party Leaders in Midnight Raids (BBG)
Turkey Appears To Have Closed Most Of The Internet (Ind.)
Historic Climate Pact Enters Into Force (AFP)
Early Closings Of US Nuclear Plants Leave Toxic Waste With Nowhere To Go (BBG)

 

 

Poverty is a problem the US flatly denies and ignores.

Both US Parties Need to Worry About Poverty (BBG)

There’s a reason presidential nominee Donald Trump’s message of a declining America is inspiring support in Republican strongholds: poverty is worsening in his party’s congressional districts, a new analysis by the Brookings Institution shows. The poverty rate increased in nearly all – 96% – of the Republican-controlled districts between 2000 and the 2010-2014 period, according to a study by Elizabeth Kneebone, a fellow with the institute. She analyzed Census data and figures from the American Community Survey. The population living in poverty in all Republican districts climbed by 49%, compared with a 33% increase in Democratic areas. A big theme of this presidential election campaign that will be decided on Nov. 8 has been the battle to win low-income voters who feel left behind from the economic expansion.

Trump’s rallies have been often packed with middle-class supporters who are receiving his message to “make America great again.” Both him and Democratic candidate Hillary Clinton have promised to raise the minimum wage and deal with the affordability of college and childcare. Neighborhoods in Democrat-leaning districts also have a high proportion of poor people. Combined, the poverty rate in districts represented by Democrats was higher at 17.1% in 2010-14 than the 14.4% in Republican areas. However, the overall number of poor residents was larger in Red districts at 25.1 million compared with 22.7 million in Blue districts, the study found. “Poverty and opportunity should be more than a top-of-the-ticket conversation,” Kneebone said. “Challenges of poverty cut across the political divide and touch all 436 congressional districts.”

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France suffers from the same disease as all Southern European contries. As long as it stays in the Eurozone, this can only get worse.

The End of a Great Industrial Power: France Car Production Collapses (Gef.)

French industry has been contracting since the adoption of the euro. It was not able to recover after either of the 2001 or 2008 crises because the euro, a currency stronger than the French franc would be, has become a burden to France’s economy. The floating exchange rate works like an indicator of the strength of the economy and like an automatic stabilizer. A weaker currency helps to regain competitiveness during a crisis, while a stronger currency supports consumption of foreign goods. China has been accused of artificial devaluation of its currency to prop up exports, while the ECB’s policy has had an opposite effect for the economy of France and some South European countries: the euro has become too strong; whereas for Germany’s it has become too weak.

That is why the common currency has increased consumption and imports in less productive countries and strengthened German competitiveness and exports. Because of the euro France could not regain international competitiveness in the world’s market after the 2001 crisis, so its industry has been slowly dying ever since. What we are saying is not that weakening your currency is a solution to boost a never-ending growth. The floating exchange rate is a great tool for bad times, which is excellently known in Poland, where there was no recession because of, among others, a temporarily weaker national currency. France and South European countries have just given this tool over to the ECB and they were not able to have a quick recovery. Just like Germany has had with an undervalued euro in their case.

Today, according to the Eurostat, industry (except construction) makes up 14.1% of the French total gross value added, while in 1995 it was 19.2%. The EU’s average is still 19.3%, but in Germany 25.9%. Moreover, the share of industry in total employment in France is only 11.9%, also under the EU’s average (15.4%) and the German level (18.8%). One of the imprints of the dying French manufacturing under the ECB rules is automotive sector collapse. According to OICA data, the world’s car production almost doubled in the years 1997-2015 from 53 million vehicles produced yearly to 90 million. At the same time, Germany increased its car production by 20% from 5 to 6 million. What happened in France, once the proud producer of beautiful and modern vehicles?

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Deflation.

The Sad Case Of Japan Should Serve As A Warning For China (BBG)

China and Japan may seem to inhabit alternative economic universes. After more than two decades of stagnation, Japan is a fading global power that can’t seem to revive its fortunes no matter what unorthodox gimmicks it tries. By contrast, China’s ascent to superpower status appears relentless as it gains wealth, technology, and ambition. Yet these Asian neighbors have a lot in common, and that doesn’t bode well for China’s economic future. The sad case of Japan should serve as a cautionary tale for China’s policymakers. Beijing pursued almost identical economic policies to Tokyo’s to generate its rapid development. Now China’s leaders are repeating the missteps the Japanese made that tanked Japan’s economy and thwarted its revival.

30 years ago, few foresaw the decline of Japan, either. Japan was the East Asian giant poised to overtake the U.S. as the world’s top economy. Driving that ascent was an economic system that many considered superior to laissez-faire American capitalism. By fostering close, cooperative ties among the state, big corporations, and banks, Japan’s policymakers encouraged investment and guided a national industrial strategy. Bureaucrats in Tokyo interfered with markets to a degree unthinkable in the U.S. by protecting nascent industries and directing financing to favored sectors and companies. Backed by such support, Japanese companies burst onto the world stage and pushed their American competitors to the wall. But even as Japan appeared destined for greatness, its economy was, in reality, starting to rot.

Those clubby ties among finance, business, and government misallocated capital and led to wasteful investments. Growth was given a boost by cheap credit in the second half of the 1980s, but that also helped inflate debt levels and stock and property prices. When this “bubble economy” burst in the early 1990s, the financial industry was flattened. Japan has yet to fully recover. [..] The methods Beijing employed to generate rapid growth—directing finance, nurturing targeted industries, and promoting exports—are replicas of Japan’s. And since the state in China’s “state capitalism” plays an even larger economic role than Japan’s officious bureaucracy does, the Chinese government interferes with markets to a greater degree.

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More record lows every day.

China Faces Looming Bulge in Currency Pressure (WSJ)

Markets have grown more accustomed to the slow-motion decline in the value of the Chinese yuan. The currency’s next milestone, however, may usher in a more challenging period. China’s currency has fallen nearly 4% against the dollar this year, with a chunk of that move taking place over the past month, though there has been a small recovery in recent days. Recent dollar strength is certainly a factor in the minds of China’s currency managers in deciding when to intervene and when to let the yuan slide. Beijing has spent more than $500 billion in reserves to manage the yuan’s slide over the past two years on a balance-of-payments basis. Still, the yuan has slipped from 6.06 a dollar to above 6.75. That is getting close to 6.82, the level around which the yuan was pegged for an extended period from 2008 until 2010.

Currency traders could be accused of overplaying such historical levels having an effect on current trading. But in this case, it may have more than just a psychological impact. The two years in which the yuan was stuck around 6.82 was also the period of the largest inflows into the Chinese economy, to the tune of $764 billion, noted Kevin Lai of Daiwa Securities. Quantitative easing in the U.S. was in full effect and trillions flowed to emerging markets, especially China. Individuals and companies that borrowed in dollars or brought money in as a carry trade may have hung on until now, figuring they haven’t lost money on the exchange rate. But seeing the yuan get back to the rate when they brought it in could hasten transfers.

Unlike the period from 2008 to 2010, when interest-rate differentials vastly favored bringing money to China, and the exchange rate was pegged, the difference between dollar rates and yuan rates have narrowed substantially, plus the Chinese have to account for the possibility the yuan will weaken further. That explains why Federal Reserve rate increases have such a powerful effect on China’s capital flows. [..] It isn’t inevitable that the bulge of money that flowed in from 2008 to 2010 will necessarily leave. But outflows do continue to bubble below the surface. The ghosts of inflows past may yet haunt China’s future.

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Lagarde poking a stick into a hornest nest.

Egypt Central Bank Devalues Currency By 48% In Exchange For IMF Loan (AlJ.)

Egypt has devalued its currency by 48%, meeting an important demand set by the IMF in exchange for a $13bn loan over three years to overhaul the country’s economy. Thursday’s much anticipated decision by the Egyptian Central Bank followed a sharp and sudden decline this week in the value of the dollar in the unofficial market, dropping from an all-time high of 18.25 pounds to around 13 to the US currency. The devaluation pegs the Egyptian pound at 13 to the dollar, up from nearly nine pounds on the official market. The IMF’s executive board has yet to ratify the $12bn loan provisionally agreed by Egypt and the IMF in August.

Egypt’s central bank increased interest rates by three percent to rebalance currency markets following weeks of turbulence. A shortage of dollars in the economy had put the currency under intense downward pressure in recent months. A rapid slide on the black market to 18 earlier this week pushed the importers to cease buying, with the rate strengthening to 13 late on Wednesday, creating a rare opportunity for the central bank to devalue. The central bank said the new exchange rate was non-binding and would serve as “soft guidance to jumpstart the market”.

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Even this can be turned into an anti-everyone-but-Hillary piece, as the Guardian proves.

‘The FBI Is Trumpland’: Anti-Clinton Atmosphere Spurred Leaks (G.)

Deep antipathy to Hillary Clinton exists within the FBI, multiple bureau sources have told the Guardian, spurring a rapid series of leaks damaging to her campaign just days before the election. Current and former FBI officials, none of whom were willing or cleared to speak on the record, have described a chaotic internal climate that resulted from outrage over director James Comey’s July decision not to recommend an indictment over Clinton’s maintenance of a private email server on which classified information transited. “The FBI is Trumpland,” said one current agent. This atmosphere raises major questions about how Comey and the bureau he is slated to run for the next seven years can work with Clinton should she win the White House.

The currently serving FBI agent said Clinton is “the antichrist personified to a large swath of FBI personnel,” and that “the reason why they’re leaking is they’re pro-Trump.” The agent called the bureau “Trumplandia”, with some colleagues openly discussing voting for a GOP nominee who has garnered unprecedented condemnation from the party’s national security wing and who has pledged to jail Clinton if elected. At the same time, other sources dispute the depth of support for Trump within the bureau, though they uniformly stated that Clinton is viewed highly unfavorably. “There are lots of people who don’t think Trump is qualified, but also believe Clinton is corrupt. What you hear a lot is that it’s a bad choice, between an incompetent and a corrupt politician,” said a former FBI official.

Sources who disputed the depth of Trump’s internal support agreed that the FBI is now in parlous political territory. Justice department officials – another current target of FBI dissatisfaction – have said the bureau disregarded longstanding rules against perceived or actual electoral interference when Comey wrote to Congress to say it was reviewing newly discovered emails relating to Clinton’s personal server. [..] Comey’s decision to tell the public in July that he was effectively dropping the Clinton server issue angered some within the bureau, particularly given the background of tensions with the justice department over the Clinton issue. A significant complication is the appearance of a conflict of interest regarding Loretta Lynch, the attorney general, who met with Bill Clinton this summer ahead of Comey’s announcement, which she acknowledged had “cast a shadow” over the inquiry.

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It’s only a poll of 1000, but perhaps the US voter is not completely stupid.

US Voters Fear The Media Far More Than Russian Hackers (WE)

Voters fear the media far more than Russian hackers when it comes to tampering with election results. According to a Suffolk University/USA Today poll, 46% of likely voters believe the news media is “the primary threat that might try to change the election results.” The national political establishment was the second most-suspected group at 21%, and another 13% were undecided. Foreign interests, including “Russian hackers,” ranked fourth with 10% and “local political bosses” came in last with 9% of likely voters as the main threat to truthful election results. The poll results found 51% of likely voters were either “very concerned” or “somewhat concerned” about the possibility of violence erupting on election day or afterwards.

The poll of 1,000 likely voters was taken between Oct. 20 and Oct. 24 and followed the release of private emails by the hacking group WikiLeaks that revealed cozy relationships between some prominent media stars and the Clinton campaign. The WikiLeaks dump also discovered Donna Brazile, the interim chairwoman of the Democratic National Committee, forwarded a debate question to Clinton that was later asked at a CNN Democratic town hall. Brazile at the time was a CNN contributor. The poll found 39% of likely voters believe the media is coordinating coverage with individual political campaigns, while 48% said the media is reporting “completely of its own accord.” The Gallup Poll has found trust in the media to have sunk to an historic low. A September Gallup survey found just 32% of American adults saying they have a great deal or fair amount of trust in the media,” a number that has dropped 8 %age points from last year.

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“.. keeping Boobus Americanus fooled into believing that that guy in the black pajamas with the giant sword will be in their neighborhood next week..”

Trump is Half Right and Half Wrong about Mosul (Di Lorenzo)

In his campaign stump speech Donald Trump ridicules Obama for publicly announcing four months in advance that “we” will be invading Mosul, Iraq to kick out ISIS there and capture its leaders. No element of surprise there. Twelve minutes after the announcement, said Trump, and the ISIS leaders were gone. Trump is right to mock this foolish talk. The element of surprise is what military commanders dream about. Stonewall Jackson’s famous flanking maneuver at the Battle of Chancellorsville (VA), where his 60,000-man army outflanked and surprised the 133,000-man Army of the Potomac with a crushing defeat is still to this day taught at military academies around the world.

But Obama is not that stupid. He’s just not interested in winning the “war on terra,” as Dub-Yuh called it. His main interest is keeping Boobus Americanus fooled into believing that that guy in the black pajamas with the giant sword will be in their neighborhood next week chopping off heads if we ever stop intervening in the Middle East. It’s all theater, in other words. That’s why the regime announces some big new military escalation every few months, lest Boobus forgets that he’s supposed to be frightened into acquiescing in the never-ending explosive growth of the military-industrial complex and the relentless growth of the state in general that it nourishes.

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The mess will only get deeper unless Brits stop blaming each other.

Tory MPs Warn High Court Trio Of Early Election If They Don’t Back Down (DM)

Theresa May could be forced to hold an early election if judges and Remain campaigners do not back down in the war against Brexit, Tory MPs warned last night. On a frantic day at Westminster, the Prime Minister vowed to appeal yesterday’s High Court verdict which would allow Parliament to frustrate or even scupper the process of Britain leaving the EU. No 10 sent a clear message to the courts that 17.4 million voters had backed Brexit and that they should not get in the way of ‘delivering the best deal for Britain’. David Davis, the Brexit Secretary, said that – if yesterday’s verdict was upheld by the Supreme Court – a full Act of Parliament would be required to trigger Brexit.

This would allow MPs or unelected peers to table amendments that could dictate the terms of Brexit or even halt the process. But Mr Davis warned that heading down this path would be a huge mistake. And senior Tories said that, if MPs and peers did try to frustrate Brexit, a General Election was almost inevitable, suggesting Mrs May would have no option but to trigger an ‘immediate’ poll in early 2017. Last night, Mr Davis said: ‘Parliament voted by six to one to give the decision to the people, no ifs or buts, and that’s why we are appealing this to get on with delivering the best deal for Britain. ‘Parliament is sovereign and has been sovereign, but of course the people are sovereign.

‘The people are the ones who parliament represents…17.4 million of them, the biggest mandate in history, voted for us to leave the EU. ‘We’re going to deliver on that mandate in the best way possible for the British national interest. ‘The people want us to get on with it and that is what we intend to do.’ Ex-justice minister Dominic Raab said the verdict had opened ‘Pandora’s box’. He added: ‘I think the elephant in the room here is if we get to the stage where [Remainers] allow this negotiation to even begin, I think there must be an increased chance that we will need to go to the country again. ‘I think that would be a mistake and I don’t think those trying to frustrate the verdict in the referendum will be rewarded.’

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A global phenomenon. “..the political process [..] actually rewards those who underfund the present and defray costs onto future generations.”

Government Pension Plans Are Headed For Disaster (Mises Inst.)

The combined debt held by U.S. public pension plans will top $1.7 trillion next year, according to a just-released report from Moody’s Investors Services. This “pension tsunami” has already forced towns like Stockton, California and Detroit, Michigan into bankruptcy. Perhaps no government mismanaged their pension as badly as Puerto Rico, where a $43 billion pension debt forced the commonwealth to seek protection from the federal government after having defaulted on its obligations to bondholders — a default which is expected to spread to retirees in the form of benefit cuts. While the disastrous outcome of Puerto Rico’s pension plan – which is projected to completely run out of assets by 2019 – represents the worst-case scenario, the same series of events that led to its demise can be found in most public pension plans nationwide.

There are three primary culprits that can be found in nearly every state suffering from a public pension crisis: 1) The use of accounting gimmicks that are designed to shift costs onto future generations – an approach outlawed for private pension plans and rejected by both public and private plans in Canada and Europe. 2) Lawmakers, acting in their political self-interest, who have catered to the past demands of government unions to enrich their members’ benefits while passing the costs onto future generations. 3) A broken governance structure where public pension board members are actually penalized in tangible ways for acting responsibly, and are rewarded by choosing to delay the day of reckoning. Perhaps the most concise assessment of public pensions came from the former chief actuary for the nation’s largest public pension fund – CalPERS – who noted simply that: “Politics and pensions just don’t mix.”

And it’s not just “liberal” states like California who have succumbed to the siren call of public pensions. My home state of Nevada – historically thought to be a bastion of limited government thought – is in a proportionally deeper hole than our California neighbors! [..] In theory, government is ostensibly designed to override the allegedly short-sighted, greedy nature of individual actors with policies that are long-term oriented and designed to maximize the general welfare. Yet, as the case of public pensions (not to mention infrastructure spending, the national debt, entitlements, etc.) reveals, the political process actually does the exact opposite: it actually rewards those who underfund the present and defray costs onto future generations.

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Just ask yourself: who profits?

Toronto Home Prices Surge in October, Undaunted by New Rules (BBG)

Toronto home sales rose to a record and prices surged in October, showing little effect so far from new government rules designed to bring stability to the market. Sales in Canada’s biggest city rose 12% to 9,768 transactions from the same month a year earlier, while average prices jumped 21% to C$762,975 ($569,852), according to the Toronto Real Estate Board. The average price of a detached home was C$1,034,077, up 26% on the year. New listings rose 0.9% to 13,377 homes. “Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments,” Jason Mercer, the board’s director of market analysis, said in a statement on Thursday.

The market remained hot even as Finance Minister Bill Morneau unveiled new federal rules in October that included a stress test for home-loan borrowers and came into effect halfway through the month. The rules also stiffened requirements for low-ratio mortgage insurance and closed a tax loophole. Toronto’s march higher contrasts with Vancouver’s continued sales decline since the provincial government enacted a tax on non-Canadian home buyers. Sales in the west coast city fell 39% in October over the prior year, while prices for all residential properties climbed to an average of C$919,300, a 25% jump from a year earlier and a 0.8% decline from September.

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The west uses the Kurds when it comes to fighting ISIS, but leaves them hanging when it comes to Erdogan’s delusions.

Turkey Police Round Up Kurdish Party Leaders in Midnight Raids (BBG)

Turkish police began rounding up Kurdish lawmakers in post-midnight raids on Friday, extending a crackdown on the opposition as President Recep Tayyip Erdogan consolidates power following a July 15 coup attempt. Selahattin Demirtas and Figen Yuksekdag, co-chairs of the Peoples’ Democratic Party, also known as the HDP, were among those detained, according to CNN-Turk. At Erdogan’s request, parliament had passed a law in May stripping the party’s lawmakers of their immunity from prosecution, which allows them to be charged with terrorism-related offenses. Last year, Demirtas looked to be a rising political star in Turkey. He led a pro-Kurdish party to win seats in parliament for the first time, passing the threshold of 10% of the national vote.

He also ran for president in 2014, and campaigned on a promise to prevent Erdogan from winning the power he seeks to transfer the seat of power in Turkey from parliament to an enhanced executive presidency. The police raids were carried out in Diyarbakir, Turkey’s largest Kurdish-majority city, and in the capital Ankara, according to Haberturk newspaper. Sirri Sureyya Onder, a member of parliament representing Istanbul, was also detained in Ankara, it said. Over the weekend, police arrested the elected mayors of Diyarbakir and later replaced them with government appointees. Demirtas had said that members of his party wouldn’t abide by orders to appear before courts, saying they’d become servants of the ruling party and were illegitimate.

Erdogan says the HDP is merely a front for the Kurdistan Workers’ Party, or PKK, a group classified by Turkey and allies – including the U.S. and EU – as a terrorist organization. The HDP is the third-largest party in Turkey’s parliament, holding 59 of the legislature’s 550 seats.

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Could still be an incident, but it would fit the pattern.

Turkey Appears To Have Closed Most Of The Internet (Ind.)

Much of the internet appears to have gone down in Turkey. People in the country are having problems accessing much of the internet’s biggest websites and services, including Facebook, WhatsApp, YouTube, Twitter and more. The website Down Detector confirmed problems in the country, particularly in the west. Some have reported that the sites are simply slow, but that it is still possible to access them. Others say they are down entirely. It isn’t clear whether the outage has been caused by an intentional ban, a cyber attack or just an accident. Some reported that issues with Turk Telecom appeared to be the cause of the problems.

Turkey Blocks, a website that tracks issues with the internet in Turkey, claimed that web traffic including that for WhatsApp was subject to throttling, where connections are slowed down to the point they are unusable. It claimed that the internet ban was related to the arrest of some political activists the night before the outage went into effect. The issue began overnight but has been going on throughout the day, according to local reports. The internet in general seems to be having a rocky few weeks – recently, it went down for almost a full day after a strange cyber attack on the internet’s infrastructure that appeared to be executed by webcams.

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Yeah, yeah, CON21. Mankind is capable of producing huge amounts of hot air in more ways than one.

Historic Climate Pact Enters Into Force (AFP)

A hard-fought pact to stave off worst-case-scenario global warming enters into force Friday after record-fast ratification by nations reassembling next week for a fresh round of UN climate talks. Dubbed the Paris Agreement, it is the first-ever pact binding all the world’s nations, rich and poor, to a commitment to cap average global warming by curbing planet-warming greenhouse gases from burning coal, oil and gas. “Humanity will look back on November 4, 2016, as the day that countries of the world shut the door on inevitable climate disaster,” UN climate chief Patricia Espinosa said. While cause for celebration, “it is also a moment to look ahead with sober assessment and renewed will over the task ahead,” she said.

This meant drastically cutting emissions in the short term, “certainly in the next 15 years,” Espinosa pointed out a day after a UN report said current trends were steering the world towards climate “tragedy”. By 2030, said the UN Environment Programme, annual greenhouse gas emissions will be 12 to 14 billion tonnes of carbon dioxide equivalent (CO2e) higher than the desired level of 42 billion tonnes. The 2014 level was about 52.7 billion tonnes. 2016 is on track to become the hottest year on record, and carbon dioxide levels in the atmosphere passed an ominous milestone in 2015. On Friday, the Eiffel Tower in Paris as well as government and public buildings in Marrakesh, New Delhi, Sao Paulo and Adelaide, among others, will be lit up in green to mark the entry into force of the historic pact.

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“..interim storage sites while the government develops a permanent solution..” Baloney. There is no permanent solution. Yucca Mountain was discarded after a judge ruled the government had to guarantee safe storage for 100,000 years. There is no such guarantee.

Early Closings Of US Nuclear Plants Leave Toxic Waste With Nowhere To Go (BBG)

Under a 1982 law, the U.S. government, not the utilities, is responsible for disposing of radioactive waste that can take thousands, even hundreds of thousands, of years to degrade. But more than a half-century after nuclear energy powered the first American home, the U.S. Department of Energy still doesn’t have a permanent solution for the waste left behind. It’s a problem that will only get worse. On October 24, the Fort Calhoun Nuclear Generating Station near Blair, Nebraska, became the fifth nuclear plant to close in five years. Of 119 reactors in the U.S., 20 are now being decommissioned and a half-dozen more are expected to close prematurely, nudged out by cheap natural gas and growing use of renewables.

Beyond that, “the big wave of retirements really starts coming in around 2030,” Energy Secretary Ernest Moniz warned last month at an event in Washington. Among experts, the nuclear waste debate invariably turns on the fleeting nature of human institutions in dealing with an element that the Environmental Protection Agency has said must be isolated for 10,000 years to protect humans and the environment from toxic radiation. “The problem with federal agencies is that the management structure changes every few years,” said Allison Macfarlane, a former chairman of the Nuclear Regulatory Commission (NRC), which licenses and regulates civilian use of radioactive material. “In hundreds of years, will these institutions be there, will they care, will they pay?” That’s one issue. A second is where exactly to put the waste.

The safest thing to do is to bury it deep underground, below the water table and within a stable rock formation. Congress picked such a site in 1987: a desert ridge in Southern Nevada known as Yucca Mountain. The site abuts a nuclear weapons testing ground where 928 atomic tests were conducted between 1951 and 1992. While a few Nevada counties agreed with the selection, the state government didn’t, and the Yucca solution soon devolved into a decades-long political fight that crossed party lines and spanned presidential administrations. In 2010, President Barack Obama finally scrapped the plan altogether, declaring the site unworkable.

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